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PROSPECTUS Stock Options 1997
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ARAMARK CORPORATION
ARAMARK Ownership Program
Stock Options
18,953,801 Shares
Common Stock, Class B, $.01 Par Value
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ARAMARK Corporation is offering you an opportunity to participate in
the ownership of our Company. To enable you to acquire shares of stock in the
Company, we have granted to you a stock option.
In general, a stock option permits you to purchase shares of stock of
our Company at the appraisal price for the stock at the time you received the
grant.
To facilitate your ability to purchase stock, we have developed a
program that permits you to defer up to 75% of the purchase price of the stock
you buy. In addition to purchasing stock by personal check, you may sell or
exchange stock of our Company that you already own.
Your ability to transfer stock which you purchase will be limited
because our Company's stock is not traded publicly and because by exercising
your right to purchase stock through a stock option you will become bound by the
terms of a Stockholders Agreement.
This Prospectus provides you with detailed information about stock
options. In addition, you may obtain information about the Company from
documents that we have filed with the Securities and Exchange Commission
("SEC"). We encourage you to read this entire document carefully.
See Page B-1 For Forms And Instructions
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is June 15, 1997. You should not assume
that the information contained in this Prospectus is accurate as of any date
other than such date, and neither the delivery of this Prospectus nor any sale
made through its use shall create any implication to the contrary. This
Prospectus does not constitute an offer or solicitation in any jurisdiction in
which such offer or solicitation is not authorized or in any jurisdiction in
which the Company is not qualified to make such an offer or solicitation or to
anyone to whom it is unlawful to make such offer or solicitation.
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TABLE OF CONTENTS
Where You Can Find More Information....................................... 2
Prospectus Summary........................................................ 3
Questions and Answers..................................................... 4
About This Prospectus..................................................... 12
The ARAMARK Ownership Program............................................. 12
The Deferred Payment Program.............................................. 14
U.S. Income Tax Considerations............................................ 14
Description of Equity Securities.......................................... 15
Experts................................................................... 16
Incorporation of Certain Documents by Reference........................... 17
Annex A -- Amended and Restated Stockholders' Agreement................... A-1
Annex B -- Exercise Forms and Instructions................................ B-1
WHERE YOU CAN FIND MORE INFORMATION
ARAMARK files annual, quarterly and special reports, and other
information with the SEC. You may read and copy any reports, statements or other
information the Company files at the SEC's public reference rooms in Washington,
DC, New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from commercial document retrieval
services and at the web site maintained by the SEC at "http://www.sec.gov."
ARAMARK has filed registration statements to register with the SEC the
Common Stock to be issued when you exercise a stock option granted under the
ARAMARK Ownership Program. As allowed by SEC rules, this Prospectus does not
contain in it all the information you can find in the registration statements or
exhibits or amendments to the registration statements.
The Company will provide without charge to each person holding a stock
option granted under the ARAMARK Ownership Program, upon the request of such
person, a copy of any or all of the documents which are incorporated by
reference herein, other than exhibits to such documents. Written or telephone
requests should be directed to ARAMARK Shareholder Services Group at First Union
National Bank toll free at 1-888-96-OWNER (1-888-966-9637) or 123 South Broad
Street, MCPA 1328, Philadelphia, PA USA 19109.
If you have not received a copy of ARAMARK`s most recent annual report
on Form 10-K, or if you have any questions about the ARAMARK Ownership Program
or would like to obtain further information, you should call the ARAMARK
Shareholder Services Group at First Union National Bank toll free at
1-888-96-OWNER (1-888-966-9637) or 123 South Broad Street, MCPA 1328,
Philadelphia, PA USA 19109.
ARAMARK Corporation is a Delaware corporation with its principal
offices located at ARAMARK Tower, 1101 Market Street, Philadelphia, PA 19107
(telephone 215-238-3000). When we use the word "Company" herein to describe
ARAMARK, we are referring to ARAMARK Corporation and its subsidiaries unless the
context otherwise requires.
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PROSPECTUS SUMMARY
This summary highlights selected information from this document and may
not contain all of the information that is important to you. You should read
carefully this entire document and the documents we have referred you to. See
"Where You Can Find More Information."
The Company
ARAMARK provides and manages services, including food and support
services, uniform services, education services and distribution services.
The ARAMARK Ownership Program
The ARAMARK Ownership Program provides you with an opportunity to
purchase shares of the Company at a price determined at the time your stock
option is granted.
Under the program you have received a grant certificate that entitles
you to purchase a specific number of shares.
Stockholders' Agreement
By purchasing stock under the program you will be agreeing to be bound
by the terms of a Stockholders' Agreement to which all stockholders are parties.
Under the Stockholders' Agreement, the stock owned by you can only be
transferred in limited circumstances. In addition, upon your termination of
employment, the Company may, but is not generally obligated to, repurchase your
shares.
A copy of the Stockholders' Agreement is attached as Annex A to this
Prospectus.
How to Purchase Shares
To purchase stock under the program you must (1) complete the
appropriate forms (see page B-1) and (2) pay the aggregate purchase price for
the stock plus the aggregate amount of taxes required to be withheld (as
computed in the exercise form).
Payment for the Shares
You may pay for your stock using any combination of the following:
(1) defer up to 75% of the total purchase price under the ARAMARK
Deferred Payment Program.
(2) sell ARAMARK shares that you already own if the Internal Market is
open at that time.
(3) use ARAMARK shares that you currently own in a stock-for-stock
exercise for up to the purchase price (not including required withholding
taxes).
(4) by personal check.
Other Factors
Before you make a decision to invest in our Company, we urge you to
read this prospectus and the Company's most recent annual report on Form 10-K
and other information that we have filed with the SEC. See "Where You Can Find
More Information."
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QUESTIONS AND ANSWERS
To assist you in better understanding stock options and the ARAMARK
Ownership Program, we have raised below frequently asked questions and have
answered them for you. For more complete answers to your questions, you should
read the text of the Stockholders' Agreement (references to which appear in the
answers) attached as Annex A to this Prospectus. For your convenience, we have
grouped the questions and answers by topic as indicated in the following table
of contents.
Topic Q/A
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General...............................................1 - 2
Stock Options
General........................................3 - 10
How to Purchase and Pay Taxes Due..............11 - 17
Deferred Payment Program.......................18 - 29
Sale of Currently-Owned Shares.................30 - 31
Stock-for-Stock Exercises......................32 - 38
Borrowing......................................39
Stock Ownership
General........................................40 - 43
Transferring Shares............................44 - 47
Pledging Shares................................48 - 50
Sales While Employed
General........................................51 - 52
Internal Market................................53
Emergency Buy-Back Program.....................54
Offer-to-Sell..................................55
Sales Upon Termination of Employment
General........................................56 - 61
Installment Notes..............................62 - 63
Stock Repurchase Policy........................64 - 69
1. Q: What is ARAMARK Corporation?
A: The Company was formed by a group of investors led by senior management
in a management buyout transaction in 1984. Management investors
directly own more than 50% of the equity of the Company.
2. Q: Are the shares of Common Stock being offered the same as the shares
owned by current management investors?
A: Yes, they are shares of Class B Common Stock with the same rights and
obligations to which current management investors are subject under the
Stockholders' Agreement.
3. Q: Am I required to purchase shares?
A: No. Any exercise of all or any portion of your stock option by you is
strictly voluntary.
4. Q: What is the purchase price per share?
A: The price per share for your stock option is set at the time your stock
option is granted. The price appears on your grant certificate and
represents the Appraisal Price based on the most recent available
independent appraisal at the time of grant. This price remains fixed
subject to adjustments for stock dividends, stock splits,
reorganizations, mergers or the like as described in Question 5 below.
Call 1-888-96-OWNER (1-888-966-9637) for the current appraisal price.
5. Q: Is my stock option adjusted in the event of a Common Stock dividend,
split, reorganization, merger or the like?
A: In such cases your stock option will be equitably adjusted, if
appropriate, as determined by the Human Resources, Compensation and
Public Affairs Committee of the Board of Directors. For example, as a
result of such adjustments previously made, a stock option originally
granted in May 1987 for 10 shares at an exercise price of $62.00 per
share is now an option for 428 shares at an exercise price of $1.44 per
share.
6. Q: When can I exercise my stock option and purchase shares?
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A: You can exercise your stock option (and thereby purchase shares) only
after the conditions set forth in your stock option certificate are
satisfied. Generally, stock options have two conditions:
(1) You must have held your stock option for at least the minimum time
specified in your certificate.
(2) A registration statement must have become effective with respect to
the exercise of your option. This second condition has been satisfied
for all stock options under the Program.
7. Q: What is the required holding period for stock options?
A: The required holding period is specified in your grant certificate.
Generally, half of your option becomes exercisable after five years, and
the portion exercisable increases each year thereafter until the option
is fully exercisable after nine years.
8. Q: Do the stock options have an expiration date?
A: Yes. The expiration date is specified in your grant certificate.
Generally, stock options expire ten years after they are granted.
9. Q: What if my employment is terminated?
A: Your stock option is canceled if your employment with the Company and
its subsidiaries (or any entity designated by the board of directors in
which the Company continues to own an equity interest) is terminated for
any reason. Unless you are terminated for cause, however, you may
exercise your option at any time during the three months following your
termination (but not after the expiration date of your option) to buy
those shares which were exercisable at the time of your termination.
If you die or become permanently disabled while employed by the Company
and its subsidiaries, (or any entity designated by the board of
directors in which the Company continues to own an equity interest) you
(or your legal representative) may exercise your options at any time
during the 12 months after your disability or death (but in any case not
after the expiration date) to buy those shares which were exercisable at
the time of your disability or death.
10. Q: If I exercise only a portion of my stock option, what happens to the
unexercised portion of my stock option?
A: The unexercised portion of your stock option is not affected.
11. Q: How do I purchase shares of Common Stock?
A: To exercise all or any portion of your stock option and purchase shares,
you must deliver to the Company, at the address which appears on the
exercise forms included in this Prospectus as Annex B, (1) your
completed exercise forms and (2) payment of the aggregate purchase price
plus the aggregate amount of applicable taxes required to be withheld or
collected. Instructions for computing your taxes required to be withheld
are included on the exercise form.
12. Q: How do I make payment for the purchase price?
A: You may be eligible to use a combination of any of the following means
to pay for the aggregate purchase price (including any required
withholding taxes) upon exercise of your stock option:
(1) the ARAMARK Deferred Payment Program for up to 75% of the total
purchase price, (2) the sale of shares of Common Stock, (3) the use of
shares of Common Stock that you currently own in a stock-for-stock
exercise for up to the purchase price (not including any required
withholding taxes), and (4) by personal check.
The following questions 13-16 apply to U.S.-based employees. Non-U.S.
based employees should check with their tax advisors concerning tax law
requirements in their countries.
13. Q: Do I have to pay taxes when I exercise my stock option?
A: All outstanding stock options are non-qualified stock options for U.S.
income tax purposes, and taxes are payable upon their exercise.
14. Q: Why do I have to pay taxes when I exercise a stock option?
A: Under current U.S. tax laws, when you exercise a stock option, the
difference (if any) between the exercise price and any higher Appraisal
Price of the Common Stock at the time of the exercise is considered
ordinary taxable income. The Company is required to withhold taxes at
the time of the exercise. These include U.S. income taxes, social
security taxes (if appropriate), and applicable state income and
unemployment taxes (depending on the state in which you are
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employed). This is not necessarily the entire amount of tax that you
will owe as a result of this exercise. Additional tax, including
estimated tax payments, may be required to meet your full tax liability
due to this exercise. You should discuss your particular situation with
your tax advisor.
15. Q: Will the Company report to the U.S. IRS the taxable income (if any) that
I realize upon the exercise of my stock option?
A: For U.S. based employees, the taxable income (if any) and the taxes
withheld will be reported on your W-2 form for the year in which the
purchase occurs. The purchase occurs at the time your completed exercise
forms and your purchase price payment are received by the Company.
16. Q: Can I compute the amount of withholding tax I must deposit with the
Company prior to exercising an installment?
A: Yes. A portion of the exercise form (included in this Prospectus as
Annex B) leads you through the computation of the estimated amount of
applicable taxes required to be withheld or collected.
It is possible (depending on your personal situation and the state in
which you are employed) that the actual amount of taxes required to be
withheld or collected will be greater than the estimated amount. In such
event, additional taxes may be withheld from subsequent paychecks.
17. Q: How will I know what the Appraisal Price of the Common Stock is when I
exercise a stock option?
A: The Company's current practice is to have the Common Stock independently
appraised quarterly (December 1, June 1, June 1, September 1) by an
independent appraiser. The Appraisal Price at June 1, 1997 was $18.50.
This information is generally communicated with the Chairman's quarterly
letter to shareholders. Additionally, recorded updates in the Appraisal
Price can be obtained by calling 1-888-96-OWNER.
18. Q: What is the Deferred Payment Program?
A: The Deferred Payment Program is a Company program that allows you to
purchase shares of Common Stock pursuant to your exercise of a stock
option and to defer paying a portion of the purchase price.
19. Q: Who is eligible to participate in the Deferred Payment Program?
A: Generally, you may participate in the Deferred Payment Program for the
exercise of any stock option.
20. Q: Will the Deferred Payment Program be offered for exercises in the
future?
A: The Company anticipates the Deferred Payment Program will be offered for
all exercises of stock options. However, the Board of Directors may
cancel or modify the Deferred Payment Program at any time.
21. Q: Do I have to participate in the Deferred Payment Program?
A: No. Any participation by you is strictly voluntary.
22. Q: How much of the purchase price payment may I defer under the Deferred
Payment Program?
A: You may defer payment of up to 75% of the total purchase price
(including required withholding taxes) for the shares you are purchasing
through exercise of your stock option.
23. Q: How do I elect to participate in the Deferred Payment Program?
A: The exercise forms included in Annex B provide for your electing to
participate in the Deferred Payment Program. A portion of the exercise
form leads you through the election and computation of the amount of
payment you may defer.
24. Q: What are the terms of the Deferred Payment Program?
A: The deferred payment is due, plus interest, on the March 15 next
following the third anniversary of the date the stock option is
exercised. For example, for a stock option exercised in May 1997, the
deferred payment is due on March 15, 2001. Interest accrues at an
interest rate to be established at the time the option is exercised, and
is payable at the same time the deferred payment is due. (The interest
rate is based on the current prime rate.) All of the shares purchased
pursuant to the stock option exercise are pledged to secure the deferred
payment obligation, and the Company holds the share certificates. If you
sell or otherwise transfer any of the pledged shares, the entire
deferred payment becomes due at the time of the sale. Deferred
obligations are demand obligations and, as such, may be called at any
time by the Company. The Company does not intend, but
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reserves the right, to call obligations under the Deferred Payment
Program.
25. Q: Can I delay the payment of my deferred obligation beyond the maturity
date?
A: On the maturity due date, you may choose to delay the payment of the
principal amount for an additional three years subject to the payment of
interest on the original maturity date. A deferred obligation may only
be extended once. Interest must still be paid on the original due date.
At the time of the extension, a new interest rate will be set for the
extension period. A separate form will be made available by the Company
prior to maturity.
26. Q: Will I be able to sell shares to pay my deferred payment obligation at
the time it becomes due?
A: The Company intends to allow you to sell shares at that time. However,
all repurchases of shares by the Company must be approved by the Board
of Directors and are subject to the ability of the Company to do so
under its financing agreements.
27. Q: Can I prepay my deferred payment obligation?
A: Yes. You may prepay all or a part of your deferred payment obligation at
any time before it becomes due. Partial payments are applied first to
interest due and then reduction of principal.
28. Q: What are the anticipated U.S. income tax consequences to me for
participation in the Deferred Payment Program?
A: The tax consequences of exercising your stock option will not change.
Generally, for U.S.-based employees the interest paid at the time of
making the deferred payment would be treated under U.S. income tax law
as "investment interest." Accordingly, it may be deductible, but only to
the extent of investment income received during the year the interest is
paid. "Investment income" does not include any income taxed at the
favorable capital gains rate. As a result, you may not be able, or wish,
to deduct deferred payment interest when you pay it. However, investment
interest expense, including deferred payment interest, that is not
deducted for U.S. income tax purposes may be carried forward
indefinitely until it is used. You are urged to discuss this matter with
your tax advisor.
29. Q: Will my obligation to pay the deferred payment be treated as debt for my
personal credit purposes?
A: Any decision regarding your personal credit, whether for a home mortgage
or otherwise, would be made by a lender. The Company understands that
generally the deferred payment obligation would be treated as debt for
personal credit purposes by lenders.
30. Q: How can I sell shares of Common Stock that I currently own to pay the
purchase price?
A: You may sell shares of Common Stock in the internal market (See Question
53). If you exercise your option during an internal market period, you
may have the cash proceeds of such sale applied to pay all or a portion
of the purchase price. The necessary forms and instructions are included
in Annex B.
31. Q: What are the tax consequences if I sell Class B shares to raise cash to
exercise my stock option?
A: For U.S.-based employees, the sale of Common Stock is a taxable event.
For a discussion of the tax treatment accorded sales of shares (See
"U.S. Income Tax Considerations" in this Prospectus). The tax
consequences of selling shares are not affected by whether or not you
use the proceeds of such sale to exercise stock options. Taxes due from
the sale of shares must be paid in addition to the taxes due on the
exercise of stock options. Again, you are urged to discuss your
particular situation with your tax advisor.
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32. Q: What is a stock-for-stock exercise?
A: The effect of a stock-for-stock exercise is much the same as if you sold
shares and used the cash proceeds to pay a portion of the purchase
price. For U.S.-based employees, there is a significant tax difference,
however, in that no taxable capital gain is currently generated by the
use of a stock-for-stock exercise.
33. Q: What is the benefit of using the stock-for-stock exercise method?
A: You can avoid recognizing any gain for U.S. income tax purposes that you
would otherwise recognize if you sold shares that you currently own and
then used the cash proceeds to pay the exercise price.
34. Q: What are the tax consequences if I use the stock-for-stock exercise
method?
A: The U.S. tax basis and holding period for the shares that you currently
own and use in the
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stock-for-stock exercise remain unchanged. The tax basis of the
additional shares you receive in the exercise is equal to the current
Appraisal Price at the time of the exercise.
35. Q: How do I use the stock-for-stock exercise method?
A: A portion of the exercise form in Annex B leads you through the
computation of how many shares that you currently own will be needed in
your stock-for-stock exercise. You may use any shares that you (or you
and your spouse jointly) have owned for more than six months in a
stock-for-stock exercise, even shares that are pledged to ARAMARK in the
Deferred Payment Program.
36. Q: Who is eligible to use a stock-for-stock exercise?
A: Generally, you may use the stock-for-stock exercise method for all stock
options.
37. Q: How much of the purchase price can be paid using the stock-for-stock
exercise method?
A: You may use the stock-for-stock exercise method to cover up to, but not
more than, the exercise price (not including any applicable withholding
taxes). For example, if the exercise price for 100 shares is $8.25 per
share, or $825.00, and the Appraisal Price at exercise is $18.50 per
share, then you may use 44 shares that you currently own in the
stock-for-stock exercise method to pay $814.00 of the exercise price,
with the balance of $11.00 (plus required withholding taxes) being paid
through the other available methods. You may not use 45 shares, because
45 times $18.50 (or $832.50) exceeds the exercise price of $825.00.
38. Q: What are the restrictions on the shares I use in a stock-for-stock
exercise?
A: You may use shares in a stock-for-stock exercise only if the shares are
owned by you (or you and your spouse jointly) and only if the shares
have been owned for more than six months. In addition, shares that you
use in the stock-for-stock exercise method, like the shares you acquire
in an exercise of a stock option, are not eligible for sale in the
internal market during the six months after the exercise.
39. Q: Can I borrow money to purchase the shares covered by my stock option?
A: Yes. Generally, if you wish to borrow money to purchase shares, you must
make your own financing arrangements with outside lenders. However, for
the exercise of stock options, you may elect to defer payment of up to
75% of the total purchase price (including required withholding taxes)
under ARAMARK's Deferred Payment Program, in effect, borrowing money
from the Company (See Questions 18 through 27).
40. Q: Will I receive a stock certificate for the shares of Common Stock that I
purchase?
A: Yes. You will receive a stock certificate for the shares purchased. If
you are eligible and have elected to participate in ARAMARK's Deferred
Payment Program, then a stock certificate will be held by the Company
(See Question 24).
41. Q: Can I have the shares registered jointly in my name and my spouse's
name?
A: Yes, you can register shares in the names of you and your spouse as
joint tenants, provided both you and your spouse sign the exercise form.
(Introduction to the Stockholders' Agreement)
If you are utilizing the Deferred Payment Program, both of you must also
sign the Obligation Note, which is on the reverse side of the exercise
form.
42. Q: Will I receive dividends on the Common Stock?
A: If the Board of Directors declares a dividend, holders of Common Stock
on the dividend record date will be entitled to receive that dividend.
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43. Q: Will I be entitled to vote on any matters submitted to a vote of ARAMARK
Corporation stockholders?
A: Yes, you will generally be free to vote your shares in any manner you
choose on any matters properly presented to the stockholders. (Section
16.04)
44. Q: May I transfer my shares of Common stock?
A: Generally, you may not sell or otherwise transfer your shares of Common
Stock (other than in certain limited instances). (Section 2.01)
45. Q: May I transfer my shares of Common Stock for estate or tax planning
purposes?
A: Yes. You may transfer your shares for estate or tax planning purposes as
gifts to your spouse, child, grandchild or parent or a trust for the
benefit of any of them or to a qualifying charitable organization. You
may also make other transfers to your family members, their
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trusts or other entities if the transfer is approved by the Company's
Board of Directors. (Section 3.01)
46. Q: Are these permitted transfers subject to any conditions?
A: Yes. The transferee must sign a document confirming that he or she is
acquiring the shares subject to all the terms and conditions of the
Stockholders' Agreement, and such document must be delivered to and
approved by the Company before the transfer. (Section 2.03(a))
47. Q: When will I be able to transfer my shares freely without having to
comply with the restrictions on transfer contained in the Stockholders'
Agreement?
A: Generally, the Stockholders' Agreement will continue in force unless the
stockholders who are parties to the Agreement and the Company vote to
terminate or change it. (Section 11)
48. Q: May I pledge my shares of ARAMARK Common Stock?
A: Yes, you may pledge your shares to a commercial bank, savings and loan
institution or any other lending or financial institution as security
for your indebtedness. However, you may do so only if the lender agrees
that, upon realization of its security, the lender will dispose of the
shares only in compliance with the terms of the Stockholders' Agreement.
(Section 3.02) If you are eligible and elect to participate in ARAMARK's
Deferred Payment Program, you will be required to pledge shares to
ARAMARK (See Question 24).
49. Q: Will the pledged shares be subject to the Stockholders' Agreement?
A: Yes.
50. Q: Will I be able to sell pledged shares in the internal market or under
the Emergency Buyback Program?
A: Yes. However, your entire deferred payment obligation will become due at
the time of such sale.
51. Q: Will I be able to sell shares back to the Company?
A: Yes. Primarily, you will be able to sell your shares to the Company in
the internal market. Secondly, the Company provides an Emergency Buyback
Program to accommodate certain limited instances when unanticipated
emergencies arise. The Company anticipates that the combination of the
internal market and the emergency buyback program should provide
adequate liquidity to all management investors on an orderly and
equitable basis. The Company also provides an offer-to-sell procedure
for the shares that could be utilized. These three methods for realizing
liquidity are described more fully below (See Questions 53, 54 and 55).
Of course, the ability of the Company to repurchase any shares is
subject to the Company's continued strong operating and financial
performance. (Section 3.03)
52. Q: Will the Company inform me prior to the time that I purchase from the
Company (through the exercise of a stock option or otherwise) or sell to
the Company (in the internal market or otherwise) any of my shares of
stock of any pending or potential transaction that could increase or
decrease the value of the stock?
A: No. The Company will not disclose any pending or potential transaction
in connection with your decision to purchase from or sell to the Company
any shares of Company stock owned by you. It is in the best interests of
the Company and the stockholders taken as a whole for the Company to be
able to conduct orderly transactions in Common Stock on a continual
basis (including in connection with the internal market and repurchases
upon termination of employment) and for the Company concurrently to be
able to consider from time to time on a confidential basis potential
transactions which could affect the fair market value and/or the
Appraisal Price of the shares. The Company does not disclose publicly
its projections or the status of any transaction that may be under
consideration. (Section 8)
53. Q: What is the internal market?
A: The internal market is a process whereby the Company, on a periodic
basis, offers to purchase some of your shares of Common Stock. At the
time of the offer, each management owner will then be able to decide
whether to accept or reject the offer. The internal market provides the
primary way for management owners to sell some of their stock holdings.
The Internal Market Policy approved for 1997 consists of four quarterly
repurchase periods, and subject to further review and approval by the
Board of Directors prior to each subsequent annual offering, is as
follows:
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Offering Periods: December 15 to January 15; March 15 to April 15;
June 15 to July 15; September 15 to October 15.
Offerees: All management owners.
Purchase Price: The most recent available Appraisal Price as of:
December 1, March 1, June 1, September 1.
Payment Terms: Cash
Individual Guideline for Generally, up to $50,000 or, if greater, 10% of
each Offering Period: shares owned (up to a maximum of $150,000);
requests for larger sales can be made by contacting
either Marie Paschall (215-238-3194) or William
Bourne (215-238-3213).
Required Holding Period: Shares owned for less than six months or used in a
Stock for Stock exchange within the prior six
months are not eligible for resale in the internal
market.
54. Q: What is the Emergency Buyback Program?
A: From time to time there may be compelling circumstances when an
unanticipated emergency arises which may cause a management owner to
request the Company to repurchase Class B shares. Each request will be
reviewed individually, taking into account all relevant circumstances.
55. Q: Will I be able to sell my shares in any other way?
A: The anticipated normal procedure for selling shares is through the
internal market. However, you could also offer a portion of your shares
to the Company at the current Appraisal Price of the Common Stock. In
the event your shares were not purchased by ARAMARK you could offer to
sell your shares within the next 90 days to a third party who agreed to
abide by all the terms of the Stockholders' Agreement, on the same terms
offered to ARAMARK. (Section 4)
Upon termination for any reason, subject to the Company's right to Call
your shares (See Question 56), you could offer to sell your shares as
described above.
56. Q: If my employment with the Company and its subsidiaries is terminated for
any reason, does the Company have the right to require me to sell my
shares to the Company?
A: Yes. This right of the Company to require you to sell your shares is
described as a "Call." At any time during the 10 years following the
termination of your employment the Company has the right to Call any or
all of your shares and any or all of the shares of all of your permitted
transferees. The Company's intention is to exercise promptly its Call
right for all shares if you are terminated for any reason. The only
exceptions are those shares acquired by exercising stock options shortly
before or after termination which the Company intends to Call
approximately six months after they were acquired. (Section 6)
57. Q: Do the Call rights apply to a termination of my employment with ARAMARK
and its subsidiaries which is beyond my control?
A: Yes. The Call rights apply to all terminations of employment with
ARAMARK and its subsidiaries without regard to cause, including death,
permanent and complete disability, voluntary or involuntary termination
of employment and retirement. For example, if ARAMARK were to sell the
division or subsidiary in which you work, then the Call rights would
apply even though you were continuing to work in the same division or
subsidiary. (Section 6)
58. Q: How will I be paid for my shares when they are Called?
A: The Company, in almost all cases, will purchase your shares at the
Appraisal Price of the Common Stock in effect as of your date of
termination of employment, without interest. However if the Company
gives notice it is exercising the Call more than 120 days after the time
of termination of employment, the Company will repurchase your shares at
the lesser of the Appraisal Price at the time of termination plus 8%
simple interest to the time of such notice, or the Appraisal Price at
the time of such notice. Under the terms of the Stockholders' Agreement,
payment will be in cash up to the least of 10% of the shares called,
$100,000, or your highest base salary, with the remainder paid in
installment notes.
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(Section 6.02)
59. Q: What if ARAMARK cannot repurchase my shares pursuant to the exercise of
a Put or a Call because it would cause a default under one of ARAMARK's
loan agreements or would violate applicable law?
A: Your shares would be repurchased on the earliest practicable date when
such repurchase could be effected in compliance with such loan agreement
and applicable law. The price to be paid could be affected because of
such delay. (Section 10.01)
60. Q: If I voluntarily terminate my employment, the Company has the right to
call my shares of Common Stock. Will the Company inform me prior to the
time I terminate my employment of any pending or potential transaction
that could increase the value of the Common Stock?
A: No. The Company will not disclose any pending or potential transaction
in connection with your decision to terminate your employment (or in
connection with your decision to exercise a Put or in any other
circumstance). It is in the best interests of the Company and the
stockholders taken as a whole for the Company to be able to conduct
orderly transactions in Common Stock on a continual basis (including in
connection with the internal market and repurchases upon termination of
employment) and for the Company concurrently to be able to consider from
time to time on a confidential basis potential transactions which could
affect the fair market value and/or the Appraisal Price of the shares.
The Company does not disclose publicly its projections or the status of
any transaction that may be under consideration. (Section 8)
61. Q: Will I be able to require the Company to repurchase shares?
A: Generally, no. However, upon your death, Complete Disability or Normal
Retirement, you or your estate, as appropriate, subject to the Company's
financing agreements, can require the Company to purchase up to 30% of
your shares. This right to require the Company to purchase shares is
described as a "Put." The Company will be required to purchase these
shares for cash at the current Appraisal Price of the Common Stock. The
Company intends to purchase ("Call") your remaining shares (See Question
56). However, in the event the Company does not Call your shares, then
you could offer to sell the remaining shares (See Question 55). (Section
5)
62. Q: What are the terms of the installment notes?
A: The Stockholders' Agreement provides for the following terms for the
installment notes. Annual cash payments will equal the least of 10% of
the principal, $100,000 or your highest base salary. At the end of the
10th year following termination, any remaining balance on the notes will
be paid in cash. Interest will be paid semi-annually and the rate will
be fixed at the Applicable Federal Rate which currently varies
approximately from 6.14% to 6.99% depending upon the term of the note.
(Section 1.08)
63. Q: If the Company purchases my shares using, in part, an installment note,
will I have to pay tax on the entire gain in the first year?
A: Generally, no. For U.S.-based employees, the purchase using a note
usually will qualify for installment treatment under the U.S. income tax
laws. You should be able to recognize taxable gain in proportion to the
cash payments of principal you will receive over the years. You should
consult with your tax advisor to determine if installment sale treatment
is advantageous to you and how you should report it on your tax returns.
64. Q: What is the Stock Repurchase Policy?
A: The Company's Stock Repurchase Policy provides for payment terms that
are generally more favorable to you than the payment terms provided for
in the Stockholders' Agreement. This Policy, which is described below
(See Questions 65 through 69), may be amended, discontinued or varied
for all repurchase transactions generally or for any specific repurchase
transaction at any time by the Company without notice. The Policy does
not affect the total repurchase price which you will be paid for your
shares.
65. Q: If I terminate before age 55 and my shares are Called, what does the
Stock Repurchase Policy currently provide?
A: The initial cash payment will be a minimum of $125,000 (or your total
holdings, if less) and each annual principal installment on the
promissory note (if applicable) will be a minimum of $75,000 up to a
maximum of $150,000 with any remaining balance paid in the final
installment.
66. Q: If I terminate at or after age 55 but before Normal Retirement and my
shares are Called, what does the Stock Repurchase Policy currently
provide?
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A: The total repurchase price will be paid in an initial cash payment of a
minimum of $125,000 (or your total holdings, if less) and subsequent
annual principal installments on the promissory note in equal amounts,
so that the entire repurchase price will have been paid before you reach
age 66. Each such payment under the promissory note is subject to a
minimum of $100,000 and a maximum of $300,000 with any remaining balance
paid in the final installment.
67. Q: If I terminate through Normal Retirement and my shares are Called (or if
I exercise my Put and the remainder of my shares are Called), what does
the Stock Repurchase Policy currently provide?
A: Generally, Normal Retirement means you are at least age 60 and you
retire from active employment. The initial cash payment will be 30% of
the total repurchase price (minimum of $125,000). The remainder of the
total repurchase price will be paid in equal annual principal
installments on the promissory note so that the entire repurchase price
will have been paid before you reach 66 (or if you are 63 or over, in 3
equal annual principal installments). Each such payment under the
promissory not is subject to a minimum of $100,000 and a maximum of
$300,000 with any remaining balance paid in the final installment.
68. Q: If I die or become Completely Disabled and my shares are Called (or if
my estate exercises its Put and the remainder of my shares are Called),
what does the Stock Repurchase Policy currently provide?
A: The initial cash payment will be 30% of the total repurchase price
(minimum of $125,000). The remainder of the total repurchase price will
be paid in three equal annual principal installments on the promissory
note. Each such payment under the promissory note is subject to a
minimum of $100,000 and a maximum of $300,000 with any remaining
balance paid in the final installment.
69. Q: Does the Stock Repurchase Policy provide for an alternative interest
rate on the promissory note?
A: Yes. In lieu of a fixed interest rate (equal to the Applicable Federal
Rate at the time of the repurchase) for the entire life of the
promissory note, you may make a one-time irrevocable election at the
time of repurchase for the rate to reset annually on the date of each
principal payment to the Applicable Federal Rate then in effect.
ABOUT THIS PROSPECTUS
This Prospectus relates to a maximum of 18,953,801 shares of the Common
Stock , $.01 par value ("Common Stock" or "Class B Common Stock"), of ARAMARK
Corporation ("ARAMARK" or the "Company") being offered to eligible employees of
the Company and its subsidiaries under the ARAMARK Ownership Program (the
"Program"). The Program consists of the 1984 Stock Option Plan (the "1984 Option
Plan"), the 1987 Stock Option Plan (the "1987 Option Plan") and the 1991 Stock
Ownership Plan (the "1991 Ownership Plan"). The latter two Plans have been
combined into the Combined Stock Ownership Plan.
THE ARAMARK OWNERSHIP PROGRAM
We have designed the ARAMARK Ownership Program (the "Program") to
provide an opportunity for selected management employees of the Company and its
subsidiaries to acquire an ownership interest in the Company and thereby give
them a more direct and continuing interest in the future success of the
Company's business.
Under the Program, the direct ownership in the Company has increased
from 62 original management investors in 1984 to approximately 1,300 management
investors today owning approximately 51% of the equity. In addition, at May 23,
1997, management employees held installment stock purchase opportunities for
9,007,489 shares and stock options for an additional 232,089 shares.
The Company's senior management believes that management ownership has
significantly contributed to the Company's success, and intends to continue to
use the Program to expand both the number of management investors and their
percentage ownership.
The Program has used or uses the 1984 Stock Option Plan and the
Combined Stock
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Ownership Plan. These Plans allow the Company to offer, and under
the Program the Company has offered, stock purchase opportunities to selected
employees in three different ways: the direct sale of shares, the grant of
installment stock purchase opportunities, and the grant of stock options.
This Prospectus relates to the grant and exercise of stock options.
Stock options may have been granted from the 1984 Option Plan and may have been
or may be granted from the Combined Stock Ownership Plan.
1984 Option Plan. The Board of Directors adopted and the stockholders
approved the 1984 Option Plan in December 1984 in connection with the management
buyout. The stockholders approved amendments to the Plan in February 1987. The
Plan provides for the issuance of shares of Common Stock through the granting of
incentive stock options and/or non-qualified options. On May 23, 1997, 795,219
options were outstanding under the Plan. No additional options can be granted
under the Plan.
1987 Option Plan. The Board of Directors adopted the 1987 Option Plan
in May 1987 and stockholders approved the Plan in February 1988. In February
1996, the Plan became part of the Combined Stock Ownership Plan. The Plan
provides for the issuance of up to 8,813,191 shares of Common Stock through the
granting of incentive stock options and/or non-qualified options. On May 23,
1997, 2,561,186 options were outstanding under the Plan. No additional options
can be granted under the plan.
1991 Ownership Plan. The Board of Directors adopted the 1991 Ownership
Plan in November 1991 and amended it in 1994. Stockholders approved the Plan in
February 1995. In February 1996, the Plan became part of the Combined Stock
Ownership Plan. The Plan provides for the issuance of up to 21,155,259 shares of
Common Stock through the granting of non-qualified options. On May 23, 1997,
5,795,673 options were outstanding under the Plan and 9,801,723 shares were
available for the grant of future options.
Combined Stock Ownership Plan. The Board of Directors adopted in 1995
and the stockholders approved in February 1996 the Combined Stock Ownership Plan
which amends and combines the 1987 Stock Option Plan and the 1991 Stock
Ownership Plan.
1996 Directors Stock Ownership Plan. The Board of Directors approved
the Directors Plan in February 1996. The Directors Plan provides for the
issuance of up to 250,000 shares of Common Stock through the granting of
nonqualified options to directors who are not employees of the Company. On May
23, 1997, 87,500 options were outstanding under the Directors Plan and 160,000
were available for the grant of future options. This Prospectus does not relate
to the grant or exercise of stock purchase opportunities under the Directors
Plan, and references to the Plans do not include the Directors Plan.
In accordance with the terms of the Plans, the purchase price for
shares subject to stock options granted under the Plans will not be less than
the fair market value of the shares (based upon the most recent available
independent appraisal) on the date of the grant. Shares issued pursuant to the
Plans are subject to the Stockholders' Agreement. The Plans provide that the
terms of options and purchase opportunities outstanding under the Plans and the
number of shares authorized under the Plans will be appropriately adjusted upon
the declaration of stock dividends and upon the occurrence of certain other
events.
The Plans grant certain authority to the Human Resources, Compensation
and Public Affairs Committee (the "Committee") which consists of six members of
the Board.
The Committee is authorized to grant stock options and to determine the
number of shares to be offered thereby to each selected key employee. The term
"key employee" is not defined in the Plans, and subject to the express
provisions of the Plans, the Committee has complete authority to determine the
employees who receive stock options thereunder. As a result, the number of
employees eligible to participate in the Plans is not determinable.
<PAGE>
Stock options generally are not transferable. No stock option can be
subject to attachment, execution or levy of any kind. Each stock option shall be
exercisable only by the employee to whom it is granted and only while an
employee of ARAMARK or a subsidiary (or any other entity in which ARAMARK
continues to own an equity interest and which the Board of Directors
designates).
ARAMARK will use the net proceeds from the sale of shares pursuant to
exercises of stock options for general corporate purposes.
The Plans are not subject to any provisions of the Employee Retirement
Income Security Act of 1974 and are not "qualified" within the meaning of
Section 401(a) of the Internal Revenue Code.
The Board of ARAMARK or the Committee may establish appropriate
procedures for the administration of the Plans. It may also include at the time
a stock option is granted such additional terms and conditions as it deems
desirable to the extent such are not inconsistent with the Plans. The decision
of the Committee, or the Board for certain matters described in the Plans, shall
be final and binding upon all persons in interest, including employees, ARAMARK
and its stockholders.
The Board may amend the Plans from time to time as it deems desirable,
except that certain
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amendments would require stockholder approval.
Neither the Plans nor any stock option granted under the Plans gives
any employee the right to continue in the employ of ARAMARK or its subsidiaries
or limits in any respect the right of ARAMARK or any subsidiary to terminate
such employee.
The appraised fair market value of the Common Stock, as of June 1,
1997, was $18.50. Houlihan Lokey Howard & Zukin ("Houlihan"), a professional
independent appraiser, provided the appraisal of the fair market value of the
shares of Common Stock. Such appraisal was based on the financial condition and
results of operations of ARAMARK, a comparison of ARAMARK with other companies
with similar characteristics, and other factors prevailing at the time it made
such determination.
The Company has paid fees of approximately $100,000 plus reimbursement
of certain expenses to Houlihan for appraisal services rendered to the Company
during the 12 months prior to the date of this Prospectus. In addition, the
Company has agreed to indemnify Houlihan against certain liabilities which it
might incur in connection with the preparation of the appraisal referred to
above or otherwise as a result of the services which it rendered.
THE DEFERRED PAYMENT PROGRAM
We designed the Deferred Payment Program to facilitate exercise of
stock options by giving employees the alternative to defer payment of a portion
of the purchase price.
We anticipate that the Deferred Payment Program will continue to be
offered. However, we may cancel or modify it at any time.
The Deferred Payment Program currently in effect will permit the holder
of a stock option to defer payment of up to 75% of the total purchase price
(including required withholding taxes) for the shares being purchased.
Accordingly, payment may be deferred initially for up to 47 months in some
cases. (In order to comply more clearly with certain laws which may be
applicable, ARAMARK has the right to require the payment on demand. However,
ARAMARK has no intention of exercising such right.) Interest will accrue on any
deferred payment at a fixed annual rate (currently 8.50% simple interest), and
will be payable at the time the deferred payment is due. ARAMARK may from time
to time select a different interest rate for use in future deferred payment
obligations. However, the interest rate at the time a deferred payment
obligation is entered into is fixed for the entire term of the obligation. The
Company will hold as collateral all shares purchased under any stock option in
which any portion of the purchase price is financed under the Deferred Payment
Program until the deferred payment is received by the Company.
Deferred payment obligations may be prepaid at any time at the election
of the employee and will become due immediately in the event any shares securing
the deferred payment obligation are sold or otherwise transferred by the
stockholder (whether pursuant to a call of such shares by ARAMARK upon
termination of employment or otherwise). Holders of stock options are not
required to use the Deferred Payment Program.
If you have any questions about the Deferred Payment Program, you
should call Marie Paschall at the ARAMARK Corporate Compensation Department
(telephone: 215-238-3194) or ARAMARK Shareholder Services Group at toll-free
1-888-96-OWNER (1-888-966-9637).
You may elect to defer the payment of the principal amount of your
Deferred Payment Obligation for one additional three year period. If the payment
date is extended, interest will accrue at a new interest rate set at the time of
the extension. You must pay the interest amount due on the original maturity
date and execute documentation required by the Company to effect the payment
extension and the new interest rate.
U.S. INCOME TAX CONSIDERATIONS
The following discussion is not intended to be a complete statement of
the U.S. income tax consequences of the granting and exercise of stock options
pursuant to the Plans or the disposition of shares acquired upon exercise of
such stock options. Because of the complexities of the U.S. income tax law, you
are urged to consult your own tax advisor. If you are a non U.S.-based employee,
you should consult with your tax advisor about tax law requirements in your
country.
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ARAMARK understands that, under current U.S. income tax laws, (i) no
income will be recognized to the employee at the time of grant, (ii) upon
exercise of a stock option, the employee must treat as ordinary income the
difference, if any, between the exercise price and any higher fair market value
of the Common Stock on the date of exercise, and (iii) assuming the shares
received upon exercise of such stock option constitute capital assets in the
employee's hands, any gain or loss upon disposition of shares (measured by
reference to the fair market value of the shares on the date of exercise) may be
treated as capital gain or loss. These results would apply whether or not shares
are disposed of by the employee to raise cash to exercise stock options. The
Company is required to report to the IRS the amount of gross proceeds received
from the disposition of stock and the employee is required to report that amount
in his/her tax return. None of the income from exercise of stock options or gain
from the sale of stock acquired through exercise of such stock options would be
an item of tax preference subject to AMT.
ARAMARK understands that tendering shares already owned by the holder
of a stock option in order to exercise such stock option (a "stock-for-stock
exercise," so called) would be considered a "like-kind exchange" of existing
shares for new shares and would not be considered a sale of such previously
acquired shares that would result in the recognition of capital gain or loss by
the employee. For tax purposes, an employee electing to make a stock-for-stock
exercise would be considered to receive from the exercise (1) the shares
tendered, with the same basis and holding period to the employee as the shares
had prior to being tendered, (2) the additional shares resulting from the
exercise with a tax basis to the employee equal to their current fair market
value and a holding period commencing with the date of exercise, and (3)
ordinary taxable income equal to the difference between the exercise price and
the current fair market value of all of the shares acquired through the
exercise.
ARAMARK further understands that income recognized upon the exercise of
a stock option is subject to tax withholding and that it is obligated to
withhold or collect an amount equal to a portion of the tax applicable to such
income. Consequently, ARAMARK requires the exercising employee to deposit with
ARAMARK the amount of taxes required to be withheld or collected. The Company is
required to report to the IRS the amount of ordinary income generated by the
exercise of a stock option by including that amount as compensation in the
employee's form W-2, and the employee is required to report that amount in
his/her tax return.
If payment of a portion of the exercise price is deferred under the
Deferred Payment Program, the interest paid would be treated as "investment
interest". Accordingly, it may be deductible, but only to the extent of
investment income received during the year the interest is paid. "Investment
income" does not include any income taxed at the favorable capital gains rate.
As a result, you may not be able, or wish, to deduct deferred payment interest
when you pay it. However, investment interest that is not deducted can be
carried forward and be deductible in future years to the extent of the holder's
investment income in such years. You are urged to discuss this matter with your
tax advisor. Similarly, to the extent that stock options are exercised using
other borrowed funds, the interest incurred on such borrowing may be treated as
"investment interest". You are urged to discuss this matter as well with your
tax advisor.
DESCRIPTION OF EQUITY SECURITIES
General
The authorized capital of the Company consists of 185,000,000 shares,
which includes 150,000,000 shares of Common Stock, Class B, par value $.01 per
share ("Common Stock" or "Class B Common Stock"); 25,000,000 shares of Common
Stock, Class A, par value $.01 per share ("Class A Common Stock"); 10,000,000
shares of Series Preferred Stock, par value $1.00 per share ("Series Preferred
Stock"). As of May 23, 1997, 21,154,170 shares of Class B Common Stock were
issued and outstanding (not including 9,886,351 shares subject to options,
installment stock purchase opportunities and deferred stock units granted and
outstanding under the Company's Plans), and 1,974,266 shares of Class A Common
Stock were issued and outstanding. No shares of series preferred stock are
issued and outstanding.
Management investors (approximately 1,300 persons at the date of this
Prospectus) hold all of the shares of outstanding Class B Common Stock of the
Company. There is no established public trading market for the Common Stock of
the Company.
The following is a summary of certain provisions of the Restated
Certificate of Incorporation of the Company (the "Certificate of Incorporation")
and the By-Laws of the Company, as amended. The summary is qualified in its
entirety by reference to such documents filed as exhibits to the Registration
Statement of which this Prospectus is a part.
The Class A Common Stock and the Class B Common Stock
Voting. Each share of Class A Common
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Stock and each share of Class B Common Stock entitles the holder thereof to one
vote on all matters submitted to the stockholders.
All actions submitted to a vote of stockholders are voted upon by
holders of Class A Common Stock and Class B Common Stock voting together except
that the holders of Class A Common Stock and Class B Common Stock vote
separately as classes with respect to amendments to the Company's Certificate of
Incorporation that may alter or change the powers, preferences or special rights
of their respective classes of stock so as to affect them adversely, and such
other matters as may require class votes under the Delaware General Corporation
Law.
There is no provision in the Certificate of Incorporation permitting
cumulative voting.
Dividends and Other Distributions (including Distributions upon
Liquidation of the Company). Dividends on the Class A Common Stock and the Class
B Common Stock are paid when, as and if declared by the Board of Directors and
permitted under the Company's loan agreements. In respect of rights to dividends
and other distributions in cash, stock or property of the Company (including
distributions upon liquidation of the Company, after provision for creditors of
the Company and any shares of the Company's capital stock having a preference on
liquidation, dissolution or winding up of the Company), each share of Class A
Common Stock is entitled to ten times the dividends and other distributions
payable on each share of Class B Common Stock when, as and if such dividends or
distributions may be declared and/or paid; provided, however, that in the case
of dividends or other distributions payable on the Class A Common Stock and the
Class B Common Stock in capital stock of the Company other than Preferred Stock,
including distributions pursuant to split-ups or divisions of the Class A Common
Stock or the Class B Common Stock, only Class A Common Stock is distributed with
respect to Class A Common Stock and only Class B Common Stock is distributed
with respect to Class B Common Stock. In no event may either Class A Common
Stock or Class B Common Stock be split, divided or combined unless the other is
split, divided or combined equally.
Convertibility. The Class A Common Stock is not convertible. Subject to
the prior approval of the Board of Directors, the Class B Common Stock is
convertible at all times, in whole or in part, and without cost to the
stockholder, into Class A Common Stock on the basis of ten shares of Class B
Common Stock for each share of Class A Common Stock. Only full-time employees
and directors of the Company (and their Permitted Transferees while the
transferor is a full-time employee or director) may hold Class B Common Stock.
Upon any holder of Class B Common Stock ceasing to be a full-time employee or
director of the Company, such holder's Class B Common Stock automatically
converts into Class A Common Stock, on the basis of ten shares of Class B Common
Stock for each share of Class A Common Stock. The Board of Directors may at any
time order the conversion of all the Class B Common Stock into Class A Common
Stock on a ten-for-one basis. No fractions of shares of Class A Common Stock
would be issued on such conversion, but rather such amounts would be paid in
cash based on the market value (or, if the Company is not publicly traded, the
last appraised value) of the Class B Common Stock.
Other. The Class A Common Stock and Class B Common Stock do not carry
any preemptive rights enabling a holder to subscribe for or receive shares of
stock of the Company of any class or any other securities convertible into
shares of stock of the Company.
EXPERTS
The audited consolidated financial statements and related notes and
schedules included in the Company's Annual Report on Form 10-K for the year
ended September 27, 1996, incorporated by reference herein have been audited by
Arthur Andersen LLP, independent public accountants, as set forth in their
report also incorporated herein by reference. In their report, that firm states
that with respect to amounts included for Versa Services Ltd., the Company's
Canadian subsidiary, its opinion, prior to fiscal 1995, is based on the report
of other auditors, namely Ernst & Young, Chartered Accountants, whose report is
also incorporated herein by reference. The financial statements and schedules
referred to above have been incorporated by reference herein in reliance upon
the reports of said firms and upon the authority of said firms as experts.
Subsequent audited financial statements of the Company and the reports thereon
of he Company's independent public accountants, to the extent incorporated
herein by reference, also will be so incorporated in reliance upon the reports
of those accountants and upon the authority of those accountants as experts to
the extent such accountants have audited those financial statements and
consented to the use in this Prospectus of their reports thereon.
The appraisal of Houlihan Lokey Howard & Zukin, independent securities
appraisers, and references thereto included in this Prospectus have been
included herein in reliance upon the authority of said firm as an expert in
securities valuations.
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DOCUMENTS INCORPORATED BY REFERENCE
The SEC permits us to "incorporate by reference" information into this
Prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to part of this Prospectus, except for
information superseded by information in this Prospectus. This Prospectus
incorporates by reference the documents set forth below that we have previously
filed with the SEC. These documents contain important information about our
Company and its finances.
(1) the Company's latest annual report on Form 10-K filed pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended.
(2) All other reports filed by the Company pursuant to Section 13(a) or 15(d) of
the Exchange Act since the end of the fiscal year of the annual report referred
to in (1) above.
(3) All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act.
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AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
OF
ARAMARK CORPORATION
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT dated as of the 14th day
of December, 1994, which further amends and restates the Amended and Restated
Stockholders' Agreement dated as of December 14, 1984 (the "Agreement"), by and
among ARAMARK CORPORATION (formerly The ARA Group, Inc. and ARA Holding
Company), a Delaware corporation ("ARAMARK"), and the parties identified on the
books of ARAMARK as "Management Investors" or their "Permitted Transferees" or
as "Individual Investors" or "Institutional Investors."
In consideration of the terms and conditions herein contained, the
parties hereto mutually agree as follows:
The parties hereto (other than ARAMARK) and any other person who
hereafter acquires equity securities of ARAMARK pursuant to the provisions of,
and subject to the restrictions and rights set forth in, this Agreement are
sometimes hereinafter referred to collectively, as the "Stockholders" or,
individually, as a "Stockholder." The Management Investors and the Individual
Investors are sometimes hereinafter referred to collectively as the "Investor
Group." Institutional Investors and Individual Investors are sometimes
hereinafter referred to collectively as "Outside Investors." Unless otherwise
explicitly set forth herein, the term "Management Investors" shall mean only
those individuals so identified on the books of ARAMARK, exclusive of such
individuals' respective heirs, Permitted Transferees (as identified on the books
of ARAMARK) or other Transferees (as defined in Section 2.03(a) hereof);
provided that the Board of Directors of ARAMARK may, from time to time and in
its sole discretion, designate any Stockholder then employed by ARAMARK or its
Subsidiaries a "Management Investor." Stockholders who are Permitted Transferees
are identified as such on the books of ARAMARK, along with the identity of their
respective transferors. Where a full-time employee or director has acquired or
acquires equity securities of ARAMARK in joint tenancy with their spouses or in
any other manner other than sole direct ownership, such employee or director is
deemed to be a Management Investor and such record owner is deemed to be his or
her Permitted Transferee.
A Transferee who is not already a party to this Agreement, by executing
the document referred to in Section 2.03(a) hereof, shall thereby become
entitled to the benefits of this Agreement and shall be deemed to be an
"Institutional Investor", except: if such Transferee is an employee of ARAMARK,
then he or she shall be deemed to be a "Management Investor"; if such Transferee
is a Transferee pursuant to Section 3.01 of an Individual Investor, then he or
she shall be deemed to be an "Individual Investor"; if such Transferee is a
Transferee pursuant to Section 3.01 of a Management Investor (or of his or her
Permitted Transferee), then he or she shall be deemed to be a "Permitted
Transferee" of such Management Investor. Determination of the classification of
a Stockholder by the Board of Directors shall be conclusive and binding on all
parties hereto.
ARAMARK's Class B Common Stock, par value $.01 per share ("Class B
Common Stock"), and Class A Common Stock, par value $.01 per share ("Class A
Common Stock") are collectively referred to herein as the "Common Stock," and
when so referred to shall be treated as one class to which all the provisions of
this Agreement apply.
Pursuant to ARAMARK's Restated Certificate of Incorporation (the
"Certificate of Incorporation"), upon the termination of employment of a
Management Investor, the shares of Class B Common Stock held by such Management
Investor and his or her Permitted Transferees shall be converted into shares of
Class A Common Stock; and upon any transfer of shares of Class B Common Stock in
accordance with the terms of this Agreement other than to a Management Investor
or Permitted Transferee of a Management Investor, such shares shall be converted
into shares of Class A Common Stock. Shares so converted shall continue to be
subject to the terms and conditions of this Agreement.
For purposes of this Agreement only, the employment of a Management
Investor shall be
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<PAGE>
deemed terminated if he or she shall cease to be a director or an active,
full-time employee of ARAMARK or its Subsidiaries. Such termination of
employment shall not change the designation of such person as a Management
Investor.
The parties hereto desire to restrict the sale, assignment, transfer,
encumbrance or other disposition of the Common Stock, including issued and
outstanding shares of Common Stock as well as shares of Common Stock which may
be issued hereafter, or which may become issuable pursuant to the exercise of
options, and to provide for certain rights and obligations with respect thereto
as hereinafter provided.
1. Certain Definitions.
1.01 "Affiliate" shall mean a Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with another Person.
1.02 "Appraisal Price" of shares of Common Stock shall mean the fair
market value of such shares, as determined by an Appraiser according to the most
recent existing appraisal of shares of Common Stock, which appraisal shall be as
of a date not more than six months prior to the use thereof. Such determination
by the Appraiser shall be conclusive and binding on all Stockholders and
ARAMARK. With respect to shares of Class A Common Stock resulting from the
conversion of shares of Class B Common Stock pursuant to the terms of the
Certificate of Incorporation, the "Appraisal Price of (an equivalent number of)
shares of Class B Common Stock" shall mean the Appraisal Price, had the
conversion not occurred, of such shares of Class B Common Stock.
1.03 "Appraiser" shall mean a firm headquartered in the United States
of nationally recognized standing in the business of appraisal or valuation of
securities which does not own any stock of ARAMARK and which has been selected
by the Board of Directors to act as an independent appraiser. The Board of
Directors shall review its selection of an Appraiser annually.
1.04 "Call" or "Called" shall mean ARAMARK's option to purchase Common
Stock from the holder thereof referred to in Sections 6 and 7 hereof.
1.05 "Completely Disabled" and "Complete Disability" shall mean a
"permanent and total disability" as now defined in Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended (the "Code").
1.06 "Normal Retirement" shall mean voluntary termination of employment
with ARAMARK after attaining the age of 60, on at least 90 days prior written
notice of such termination, where the retiree does not intend to, at the time of
termination, and in fact does not, engage in full-time employment following such
termination other than employment that is with a governmental or a charitable,
non-profit organization and that is not competitive with ARAMARK.
1.07 "Person" shall mean a corporation, an association, a partnership,
an organization, a business, an individual, a government or political
subdivision thereof or a governmental agency.
1.08 "Promissory Note" shall mean a subordinated installment note of
ARAMARK substantially in the form of Exhibit A to this Agreement, with a stated
annual rate of interest equal to the Applicable Federal Rate (as such term is
defined in the Code) as of the issue date of the Promissory Note, as determined
by ARAMARK; with equal annual installments of principal equal in amount to the
least of (1) 10% of the original principal amount of the Promissory Note, (2)
the Management Investor's highest annual base salary as an employee of ARAMARK,
or (3) $100,000; and with the final installment of principal equal to the
outstanding balance and due at the final maturity; and with the first
installment of principal due on the April 15 or October 15 occurring closest to
the first anniversary of the issue date of the Promissory Note; and with the
final maturity no later than the tenth anniversary of the Management Investor's
termination of employment; and with such other insertions as ARAMARK shall
reasonably make.
1.09 "Put" shall mean the option of the holder to cause ARA to purchase
Common Stock referred to in Section 5 hereof.
1.10 "Subsidiary" shall mean any corporation or other entity of which
ARAMARK shall, directly or indirectly, own 50% or more of the equity, as
determined for purposes of this Agreement by the ARAMARK Board of Directors and
any other corporation or other entity in which ARAMARK shall directly or
indirectly have an equity investment and which the ARAMARK Board of Directors
shall in its sole discretion designate.
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2. Limitations on Transfers of Shares.
2.01 Transfers Prohibited Unless Specifically Permitted. No Stockholder
shall transfer any shares of Common Stock at any time, unless such sale,
assignment, pledge or encumbrance or other transfer shall have been effected in
accordance with the terms of Section 3, 4, 5, 6 or 7 of this Agreement. ARAMARK
shall not transfer upon its books any shares of Common Stock held or owned by
any of the Stockholders to any person except in accordance with this Agreement.
2.02 Inconsistent Agreements Prohibited. Unless approved by the Board
of Directors, no Stockholder shall grant any proxy or enter into or agree to be
bound by any voting trust with respect to Common Stock nor shall any Stockholder
enter into any stockholder agreement or arrangement of any kind with any person
with respect to Common Stock inconsistent with the provisions of this Agreement
(whether or not such agreement and arrangement is with other Stockholders or
holders of Common Stock that are not parties to this Agreement), including but
not limited to, any agreement or arrangement with respect to the acquisition,
disposition or voting of shares of Common Stock, or act, for any reason, as a
member of a group or in concert with any other persons in connection with the
acquisition, disposition or voting of shares of Common Stock in any manner which
is inconsistent with the provisions of this Agreement.
2.03 Requirements for all Transfers.
(a) Transferee Must Agree to be Bound by Agreement. Unless
otherwise explicitly provided herein, no Stockholder shall sell,
assign, pledge, encumber or otherwise transfer any shares of
Common Stock to any person (all such persons, regardless of the
method of transfer, shall be referred to collectively as
"Transferees" and individually as a "Transferee") unless (a) such
Transferee shall have executed, as a condition to its acquisition
of shares (or, in the case of a Transferee by will or the laws of
descent, record ownership on the books of ARAMARK) of Common
Stock, an appropriate document confirming that such Transferee
takes such shares subject to all the terms and conditions of this
Agreement and (b) such document shall have been delivered to and
approved by ARAMARK prior to such Transferee's acquisition of
shares (or, in the case of a Transferee by will or the laws of
descent, record ownership on the books of ARAMARK) of Common
Stock. ARAMARK shall not unreasonably withhold or delay its
approval of any such document.
(b)Transfer Must Comply with Securities Laws. No Stockholder
shall sell, assign, pledge, encumber or otherwise transfer any
shares of Common Stock at any time if such action would
constitute a violation of any federal or state securities or blue
sky laws or a breach of the conditions to any exemption from
registration of the Common Stock under any such laws or a breach
of any undertaking or agreement of such Stockholder entered into
pursuant to such laws or in connection with obtaining an
exemption thereunder. Any Stockholder who proposes to sell,
assign, pledge, encumber or transfer any shares of Common Stock
may deliver to ARAMARK an opinion of counsel that such action
would not result in any such violation or breach. The delivery of
such opinion shall be deemed to establish compliance with the
provisions of this Section 2.03(b) unless, within ten days after
the receipt by ARAMARK of such opinion, counsel for ARAMARK shall
deliver an opinion that such action would result in any such
violation or breach (such opinion to state the basis of the legal
conclusions reached therein).
(c)Endorsement of Stock Certificates. Each certificate
representing shares of Common Stock shall bear endorsements
reading substantially as follows:
The securities represented by this certificate are
subject to the right of the Corporation to repurchase
such securities on the terms and conditions set forth
in a Stockholders' Agreement dated as of December 14,
1984, as the same may be amended from time to time, a
copy of which
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<PAGE>
may be obtained from the Corporation or
from the holder of this instrument. No transfer of
such securities will be made on the books of the
Corporation unless accompanied by evidence of
compliance with the terms of such Agreement.
Such certificate shall bear any additional endorsement
which may be required for compliance with federal or state
securities or blue sky laws. In the case of uncertificated
shares of Common Stock, the books of ARAMARK shall bear
appropriate notations reflecting the foregoing.
3. Certain Permitted Transfers of Shares.
3.01 Estate Planning Transfers, etc. Subject to the restrictions set
forth in Section 2.03 and Section 4.06, a Stockholder shall be entitled to make
the following transfers of shares of Common Stock: (A) if made for nominal
consideration or as gifts: (i) any transfer or assignment to any one or more of
the following relatives of the Stockholder - spouse, child, grandchild, parent -
or to a trust of which there are and continue to be, during the term of this
Agreement no principal beneficiaries other than one or more of such relatives;
(ii) any transfer to any charitable organization which qualifies as such under
Section 501 (c) (3) or any successor provision of the Code; (iii) any transfer
to a legal representative in the event any Stockholder becomes mentally
incompetent; (iv) any transfer of record title to any nominee or custodian,
provided that the Stockholder so transferring such shares remains the beneficial
owner thereof; (B) any transfer among members of a family, their trusts or other
entities, if approved by the Board of Directors; (C) any transfer among
Institutional Investors which became Stockholders in December 1984; and (D) with
respect to a corporate or partnership Stockholder transfer between an Affiliate
and such corporate or partnership Stockholder (it being understood with respect
to such Affiliate that the later sale of such Affiliate as part of a sale or
series of sales of substantial assets other than Common Stock would not
constitute an indirect sale of Common Stock by such corporate or partnership
Stockholder, and need not be made within the terms of this Agreement, provided
that an officer of such institution certifies that such sale is not being
undertaken to evade the transfer restrictions herein).
3.02 Permitted Pledges. A Stockholder shall be entitled to pledge his
or her shares of Common Stock to ARAMARK, a commercial bank, savings and loan
institution or any other lending or financial institution as security for any
indebtedness of such Stockholder to such lender; provided that such lender shall
first agree not to dispose of such shares except in compliance with the
provisions of this Agreement.
3.03 Authority of Board of Directors to Approve Transfers; Actions by
Board of Directors. Notwithstanding any other provision of this Agreement, the
Board of Directors shall have the authority to approve any transfer, or class,
category or type of transfer, of Common Stock. Such authority of the Board of
Directors shall extend to, among other things, (i) the authority to create an
internal market for shares of the Company's stock pursuant to which Management
Investors would be offered the opportunity to sell a portion of their shares at
the times and on the terms set by the Board of Directors, and (ii) the authority
to waive entirely the restrictions (including, without limitation, restrictions
relating to rights of first offer and reoffer, calls upon termination of
employment and sales, transfers and other dispositions of shares) set forth in
this Agreement which relate to Management Investors and which do not relate to
Outside Investors. Any such approval may be revoked by the Board at any time
without notice and such revocation shall be effective with respect to any
action, including any or all transfers or proposed transfers, unless, prior to
such revocation, the shares have been presented to the transfer agent for the
purpose of registering such transfer, in proper form and satisfying the
requirements of Section 8-401 of the Uniform Commercial Code or such other
applicable law relating to the duty of an issuer to register securities
transfers.
The Board of Directors may delegate any and all authority it has under
this Agreement to any committee thereof and/or to any authorized officer or
agent.
4. Rights of First Offer and Reoffer of Shares.
4.01 Transfers by Management
Investors.
(a)A Management Investor or Permitted Transferee may sell shares
of Common Stock, by complying with the terms of this Section 4.
The selling Management Investor shall first give written notice
(a "Management Investor's Notice") to ARAMARK stating such
selling
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<PAGE>
Management Investor's desire to make such transfer, the
number of shares of Common Stock to be transferred (the "Offered
Management Shares"), and the price which the selling Management
Investor proposes to be paid for the Offered Management Shares,
which proposed price shall not be greater than the Appraisal
Price of (an equivalent number of) shares of Class B Common Stock
(the "First Offer Price").
(b)Upon receipt of the Management Investor's Notice, ARAMARK
shall have the irrevocable and exclusive option to buy up to all
of the Offered Management Shares at the First Offer Price;
provided, however, that ARAMARK shall not have the right to
purchase any of the Offered Management Shares unless either (i)
ARAMARK purchases all such Offered Management Shares, or (ii)
such selling Management Investor consents to the purchase of less
than all of the Offered Management Shares. ARAMARK's option under
this Section 4.01(b) shall be exercisable by a written notice to
such selling Management Investor, given within 45 days from the
date of receipt of the Management Investor's Notice.
4.02 Transfers by Outside Investors.
(a)An Outside Investor may sell shares of Common Stock, including
pursuant to the registration rights under Section 2.1 of
ARAMARK's Amended and Restated Registration Rights Agreement
amended and restated as of April 7, 1988 (the "Registration
Rights Agreement"), by complying with the terms of this Section
4. The selling Outside Investor shall first give written notice
(a "Seller's Notice") to ARAMARK stating such selling Outside
Investor's desire to make such transfer, the number of shares of
Common Stock to be transferred (the "Offered Investors' Shares"),
and the price which the selling Outside Investor proposes to be
paid for the Offered Investors' Shares (the "First Offer
Investors' Price").
(b)Upon receipt of the Seller's Notice, ARAMARK shall have the
irrevocable and exclusive option to buy up to all of the Offered
Investors' Shares at the First Offer Investors' Price; provided,
however, that ARAMARK shall not have the right to purchase any of
the Offered Investors' Shares unless either (i) ARAMARK purchases
all such Offered Investors' Shares, or (ii) such selling Outside
Investor consents to the purchase of less than all of the Offered
Investors' Shares. ARAMARK's option under this Section 4.02(b)
shall be exercisable by a written notice to such selling Outside
Investor, given within 45 days from the date of the receipt of
Seller's Notice.
4.03 Transfer of Offered Shares to Third Parties. If the Management
Investor's Notice or the Seller's Notice (collectively, the "Notice") required
to be given pursuant to Section 4.01 or 4.02, as the case may be, has been duly
given, and ARAMARK determines not to exercise its option to purchase the Offered
Management Shares or the Offered Investors' Shares (collectively, the "Offered
Shares") or determines (with the consent of the Stockholder who has made the
First Offer) to exercise its option to purchase less than all the Offered
Shares, then the Stockholder who has made such First Offer shall be free, for a
period of 90 days from the earlier of (i) the expiration of the option period
with respect to such First Offer pursuant to Section 4.01 or 4.02, as the case
may be, or (ii) the date such Stockholder shall have received written notice
from ARAMARK stating that ARAMARK intends not to exercise in whole or in part
the option granted under Section 4.01 or 4.02, as the case may be, to sell to
any third-party Transferees the remaining Offered Shares, at a price equal to or
greater than the First Offer Price, in the case of Management Investors or their
Permitted Transferees, and the First Offer Investors' Price, in the case of
Outside Investors; provided, however, that the Transferee complies with the
provisions of Section 2.03; and provided further that, in the case where such
selling Stockholder is a Management Investor or a Permitted Transferee, such
Transferee shall have been approved by ARAMARK as a suitable investor in a
privately-owned services management company. ARAMARK shall not unreasonably
withhold or delay such approval. Anything herein to the contrary
notwithstanding, the 90-day period described in this Section 4.03 shall be
extended until the completion of all sales pursuant to a registration statement,
a request for which was made substantially concurrently with the Notice.
4.04 Reoffers. In the event the proposed purchase price of a
third-party Transferee for the
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<PAGE>
Offered Shares is less than the First Offer Price or the First Offer Investors'
Price, as the case may be, the Stockholder desiring to sell at such lesser price
shall not sell or otherwise transfer any of the Offered Shares unless such
selling Stockholder shall first reoffer the Offered Shares at such lesser price
to ARAMARK by giving written notice (the "Reoffer Notice") to ARAMARK of such
selling Stockholder's intention to make such transfer at such lower price (the
"Reoffer Price"). ARAMARK shall then have an irrevocable and exclusive option to
purchase all or part of the Offered Shares at the Reoffer Price, exercisable in
the same manner as provided in Section 4.01 or 4.02, as the case may be. In the
event ARAMARK does not then elect to purchase all the remaining Offered Shares,
or ARAMARK elects (with the consent of the Stockholder desiring to sell) to
purchase less than all the remaining Offered Shares, the remaining Offered
Shares may be sold by such selling Stockholder within 30 days following the
earlier of (i) the expiration of the option period with respect to such Reoffer
pursuant to Section 4.01 or 4.02, as the case may be, or (ii) the last date on
which such selling Stockholder shall have received written notice from ARAMARK
stating that ARAMARK intends not to exercise in whole or in part the option
granted in this Section 4.04, at a price equal to or greater than the Reoffer
Price; provided, however, that the Transferee complies with the provisions of
Section 2.03; and provided further that, in the case where such selling
Stockholder is a Management Investor or a Management Investor's Permitted
Transferee, such Transferee shall have been approved by ARAMARK as a suitable
investor in a privately-owned services management company. ARAMARK shall not
unreasonably withhold or delay such approval.
4.05 Waiting Period With Respect to Subsequent Transfers. In the event
that ARAMARK does not exercise its option to purchase any or all of the Offered
Shares at the First Offer Price or the First Offer Investors' Price, as the case
may be, or at the Reoffer Price, and the Stockholder desiring to sell shall not
have sold the remaining Offered Shares to any Transferee for any reason before
the expiration of the 30 day period described in Section 4.04 in the event of a
Reoffer, or, if no Reoffer Notice is given, the 90 day period described in
Section 4.03, then such selling Stockholder shall not sell any shares of Common
Stock to any Transferee or other Stockholder (other than to Permitted
Transferees pursuant to Section 3.01) at any price for a period of three months
from the last day of such 30 or 90 day period, as the case may be.
4.06 No Sales of Control.
(a) Subject to Section 4.06(b) and except as provided in Section
3.03 (transfers approved by the Board of Directors), no Person or
group of Persons, as defined in Section 13 (d) (3) of the
Securities Exchange Act of 1934 (the "Exchange Act"), including
for the purposes of this paragraph as part of such Person's
group, Transferees pursuant to Section 3.01, shall become
(whether through the purchase of shares pursuant to this
Agreement or otherwise or through any other action) the holder,
directly or indirectly, of 10% or more of either the outstanding
shares of Class A Common Stock or the outstanding shares of Class
B Common Stock. Any transaction resulting in a violation of this
Section 4.06(a) shall be void, and of no effect against ARAMARK,
and ARAMARK shall not record any such purported transfer on its
books. Two or more Stockholders owning in the aggregate 10% or
more of such outstanding shares shall not be deemed to be a group
of Persons for the purposes of this Section 4.06 solely because
such Stockholders are parties to this Agreement or because such
Stockholders are related by blood or marriage and/or because such
Stockholders are officers or directors of ARAMARK.
(b)The provisions of Section 4.06(a) shall not apply to the
acquisition by ARAMARK, directly or indirectly, of shares of
Common Stock, notwithstanding that as a result of such
acquisition any Person or group of Persons acting in concert
would own 10% or more of such outstanding shares subsequent to
such an acquisition, but shall apply to any subsequent
acquisition or other action by such Person or group of Persons.
4.07 Form of Consideration for Shares. No offer to purchase or to sell
shares of Common Stock shall be deemed to be a valid offer under this Section 4
unless the purchase price of such offer is
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<PAGE>
payable in cash or securities that can be readily valued by reference to quoted
trading prices. The purchase price of shares upon exercise of an option under
this Section 4 in respect of a Notice which specifies only cash as the form of
consideration shall be payable only in cash.
4.08 Merger Transaction. Subject to any applicable provisions of the
Certificate of Incorporation or any loan agreement or instruments to which
ARAMARK is a party, ARAMARK may enter into any agreement of merger to merge with
or into any other corporation; and, in such event, Sections 4.01 through 4.07 of
this Agreement shall not be applicable to such merger and all shares may be
transferred for such consideration as approved by the Board of Directors and the
Stockholders in accordance with applicable law.
4.09 Transfers in a Public Offering. In the event a request is made
under Section 2.1 of the Registration Rights Agreement for a demand
registration, then the procedures set forth in Sections 4.02 through 4.05 shall
be modified in the following respects:
(a)Such request shall also provide the information required to be
stated in a Seller's Notice, and shall also constitute a Seller's
Notice.
(b)Prior to the expiration of the 21 day period under the
Registration Rights Agreement within which ARAMARK is to file a
registration statement covering the shares the holder of which
requested a demand registration, ARAMARK shall have the
irrevocable and exclusive option to buy all (and only all) of the
Offered Investors' Shares at the First Offer Investors' Price,
which shall be the proposed public offering price after reduction
for commissions, discounts and the like.
(c)In the event the public offering price (after reduction for
commissions, discounts and the like) is more than 10% lower than
the First Offer Investors' Price, or the number of shares
included in the offering is reduced to less than 75% of the
shares as to which the Seller's Notice was delivered (otherwise
than by reason of a cut down by the Underwriter) then Section
4.04 shall apply, but such section shall not otherwise apply to
any sale pursuant to a registration statement.
(d)In the event all of the Offered Investors' Shares are elected
to be purchased, the demand registration shall be held in
abeyance pending the closing of such purchase in accordance with
this Agreement.
5. Put of Shares upon Death, Complete Disability or Normal Retirement.
5.01 Put in Event of Death, Complete Disability or Normal Retirement.
Subject to any instruments or agreements of ARAMARK from time to time in effect
restricting or otherwise governing the repurchase or retirement of shares of
ARAMARK's capital stock (the "Loan Agreements") and to applicable law, unless a
Call pursuant to Section 6.01 shall have been exercised by ARAMARK, upon the
death, Complete Disability or Normal Retirement of any Investor Group member, at
the option of such Investor Group member, such Investor Group member's estate,
heirs or personal representative, and such Investor Group member's Permitted
Transferees (other than Permitted Transferees specified in Section 3.01(A)(ii))
(collectively, the "Holders" of such Investor Group member's shares) and within
30 days of receipt by ARAMARK of a Seller's Notice from such Holders, which
notice must be given within 30 days from the date of the appointment of a
personal representative of such Investor Group member, the date he or she became
Completely Disabled, or the date of his or her Normal Retirement, ARAMARK shall
purchase from such Holders the shares of Common Stock held by such Holders
specified in such Seller's Notice up to 30% of such shares so held at a purchase
price determined in accordance with Section 5.02. ARAMARK shall be under no
obligation to purchase such shares unless it shall have received a Seller's
Notice from such Holders in accordance with this Section 5.01.
5.02 Purchase Price of Put Shares. The purchase price for the shares of
Common Stock purchased pursuant to Section 5.01 shall be the Appraisal Price of
(an equivalent number of) shares of Class B Common Stock, for the shares of a
Holder of a Management Investor's shares, and shall be the Appraisal Price of
shares of Class A Common Stock for the shares of a Holder of an Individual
Investor's shares. ARAMARK shall satisfy its obligation to purchase shares upon
the exercise of any Put granted under Section 5.01 with cash.
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6. Call of Shares upon Termination of Employment.
6.01 Call in Event of Termination. Unless the shares of Common Stock
held by a Management Investor and his or her Permitted Transferees have been
earlier sold pursuant to Section 4 (rights of first offer and reoffer),
including the earlier recording of the transfer of such shares on the books of
ARAMARK, ARAMARK shall have an exclusive and irrevocable option, at any time and
from time to time during the period of 10 years following the termination of
employment of such Management Investor for any reason whatsoever (including
without limitation death, Complete Disability or Normal Retirement) to make a
purchase or purchases of up to all of the shares of Common Stock owned by such
Management Investor and his or her Permitted Transferees, at a purchase price,
with respect to any such exercise, determined in accordance with Section 6.02.
6.02 Purchase Price. The purchase price per share for any shares of
Common Stock purchased pursuant to Section 6.01 shall be the lesser of (i) the
Appraisal Price of (an equivalent number of) shares of Class B Common Stock at
the time ARAMARK gives notice that it is exercising its Call option and (ii) the
Appraisal Price of (an equivalent number of) shares of Class B Common Stock at
the date of termination of employment, plus in the case where ARAMARK gives
notice it is exercising its Call option more than 120 days after the date of
termination of employment, 8% simple interest on such amount from the date of
termination of employment through the date ARAMARK gives notice that it is
exercising its Call option. ARAMARK shall satisfy its obligations to purchase
shares upon the exercise of such Calls with cash up to the least of $100,000, or
the Management Investor's highest annual base salary as an employee of ARAMARK,
or 10% of the aggregate purchase price for such Called shares and, at the
Company's option, with cash and/or Promissory Notes valued at their principal
amount for the remainder.
7. Involuntary Transfer of Shares.
7.01 Certain Involuntary Transfers; Seller's Notice. Except for
involuntary transfers (by foreclosure or otherwise) to ARAMARK of shares of
Common Stock pledged to ARAMARK, in the event a Stockholder shall involuntarily
transfer directly or indirectly any or all of his or her shares, for any reason
other than as a result of those events specified in Section 6, such Stockholder
shall give written notice within 30 days of such involuntary transfer (the
"Stockholder Notice") to ARAMARK, with a copy to the Transferee, stating the
fact that the involuntary transfer occurred, the reason therefor, the date of
the transfer, the name and address of the Transferee and the number of shares
acquired by the Transferee (the "Acquired Shares"). For purposes of this Section
7 an involuntary transfer shall include, without limitation, a court-ordered
transfer, constructive trust or other device designed to transfer economic
benefit of share ownership.
7.02 Right to Repurchase. For a period of 60 days from the date of
receipt of the Stockholder Notice or, failing receipt of such notice, 60 days
from the date ARAMARK sends written notice to the Transferee that the transfer
is deemed to be an involuntary transfer subject to repurchase under this
Agreement, ARAMARK shall have an irrevocable and exclusive option to buy all of
the Acquired Shares, exercisable in the same manner as provided in Section 4.01,
and the provisions of such applicable Section shall be followed in their
entirety except that the purchase price shall be as provided in Section 7.03.
7.03 Purchase Price. The purchase price for shares purchased pursuant
to Section 7.02 shall be payable in cash and shall be equal to the Appraisal
Price of (an equivalent number of) shares of Class B Common Stock at the time
ARAMARK gives notice that it is exercising its Call option.
8. Limited Access to Information.
8.01 No Duty to Disclose Information. Each of the parties to this
Agreement acknowledges and agrees that it is in the best interests of ARAMARK
and the Stockholders taken as a whole for ARAMARK to be able to conduct orderly
transactions in Common Stock on a continual basis (including in connection with
the internal market and repurchases upon termination of employment and
otherwise), and for ARAMARK concurrently to be able to consider from time to
time on a confidential basis potential transactions which could affect the fair
market value and/or the Appraisal Price of the Common Stock. Each of the parties
to this Agreement acknowledges and agrees that, at the time of a sale by a
Stockholder of shares of Common Stock pursuant to this Agreement, there may have
occurred or be proposed or pending an event or a transaction that could affect
the Appraisal Price of the Common Stock, and that the Appraisal Price of the
Common Stock (and, accordingly, the repurchase price) may be substantially less
than the fair market value as of the current date, and further acknowledges and
agrees that ARAMARK may have valid business reasons not
A-8
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
<PAGE>
to, and in any case shall not be required to, disclose any event or transaction
that may have occurred or be proposed or pending at the time of any such sale.
8.02 Sale of ARAMARK Following Call. In the event that any entity,
person, or any group of persons acting in concert (excluding the Management
Investors as a group), acquires in any manner shares of Common Stock with 50% of
the ordinary voting rights of the outstanding shares of Common Stock or in the
event of the redemption or repurchase of all the shares of Common Stock in
connection with a sale of all or substantially all the assets of ARAMARK, or the
winding up, dissolution or liquidation of ARAMARK, within 90 days from the date
of a sale pursuant to Section 6.01 then, subject to the Loan Agreements, ARAMARK
and/or the purchaser of such shares of Common Stock with 50% of the ordinary
voting rights of the outstanding shares of Common Stock shall pay to the Holders
whose shares have been so purchased the excess, if any, of the amount per share
realized by ARAMARK's stockholders upon such acquisition, redemption,
repurchase, winding up, dissolution or liquidation over the purchase price per
share paid to such Holders pursuant to Section 6 less the interest paid on any
Promissory Notes paid as consideration for such stock and less a financing cost
for carrying such stock for any cash received, based on an interest rate equal
to the rate paid by ARAMARK under the Loan Agreements at the date of payment
hereunder, for the period from the date of payment to such Holders pursuant to
Section 6 to the date of such acquisition, redemption, repurchase, winding up,
dissolution or liquidation, for each share purchased by ARAMARK. Determination
of whether or not any such payment is appropriate, and the amount of such
payment, shall be made by the Board of Directors; and such determination shall
be conclusive and binding on all parties hereto.
9. No Right to Continued Employment.
Neither this Agreement nor the ownership of Common Stock by a
Management Investor shall confer upon any Management Investor any right to
continue in the employ of ARAMARK or any of its Subsidiaries or limit in any
respect the right of ARAMARK or its Subsidiaries to terminate his or her
employment at any time.
10. Closing.
10.01 Closing Date; Purchase Price. Any selling Stockholder and ARAMARK,
as purchaser, of shares of Common Stock pursuant to Section 4, 5, 6 or 7 shall
mutually determine a closing date (the "Closing Date") which, unless this
Agreement otherwise explicitly provides, shall be not more than 60 business days
after ARAMARK gives notice that it will purchase such shares; provided, however,
that absent agreement, the Closing Date shall be the business day determined by
ARAMARK. In respect of shares of Common Stock distributed by any employee
benefit plan upon termination of employment, the Closing Date shall be such date
selected by ARAMARK consistent with the orderly administration of such plan.
Notwithstanding anything in this Agreement to the contrary, the Closing
Date may be delayed in any case in which ARAMARK cannot, in compliance with the
Loan Agreements or applicable law, purchase any shares of Common Stock that it
is otherwise obligated to purchase until the earliest practicable date when such
closing may be effected in compliance with such Loan Agreements or applicable
law. The closing shall be held at 11:00 a.m., local time, at the offices of
ARAMARK or at such other time or place as the parties may agree.
The determination date of the Appraisal Price shall be appropriately
changed if the Closing Date is delayed in accordance with the foregoing
paragraph.
10.02 Shares No Longer Outstanding. If a selling Stockholder shall fail
to deliver the certificates representing the shares of Common Stock to be sold
or shall otherwise fail to perform any obligation required to be performed at
the closing and ARAMARK shall have been ready to purchase such shares at the
closing, then effective at the closing, such shares shall no longer be deemed to
be outstanding, and all rights of the holder thereof as stockholder of ARAMARK
(except the right to receive from ARAMARK the purchase price therefor) shall
cease.
10.03 Deliveries at Closing; Method of Payment of Purchase Price. On the
Closing Date, any selling Stockholder shall deliver certificates with
appropriate transfer tax stamps affixed and with stock powers endorsed in blank,
representing the shares of Common Stock to be purchased, and ARAMARK, as
purchaser shall deliver to such Stockholder the purchase price which is payable
in cash (or by wire transfer or check) and the other consideration, if any, to
be given in exchange for such shares. In addition, if the person selling shares
is the personal representative of a deceased Stockholder, the personal
representative shall also deliver to the purchaser or purchasers (i) copies of
letters testamentary or letters of administration evidencing his or her
appointment and qualification, (ii) a certificate issued by the Internal
A-9
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
<PAGE>
Revenue Service pursuant to Section 6325 of the Code discharging the shares
being sold from liens imposed by the Code and (iii) an estate tax waiver issued
by the state of the decedent's domicile.
11. Term. The terms and provisions of this Agreement which relate to Management
Investors may be terminated by an instrument in writing signed by Management
Investors who hold, in combination with their Permitted Transferees, at least
the majority of the Common Stock held by Management Investors and their
Permitted Transferees and by ARAMARK. The terms and provisions of this Agreement
which relate to Outside Investors shall terminate on April 7, 2008 or, if
earlier, on the closing date of the first to occur of (i) any merger or other
business combination of ARAMARK with or into any other corporations, except a
merger or other business combination in which the stockholders of ARAMARK
immediately prior thereto constitute more than a majority of the stockholders
(by value of equity securities held) following such merger, and (ii) the sale of
shares of Class A Common Stock to the public pursuant to an underwritten,
registered public offering under the Securities Act of 1993, as amended (the
"Securities Act") as a result of which offering the public (including for this
purpose all purchasers in the underwriting irrespective of any relationship with
ARAMARK) owns 10% or more of the outstanding shares of Class A Common Stock,
provided such shares have a fair market value equal to at least $25,000,000 at
the time of the offering.
Notwithstanding the foregoing, the restrictive terms and provisions set
forth herein with respect to the rights and obligations of Management Investors
shall terminate, effective upon or after the occurrence of a public offering
pursuant to clause (ii) above, to the extent the existence of such terms and
provisions would impair the ability of ARAMARK to list its Common Stock on the
New York Stock Exchange or, in the written opinion of the lead underwriter,
significantly impair the value of the Common Stock proposed to be sold in a
public offering.
12. Registration of Common Stock. In the event of any registration under the
Securities Act and public offering of Common Stock, each Stockholder shall, at a
meeting convened for the purpose of amending the Certificate of Incorporation,
vote to increase the authorized number of shares of Common Stock and, if
necessary, to subdivide the outstanding shares of Common Stock of ARAMARK, in
both instances as recommended by a majority of the members of the Board in order
to effectuate such public offering.
13. Injunctive Relief. It is acknowledged that it will be impossible to measure
in money the damages that would be suffered if the parties fail to comply with
any of the obligations herein imposed on them and that in the event of any such
failure, an aggrieved person will be irreparably damaged and will not have an
adequate remedy at law. Any such person shall, therefore, be entitled to
injunctive relief, including specific performance, to enforce such obligations,
and if any action should be brought in equity to enforce any of the provisions
of this Agreement, none of the parties hereto shall raise the defense that there
is an adequate remedy at law.
14. Notices. All notices, statements, instructions or other documents required
to be given hereunder, shall be in writing and shall be given either personally,
or by mailing the same in a sealed envelope, first-class mail, postage prepaid,
addressed to ARAMARK at its principal offices to the attention of the General
Counsel and to the other parties at their addresses reflected in the stock
records of ARAMARK, or sent by telegram, telex, telecopy or similar form of
telecommunication. Each Stockholder, by written notice given to ARAMARK in
accordance with this Section 14 may change the address to which notices,
statements, instructions or other documents are to be sent to such Stockholder.
All notices, statements, instructions and other documents hereunder that are
mailed shall be deemed to have been given on the date of mailing.
15. Cooperation. ARAMARK agrees that it will use all reasonable efforts under
the circumstances to help any Stockholder desiring to dispose of its Common
Stock pursuant to the provisions of this Agreement to do so.
16. Miscellaneous.
16.01 Successor and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties, and their respective successors and
assigns. The provisions of this Agreement are for the sole benefit of the
parties hereto and their heirs, executors, administrators, legal
representatives, successors and assigns, and they shall not be construed as
conferring any rights on any other persons. If any Transferee of any Stockholder
shall acquire any shares of Common Stock, in any manner, whether by operation of
law or otherwise, such shares shall be held subject to all of the terms of this
Agreement, and by taking and holding such shares such person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement.
A-10
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
<PAGE>
ARAMARK may assign to any other Person its rights with respect to any
specific transaction pursuant to Section 4, 5, 6 or 7, provided that Person
complies with the provisions of Section 2.03.
16.02 Governing Law. Regardless of the place of execution, this
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware applicable to agreements made and to be wholly performed in
such State.
16.03 Headings. Paragraph headings are inserted herein for convenience
only and do not form a part of this Agreement.
16.04 Entire Agreement; Amendment. This Agreement contains the entire
agreement among the parties hereto with respect to the transactions contemplated
herein, supersedes all prior written agreements and negotiations and oral
understandings, if any, and may not be amended, supplemented or discharged
except by performance or by an instrument in writing signed by the holders of at
least three-fourths of the Common Stock held by the Institutional and Individual
Investors (taken as a whole), and by Management Investors who hold (in
combination with their Permitted Transferees) at least a majority of the Common
Stock held by Management Investors and their Permitted Transferees, and by
ARAMARK. In the event of the amendment or modification of this Agreement in
accordance with its terms, the Stockholders shall cause the Board of Directors
of ARAMARK to meet within 30 days following such amendment or modification or as
soon thereafter as is practicable for the purpose of amending the Certificate of
Incorporation and By-Laws of ARAMARK, as may be required as a result of such
amendment or modification, and proposing such amendments to the stockholders of
ARAMARK entitled to vote thereon, and such action shall be the first action to
be taken at such meeting.
This amended and restated Agreement shall become effective upon the
later of (i) December 14, 1994 and (ii) the date ARAMARK has received and holds
duly executed (and not previously rescinded) instruments in writing approving
such amended and restated Agreement from the required parties as provided in
this Section 16.04.
16.05 Inspection. A copy of this Agreement shall be filed with the
Secretary of ARAMARK and kept with the records of ARAMARK and shall be made
available for inspection by any stockholder of ARAMARK at the principal offices
of ARAMARK.
16.06 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[Signature Pages Omitted]
A-11
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
<PAGE>
EXHIBIT A
(to Amended and Restated
Stockholders' Agreement)
THIS NOTE IS NOT TRANSFERABLE UNLESS AS A CONDITION
PRECEDENT TO THE EFFECTIVENESS OF ANY TRANSFER THE
PAYEE HAS OBTAINED THE WRITTEN CONSENT OF THE
COMPANY AS TO THE PROPOSED TRANSFER.
$__________ Philadelphia, Pennsylvania
________________, 19___
SUBORDINATED INSTALLMENT NOTE
1. For value received, ARAMARK CORPORATION (formerly The ARA Group,
Inc. and ARA Holding Company), a Delaware corporation (the "Company"), hereby
promises to pay to (the "Payee") the sum of $ in equal, annual
installments of $ and one final installment of $ on each [April/
October] 15 commencing on [April/October] 15, 19 , and to pay simple interest
at the rate of % per annum on the unpaid balance thereof, semi-annually in
arrears on each April 15 and October 15.
2. The Payee may not sell, assign or otherwise transfer or encumber any
portion of this Note or interest herein without first procuring the written
consent of the Company, which consent the Company is under no obligation to
provide. No transfer of this Note shall be effective unless such transfer is in
compliance with the foregoing, including the requirements set forth in the
legend provided for above.
3. Both the principal of this Note and interest thereon are payable in
lawful money of the United States of America at 1101 Market Street,
Philadelphia, PA 19107, or such address of any subsequent principal executive
office of the Company within the United States of America as the Company shall
designate in writing to the Payee, or at the option of the Company, by check
mailed to the Payee at such address for the Payee as is indicated on the books
of the Company.
4. This Note may be prepaid in full, or in part, any time, without
premium or penalty. All prepayments shall be applied first to accrued interest
and then to installments of principal in the order of their maturities.
5. The indebtedness evidenced by this Note and the payment of the
principal of and interest on this Note are hereby expressly subordinated, to the
extent and in the manner hereinafter set forth, to the prior payment in full of
all Senior Indebtedness.
5.1 "Senior Indebtedness" means the principal of, premium, if any,
interest and any other amounts due on (1) all Indebtedness incurred, assumed or
guaranteed by the Company, either before or after the date hereof, (excluding
any debt which by the terms of the instrument creating or evidencing the same is
not superior in right of payment to this Note), including, without limitation,
(a) any amount payable with respect to any lease, conditional sale or
installment sale agreement or other financing instrument or agreement which in
accordance with generally accepted accounting principles is, at the date hereof
or at the time the lease, conditional sale or installment sale agreement or
other financing instrument or agreement is entered into, or assumed or
guaranteed by, directly or indirectly, the Company, required to be reflected as
a liability on the face of the balance sheet of the Company, (b) any amounts
payable in respect to any interest rate exchange agreement, currency exchange
agreement or similar agreement and (c) any subordinated indebtedness of a
corporation merged with or into or acquired by the Company; and (2) any
A-12
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
<PAGE>
renewals or extensions or refunding of any such Senior Indebtedness or evidences
of indebtedness issued in exchange for such Senior Indebtedness.
5.2 "Indebtedness" means (a) all items, except items of capital stock
or of surplus or of general contingency reserves or of reserves for deferred
income taxes, which in accordance with generally accepted accounting principles
in effect on the date hereof should be included in determining total liabilities
as shown on the liability side of a balance sheet of the Company as at the date
of which Indebtedness is to be determined, (b) all indebtedness secured by any
mortgage, pledge, lien or conditional sale or other title retention agreement
existing on any property or asset owned or held by the Company, whether or not
such indebtedness shall have been assumed, and (c) all indebtedness of others
which the Company has directly or indirectly guaranteed, endorsed, discounted or
agreed (contingently or otherwise) to purchase or repurchase or otherwise
acquire, or in respect of which the Company has agreed to supply or advance
funds or otherwise to become liable directly or indirectly with respect thereto,
including, without limitation, indebtedness arising out of the sale or transfer
of accounts or notes receivable or any moneys due or to become due.
6. In the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether voluntary or involuntary and whether in
bankruptcy, insolvency or receivership proceedings, or upon an assignment for
the benefit of creditors or any readjustment of debt, arrangement or composition
among creditors or any other marshalling of the assets and liabilities of the
Company or otherwise), then holders of Senior Indebtedness shall first be paid
in full, or provision made for such payment, before any payment or distribution,
directly or indirectly (including by way of set off) is made upon the principal
of or interest on this Note, and to that end the holders of Senior Indebtedness
shall be entitled to receive in payment thereof any payment or distribution of
assets of the Company, whether in cash or property or securities, which may be
payable or deliverable in any such proceeding in respect of this Note. The Payee
irrevocably authorizes, empowers and directs all receivers, custodians, trustee,
liquidators, conservators and others having authority in the premises to effect
all such payments and deliveries. Notwithstanding any statute, including without
limitation the Federal Bankruptcy Code, any rule of law or bankruptcy procedures
to the contrary, the right of the holders of the Senior Indebtedness to have all
of the Senior Indebtedness paid and satisfied in full prior to the payment of
any amounts due the payee under this Note shall include, without limitation, the
right of the holders of the Senior Indebtedness to be paid in full all interest
accruing on the Senior Indebtedness due them after the filing of any petition by
or against the Company in connection with any bankruptcy or similar proceeding
or any other proceeding referred to in paragraph 6 hereof, prior to the payment
of any amounts in respect of the Note, including, without limitation, any
interest due to the Payee accruing after such date.
7. No payment, directly or indirectly (including by way of set off),
shall be made by the Company with respect to the principal of or interest on
this Note if (i) an event of default has happened with respect to any Senior
Indebtedness, as defined therein or in the instrument under which the same is
outstanding which if occurring prior to the stated maturity of such Senior
Indebtedness, permits holders thereof upon the giving of notice or passage of
time, or both, to accelerate the maturity thereof ("Senior Indebtedness
Default") and has not been cured, (ii) a payment by the Company to or for the
benefit of Payee would, immediately after giving effect thereto, result in a
Senior Indebtedness Default, or (iii) full payment of all amounts then due for
principal of (or premium, if any), interest or any other amounts due on Senior
Indebtedness shall not then have been made or duly provided for. Upon the
occurrence of any events described in (i), (ii) or (iii) described above,
notwithstanding any event of default under this Note by the Company, the Payee
may not accelerate the maturity of all or any portion of this Note, or take any
action towards collection of all or any portion of this Note or enforcement of
any rights, powers or remedies under this Note, or applicable law until the
earlier of the date on which a Senior Indebtedness Default (or in the case of
(iii) required payments shall have been duly provided for) have been cured or
such Senior Indebtedness has been paid in full.
8. In the event that, notwithstanding the foregoing, the Company shall
make any payment prohibited by Section 6 or 7, then, except as hereinafter in
this Section otherwise provided, unless and until any such Senior Indebtedness
Default shall have been cured or waived or shall cease to exist, such payment
shall be held in trust for the benefit of and shall be paid over to the holders
of Senior Indebtedness or their representative or representatives or to the
trustee or trustees under any indenture under which any instrument evidencing
the Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay in full all Senior Indebtedness then due,
after giving effect to any concurrent payment to the holders of such Senior
Indebtedness.
A-13
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
<PAGE>
9. Subject to the payment in full of all Senior Indebtedness at the
time outstanding, the Payee shall be subrogated to the rights of the holders of
Senior Indebtedness to receive payments or distributions of assets of the
Company applicable to the Senior Indebtedness until this Note shall be paid in
full, and no payments or distributions to the holders of Senior Indebtedness by
or on behalf of the Company from the proceeds that would otherwise be payable to
the Payee, or by or on behalf of the Payee, shall as between the Company and the
Payee, be deemed to be a payment by the Company to or for the account of holders
of Senior Indebtedness.
10. No holder of Senior Indebtedness shall be prejudiced in his or her
right to enforce subordination of this Note by any act on the part of the
Company. The above provisions in regard to subordination are intended solely for
the purpose of defining the relative rights of the Payee on the one hand, and
the holders of Senior Indebtedness, on the other hand, and nothing contained in
this Note is intended to or shall impair, as between the Company, its creditors
other than the holders of Senior Indebtedness and the Payee, the obligation of
the Company, which is absolute and unconditional, to pay to the Payee, subject
to the rights of the holders of Senior Indebtedness, the principal of and
interest on this Note as and when the same shall become due and payable in
accordance with its terms, subject to the rights, if any, under the above
subordination provisions, of holders of Senior Indebtedness to receive cash,
property or securities of the Company payable in respect thereof.
11. The principal of this Note and accrued unpaid interest thereon
shall (if not already due and payable) upon written demand by the Payee become
due and payable forthwith, if there shall have been a default in the payment of
any interest on, or principal of, this Note when it becomes due and payable (but
only if such payment is not prohibited by the provisions of this Note), and such
default shall have continued for a period of 30 days after written notice of
such default shall have been given to the Company and shall be continuing at the
time of such written demand.
12. No course of dealing between the Company and the Payee or any delay
on the part of the Payee in exercising any rights under this Note shall operate
as a waiver of any rights of the Payee.
13. All notices and other communications hereunder shall be in writing
and shall be deemed to have been given when delivered, or deposited in the
mails, first-class, postage prepaid, or delivered to a telegraph office for
transmission, if to the Payee, at such address for the Payee as is indicated on
the books of the Company or if to the Company, at the address of the principal
executive offices of the Company as provided above.
14. This Note shall be governed by the laws of the State of Delaware.
ARAMARK CORPORATION
By: ______________________________
Treasurer
#83000
A-14
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
<PAGE>
GENERAL INSTRUCTIONS TO FORMS
PERFORMANCE OPTIONS
In this section, you will find the forms that you will need in order to complete
transactions involving your performance options. Several copies of each form
have been included. These forms have been color-coded for ease of reference.
As you complete the forms, have your ownership statement handy, as you will need
to transfer information from it onto the form(s).
We urge you to carefully read this Prospectus so that you will be fully informed
of the terms and conditions of your stock options and the payment alternatives
available to you.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
This year, there are several ways to finance your stock option exercise. You may choose to utilize a combination of the methods
listed below.
====================================================================================================================================
DEFERRED STOCK-FOR- INTERNAL
CASH PAYMENT STOCK MARKET
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Who Is Eligible? All option holders. Those exercising Those exercising All owners who have held
non-qualified stock non-qualified stock shares at least 6 months
options. options. from purchase or from
stock-for-stock exchange
date, but only during the
quarterly Internal Market
periods: (December 15 -
January 15; March 15 - April
15; June 15 - July 15;
September 15 - October 15).
- ------------------------------------------------------------------------------------------------------------------------------------
What Is It? Payment in full at Postponing payment of up Exchanging shares you own Selling shares back to the
the time of to 75% of your purchase (at the current appraisal company and applying all or
exercise. amount. (Interest, due no price), for new ones (at part of the proceeds toward
later than the end of the your option exercise the exercise of NQ options.
deferral period, will be price).
charged.)
- ------------------------------------------------------------------------------------------------------------------------------------
THE FOLLOWING CHART INDICATES THE FORMS TO BE COMPLETED AND RETURNED TO THE ARAMARK SHAREHOLDER SERVICES GROUP.
- ------------------------------------------------------------------------------------------------------------------------------------
FOR THIS TRANSACTION . . . COMPLETE AND SUBMIT THESE FORMS . . . AND ALSO SEND IN . . .
====================================================================================================================================
Stock
Deferred Internal Your Certificates Or
Payment Market Check Confirmation
Obligation(1) Stock-For- Worksheet/ Payable To Statements
Exercise (Yellow) - On Stock Request ARAMARK For Shares
Form(1) Reverse Of Worksheet Form(2) For Any To Be Sold
(Yellow) Exercise Form (Green)(2) (Pink) Balance Or Exchanged
- ------------------------------------------------------------------------------------------------------------------------------------
Stock Exercise (Purchase) X X
- ------------------------------------------------------------------------------------------------------------------------------------
Deferred Payment X X X
- ------------------------------------------------------------------------------------------------------------------------------------
Stock Sale(3) (If applied to purchase) X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
Stock-For-Stock Exercise X X X X
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Complete a separate form for each exercise. (3) If you are not applying proceeds toward a purchase,
(2) For multiple transactions, compile onto one form per only submit the Internal Market form and the Stock
registered owner. (Note: If shares are held jointly in Certificate(s) for the shares you are selling.
your and your spouse's names, that is considered as one
owner.
- ------------------------------------------------------------------------------------------------------------------------------------
Send all completed documents including, where applicable, your worksheets, stock certificates, and your checks, made payable to
ARAMARK Corporation, to: First Union National Bank, N.A., Shareholder Services Group, P.O. Box 13675, Philadelphia, PA 19101-9024 or
123 South Broad Street, MCPA1328, Philadelphia, PA 19109.
</TABLE>
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
B-2
<PAGE>
EXERCISE FORM -- See General Instructions, page B-1
SECTION I -- WORKSHEET
<TABLE>
<CAPTION>
<S> <C> <C>
- ------------------------------------------------
DETERMINING YOUR COST FOR SHARES
- ------------------------------------------------
DEFINITION SOURCE
---------- ------
1 Grant Date ................................................... Ownership Statement ............................. 1 _______
2 Type of Option ............................................... Verify on Ownership Statement ................... 2 _NQ____
3 Number of Shares Now Exercisable ............................. Ownership Statement ............................. 3 _______
4 Exercise Price Per Share ..................................... Ownership Statement ............................. 4 $______
5 Number of Shares You Want To Exercise ........................ Cannot exceed Line 3 ............................ 5 _______
6 Current Appraisal Price Per Share ............................ Call 1-888-96-OWNER ............................. 6 $______
7 Total Cost of Shares .................................... Line 4 x Line 5 ................................. 7 $______
- --------------------------------------------------------------------------------------------
CALCULATING YOUR TAX WITHHOLDINGS, APPLICABLE TO U.S.-BASED EMPLOYEES
- --------------------------------------------------------------------------------------------
8 Appraisal Price x Shares Exercised ........................... Line 5 x Line 6 ................................. 8 $________
9 Total Appreciation Subject To Taxes .......................... Line 8 - Line 7 ................................. 9 $________
10 Total Withholding Tax Due (38%) .............................. Line 9 x .38 .................................... 10$________
11 Total Amount Due ............................................. Line 7 + Line 10 ................................ 11$________
- ---------------------------------------------------------------------
DETERMINING YOUR DEFERRAL -- ALSO COMPLETE REVERSE
- ---------------------------------------------------------------------
12 Maximum Amount Eligible To Be Deferred ....................... Line 11 x .75 ................................... 12$________
13 Payment Amount You Want To Defer (also complete reverse side). Can't exceed Line 12 - Enter "0" if no deferral . 13$________
14 Balance After Deferral ....................................... Line 11 - Line 13 14$________
- -------------------------------------------
EXCHANGING OR SELLING SHARES
- -------------------------------------------
15 Number Of Shares Exchanged ................................... Line 5 of green Stock-For-Stock Worksheet ....... 15 ________
16 Appraisal Price x Shares Exchanged ........................... Line 6 of green Stock-For-Stock Worksheet ....... 16$________
17 Proceeds From Internal Market - Enclose certificates and
pink worksheet .............................................. Lines 5 a-e of pink Internal Market Worksheet ... 17$________
- ---------------------------
EXERCISE SUMMARY
- ---------------------------
18 Total Cash Due - Send Check For This Amount .................. Line 14 - Line 16 - Line 17 ..................... 18$________
19 Shares Exercised ............................................. Line 5 .......................................... 19 ________
20 Shares Exchanged - Enclose certificates and green worksheet Line 15 ......................................... 20 ________
21 Number Of New Shares Acquired ................................ Line 19 - Line 20 ............................... 21 ________
SECTION II REGISTRATION AND SIGNATURES
Shares must be registered initially either in your name or in the names of you and your spouse, as joint tenants. If shares are to
be registered jointly in the names of both you and your spouse, you must print both names below, enter your Social Security
number, and you both must sign. If you are deferring payment, you (and your spouse, if applicable) must also complete and sign the
reverse side.
I/We hereby represent, warrant, and agree as follows:
A. I/We have received and read copies of (a) the Prospectus dated June 15, 1997, including the Amended and Restated Stockholders'
Agreement and (b) ARAMARK's annual report on Form 10-K.
B. I/We have full power and authority to enter into the Amended and Restated Stockholders' Agreement.
C. By signing below, I/We hereby execute and deliver and agree to be bound by the Amended and Restated Stockholders' Agreement.
D. I/We will, upon request, execute any additional documents necessary or desirable for me/us to become a party to the Amended and
Restated Stockholders' Agreement.
Print Name(s) Signature(s) Social Security Number Date
__________________________ ______________________________ __________________________________ ___________
__________________________ ______________________________ __________________________________ ___________
Home Address: _____________________________________________________________________________________________________________________
(Street) (City) (State) (Zip Code)
Home Phone #: _______________ Business Phone #: _________________ Business Unit: ______________ Component #: _____________
Send all completed documents, including worksheets and your check (if applicable) to: First Union National Bank, N.A., Shareholder
Services Group, P.O. Box 13675, Philadelphia, PA 19101-9024 or 123 South Broad Street, MCPA1328, Philadelphia, PA 19109.
- ------------------------------------------------------------------------------------------------------------------------------------
For Transfer Agent Check Number _______ Check Amount $__________
use only: Account #___________ Deferred Amount $___________ Shares Exchanged___________
- ------------------------------------------------------------------------------------------------------------------------------------
(PLEASE TURN OVER)
</TABLE>
<PAGE>
DEFERRED PAYMENT OBLIGATION -- See General Instructions, page B-1
- --------------------------------------------------------------------------------
INSTRUCTIONS
1. Insert the Payment Amount You Want To Defer (Line 13 from the Exercise
Form) in the first paragraph below.
2. Insert the Number of New Shares Acquired (Line 21 from the Exercise Form)
in the second paragraph below.
3. Print and sign your name exactly as on the Exercise Form. If your spouse
signed the Exercise Form, he/she must also sign this Deferred Payment
Obligation form. By signing this form, your spouse joins in the agreement
you are making to pay the amount of the Deferred Payment Obligation.
- --------------------------------------------------------------------------------
I/We promise to pay to the order of ARAMARK CD Company (a subsidiary of ARAMARK
Corporation) if deferring less than $5,000 or ARAMARK Corporation if deferring
$5,000 or more, $______ , and to pay interest from the date the associated
exercise is effected at the rate of ___% per year*, simple interest. Payment of
the deferred obligation and interest will be due on the March 15 following the
three-year anniversary of the deferral (or on demand if the payee is ARAMARK
Corporation) to the applicable payee, and may be prepaid at any time.
I/We grant to the applicable payee a security interest in ______ shares of
ARAMARK Common Stock (the "Pledged Shares") and agree that the Pledged Shares
will be held as collateral by the applicable payee until the amount is paid in
full. If the amount is not paid when due, the applicable payee will be entitled
to exercise the legal remedies available under applicable law. If any of the
Pledged Shares are to be sold or otherwise transferred, then the amount will
become due immediately.
This agreement may be assigned by the applicable payee at any time and will be
governed by the laws of the Commonwealth of Pennsylvania.
__________________________________ __________________________________
(Print Name) (Print Name)
__________________________________ __________________________________
(Signature) (Signature)
__________________________________ __________________________________
(Date) (Date)
* Call the ARAMARK Shareholder Services Group at 1-888-96-OWNER
(1-888-966-9637) for the current rate of interest.
<PAGE>
STOCK-FOR-STOCK WORKSHEET -- See General Instructions, page B-1
(Use one form per registered owner.)
<TABLE>
<CAPTION>
Note: Stock-for-stock transactions are only available for exercises of non-qualified stock options.
- ------------------------------------------------------------------------------------------------------------------------------------
Employee Name (please print) Social Security or Account Number Date
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Use One Column For Each Exercise
Involving a Stock-For-Stock Exchange
---------------------------------------------------------
EXERCISE
---------------------------------------------------------
Line Definition Source #1 #2 #3 #4 #5 Total
#
---------------------------------------------------------------
1 Grant Date Line 1 on yellow Exercise N/A
Form ---------------------------------------------------------------
---------------------------------------------------------------
2 Maximum Dollar Amount Line 7 on yellow Exercise $ $ $ $ $ $
Eligible To Be Covered By Form ---------------------------------------------------------------
Exchange
---------------------------------------------------------------
3 Approximate Dollar Value Portion of Line 2 (above) $ $ $ $ $ $
Of Shares You Wish To that you wish to cover via ---------------------------------------------------------------
Exchange Stock-For-Stock (can't
exceed Line 2)
---------------------------------------------------------------
4 Current Appraisal Price (Call 1-888-96-OWNER)
Per Share ---------------------------------------------------------------
---------------------------------------------------------------
5 Number Of Shares To Be Line 3 (above) (divided by)
Exchanged Line 4 (above). Rounded ---------------------------------------------------------------
down to next full share (Transfer to Line 15 of yellow Exercise Form.)
---------------------------------------------------------------
6 Appraisal Price x Shares Line 4 (above) x Line 5 $ $ $ $ $ $
Exchanged (above) ---------------------------------------------------------------
(Transfer to Line 16 of yellow Exercise Form.)
SHARE EXCHANGE SUMMARY
NUMBER OF SHARES TO BE EXCHANGED
---------------------------------------------------------------
Certificate Shares Shown On
Number(s) This
Enclosed Certificate #1 #2 #3 #4 #5 Total
-----------------------------------------------------------------------------------------------------------------
Note: Use additional
Stock-For-Stock ------------------------------------------------------------------------------------------------
Worksheets if you are
submitting more than 5 stock
certificates. ------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
--------------------------------------------------------------
Totals
--------------------------------------------------------------
Must Equal Line 5 Above For Each Exercise And In Total
--------------------------------------------------------------
Send this completed form and your unsigned stock certificates, along with your exercise form to: First Union National Bank, N.A.,
Shareholder Services Group, P.O. Box 13675, Philadelphia, PA 19101-9024 or 123 South Broad Street, MCPA1328, Philadelphia, PA 19109.
</TABLE>
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK)
B-10
<PAGE>
SECTION I -- INTERNAL MARKET SALE REQUEST FORM
Use one form per registered owner
INSTRUCTIONS: In this Section, you will be listing the certificate(s) or
confirmation statement(s) that you are enclosing, and indicating the number of
shares listed on each, and the number of shares you would like to sell.
<TABLE>
<CAPTION>
NAME (PLEASE PRINT) ACCOUNT OR SOCIAL SECURITY NUMBER
- ------------------------------------------------------------------ --------------------------------------
___________________________________________________ ___________________________
- ------------------------------------------------------------------ --------------------------------------
- ----------------------------------------------
SALE OF COMMON SHARES -- CLASS B
- ----------------------------------------------
NO. OF SHARES NO. OF SHARES TO
CERTIFICATE/ SHOWN ON THIS BE SOLD FROM THIS
STATEMENT LINE CERTIFICATE/ LINE CERTIFICATE/
LINE NO. NUMBER ENCLOSED NO. STATEMENT NO. STATEMENT
-------- --------------- --- -------------- -------- ------------------
<S> <C> <C> <C> <C> <C>
| | | | |
1a | | 1a | | 1a |
_________|_________________________|________|_________________________|________|_____________________________
| | | | |
1b | | 1b | | 1b |
_________|_________________________|________|_________________________|________|_____________________________
| | | | |
1c | | 1c | | 1c |
_________|_________________________|________|_________________________|________|____________________________
| | | | |
1d | | 1d | | 1d |
_________|_________________________|________|_________________________|________|____________________________
| | | | |
1e | | 1e | | 1e |
_________|_________________________|________|_________________________|________|____________________________
| | | | |
1f | | 1f | | 1f |
_________|_________________________|________|_________________________|________|____________________________
| | | | |
1g | | 1g | | 1g |
_________|_________________________|________|_________________________|________|_____________________________
| | | | |
1h | | 1h | | 1h |
_________|_________________________|________|_________________________|________|_____________________________
| | | | |
1i | | 1i | | 1i |
_________|_________________________|________|_________________________|________|_____________________________
| | | | |
1j | | 1j | | 1j |
_________|_________________________|________|_________________________|________|_____________________________
| |
| | TOTAL SHARES TO BE SOLD
| | (COPY 1l TO LINE 1 ON
TOTAL SHARES SHOWN | | REVERSE SIDE)
| |
______________________________________________________________________|________|_____________________________
1k TOTAL SHARES | 1k | 1l |
(ADD 1a - 1j IN EACH COLUMN) | | |
____________________________________|_________________________________|________|_____________________________
TOTAL COMMON SHARES LEFT OVER (1k | | |
MINUS 1l) | 1m | |
____________________________________|_________|________________________________|
</TABLE>
Note: Shares used in a stock-for-stock exchange or purchased within prior six
(6) months cannot be sold. If shares to be sold are pledged under a prior
Deferred Payment Obligation, Lines 4a, b, and c on front of form must also be
completed.
Complete Sections II and III on reverse side of this form.
FORM B
(Please see reverse.)
<PAGE>
<TABLE>
<CAPTION>
SECTION II -- INTERNAL MARKET WORKSHEET -- See General Instructions, page B-1
(Use one form per registered owner.)
- ---------------------
SALE OF COMMON SHARES
- ---------------------
<S> <C> <C>
1 Number of Common Shares to be Sold (Section I, Line 1l):................................. 1
-------------
2 Sale Price Per Common Share (Call 1-888-96-OWNER for current price):..................... 2 $
-------------
3 Total Sale Price of Common Shares (Line 1 x Line 2)...................................... 3 $
------------
Note: If shares to be sold are pledged under a prior Deferred Payment Obligation, Lines 4a, b, and c must also be completed.
- ------------------------------
DISTRIBUTION OF TOTAL PROCEEDS
- ------------------------------
4 Amount to be Applied to Pay Off Related Deferred Payment Obligation* (write "N/A" if not applicable)
(a) Principal Due:....................................................................... 4(a) $
--------
(b) Accrued Interest Due:................................................................ 4(b) $
--------
(c) Total Deferred Payment Due (Line 4a + Line 4b):...................................... 4(c) $
----------
5 Amount to be Applied to Current Exercise (if applicable)
(a) Grant Date:__________................................................................ 5(a) $
--------
(b) Grant Date:__________................................................................ 5(b) $
--------
(c) Grant Date:__________................................................................ 5(c) $
--------
(d) Grant Date:__________................................................................ 5(d) $
--------
(e) Grant Date:__________................................................................ 5(e) $
--------
(f) Total (Lines 5a + 5b + 5c + 5d + 5e):................................................ 5(f) $
----------
6 Cash Back to You (Line 3 minus Line 4c minus Line 5f):................................... 6 $
----------
7 Total Distribution (Line 4c + Line 5f + Line 6) - Total must equal Line 3: .............. 7 $
----------
SECTION III -- INTERNAL MARKET REQUEST FORM
- ----------
SIGNATURES
- ----------
By signing below, you are offering to sell to ARAMARK the shares indicated in Line 1, subject to the terms and conditions of the
Internal Market. You also are acknowledging that: you have full authority to sell the shares; you have received and read Form 10-K
for the most recent year; you are under no obligation to sell; and the offer price is the most recent appraisal price, reflecting
the shares' current lack of marketability and is less than it would be if the shares were publicly traded. Please sign below exactly
as your name(s) appear on the stock certificate(s).
Print Name(s) Social Security or Account Number(s)
- ----------------------------------------------------------- ------------------------------------------------------------
- ----------------------------------------------------------- ------------------------------------------------------------
Signature(s) Date
- ----------------------------------------------------------- ------------------------------------------------------------
- ----------------------------------------------------------- ------------------------------------------------------------
- --------------------
DELIVERY ADDRESS(ES)
- --------------------
===================================================================================================================================
|
Send Check For Net Sale Proceeds To: | Send Stock Certificate(s)** To:
|
- -------------------------------------------------------- | ------------------------------------------------------------
- -------------------------------------------------------- | ------------------------------------------------------------
===================================================================================================================================
* Call the ARAMARK Shareholder Services Group at 1-888-96-OWNER to obtain the exact amounts of Principal Due and Accrued Interest
Due.
** In cases where the number of shares on the stock certificate(s) or confirmation statement(s) you are submitting exceeds the
number of shares you are selling, a certificate for the balance will be sent to you upon request, by indicating an address
above. If your shares are pledged to an outside lender, the lender may require that the stock certificate for unsold shares be
returned to the lender.
THIS COMPLETED FORM AND STOCK CERTIFICATES MUST BE RECEIVED AT THE ARAMARK SHAREHOLDER SERVICES GROUP BEFORE THE EXPIRATION OF THE
INTERNAL MARKET PERIOD. (If certificates were not sent to you for the shares, attach a copy of the confirmation statement(s) in lieu
of certificate.) Send the form(s) and stock certificate(s) or confirmation statement(s), to: First Union National Bank, N.A.,
Shareholder Services Group, P.O. Box 13675, Philadelphia, PA 19101-9024 or 123 South Broad Street, MCPA1328, Philadelphia, PA 19109.
</TABLE>
