<PAGE>
1998 10-K
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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended October 2, 1998 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from ________ to __________
Commission file number: 1-8827
ARAMARK CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 23-2319139
(State of incorporation) (I.R.S. Employer Identification No.)
ARAMARK Tower
1101 Market Street
Philadelphia, Pennsylvania 19107
(Address of principal executive offices)
Telephone Number: 215-238-3000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g)
of the Act: Class B Common Stock,
$.01 par value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Aggregate market value of the voting stock held by nonaffiliates: $851 million
Common stock outstanding at
October 30, 1998 Class A Common stock 2,524,993 shares
Class B Common stock 62,725,606 shares
Documents incorporated by reference: Portions of the registrant's Proxy
Statement for the 1999 annual meeting of stockholders are incorporated by
reference in Part III of this Report.
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As used herein, references to the "Company" shall mean ARAMARK Corporation
and its subsidiaries (including ARAMARK Services, Inc.) unless the context
otherwise requires. References to "ARAMARK" shall mean ARAMARK Services, Inc.
and its subsidiaries unless the context otherwise requires.
PART I
Item 1. Business
Description of Business Segments
The Company is engaged in providing or managing services, including food
and support services, uniform and career apparel and educational resources.
ARAMARK was organized in 1959 in Delaware. The Company was formed in September
1984 by the management of ARAMARK and acquired ARAMARK in December 1984 through
a merger.
The Company provides most of its services in the United States. The
Company also conducts operations, primarily the management of food services, in
Belgium, Canada, the Czech Republic, Germany, Hungary, Japan, Korea, Mexico,
Spain and the United Kingdom.
Financial information by business segment and geographic area appears in
note 11 to the consolidated financial statements. The businesses of the Company
have been grouped into the segments described below.
Food and Support Services
The Company provides food, refreshment, specialized dietary and support
services (including facility maintenance and housekeeping) to businesses, and to
educational, governmental and healthcare institutions. Food, lodging and
merchandise services are also provided at sports and entertainment facilities
such as convention centers, stadiums, parks, arenas, race tracks and other
recreational facilities.
Food, refreshment, specialized dietary and support services are operated
at customer locations generally under contracts of indefinite duration which may
be subject to termination by either party. However, food and related services at
sports and entertainment facilities generally are for fixed contract terms well
in excess of one year. The Company's food and support services are performed
under various financial arrangements including management-fee and
profit-and-loss based agreements.
At most customer food service locations, the equipment and facilities used
in providing these services are owned by the customer. Vending machines and
related equipment, however, are generally owned by the Company. At most sports
and entertainment facilities, the equipment is owned by the Company.
<PAGE>
There is a high level of competition in the food and support services
business from local, regional, national and international companies as well as
from businesses and institutions which operate their own services. This
competition takes a number of different forms, including pricing, maintaining
high food and service standards, and innovative approaches to marketing with a
strong emphasis on securing and retaining customer accounts. The Company
believes that it is a significant provider of food and support services in the
United States, Belgium, Canada, Germany and Spain, but that its volume of such
business is small in relation to the total market. See note 10 to the
consolidated financial statements for information relating to the seasonal
aspects of this business segment.
Uniform and Career Apparel
The Company rents, sells, cleans, maintains and delivers personalized
uniform and career apparel and other textile items for customers throughout the
United States on a contract basis. Also provided are walk-off mats, cleaning
cloths, disposable towels, and other environmental control items.
The Company operates one of the largest direct marketers of personalized
work clothing, uniforms and related accessories, primarily in the United States.
The Company also operates one of the largest direct marketers of public safety
equipment and public employee uniforms in the United States, and is a leading
provider of uniform apparel to the hospitality and healthcare markets.
Service contracts for the rental and laundering of work apparel and other
textile items are for well in excess of one year and typically for an initial
term of three to five years. Generally, the direct marketing business is
conducted under an invoice arrangement with customers.
The uniform rental services and sales business is highly competitive in
the areas in which the Company operates, with numerous competitors in each major
operating area. Although no one uniform rental services company is predominant
in this industry, the Company believes that it is a significant competitor.
Competition in the direct marketing of work clothing, career apparel,
public safety equipment and related items is from numerous retailers and other
direct marketers at local, regional and national levels. In this market, while
the Company is a significant competitor, the Company's volume of sales is small
in relation to the total market.
The significant competitive factors in the uniform and career apparel
business are the quality of services provided to customers and the prices
charged for such services.
Educational Resources
The Company provides infant, toddler, pre-school, and school-age learning
programs. The Company operates community-based child care centers, before and
after school programs on the premises of elementary schools, private elementary
schools, and employer on-site child care centers. These services are provided
to, and are primarily paid for on a weekly or monthly basis directly by
individual families under short-term agreements. The Company leases a
significant number of its facilities under long-term arrangements.
2
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The Company believes it is a significant provider of educational and child
care services in the United States.
Competition in all phases of this business segment is from both national
and local providers of educational services as well as from private and public
institutions which provide for their own educational services. Significant
competitive factors in the Company's educational services business are the
quality of care, reputation, physical appearance of facilities, the types of
programs offered to the users of these services and the prices charged for such
services.
Distributive Services
Effective in July 1998, the Company formed a joint venture for its
distributive business with another leading magazine and book wholesaler. The
Company contributed substantially all of its distribution segment's assets and
liabilities to the venture in exchange for a minority interest in the venture.
See note 2 to the consolidated financial statements.
General
The Company employs approximately 150,000 persons, both full and part
time, including approximately 40,000 employees outside the United States.
Approximately 25,500 employees in the United States are represented by various
labor unions.
The Company believes it recognizes benefits from its corporate name
recognition. Nonetheless, consistent with its businesses, the Company does not
have any material trademarks or patents, and its research and development
expenditures are not material in amount. Although the Company pursues strategies
to increase the number and scope of the services it provides to existing
customers, no single customer of the Company accounts for more than 5% of its
revenues. While the Company focuses its purchasing on selected suppliers and
vendors to realize pricing, quality and service benefits, generally, all
materials and services that the Company purchases are available from more than
one supplier, and the loss of any supplier would not have a material impact on
the Company's results of operations. The Company's businesses are subject to
various governmental environmental regulations, and the Company has adopted
policies designed to comply with such regulations. Such compliance has not had a
material impact on the Company's capital expenditures, earnings or competitive
position.
3
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Item 2. Properties
The principal property and equipment of the Company are its service
equipment and fixtures (including vehicles) and real estate.
The service equipment and fixtures include vending, commissary, warehouse
and janitorial and maintenance equipment used primarily by the Food and Support
Services Group and laundry equipment used by the Uniform and Career Apparel
Group. The vehicles include automobiles and delivery trucks used in the Food and
Support Services and Uniform and Career Apparel Groups. The service equipment
and fixtures represent 59% of the net book value of all fixed assets as of
October 2, 1998.
The Company's real estate is comprised of educational and child care
facilities, of which a significant number are held under long-term operating
leases. The Company also maintains other real estate and leasehold improvements
which it uses in the Uniform and Career Apparel and Food and Support Services
Groups. Additional information concerning property and equipment (including
leases and noncancelable lease commitments) is included in notes 1 and 8 to the
consolidated financial statements. No individual parcel of real estate owned or
leased is of material significance to the Company's total assets.
See note 11 to the consolidated financial statements for information
concerning the identifiable assets of the Company's business segments.
Item 3. Legal Proceedings
The Company and its subsidiaries are not parties to any lawsuits (other
than ordinary routine litigation incidental to its business) which are material
to the Company's business or financial condition. See note 8 to the consolidated
financial statements for additional information concerning legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable.
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Item 4A. Directors and Executive Officers of the Registrant
<TABLE>
<CAPTION>
Directors:
Name Principal Occupation
- ---- --------------------
<S> <C>
Joseph Neubauer...................................... Chairman and Chief Executive Officer
ARAMARK Corporation
James E. Ksansnak.................................... Vice Chairman, ARAMARK Corporation
Patricia C. Barron................................... Executive-in-Residence and Senior Fellow,
Leonard N. Stern School of Business
New York University
Robert J. Callander.................................. Executive-in-Residence, Columbia University
Retired Vice Chairman, Chemical Banking Corporation
Ronald R. Davenport.................................. Chairman, Sheridan Broadcasting Corporation
Lee F. Driscoll, Jr.................................. Corporate Director
Mitchell S. Fromstein................................ Chairman, President and Chief Executive Officer Manpower Inc.
Edward G. Jordan..................................... Former Chairman and Chief Executive Officer
Consolidated Rail Corporation
Thomas H. Kean....................................... President, Drew University
Former Governor of New Jersey
Reynold C. MacDonald................................. Retired Chairman, Acme Metals Incorporated
James E. Preston..................................... Chairman, Avon Products, Inc.
</TABLE>
<TABLE>
<CAPTION>
Officers: Officer
Name (Age as of November 1, 1998) Office Held Since
- ---------------------------------- ------------ -----
<S> <C> <C>
Joseph Neubauer (57)................................. Chairman and Director................................ 1979
James E. Ksansnak (58)............................... Vice Chairman and Director........................... 1986
William Leonard (50)................................. President............................................ 1992
Charles E. Kiernan (53).............................. Executive Vice President............................. 1998
Brian G. Mulvaney (42)............................... Executive Vice President............................. 1993
Martin W. Spector (60)............................... Executive Vice President,
General Counsel and Secretary........................ 1976
L. Frederick Sutherland (46)......................... Executive Vice President and
Chief Financial Officer.............................. 1983
Barbara A. Austell (45).............................. Senior Vice President
and Treasurer........................................ 1996
Alan J. Griffith (44)................................ Vice President, Controller and
Chief Accounting Officer............................. 1994
Dean E. Hill (47).................................... Vice President....................................... 1993
John P. Kallelis (60)................................ Vice President....................................... 1982
Michael R. Murphy (41)................................ Director of Audit and Controls....................... 1995
Donald S. Morton (50)................................ Assistant Secretary and
Associate General Counsel............................ 1985
Richard M. Thon (43)................................. Assistant Treasurer.................................. 1994
</TABLE>
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Except as set forth below, the principal occupation of each executive
officer throughout the past five years has been the performance of the functions
of the corporate offices shown above.
Mr. Ksansnak was elected vice chairman of the Company in May 1997. From
February 1991 to May 1997 he was executive vice president of the Company and
chief financial officer from May 1986 to May 1997.
Mr. Leonard has been president and chief operating officer of the Company
since May 1997. He was executive vice president of the Company from May 1992
until May 1997.
Mr. Kiernan was elected executive vice president of the Company in October
1998. Prior to that time he was president, Duracell North America and then in
1994, president and chief operating officer, Duracell International, Inc.
Mr. Mulvaney was elected executive vice president of the Company in
August 1996. He was senior vice president of the Company from February 1995 to
August 1996 and vice president from February 1993 to February 1995.
Mr. Sutherland became chief financial officer of the Company in May
1997. He was elected executive vice president in May 1993.
Ms. Austell was elected senior vice president and treasurer of the
Company in August 1996. Prior to joining the Company in July 1996, she was a
managing director of J. P. Morgan & Co.
Mr. Griffith was elected vice president of the Company in February
1995. In December 1993 he became controller and chief accounting officer.
Mr. Murphy became director of audit and controls in September 1995. He
joined the Company as senior audit manager in January 1993. Prior to that time
he was a senior audit manager with Arthur Andersen LLP.
Mr. Thon was elected assistant treasurer of the Company in August 1994.
Previously he held various treasury analyst positions since joining the Company
in 1987.
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PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
There are currently approximately 2,200 record holders of Class B common
stock of the Company, all of whom are employees or directors of the Company (or
members of their families or trusts created by them). There are currently 170
record holders of the Class A common stock of the Company, all of whom are
institutional investors, Company benefit plans or individuals not employed by
the Company.
The Company has not paid a cash dividend during the last two fiscal years.
From time to time, the Board of Directors may consider paying cash dividends in
the future, based upon the Company's circumstances at that time.
There is no established public trading market for the common stock of the
Company. However, employees of the Company are able to sell shares of common
stock through various programs maintained by the Company. See note 7 to the
consolidated financial statements for information regarding the Company's
shareholders' agreement.
7
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Item 6. Selected Financial Data
The following table presents summary consolidated financial data for the
Company. The following data should be read in conjunction with the consolidated
financial statements and the related notes thereto and Management's Discussion
and Analysis of Results of Operations and Financial Condition, each included
elsewhere herein.
<TABLE>
<CAPTION>
ARAMARK Corporation and Subsidiaries
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Fiscal Year Ended on or near
September 30
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1998 1997(1) 1996 1995 1994
-------- --------- -------- -------- --------
(in millions, except per share amounts and ratios)
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Revenues..................................................... $6,377.3 $6,310.4 $6,122.5 $5,600.6 $5,161.6
Earnings before depreciation and
amortization, interest, and income taxes.................. 528.9 523.6 478.0 433.9 415.7
Earnings before interest
and income taxes (2)...................................... 333.1 331.8 295.2 277.0 272.0
Interest expense, net........................................ 117.3 116.0 116.0 109.4 108.5
Income before extraordinary item
and cumulative effect of
change in accounting for
income taxes (3).......................................... 133.7 146.1 112.2 100.2 95.0
Net income................................................... 129.2 146.1 109.5 93.5 86.1
Earnings per share: (4)
Income before extraordinary item and
cumulative effect of change in accounting
for income taxes: (3)
Basic................................................ $1.17 $1.16 $.84 $.71 $.67
Diluted.............................................. 1.10 1.10 .79 .67 .63
Net Income:
Basic................................................ 1.14 1.16 .82 .66 .61
Diluted.............................................. 1.06 1.10 .77 .63 .57
Ratio of earnings to fixed charges (5)....................... 2.3x 2.3x 2.1x 2.1x 2.1x
Balance Sheet Data (at period end):
Total assets................................................. $2,741.3 $2,753.6 $2,844.8 $2,643.3 $2,122.0
Long-term borrowings: (6)
Senior.................................................... 1,678.3 1,084.9 1,160.8 1,109.4 691.5
Subordinated.............................................. 26.7 129.0 161.2 165.4 290.4
Common stock subject to potential
repurchase (7)............................................ 20.0 23.3 18.6 19.1 20.8
Shareholders' equity (deficit) (8)........................... (78.9) 370.0 296.2 252.3 182.6
</TABLE>
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(1) Fiscal 1997 is a fifty-three week period. See note 1 to the
consolidated financial statements.
(2) See note 2 to the consolidated financial statements.
(3) See note 3 to the consolidated financial statements.
(4) Fiscal 1994 through 1997 earnings per share amounts have been
restated to reflect the 3 for 1 stock split effective September
1, 1998 and the adoption of Statement of Financial Accounting
Standards No. 128, "Earnings per Share" which was effective
beginning in fiscal 1998. See Notes 1 and 7 to the consolidated
financial statements.
(5) For the purpose of determining the ratio of earnings to fixed
charges, earnings include pre-tax income plus fixed charges
(excluding capitalized interest). Fixed charges consist of
interest on all indebtedness (including capitalized interest) plus
that portion of operating lease rentals representative of the
interest factor (deemed to be one-third of operating lease
rentals).
(6) See note 4 to the consolidated financial statements.
(7) See note 7 to the consolidated financial statements.
(8) 1998 reflects the impact of the Common Stock Class A Tender Offer.
See note 7 to the consolidated financial statements.
8
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Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition
RESULTS OF OPERATIONS
Fiscal 1998 Compared to Fiscal 1997
Overview. Revenues for the fiscal year ended October 2, 1998 were $6.4
billion, an increase of 1% over fiscal 1997, with increases in the Food and
Support Services and Uniform and Career Apparel segments partially offset by
decreases in the Health and Educational Resources and Distributive segments due
to the sale of Spectrum in fiscal 1997 and the Distributive segment transaction
in fiscal 1998 (see note 2 to the consolidated financial statements). Excluding
the impact of the Spectrum and Distributive segment transactions, revenues
increased 5% over the prior year. Operating income of $333.1 million increased
$1.3 million over the prior year. Total Company operating income includes other
expense of $5 million in fiscal 1998 and other income of $11.7 million in fiscal
1997 as described in note 2 to the consolidated financial statements. Excluding
other expense/income and the operating results of Spectrum and the Distributive
segment, operating income increased 7% over the prior year, due to strong
performances in the Food and Support Services and Educational Resources
segments, partially offset by a decline in operating income in the Uniform and
Career Apparel segment. Excluding other expense/income, the Company's operating
income margin increased to 5.3% from 5.1%, due primarily to improved cost
controls and leveraging of fixed costs.
Interest expense increased $1.3 million or 1% over the prior year due
primarily to increased debt levels including the impact of the Tender Offer in
June 1998 (see note 7 to the consolidated financial statements). The fiscal 1998
effective tax rate was 38% which includes the favorable impact resulting from
the September 1998 settlement of certain prior years' tax returns. The fiscal
1997 effective tax rate of 32% reflects the favorable impact of a permanent
difference in the book and tax basis of Spectrum, net of the unfavorable
permanent book/tax differences related to certain intangible asset write-offs.
Fiscal 1998 net income also includes an extraordinary item for early
extinguishment of debt of $4.5 million as described in note 3 to the
consolidated financial statements.
Segment Results. Food and Support Services segment revenues were 5%
higher than the prior year due to new accounts (approximately 4%) and increased
volume at existing accounts (approximately 2%), partially off-set by the
unfavorable impact of foreign currency translation (approximately 1%). Uniform
and Career Apparel segment revenues increased 4% due to increased volume in both
the uniform rental and direct marketing businesses. Health and Educational
Resources segment revenues, excluding the fiscal 1997 Spectrum operations,
increased 9% over the comparable prior year period due to enrollment growth,
pricing and new locations at Educational Resources. Distributive segment
revenues decreased 21% from the prior year primarily due to the July 1998
transaction described below.
Food and Support Services operating income increased 35% versus the
prior year period. Fiscal 1997 operating income included charges of
approximately $30 million (see notes 2 and 11 to the consolidated financial
statements). Excluding the impact of these prior year charges, operating income
increased 15% as a result of the revenue increases noted above, plus effective
cost controls. Uniform and Career Apparel segment operating income decreased 6%
versus the prior year. Excluding a fiscal 1998 gain from the sale of certain
assets and fiscal 1997 other income, operating income decreased 7% as the direct
9
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marketing businesses wrote down certain inventory to net realizable value and
incurred increased operating costs which were partially offset by the impact of
increased volume noted above. Excluding the impact of the Spectrum gain and its
operating results in fiscal 1997 (see note 2 to the consolidated financial
statements), operating income in the Health and Educational Resources segment
increased 19% versus the prior year due to the revenue increases at Educational
Resources noted above. In the fourth quarter of fiscal 1998, the Company
contributed substantially all of its Distributive segment's assets and
liabilities to a joint venture with another leading magazine and book
wholesaler, in exchange for a minority interest in the venture. The Company will
account for its interest in the venture on the cost basis. Operating losses in
the Distributive segment were $20.3 million and $49.6 million in fiscal 1998 and
1997, respectively, and include charges of $5 million and $34 million in fiscal
1998 and 1997, respectively, as described in notes 2 and 11 to the consolidated
financial statements. The increase in fiscal 1998 General Corporate and Other
Expenses relate to costs associated with several corporate development and
strategic initiatives.
Fiscal 1997 Compared to Fiscal 1996
Overview. Revenues for the fiscal year ended October 3, 1997 were $6.3
billion, an increase of 3% over fiscal 1996, with increases in the Food and
Support Services and Uniform and Career Apparel segments partially offset by a
decline in revenues in the Distributive segment and the Health and Educational
Resources segment reflecting the sale of Spectrum (see note 2 to the
consolidated financial statements). Excluding Spectrum, revenues increased 10%
over the prior year. Operating income of $331.8 million increased 12% compared
to the prior year. Total Company operating income includes other income of $11.7
million and $2.9 million in fiscal 1997 and 1996, respectively, as described in
note 2 to the consolidated financial statements. Excluding other income and the
operating results of Spectrum, operating income increased 16% over the prior
year, due to strong performances in the Food and Support Services and Uniform
and Career Apparel segments and Educational Resources, partially offset by
increased operating losses in the Distributive segment. Excluding other income,
the Company's operating income margin increased to 5.1% from 4.8%, due primarily
to improved cost controls and leveraging of fixed costs.
Interest expense was equal with the prior year, with the impact of
lower rates being offset by increased debt levels to finance capital
expenditures and working capital requirements. The effective income tax rate
decreased to 32% in fiscal 1997 from 37% in fiscal 1996 due primarily to the
favorable impact of a permanent difference in the book and tax basis of
Spectrum, partially offset by unfavorable permanent book/tax differences related
to certain intangible asset write-offs (see notes 2 and 6 to the consolidated
financial statements). Fiscal 1996 net income also includes an extraordinary
item for early extinguishment of debt of $2.8 million as described in note 3 to
the consolidated financial statements.
Segment Results. Food and Support Services segment revenues were 8%
higher than the prior year due to new accounts (approximately 3%) and increased
volume (approximately 6%), primarily in the United States food businesses,
partially offset by the unfavorable impact of foreign currency translation
(approximately 1%). Uniform and Career Apparel segment revenues increased 19%
due to the impact of recent acquisitions (approximately 11%) and increased
volume in both the uniform rental and direct marketing businesses. Health and
Educational Resources segment revenues, excluding the Spectrum operations,
increased 15% over the comparable prior year period due to enrollment growth,
pricing and new locations at Educational Resources. Distributive segment
revenues decreased 3% from the comparable prior year period due to a decrease in
base business of approximately 6%, partially offset by the impact of recent
acquisitions.
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Fiscal 1997 operating income for the Food and Support Services segment includes
charges of approximately $30 million due primarily to recognize an impairment of
goodwill in a European operation and to reduce certain other assets to net
realizable value as discussed in notes 2 and 11 to the consolidated financial
statements. Excluding the impact of these charges, operating income increased
20% over the prior year period as a result of the revenue increases noted above,
plus effective cost controls at both United States and international operations.
Uniform and Career Apparel segment operating income includes gains on the sale
of assets of $9 million in 1997 and $37 million in 1996 and charges related
primarily to asset realization of $6 million and $5 million in fiscal 1997 and
1996, respectively (see notes 2 and 11 to the consolidated financial
statements). Excluding the impact of these items, fiscal 1997 operating income
increased 11% from the prior year period due to the revenue increases noted
above plus effective cost controls in the direct marketing businesses, partially
offset by increased operating costs in the uniform rental business. Health and
Educational Resources fiscal 1997 operating income includes the gain on sale of
Spectrum of $72 million and fiscal 1996 operating income includes charges of $13
million as discussed in notes 2 and 11 to the consolidated financial statements.
Excluding the impact of these items, as well as the operating results of
Spectrum, segment operating income increased 23% over the prior year due to the
revenue increases at Educational Resources noted above. The Distributive segment
incurred a fiscal 1997 operating loss of $49.6 million, which includes charges
of approximately $34 million related to asset realization (see notes 2 and 11 to
the consolidated financial statements) versus an operating loss of $6.0 million
in fiscal 1996. Results continued to be severely impacted by higher operating
expenses due to costs of servicing customers and reduced volume and margins
resulting from the increased competition and consolidation in the magazine
wholesale distribution industry. The decrease in fiscal 1997 General Corporate
and Other Expenses is due to reserves established in fiscal 1996 for asset
realization, legal, and other matters described in note 11 to the consolidated
financial statements.
FINANCIAL CONDITION AND LIQUIDITY
Cash provided by operating activities was $277 million. Debt increased by $497
million, primarily due to the Tender Offer described below. The Company expects
to continue to fund capital expenditures, acquisitions and other liquidity needs
from cash provided by operating activities, normal disposals of property and
equipment and borrowings available under its credit facilities. As of October 2,
1998, the Company had capital commitments of approximately $37 million related
to several long-term concession contracts.
During fiscal 1998, the Company amended its credit facility, increasing
availability to $1.4 billion, extending the maturity date to March 2005, and
revising certain financial covenant and ratio requirements to reflect the impact
of the Tender Offer discussed below. Subsequent to the Tender Offer and the
issuance of the senior notes discussed below, the Company reduced the credit
facility commitment to $1 billion. Currently, the Company has approximately $715
million of unused committed credit availability under its credit facilities.
On June 15, 1998, the Company completed a cash tender offer (the "Tender Offer")
for outstanding shares of its Class A common stock at a price of $500 per share
(pre-split). Pursuant to the Tender Offer, the Company repurchased 1,062,485
shares (pre-split) for an aggregate purchase price of $531.2 million plus
transaction costs. The purchase price was financed through additional borrowings
under the credit facility. Additionally, during fiscal 1998 the Company
repurchased $79 million of its Class B common stock, with $18 million of
subordinated installment notes issued as partial consideration. The Company also
issued $22 million of Class B common stock to eligible employees, primarily
through the exercise of installment stock purchase opportunities (see note 7 to
the consolidated financial statements).
11
<PAGE>
In the fourth quarter of fiscal 1998, the Company issued $300 million of 6.75%
senior notes due August 2004 and $300 million of 7% senior notes due July 2006.
The proceeds from the note offerings were used to repay borrowings under the
credit facility.
During fiscal 1998, the Company exercised its option to redeem its $100 million
8.5% subordinated notes at a price of 104.25% of the principal amount and, also
redeemed a $50 million 8% note due April 2002 for a premium. The redemptions
were financed through additional borrowings under the credit facility. The
resultant extraordinary charge on these transactions was $4.5 million (net of
income taxes) or $0.04 per share (see note 3 to the consolidated financial
statements).
On August 11, 1998, the Company's Board of Directors declared, effective
September 1, 1998, a three-for-one split of the Class B and Class A common stock
effected in the form of a stock dividend to shareholders of record on September
1, 1998 (see note 7 to the consolidated financial statements).
As discussed in note 2 to the consolidated financial statements, in July 1998
the Company contributed substantially all of the Distributive segment's assets
and liabilities to a joint venture. The transaction will not have a material
impact on the Company's liquidity.
YEAR 2000 READINESS DISCLOSURE
The Year 2000 issue exists because many computer systems and applications
currently use two-digit date fields to designate a year. As a result, on or near
the change of the century, date-sensitive systems may recognize the Year 2000 as
1900, or not at all, which may cause systems to fail or process financial and
operational information incorrectly.
The Company has developed plans to address its Year 2000 issues. The plans
address three broad areas: (1) internal information technology systems -
including financial and operational application systems, computer hardware and
systems software; (2) non-information technology systems - such as communication
systems, building systems and devices with embedded computer chips; and (3)
third party compliance - which addresses Year 2000 compliance efforts of key
vendors and suppliers. The project plans consist of the following phases:
1) Organizational awareness - general awareness of the Year 2000 issues, which
has been completed, and ongoing communication of Year 2000 project status.
2) Inventory of current applications.
3) Risk assessment of inventoried systems, with identification of
mission-critical systems.
4) Replacement/remediation of systems.
5) Year 2000 testing and conversion of systems.
6) Contingency planning.
Program management offices, staffed with a combination of business unit
personnel and external consultants, have been established to address Year 2000
issues. Additionally, a Corporate Compliance Task Force consisting of internal
audit, information technology, legal and risk management personnel, as well as
external consultants, was formed in 1997 to review and monitor the Year 2000
compliance programs. The Task Force meets regularly to review corporate-wide
Year 2000 issues and progress. The Company's Year 2000 compliance effort is
monitored by senior management on a regular basis and the Audit Committee of the
Board of Directors receives quarterly progress reports.
12
<PAGE>
Internal information technology systems - As of November 23, 1998, the inventory
and risk assessment phases for mission-critical systems have been substantially
completed. Systems replacement/remediation is in process, with target completion
dates ranging from December 1998 through June 1999. Testing and conversion plans
have been, or are currently being, developed and implemented. The Company
expects that mission-critical internal systems will be Year 2000 compliant by
September 1999. Based on the current status of project plans, the Company
believes that Year 2000 events caused by the Company's internal financial and
operational systems would not have a material adverse impact on the Company's
operations or financial condition.
Non-information technology systems - The inventory and risk assessment phases
are currently in process. Based on the results of these phases,
replacement/remediation plans will be developed for mission-critical equipment
and facilities, which are expected to be implemented by September 1999. Given
the nature and geographic dispersion of the Company's business units, the
Company believes that any events caused by Year 2000 failures of non-information
technology systems would be short-term in nature and would not have a material
adverse impact on the Company's operations or financial condition.
Third party compliance - The Company has identified, and initiated
communications with, key third party suppliers and customers to determine
potential exposure to these third parties' failure to remediate their own Year
2000 issues. The Company expects to complete its third party reviews by March
1999 and will develop contingency plans to address potential third party Year
2000 failures. As discussed in the Business section of the Form 10-K, the basic
materials required to operate the Company's businesses are generally available
from a number of suppliers, and in the event of an inability of a key supplier
to deliver product, the Company believes alternative sources will be available.
However, an extended outage by utilities (electric, water, telephone, etc.), key
third-party suppliers or financial institutions, while somewhat mitigated by the
geographic dispersion of the Company's businesses, could have material adverse
impacts on the Company's operations and financial condition.
Contingency Plans
Company resources to date have been focused primarily on Year 2000 remediation.
The Company maintains contingency plans for computer failures, power outages,
natural disasters, etc. Year 2000 contingency plans for mission-critical
systems, in the areas discussed above, will be developed and integrated with the
existing contingency plans where appropriate by December 1999.
Costs
The Company currently estimates spending approximately $15 to 20 million,
excluding internal costs, to complete its Year 2000 compliance program,
including approximately $8 million that has been expended through fiscal 1998.
Year 2000 costs related to systems or equipment replacement are capitalized in
accordance with the Company's accounting policies. Year 2000 remediation costs
are expensed as incurred.
The Company's ability to achieve Year 2000 compliance, the level of costs
associated therewith and the resultant impact on operations and financial
condition could be adversely impacted by, among other things, the availability
and cost of applicable resources, vendors' ability to modify proprietary
software, and unanticipated problems identified in the ongoing compliance
program.
13
<PAGE>
EURO CONVERSION
On January 1, 1999, eleven of the fifteen member countries of the European Union
(the "participating countries") are scheduled to establish fixed conversion
rates between their existing sovereign currencies and establish the euro as
their common legal currency. Revenues and operating income of the Company's
businesses in participating countries are less than 6% of the Company's
consolidated results. The Company has established plans to address operational
and information system issues related to the euro conversion. Based on the
current status of existing plans, the Company does not expect the euro
conversion to have a material adverse impact on the Company's operations or
financial condition.
Item 7A. Quantitative and Qualitative Disclosure about Market Risk
The Company is exposed to the impact of interest rate changes and manages this
exposure through the use of variable-rate and fixed-rate debt and by utilizing
interest rate swaps. The Company does not enter into contracts for trading
purposes and does not use leveraged instruments. The information below
summarizes the Company's market risks associated with debt obligations and other
significant financial instruments as of October 2, 1998. Fair values were
computed using market quotes, if available, or based on discounted cash flows
using market interest rates as of the end of the period. The information
presented below should be read in conjunction with note 4 to the Consolidated
Financial Statements. For debt obligations, the table presents principal cash
flows and related interest rates by expected fiscal year of maturity. Variable
interest rates disclosed represent the weighted-average rates of the portfolio
at October 2, 1998. For interest rate swaps, the table presents the notional
amounts and related weighted-average interest rates by fiscal year of maturity.
The variable rates presented are the average forward rates for the term of each
contract.
<TABLE>
<CAPTION>
Expected Fiscal Year of Maturity
(US$ equivalent in millions)
1999 2000 2001 2002 2003 Thereafter Total Fair Value
---- ---- ---- ---- ---- ---------- ----- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Debt:
Fixed rate $104 $25 $75 $25 $985 (a) $1,214 $1,277
Average Interest Rate 9.3% 6.8% 7.6% 6.8% 7.3% 7.5%
Variable Rate $24 $5 $32 $455 $516 $516
Average Interest Rate 6.0% 6.0% 6.3% 6.2% 6.2%
Interest Rate Swaps:
Receive Variable/
Pay Fixed $69 $75 $75 $(4)
Average pay rate 5.7% 6.1% 6.0%
Average receive rate 5.1% 4.9% 4.7%
</TABLE>
(a) Balance includes $600 million of senior notes callable by the Company at any
time
The Company uses foreign currency debt as a hedge for its investment in foreign
subsidiaries. The table above includes $60 million of debt denominated in the
functional currency of the Company's various subsidiaries, primarily the
Canadian dollar and the German deutschemark.
14
<PAGE>
Item 8. Financial Statements and Supplementary Data
See Index to Financial Statements and Schedules at page S-1.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not Applicable.
PART III
Items 10, 11, 12, and 13 of Part III are incorporated by reference to the
Section titled "Election of Directors" in the registrant's Proxy Statement for
its annual meeting of stockholders, to be filed with the Commission pursuant to
Regulation 14A (except for the stock price performance graph and the committee
report on executive compensation in the Company's Proxy Statement).
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Index to Financial Statements
See Index to Financial Statements and Schedules at page S-1.
(b) Reports on Form 8-K
None.
(c) Exhibits Required by Item 601 of Regulation S-K
See Index to Exhibits.
(d) Financial Statement Schedules
See Index to Financial Statements and Schedules at page S-1.
Item 15. Cautionary Statement regarding Forward-Looking Statements
Certain statements made in this Form 10-K are forward-looking statements.
Because such statements include risks and uncertainties, actual results may
differ materially from those expressed or implied by such forward-looking
statements. Factors that could cause actual results to differ materially
include, but are not limited to, those discussed herein at Item 7, "Management's
Discussion and Analysis of Results of Operations and Financial Condition".
15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this annual report to be
signed on its behalf by the undersigned, thereunto duly authorized.
ARAMARK CORPORATION
By: Alan J. Griffith
----------------------------
Alan J. Griffith
Vice President, Controller
and Chief Accounting Officer
November 25, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on November 25, 1998.
Signature Title
- --------- -----
Joseph Neubauer Chairman and Director
- -------------------------- (Principal Executive Officer)
Joseph Neubauer
L. Frederick Sutherland Executive Vice President
- -------------------------- (Principal Financial Officer)
L. Frederick Sutherland
Alan J. Griffith Vice President, Controller
- -------------------------- and Chief Accounting Officer
Alan J. Griffith (Principal Accounting Officer)
Patricia C. Barron
Robert J. Callander
Ronald R. Davenport
Lee F. Driscoll, Jr. Directors
Mitchell S. Fromstein
Edward G. Jordan
Thomas H. Kean
James E. Ksansnak
Reynold C. MacDonald
James E. Preston
Martin W. Spector
- ------------------
Martin W. Spector
Attorney-in-Fact
16
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Page
----
Report of Independent Public Accountants S-2
Consolidated Balance Sheets:
As of October 2, 1998 and October 3, 1997 S-3
Consolidated Statements of Income:
Fiscal Years 1998, 1997 and 1996 S-5
Consolidated Statements of Cash Flows:
Fiscal Years 1998, 1997 and 1996 S-6
Consolidated Statements of Shareholders' Equity:
Fiscal Years 1998, 1997 and 1996 S-7
Notes to Consolidated Financial Statements S-10
Consolidated Supporting Schedules Filed:
Schedule
Number
- --------
I Condensed Financial Information of Registrant S-28
II Valuation and Qualifying Accounts and Reserves S-32
All other schedules are omitted because they are not applicable, not
required, or the information required to be set forth therein is included in the
consolidated financial statements or in the notes thereto.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To ARAMARK Corporation:
We have audited the accompanying consolidated balance sheets of ARAMARK
Corporation (a Delaware corporation) and subsidiaries as of October 2, 1998 and
October 3, 1997, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three fiscal years in the
period ended October 2, 1998. These consolidated financial statements and the
schedules referred to below are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ARAMARK Corporation and
subsidiaries as of October 2, 1998 and October 3, 1997, and the results of their
operations and their cash flows for each of the three fiscal years in the period
ended October 2, 1998, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the index to
financial statements are presented for purposes of complying with the Securities
and Exchange Commission's rules and are not part of the basic financial
statements. These schedules have been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion,
fairly state in all material respects the financial data required to be set
forth therein in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
November 9, 1998
S-2
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
October 2, 1998 and October 3, 1997
(dollars in thousands, except share amounts)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
1998 1997
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 20,614 $ 27,352
Receivables (less allowances: 1998, $24,457; 526,506 517,035
1997, $23,158)
Inventories 361,451 366,515
Prepayments and other current assets 60,734 67,314
- -----------------------------------------------------------------------------------------------------------------------------
Total current assets 969,305 978,216
- -----------------------------------------------------------------------------------------------------------------------------
Property and Equipment, at Cost:
Land, buildings and improvements 526,888 507,775
Service equipment and fixtures 1,212,369 1,170,230
Leased property under capital leases 8,958 10,992
- -----------------------------------------------------------------------------------------------------------------------------
1,748,215 1,688,997
Less-Accumulated depreciation 873,822 821,821
- -----------------------------------------------------------------------------------------------------------------------------
874,393 867,176
- -----------------------------------------------------------------------------------------------------------------------------
Goodwill 603,937 623,841
- -----------------------------------------------------------------------------------------------------------------------------
Other Assets 293,664 284,346
- -----------------------------------------------------------------------------------------------------------------------------
$2,741,299 $2,753,579
=============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-3
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
1998 1997
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term borrowings $ 24,560 $ 18,517
Accounts payable 373,696 459,847
Accrued payroll and related expenses 174,710 156,216
Other accrued expenses and current liabilities 327,772 302,171
- -----------------------------------------------------------------------------------------------------------------------------
Total current liabilities 900,738 936,751
- -----------------------------------------------------------------------------------------------------------------------------
Long-Term Borrowings:
Senior 1,701,125 1,100,819
Subordinated 26,689 129,027
Obligations under capital leases 1,795 2,615
- -----------------------------------------------------------------------------------------------------------------------------
1,729,609 1,232,461
Less-current portion 24,560 18,517
- -----------------------------------------------------------------------------------------------------------------------------
Total long-term borrowings 1,705,049 1,213,944
- -----------------------------------------------------------------------------------------------------------------------------
Deferred Income Taxes and Other Noncurrent Liabilities 194,388 209,583
Common Stock Subject to Potential Repurchase Under
Provisions of Shareholders' Agreement 20,000 23,254
Shareholders' Equity/(Deficit) Excluding Common Stock
Subject to Repurchase:
Class A common stock, par value $.01; authorized:
25,000,000 shares; issued: 1998 - 2,516,081 shares;
1997 -1,961,413 shares 25 20
Class B common stock, par value $.01; authorized:
150,000,000 shares; issued: 1998 - 62,927,645 shares;
1997 - 20,450,100 shares 629 205
Earnings retained for use in the business (56,815) 394,090
Cumulative translation adjustment (2,715) (1,014)
Impact of potential repurchase feature of common stock (20,000) (23,254)
- -----------------------------------------------------------------------------------------------------------------------------
Total (78,876) 370,047
- -----------------------------------------------------------------------------------------------------------------------------
$2,741,299 $2,753,579
=============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-4
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Fiscal Years Ended October 2, 1998, October 3, 1997 and
September 27, 1996
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 6,377,276 $ 6,310,417 $ 6,122,500
- ----------------------------------------------------------------------------------------------------------------------------------
Costs and Expenses:
Cost of services provided 5,760,697 5,715,402 5,565,038
Depreciation and amortization 195,770 191,732 182,785
Selling and general corporate expense 82,680 83,079 82,354
Other expense (income), net 5,000 (11,655) (2,850)
- ----------------------------------------------------------------------------------------------------------------------------------
6,044,147 5,978,558 5,827,327
- ----------------------------------------------------------------------------------------------------------------------------------
Operating income 333,129 331,859 295,173
Interest Expense, net 117,357 116,012 116,014
- ----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 215,772 215,847 179,159
Provision For Income Taxes 82,062 69,739 66,931
- ----------------------------------------------------------------------------------------------------------------------------------
Income Before Extraordinary Item 133,710 146,108 112,228
Extraordinary Item Due to Early Extinguishment
of Debt (net of income taxes of $2,982 in 1998
and $1,839 in 1996) 4,474 - 2,758
- ----------------------------------------------------------------------------------------------------------------------------------
Net Income $ 129,236 $ 146,108 $ 109,470
==================================================================================================================================
Earnings Per Share:
Income before extraordinary item
Basic $1.17 $1.16 $0.84
Diluted $1.10 $1.10 $0.79
Net income
Basic $1.14 $1.16 $0.82
Diluted $1.06 $1.10 $0.77
==================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-5
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Fiscal Years Ended October 2, 1998, October 3, 1997 and
September 27, 1996 (in thousands)
<TABLE>
<CAPTION>
1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $129,236 $146,108 $109,470
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 195,770 191,732 182,785
Income taxes deferred 11,542 (11,049) (27,604)
Extraordinary item 4,474 - 2,758
Changes in noncash working capital:
Receivables (51,743) (19,934) (62,239)
Inventories (9,240) (32,428) (9,734)
Prepayments (754) (5,740) (209)
Accounts payable (49,943) (61,348) 28,973
Accrued expenses 60,905 48,364 27,245
Changes in other noncurrent liabilities (3,914) (1,651) (461)
Changes in other assets (8,934) (9,727) (9,217)
Other, net (695) (14,261) (2,494)
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 276,704 230,066 239,273
- ------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchases of property and equipment (164,286) (197,835) (190,896)
Disposals of property and equipment 22,204 27,641 13,099
Sale of investments 5,779 9,284 -
Divestiture of certain businesses 31,116 119,152 51,285
Acquisition of certain businesses:
Working capital other than cash acquired 9,550 (74) (29,042)
Property and equipment (17,309) (4,163) (11,105)
Additions to intangibles and other assets (35,199) (5,688) (72,616)
Other (41,452) (8,020) (8,362)
- ------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (189,597) (59,703) (247,637)
- ------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from additional long-term borrowings 658,820 127,323 155,510
Payment of long-term borrowings including premiums (167,942) (242,944) (95,510)
Redemption of preferred stock - - (6,359)
Proceeds from issuance of common stock 22,303 14,338 13,949
Repurchase of common stock (591,535) (65,463) (54,849)
Payment of preferred stock dividend - - (1,067)
Other (15,491) (1,548) (1,109)
- ------------------------------------------------------------------------------------------------------------------
Net cash (used in)/provided by financing activities (93,845) (168,294) 10,565
- ------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents (6,738) 2,069 2,201
Cash and cash equivalents, beginning of year 27,352 25,283 23,082
- ------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 20,614 $ 27,352 $ 25,283
==================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-6
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE FISCAL YEAR ENDED OCTOBER 2, 1998
(in thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Impact of
Potential
Class A Class B Cumulative Repurchase
Common Common Capital Retained Translation Feature of
Stock Stock Surplus Earnings Adjustment Common Stock
----- ----- ------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, October 3, 1997 $ 20 $ 205 $ -- $ 394,090 $ (1,014) $ (23,254)
Net income 129,236
Issuance of Class A common stock to
employee benefit plans 397
Issuance of Class B common stock 25 38,975
Retirement of common stock (12) (23) (39,372) (579,702)
Common stock split 17 422 (439)
Change during the period (1,701) 3,254
--------- --------- --------- --------- --------- ---------
Balance, October 2, 1998 $ 25 $ 629 $ -- $ (56,815) $ (2,715) $ (20,000)
========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-7
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE FISCAL YEAR ENDED OCTOBER 3, 1997
(in thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Impact of
Potential
Class A Class B Cumulative Repurchase
Common Common Capital Retained Translation Feature of
Stock Stock Surplus Earnings Adjustment Common Stock
----- ----- ------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, September 27, 1996 $ 20 $ 227 $ -- $ 309,437 $ 5,131 $ (18,614)
Net income 146,108
Issuance of Class A common stock to
employee benefit plans 384
Issuance of Class B common stock 24 25,025
Retirement of common stock (46) (25,409) (61,455)
Change during the period (6,145) (4,640)
--------- --------- --------- --------- --------- ---------
Balance, October 3, 1997 $ 20 $ 205 $ -- $ 394,090 $ (1,014) $ (23,254)
========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-8
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE FISCAL YEAR ENDED SEPTEMBER 27, 1996
(in thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Impact of
Potential
Series C Class A Class B Cumulative Repurchase
Preferred Common Common Capital Retained Translation Feature of
Stock Stock Stock Surplus Earnings Adjustment Common Stock
--------- ----- ----- ------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, September 29, 1995 $ 14,965 $ 21 $ 235 $ -- $ 247,805 $ 8,318 $ (19,060)
Net income 109,470
Dividends on preferred stock (769)
Issuance of Class A common stock
to employee benefit plans 5,728
Issuance of Class B common stock 25 30,519
Retirement of common and preferred
stock (14,965) (1) (33) (36,247) (47,069)
Change during the period (3,187) 446
--------- --------- --------- --------- --------- --------- ---------
Balance, September 27, 1996 $ -- $ 20 $ 227 $ -- $ 309,437 $ 5,131 $ (18,614)
========= ========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-9
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
FISCAL YEAR
The Company's fiscal year is the fifty-two or fifty-three week period which ends
on the Friday nearest September 30th. The fiscal years ended October 2, 1998,
October 3, 1997 and September 27, 1996 are fifty-two, fifty-three and fifty-two
week periods, respectively.
PRINCIPLES OF CONSOLIDATION, ETC.
The consolidated financial statements include the accounts of the Company and
all its subsidiaries. All significant intercompany balances and transactions
have been eliminated.
In fiscal 1999, the Company is required to adopt the provisions of SFAS No. 130,
"Reporting Comprehensive Income" and SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." The adoption of these standards will
not have a material impact on results of operations or financial statement
disclosures.
In fiscal 2000, the Company is required to adopt SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" and Statement of Position 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." The Company is currently assessing the impact the adoption of
these standards will have on the consolidated financial statements.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
CURRENCY TRANSLATION
Gains and losses resulting from the translation of financial statements of
non-U.S. subsidiaries are reflected as a currency translation adjustment in
shareholders' equity. Currency transaction gains and losses included in
operating results for fiscal 1998, 1997 and 1996 were not significant.
CURRENT ASSETS
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
Inventories are valued at the lower of cost (principally the first-in, first-out
method) or market. The LIFO (last-in, first-out) method of determining cost is
used to value directly marketed career apparel and public safety clothing and
equipment. The stated value of inventories determined using the LIFO method is
not significantly different from replacement or current cost. Personalized work
apparel and linens in service are recorded at cost and are amortized over their
estimated useful lives, approximately two years.
S-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
CURRENT ASSETS (Continued)
The components of inventories are as follows:
1998 1997
- --------------------------------------------------------------------------------
Food 22.0% 21.1%
Career apparel, safety equipment and linens 70.3% 64.5%
Parts, supplies and novelties 7.7% 7.7%
Magazines and books - 6.7%
- --------------------------------------------------------------------------------
100.0% 100.0%
- --------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and are depreciated over their
estimated useful lives on a straight-line basis. Gains and losses on
dispositions are included in operating results. Maintenance and repairs are
charged to operations currently, and replacements and significant improvements
are capitalized. The estimated useful lives for the major categories of property
and equipment are 10 to 40 years for buildings and improvements and 3 to 10
years for service equipment and fixtures. Depreciation expense in fiscal 1998,
1997 and 1996 was $144.3 million, $136.1 million and $129.1 million,
respectively.
GOODWILL
Goodwill, which represents the excess of cost over fair value of the net assets
of acquired businesses, is being amortized on a straight-line basis principally
over 40 years. The Company develops operating income projections for each of its
lines of business and evaluates the recoverability and amortization period of
goodwill using these projections. In fiscal 1997, the Company wrote off certain
intangible assets as discussed in Note 2. Based upon management's current
assessment, the estimated remaining amortization period of goodwill is
appropriate and the remaining balance is fully recoverable. Accumulated
amortization at October 2, 1998 and October 3, 1997 was $181.2 million and
$162.2 million, respectively.
OTHER ASSETS
Other assets consist primarily of investments in 50% or less owned entities,
contract rights, customer lists, and long-term receivables. Investments in which
the Company owns more than 20% but less than a majority are accounted for using
the equity method. Investments in which the Company owns less than 20% are
accounted for under the provisions of SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" or the cost method, as applicable.
Contract rights and customer lists are being amortized on a straight-line basis
over the expected period of benefit, 3 to 20 years.
OTHER LIABILITIES
Other noncurrent liabilities consist primarily of deferred compensation,
insurance accruals, deferred gains arising from sale and leaseback transactions
and subordinated installment notes arising from repurchases of common stock.
The Company is self-insured for a limited portion of the risk retained under its
general liability and workers' compensation arrangements. Self-insurance
reserves are determined based on actuarial analyses. The self-insurance reserves
for workers' compensation insurance are accrued on a present value basis using a
discount rate which approximates a risk-free rate.
S-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
EARNINGS PER SHARE
In fiscal 1998, the Company adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 128, "Earnings per Share." Earnings per share is
reported on a Common Stock, Class B equivalent basis (which reflects Common
Stock, Class A shares converted to a Class B basis, ten for one). Basic earnings
per share is based on the weighted average number of common shares outstanding
during the respective periods. Diluted earnings per share is based on the
weighted average number of common shares outstanding during the respective
periods, plus the common equivalent shares, if dilutive, that would result from
the exercise of stock options. Earnings per share for prior periods have been
restated to conform with the requirements of SFAS No. 128. Share and per share
amounts have also been restated to reflect the three-for-one stock split in
September 1998. See Note 7. Earnings applicable to common stock and common
shares utilized in the calculation of basic and diluted earnings per share are
as follows:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
(in thousands, except per share data)
<S> <C> <C> <C>
Earnings:
Income before extraordinary item $ 133,710 $ 146,108 $ 112,228
Preferred stock dividends -- -- (769)
--------- --------- ---------
Earnings available to common
stock before extraordinary item $ 133,710 $ 146,108 $ 111,459
========= ========= =========
Shares:
Weighted average number of common
shares outstanding used in basic
earnings per share calculation 113,859 125,625 132,954
Impact of potential exercise opportunities
under the ARAMARK Ownership Plan 8,096 6,813 7,364
--------- --------- ---------
Total common shares used in diluted
earnings per share calculation 121,955 132,438 140,318
========= ========= =========
Basic earnings per common share $ 1.17 $ 1.16 $ 0.84
========= ========= =========
Diluted earnings per common share $ 1.10 $ 1.10 $ 0.79
========= ========= =========
</TABLE>
S-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
SUPPLEMENTAL CASH FLOW INFORMATION
1998 1997 1996
--------- --------- ---------
(in millions)
Interest Paid $109.5 $106.4 $108.1
Income Taxes Paid $54.9 $63.0 $91.4
Significant noncash investing and financing activities are as follows:
o During fiscal 1998, 1997 and 1996, the Company contributed $0.4 million,
$0.4 million and $5.7 million, respectively, of Class A Common Stock to its
employee benefit plans to fund previously accrued obligations. In addition,
during fiscal 1998, 1997 and 1996, the Company contributed $1.9 million,
$2.3 million and $1.7 million, respectively, of stock units to its stock
unit retirement plan in satisfaction of its accrued obligations. See Note
5.
o During fiscal 1998, the Company contributed assets and liabilities with a
net book value of $14 million into a newly formed joint venture. See Note
2.
o During fiscal 1998, 1997 and 1996, the Company received $14.9 million,
$10.5 million, and $7.2 million, respectively, of employee notes under its
Deferred Payment program as partial consideration for the issuance of
Common Stock, Class B. Also, during fiscal 1998, 1997 and 1996, the Company
issued subordinated installment notes of $18.4 million, $21.9 million and
$26.8 million, respectively, as partial consideration for repurchases of
Common Stock. See Note 7.
NOTE 2. ACQUISITIONS AND DIVESTITURES, ETC.:
In the fourth quarter of fiscal 1998, the Company formed a joint venture between
its distributive business and another leading magazine and book wholesaler,
Anderson News Corporation. The Company contributed substantially all of its
Distributive segment's assets and liabilities in exchange for a minority
interest in the venture. In connection with the transaction, the Company
recorded a $5 million pre-tax charge, which is reflected as "Other
expense/income" in the accompanying consolidated statements of income. The
Company will account for its interest in the venture on the cost basis.
S-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. ACQUISITIONS AND DIVESTITURES, ETC.: (Continued)
During the fourth quarter of fiscal 1998, the Company acquired Facilities
Resource Management Co., a provider of energy and facilities management
consulting services, for approximately $20 million in cash and common stock. The
acquisition was accounted for under the purchase method of accounting. The
Company's pro forma results of operations for fiscal 1998 and 1997 would not
have been materially different assuming the acquisition had occurred at the
beginning of the respective periods.
In the second quarter of fiscal 1997, the Company sold an approximate 83%
interest in its Spectrum Healthcare Services, Inc. subsidiary (Spectrum). Total
consideration was approximately $158 million and included cash ($125 million),
notes and a warrant. The transaction resulted in a pre-tax gain of $72.4
million, net of transaction costs and reserves established for indemnification
of certain matters related to insurance, legal and other matters ($20 million),
and is included in "Other expense/income" in the accompanying consolidated
statements of income. No income taxes were provided on the gain due to permanent
differences in the underlying book and tax basis of Spectrum. In fiscal 1996,
the business had approximately $500 million in annual revenues and a normalized
operating margin of approximately 4%. Cash proceeds from the divestiture were
used to repay borrowings under the credit facility. Also reflected in other
expense/income are pre-tax charges of $69.8 million, primarily to write off
certain intangible assets in the Food and Support Services and Distributive
segments. These charges were partially offset by a gain of $9.1 million on the
sale of an investment in Brylane, Inc., acquired in connection with the fiscal
1996 King-Size divestiture described below.
The amount of the fiscal 1997 charges applicable to the Food and Support
Services segment was approximately $30 million due primarily to recognize an
impairment of goodwill in a European operation and to reduce certain other
assets to net realizable value. The goodwill impairment was determined based on
a discounted cash flow basis. The amount of charges applicable to the
Distribution segment was $34 million, reflecting an asset writedown which was
determined based on estimates of discounted future cash flows and an impairment
loss on operations to be divested, which was determined based on preliminary
indications of value for those operations.
In the first quarter of fiscal 1996, the Company sold the King-Size division of
its Uniform and Career Apparel business. The net selling price was approximately
$51 million in cash plus "warrants" in Brylane, Inc. and resulted in a pre-tax
gain of $37 million, which was offset by other charges related to asset
realization ($20 million) and insurance, legal and other matters ($14 million),
including a $2 million charge for environmental liabilities, and is reflected as
"Other expense/income" in the accompanying consolidated statements of income.
The environmental liabilities related to several minor remediation projects
involving properties no longer in service. These remediation projects will not
have any material ongoing financial impact on the Company's financial
statements. The King-Size operations were not material to the Company's
consolidated revenues or operating income.
S-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. ACQUISITIONS AND DIVESTITURES, ETC.: (Continued)
At fiscal 1996 yearend, the Company acquired Crest Uniform Company, a provider
of uniform apparel to the hospitality and healthcare markets for cash of
approximately $95 million. The acquisition was accounted for under the purchase
method of accounting. The Company's pro forma results of operations for fiscal
1996 would not have been materially different assuming the acquisition had
occurred as of the beginning of the period.
NOTE 3. EXTRAORDINARY ITEM:
During fiscal 1998, the Company exercised its option to redeem its $100 million
8.5% subordinated notes at a price of 104.25% of the principal amount and also
redeemed a $50 million 8% note due April 2002 for a premium. The resultant
extraordinary charge on these transactions was $4.5 million or $0.04 per share.
During fiscal 1996, the Company redeemed its $80 million 8.25% senior notes for
a premium. The debt extinguishment was financed through the issuance of a $125
million 6.79% senior note. Additionally, the Company replaced its credit
facility with a new $1 billion credit facility (See Note 4), writing off the
unamortized balance of financing costs related to the old credit facility. The
resultant extraordinary charge on these transactions was $2.8 million or $0.02
per share.
NOTE 4. BORROWINGS:
Long-term borrowings at October 2, 1998 and October 3, 1997 are summarized in
the following table:
<TABLE>
<CAPTION>
1998 1997
---- ----
(in thousands)
<S> <C> <C>
SENIOR:
Credit facility borrowings $ 429,300 $ 370,000
Canadian credit facility 31,728 39,350
6.75% notes, due August 2004 298,520 --
6.79% note, payable in installments through 2003 125,000 125,000
7.00% notes, due July 2006 299,921 --
7.10% notes, due December 2006 124,846 124,827
7.25% notes and debentures due August 2007 32,160 32,160
8% notes, due April 2002 50,000 100,000
8.15% notes, due May 2005 150,000 150,000
10-5/8% notes, due August 2000 100,000 100,000
Other 59,650 59,482
- -----------------------------------------------------------------------------------------------
1,701,125 1,100,819
- -----------------------------------------------------------------------------------------------
SUBORDINATED:
8.5% subordinated notes, due June 2003 -- 100,000
10% exchangeable debentures and notes, due August 2000 26,689 26,689
Other -- 2,338
- -----------------------------------------------------------------------------------------------
26,689 129,027
- -----------------------------------------------------------------------------------------------
OBLIGATIONS UNDER CAPITAL LEASES 1,795 2,615
- -----------------------------------------------------------------------------------------------
1,729,609 1,232,461
Less-current portion 24,560 18,517
- -----------------------------------------------------------------------------------------------
$1,705,049 $1,213,944
===============================================================================================
</TABLE>
S-15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. BORROWINGS: (Continued)
The non-amortizing $1.0 billion revolving credit facility ("Credit Agreement")
is provided by a group of banks and matures in March 2005. Interest under the
Credit Agreement is based on the Prime Rate, LIBOR plus a spread of .18% to .70%
(as of October 2, 1998 - .30%) or the Certificate of Deposit Rate plus a spread
of .28% to .80% (as of October 2, 1998 - .40%), at the option of the Company.
There is a fee of .10% to .30% (as of October 2, 1998 - .15%) on the entire
credit facility. The spread and fee margins are based on certain financial
ratios as defined.
The non-amortizing C$80 million Canadian revolving credit facility provides for
either U.S. dollar or Canadian dollar borrowings and matures in June 2001.
Interest on this facility is based on the Canadian Bankers Acceptance Rate, U.S.
Prime Rate, Canadian Prime Rate or LIBOR plus a spread of up to 5/8%, as
defined. As of October 2, 1998, all borrowings under this facility are payable
in Canadian dollars, with a weighted average interest rate of 6.2%. There is a
fee of .17% on the entire credit facility.
The Company's ARAMARK Educational Resources, Inc. (AERI) subsidiary also has a
$125 million revolving credit facility with a group of banks. The credit
facility matures in August 2003, with quarterly commitment reductions of $5
million starting in September 2001, which increase to $6.25 million starting
September 2002. Interest under the credit facility is based on the Prime Rate
plus a spread of 0% to 1/4% or LIBOR plus a spread of 1/2% to 1%, at the option
of AERI. There is a fee of .20% to .375% (as of October 2, 1998 - .20%) on the
unborrowed portion of the credit facility. The spread and fee margins are based
on certain financial ratios as defined. As of October 2, 1998 there were no
borrowings outstanding under this credit facility.
The 6.75% and 7.0% notes may be redeemed, in whole or in part, at any time at
the Company's option. The redemption price equals the greater of (i) 100% of the
principal amount or (ii) an amount based on the discounted present value of
scheduled principal and interest payments, as defined.
The 6.79% note is payable in $25 million annual installments beginning January
1999, with a final maturity of January 2003.
The 7.25% notes and debentures may be exchanged, in whole or in part, at the
option of the holder, for 7.10% senior notes due December 2006. The Company has
the right to redeem these notes and debentures, at par, upon being presented
with a notice of conversion or at any time after June 2004.
The 10-5/8% senior notes require a sinking fund payment of $50 million in August
1999 with a final maturity in August 2000.
The 10% subordinated exchangeable debentures and notes may be exchanged at any
time in whole or part, at the option of the holder, for 10-5/8% senior notes due
August 2000 at an exchange ratio of .93.
S-16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. BORROWINGS: (Continued)
Installment payments on the 6.79% and 10-5/8% notes due in fiscal 1999 have been
classified as non-current in the accompanying consolidated balance sheet as the
Company has the ability and intent to finance the repayments through additional
borrowings under the Credit Agreement. Accrued interest on borrowings totaling
$30.4 million at October 2, 1998 and $27.7 million at October 3, 1997 is
included in current liabilities as "Other accrued expenses."
The Company utilizes derivative financial instruments, such as interest rate
swap and forward exchange agreements to manage changes in market conditions
related to debt obligations and foreign currency exposures. At October 2, 1998
and October 3, 1997, the Company has $219 million and $197 million,
respectively, of interest rate exchange agreements fixing the rate on a like
amount of borrowings under the Credit Agreement at an average effective rate of
6.4% and 6.7%, respectively. As of October 2, 1998, interest rate exchange
agreements remain in effect for periods ranging from 1 to 28 months. All
interest rate swaps are accounted for as hedges under the accrual method with
the net payments under the terms of the swap agreements recognized currently in
income as a component of interest expense. Gains or losses on the termination of
interest rate swaps are deferred and amortized over the remaining life of the
terminated swap agreement. Interest rate swaps, for which the designated debt
instrument being hedged is extinguished, are accounted for on the fair value
method from the extinguishment date, if not concurrently terminated, with gains
and losses recognized currently in the consolidated statement of income. The
Company has a $24 million foreign currency swap agreement maturing in August
2000. This swap hedges the currency exposure of its net investment in Spain and
accordingly, gains and losses on the currency swap are recorded as a component
of the cumulative translation adjustment. The counterparties to the above
derivative agreements are major international banks. The Company continually
monitors its positions and credit ratings of its counterparties, and does not
anticipate nonperformance by the counterparties.
The following summarizes the fair value of the Company's financial instruments
as of October 2, 1998 and October 3, 1997. The fair values were computed using
market quotes, if available, or based on discounted cash flows using market
interest rates as of the end of the respective periods.
<TABLE>
<CAPTION>
1998 1997
------------------------------ ---------------------------
Carrying Fair Carrying Fair
Asset/(Liability) in millions Amount Value Amount Value
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Long-term debt $(1,729.6) $(1,793.0) $(1,232.5) $(1,263.5)
Interest rate swap agreements - (3.9) - (0.7)
Foreign currency swap agreement 2.4 1.1 3.6 2.8
</TABLE>
The Credit Agreement contains restrictive covenants which provide, among other
things, limitations on liens, dispositions of material assets and repurchases of
capital stock. The terms of the Credit Agreement also require that the Company
maintain certain specified minimum ratios of cash flow to fixed charges and to
total borrowings and certain minimum levels of net worth (as defined). At
October 2, 1998, the Company was in compliance with all of these covenants.
Assets with a net book value of $2.2 million at October 2, 1998, are subject to
liens under several of the Company's borrowing arrangements.
S-17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. BORROWINGS: (Continued)
Long-term borrowings maturing in the next five years, excluding capital lease
obligations, are as follows:
Amount
(in thousands)
--------------
1999 $ 23,962
2000 109,074
2001 57,020
2002 75,290
2003 25,259
NOTE 5. EMPLOYEE PENSION AND PROFIT SHARING PLANS:
In the United States, the Company maintains qualified contributory and
non-contributory retirement plans for eligible employees, with Company
contributions to the plans based on earnings performance or salary level.
Qualified non-contributory profit sharing plans are maintained by certain
businesses, with annual contributions determined by management. The Company has
a non-qualified stock unit retirement plan for certain employees. The total
expense of the above plans for fiscal 1998, 1997 and 1996 was $15.7 million,
$15.5 million and $15.7 million, respectively. During fiscal 1998, 1997 and
1996, the Company contributed 4,161 shares, 5,985 shares and 97,425 shares,
respectively, of Common Stock, Class A to these plans to partially fund
previously accrued obligations. In addition, during fiscal 1998, 1997 and 1996,
the Company contributed to the stock unit retirement plan 163,873 stock units,
363,555 stock units and 314,814 stock units, respectively, which are convertible
into Common Stock, Class B, in satisfaction of its accrued obligations. Shares
contributed to these plans have been adjusted to reflect the stock split
described in Note 7. The value of the stock units was credited to capital
surplus. The Company participates in various multi-employer union administered
pension plans. Contributions to these plans, which are primarily defined benefit
plans, result from contractual provisions of labor contracts and were $14.8
million, $14.4 million and $13.6 million for fiscal 1998, 1997 and 1996,
respectively.
Additionally, the Company maintains several contributory and non-contributory
defined benefit pension plans, primarily in Canada and the United Kingdom. The
projected benefit obligation of these plans as of October 2, 1998, which is
fully funded, was $51.8 million. Pension expense related to these plans is not
material to the consolidated financial statements.
NOTE 6. INCOME TAXES:
The Company accounts for income taxes under the provisions of SFAS No. 109,
"Accounting for Income Taxes." SFAS No. 109 requires deferred tax assets or
liabilities to be recognized for the estimated future tax effects of temporary
differences between the financial reporting and tax bases of the Company's
assets and liabilities based on the enacted tax law and statutory tax rates
applicable to the periods in which the temporary differences are expected to
affect taxable income. In September 1998 and June 1996 the Company settled
certain prior years' tax returns.
S-18
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. INCOME TAXES: (Continued)
The components of income before income taxes, including the effects of other
expense/income (See Note 2), by source of income are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
United States $ 188,132 $ 221,710 $ 172,572
Non-U.S 27,640 (5,863) 6,587
- ---------------------------------------------------------------------------------------------------------------------------------
$ 215,772 $ 215,847 $ 179,159
=================================================================================================================================
</TABLE>
The provision for income taxes, including the effects of other expense/income
(See Note 2), consists of:
<TABLE>
<CAPTION>
1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C>
Current:
Federal $ 51,001 $ 60,370 $ 73,919
State and local 7,643 13,366 17,335
Non-U.S 11,876 7,052 3,281
- ---------------------------------------------------------------------------------------------------------------------------------
70,520 80,788 94,535
- ---------------------------------------------------------------------------------------------------------------------------------
Deferred:
Federal 9,369 (8,027) (23,210)
State and local 2,171 (3,494) (5,379)
Non-U.S 2 472 985
- ---------------------------------------------------------------------------------------------------------------------------------
11,542 (11,049) (27,604)
- ---------------------------------------------------------------------------------------------------------------------------------
$ 82,062 $ 69,739 $ 66,931
=================================================================================================================================
</TABLE>
The provision for income taxes varies from the amount determined by applying the
United States Federal statutory rate to pre-tax income as a result of the
following:
<TABLE>
<CAPTION>
1998 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------------
(% of pre-tax income)
<S> <C> <C> <C>
United States statutory income tax rate 35.0% 35.0% 35.0%
Increase (decrease) in taxes, resulting from:
State income taxes, net of Federal tax benefit 3.9 3.0 4.3
Permanent book/tax difference related to the sale of Spectrum -- (11.3) --
Permanent book/tax differences, primarily
resulting from purchase accounting 3.6 8.4 2.1
Favorable impact of tax settlements (3.2) -- (2.8)
Tax credits and other (1.3) (2.8) (1.2)
- ---------------------------------------------------------------------------------------------------------------------------------
Effective income tax rate 38.0% 32.3% 37.4%
=================================================================================================================================
</TABLE>
S-19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. INCOME TAXES: (Continued)
As of October 2, 1998 and October 3, 1997, the components of deferred taxes are
as follows:
1998 1997
-------- --------
(in thousands)
Deferred tax liabilities:
Property and equipment $ 70,379 $ 57,720
Inventory 5,428 5,066
Investments 13,520 15,709
Other 11,061 11,928
-------- --------
Gross deferred tax liability 100,388 90,423
-------- --------
Deferred tax assets:
Insurance $ 8,694 $ 11,815
Employee compensation and benefits 41,318 36,077
Accruals and allowances 29,917 33,159
Intangibles 5,458 4,147
Other 1,943 2,414
-------- --------
Gross deferred tax asset 87,330 87,612
-------- --------
Net deferred tax liability $ 13,058 $ 2,811
======== ========
NOTE 7. CAPITAL STOCK:
There are two classes of common stock authorized and outstanding, Common Stock,
Class A and Common Stock, Class B. Each Class A and Class B Share is entitled to
one vote on all matters submitted to shareholders, voting together as a single
class except where otherwise required by law. Each Class A Share is entitled to
ten times the dividends and other distributions payable on each Class B Share.
Class B Shares may be held only by employees, directors and their family
members, and upon termination of employment each Class B Share is automatically
converted into 1/10 of a Class A Share.
On June 15, 1998, the Company completed a cash tender offer (the "Tender Offer")
for outstanding shares of its Class A common stock at a price of $500 per share
(pre-split). Pursuant to the Tender Offer, the Company repurchased 1,062,485
shares (pre-split) for an aggregate purchase price of $531.2 million plus
transaction costs. The purchase price was financed through additional borrowings
under the Credit Agreement.
On August 11, 1998, the Company's Board of Directors declared, effective
September 1, 1998, a three-for-one split of the Class B and Class A Common Stock
effected in the form of a stock dividend to shareholders of record on September
1, 1998. The stated par value of $.01 per share of Class B and Class A common
stock was not changed.
During fiscal 1996, the Company redeemed, at par, all its outstanding Series C
Preferred Stock for $6.4 million in cash and the issuance of $8.6 million of
Common Stock, Class B.
S-20
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. CAPITAL STOCK: (Continued)
As of October 2, 1998, the Company's stock option plans provided for the
issuance of up to 134,584,926 options to purchase shares of Common Stock, Class
B. The Company granted installment stock purchase opportunities under its stock
ownership program in fiscal 1998, 1997 and 1996 which provide for the purchase
of shares of Common Stock, Class B. Installment stock purchase opportunities are
exercisable in six annual installments with the exercise price of each purchase
opportunity equal to the current fair market value at the time the purchase
opportunity is granted. The Company has a program to grant non-qualified stock
options to additional qualified employees on an annual basis. Under the program,
options vest after three years and may be exercised for a period of three years
after vesting. The exercise price of each option is equal to the current fair
market value at the date of grant. In fiscal 1998, 1997 and 1996, the Company
granted cumulative installment stock purchase opportunities under its existing
stock ownership program which are similar to the installment stock purchase
opportunities discussed above; however, any purchase opportunities not exercised
during an installment period may be carried forward to subsequent installment
periods. The Company has a Deferred Payment Program which enables holders of
non-qualified stock options and installment purchase opportunities to defer a
portion of the total amount required to exercise the options. Interest currently
accrues on deferred payments at 8.25% compounded annually and is payable when
the deferred payments are due. At October 2, 1998 and October 3, 1997, the
receivables from individuals under the Deferred Payment Program were $35.7
million and $26.6 million, respectively, which are reflected as a reduction of
Shareholders' Equity. The Company holds as collateral all shares purchased in
which any portion of the purchase price is financed under the Deferred Payment
Program until the deferred payment is received from the individual by the
Company. Status of the options under the various ownership programs, adjusted to
reflect the three-for-one stock split, follows:
<TABLE>
<CAPTION>
Number of Shares Average Option Price
-------------------------------------------- -----------------------------
1998 1997 1996 1998 1997 1996
------------ ------------- ------------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 26,832,636 31,103,952 30,321,597 $4.74 $4.06 $3.49
Options granted 9,634,800 10,371,000 12,399,300 $7.47 $5.54 $4.92
Options exercised 7,228,446 7,289,349 5,814,426 $4.43 $3.23 $2.94
Canceled/Forfeited 4,537,785 7,352,967 5,802,519 $5.27 $4.31 $3.89
Outstanding at end of year 24,701,205 26,832,636 31,103,952 $5.78 $4.74 $4.06
Exercisable at end of year 81,840 193,176 1,619,160 $1.52 $2.96 $1.24
</TABLE>
The exercise prices on outstanding options at October 2, 1998 range from $1.44
to $10.70 with a weighted average remaining life of approximately three years.
The Company has reserved 26,805,387 shares of Common Stock, Class B at October
2, 1998 for issuance of stock pursuant to its employee ownership and benefit
programs.
The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," and related interpretations in accounting for its
stock option plans. Accordingly, no compensation expense has been recognized
related to the plans described above. If compensation cost for these plans had
been determined using the fair-value method prescribed by SFAS No. 123,
"Accounting for Stock Based Compensation," the Company's net income and earnings
per share would have been reduced to the pro forma amounts indicated below.
S-21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. CAPITAL STOCK: (Continued)
1998 1997 1996
---- ---- ----
Net Income
As reported $129,236 $146,108 $109,470
Pro forma $125,658 $143,570 $108,199
Earnings per share
As reported:
Basic $1.14 $1.16 $0.82
Diluted $1.06 $1.10 $0.77
Pro forma:
Basic $1.10 $1.14 $0.81
Diluted $1.03 $1.08 $0.77
Because the SFAS No. 123 method of accounting has not been applied to options
granted prior to fiscal 1996, the resulting pro forma compensation cost may not
be representative of that to be expected in future years.
The weighted average fair value of options granted in fiscal 1998, 1997 and 1996
was $1.12, $0.88 and $0.82 per option, respectively, adjusted to reflect the
three-for-one stock split. As the Company's stock is not publicly traded, the
fair value of each option was estimated on the grant date using the minimum
value method (which excludes a volatility assumption), with the following
assumptions:
1998 1997 1996
------------ ------------- ------------
Risk-free interest rate 5.3 - 5.9% 5.2 - 6.1% 5.4 - 5.9%
Expected life in years 3.2 3.2 3.5
Dividend yield 0% 0% 0%
The Company and its shareholders are parties to an Amended and Restated
Shareholders' Agreement. Pursuant to this agreement, holders of common stock who
are individuals, upon their death, complete disability or normal retirement, may
cause the Company to repurchase up to 30% of their shares for cash at the then
appraised value, but only to the extent such repurchase by the Company is
permitted under the Credit Agreement. Under this Credit Agreement restriction,
repurchases of capital stock cannot exceed an aggregate limit, which amount was
$20 million at October 2, 1998 and $23.3 million at October 3, 1997. Pursuant to
interpretations of its rules related to "Redeemable Preferred Stock," the
Securities and Exchange Commission has requested that these amounts representing
the Company's potential repurchase of its Common Stock be presented as a
separate item and accordingly, the Company's Shareholders' Equity reflects this
reclassification in the consolidated financial statements. Also, the
Shareholders' Agreement provides that the Company may, at its option, repurchase
shares from individuals who are no longer employees. Such repurchased shares may
be resold to others including replacement personnel at prices equal to or
greater than the repurchase price. Generally, payment for shares repurchased can
be, at the Company's option, in cash or subordinated installment notes, which
are subordinated to all other indebtedness of the Company. Interest on these
notes is payable semi-annually and principal payments are made annually over
varying periods not to exceed ten years. The noncurrent portion of these notes
($44.1 million as of October 2, 1998 and $50.9 million as of October 3, 1997) is
included in the consolidated balance sheets as "Other Noncurrent Liabilities"
and the current portion of these notes ($26.0 million as of October 2, 1998 and
$19.9 million as of October 3, 1997) is included in the consolidated balance
sheets as "Accounts Payable."
S-22
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8. COMMITMENTS AND CONTINGENCIES:
1998 1997
- ------------------------------------------------------------------------
(in thousands)
Facilities under capital leases $8,958 $10,992
Less-accumulated amortization 7,686 8,961
- ------------------------------------------------------------------------
$1,272 $ 2,031
========================================================================
Rental expense for all operating leases was $143.2 million, $129.7 million, and
$128.6 million for fiscal 1998, 1997 and 1996, respectively.
Following is a schedule of the future minimum rental commitments under all
noncancelable leases as of October 2, 1998:
Fiscal Year Operating Capital
- ------------------------------------------------------------------------------
(in thousands)
1999 $146,478 $848
2000 83,860 632
2001 72,595 255
2002 56,248 128
2003 50,103 59
Subsequent years 122,504 55
- ------------------------------------------------------------------------------
Total minimum rental obligations $531,788 1,977
==============================================================================
Less-amount representing interest 182
Present value of capital leases 1,795
Less-current portion 598
- ------------------------------------------------------------------------------
Noncurrent obligations under capital leases $1,197
==============================================================================
The Company has capital commitments of approximately $37 million at October 2,
1998 in connection with several long-term concession contracts. The Company is
party to certain claims and litigation arising in the ordinary course of
business. The Company believes it has meritorious defenses to these claims and
is of the opinion that adequate reserves have been provided for the ultimate
resolution of these matters.
S-23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9. ARAMARK SERVICES, INC. AND SUBSIDIARIES:
The following financial information has been summarized from the separate
consolidated financial statements of ARAMARK Services, Inc. (a wholly owned
subsidiary of ARAMARK Corporation) and the subsidiaries which it currently owns.
ARAMARK Services, Inc. is the borrower under the Credit Agreement and certain
other senior debt described in Note 4 and incurs the interest expense
thereunder. This interest expense is only partially allocated to all of the
other subsidiaries of ARAMARK Corporation.
1998 1997 1996
---------- ---------- ---------
(in thousands)
Revenues $3,656,571 $3,464,051 $3,200,388
Cost of services provided 3,422,640 3,256,787 3,024,136
Net income 40,842 20,690 15,503
1998 1997
----------- ----------
(in thousands)
Current assets $ 451,050 $ 407,978
Noncurrent assets 2,079,782 1,558,010
Current liabilities 545,406 507,179
Noncurrent liabilities 1,823,868 1,333,759
S-24
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10. QUARTERLY RESULTS (Unaudited):
The following table summarizes quarterly financial data for fiscal 1998
and 1997:
<TABLE>
<CAPTION>
Fiscal Quarter
------------------------------------------------------
1998 First Second Third Fourth(1) Year
- ------------------------------------------------------------------------------------------------------------------
(in thousands, except earnings per share)
<S> <C> <C> <C> <C> <C>
Revenues $1,590,661 $1,592,214 $ 1,634,325 $1,560,076 $6,377,276
Cost of services provided 1,441,708 1,461,334 1,478,760 1,378,895 5,760,697
Income before extraordinary item 30,077 18,658 37,169 47,806 133,710
Extraordinary item (2) - 1,559 2,915 - 4,474
Net income 30,077 17,099 34,254 47,806 129,236
Diluted earnings per share:
Income before extraordinary item $.23 $.14 $.30 $.49 $1.10
Net income $.23 $.13 $.27 $.49 $1.06
Fiscal Quarter
------------------------------------------------------
1997 First Second(3) Third Fourth(4) Year
- -------------------------------------------------------------------------------------------------------------------
(in thousands, except earnings per share)
Revenues $1,686,751 $1,458,017 $1,531,614 $1,634,035 $6,310,417
Cost of services provided 1,540,226 1,336,421 1,384,834 1,453,921 5,715,402
Net income 27,655 87,952 30,134 367 146,108
Diluted earnings per share:
Net income $.21 $.65 $.23 $ - $1.10
</TABLE>
(1) Fiscal 1998 fourth quarter results reflect charges relating to the
contribution of the Company's distributive business into a joint venture.
See Note 2.
(2) See Note 3.
(3) Fiscal 1997 second quarter results reflect the sale of Spectrum. See Note
2.
(4) Fiscal 1997 fourth quarter results reflect charges primarily related to
asset realization. See Note 2. Also, fiscal 1997 was a fifty-three week
year with the fourth quarter being a fourteen week period.
In the first and second fiscal quarters, within the Food and Support Services
segment there is a lower level of activity at the higher margin leisure and
recreational food service operations which is partly offset by increased
activity in the educational market. In addition, there is a seasonal increase in
volume of directly marketed work clothing during the first quarter. Whereas in
the third and fourth fiscal quarters, there is a significant increase at leisure
and recreational accounts which is partially offset by the effect of summer
closings in the educational market.
S-25
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11. BUSINESS SEGMENTS:
The Company provides or manages services in the following business segments:
Food and Support Services - Food, refreshment, specialized dietary and support
services, including maintenance and housekeeping, provided to business,
educational, governmental and medical institutions and in recreational and other
facilities serving the general public. Fiscal 1997 operating income includes
charges of approximately $30 million related primarily to asset realization. See
Note 2.
Uniform and Career Apparel - Rental of personalized work apparel and linens for
business and institutions on a contract basis and the direct marketing of work
clothing, safety equipment and accessories. Fiscal 1997 operating income
includes a $9 million gain on the sale of an investment and charges of
approximately $6 million related primarily to asset realization. See Note 2.
Fiscal 1996 operating income includes the $37 million gain on the sale of a
division and charges of approximately $5 million related to changes in estimates
regarding asset realization and environmental matters. See Note 2.
Health and Educational Resources - Provider of educational and child care
services at both company operated and customer facilities. In 1997 the Company
sold an approximate 83% interest in Spectrum, a provider of general management
and specialized services to emergency rooms, and other hospital specialties, and
medical services to correctional institutions. See Note 2. The Spectrum
operations contributed 29% and 63% of segment revenues and 4% and 32% of segment
operating income in fiscal 1997 and 1996, respectively. Fiscal 1997 operating
income includes the gain of $72 million from the sale of Spectrum. Fiscal 1996
operating income includes charges of approximately $13 million for insurance
claims and real estate exposures. See Note 2.
Distributive - Wholesale distribution of magazines and other published materials
to retail locations patronized by the general public. Distributive Segment
operating results were severely impacted by higher operating costs related to
servicing customers and reduced margins resulting from increased competition and
consolidation in the magazine wholesale distribution industry. Fiscal 1997
includes charges of approximately $34 million related to asset realization. See
Note 2. In July 1998, the Company contributed substantially all of the
Distributive segment operations into a joint venture and recorded a $5 million
pre-tax charge in connection with the transaction. See Note 2.
Revenues by segment are substantially comprised of services to unaffiliated
customers and clients. Operating income reflects expenses directly related to
individual segments plus an allocation of expenses applicable to more than one
segment. General corporate expenses include expenses not specifically
identifiable with an individual segment. Fiscal 1998 General Corporate expenses
include costs related to several corporate development and strategic
initiatives. Fiscal 1996 General Corporate expenses reflect reserves established
for asset realization, legal and other matters. See Note 2. Direct selling
expenses are approximately 1% of revenues for fiscal 1998, 1997 and 1996.
Corporate assets consist principally of goodwill not allocable to any individual
segment and other noncurrent assets.
S-26
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11. BUSINESS SEGMENTS: (Continued)
<TABLE>
<CAPTION>
Revenues Depreciation and Amortization
------------------------------------------ ------------------------------------
1998 1997 1996 1998 1997 1996
----------- ----------- --------- -------- ------- --------
(in millions)
<S> <C> <C> <C> <C> <C> <C>
Food and Support Services $4,342.3 $4,131.4 $3,816.0 $102.8 $100.2 $96.5
Uniform and Career Apparel 1,308.4 1,252.2 1,049.2 60.1 58.4 52.2
Health and Educational Resources 360.8 466.0 781.0 18.8 18.2 19.6
Distributive 365.8 460.8 476.3 12.0 12.3 8.3
Corporate - - - 2.1 2.6 6.2
-------- -------- -------- ------ ------ -------
Total $6,377.3 $6,310.4 $6,122.5 $195.8 $191.7 $182.8
======== ======== ======== ====== ====== =======
</TABLE>
<TABLE>
<CAPTION>
Operating Income
------------------------------------------------------
(in millions)
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Food and Support Services $ 229.6 $ 170.4 $ 166.9
Uniform and Career Apparel 116.4 124.0 140.2
Health and Educational Resources 31.5 103.5 26.8
Distributive (20.3) (49.6) (6.0)
------ ------ ------
357.2 348.3 327.9
General Corporate and Other Expenses (24.1) (16.4) (32.7)
------ ------ ------
Operating Income 333.1 331.9 295.2
Interest Expense, Net (117.3) (116.0) (116.0)
------ ------ ------
Income Before Income Taxes
and Extraordinary Item $ 215.8 $ 215.9 $ 179.2
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Capital Expenditures Identifiable Assets
--------------------------------- --------------------------------------
1998 1997 1996 1998 1997 1996
------ ------ ------ ------ ------ -------
(in millions)
<S> <C> <C> <C> <C> <C> <C>
Food and Support Services $ 97.7 $ 97.3 $99.5 $1,327.3 $1,258.8 $1,286.4
Uniform and Career Apparel 47.1 66.7 57.7 1,053.3 1,042.0 1,000.8
Health and Educational Resources 24.1 36.0 39.2 219.8 210.4 308.3
Distributive 12.0 1.5 4.6 28.7 138.0 174.1
Corporate .7 .5 1.0 112.2 104.4 75.2
------ ------ ------ -------- -------- --------
$181.6 $202.0 $202.0 $2,741.3 $2,753.6 $2,844.8
====== ====== ====== ======== ======== ========
</TABLE>
Most services are provided in the United States, with operations also being
conducted in Belgium, Canada, the Czech Republic, Germany, Hungary, Japan,
Korea, Mexico, Spain and the United Kingdom. The Company's non-U.S. operations
for each year contributed approximately 15% of total revenues and 10% of total
operating income (excluding the effect of other expense/income), and
identifiable assets for these operations were approximately 9% of the total.
S-27
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
ARAMARK CORPORATION
BALANCE SHEETS
OCTOBER 2, 1998 AND OCTOBER 3, 1997
(in thousands)
<TABLE>
<CAPTION>
ASSETS
------
1998 1997
------------- ------------
<S> <C> <C>
Current Assets:
Receivables $ 933 $ 1,186
Inventories 23 23
Prepayments 1,565 2,880
----------- -----------
Total current assets 2,521 4,089
----------- -----------
Property & Equipment, net 2,947 5,671
Investment in Subsidiaries 1,214,682 977,599
Notes Receivable from ARAMARK Services, Inc. -- 100,000
Other Assets 1,669 2,274
----------- -----------
$ 1,221,819 $ 1,089,633
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable $ 29,963 $ 22,238
Accrued expenses 24,689 14,924
----------- -----------
Total current liabilities 54,652 37,162
----------- -----------
Long-Term Borrowings 26,701 129,029
Other Noncurrent Liabilities 59,342 65,264
Payable to Subsidiaries 1,140,000 464,877
Common Stock Subject to Potential Repurchase Under
Provisions of Shareholders' Agreement 20,000 23,254
Shareholders' Equity (Deficit) Excluding Common Stock
Subject to Repurchase:
Class A common stock, par value $.01 25 20
Class B common stock, par value $.01 629 205
Earnings retained for use in the business (56,815) 394,090
Cumulative translation adjustment (2,715) (1,014)
Impact of potential repurchase feature of
common stock (20,000) (23,254)
----------- -----------
Total (78,876) 370,047
----------- -----------
$ 1,221,819 $ 1,089,633
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-28
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued)
ARAMARK CORPORATION
STATEMENTS OF INCOME
FOR THE FISCAL YEARS ENDED OCTOBER 2, 1998, OCTOBER 3, 1997 AND
SEPTEMBER 27, 1996
(in thousands)
<TABLE>
<CAPTION>
1998 1997 1996
------------ ---------- ----------
<S> <C> <C> <C>
Equity in Net Income of Subsidiaries $129,236 $146,108 $109,470
-------- -------- --------
Management Fee Income 34,853 35,342 49,677
-------- -------- --------
General and Administrative Expenses 24,885 27,320 39,425
-------- -------- --------
Interest (Income) Expense -
Intercompany interest income (5,568) (8,663) (8,477)
Interest expense 10,678 16,685 18,729
-------- -------- --------
Interest Expense, net 5,110 8,022 10,252
-------- -------- --------
Income before income taxes 134,094 146,108 109,470
Provision for Income Taxes 1,943 - -
-------- -------- --------
Income Before Extraordinary Item 132,151 146,108 109,470
Extraordinary Item Due to Early Extinguishments
of Debt (net of income taxes of $1,943 in 1998)
2,915 - -
-------- -------- --------
Net income $129,236 $146,108 $109,470
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-29
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued)
ARAMARK CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED OCTOBER 2, 1998, OCTOBER 3, 1997 AND
SEPTEMBER 27, 1996
(in thousands)
<TABLE>
<CAPTION>
1998 1997 1996
------------ ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 129,236 $ 146,108 $109,470
Equity in net income of subsidiaries (129,236) (146,108) (109,470)
Extraordinary item 2,915 - -
Other, primarily noncash working capital 256 (6,204) 445
--------- --------- --------
Net cash provided by (used in) operating activities 3,171 (6,204) 445
--------- --------- --------
Cash flows from investing activities:
Purchases of property and equipment (732) (469) (968)
Other (117) (322) 3,474
--------- --------- --------
Net cash provided by (used in) investing activities (849) (791) 2,506
--------- ---------- --------
Cash flows from financing activities:
Payment of long-term borrowings including
premiums (106,563) (32,160) (4,225)
Change in notes receivable from
ARAMARK Services, Inc. 100,000 - -
Change in intercompany payable to
subsidiaries 573,473 90,280 49,600
Redemption of preferred stock - - (6,359)
Proceeds from issuance of common stock 22,303 14,338 13,949
Repurchase of common stock (591,535) (65,463) (54,849)
Payment of preferred stock dividend - - (1,067)
--------- ---------- --------
Net cash provided by (used in) financing activities (2,322) 6,995 (2,951)
--------- ---------- --------
Change in cash $ - $ - $ -
========= ========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
S-30
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (Continued)
ARAMARK CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1.
These statements should be read in conjunction with the Company's
consolidated financial statements and notes thereto beginning on page S-3.
Property and equipment are stated at cost and are depreciated over their
estimated useful lives on a straight-line basis.
Other noncurrent liabilities consist primarily of deferred compensation and
subordinated installment notes arising from repurchases of common stock.
Note 2.
The Company has guaranteed certain debt obligations of ARAMARK Services,
Inc., its wholly-owned subsidiary, which totaled $1.7 billion on October 2,
1998. See Note 4 to the Company's consolidated financial statements.
S-31
<PAGE>
ARAMARK CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE FISCAL YEARS ENDED OCTOBER 2, 1998,
OCTOBER 3, 1997 AND SEPTEMBER 27, 1996
<TABLE>
<CAPTION>
Additions Reductions
-------------------------- -----------------------------
Balance, Acquisition Divestiture Deductions Balance,
Beginning of of Charged to of from End of
Description Fiscal Year Businesses Income Businesses Reserves(1) Fiscal Year
- ----------- ----------- ---------- ------ ---------- ----------- -----------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Fiscal Year 1998
- ----------------
Reserve for doubtful accounts,
advances & current notes receivable $23,158 $ 779 $12,209 $ 3,739 $ 7,950 $24,457
======= ======= ======= ========= ======= =======
Fiscal Year 1997
- ----------------
Reserve for doubtful accounts,
advances & current notes receivable $16,973 $ 141 $16,287 $ 1,988 $ 8,255 $23,158
======= ======= ======= ========= ======= =======
Fiscal Year 1996
- ----------------
Reserve for doubtful accounts,
advances & current notes receivable $15,996 $ 831 $ 6,875 $ -- $ 6,729 $16,973
======= ======= ======= ========= ======= =======
</TABLE>
(1) Allowances granted and amounts determined not to be collectible.
S-32
<PAGE>
INDEX TO EXHIBITS
3.1 Restated Certificate of Incorporation is incorporated by
reference to the Company'squarterly report on Form 10-Q for
the fiscal quarter ended July 3, 1998
3.2 Corporate By-Laws, as amended, are incorporated by reference
to the Company's quarterly report on Form 10-Q for the fiscal
quarter ended July 3, 1998
3.3 Amendment to By-Laws dated November 10, 1998
4.1 Amended and Restated Stockholders' Agreement is incorporated
by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 1994
4.2 Amended and Restated Registration Rights Agreement is
incorporated by reference to the Company's quarterly report on
Form 10-Q for the fiscal quarter ended April 1, 1988
Long-term debt instruments authorizing debt which does not
exceed 10% of the total consolidated assets of the Company are
not filed herewithin but will be furnished on request of the
Commission
10.1 Restated Employment Agreement dated November 13, 1991 with
Joseph Neubauer is incorporated by reference to the Company's
Annual Report on Form 10-K for the fiscal year ended September
27, 1991
10.3 Agreement relating to employment and post-employment
competition dated May 6, 1986 with James E. Ksansnak is
incorporated by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended September 29, 1989
10.4 Agreement relating to employment and post-employment
competition dated October 4, 1991 with William Leonard is
incorporated by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended October 1, 1993
10.5 Agreement relating to employment and post-employment
competition dated December 19, 1983 with Martin W. Spector is
incorporated by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended September 29, 1989
10.6 Agreement relating to employment and post-employment
competition dated June 7, 1993 with L. Frederick Sutherland is
incorporated by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended September 27, 1996
10.8 Credit and Guaranty Agreement dated January 7, 1998 and
amendments thereto dated May 7, 1998 and September 10, 1998
12 Ratio of Earnings to Fixed Charges
21 Subsidiaries of Registrant
23 Consent of Arthur Andersen LLP, Independent Public Accountants
24 Powers of Attorney
27 Financial Data Schedule
<PAGE>
November 10, 1998
Amendment to Section 2 of Article II of BY-LAWS
The following paragraphs shall be added to Section 2:
Nominations of persons for election to the Board and the proposal of
business to be transacted by the stockholders may be made at an annual meeting
of stockholders (a) pursuant to the Corporation's notice with respect to such
meeting, (b) by or at the direction of the Board or (c) by any stockholder of
record of the Corporation who was a stockholder of record at the time of the
giving of the notice provided for in the following paragraph, who is entitled to
vote at the meeting and who has complied with the notice procedures set forth in
this section.
For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (c) of the foregoing
paragraph, (1) the stockholder must have given timely notice thereof in writing
to the Secretary of the Corporation, (2) such business must be a proper matter
for stockholder action under the General Corporation Law of the State of
Delaware, (3) if the stockholder, or the beneficial owner on whose behalf any
such proposal or nomination is made, has provided the Corporation with a
Solicitation Notice, as that term is defined in subclause (c)(iii) of this
paragraph, such stockholder or beneficial owner must, in the case of a proposal,
have delivered a proxy statement and form of proxy to holders of at least the
percentage of the Corporation's voting shares required under applicable law to
carry any such proposal, or, in the case of a nomination or nominations, have
delivered a proxy statement and form of proxy to holders of a percentage of the
Corporation's voting shares reasonably believed by such stockholder or
beneficial holder to be sufficient to elect the nominee or nominees proposed to
be nominated by such stockholder, and must, in either case, have included in
such materials the Solicitation Notice and (4) if no Solicitation Notice
relating thereto has been timely provided pursuant to this section, the
stockholder or beneficial owner proposing such business or nomination must not
have solicited a number of proxies sufficient to have required the delivery of
such a Solicitation Notice under this section. To be timely, a stockholder's
notice shall be delivered to the Secretary at the principal executive offices of
the Corporation not less than 45 days prior to the first anniversary (the
"Anniversary") of the date on which the Corporation first mailed its proxy
materials for the preceding year's annual meeting of stockholders; provided,
however, that if the date of the annual meeting is advanced more than 30 days
prior to or delayed by more than 30 days after the anniversary of the preceding
years annual meeting, notice by the stockholder to be timely must be so
delivered not later than the close of business on the later of (i) the 90th day
prior to such annual meeting or (ii) the 10th day following the day on which
public announcement of the date of such meeting is first made. Such
stockholder's notice shall set forth (a) as to each person whom the stockholder
proposes to nominate for election or reelection as a director all information
relating to such person as would be required to be disclosed in solicitations of
proxies for the election of such nominees as directors pursuant to Regulation
14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and such person's written consent to serve as a director if elected; (b) as to
any other business that the stockholder proposes to bring before the meeting, a
brief description of such business, the reasons for conducting such business at
the meeting and any material interest in such business of such stockholder and
the beneficial owner, if any, on whose behalf the proposal is made; (c) as to
the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (i) the name and address of such
stockholder, as they appear on the Corporation's books, and of such beneficial
owner, (ii) the class and number of shares of the record by such stockholder and
such beneficial owner, and (iii) whether either such stockholder or beneficial
owner intends to deliver a proxy statement and form of proxy to holders of, in
the case of a Corporation that are owned beneficially and of proposal, at least
<PAGE>
the percentage of the Corporation's voting shares required under applicable law
to carry the proposal or, in the case of a nomination or nominations, a
sufficient number of holders of the Corporation's voting shares to elect such
nominee or nominees (an affirmative statement of such intent, a "Solicitation
Notice").
Only persons nominated in accordance with the procedures set forth in
this Section 2 shall be eligible to serve as directors and only such business
shall be conducted at an annual meeting of stockholders as shall have been
brought before the meeting in accordance with the procedures set forth in this
section. The chair of the meeting shall have the power and the duty to determine
whether a nomination or any business proposed to be brought before the meeting
has been made in accordance with the procedures set forth in these Bylaws and,
if any proposed nomination or business is not in compliance with these Bylaws,
to declare that such defective proposed business or nomination shall not be
presented for stockholder action at the meeting and shall be disregarded.
Notwithstanding the foregoing provisions of this Section 2, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to matters set forth
in this Section 2. Nothing in this Section 2 shall be deemed to affect any
rights of stockholders to request inclusion of proposals in the corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act.
<PAGE>
EXHIBIT 10.8
CREDIT AND GUARANTY AGREEMENT
CONFORMED COPY
$1,400,000,000
CREDIT AND GUARANTY AGREEMENT
dated as of
January 7, 1998
among
ARAMARK SERVICES, INC.,
ARAMARK UNIFORM SERVICES GROUP, INC.,
ARAMARK CORPORATION,
as Parent Guarantor
THE BANKS LISTED HEREIN
and
THE CHASE MANHATTAN BANK
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agents
<PAGE>
TABLE OF CONTENTS
-------------
<TABLE>
<CAPTION>
PAGE
----
ARTICLE 1
DEFINITIONS
<S> <C> <C>
SECTION 1.01. Definitions...............................................................................1
SECTION 1.02. Accounting Terms and Determinations......................................................16
SECTION 1.03. Types of Borrowings......................................................................16
ARTICLE 2
THE LOANS
SECTION 2.01. Commitments to Lend......................................................................17
SECTION 2.02. Notice of Committed Borrowings...........................................................17
SECTION 2.03. Money Market Borrowings..................................................................18
SECTION 2.04. Swingline Advances.......................................................................21
SECTION 2.05. Notice to Banks; Funding of Loans........................................................21
SECTION 2.06. Maturity of Loans........................................................................22
SECTION 2.07. Notes....................................................................................22
SECTION 2.08. Interest.................................................................................23
SECTION 2.09. Facility Fees............................................................................28
SECTION 2.10. Reduction of Commitments.................................................................29
SECTION 2.11. Mandatory Termination of Commitments.....................................................31
SECTION 2.12. Optional Prepayments.....................................................................31
SECTION 2.13. Payments.................................................................................31
SECTION 2.14. Funding Losses...........................................................................32
SECTION 2.15. Withholding Tax Exemption................................................................32
ARTICLE 3
CONDITIONS
SECTION 3.01. Effectiveness............................................................................33
SECTION 3.02. Conditions to Borrowing..................................................................35
SECTION 3.03. Representation by Borrower...............................................................35
SECTION 3.04. Transitional Provisions..................................................................35
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power............................................................36
SECTION 4.02. Corporate and Governmental Authorization; No Contravention...............................36
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 4.03. Binding Effect...........................................................................37
SECTION 4.04. Financial Information....................................................................37
SECTION 4.05. Litigation...............................................................................37
SECTION 4.06. Compliance with ERISA....................................................................37
SECTION 4.07. Environmental Matters....................................................................38
SECTION 4.08. Taxes....................................................................................38
SECTION 4.09. Compliance with Laws.....................................................................38
SECTION 4.10. Not an Investment Company................................................................39
SECTION 4.11. Full Disclosure..........................................................................39
ARTICLE 5
COVENANTS
SECTION 5.01. Information..............................................................................39
SECTION 5.02. Payment of Obligations...................................................................42
SECTION 5.03. Maintenance of Property; Insurance.......................................................42
SECTION 5.04. Conduct of Business and Maintenance of Existence.........................................42
SECTION 5.05. Inspection of Property, Books and Records................................................43
SECTION 5.06. Maintenance of Stock of Borrowers........................................................43
SECTION 5.07. Negative Pledge..........................................................................43
SECTION 5.08. Consolidations, Mergers and Sales of Assets..............................................44
SECTION 5.09. Fixed Charge Coverage....................................................................45
SECTION 5.10. Debt Coverage............................................................................45
SECTION 5.11. Minimum Consolidated Net Worth...........................................................45
SECTION 5.12. Transactions with Affiliates.............................................................45
SECTION 5.13. Use of Proceeds..........................................................................45
SECTION 5.14. Restricted Payments......................................................................46
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Default........................................................................46
SECTION 6.02. Notice of Default........................................................................49
ARTICLE 7
THE AGENTS
SECTION 7.01. Appointment and Authorization............................................................49
SECTION 7.02. Agents and Affiliates....................................................................49
SECTION 7.03. Action by Agents.........................................................................49
SECTION 7.04. Consultation with Experts................................................................50
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 7.05. Liability of Agents......................................................................50
SECTION 7.06. Indemnification..........................................................................50
SECTION 7.07. Credit Decision..........................................................................50
SECTION 7.08. Agency Fees..............................................................................51
SECTION 7.09. Successor Agents.........................................................................51
SECTION 7.10. Co-Agents................................................................................51
ARTICLE 8
CHANGES IN CIRCUMSTANCES AFFECTING FIXED RATE LOANS
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair.................................51
SECTION 8.02. Illegality...............................................................................52
SECTION 8.03. Increased Cost...........................................................................52
SECTION 8.04. Base Rate Loans Substituted for Affected Loans...........................................54
ARTICLE 9
GUARANTEE
SECTION 9.01. The Guarantee............................................................................55
SECTION 9.02. Guarantee Unconditional..................................................................55
SECTION 9.03. Discharge Only upon Payment in Full; Reinstatement in Certain
Circumstances..................................................................................56
SECTION 9.04. Waiver...................................................................................57
SECTION 9.05. Subrogation and Contribution.............................................................57
SECTION 9.06. Stay of Acceleration.....................................................................57
ARTICLE 10
JUDICIAL PROCEEDINGS
SECTION 10.01. Consent to Jurisdiction.................................................................57
SECTION 10.02. Enforcement of Judgments................................................................57
SECTION 10.03. Service of Process......................................................................58
SECTION 10.04. No Limitation on Service or Suit........................................................58
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Notices.................................................................................58
SECTION 11.02. No Waiver...............................................................................58
SECTION 11.03. Expenses; Documentary Taxes; Indemnification for Litigation.............................59
SECTION 11.04. Amendments and Waivers..................................................................59
</TABLE>
iii
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<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 11.05. Sharing of Set-offs.....................................................................60
SECTION 11.06. New York Law............................................................................60
SECTION 11.07. Successors and Assigns..................................................................60
SECTION 11.08. Collateral..............................................................................62
SECTION 11.09. Counterparts............................................................................62
SECTION 11.10. WAIVER OF JURY TRIAL....................................................................62
</TABLE>
Exhibit A - Note
Exhibit B - Opinion of Counsel of the
Borrowers and the Parent Guarantor
Exhibit C - Opinion of Special Counsel for the Agents
Exhibit D - Subsidiary Guaranty Agreement
Exhibit E - Management Equity Note
Exhibit F - Invitation for Money Market Quotes
Exhibit G - Money Market Quote
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CREDIT AND GUARANTY AGREEMENT
AGREEMENT dated as of January 7, 1998 (the "Agreement") among ARAMARK
SERVICES, INC., ARAMARK UNIFORM SERVICES GROUP, INC., ARAMARK CORPORATION, as
the Parent Guarantor, the BANKS party hereto and THE CHASE MANHATTAN BANK and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agents.
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein, have
the following meanings:
"Adjusted CD Rate" has the meaning set forth in Section 2.08(c).
"Administrative Agent" means The Chase Manhattan Bank, in its capacity
as administrative agent for the Banks hereunder, and its successors in such
capacity.
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in the form requested by the Administrative Agent
that is submitted to the Administrative Agent (with a copy to the other Agent
and the Borrowers) duly completed by such Bank.
"Affiliate" means any Person (other than the Parent Guarantor or a
Subsidiary) which controls, is controlled by or is under common control with the
Parent Guarantor. As used herein, the term "control" means possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agents" means The Chase Manhattan Bank and Morgan Guaranty Trust
Company of New York, in their respective capacities as agents for the Banks
hereunder, including, in the case of the Administrative Agent, its
administrative capacities hereunder.
"ARAMARK Services" means ARAMARK Services, Inc., a Delaware
corporation, and its successors.
<PAGE>
"ARAMARK Uniform" means ARAMARK Uniform Services Group, Inc., a
Delaware corporation, and its successors.
The "Article 8 Share" of any Borrower with respect to any amount
payable under Section 8.03 is the sum of (i) to the extent such amount is
properly allocable to Loans outstanding hereunder, the portion of such amount
properly allocable to the Loans outstanding to such Borrower and (ii) to the
extent such amount is not properly allocable to Loans outstanding hereunder,
50%.
"Assessment Rate" has the meaning set forth in Section 2.08(c).
"Bank" means each bank listed on the signature pages hereof as having a
Commitment, and (subject to Section 11.07) its successors and assigns, and
"Banks" means all of the foregoing.
"Base Overdue Interest Rate" has the meaning set forth in Section
2.08(b).
"Base Rate" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
"Base Rate Loan" means a Committed Loan made or to be made by a Bank as
a Base Rate Loan in accordance with the applicable Notice of Committed Borrowing
or pursuant to Article VIII.
"Benefit Arrangement" means at any time an employee benefit plan within
the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan
and which is maintained or otherwise contributed to by any member of the ERISA
Group.
"Borrower" means either ARAMARK Services or ARAMARK Uniform. References
to "the Borrower" in connection with any Loan or Borrowing are to the particular
Borrower to which such Loan is made or proposed to be made or by which such
Borrowing is made or proposed to be made. References to "Borrowers" shall mean
both ARAMARK Services and ARAMARK Uniform.
"Borrowing" has the meaning set forth in Section 1.03.
"Capital Lease" means a lease that would be capitalized on a balance
sheet of the lessee prepared in accordance with generally accepted accounting
principles.
"CD Base Rate" has the meaning set forth in Section 2.08(c).
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"CD Loan" means a Committed Loan made or to be made by a Bank as a CD
Loan in accordance with the applicable Notice of Committed Borrowing.
"CD Reference Banks" means Morgan Guaranty Trust Company of New York,
The Chase Manhattan Bank and First Union National Bank.
"Co-Agents" means the Banks identified on the signature pages hereof as
such, in their capacity as Co-Agents in respect of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
"Commitment" means, with respect to each Bank, the amount set forth
opposite the name of such Bank on the signature pages hereof (or, in the case of
an Assignee, the portion of the transferor Bank's Commitment assigned to such
Assignee pursuant to Section 11.07), in each case, as such amount may be reduced
from time to time pursuant to Section 2.10 or changed as a result of an
assignment pursuant to Section 11.07.
"Committed Loan" means a loan made or to be made by a Bank pursuant to
Section 2.01.
"Common Stock" means the Common Stock, par value $.01 per share, of the
Parent Guarantor.
"Consolidated Cash Flow Available for Fixed Charges" means for any
period EBITDA for such period, plus the excess (if any) of (x) the aggregate
amounts deducted in determining Consolidated Net Income for such period in
respect of rental expense over (y) the aggregate amounts included in determining
such Consolidated Net Income in respect of rental income (excluding any portion
of such rental expense or rental income in respect of leases having a term of
one year or less or in respect of Capital Leases).
"Consolidated Fixed Charges" means for any period (the "Applicable
Period") the sum of, without duplication, (i) the Consolidated Interest Charges
accrued in the Applicable Period, (ii) the excess (if any) of (x) the aggregate
amounts deducted in determining Consolidated Net Income for the Applicable
Period in respect of rental expense over (y) the aggregate amounts included in
determining such Consolidated Net Income in respect of rental income (excluding
any portion of such rental expense or rental income in respect of leases having
a term of one year or less or in respect of Capital Leases) and (iii) the
aggregate amount of dividends accrued in the Applicable Period in respect of
Series Preferred Stock.
"Consolidated Interest Charges" means for any period the aggregate
interest expense (net of interest income) of the Parent Guarantor and its
Consolidated Subsidiaries
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<PAGE>
for such period including, without limitation, (i) the portion of any obligation
under Capital Leases allocable to interest expense in accordance with generally
accepted accounting principles, and (ii) the portion of any debt discount or
premium arising at issuance of such debt that shall be amortized in such period.
"Consolidated Net Income" means for any period the consolidated net
income of the Parent Guarantor and its Consolidated Subsidiaries for such
period.
"Consolidated Net Worth" means at any date (the "Date of
Determination") without duplication (i) the consolidated shareholders' equity
(exclusive of the cumulative foreign currency translation adjustment as
determined in accordance with generally accepted accounting principles) of the
Parent Guarantor and its Consolidated Subsidiaries as of the Date of
Determination plus (ii) the principal amount of all Management Equity Notes
outstanding on the Date of Determination. For purposes of this definition,
consolidated shareholders' equity includes Common Stock subject to potential
repurchase pursuant to the Stockholders' Agreement, as reflected in the
consolidated financial statements of the Parent Guarantor and its Consolidated
Subsidiaries.
"Consolidated Subsidiary" means, at any date with respect to any
Person, any Subsidiary or other entity the accounts of which would be
consolidated with those of such Person in the consolidated financial statements
of such Person as of such date.
"Consolidated Tangible Assets" means at any date the consolidated
assets of the Parent Guarantor and its Consolidated Subsidiaries determined as
of such date less their consolidated goodwill, all determined as of such date.
"Contingent Liability" means any quantifiable obligation or liability
which is of a type required to be disclosed as a contingent liability in the
consolidated financial statements of the Parent Guarantor and its Consolidated
Subsidiaries in accordance with generally accepted accounting principles;
provided that Guarantees constitute Debt and not Contingent Liabilities.
"Credit" means any Loan or Swingline Advance.
"Debt" of any Person means, without duplication, (i) all obligations of
such Person for borrowed money, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of
such Person to pay the deferred purchase price of property or services, except
trade accounts payable arising in the ordinary course of business, (iv) all
obligations of such Person as lessee under Capital Leases, (v) all obligations
of such Person to purchase securities which arise out of or in connection with
the sale of the same or substantially similar securities, (vi) all noncontingent
obligations (and, for purposes of Section 5.07, all contingent obligations) of
such Person to reimburse any other Person for amounts which have been drawn
under
4
<PAGE>
a letter of credit or similar instrument, (vii) all Debt of others secured by a
Lien on any asset of such Person, whether or not such Debt is assumed by such
Person (such Debt to have a principal amount, for purposes of determinations
under this Agreement, not exceeding the net unencumbered carrying value of such
asset under generally accepted accounting principles), and (viii) all Debt of
others Guaranteed by such Person (such Debt to have a principal amount, for
purposes of determinations under this Agreement, not exceeding the portion of
such Debt Guaranteed by such Person).
"Default" means any condition or event that constitutes an Event of
Default or that with the giving of notice or lapse of time or both would, unless
cured or waived, become an Event of Default.
"Derivatives Obligations" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions.
"Disposition" means the sale, assignment, transfer or other disposition
by any Person of any asset or assets in a transaction or series of related
transactions.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City (or, when used with
reference to any Swingline Advance, in the city in which the lending Bank is
located) are authorized or required by law to close.
"Domestic Lending Office" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Borrowers and the Administrative Agent; provided that any Bank may
so designate separate Domestic Lending Offices for its Base Rate Loans, on the
one hand, and its CD Loans, on the other hand, in which case all references
herein to the Domestic Lending Office of such Bank shall be deemed to refer to
either or both of such offices, as the context may require.
"Domestic Loan" means a CD Loan or a Base Rate Loan.
"Domestic Reserve Percentage" has the meaning set forth in Section
2.08(c).
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<PAGE>
"EBITDA" means for any period Consolidated Net Income for such period,
excluding therefrom any extraordinary items of gain or loss, plus the aggregate
amounts deducted in determining Consolidated Net Income for such period in
respect of (i) income taxes, (ii) Consolidated Interest Charges and (iii)
depreciation, amortization and other similar non-cash charges. If the period for
which EBITDA is calculated includes a date on which the Parent Guarantor or any
of its Consolidated Subsidiaries made a Major Asset Acquisition or Major Asset
Sale, then EBITDA for such period shall be calculated on a pro forma basis as if
such acquisition or sale had occurred on the first day thereof.
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 3.01.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
the environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment including, without limitation, ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Parent Guarantor, any Subsidiary and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Parent Guarantor or any Subsidiary, are treated as a single employer under
Section 414 of the Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrowers and the Administrative Agent.
6
<PAGE>
"Euro-Dollar Loan" means a Committed Loan made or to be made as a
Euro-Dollar Loan pursuant to the applicable Notice of Committed Borrowing.
"Euro-Dollar Overdue Interest Rate" means a rate of interest determined
pursuant to Section 2.08(f).
"Euro-Dollar Reference Banks" means the principal London offices of
Morgan Guaranty Trust Company of New York, The Chase Manhattan Bank and First
Union National Bank.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor), for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Bank to United
States residents).
"Events of Default" has the meaning set forth in Section 6.01.
"Excess Contingent Liabilities" means at any time all Contingent
Liabilities of the Parent Guarantor and its Subsidiaries other than:
(a) surety or fidelity bonds or letters of credit issued on behalf of
the Parent Guarantor or any of its Subsidiaries issued in the normal course of
business of the Parent Guarantor or such Subsidiary, as the case may be; and
(b) other Contingent Liabilities in an aggregate amount not exceeding
$100,000,000.
"Excess Secured Debt" means secured Debt other than Debt secured by
Liens permitted pursuant to clauses (a) through (g) of Section 5.07.
"Existing Credit Agreement" means the Credit and Guaranty Agreement
dated as of May 29, 1996 among ARAMARK Services, the Parent Guarantor, the banks
party thereto and The Chase Manhattan Bank (formerly known as Chemical Bank) and
Morgan Guaranty Trust Company of New York, as agents, as in effect immediately
prior to the effectiveness of this Agreement.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on
7
<PAGE>
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published by the Federal
Reserve Bank of New York on the Domestic Business Day next succeeding such day,
provided that (i) if such day is not a Domestic Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next preceding
Domestic Business Day as so published on the next succeeding Domestic Business
Day, and (ii) if no such rate is so published on such next succeeding Domestic
Business Day, the Federal Funds Rate for such day shall be the average rate
quoted to The Chase Manhattan Bank on such day on such transactions as
determined by the Administrative Agent.
"Financing Documents" means this Agreement, the Notes and the
Subsidiary Guaranty Agreement.
"Fiscal Year" means a fiscal year of the Parent Guarantor.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or Money Market
Loans or any combination of the foregoing.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt (whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Debt of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part), provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives, by-products
and other hydrocarbons, or any substance having any constituent elements
displaying any of the foregoing characteristics.
"Interest Period" means:
(1) with respect to each Euro-Dollar Borrowing, the period commencing
on the date of such Euro-Dollar Borrowing and ending one, two, three or six
months thereafter, or (subject to paragraph (e) of Section 2.08) 12 months
thereafter, as the Borrower may elect in the applicable Notice of Borrowing;
provided that:
8
<PAGE>
(a) any Interest Period that would otherwise end on a day that
is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such day falls in another
calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period that begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
day of a calendar month; and
(c) no Interest Period applicable to any Euro-Dollar Loan
shall extend beyond a date on which a payment of principal of the Loans
is required (as of the commencement of such Interest Period) to be made
under Section 2.10(f) or Section 2.11, unless the aggregate principal
amount of the Loans represented by Base Rate Loans, or by Fixed Rate
Loans having Interest Periods that will expire on or before such date,
equal or exceeds the amount of such principal payment;
(2) with respect to each CD Borrowing, the period commencing on the
date of such Borrowing and ending 30, 60, 90 or 180 days thereafter, as the
Borrower may elect in the applicable Notice of Borrowing; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b) below) which would otherwise end on a
day which is not a Euro-Dollar Business Day shall be extended to the
next succeeding Euro-Dollar Business Day; and
(b) no Interest Period applicable to any CD Loan shall extend
beyond a date on which a payment of principal of the Loans is required
(as of the commencement of such Interest Period) to be made under
Section 2.10(f) or Section 2.11, unless the aggregate principal amount
of the Loans represented by Base Rate Loans, or by Fixed Rate Loans
having Interest Periods that will expire on or before such date, equal
or exceeds the amount of such principal payment;
(3) with respect to each Base Rate Borrowing, the period commencing on
the date of such Borrowing and ending on the next succeeding Quarterly Date;
provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b) below) which would otherwise end on a
day which is not a Euro-Dollar Business Day shall be extended to the
next succeeding Euro-Dollar Business Day; and
(b) any Interest Period which would otherwise end after the
Termination Date shall end on the Termination Date;
9
<PAGE>
(4) with respect to each Money Market Borrowing, the period commencing
on the date of such Borrowing and ending such number of days thereafter (but not
less than 7 nor more than 270 days) as the Borrower may elect in accordance with
Section 2.03; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b) below) which would otherwise end on a
day which is not a Euro-Dollar Business Day shall be extended to the
next succeeding Euro-Dollar Business Day; and
(b) no Interest Period applicable to any Money Market Loan
shall extend beyond a date on which a payment of principal of the Loans
is required (as of the commencement of such Interest Period) to be made
under Section 2.10(f) or Section 2.11, unless the aggregate principal
amount of the Loans represented by Base Rate Loans, or by Fixed Rate
Loans having Interest Periods that will expire on or before such date,
equal or exceeds the amount of such principal payment; and
(5) with respect to each Swingline Advance, the period commencing on
the date of such Swingline Advance and ending on the applicable Swingline
Maturity Date.
"Interest Rate Agreement" means an agreement under the International
Swap and Derivatives Association, Inc. Master Agreement (or any predecessor or
successor agreement), or any other interest rate swap agreement or similar
agreement between a Borrower and one or more of the Banks or any affiliates of
the Banks.
"Interest Rate Indebtedness" means the obligations of a Borrower to the
Banks or any of them in respect of the Interest Rate Agreements.
"Lending Office" means, as to any Bank, its Domestic Lending Office,
its Euro-Dollar Lending Office or its Money Market Lending Office, as the
context may require.
"Leverage Ratio" means on any date (the "Date of Determination") the
ratio of (A) EBITDA for the four most recent fiscal quarters of the Parent
Guarantor ended on or prior to the Date of Determination to (B) Total Borrowed
Funds as of the last day of the most recent fiscal quarter of the Parent
Guarantor ended on or prior to the Date of Determination.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
For the purpose of this Agreement, the Parent Guarantor or any of its
Subsidiaries shall be deemed to own subject to a Lien any asset that it has
acquired or holds subject to the interest of a vendor
10
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or lessor under any conditional sale agreement or other title retention
agreement relating to such asset or any Capital Lease.
"Loan" means a Domestic Loan or a Euro-Dollar or a Money Market Loan,
and "Loans" means Domestic Loans or Euro-Dollar Loans or Money Market Loans or
any combination of the foregoing.
"London Interbank Offered Rate" has the meaning set forth in Section
2.08(d).
"Major Asset Acquisition" means any acquisition for cash or other
consideration by the Parent Guarantor or any of its Subsidiaries, or any series
of such acquisitions of (a) any asset, (b) any group of related assets or (c)
any shares of capital stock or any other ownership interest in any Person;
provided that in the case of any such acquisition, or such series of
acquisitions, the aggregate of all consideration (including cash and the fair
market value (as certified by a Principal Officer of the Parent Guarantor) of
all other consideration paid by the Parent Guarantor or any of its
Subsidiaries) for or in respect of such acquisition, or such series of
acquisitions, exceeds $25,000,000; and provided further that no such acquisition
or series of acquisitions from the Parent Guarantor or any Subsidiary of the
Parent Guarantor shall constitute a Major Asset Acquisition.
"Major Asset Sale" means any Disposition by the Parent Guarantor or any
of its Subsidiaries of a Single Asset; provided that in the case of any such
Disposition the aggregate of all cash and the fair market value (as certified by
a Principal Officer of the Parent Guarantor) of all property received by the
Parent Guarantor or any of its Subsidiaries from or in respect of such
Disposition exceeds $25,000,000; and provided further that (i) no such
Disposition by any Wholly Owned Subsidiary of the Parent Guarantor to any other
Wholly Owned Subsidiary of the Parent Guarantor shall constitute a Major Asset
Sale and (ii) no Sale and Leaseback Transaction shall constitute a Major Asset
Sale.
"Management Equity Note" means a subordinated promissory note of the
Parent Guarantor carrying an interest rate no higher than the market interest
rate payable in respect of debt with comparable terms issued by comparable
issuers, substantially in the form of Exhibit E hereto, issued to management or
former management (including directors) of the Parent Guarantor in exchange for
shares of Common Stock pursuant to the Stockholders' Agreement or in exchange
for Series Preferred Stock.
"Margin Stock" means "margin stock" as such term is defined in
Regulation U of the Board of Governors of the Federal Reserve System, as the
same may be amended, supplemented or modified from time to time.
"Material Financial Obligations" means a principal or face amount of
Debt and/or payment or collateralization obligations in respect of Derivatives
Obligations of
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the Parent Guarantor and/or one or more of its Subsidiaries, arising in one or
more related or unrelated transactions, exceeding in the aggregate $25,000,000.
"Money Market Auction" means a solicitation of Money Market Quotes
setting forth Money Market Rates pursuant to Section 2.03.
"Money Market Lending Office" means, as to each Bank, its Domestic
Lending Office or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Money Market Lending Office by notice to the
Borrowers and the Administrative Agent.
"Money Market Loan" means a loan made or to be made by a Bank pursuant
to a Money Market Auction.
"Money Market Quote" means an offer by a Bank to make a Money Market
Loan in accordance with Section 2.03.
"Money Market Rate" has the meaning set forth in Section 2.03(c).
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five-year period.
"Notes" means promissory notes of a Borrower, substantially in the form
of Exhibit A hereto, evidencing the obligation of such Borrower to repay the
Loans and the Swingline Advances, and "Note" means any one of such promissory
notes issued hereunder.
"Notice of Borrowing" means a Notice of Committed Borrowing or a Notice
of Money Market Borrowing.
"Notice of Committed Borrowing" has the meaning set forth in Section
2.02(a).
"Notice of Money Market Borrowing" has the meaning set forth in Section
2.03(d).
"Obligors" means the Borrowers, the Parent Guarantor and each
Subsidiary from time to time party to the Subsidiary Guaranty Agreement.
"Parent" means, with respect to any Bank, any Person controlling such
Bank.
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"Parent Guarantor" means ARAMARK Corporation, a Delaware corporation
and its successors.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title I or IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code and either (i) is
maintained, or contributed to, by any member of the ERISA Group for employees of
any member of the ERISA Group or (ii) has at any time within the preceding five
years been maintained, or contributed to, by any Person which was at such time a
member of the ERISA Group for employees of any Person which was at such time a
member of the ERISA Group.
"Prime Rate" means the rate of interest publicly announced from time to
time by The Chase Manhattan Bank at its main offices in New York City as its
prime rate.
"Principal Officer" means the chief executive officer, chief operating
officer, chief financial officer, chief accounting officer, any executive vice
president, treasurer or general counsel of the Parent Guarantor or a Borrower.
"Qualification" means, with respect to any report of independent public
accountants covering financial statements of a Person, (a) an explanatory
paragraph with respect to the continued existence of such Person, as
contemplated by Statement on Auditing Standards No. 59, or (b) a qualification
to such report (such as an "except for" statement therein) (i) resulting from a
limitation on the scope of audit of such financial statements or the underlying
data, (ii) resulting from a change in accounting principles to which such
independent public accountants take exception or (iii) which could be eliminated
by changes in financial statements or notes thereto covered by such report (such
as, by the creation of or increase in a reserve or a decrease in the carrying
value of assets) and which if so eliminated by the making of any such change and
after giving effect thereto would occasion a Default, provided that neither of
the following shall constitute a Qualification: (x) an explanatory paragraph
relating to a change in accounting principles to which such independent public
accountants take no exception or (y) an explanatory paragraph relating to the
outcome or disposition of any uncertainty, including but not limited to
threatened litigation, pending litigation being contested in good faith, pending
or threatened claims or other contingencies, the impact of which litigation,
claims, contingencies or uncertainties cannot be determined with sufficient
certainty to permit quantification in such financial statements.
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"Quarterly Date" means each March 31, June 30, September 30 and
December 31.
"Reference Banks" means the CD Reference Banks or the Euro-Dollar
Reference Banks, as the context may require, and "Reference Bank" means any one
of such Reference Banks.
"Refunding Borrowing" means a Borrowing which, after application of
the proceeds thereof, results in no net increase in the outstanding principal
amount of Committed Loans made by any Bank.
"Regulation U" has the meaning set forth in Section 5.13.
"Required Banks" means at any time Banks having at least 51% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing at least 51% of the aggregate unpaid
principal amount of the Loans.
"Revolving Credit Period" means the period from the Effective Date to
but not including the Termination Date.
"Sale and Leaseback Transaction" means any arrangement with any Person
providing for the leasing by the Parent Guarantor or any Subsidiary of any
property that, or of any property similar to and used for substantially the same
purposes as any other property that, has been or is to be sold, assigned,
transferred or otherwise disposed of by the Parent Guarantor or any of its
Subsidiaries to such Person with the intention of entering into such a lease.
"Series Preferred Stock" means any series of Series Preferred Stock
issued by the Parent Guarantor from time to time.
"Single Asset" means, in the case of any Disposition by the Parent
Guarantor or any of its Subsidiaries, (a) any asset, (b) any group of assets
used in connection with the same line of business of the Parent Guarantor or
such Subsidiary prior to such sale, assignment, transfer or other disposition or
(c) any shares of capital stock or any other ownership interest in any Person.
"Stockholders' Agreement" means the Amended and Restated Stockholders'
Agreement dated as of December 14, 1994 among the Parent Guarantor and the
investors listed therein, as the same may be amended from time to time.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the
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time directly or indirectly owned by such Person. As used herein, the term
"Subsidiary" shall be deemed to refer to a Subsidiary of the Parent Guarantor
unless otherwise specified.
"Subsidiary Guaranty Agreement" means the Subsidiary Guaranty Agreement
dated as of the date hereof among the Borrowers, the Parent Guarantor and
certain Subsidiaries, in the form of Exhibit D hereto.
"Swingline Advance" means an advance made by a Bank to a Borrower
pursuant to a solicitation of offers therefor in accordance with Section 2.04.
"Swingline Maturity Date" has the meaning set forth in Section 2.06.
"Termination Date" means March 31, 2005, or if such date is not a
Euro-Dollar Business Day, the next succeeding Euro-Dollar Business Day unless
such succeeding Euro-Dollar Business Day falls in another calendar month, in
which case the Termination Date shall be the next preceding Euro-Dollar Business
Day.
"The Chase Manhattan Bank" means The Chase Manhattan Bank and its
successors.
"Total Borrowed Funds" means at any date the sum of (i) all Debt of the
Parent Guarantor and its Consolidated Subsidiaries that would be required to be
reflected on or referred to in a consolidated balance sheet of the Parent
Guarantor and its Consolidated Subsidiaries at such date (including without
limitation all Capital Leases of and, except as set forth below, all Debt
Guaranteed by the Parent Guarantor and its Consolidated Subsidiaries but
excluding (x) Debt Guaranteed by the Parent Guarantor and its Consolidated
Subsidiaries outstanding on January 7, 1998 in an aggregate principal amount not
exceeding $10,000,000 and (y) the Management Equity Notes) and (ii) Excess
Contingent Liabilities.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"Wholly Owned Domestic Material Subsidiary" means, with respect to any
Person, a Wholly Owned Subsidiary that (i) is organized under the laws of the
United States, any state thereof or any political subdivision thereof or therein
and (ii) whose total
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assets (or in the case of any Subsidiary which itself has Subsidiaries, the
consolidated total assets of such Subsidiary and its Consolidated Subsidiaries)
are at least 5% of the consolidated total assets of the Parent Guarantor and its
Consolidated Subsidiaries, as shown by the financial statements then most
recently delivered pursuant to Section 5.01 provided that if the Parent
Guarantor determines in good faith that a Subsidiary does not have consolidated
assets of at least 5% of the consolidated total assets of the Parent Guarantor
and its Consolidated Subsidiaries as at any fiscal year-end, such determination
shall be conclusive for purposes of this Agreement and the Subsidiary Guaranty
Agreement for a period of 270 days following such fiscal year-end.
"Wholly Owned Subsidiary" means, with respect to any Person, any
Subsidiary all of the shares of capital stock or other ownership interests of
which (except directors' qualifying shares) are at the time directly or
indirectly owned by such Person.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles applied on a basis consistent with the
audited consolidated financial statements of the Parent Guarantor and its
Consolidated Subsidiaries for the fiscal year ended October 3, 1997 referred to
in paragraph (a) of Section 4.04 (except for changes to which independent public
accountants for the Parent Guarantor take no exception) provided that, if the
Borrowers notify the Agents that the Borrowers wish to amend any covenant in
Article V to eliminate the effect of any change in generally accepted accounting
principles on the operation of such covenant (or if the Agents notify the
Borrowers that the Required Banks wish to amend Article V for such purpose),
then the Borrowers' compliance with such covenant shall be determined on the
basis of generally accepted accounting principles in effect immediately before
the relevant change in generally accepted accounting principles became
effective, until either such notice is withdrawn or such covenant is amended in
a manner satisfactory to the Parent Guarantor, the Borrowers and the Required
Banks.
SECTION 1.03. Types of Borrowings. The term "Borrowing" denotes the
aggregation of Loans of one or more Banks to be made to a single Borrower
pursuant to Article II on a single date and for a single Interest Period.
Borrowings are classified for purposes of this Agreement either by reference to
the pricing of Loans comprising such Borrowing (e.g., a "Euro-Dollar Borrowing"
is a Borrowing comprised of EuroDollar Loans) or by reference to the provisions
of Article II under which participation therein is determined (i.e., a
"Committed Borrowing" is a Borrowing under Section 2.01 in which all Banks
participate in proportion to their Commitments, while a "Money Market Borrowing"
is a Borrowing under Section 2.03 in which the Bank participants are determined
on the basis of their bids in accordance therewith).
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ARTICLE 2
THE LOANS
SECTION 2.01. Commitments to Lend. During the Revolving Credit Period
each Bank severally agrees, on the terms and conditions set forth in this
Agreement, to make loans to either Borrower pursuant to this Section from time
to time in amounts such that the aggregate principal amount of Committed Loans
by such Bank at any one time outstanding to both Borrowers shall not exceed the
amount of such Bank's Commitment. Each Borrowing under this Section shall be in
an aggregate principal amount of $5,000,000 or any larger multiple of $5,000,000
(except that any such Borrowing may be in the aggregate amount available in
accordance with Section 3.02(b)) and shall be made from the several Banks
ratably in proportion to their respective Commitments. Within the foregoing
limits, the Borrowers may borrow under this Section, repay or, to the extent
permitted by Section 2.12, prepay Loans and reborrow at any time during the
Revolving Credit Period pursuant to this Section.
SECTION 2.02. Notice of Committed Borrowings. (a) A Borrower shall give
the Administrative Agent at least two Domestic Business Days' notice (or, in the
case of a Base Rate Borrowing on a date for which such Borrower has requested
quotes pursuant to a Money Market Auction but not accepted quotes in the full
amount for which requested, notice not later than 11:00 A.M. (New York City
time) on the date of such Borrowing) (a "Notice of Committed Borrowing") of its
intention to make a Domestic Borrowing and at least three Euro-Dollar Business
Days' notice (five Euro-Dollar Business Days' notice, in the case of a
Euro-Dollar Borrowing with respect to which a 12-month Interest Period is
requested) of its intention to make a Euro-Dollar Borrowing, in each case in
writing (or by telephone confirmed in writing not later than the close of
business on the next succeeding Domestic Business Day or Euro-Dollar Business
Day, as applicable) specifying:
(i) the proposed date of such Borrowing, which shall be a Domestic
Business Day in the case of a Domestic Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are to be CD Loans,
Base Rate Loans or Euro-Dollar Loans, and
(iv) in the case of a Fixed Rate Borrowing, the duration of the
Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period.
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(b) The provisions of subsection (a) above notwithstanding, if a
Borrower shall not have given a Notice of Committed Borrowing not later than two
Domestic Business Days prior to the last day of the Interest Period applicable
to an outstanding Committed Borrowing consisting of Base Rate Loans, then,
unless such Borrower shall have notified the Administrative Agent not later than
two Domestic Business Days prior to the last day of such Interest Period that it
elects not to borrow on such date, the Administrative Agent shall be deemed to
have received a Notice of Committed Borrowing specifying (i) that the date of
the proposed Borrowing shall be the last day of the Interest Period applicable
to such outstanding Borrowing, (ii) that the aggregate amount of the proposed
Borrowing shall be the amount of such outstanding Borrowing (reduced to the
extent necessary to reflect any reduction of the Commitments on or prior to the
date of the proposed Borrowing), and (iii) that the Loans comprising the
proposed Borrowing are to be Base Rate Loans.
(c) No more than eight Euro-Dollar Borrowings and eight CD Borrowings
shall be outstanding at any one time and no more than four Euro-Dollar
Borrowings or CD Borrowings at any one time outstanding shall have one-month or
30-day Interest Periods.
SECTION 2.03. Money Market Borrowings.
(a) The Money Market Option. In addition to Committed Borrowings
pursuant to Section 2.01, a Borrower may, as set forth in this Section, request
the Banks during the Revolving Credit Period to make offers to make Money Market
Loans to such Borrower. The Banks may, but shall have no obligation to, make
such offers and such Borrower may, but shall have no obligation to, accept any
such offers in the manner set forth in this Section 2.03.
(b) Money Market Quote Request. When a Borrower wishes to request
offers to make Money Market Loans under this Section 2.03, it shall transmit an
Invitation for Money Market Quotes substantially in the form of Exhibit F hereto
to each of the Banks by telex or facsimile transmission so as to be received no
later than 10:00 A.M. (New York City time) on the Domestic Business Day next
preceding the date of Borrowing proposed therein specifying:
(i) the proposed date of Borrowing, which shall be a Domestic
Business Day,
(ii) the aggregate amount of such Borrowing, which shall be $5,000,000
or a larger multiple of $1,000,000, and
(iii) the duration of the Interest Period applicable thereto, subject to
the provisions of the definition of Interest Period.
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A Borrower may request offers to make Money Market Loans for up to six different
Interest Periods in a single Invitation for Money Market Quotes. No Invitation
for Money Market Quotes shall be given within three Domestic Business Days of
any other Invitation for Money Market Quotes.
(c) Submission and Contents of Money Market Quotes. (i) Each Bank may
submit a Money Market Quote containing an offer or offers to make Money Market
Loans in response to any Invitation for Money Market Quotes. Each Money Market
Quote must comply with the requirements of this subsection (c) and must be
submitted to the Borrower by telex or facsimile transmission at its offices
specified in or pursuant to Section 11.01 not later than 10:00 A.M. (New York
City time) on the proposed date of Borrowing. Subject to Articles III and VI,
any Money Market Quote so made shall be irrevocable except with the written
consent of the Borrower.
(ii) Each Money Market Quote shall be in substantially the form of
Exhibit G hereto and shall in any case specify:
(A) the proposed date of Borrowing,
(B) the principal amount of the Money Market Loan for
which each such offer is being made, which principal amount
(w) may be greater than or less than the Commitment of the
quoting Bank, (x) must be $5,000,000 or a larger multiple of
$1,000,000, (y) may not exceed the principal amount of Money
Market Loans for which offers were requested and (z) may be
subject to an aggregate limitation as to the principal amount
of Money Market Loans for which offers being made by such
quoting Bank may be accepted,
(C) the rate of interest per annum (specified to the
nearest 1/10,000th of 1%) (the "Money Market Rate") offered
for each such Money Market Loan, and
(D) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(A) is not substantially in conformity with Exhibit G
hereto or does not specify all of the information required by
subsection (c)(ii);
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(B) except as provided in subsection (c)(ii)(B)(z),
contains qualifying, conditional or similar language;
(C) proposes terms other than or in addition to those set
forth in the applicable Invitation for Money Market Quotes; or
(D) arrives after the time set forth in subsection
(c)(i).
(d) Acceptance and Notice by Borrower. Not later than 11:00 A.M. (New
York City time) on the proposed date of Borrowing, the Borrower shall notify the
Administrative Agent of its acceptance or non-acceptance of the offers so
notified to it pursuant to subsection (c). In the case of acceptance, such
notice (a "Notice of Money Market Borrowing") shall specify the aggregate
principal amount of offers for each Interest Period that are accepted. The
Borrower may accept any Money Market Quote in whole or in part; provided that:
(i) the aggregate principal amount of each Money Market Borrowing may
not exceed the applicable amount set forth in the related Invitation
for Money Market Quotes,
(ii) the principal amount of each Money Market Borrowing must be
$5,000,000 or a larger multiple of $1,000,000,
(iii) acceptance of offers may only be made on the basis of ascending
Money Market Rates and without regard to any Money Market Quote
submitted by a Bank that amends, modifies or is otherwise inconsistent
with a previous Money Market Quote submitted by such Bank in response
to the same Invitation for Money Market Quotes, unless such subsequent
Money Market Quote is submitted solely to correct a manifest error in
such former Money Market Quote,
(iv) the Borrower may not accept any offer that is described in
subsection (c)(iii) or that otherwise fails to comply with the
requirements of this Agreement, and
(v) the absence of timely acceptance by the Borrower in accordance
with this subsection (d) shall constitute rejection of all related
Money Market Quotes.
(e) Allocation Among Banks. If offers are made by two or more Banks
with the same Money Market Rates, for a greater aggregate principal amount than
the amount in respect of which such offers are accepted for the related Interest
Period, the principal amount of Money Market Loans in respect of which such
offers are accepted shall be allocated by the Borrower among such Banks as
nearly as possible (in multiples of $1,000,000) in proportion to the aggregate
principal amounts of such offers. Such
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determinations of the amounts of Money Market Loans shall be conclusive in the
absence of manifest error.
SECTION 2.04. Swingline Advances.
(a) A Borrower may at any time during the Revolving Credit Period
request any or all of the Banks to offer to make Swingline Advances under this
Section. No such Bank shall have any obligation to make such an offer, and such
Borrower shall have no obligation to request or accept any such offer.
(b) A Borrower may not request or accept any offer to make a Swingline
Advance:
(i) the final maturity date of which is more than 270 days after
the date of such Swingline Advance; or
(ii) the principal amount of which, when added to the aggregate
principal amount of all Credits then outstanding, exceeds the
aggregate Commitments at such time.
(c) A Borrower shall promptly notify the Administrative Agent, upon
receipt of a request therefor from the Administrative Agent during normal
business hours, of the aggregate principal amount of Swingline Advances then
outstanding to such Borrower.
SECTION 2.05. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Administrative Agent
shall promptly notify (by telex, cable, facsimile transmission, telephone or
other means of telecommunications) each Bank participating therein of the
contents thereof and of such Bank's share of such Borrowing, and such Notice of
Borrowing shall not thereafter be revocable by the Borrower.
(b) Not later than 12:00 Noon (New York City time) on the date of each
Borrowing, each Bank participating therein shall, except as provided in
subsection (c) of this Section 2.05, make available its share of such Borrowing,
in Federal or other funds immediately available in New York City, to the
Administrative Agent at its address specified in or pursuant to Section 11.01.
Unless the Administrative Agent determines that any applicable condition
specified in Article III has not been satisfied, the Administrative Agent will
make the funds so received from the Banks available to the Borrower on such date
at the Administrative Agent's aforesaid address.
(c) If pursuant to any provision of this Agreement any Bank makes a
new Committed Loan hereunder to the Borrower on a day on which the Borrower is
to repay
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all or any part of an outstanding Committed Loan from such Bank, such Bank shall
apply the proceeds of such new Committed Loan to make such repayment and only an
amount equal to the difference (if any) between the amount being borrowed and
the amount being repaid shall be made available by such Bank to the
Administrative Agent, or remitted by the Borrower to the Administrative Agent,
as the case may be.
(d) Unless the Administrative Agent shall have received notice from a
Bank prior to the date of any Borrowing that such Bank will not make available
to the Administrative Agent such Bank's share of such Borrowing, the
Administrative Agent may assume that such Bank has made such share available to
the Administrative Agent on the date of such Borrowing in accordance with
subsections (b) and (c) of this Section 2.05 and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so made
such share available to the Administrative Agent, such Bank and the Borrower
severally agree to repay to the Administrative Agent forthwith on demand (or
within one Domestic Business Day, in the case of the Borrower) such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent, at (i) in the case of the Borrower, a rate
per annum equal to the higher of the Federal Funds Rate and the interest rate
applicable thereto pursuant to Section 2.08 and (ii) in the case of such Bank,
the Federal Funds Rate. If such Bank shall repay to the Administrative Agent
such corresponding amount, such amount so repaid shall constitute such Bank's
Loan included in such Borrowing for purposes of this Agreement.
SECTION 2.06. Maturity of Loans. Each Committed Loan and each Money
Market Loan shall mature, and the principal amount thereof shall be due and
payable, on the last day of the Interest Period applicable thereto. Each
Swingline Advance made by a Bank shall mature, and the principal amount thereof
shall be due and payable, on the maturity date specified in the applicable offer
made pursuant to Section 2.04 (the "Swingline Maturity Date").
SECTION 2.07. Notes. (a) The Credits of each Bank to a Borrower shall
be evidenced by a single Note of such Borrower payable to the order of such Bank
for the account of its Lending Office in an amount equal to the aggregate unpaid
principal amount of such Bank's Credits to such Borrower.
(b) Each Bank may, by notice to a Borrower and the Administrative
Agent, request that its Credits of a particular type to such Borrower be
evidenced by a separate Note of such Borrower in an amount equal to the
aggregate unpaid principal amount of such Credits. Each such Note shall be in
substantially the form of Exhibit A hereto with appropriate modifications to
reflect the fact that it evidences solely Credits of the relevant
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type. Each reference in this Agreement to the "Note" of such Bank shall be
deemed to refer to and include any or all of such Notes, as the context may
require.
(c) Upon receipt of each Bank's Note pursuant to Section 3.01, the
Administrative Agent shall deliver, by hand or overnight courier, such Note to
such Bank. Each Bank shall record the date, amount, type and maturity of each
Credit to be evidenced by its Note and the date and amount of each payment of
principal made by the Borrower with respect thereto and may, if a Bank so elects
in connection with any transfer or enforcement of its Note, and is hereby
irrevocably authorized by each Borrower to, endorse on the schedules forming a
part thereof appropriate notations to evidence such information and attach to
and make a part of any Note a continuation of any such schedule as and when
required. Notwithstanding the foregoing provisions of this paragraph (c),
neither the obligations of the Borrowers and the Parent Guarantor hereunder nor
the rights of any Bank shall be affected by the failure of any Bank to
appropriately record such information on any Note.
SECTION 2.08. Interest. (a) Subject to paragraph (b) of this Section
2.08, each Base Rate Loan shall bear interest on the unpaid principal amount
thereof from time to time outstanding at a rate per annum equal to the Base
Rate. Such interest rate shall be adjusted automatically on and as of the
effective date of any change in the Base Rate. Such interest shall be payable
with respect to each Base Rate Loan on the last day of the related Interest
Period.
(b) Any overdue principal of or interest on any Base Rate Loan shall
bear interest, payable on demand, for each day from the date payment thereof was
due to but excluding the date of actual payment, at a rate per annum equal to
the sum of 1-1/2% plus the Base Rate for such day (the "Base Overdue Interest
Rate").
(c) Each CD Loan shall bear interest on the outstanding principal
amount thereof, for each day during the Interest Period applicable thereto, at a
rate per annum equal to the sum of the CD Margin for such day plus the Adjusted
CD Rate applicable to such Interest Period; provided that (i) such interest
rates shall be adjusted automatically on and as of the effective date of any
change in the Domestic Reserve Percentage, the Assessment Rate or the CD Margin
and (ii) if any CD Loan shall, as a result of clause (2)(b) of the definition of
Interest Period, have an Interest Period of less than 30 days, such CD Loan
shall bear interest during such Interest Period at the rate applicable to Base
Rate Loans during such period. Such interest shall be payable for each Interest
Period on the last day thereof and, if such Interest Period is longer than 90
days, 90 days after the first day thereof. Any overdue principal of or interest
on any CD Loan shall bear interest, payable on demand, for each day until paid
at a rate per annum equal to the higher of (i) the sum of 1-1/2% plus the sum of
the Adjusted CD Rate applicable to the Interest Period for such Loan plus the CD
Margin for such day and (ii) the Base Overdue Interest Rate for such day.
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"CD Margin" means a rate per annum determined in accordance with the
table set forth below paragraph (g) of this Section 2.08.
The "Adjusted CD Rate" applicable to any Interest Period means a rate
per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
- ----------
* The amount in brackets being rounded upward, if necessary, to the next
higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period is the rate of
interest determined by the Administrative Agent to be the average (rounded
upward, if necessary, to the next higher 1/100 of 1%) of the prevailing rates
per annum bid at 10:00 A.M. (New York City time) (or as soon thereafter as
practicable) on the first day of such Interest Period by two or more New York
certificate of deposit dealers of recognized standing for the purchase at face
value from each CD Reference Bank of its certificates of deposit in an amount
comparable to the principal amount of the CD Loan of such CD Reference Bank to
which such Interest Period applies and having a maturity comparable to such
Interest Period.
"Domestic Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including without limitation any
basic, supplemental or emergency reserves) for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of new non-personal time deposits in dollars in New York City having a
maturity comparable to the related Interest Period and in an amount of $100,000
or more.
"Assessment Rate" means for any day the annual assessment rate in
effect on such day which is payable by a member of the Bank Insurance Fund
classified as adequately capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. ss. 327.4(a) (or any
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successor provision) to the Federal Deposit Insurance Corporation (or any
successor) for such Corporation's (or such successor's) insuring time deposits
at offices of such institution in the United States.
(d) Subject to paragraph (f) of this Section 2.08, each Euro-Dollar
Loan shall bear interest on the unpaid principal amount thereof, for each day
during the Interest Period applicable thereto, at an interest rate per annum
equal to the sum of the Euro-Dollar Margin for such day plus the Adjusted
Euro-Dollar Rate applicable to such Interest Period. Such interest rate shall be
adjusted automatically on and as of the effective date of any change in the
Euro-Dollar Reserve Percentage or the Euro-Dollar Margin. Interest on each
Euro-Dollar Loan shall be payable on the last day of the related Interest Period
and, if such Interest Period is longer than three months, at intervals of three
months after the first day thereof.
"Euro-Dollar Margin" means a rate per annum determined in accordance
with the table set forth below paragraph (g) of this Section 2.08.
The "Adjusted Euro-Dollar Rate" applicable to any Interest Period means
a rate per annum equal to the quotient obtained (rounded upward, if necessary,
to the next higher 1/100 of 1%) by dividing (i) the applicable London Interbank
Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/16 of 1%)
of the respective rates per annum at which deposits in dollars are offered to
each of the Euro-Dollar Reference Banks in the London interbank market at
approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately equal to the
principal amount of the largest Euro-Dollar Loan to which such Interest Period
is to apply and for a period of time comparable to such Interest Period.
(e) If requested to do so by a Borrower through the Administrative
Agent at least five Euro-Dollar Business Days before the beginning of any
Interest Period applicable to a Euro-Dollar Borrowing, each Bank participating
therein will advise the Administrative Agent before noon (New York City time) on
the third Euro-Dollar Business Day preceding the beginning of such Interest
Period as to whether, if such Borrower selects a duration of 12 months for such
Interest Period, such Bank expects that deposits in dollars with a term
corresponding to such Interest Period will be available to it on the first day
of such Interest Period in the amount required to fund its Euro-Dollar Loan to
which such Interest Period would apply. Unless Banks having more than 34% of the
aggregate principal amount of the Commitments respond by such time to the effect
that they expect such deposits not to be available to them, such Borrower shall
be entitled to select a duration of 12 months for such Interest Period.
25
<PAGE>
(f) Any overdue principal of or interest on any Euro-Dollar Loan shall
bear interest, payable on demand, for each day from and including the date
payment thereof was due to but excluding the date of actual payment, at a rate
per annum equal to the sum of 1-1/2% plus the Euro-Dollar Margin for such day
plus the quotient obtained (rounded upward, if necessary to the next higher
1/100 of 1%) by dividing (i) the average (rounded upward, if necessary, to the
next higher 1/16 of 1%) of the respective rates per annum at which one-day (or,
if such amount due remains unpaid more than three Euro-Dollar Business Days,
then for such other period of time not longer than six months as the
Administrative Agent may elect) deposits in dollars in an amount approximately
equal to the largest such overdue payment due to any Bank are offered to each
Euro-Dollar Reference Bank in the London interbank market for the applicable
period determined as provided above by (ii) 1.00 minus the Euro-Dollar Reserve
Percentage (or, if the circumstances described in clause (a) or (b) of Section
8.01 shall exist, at a rate per annum equal to the Base Overdue Interest Rate
for such day).
(g) The "Euro-Dollar Margin", "CD Margin" and "Facility Fee Rate"
shall be for any day the respective percentages indicated in the table set forth
below in the applicable row under the column corresponding to the Status that
applies on such day.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Status Level Level Level Level Level Level
I II III IV V VI
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Euro-Dollar 0.18% 0.22% 0.30% 0.40% 0.50% 0.70%
Margin
- ---------------------------------------------------------------------------------------------------------------
CD Margin 0.28% 0.32% 0.40% 0.50% 0.60% 0.80%
- ---------------------------------------------------------------------------------------------------------------
Facility Fee 0.10% 0.11% 0.15% 0.225% 0.25% 0.30%
Rate
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
For purposes of this Section 2.08(g), the following terms have the
following meanings (in addition to terms defined in Section 1.01):
"Level I Status" applies at any date if, at such date, either (x)
ARAMARK Service's long-term debt is rated BBB+ or higher by S&P or Baa1 or
higher by Moody's or (y) the Reference Ratio is equal to or greater than .50 to
1.0.
"Level II Status" applies at any date if, at such date, (i) either (x)
ARAMARK Service's long-term debt is rated BBB or higher by S&P or Baa2 or higher
by Moody's or (y) the Reference Ratio is equal to or greater than .45 to 1.0 and
(ii) Level I Status does not apply.
26
<PAGE>
"Level III Status" applies at any date if, at such date, (i) either (x)
ARAMARK Service's long-term debt is rated BBB- or higher by S&P or Baa3 or
higher by Moody's or (y) the Reference Ratio is equal to or greater than .40 to
1.0 and (ii) neither Level I Status nor Level II Status applies.
"Level IV Status" applies at any date if, at such date, (i) either (x)
ARAMARK Service's long-term debt is rated BB+ or higher by S&P or Ba1 or higher
by Moody's or (y) the Reference Ratio is equal to or greater than .35 to 1.0 and
(ii) none of Level I Status, Level II Status and Level III Status applies.
"Level V Status" applies at any date if, at such date, (i) either (x)
ARAMARK Service's long-term debt is rated BB or higher by S&P or Ba2 or higher
by Moody's or (y) the Reference Ratio is equal to or greater than .30 to 1.0 and
(ii) none of Level I Status, Level II Status, Level III Status and Level IV
Status applies.
"Level VI Status" applies at any date if, at such date, no other Status
applies.
"Moody's" means Moody's Investors Service, Inc.
"Reference Ratio" means for any day during any fiscal quarter of the
Parent Guarantor (the "Current Quarter"), the Leverage Ratio as of the last day
of the most recent fiscal quarter of the Parent Guarantor ended 80 days or more
before the first day of the Current Quarter; provided that from the Effective
Date until July 2, 1998, the Reference Ratio shall be deemed to be at a level
resulting in Level III Status. The Parent Guarantor shall, prior to the first
day of each fiscal quarter of the Parent Guarantor during which Status (if
determined solely on the basis of the Reference Ratio) would differ from the
Status (if so determined) during the next preceding fiscal quarter of the Parent
Guarantor, deliver to the Administrative Agent a certificate of the Parent
Guarantor signed by its chief financial officer, its Treasurer or its chief
accounting officer setting forth in reasonable detail the calculation of the
Reference Ratio.
"S&P" means Standard & Poor's Ratings Services.
"Status" refers to the determination of which of Level I Status through
Level VI Status applies at any date.
The credit ratings to be utilized for purposes of the above schedule
are those assigned to the senior unsecured long-term debt securities of ARAMARK
Services without third-party credit enhancement, and any rating assigned to any
other debt security of ARAMARK Services shall be disregarded. The rating in
effect at any date is that in effect at the close of business on such date.
ARAMARK Services shall promptly notify the Administrative Agent of any change in
the credit ratings assigned to its long-term debt.
27
<PAGE>
(h) Each Money Market Loan and each Swingline Advance made by a Bank
shall bear interest on the outstanding principal amount thereof, for the
Interest Period applicable thereto, at a rate per annum equal to the Money
Market Rate quoted by the Bank making such Loan in accordance with Section 2.03
or the fixed interest rate quoted by the Bank making such Swingline Advance in
accordance with Section 2.04, as the case may be. Such interest shall be payable
for each Interest Period on the last day thereof. Any overdue principal of or
interest on any Money Market Loan or Swingline Advance shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the sum
of 2% plus the Prime Rate for such day.
(i) The Administrative Agent shall determine each rate of interest
applicable to the Loans. The Administrative Agent shall give prompt notice
thereof to the Borrower and the affected Banks by telephone, facsimile
transmission, telex or cable. The Administrative Agent's good faith
determination of each such rate of interest shall be conclusive in the absence
of manifest error.
(j) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Administrative Agent as contemplated hereby. If any Reference
Bank does not furnish a timely quotation, the Administrative Agent shall
determine the relevant interest rate on the basis of the quotation or quotations
furnished by the remaining Reference Bank or Banks or, if none of such
quotations is available on a timely basis, the provisions of Section 8.01 shall
apply.
(k) Interest based on the Prime Rate shall be computed on the basis of
a year of 365 days (or 366 days in a leap year) and paid for the actual number
of days elapsed (including the first day but excluding the last day). All other
interest shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed, calculated as to each Interest Period or period
fixed pursuant to paragraph (f) of this Section 2.08 from and including the
first day thereof to but excluding the last day thereof.
SECTION 2.09. Facility Fees. (a) The Borrowers shall be jointly and
severally obligated to pay to the Administrative Agent for the account of the
Banks a facility fee at the Facility Fee Rate (determined daily in accordance
with the schedule set forth below paragraph (g) of Section 2.08) accrued (i)
from and including the Effective Date to but excluding the Termination Date (or
earlier date of termination of the Commitments in their entirety) on the daily
average aggregate amount of the Commitments (whether used or unused) and (ii)
from and including the Termination Date or such earlier date of termination to
but excluding the date the Loans shall be repaid in their entirety, on the daily
aggregate outstanding principal amount of the Loans; provided that no such fee
shall accrue with respect to the portion, if any, of the aggregate Commitments
utilized in the form of Base Rate Loans during any fiscal quarter of the Parent
Guarantor if the Reference Ratio is more than 0.45 to 1 for such fiscal quarter.
28
<PAGE>
(b) Accrued facility fees under this Section shall be computed on the
basis of a year of 360 days and paid for the actual number of days elapsed. Such
facility fees shall be paid quarterly in arrears on each March 31, June 30,
September 30 and December 31 and on the Termination Date (and, if later, such
later date of repayment).
(c) Upon receipt of any amount representing fees paid pursuant to this
Section 2.09, the Administrative Agent shall pay such amount to the Banks in
proportion to their respective Commitments.
SECTION 2.10. Reduction of Commitments. (a) The Borrowers at their
option may at any time and from time to time upon at least three Domestic
Business Days' notice to the Administrative Agent terminate in their entirety or
reduce, in an aggregate amount of $10,000,000 or any larger multiple of
$5,000,000, the unused Commitments. For this purpose, the Commitments shall be
deemed unused at any time to the extent (and only to the extent) that a Borrower
could at such time borrow Committed Loans without causing the Credits to exceed
the aggregate Commitments at such time. Upon any termination or reduction of the
Commitments pursuant to this subsection (a) or subsection (b) below, the
Administrative Agent shall promptly notify each Bank of such termination or
reduction.
(b) In addition, the Commitments shall be reduced:
(i) on each date set forth in the table below by an aggregate
amount equal to the amount set forth in the applicable row under the
column corresponding to such date
==========================================================
DATE AMOUNT OF REDUCTION
==========================================================
March 31, 2000 $100,000,000
----------------------------------------------------------
March 31, 2001 $150,000,000
----------------------------------------------------------
March 31, 2002 $150,000,000
==========================================================
; and
(ii) upon the incurrence by the Parent Guarantor or any of its
Subsidiaries of Excess Secured Debt (other than Excess Secured Debt
arising out of the refinancing, extension, renewal or refunding of
other Excess Secured Debt, except to the extent, and only to the
extent, that the outstanding principal amount of such other Excess
Secured Debt is increased), in an amount equal to the cash proceeds of
such Excess Secured Debt, net of the reasonable expenses of the Parent
Guarantor or such Subsidiary in connection with such incurrence.
29
<PAGE>
(c) (i) Any reduction of the Commitments pursuant to subsection (a) of
this Section 2.10 shall be applied to reduce subsequent mandatory reductions of
the Commitments required by subsection (b)(i) in forward chronological order.
(ii) Any reduction of the Commitments pursuant to subsection (b) (ii)
of this Section 2.10 shall be applied to ratably reduce the amounts of
subsequent mandatory reductions required by subsection (b)(i).
(d) The reduction required by subsection (b)(ii) of this Section 2.10
shall be effective on the date of receipt by the Parent Guarantor or any of its
Subsidiaries of the amounts described therein; provided that, in the event such
amounts shall aggregate less than $10,000,000, such reduction shall be effective
forthwith upon receipt by the Parent Guarantor or any of its Subsidiaries of
proceeds which, together with all other amounts described in subsection (b)(ii)
above not previously applied pursuant to subsection (b)(ii) of this Section
2.10, aggregate $10,000,000 or more. The Borrowers shall give the Administrative
Agent at least four Euro-Dollar Business Days' notice of each reduction in the
Commitments pursuant to subsection (b)(ii) of this Section 2.10 and a
certificate of a Principal Officer of the Parent Guarantor, setting forth the
information, in form and substance satisfactory to the Administrative Agent,
necessary to determine the amount of each such reduction.
(e) Each reduction of the Commitments pursuant to this Section 2.10
shall be applied ratably to the respective Commitments of the Banks. In
addition, each reduction of the Commitments pursuant to this Section 2.10 shall
be permanent.
(f) On each date on which a reduction required by subsection (b)
becomes effective, each Borrower shall, in such proportion as the Borrowers have
jointly determined or in the absence of any such determination as shall be
determined by the Administrative Agent, repay or prepay such principal amount of
the outstanding Credits, if any, as may be necessary so that after such payment
or prepayment, (i) the unpaid principal amount of the Credits does not exceed
the aggregate Commitments after giving effect to such reduction of the
Commitments and (ii) the unpaid principal amount of the Committed Loans of each
Bank does not exceed the amount of the Commitment of such Bank as then reduced.
The particular Borrowings to be repaid shall be as designated by the Borrowers
in the related Notice or Notices of Borrowing; provided that if there shall have
been a mandatory reduction of the Commitments pursuant to subsection (b) of this
Section 2.10 at a time such that, and with the result that, this subsection (f)
would otherwise require payment of principal of Fixed Rate Loans or portions
thereof prior to the last day of the related Interest Period, such payment shall
be deferred to such last day unless the Required Banks otherwise elect by notice
to the Borrowers through the Administrative Agent (and the facility fee provided
for in Section 2.09(a) shall continue
30
<PAGE>
to accrue on the amount of such deferred payment until such payment is made).
Each repayment or prepayment pursuant to this subsection (e) shall be made
together with accrued interest to the date of payment or prepayment, and shall
be applied ratably to payment of the Credits of the several Banks in the related
Borrowing.
SECTION 2.11. Mandatory Termination of Commitments. The Commitments
shall terminate on the Termination Date, and any Loans then outstanding
(together with accrued interest thereon) shall be due and payable on such date.
SECTION 2.12. Optional Prepayments. (a) A Borrower may (i) upon at
least one Domestic Business Day's notice to the Administrative Agent, prepay any
Base Rate Borrowing without premium or penalty, (ii) upon three Domestic
Business Days' notice to the Administrative Agent, subject to Section 2.14,
prepay any CD Borrowing and (iii) upon at least three Euro-Dollar Business Days'
notice to the Administrative Agent subject to Section 2.14, prepay any
Euro-Dollar Borrowing, in each case in whole at any time or from time to time in
part in an aggregate amount equal to $5,000,000 or any larger multiple of
$5,000,000, by paying the principal amount being prepaid together with interest
accrued thereon to the date of prepayment. Each such prepayment shall be applied
ratably to the Loans of the Banks included in the applicable Borrowing.
(b) Subject to Section 2.14, Money Market Loans and Swingline Advances
shall be prepayable as may be mutually agreed by the Borrower and the Bank
making any such Money Market Loan or Swingline Advance.
(c) Upon receipt of a notice of prepayment pursuant to this Section,
the Administrative Agent shall promptly notify each affected Bank of the
contents thereof and of such Bank's ratable share of such prepayment and such
notice shall not thereafter be revocable by the Borrower.
SECTION 2.13. Payments. (a) All payments of principal of, and interest
on, the Loans and of fees and other amounts payable hereunder shall be made not
later than 12:00 Noon (New York City time) on the date when due, in Federal or
other funds immediately available in New York City, without set-off,
counterclaim or other deduction, to the Administrative Agent at its office at 52
Broadway, New York, New York. The Administrative Agent will promptly distribute
to each Bank in like funds its ratable share of each such payment received by
the Administrative Agent for the account of the Banks.
(b) Whenever any payment of principal of, or interest on, any Domestic
Loans or any Swingline Advances or of facility fees hereunder shall be due on a
day which is not a Domestic Business Day, the date for payment thereof shall be
extended to the next succeeding Domestic Business Day. Whenever any payment of
principal of, or interest on, any Euro-Dollar Loans shall be due on a day which
is not a Euro-Dollar Business
31
<PAGE>
Day, the date for payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day, unless such day falls in another calendar month, in
which case such payment shall be due on the next preceding Euro-Dollar Business
Day. Whenever any payment of principal of, or interest on, any Money Market
Loans shall be due on a day which is not a Euro-Dollar Business Day, the date
for payment thereof shall be extended to the next succeeding Euro-Dollar
Business Day. If the date for any payment of principal is extended by operation
of law or otherwise, interest thereon shall be payable for such extended time.
(c) Unless the Administrative Agent shall have received notice from a
Borrower prior to the date on which any payment is due to the Banks hereunder
that such Borrower will not make such payment in full, the Administrative Agent
may assume that such Borrower has made such payment in full to the
Administrative Agent on such date and the Administrative Agent may, in reliance
upon such assumption, cause to be distributed to each Bank on such due date an
amount equal to the amount then due such Bank. If and to the extent that such
Borrower shall not have so made such payment, each Bank shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Bank
together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
SECTION 2.14. Funding Losses. If a Borrower makes any payment of
principal with respect to any Fixed Rate Loan or Swingline Advance (pursuant to
Article II, VI, VIII or otherwise) on any day other than the last day of the
Interest Period applicable thereto, or the last day of an applicable period
fixed pursuant to Section 2.08(f), or if a Borrower fails to borrow or prepay
any Fixed Rate Loan after notice has been given to any Bank in accordance with
Section 2.05(a) or 2.12(c), such Borrower shall reimburse each Bank on demand
for any resulting loss or expense incurred by such Bank (or by any existing or
prospective participant in the related Credit), including (without limitation)
any loss incurred in obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after any such payment or
failure to borrow or prepay, provided that such Bank shall have delivered to
such Borrower a certificate as to the amount of such loss or expense, which
certificate shall be conclusive in the absence of manifest error.
SECTION 2.15. Withholding Tax Exemption. At least five Domestic
Business Days prior to the first date on which interest or facility fees are
payable hereunder for the account of any Bank, each Bank that is not
incorporated under the laws of the United States of America or a state thereof
agrees that it will deliver to each Borrower and the Administrative Agent two
duly completed copies of United States Internal Revenue Service Form 1001 or
4224, certifying in either case that such Bank is entitled to receive payments
under the Financing Documents without deduction or withholding of any United
States federal income taxes. Each Bank which so delivers a Form 1001 or 4224
32
<PAGE>
further undertakes to deliver to each Borrower and the Administrative Agent two
additional copies of such form (or a successor form) on or before the date that
such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by a Borrower or the Administrative Agent, in each case certifying
that such Bank is entitled to receive payments under the Financing Documents
without deduction or withholding of any United States federal income taxes,
unless an event (including without limitation any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Bank from duly completing and delivering any such form with respect
to it and such Bank advises each Borrower and the Administrative Agent that it
is not capable of receiving payments without any deduction or withholding of
United States federal income tax.
ARTICLE 3
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement shall become effective on
the date that each of the following conditions shall have been satisfied (or
waived in accordance with Section 11.04):
(a) receipt by the Administrative Agent of counterparts hereof
signed by each of the parties hereto (or, in the case of any party as
to which an executed counterpart shall not have been received, receipt
by the Administrative Agent in form satisfactory to it of telegraphic,
telex or other written confirmation from such party of execution of a
counterpart hereof by such party);
(b) receipt by the Administrative Agent for the account of each
Bank of a duly executed Note of each Borrower dated on or before the
Effective Date complying with the provisions of Section 2.07;
(c) receipt by the Administrative Agent of counterparts of all
other Financing Documents signed by each of the parties thereto (or, in
the case of any party as to which an executed counterpart shall not
have been received, receipt by the Administrative Agent in form
satisfactory to it of telegraphic, telex or other written confirmation
from such party of execution of a counterpart thereof by such party);
(d) receipt by the Agents of evidence satisfactory to them of the
payment of all principal and interest on any "Loans" (as therein
defined) outstanding
33
<PAGE>
under, and of all other amounts payable under, the Existing Credit
Agreement (excluding amounts payable with respect to the Money Market
Loans and Swingline Advances specified in Section 3.04(b));
(e) receipt by the Agents (i) for their own respective accounts,
of the fees set forth in Section 7.08 and (ii) for the account of the
Banks, of participation fees in the amounts heretofore mutually agreed
upon;
(f) receipt by the Agents of a certificate of a Principal Officer
of the Parent Guarantor and of each Borrower that, upon the Effective
Date, no Default shall have occurred and be continuing and that each of
the representations and warranties made by the Obligors in or pursuant
to the Financing Documents are true and correct in all material
respects;
(g) receipt by the Agents of an opinion of the General Counsel or
Associate General Counsel of each Borrower and the Parent Guarantor,
substantially in the form of Exhibit B hereto and covering such
additional matters relating to the transactions contemplated hereby as
the Required Banks may reasonably request;
(h) receipt by the Agents of an opinion of Davis Polk & Wardwell,
special counsel for the Agents, substantially in the form of Exhibit C
hereto and covering such additional matters relating to the
transactions contemplated hereby as the Required Banks may reasonably
request; and
(i) receipt by the Agents of all documents they may reasonably
request relating to the existence of each Borrower and the Parent
Guarantor, the corporate authority for and the validity and
enforceability of the Financing Documents, and any other matters
relevant hereto, all in form and substance satisfactory to the Agents;
provided that this Agreement shall not become effective or be binding on any
party hereto unless all of the foregoing conditions are satisfied not later than
January 21, 1998. The Administrative Agent shall promptly notify the Borrowers
and the Banks of the Effective Date, and such notice shall be conclusive and
binding on all parties hereto. The Banks that are parties to the Existing Credit
Agreement, comprising the "Required Banks" as defined therein, and ARAMARK
Services and the Parent Guarantor agree to eliminate the requirement under
Section 2.10(a) of the Existing Credit Agreement that notice of optional
termination of the commitments thereunder be given three Domestic Business Days
in advance, and further agree that the commitments under the Existing Credit
Agreement shall terminate in their entirety simultaneously with and subject to
the effectiveness of this Agreement and that ARAMARK Services shall be obligated
to pay the accrued facility fees thereunder to but excluding the date of such
effectiveness.
34
<PAGE>
SECTION 3.02. Conditions to Borrowing. The obligation of each Bank to
make a Loan on the occasion of each Borrowing is subject to the satisfaction of
such of the following conditions as shall not have been expressly waived in
writing by Banks having 51% or more in aggregate principal amount of the Loans
to be included in such Borrowing:
(a) receipt (or deemed receipt) by the Administrative Agent of a
Notice of Borrowing as required by Section 2.02 or 2.03, as the case
may be;
(b) the fact that, immediately after such Borrowing, the aggregate
outstanding principal amount of Loans will not exceed an amount equal
to (A) the aggregate amount of the Commitments at such time less (B)
the aggregate outstanding principal amount of Swingline Advances at
such time;
(c) the fact that, immediately after such Borrowing: (i) in the
case of a Refunding Borrowing, no Event of Default and no Default under
Section 6.01(a) or (b) shall have occurred and be continuing and (ii)
in the case of any other Borrowing, no Default shall have occurred and
be continuing;
(d) the fact that each of the representations and warranties made
by the Obligors in or pursuant to the Financing Documents (other than,
in the case of a Refunding Borrowing, the representations and
warranties set forth in Sections 4.04(b), 4.05, 4.06, 4.07 and 4.08 of
this Agreement), shall be true and correct in all material respects on
and as of the date of such Borrowing; and
(e) the fact that such Borrowing will not violate any provision of
law or regulation applicable to any Bank (including, without limiting
the generality of the foregoing, Regulations U and X of the Board of
Governors of the Federal Reserve System) as then in effect.
SECTION 3.03. Representation by Borrower. Each Borrowing under this
Agreement shall be deemed to be a representation and warranty by the Borrower on
the date of such Borrowing as to the facts specified in subsections (b), (c) and
(d) of Section 3.02.
SECTION 3.04. Transitional Provisions. (a) Upon the Effective Date, any
outstanding Money Market Loans or Swingline Advances of any bank party to the
Existing Credit Agreement that is not a Bank hereunder (a "Non-Continuing Bank")
shall become due, and ARAMARK Services shall on the Effective Date repay any
such outstanding Money Market Loans or Swingline Advances made by such
Non-Continuing Banks. If any repayment of Money Market Loans or Swingline
Advances under the Existing Credit Agreement is made pursuant to this subsection
(a), ARAMARK Services
35
<PAGE>
agrees that it will reimburse each Non-Continuing Bank for any funding losses
incurred in connection therewith pursuant to Section 2.14 of the Existing Credit
Agreement.
(b) Each Money Market Loan or Swingline Advance outstanding under the
Existing Credit Agreement and made on or prior to the Effective Date by any bank
that is both a party to the Existing Credit Agreement and a Bank hereunder shall
(i) mature on the last day of the then current Interest Period applicable
thereto under the Existing Credit Agreement, (ii) bear interest at the interest
rate applicable thereto under the Existing Credit Agreement, (iii) be deemed
made pursuant to this Agreement and (iv) be deemed no longer outstanding under
the Existing Credit Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Parent Guarantor and each Borrower jointly and severally represent
and warrant to each Agent and each Bank that:
SECTION 4.01. Corporate Existence and Power. Each of the Parent
Guarantor, each Borrower and each of their respective Subsidiaries is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted (except, in the case of such
Subsidiaries, to the extent that failure to comply with the foregoing statements
could not, in the aggregate, affect the business, financial position, results of
operations or prospects of the Parent Guarantor and its Consolidated
Subsidiaries in a manner material and adverse to the creditworthiness of the
Borrowers and the other Obligors, considered as a whole), and each of the Parent
Guarantor, each Borrower and each of their respective Subsidiaries is duly
qualified as a foreign corporation, licensed and in good standing in each
jurisdiction where qualification or licensing is required by the nature of its
business or the character and location of its property, business or customers
and in which the failure so to qualify or be licensed, as the case may be, in
the aggregate, could affect the business, financial position, results of
operations or prospects of the Parent Guarantor and its Consolidated
Subsidiaries in a manner material and adverse to the creditworthiness of the
Borrowers and the other Obligors, considered as a whole.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution and delivery by each Obligor of each of the
Financing Documents to which it is a party and the performance by such Obligor
of its obligations thereunder are within the corporate power of such Obligor,
have been duly authorized by all necessary
36
<PAGE>
corporate action, require no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the charter
or by-laws of such Obligor or of any agreement or instrument relating to Debt of
the Parent Guarantor or any Subsidiary or any other agreement, judgment,
injunction, order, decree or other instrument binding upon such Obligor material
to the business of the Parent Guarantor and its Consolidated Subsidiaries,
considered as a whole, or result in the creation or imposition of any Lien on
any asset of the Parent Guarantor or any Subsidiary.
SECTION 4.03. Binding Effect. This Agreement constitutes a valid and
binding agreement of each of the Parent Guarantor and each Borrower and the
other Financing Documents, when executed and delivered in accordance with this
Agreement, will constitute valid and binding obligations of each Obligor that is
a party thereto, in each case enforceable in accordance with its terms.
SECTION 4.04. Financial Information. (a) The consolidated balance sheet
of the Parent Guarantor and its Consolidated Subsidiaries as of October 3, 1997
and the related consolidated statements of income and cash flows for the fiscal
year then ended, reported on by Arthur Andersen LLP, a copy of which has been
delivered to each of the Banks, fairly present, in conformity with generally
accepted accounting principles, the consolidated financial position of the
Parent Guarantor and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such fiscal year.
(b) Since October 3, 1997, there has been no change in the business,
financial position or results of operations of the Parent Guarantor and its
Consolidated Subsidiaries which materially and adversely affects the
credit-worthiness of the Borrowers and the other Obligors, considered as a
whole.
SECTION 4.05. Litigation. There is no action, suit or proceeding
pending against, or to the knowledge of a Principal Officer threatened against,
the Parent Guarantor, either Borrower or any of their respective Subsidiaries
before any court or arbitrator or any governmental body, agency or official in
which there is a reasonable likelihood of an adverse decision which would affect
the business, financial position or results of operations of the Parent
Guarantor and its Consolidated Subsidiaries in a manner material and adverse to
the credit-worthiness of the Borrowers and the other Obligors, considered as a
whole, or which in any manner questions the validity or enforceability of any
Financing Document.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Code with respect to each Plan and is in compliance in all material respects
with the presently applicable provisions of ERISA and the Code with respect to
each Plan. No member of
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the ERISA Group has (i) sought a waiver of the minimum funding standard under
Section 412 of the Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Code or (iii) incurred any liability
under Title IV of ERISA other than a liability to the PBGC for premiums under
Section 4007 of ERISA.
SECTION 4.07. Environmental Matters. The Parent Guarantor has
reasonably concluded that the liabilities and costs associated with the effect
of Environmental Laws on the business, operations and properties of the Parent
Guarantor and its Subsidiaries, including the costs of compliance with
Environmental Laws, are unlikely to affect the business, financial condition,
results of operations or prospects of the Parent Guarantor and its Consolidated
Subsidiaries in a manner material and adverse to the creditworthiness of the
Borrowers and the other Obligors, considered as a whole.
SECTION 4.08. Taxes. United States Federal income tax returns of
ARAMARK Services and its Subsidiaries have been examined and closed through the
fiscal year ended on October 2, 1992. The Parent Guarantor, each Borrower and
each of their respective Subsidiaries have filed all United States Federal
income tax returns and all other material tax returns that are required to be
filed by them and have paid all taxes due pursuant to such returns or pursuant
to any assessment received by any of them, except for any such taxes being
diligently contested in good faith and by appropriate proceedings. Adequate
reserves have been provided on the books of the Parent Guarantor and its
Subsidiaries in respect of all taxes or other governmental charges in accordance
with generally accepted accounting principles, and no tax liabilities in excess
of the amount so provided are, in the good faith determination of the Parent
Guarantor, anticipated that could affect the business, financial position,
results of operations or prospects of the Parent Guarantor and its Consolidated
Subsidiaries in a manner material and adverse to the creditworthiness of the
Borrowers and the other Obligors, considered as a whole.
SECTION 4.09. Compliance with Laws. The Parent Guarantor, each Borrower
and each of their respective Subsidiaries are, in the good faith determination
of the Parent Guarantor, in compliance with all applicable laws, rules and
regulations (including, without limitation, Environmental Laws and ERISA and the
rules and regulations thereunder), other than such laws, rules or regulations
(i) the validity or applicability of which the Parent Guarantor, a Borrower or
such Subsidiary is contesting in good faith or (ii) the failure to comply with
which cannot reasonably be expected to affect the business, financial position,
results of operations or prospects of the Parent Guarantor and its Consolidated
Subsidiaries in a manner material and adverse to the creditworthiness of the
Borrowers and the other Obligors, considered as a whole.
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SECTION 4.10. Not an Investment Company. None of the Obligors is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
SECTION 4.11. Full Disclosure. All information heretofore furnished by
the Parent Guarantor or the Borrowers to the Agents or any Bank for purposes of
this Agreement or any transaction contemplated hereby was, in the good faith
opinion of the Parent Guarantor at the time such information was furnished, true
and accurate in all material respects on the date as of which such information
was furnished, and such information as may have been modified or superseded by
any subsequently furnished information is true and accurate in all material
respects.
ARTICLE 5
COVENANTS
The Parent Guarantor and each Borrower jointly and severally agree
that, so long as any Bank has any Commitment hereunder or any amount payable
under any Note remains unpaid:
SECTION 5.01. Information. The Parent Guarantor will deliver to each of
the Banks, with respect to information relating to the Parent Guarantor, from
the Effective Date and, with respect to information relating to a Borrower, from
the date such Borrower borrows any amount hereunder:
(a) within 90 days after the end of each fiscal year of the Parent
Guarantor, consolidated balance sheets of such Borrower and its
respective Consolidated Subsidiaries and of the Parent Guarantor and
its Consolidated Subsidiaries as of the end of such fiscal year, and
the related consolidated statements of income and cash flows for such
fiscal year, setting forth in each case in comparative form the figures
for the previous fiscal year, all in reasonable detail and, in the case
of such balance sheet and related consolidated statements of income and
cash flows of the Parent Guarantor and its Consolidated Subsidiaries,
accompanied by an opinion thereon by Arthur Andersen LLP or other
independent public accountants of nationally recognized standing, which
opinion (x) shall state that such financial statements present fairly
the consolidated financial position of the companies being reported
upon as of the date of such financial statements and the consolidated
results of their operations and cash flows for the period covered by
such financial statements in conformity with generally accepted
accounting principles and that the audit of such accountants in
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connection with such financial statements has been conducted in
accordance with generally accepted auditing standards and (y) shall not
contain any Qualification;
(b) within 60 days, in the case of the Parent Guarantor, and 75
days, in the case of a Borrower, after the end of each of the first
three quarters of each fiscal year of the Parent Guarantor,
consolidated balance sheets of such Borrower and its respective
Consolidated Subsidiaries and of the Parent Guarantor and its
Consolidated Subsidiaries, and the related consolidated statements of
income for such quarter and for the portion of the fiscal year ended at
the end of such quarter and cash flows for the portion of the fiscal
year ended at the end of such quarter, setting forth in each case in
comparative form the figures for the corresponding quarter and the
corresponding portion of the previous fiscal year, if any, all prepared
in accordance with Rule 10-01 of Regulation S-X of the General Rules
and Regulations under the Securities Act of 1933, or any successor rule
that sets forth the manner in which interim financial statements shall
be prepared, and certified (subject to normal year-end audit
adjustments) as to fairness of presentation and consistency by the
chief financial officer or the chief accounting officer of ARAMARK
Services, ARAMARK Uniform or the Parent Guarantor, as applicable;
(c) simultaneously with the delivery of each set of financial
statements referred to in paragraphs (a) and (b) of this Section 5.01,
a certificate of the chief financial officer, Treasurer or chief
accounting officer of the Parent Guarantor (i) setting forth in
reasonable detail such calculations as are required to establish
whether the Parent Guarantor was in compliance with the requirements of
Sections 5.07 through 5.14, inclusive, on the date of such financial
statements, (ii) stating whether there exists on the date of such
certificate any Default and, if any Default then exists, setting forth
the details thereof and the action that the Parent Guarantor is taking
or proposes to take with respect thereto and (iii) stating whether,
since the date of the most recent financial statements previously
delivered pursuant to paragraph (a) or (b) of this Section 5.01, there
has been a change in the generally accepted accounting principles
applied in preparing the financial statements then being delivered from
those applied in preparing the most recent financial statements and, in
the case of the Parent Guarantor, audited financial statements so
delivered which is material to the financial statements then being
delivered;
(d) within five days after any officer of the Parent Guarantor
obtains knowledge of any Default, if such Default is then continuing, a
certificate of the chief financial officer, Treasurer or chief
accounting officer of the Parent Guarantor setting forth the details
thereof and the action that the Parent Guarantor is taking or proposes
to take with respect thereto;
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(e) promptly upon the receipt of a request therefor from the
Administrative Agent at the request of any Bank, copies of all
financial statements, reports and proxy statements that the Parent
Guarantor shall have mailed to its shareholders;
(f) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and annual, quarterly or
monthly reports that the Parent Guarantor or any of its Consolidated
Subsidiaries shall have filed with the Securities and Exchange
Commission;
(g) excluding any event which has not resulted and will not result
in a potential liability of a member of the ERISA Group under Title IV
of ERISA in an amount in excess of $10,000,000, if and when any member
of the ERISA Group (i) gives or is required to give notice to the PBGC
of any "reportable event" (as defined in Section 4043 of ERISA) with
respect to any Plan which could reasonably lead to a termination of
such Plan under Title IV of ERISA, or knows that the plan administrator
of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given
or required to be given to the PBGC; (ii) receives notice of complete
or partial withdrawal liability under Title IV of ERISA in an amount
greater than $10,000,000 or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of
an intent to terminate, impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or appoint a trustee to
administer, any Plan, a copy of such notice; (iv) applies for a waiver
of the minimum funding standard under Section 412 of the Code, a copy
of such application; (v) gives notice of intent to terminate any Plan
under Section 4041(c) of ERISA, a copy of such notice and other
information filed with the PBGC; (vi) gives notice of withdrawal from
any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or
(vii) fails to make any required payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes
any amendment to any Plan or Benefit Arrangement which has resulted or
could result in the imposition of a Lien or the posting of a bond or
other security, a certificate of the chief financial officer or the
chief accounting officer of the Parent Guarantor setting forth details
as to such occurrence and action, if any, which the applicable member
of the ERISA Group is required or proposes to take; and
(h) from time to time such additional information regarding the
financial position, results of operations, business or prospects of the
Parent Guarantor or any of its Subsidiaries as the Administrative
Agent, at the request of any Bank, may reasonably request.
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SECTION 5.02. Payment of Obligations. The Parent Guarantor will, and
will cause each of its Subsidiaries to, pay and discharge, as the same shall
become due and payable, (i) all material claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons which, in
any such case, if unpaid, might by law give rise to a Lien upon any of its
property or assets, and (ii) all material taxes, assessments and governmental
charges or levies upon it or its property or assets, except where any of the
items in clause (i) or (ii) above may be contested in good faith by appropriate
proceedings, and the Parent Guarantor or such Subsidiary, as the case may be,
shall have set aside on its books, in accordance with generally accepted
accounting principles, appropriate reserves for the accrual of any such items.
SECTION 5.03. Maintenance of Property; Insurance. The Parent Guarantor
will keep, and will cause each of its Subsidiaries to keep, all material
property useful and necessary in its business in good working order and
condition in accordance with generally accepted industry standards applicable to
the line of business in which such property is used; will maintain and will
cause each of its Subsidiaries to maintain (either in the name of the Parent
Guarantor or in such Subsidiary's own name) with insurance companies which the
Parent Guarantor reasonably believes, at the time the relevant coverage is
placed or renewed, are financially sound and responsible, insurance on all their
respective properties in at least such amounts and against at least such risks
(and with such risk retentions) as are usually insured against in the same
general area by companies of established repute engaged in the same or a similar
business; and will furnish to the Banks, upon written request from the
Administrative Agent, information presented in reasonable detail as to the
insurance so carried. Notwithstanding the foregoing, the Parent Guarantor may,
in lieu of maintaining the insurance required by the preceding sentence,
self-insure, or cause any of its Subsidiaries to self-insure, with respect to
the properties and risks referred to in the preceding sentence to the extent
that such self-insurance is customary among companies of established repute
engaged in the line of business in which such properties are used or to which
such risks pertain.
SECTION 5.04. Conduct of Business and Maintenance of Existence. Subject
to Section 5.08, the Parent Guarantor will continue, and will cause each of its
Subsidiaries to continue, to engage in business of the same general type as now
conducted by the Parent Guarantor and its Subsidiaries, and will preserve, renew
and keep in full force and effect, and will cause each of its Subsidiaries to
preserve, renew and keep in full force and effect, their respective corporate
existences and their respective rights, privileges and franchises necessary or
desirable in the normal conduct of business; provided that, subject to Section
5.08, nothing in this Section 5.04 shall prohibit the termination of the
corporate existence of any Subsidiary (other than the Borrowers) if the Parent
Guarantor in good faith determines that such termination is in the best interest
of the Parent Guarantor and is not adverse to the interests of the Banks;
provided further that nothing in this Section 5.04 shall prohibit the
termination of the corporate existence of either
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Borrower or the Parent Guarantor, if such termination is the result of the
merger of such Borrower with the Parent Guarantor or of the merger of the
Borrowers with each other, in each case, pursuant to Section 5.08 hereof.
SECTION 5.05. Inspection of Property, Books and Records. The Parent
Guarantor will keep, and will cause each of its Subsidiaries to keep, proper
books of record and account in which full, true and correct entries in
conformity with generally accepted accounting principles shall be made of all
dealings and transactions in relation to its business and activities. The Parent
Guarantor, upon reasonable request by any Bank to the Treasurer of the Parent
Guarantor, will permit, and will cause each of its Subsidiaries to permit,
representatives of any Bank to visit and inspect any of their respective
properties, to examine and make abstracts from any of their respective books and
records and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants, all at
such reasonable times and as often as may reasonably be desired.
SECTION 5.06. Maintenance of Stock of Borrowers. The Parent Guarantor
will at all times maintain ownership of 100% of the outstanding shares of each
class of capital stock of each Borrower, unless such Borrower and the Parent
Guarantor shall have merged or the Borrowers shall have merged with each other,
in each case, in accordance with Section 5.08.
SECTION 5.07. Negative Pledge. The Parent Guarantor will not, and will
not permit any of its Subsidiaries to, create, assume or suffer to exist any
Lien on any asset now owned or hereafter acquired by the Parent Guarantor or any
such Subsidiary, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal
amount not exceeding $10,000,000;
(b) any Lien existing on any asset prior to the acquisition
thereof by the Parent Guarantor or such Subsidiary and not created in
contemplation of such acquisition;
(c) any Lien existing on any asset of any Person at the time such
Person becomes a Subsidiary and not created in contemplation of such
event;
(d) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by any Lien permitted by any of the
foregoing subsections of this Section 5.07, provided that the
outstanding principal amount of such Debt is not increased and is not
secured by any additional assets;
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(e) any Liens arising in the ordinary course of business of the
Parent Guarantor or any of its Subsidiaries which (i) do not secure
Debt or Derivatives Obligations and (ii) do not in the aggregate
materially detract from the value of the assets of the Parent Guarantor
and its Consolidated Subsidiaries, considered as a whole, or impair the
use thereof in the operation of the business of the Parent Guarantor
and its Consolidated Subsidiaries, considered as a whole; provided that
any Lien on any asset of the Parent Guarantor or any of its
Subsidiaries arising in connection with a judgment in excess of
$25,000,000 (reduced, for purposes of this proviso, by any amount in
respect thereof that is acknowledged by a reputable insurer as being
payable under any valid and enforceable insurance policy issued by such
insurer), whether or not such judgment is being contested or execution
thereof has been stayed, shall be deemed not arising in the ordinary
course of business of the Parent Guarantor or such Subsidiary;
(f) Liens on cash and cash equivalents securing Derivatives
Obligations, provided that the aggregate amount of cash and cash
equivalents subject to such Liens may at no time exceed $25,000,000;
(g) any Lien not otherwise permitted by the foregoing provisions
of this Section 5.07 securing Debt (or Derivative Obligations, as
measured by the amount of the pledged collateral in excess of that
permitted under (f)) in an aggregate principal amount not to exceed an
amount equal to 10% of Consolidated Tangible Assets (excluding any such
Lien securing any individual obligation in an amount not in excess of
$5,000,000); and
(h) subject to Section 2.10(b), any Lien on any asset or assets of
the Parent Guarantor or any of its Subsidiaries securing Excess Secured
Debt.
SECTION 5.08. Consolidations, Mergers and Sales of Assets. (a) None of
the Parent Guarantor or either Borrower shall consolidate or merge with or into
any Person, except that (i) the Parent Guarantor and either Borrower may merge
with any Person (other than each other) if the Parent Guarantor or such Borrower
is the surviving corporation and if, immediately after such merger (and giving
effect thereto), no Default shall have occurred and be continuing, (ii) the
Parent Guarantor and either Borrower may merge with each other and (iii) the
Borrowers may merge with each other, if (x) immediately after such merger (and
giving effect thereto), no Default shall have occurred and be continuing and (y)
the surviving corporation, whether it be the Parent Guarantor or a Borrower,
shall have signed an instrument of assumption in form and substance satisfactory
to the Required Banks immediately prior to such merger.
(b) The Parent Guarantor will not, and will not permit any of its
Subsidiaries to, sell, lease or otherwise transfer or dispose of to any Person
all or any substantial part of the assets of the Parent Guarantor and its
Subsidiaries, taken as a whole.
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SECTION 5.09. Fixed Charge Coverage. As of the last day of each fiscal
quarter of the Parent Guarantor, the ratio of Consolidated Cash Flow Available
for Fixed Charges to Consolidated Fixed Charges, in each case for the four
fiscal quarters ending on such day, shall not be less than 2.0 to 1.0.
SECTION 5.10. Debt Coverage. As of the last day of each fiscal quarter
of the Parent Guarantor ending during a period set forth in the table below, the
Leverage Ratio at such day shall not be less than the ratio set forth in the
table below corresponding to the applicable period.
===================================================================
Period Leverage Ratio
===================================================================
Prior to October 2, 1998 .250
-------------------------------------------------------------------
On or after October 2, 1998 and prior to .275
October 1, 1999
-------------------------------------------------------------------
On or after October 1, 1999 .300
===================================================================
SECTION 5.11. Minimum Consolidated Net Worth. Consolidated Net Worth
shall (i) at no date on or after October 3, 1997 be less than negative
$75,000,000, (ii) at no date on or after October 2, 1998 be less than $0, (iii)
at no date on or after October 1, 1999 be less than $100,000,000 and (iv) at no
date on or after September 29, 2000 be less than $100,000,000 plus an amount
equal to 50% of Consolidated Net Income for each Fiscal Year ending on or after
September 29, 2000 but prior to the date of determination for which Consolidated
Net Income is positive (but with no deduction on account of negative
Consolidated Net Income for any fiscal year of the Parent Guarantor).
SECTION 5.12. Transactions with Affiliates. The Parent Guarantor will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
engage in any material transaction with an Affiliate unless the terms of such
transaction are determined on an arm's-length basis and are substantially as
favorable to the Parent Guarantor or such Subsidiary as the terms which could
have been obtained from a Person which was not an Affiliate.
SECTION 5.13. Use of Proceeds. The proceeds of Credits hereunder will
be used for general corporate purposes, including a repurchase and/or redemption
by the Parent Guarantor of its shares of common stock pursuant to a proposed
plan of recapitalization dated as of January 6, 1998. None of such proceeds will
be used in violation of any
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applicable law or regulation, including without limitation Regulation G, T, U or
X of the Board of Governors of the Federal Reserve System, as each is in effect
from time to time. After giving effect to the making of each Loan and
application of the proceeds thereof, Margin Stock that was Margin Stock at the
time it was acquired by the Parent Guarantor or any Subsidiary will not exceed
10% of the value of the total assets (as determined in good faith by the board
of directors of the Parent Guarantor) of the Parent Guarantor and its
Consolidated Subsidiaries, taken as a whole.
SECTION 5.14. Restricted Payments. The Parent Guarantor will not
repurchase shares of its capital stock pursuant to Section 5 of the
Stockholders' Agreement (Put of Shares upon Death, Complete Disability or Normal
Retirement) unless the aggregate cash amount paid with respect to such
repurchase of shares, together with the aggregate cash amount paid in respect of
all prior repurchases of shares pursuant to Section 5 of the Stockholders'
Agreement made after January 7, 1998, shall not exceed an amount equal to the
greater of (x) $20,000,000 and (y) 5% of Consolidated Net Worth, as reflected in
the most recent balance sheet of the Parent Guarantor and its Consolidated
Subsidiaries referred to in Section 4.04(a) or delivered prior to such
repurchase pursuant to Section 5.01.
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following events
("Events of Default") shall have occurred and be continuing
(a) a Borrower shall fail to pay when due any principal of any Note; or
(b) a Borrower shall fail to pay any interest on any Note or any fees
or any other amount payable hereunder for a period of three Domestic Business
Days after the same shall become due; or
(c) any Obligor shall fail to observe or perform any covenant contained
in Sections 5.06 to 5.14, inclusive; or
(d) any Obligor shall fail to observe or perform any of its covenants
or agreements contained in the Financing Documents (other than those covered by
paragraph (a), (b) or (c) above) for 30 days after notice thereof has been given
to the Parent Guarantor by the Administrative Agent at the request of any Bank;
or
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(e) any representation, warranty, certification or statement made or
deemed made by any Obligor in any Financing Document or in any certificate,
financial statement or other document delivered pursuant thereto shall prove to
have been incorrect in any material respect when made or deemed made; or
(f) the Parent Guarantor or any of its Subsidiaries shall fail to make
any payment in respect of any Material Financial Obligations when due or within
any applicable grace period; or
(g) any event or condition shall occur that results in the acceleration
of the maturity of Debt of the Parent Guarantor or any of its Subsidiaries
aggregating in excess of $25,000,000, or enables (or, with the giving of notice
or lapse of time or both, would enable) the holder or holders of such Debt or
any Person acting on behalf of such holder or holders to accelerate the maturity
thereof (it being understood that the prepayment by ARAMARK Services of (x) its
Senior Note (the "Senior Note") payable to Metropolitan Life Insurance Company
(the "Holder") or (y) any successor note (a "Successor Note") issued by ARAMARK
Services to the Holder in connection with the refinancing of the Debt evidenced
by the Senior Note (provided that the principal amount of any Successor Note is
not more than $150,000,000 and that such Successor Note is substantially in the
form of the Senior Note in all material respects other than principal amount,
amortization, maturity and interest rate), by reason of the refusal by the
Holder to consent to a proposed written waiver or amendment of this Agreement
insofar as the provisions hereof are incorporated by reference in the Senior
Note or the Successor Note, as the case may be, shall not constitute an event or
condition subject to this paragraph (g)); or
(h) the Parent Guarantor or any Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally or admit in writing its
inability to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing; or
(i) an involuntary case or other proceeding shall be commenced against
the Parent Guarantor or any Subsidiary seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period
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of 60 days; or an order for relief shall be entered against the Parent Guarantor
or any Subsidiary under the Federal bankruptcy laws as now or hereafter in
effect; or
(j) any member of the ERISA Group shall fail to pay when due an amount
or amounts aggregating in excess of $25,000,000 which it shall have become
liable to pay under Title IV of ERISA (other than any such liability which is
being contested in good faith by appropriate proceedings and is not secured by
any Lien); or notice of intent to terminate a Plan or Plans having aggregate
Unfunded Liabilities in excess of $25,000,000 (a "Material Plan") shall be filed
under Title IV of ERISA by any member of the ERISA Group, any plan administrator
or any combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate, to impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer, any Material Plan; or a condition shall exist by reason
of which the PBGC would be entitled to obtain a decree adjudicating that any
Material Plan must be terminated; or there shall occur a complete or partial
withdrawal from, or a default, within the meaning of Section 4219(c)(5) of
ERISA, with respect to, one or more Multiemployer Plans which could cause one or
more members of the ERISA Group to incur a current annual payment obligation in
excess of $25,000,000 or an aggregate payment obligation in excess of
$25,000,000; or
(k) a judgment or order for the payment of money in excess of
$15,000,000 (reduced, for purposes of this paragraph (k), by any amount in
respect thereof that is acknowledged by a reputable insurer as being payable
under any valid and enforceable insurance policy issued by such insurer) shall
be rendered against the Parent Guarantor or any of its Subsidiaries and such
judgment or order shall continue unsatisfied and unstayed for a period of 30
days; or
(l) any Wholly Owned Domestic Material Subsidiary shall not have
entered into the Subsidiary Guaranty Agreement within 30 days after the later of
the date hereof or the date on which such Wholly Owned Domestic Material
Subsidiary shall have become a Wholly Owned Domestic Material Subsidiary;
provided that the foregoing provision of this paragraph (l) shall not apply to
any Wholly Owned Domestic Material Subsidiary if such Wholly Owned Domestic
Material Subsidiary is a Subsidiary of an Obligor (other than the Parent
Guarantor or the Borrowers); or
(m) more than 30 percent (40 percent, in the case of voting securities
held by a Plan) in voting power of the voting securities of the Parent Guarantor
shall be held (i) by any Person or (ii) by any two or more Persons (other than
parties to the Stockholders' Agreement) who "act as a partnership, limited
partnership, syndicate or other group for the purpose of acquiring, holding, or
disposing of securities" of the Parent Guarantor, as the case may be, within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934;
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then, and in every such event, the Administrative Agent shall (i) if requested
by Banks having more than 50 percent in aggregate amount of the Commitments, by
notice to each Borrower terminate the Commitments, and the Commitments shall
thereupon terminate, and (ii) if requested by the Banks holding Notes evidencing
more than 50 percent in aggregate principal amount of the Loans, by notice to
each Borrower declare the Notes (together with accrued interest thereon) and all
other amounts payable by the Borrowers hereunder to be, and such Notes (together
with accrued interest thereon) and amounts shall thereupon become, immediately
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by each Borrower, provided that in the case
of any of the Events of Default specified in paragraph (h) or (i) of this
Section 6.01 with respect to the Parent Guarantor or the Borrowers, without any
notice to any Obligor or any other act by any Agent or any Bank, the Commitments
shall thereupon terminate and the Notes (together with accrued interest thereon)
and all other amounts payable by the Borrowers hereunder shall become
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by each Borrower.
SECTION 6.02. Notice of Default. The Administrative Agent shall give
notice to the Parent Guarantor and each Borrower under Section 6.01(d) promptly
upon being requested to do so by any Bank and shall thereupon notify all the
Banks thereof.
ARTICLE 7
THE AGENTS
SECTION 7.01. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes each Agent to take such action as agent on such Bank's
behalf and to exercise such powers under the Financing Documents as are
delegated to such Agent by the terms thereof, together with all such powers as
are reasonably incidental thereto.
SECTION 7.02. Agents and Affiliates. Each of The Chase Manhattan Bank
and Morgan Guaranty Trust Company of New York shall have the same rights and
powers under this Agreement as any other Bank and may exercise or refrain from
exercising the same as though it were not an Agent, and each of The Chase
Manhattan Bank and Morgan Guaranty Trust Company of New York and its affiliates
may accept deposits from, lend money to, and generally engage in any kind of
business with the Parent Guarantor or any Subsidiary or Affiliate of the Parent
Guarantor as if it were not an Agent.
SECTION 7.03. Action by Agents. The obligations of each Agent under the
Financing Documents are only those expressly set forth therein with respect to
it.
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Without limiting the generality of the foregoing, neither Agent shall be
required to take any action with respect to any Default, except as expressly
provided in Article VI.
SECTION 7.04. Consultation with Experts. Either Agent may consult with
legal counsel (who may be counsel for the Parent Guarantor or a Borrower),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agents. Neither any Agent nor any of its
affiliates nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or not taken by such Agent or affiliate or
any such director, officer, agent or employee in connection herewith (i) with
the consent or at the request of the Required Banks or (ii) in the absence of
the gross negligence or willful misconduct of such Agent, affiliate, director,
officer, agent or employee. Neither any Agent nor any of its directors,
officers, agents or employees shall be responsible for or have any duty to
ascertain, inquire into or verify (i) any statement, warranty or representation
made in connection with any Financing Document or any borrowing hereunder; (ii)
the performance or observance of any of the covenants or agreements of any
Obligor under any Financing Document; (iii) the satisfaction of any condition
specified in Article III except, in the case of the Administrative Agent,
receipt of items required to be delivered to the Administrative Agent; or (iv)
the validity, effectiveness or genuineness of any Financing Document or any
other instrument or writing furnished in connection therewith. Neither Agent
shall incur any liability by acting in reliance upon any notice, consent,
certificate, statement, or other writing (which may be a bank wire, telex,
facsimile or similar writing) believed by it to be genuine or to be signed by
the proper party or parties.
SECTION 7.06. Indemnification. The Banks shall, ratably in accordance
with their respective Commitments, indemnify each Agent (to the extent not
reimbursed by any Obligor) against any cost, expense (including counsel fees and
disbursements), claim, demand, action, loss or liability (except such as result
from such Agent's gross negligence or willful misconduct) that such Agent may
suffer or incur in connection with the Financing Documents or any action taken
or omitted by such Agent thereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon either Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement and any other
Financing Document to which it is a party. Each Bank also acknowledges that it
will, independently and without reliance upon either Agent or any other Bank,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking any
action under the Financing Documents.
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SECTION 7.08. Agency Fees. The Borrowers shall be jointly and severally
obligated to pay fees to the Agents in the amounts and on the dates agreed to
prior to the date hereof by the Borrowers and the Agents.
SECTION 7.09. Successor Agents. Either Agent may resign at any time by
giving notice thereof to the Banks and the Obligors. Upon any such resignation,
the Required Banks shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Required Banks, and shall
have accepted such appointment, within 30 days after the retiring Agent gives
notice of resignation, then the retiring Agent may, on behalf of the Banks,
appoint a successor Agent, which shall be a commercial bank organized or
licensed under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $500,000,000. Upon the
acceptance of its appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the rights
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent.
SECTION 7.10. Co-Agents. Nothing contained in this Agreement shall be
construed to impose any obligation or duty whatsoever on any Co-Agent in its
capacity as such.
ARTICLE 8
CHANGES IN CIRCUMSTANCES AFFECTING FIXED RATE LOANS
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair.
If on or prior to the first day of any Interest Period for any Fixed Rate
Borrowing:
(a) the Administrative Agent is advised by the Reference Banks that
deposits in dollars (in the applicable amounts) are not being offered to the
Reference Banks in the relevant market for such Interest Period, or
(b) in the case of a Committed Borrowing, Banks having at least a
majority of the aggregate amount of the related Commitments advise the
Administrative Agent that the Adjusted CD Rate or the Adjusted Euro-Dollar Rate,
as the case may be, as determined by the Administrative Agent will not
adequately and fairly reflect the cost to such Banks of maintaining or funding
their respective CD Loans or Euro-Dollar Loans, as the case may be, for such
Interest Period,
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the Administrative Agent shall forthwith give notice thereof to the Borrower
(specifying in reasonable detail, in the case of an event referred to in clause
(b) above, the information relating thereto received by the Administrative Agent
from the Banks) and the Banks, whereupon until the Administrative Agent notifies
the Borrower that the circumstances giving rise to such suspension no longer
exist (which it shall promptly do when it determines that such circumstances
have ceased to exist or, in the case of clause (b) of this Section 8.01, when
the Administrative Agent is so notified by Banks having at least a majority of
the related Commitments, as specified above), the obligations of the Banks to
make CD Loans or Euro-Dollar Loans, as the case may be, shall be suspended.
Unless the Borrower notifies the Administrative Agent at least two Domestic
Business Days before the date of any Fixed Rate Borrowing for which a Notice of
Borrowing has previously been given that it elects not to borrow on such date,
if such Fixed Rate Borrowing is a Committed Borrowing, such Borrowing shall
instead be made as a Base Rate Borrowing.
SECTION 8.02. Illegality. If, on or after the date hereof, the adoption
of any applicable law, rule or regulation, or any change in any applicable law,
rule or regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Bank (or
its Euro-Dollar Lending Office) with any request or directive (whether or not
having the force of law) of any such author ity, central bank or comparable
agency shall make it unlawful or impossible for any Bank (or its Euro-Dollar
Lending Office) to make, maintain or fund any of its Euro-Dollar Loans and such
Bank shall so notify the Administrative Agent, the Administrative Agent shall
forthwith give notice thereof to the other Banks and each Borrower, whereupon
until such Bank notifies each Borrower and the Administrative Agent that the
circumstances giving rise to such suspension no longer exist, the obligation of
such Bank to make Euro-Dollar Loans shall be suspended. Before giving any notice
to the Administrative Agent pursuant to this Section 8.02, such Bank shall
designate a different Euro-Dollar Lending Office if such designation will avoid
the need for giving such notice and will not, in the judgment of such Bank, be
otherwise disadvantageous to such Bank. If such Bank shall determine that it may
not lawfully continue to maintain and fund any of its outstanding Euro-Dollar
Loans to maturity and shall so specify in such notice, each Borrower shall
immediately prepay in full the then outstanding principal amount of each such
Euro-Dollar Loan to it, together with accrued interest thereon. Concurrently
with prepaying each such Euro-Dollar Loan, such Borrower shall borrow a Base
Rate Loan in equal principal amount from such Bank (on which interest and
principal shall be payable contemporaneously with the related Euro-Dollar Loans
of the other Banks), and such Bank shall make such a Base Rate Loan.
SECTION 8.03. Increased Cost. (a)If on or after (x) the date hereof, in
the case of any Committed Loan or any obligation to make Committed Loans, or (y)
the date of the related Money Market Quote, in the case of any Money Market
Loan, the adoption of
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any applicable law, rule or regulation, or any change in any applicable law,
rule or regulation, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Bank (or
its Lending Office) with any request or directive (whether or not having the
force of law) of any such authority, central bank or comparable agency:
(A) shall subject any Bank (or its Lending Office) to any
tax, duty or other charge with respect to its Fixed Rate
Loans, its Notes or its obligation to make Fixed Rate Loans,
or shall change the basis of taxation of payments to any Bank
(or its Lending Office) of the principal of or interest on its
Fixed Rate Loans or any other amounts due under this Agreement
in respect of its Fixed Rate Loans or its obligation to make
Fixed Rate Loans (except for changes in the rate of tax on the
overall net income of such Bank or its Lending Office imposed
by the jurisdiction in which such Bank's principal executive
office or Lending Office is located); or
(B) shall impose, modify or deem applicable any reserve,
special deposit, insurance assessment or similar requirement
(including, without limitation, any such requirement imposed
by the Board of Governors of the Federal Reserve System, but
excluding (x) with respect to any CD Loan any such requirement
included in an applicable Domestic Reserve Percentage or
Assessment Rate and (y) with respect to any Euro-Dollar Loan
any such requirement included in an applicable Euro-Dollar
Reserve Percentage) against assets of, deposits with or for
the account of, or credit extended by, any Bank's Lending
Office or shall impose on any Bank (or its Lending Office) or
on the United States market for certificates of deposit or the
London interbank market any other condition affecting its
Fixed Rate Loans, its Note or its obligation to make Fixed
Rate Loans;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Lending Office) of making or maintaining any Fixed Rate Loan, or to reduce
the amount of any sum received or receivable by such Bank (or its Lending
Office) under this Agreement or under its Note with respect thereto, by an
amount deemed by such Bank to be material, then, within 15 days after demand by
such Bank (with a copy to the Administrative Agent), the Borrowers shall pay to
or for the account of such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction with respect to its
Fixed Rate Loans. Each Borrower shall be severally liable for its Article 8
Share of such amount.
(b) If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy of
general applicability,
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or any change in any such law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Lending Office) with any request or
directive regarding capital adequacy of general applicability (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on the
capital of such Bank (or its Parent) as a consequence of an undrawn Commitment
hereunder to a level below that which such Bank (or its Parent) could have
achieved but for such adoption, change or compliance (taking into consideration
its policies with respect to capital adequacy) by an amount deemed by such Bank
to be material, then from time to time, within 15 days after demand by such Bank
(with a copy to the Administrative Agent), the Borrowers shall pay to such Bank
such additional amount or amounts as will compensate such Bank (or its Parent)
for such reduction. Each Borrower shall be severally liable for its Article 8
Share of such amount. The Borrowers shall not be obligated to compensate any
Bank pursuant to this subsection (b) for reduced return accruing prior to the
date which is 30 days before such Bank requests compensation; provided that if
any law, rule or regulation, or interpretation or administration thereof, or any
request or directive giving rise to reduced returns has retroactive effect, such
Bank shall be entitled to claim compensation hereunder for the period commencing
on such date of retroactive effect through the date of adoption or change or
promulgation thereof without regard to the foregoing limitation. If any Bank has
demanded compensation under this subsection (b), the Borrowers shall have the
right, with the assistance of the Administrative Agent, to seek a mutually
satisfactory substitute bank or banks (which may be one or more of the Banks) to
purchase the Note and assume the Commitment of such Bank; and
(c) Each Bank will promptly notify each Borrower and the Administrative
Agent of any event of which it has knowledge, occurring after the date hereof,
that will entitle such Bank to compensation pursuant to this Section 8.03 and
will designate a different Lending Office if such designation will avoid the
need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate
of any Bank claiming compensation under this Section 8.03 and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods.
SECTION 8.04. Base Rate Loans Substituted for Affected Loans. If (i)
the obligation of any Bank to make Euro-Dollar Loans has been suspended pursuant
to Section 8.02 or (ii) any Bank has demanded compensation under Section 8.03(a)
and the Borrowers shall by at least five Euro-Dollar Business Days' prior notice
to such Bank through the Administrative Agent have elected that the provisions
of this Section shall apply to such Bank, then, unless and until such Bank
notifies the Borrowers that the
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circumstances giving rise to such suspension or demand for compensation no
longer apply:
(a) all Loans which would otherwise be made by such Bank as CD
Loans or Euro-Dollar Loans, as the case may be, shall be made instead
as Base Rate Loans (on which interest and principal shall be payable
contemporaneously with the related Fixed Rate Loans of the other
Banks), and
(b) after each of its CD Loans or Euro-Dollar Loans, as the case
may be, has been repaid, all payments of principal that would otherwise
be applied to repay such Fixed Rate Loans shall be applied to repay its
Base Rate Loans instead.
ARTICLE 9
GUARANTEE
SECTION 9.01. The Guarantee. The Parent Guarantor hereby
unconditionally and irrevocably guarantees to the Banks, and to each of them,
the due and punctual payment of all present and future indebtedness evidenced by
or arising out of this Agreement, the Notes and any Interest Rate Agreements,
including, but not limited to, the due and punctual payment of principal of and
interest on the Notes and the due and punctual payment of all other sums now or
hereafter owed by the Borrowers under this Agreement and the Notes as and when
the same shall become due and payable, whether at maturity, by declaration or
otherwise, according to the terms hereof and thereof and the due and punctual
payment of any Interest Rate Indebtedness. In case of failure by a Borrower
punctually to pay the indebtedness guaranteed hereby, the Parent Guarantor
hereby unconditionally agrees to cause such payment to be made punctually as and
when the same shall become due and payable, whether at maturity or by
declaration or otherwise, and as if such payment were made by such Borrower.
SECTION 9.02. Guarantee Unconditional. The obligations of the Parent
Guarantor under this Article IX shall be unconditional and absolute and, without
limiting the generality of the foregoing, shall not be released, discharged or
otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of any other Obligor under any
Financing Document or any Interest Rate Agreement by operation of law
or otherwise;
(b) any modification or amendment of or supplement to any
Financing Document or any Interest Rate Agreement;
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(c) any modification, amendment, waiver, release, non-perfection
or invalidity of any direct or indirect security, or of any guarantee
or other liability of any third party, for any obligation of any other
Obligor under any Financing Document or any Interest Rate Agreement;
(d) any change in the corporate existence, structure or ownership
of any other Obligor, or any insolvency, bankruptcy, reorganization or
other similar proceeding affecting any other Obligor or its assets or
any resulting release or discharge of any obligation of any other
Obligor contained in any Financing Document or any Interest Rate
Agreement;
(e) the existence of any claim, set-off or other rights which the
Parent Guarantor may have at any time against any other Obligor, any
Agent, any Bank or any other Person, whether or not arising in
connection with any Financing Document or any Interest Rate Agreement,
provided that nothing herein shall prevent the assertion of any such
claim by separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against any
other Obligor for any reason of any Financing Document or any Interest
Rate Agreement, or any provision of applicable law or regulation
purporting to prohibit the payment by any other Obligor of the
principal of or interest on any Note or any other amount payable by it
under any Financing Document or any Interest Rate Agreement; or
(g) any other act or omission to act or delay of any kind by any
other Obligor, any Agent, any Bank or any other Person or any other
circumstance whatsoever that might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of the obligations
of the Parent Guarantor under this Article IX.
SECTION 9.03. Discharge Only upon Payment in Full; Reinstatement in
Certain Circumstances. The Parent Guarantor's obligations under this Article IX
shall remain in full force and effect until the Commitments are terminated and
the principal of and interest on the Notes and all other amounts payable by the
Borrowers under this Agreement shall have been paid in full. If at any time any
payment of the principal of or interest on any Note or any other amount payable
by a Borrower under this Agreement is rescinded or must be otherwise restored or
returned upon the insolvency, bankruptcy or reorganization of such Borrower or
any Subsidiary Guarantor or otherwise, the Parent Guarantor's obligations under
this Article IX with respect to such payment shall be reinstated at such time as
though such payment had become due but had not been made at such time.
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SECTION 9.04. Waiver. The Parent Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against any other Obligor or any other Person.
SECTION 9.05. Subrogation and Contribution. The Parent Guarantor
irrevocably waives any and all rights to which it may be entitled, by operation
of law or otherwise, upon making any payment hereunder (i) to be subrogated to
the rights of the payee against a Borrower with respect to such payment or
otherwise to be reimbursed, indemnified or exonerated by a Borrower in respect
thereof or (ii) to receive any payment, in the nature of contribution or for any
other reason, from any other Obligor with respect to such payment.
SECTION 9.06. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by a Borrower under this Agreement or the Notes is
stayed upon the insolvency, bankruptcy or reorganization of such Borrower, all
such amounts otherwise subject to acceleration under the terms of this Agreement
shall nonetheless be payable by the Parent Guarantor hereunder forthwith on
demand by the Administrative Agent made at the request of the requisite number
of Banks specified in Section 6.01.
ARTICLE 10
JUDICIAL PROCEEDINGS
SECTION 10.01. Consent to Jurisdiction. Each Obligor hereby irrevocably
submits to the non-exclusive jurisdiction of the United States District Court
for the Southern District of New York and of any New York State court sitting in
the City of New York over any suit, action or proceeding arising out of or
relating to any Financing Document. To the fullest extent it may effectively do
so under applicable law, each Obligor irrevocably waives and agrees not to
assert, by way of motion, as a defense or otherwise, any claim that it is not
subject to the jurisdiction of any such court, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
brought in any such court and any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
SECTION 10.02. Enforcement of Judgments. Each Obligor agrees, to the
fullest extent it may effectively do so under applicable law, that a judgment in
any suit, action or proceeding of the nature referred to in Section 10.01
brought in any such court shall be conclusive and binding upon such Obligor and
may be enforced in the courts of the United States of America or the State of
New York (or any other courts to the jurisdiction of which such Obligor is or
may be subject) by a suit upon such judgment.
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SECTION 10.03. Service of Process. Each Obligor consents to process
being served in any suit, action or proceeding of the nature referred to in
Section 10.01 by mailing a copy thereof by registered or certified air mail,
postage prepaid, return receipt requested, to the address of such Obligor
specified in or designated pursuant to Section 11.01. Each Obligor agrees that
such service (i) shall be deemed in every respect effective service of process
upon such Obligor in any such suit, action or proceeding and (ii) shall, to the
fullest extent permitted by law, be taken and held to be valid personal service
upon and personal delivery to such Obligor.
SECTION 10.04. No Limitation on Service or Suit. Nothing in this
Article X shall affect the right of the Administrative Agent or any Bank to
serve process in any manner permitted by law, or limit any right that the
Administrative Agent or any Bank may have to bring proceedings against any
Obligor in the courts of any jurisdiction or to enforce in any lawful manner a
judgment obtained in one jurisdiction in any other jurisdiction.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Notices. Unless otherwise specified herein, all notices,
requests and other communications to any party hereunder shall be in writing
(including bank wire, telex, facsimile transmission or similar writing) and
shall be given to such party (x) in the case of the Parent Guarantor, either
Borrower or either Agent, at its address or telex or facsimile number set forth
on the signature pages hereof, (y) in the case of any Bank, at its address or
telex or facsimile number set forth in its Administrative Questionnaire, or (z)
in the case of any party hereto, at such other address or telex or facsimile
number as such party may hereafter specify for the purpose by notice to the
Agents and the Parent Guarantor. Each such notice, request or other
communication shall be effective (i) if given by telex, when such telex is
transmitted to the telex number specified in this Section 11.01 and the
appropriate answerback is received, (ii) if given by facsimile transmission,
when transmitted to the facsimile number specified in this Section and
confirmation of receipt is received, (iii) if given by mail, five days after
such communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid, or (iv) if given by any other means, when delivered at
the address specified in this Section 11.01, provided that notices to the
Administrative Agent under Article II or VIII shall not be effective until
received.
SECTION 11.02. No Waiver. No failure or delay by any Agent or any Bank
in exercising any right, power or privilege under any Financing Document shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies provided in the Financing
Documents shall be cumulative and not exclusive of any rights or remedies
provided by law.
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SECTION 11.03. Expenses; Documentary Taxes; Indemnification for
Litigation. (a) The Borrowers shall be jointly and severally obligated to pay
(i) all out-of-pocket expenses of each Agent, including fees and disbursements
of the law firm acting as special counsel for the Banks and the Agents and such
local counsel as may be retained by the Administrative Agent on behalf of the
Banks and the Agents, in connection with the preparation and administration of
the Financing Documents, any waiver or amendment of any provision thereof, or
any Default or alleged Default hereunder, and (ii) if any Event of Default
occurs, all out-of-pocket expenses incurred by any Agent or any Bank, including
fees and disbursements of counsel, in connection with such Event of Default and
collection, bankruptcy, insolvency and other enforcement proceedings resulting
therefrom. The Borrowers shall be jointly and severally obligated to indemnify
each Bank from and hold it harmless against any transfer taxes, documentary
taxes, or other similar assessments or charges made by any governmental
authority by reason of the execution and delivery of the Financing Documents.
(b) The Parent Guarantor and the Borrowers shall be jointly and
severally obligated to indemnify each Bank and hold each Bank harmless from and
against any and all liabilities, losses, damages, costs and expenses of any kind
(including, without limitation, the reasonable fees and disbursements of counsel
for any Bank in connection with any investigative, administrative or judicial
proceeding, whether or not such Bank shall be designated a party thereto) which
may be incurred by any Bank (or by any Agent in connection with its actions as
Agent hereunder), relating to or arising out of the Financing Documents or any
actual or proposed use of the proceeds of the Credits hereunder, provided that
no Bank shall have the right to be indemnified hereunder for its own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction.
SECTION 11.04. Amendments and Waivers. Any provision of this Agreement
or the Notes may be amended or waived if, and only if, such amendment or waiver
is in writing and is signed by the Parent Guarantor, each Borrower (or in the
case of the Notes, the relevant Borrower) and the Required Banks (and, if the
rights or duties of either Agent are affected thereby, by such Agent), provided
that no such amendment or waiver shall, unless signed by all the Banks, (i)
increase or decrease the amount of any Commitment (except for a ratable decrease
in the Commitments of all Banks) or subject any Bank to any additional
obligation, (ii) reduce the principal of or rate of interest on any Loan or any
fees payable hereunder, (iii) postpone the date fixed for any payment of
principal of or interest on any Loan or any fees payable hereunder, (iv) change
the percentage of the Commitments or of the aggregate unpaid principal amount of
the Notes, or the number of Banks, which shall be required for the Banks or any
of them to take any action under this Section 11.04 or any other provision of
this Agreement or any other Financing Document or (v) postpone the date fixed
for termination or reduction of the Commitments; and provided further that an
amendment or waiver of the payment
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obligations of a Borrower with respect to any Swingline Advance shall be
effective if, and only if, signed by such Borrower and the Bank making such
Swingline Advance.
In the event that (i) a Bank shall have granted a participation
pursuant to Section 11.07(b); (ii) by virtue of the participation arrangement,
such Bank is required to obtain the consent of its participant to a proposed
amendment to this Agreement or its Note; (iii) such participant's consent is not
forthcoming; (iv) such Bank and the other Banks are otherwise prepared to agree
to such proposed amendment; and (v) such Bank shall have so certified to the
Administrative Agent, then, in order to effect and in conjunction with such
amendment, the Borrowers may terminate the Commitment of such Bank and, on a
date otherwise permitted hereunder, prepay the outstanding Credits of such Bank
in their entirety, provided that the Borrowers shall have procured a substitute
Bank (which may be such Bank) contemporaneously to assume the Commitment of such
Bank and to fund, for the balance of the respective Interest Periods applicable
thereto, the Loans prepaid pursuant to this paragraph.
SECTION 11.05. Sharing of Set-offs. Each Bank agrees that if it shall,
by exercising any right of set-off or counterclaim or otherwise, receive payment
of a proportion of the aggregate amount of principal and interest due with
respect to its Credits which is greater than the proportion received by any
other Bank in respect of the aggregate amount of principal and interest due with
respect to the Credits of such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the
Credits of the other Banks, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest with respect to the
Credits of the Banks shall be shared by the Banks pro rata. Each Borrower and
the Parent Guarantor agree, to the fullest extent they may effectively do so
under applicable law, that any holder of a participation in a Note, whether or
not acquired pursuant to the foregoing arrangements, may exercise rights of
set-off or counterclaim and other rights with respect to such participation as
fully as if such holder of a participation were a direct creditor of such
Borrower or the Parent Guarantor, as the case may be, in the amount of such
participation. Each Bank further agrees that if it shall, by exercising any
right of set-off or counterclaim or otherwise, receive payment of a proportion
of the aggregate amount of facility fees due with respect to its Commitments
which is greater than the proportion received by any other Bank in respect of
the aggregate amount of facility fees due with respect to the Commitments of
such other Bank, adjustments shall be made as may be required so that all such
payments of facility fees with respect to the Commitments of the Banks shall be
shared by the Banks pro rata.
SECTION 11.06. New York Law. This Agreement and each Note shall be
construed in accordance with and governed by the law of the State of New York.
SECTION 11.07. Successors and Assigns. (a) All of the provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their
60
<PAGE>
respective successors and assigns, except that neither the Parent Guarantor nor
the Borrowers may assign or transfer any of its rights or obligations under this
Agreement without the consent of all Banks.
(b) No Bank may assign (other than (x) to Persons affiliated with such
Bank or (y) by granting participations) such Bank's rights or obligations
hereunder without the consent of each Borrower, which shall not be unreasonably
withheld, and no Bank may grant participations (other than to Persons affiliated
with such Bank) with respect to amounts exceeding 80% of such Bank's Commitment;
provided that nothing herein shall be deemed to prohibit (i) the granting of
participations by any Bank in its rights with respect to any particular Credit
or Credits or (ii) the assignment or pledge by any Bank of its Notes and its
rights hereunder with respect thereto to any Federal Reserve Bank. Any agreement
pursuant to which any Bank may grant a participation shall provide that such
Bank shall retain the sole right and responsibility to enforce the obligations
of the Borrowers relating to any Credit or Credits including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement; provided that (i) any such participation agreement
with respect to any or all of a Bank's Credit or Credits may provide that such
Bank will not agree to any proposed modification, amendment or waiver of this
Agreement without the consent of the participant which would reduce the
principal of or rate of interest on such Credit or Credits or postpone the date
fixed for any payment of principal of or interest on such Credit or Credits and
(ii) any such participation agreement with respect to a portion of a Bank's
Commitment may provide that such Bank will not agree to any modification,
amendment or waiver described in clause (i), (ii) or (iii) of the first sentence
of Section 11.04 without the consent of the participant; provided further that
any such participation agreement described in the preceding clause (ii) shall
further provide that such Bank may agree to any proposed modification, amendment
or waiver referred to in such clause (ii) without the consent of such
participant if such participant fails to provide such Bank voting instructions
with respect to such proposal within 30 days after such participant's receipt of
such proposal and such Bank's request for such voting instructions. Any Bank
that has granted or grants a participation with respect to a portion of its
Commitment shall notify the Borrowers as to the amount of its Commitment subject
to such participation and the identity of the participant. Each of the Agents
and each Borrower may, for all purposes of this Agreement, treat any Bank as the
holder of any Note drawn to its order until written notice of an assignment in
accordance with this Section 11.07(b) is received by it.
(c) No assignee of any Bank's rights or obligations shall be entitled
to receive any greater payment under Section 8.03 than such Bank would have been
entitled to receive with respect to the rights assigned, unless such assignment
(or change in Lending Office) is made with the Borrowers' prior written consent
or by reason of the provisions of Section 8.02 or 8.03 requiring such Bank to
designate a different Lending Office under
61
<PAGE>
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
SECTION 11.08. Collateral. Each Bank (the "Representing Bank")
represents to each Agent and each other Bank that the Representing Bank in good
faith is not relying upon any Margin Stock as collateral in the extension or
maintenance of the credit provided for in the Financing Documents.
SECTION 11.09. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, and all of which taken
together shall constitute a single agreement, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 11.10. WAIVER OF JURY TRIAL. EACH OF THE OBLIGORS, THE AGENTS
AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE FINANCING DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED THEREBY.
62
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date first above
written.
ARAMARK SERVICES, INC.
By /s/ B.A. Austell
-------------------------------------
Title: Treasurer
ARAMARK Tower
1101 Market Street
Philadelphia, Pennsylvania 19107
Facsimile number: (215) 238-3284
(215) 238-3282
ARAMARK UNIFORM SERVICES GROUP,
INC.
By /s/ B.A. Austell
-------------------------------------
Title: Treasurer
ARAMARK Tower
1101 Market Street
Philadelphia, Pennsylvania 19107
Facsimile number: (215) 238-3284
(215) 238-3282
ARAMARK CORPORATION
By /s/ B.A. Austell
-------------------------------------
Title: Senior Vice President, Finance
and Treasurer
ARAMARK Tower
1101 Market Street
Philadelphia, Pennsylvania 19107
Facsimile number: (215) 238-3284
(215) 238-3282
63
<PAGE>
Commitments
- -----------
Agents
------
$106,000,000 THE CHASE MANHATTAN BANK
By /s/ Karen M. Sharf
-----------------------------------------
Title: Vice President
$106,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Diana H. Imhof
-----------------------------------------
Title: Vice President
Co-Agents
---------
$81,000,000 BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By /s/ John Pocalyko
-----------------------------------------
Title: Managing Director
$81,000,000 CORESTATES BANK, N.A.
By /s/ Kathleen E. Stucy
-----------------------------------------
Title: Senior Vice President
<PAGE>
$81,000,000 CREDIT LYONNAIS
NEW YORK BRANCH
By /s/ Scott R. Chappelka
-------------------------------------------
Title: Vice President
$81,000,000 FIRST UNION NATIONAL BANK
By /s/ Wynelle Farlow
-------------------------------------------
Title: Vice President
$81,000,000 NATIONSBANK, N.A.
By /s/ Rajesh Sood
-------------------------------------------
Title: Vice President
$81,000,000 PNC BANK NATIONAL ASSOCIATION
By /s/ Daniel K. Fitzpatrick
-------------------------------------------
Title: Vice President & Senior Relationship
Manager
$81,000,000 THE BANK OF NEW YORK
By /s/ Peter H. Abdill
-------------------------------------------
Title: Vice President
<PAGE>
$81,000,000 THE SUMITOMO BANK, LIMITED
NEW YORK BRANCH
By /s/ Kazuyoshi Ogawa
-------------------------------------------
Title: Joint General Manager
$81,000,000 WACHOVIA BANK, N.A.
By /s/ Adam T. Ogburn
-------------------------------------------
Title: Vice President
Participants
$30,000,000 BANK OF HAWAII
By /s/ Joseph T. Donalson
-------------------------------------------
Title: Vice President
$25,000,000 THE BANK OF NOVA SCOTIA
By /s/ J. Alan Edwards
-------------------------------------------
Title: Authorized Signatory
$25,000,000 BANK ONE, N.A.
By /s/ David A. Hammond
-------------------------------------------
Title: Vice President
<PAGE>
$30,000,000 BANKBOSTON, N.A.
By /s/ Maura Wadlinger
-------------------------------------------
Title: Vice President
$25,000,000 BHF-BANK AKTIENGESELLSCHAFT
By /s/ Linda Pace
-------------------------------------------
Title: Vice President
By /s/ Thomas Scifo
-------------------------------------------
Title: Assistant Vice President
$40,000,000 CIBC INC.
By /s/ Christopher Kleczkowski
-------------------------------------------
Title: Executive Director
CIBC Oppenheimer Corp., as Agent
$25,000,000 COMERICA BANK
By /s/ Dan M. Roman
-------------------------------------------
Title: Vice President
$40,000,000 FLEET NATIONAL BANK
By /s/ Peter Dorfman
-------------------------------------------
Title: Vice President
<PAGE>
$40,000,000 KREDIETBANK N.V.
By /s/ Robert Snauffer
----------------------------------------
Title: Vice President
By /s/ Tod R. Angus
----------------------------------------
Title: Vice President
$40,000,000 MELLON BANK, N.A.
By /s/ Laurie G. Dunn
----------------------------------------
Title: Vice President
$30,000,000 NATIONAL WESTMINSTER BANK PLC
By /s/ John G. Brett
----------------------------------------
Title: Corporate Manager
$25,000,000 COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND",
NEW YORK BRANCH
By /s/ Angelo J. Balestrieri
----------------------------------------
Title: Vice President
By /s/ W. Pieter C. Kodde
----------------------------------------
Title: Vice President
$54,000,000 THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., NEW YORK BRANCH
By /s/ Hiroshi Kitada
----------------------------------------
Title: Deputy General Manager
<PAGE>
$30,000,000 U.S. BANK NATIONAL ASSOCIATION
By /s/ Mark R. Olmon
----------------------------------------
Title: Vice President
Total Commitments
$1,400,000,000
<PAGE>
THE CHASE MANHATTAN BANK, as Agent
By /s/ Karen M. Sharf
----------------------------------------
Title: Vice President
270 Park Avenue
New York, NY 10017
Telex: 129100
Facsimile: (212) 270-7138
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ Diana H. Imhof
----------------------------------------
Title: Vice President
60 Wall Street
New York, New York 10260
Telex: 177615
Facsimile: (212) 648-5018
<PAGE>
EXHIBIT A
NOTE
New York, New York
____________, 19__
For value received, [ARAMARK Services, Inc./ARAMARK Uniform Services
Group, Inc.], a Delaware corporation (the "Borrower"), promises to pay to the
order of
(the "Bank"), for the account of its Applicable
Lending Office, the unpaid principal amount of each Credit provided by the Bank
to the Borrower pursuant to the Credit Agreement referred to below on the last
day of the Interest Period relating to such Credit. The Borrower promises to pay
interest on the unpaid principal amount of each such Credit on the dates and at
the rate or rates provided for in the Credit Agreement. All such payments of
principal and interest shall be made in lawful money of the United States in
Federal or other immediately available funds at the office of The Chase
Manhattan Bank, 52 Broadway, New York, New York.
All Credits provided by the Bank, the respective types and maturities
thereof and all repayments of the principal thereof shall be recorded by the
Bank and, if the Bank so elects in connection with any transfer or enforcement
hereof, appropriate notations to evidence the foregoing information with respect
to each such Credit then outstanding may be endorsed by the Bank on the schedule
attached hereto, or on a continuation of such schedule attached to and made a
part hereof; provided that the failure of the Bank to make any such recordation
or endorsement shall not affect the obligations of the Borrower hereunder or
under the Credit Agreement.
<PAGE>
This note is one of the Notes referred to in the Credit and Guaranty
Agreement dated as of January 7, 1998 among the Borrower, [ARAMARK Uniform
Services Group, Inc./ARAMARK Services, Inc.], a Delaware corporation, ARAMARK
Corporation, a Delaware corporation, the banks party thereto and The Chase
Manhattan Bank and Morgan Guaranty Trust Company of New York, as Agents (as the
same may be amended from time to time, the "Credit Agreement"). Terms defined in
the Credit Agreement are used herein with the same meanings. Reference is made
to the Credit Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof.
[ARAMARK SERVICES, INC./
ARAMARK UNIFORM SERVICES
GROUP, INC.]
By __________________________
Name:
Title:
A-2
<PAGE>
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- ------------------------------------------------------------------------------
AMOUNT TYPE AMOUNT OF
OF OF PRINCIPAL MATURITY NOTATION
DATE LOAN LOAN REPAID DATE MADE BY
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
A-3
<PAGE>
EXHIBIT B
OPINION OF GENERAL COUNSEL OR ASSOCIATE GENERAL COUNSEL
OF ARAMARK SERVICES, ARAMARK UNIFORM
AND THE PARENT GUARANTOR
[Effective Date]
To the Banks and the Agents
c/o The Chase Manhattan Bank, as
Administrative Agent
277 Park Avenue
New York, New York 10172
Dear Sirs:
I am General Counsel of ARAMARK Services, Inc. ("ARAMARK Services"),
of ARAMARK Uniform Services Group, Inc. ("ARAMARK Uniform" and together with
ARAMARK Services, the "Borrowers"), and of ARAMARK Corporation (the "Parent
Guarantor") and am familiar with (i) the Credit and Guaranty Agreement (the
"Credit Agreement") dated as of January 7, 1998 among the Borrowers, the Parent
Guarantor, the banks party thereto and The Chase Manhattan Bank and Morgan
Guaranty Trust Company of New York, as Agents, and (ii) the Subsidiary Guaranty
Agreement. Terms defined in the Credit Agreement and not otherwise defined
herein are used herein as therein defined.
I have examined originals or copies, certified or otherwise identified
to my satisfaction, of such documents, corporate records, certificates of public
officials and other instruments and have conducted such other investigations of
fact and law as I have deemed necessary or advisable for purposes of this
opinion. I have assumed, for purposes of this opinion, that the Banks and the
Agents have all requisite power and authority and have taken all necessary
corporate action to enter into the Credit Agreement and to effect any
transaction contemplated thereby. This opinion is limited to the federal laws of
the United States, the laws of the States of Pennsylvania and New York and the
corporation law of the State of Delaware. As to matters pertaining to the laws
of any other State, I do not purport to practice law therein or be an expert on
the laws thereof and have relied on my general familiarity and experience with
pertinent opinions in similar transactions and relevant statutes and case law.
As to the due incorporation and
<PAGE>
good standing of the Subsidiaries of the Parent Guarantor under the laws of any
State, I have relied on certificates of public officials of such State and have
no reason to believe that any such Subsidiary is not duly incorporated or in
good standing in such State. For purposes of this opinion, "Material Debt" means
all Debt of the Parent Guarantor, the Borrowers or any of their respective
Subsidiaries, other than any such Debt having an outstanding principal amount of
$1,000,000 or less and aggregating, together with all other such Debt, not more
than $10,000,000 in outstanding principal amount.
Upon the basis of the foregoing, I am of the opinion that:
1. Each Borrower and the Parent Guarantor is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and has all corporate powers required to carry on its business as
now conducted.
2. The execution, delivery and performance (a) of the Credit Agreement
by each Borrower and the Parent Guarantor, (b) of the Notes by the relevant
Borrower and (c) of the Subsidiary Guaranty Agreement by the Parent Guarantor,
each Borrower and each of the Subsidiaries of the Parent Guarantor listed on the
signature pages of the Subsidiary Guaranty Agreement (the "Subsidiary
Guarantors" and with the Borrowers and the Parent Guarantor, collectively, the
"Obligors") are within the respective corporate powers of the Obligors, have
been duly authorized by all necessary corporate action, require no action by or
in respect of, or filing with, any governmental body, agency or official and do
not contravene, or constitute a default under, any provision of applicable law
or regulation or of the charter or by-laws of any Obligor or of any agreement or
instrument relating to Material Debt or any other agreement, judgment,
injunction, order, decree or other instrument binding upon any Obligor material
to the business of the Parent Guarantor and its Subsidiaries, considered as a
whole, or result in the creation or imposition of any Lien on any asset of any
Obligor or any of their respective Subsidiaries.
3. The Credit Agreement constitutes a valid and binding agreement of
each Borrower and the Parent Guarantor, and the Notes constitute valid and
binding obligations of the relevant Borrower, in each case enforceable in
accordance with their respective terms except as (i) the enforceability thereof
may be limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally and (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability.
4. The Subsidiary Guaranty Agreement constitutes a valid and binding
agreement of each Borrower, the Parent Guarantor and each Subsidiary of the
B-2
<PAGE>
Parent Guarantor listed on the signature pages thereof, enforceable in
accordance with its terms except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability. I have
assumed for purposes of the foregoing opinion that, in light of the limitations
set forth in Section 2.03 of the Subsidiary Guaranty Agreement and other
relevant considerations, a court would conclude that a fraudulent conveyance has
not occurred.
5. To the best of my knowledge after due inquiry, there is no action,
suit or proceeding pending or threatened against the Parent Guarantor, either
Borrower or any of their respective Subsidiaries before any court or arbitrator
or any governmental body, agency or official in which there is a reasonable
likelihood of an adverse decision which would affect the business, financial
position or results of operations of the Parent Guarantor and its Subsidiaries,
considered as a whole, in a manner material and adverse to the creditworthiness
of the Obligors, considered as a whole, or which in any manner questions the
validity or enforceability of any Financing Document.
6. Each Obligor (other than the Parent Guarantor and the Borrowers) is
a corporation validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted.
7. None of the Obligors is an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
In giving the foregoing opinion, I express no opinion as to the effect
(if any) of any law of any jurisdiction in which any Bank is located which
limits the rate of interest that such Bank may charge or collect.
Very truly yours,
B-3
<PAGE>
EXHIBIT C
OPINION OF
DAVIS POLK & WARDWELL, SPECIAL COUNSEL
FOR THE AGENTS
[Effective Date]
To the Banks and the Agents
c/o The Chase Manhattan Bank,
as Administrative Agent
277 Park Avenue
New York, New York 10172
Dear Sirs:
We have participated in the preparation of the Credit and Guaranty
Agreement (the "Credit Agreement") dated as of January 7, 1998 among ARAMARK
Services Inc., a Delaware corporation ("ARAMARK Services"), ARAMARK Uniform
Services Group, Inc., a Delaware corporation ("ARAMARK Uniform" and together
with ARAMARK Services, the "Borrowers"), ARAMARK Corporation, a Delaware
corporation (the "Parent Guarantor"), the banks party thereto (the "Banks") and
The Chase Manhattan Bank and Morgan Guaranty Trust Company of New York, as
Agents (the "Agents"), and have acted as special counsel for the Agents for the
purpose of rendering this opinion pursuant to Section 3.01(g) of the Credit
Agreement. Terms defined in the Credit Agreement are used herein as therein
defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion. In addition, in connection with certain questions of
fact, we have relied upon representations and certificates of officers of the
Company.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by each Borrower and the
Parent Guarantor of the Credit Agreement and by the relevant Borrower of the
<PAGE>
Notes are within the respective corporate powers of the Parent Guarantor and
each Borrower and have been duly authorized by all necessary corporate action.
2. The Credit Agreement constitutes a valid and binding agreement of
each Borrower and the Parent Guarantor, and each Note constitutes a valid and
binding obligation of the relevant Borrower, in each case enforceable in
accordance with its terms, except as may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and by general principles of
equity.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, the federal laws of the
United States of America and the General Corporation Law of the State of
Delaware. In giving the foregoing opinion, we express no opinion as to the
effect (if any) of any law of any jurisdiction (except the State of New York) in
which any Bank is located which limits the rate of interest that such Bank may
charge or collect.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by any other person without our prior written consent.
Very truly yours,
C-2
<PAGE>
EXHIBIT D
SUBSIDIARY GUARANTY AGREEMENT
dated as of
January 7, 1998
among
ARAMARK SERVICES, INC.,
ARAMARK UNIFORM SERVICES GROUP, INC.,
ARAMARK CORPORATION
and
THE SUBSIDIARY GUARANTORS REFERRED TO HEREIN
<PAGE>
TABLE OF CONTENTS
-------------
<TABLE>
<CAPTION>
PAGE
----
ARTICLE 1
DEFINITIONS
<S> <C> <C>
SECTION 1.01. Definitions...............................................................................1
SECTION 1.02. Accounting Terms and Determinations......................................................16
SECTION 1.03. Types of Borrowings......................................................................16
ARTICLE 2
THE LOANS
SECTION 2.01. Commitments to Lend......................................................................17
SECTION 2.02. Notice of Committed Borrowings...........................................................17
SECTION 2.03. Money Market Borrowings..................................................................18
SECTION 2.04. Swingline Advances.......................................................................21
SECTION 2.05. Notice to Banks; Funding of Loans........................................................21
SECTION 2.06. Maturity of Loans........................................................................22
SECTION 2.07. Notes....................................................................................22
SECTION 2.08. Interest.................................................................................23
SECTION 2.09. Facility Fees............................................................................28
SECTION 2.10. Reduction of Commitments.................................................................29
SECTION 2.11. Mandatory Termination of Commitments.....................................................31
SECTION 2.12. Optional Prepayments.....................................................................31
SECTION 2.13. Payments.................................................................................31
SECTION 2.14. Funding Losses...........................................................................32
SECTION 2.15. Withholding Tax Exemption................................................................32
ARTICLE 3
CONDITIONS
SECTION 3.01. Effectiveness............................................................................33
SECTION 3.02. Conditions to Borrowing..................................................................35
SECTION 3.03. Representation by Borrower...............................................................35
SECTION 3.04. Transitional Provisions..................................................................35
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power............................................................36
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention..................................................................................36
SECTION 4.03. Binding Effect...........................................................................37
SECTION 4.04. Financial Information....................................................................37
SECTION 4.05. Litigation...............................................................................37
SECTION 4.06. Compliance with ERISA....................................................................37
SECTION 4.07. Environmental Matters....................................................................38
SECTION 4.08. Taxes....................................................................................38
SECTION 4.09. Compliance with Laws.....................................................................38
SECTION 4.10. Not an Investment Company................................................................39
SECTION 4.11. Full Disclosure..........................................................................39
ARTICLE 5
COVENANTS
SECTION 5.01. Information..............................................................................39
SECTION 5.02. Payment of Obligations...................................................................42
SECTION 5.03. Maintenance of Property; Insurance.......................................................42
SECTION 5.04. Conduct of Business and Maintenance of Existence.........................................42
SECTION 5.05. Inspection of Property, Books and Records................................................43
SECTION 5.06. Maintenance of Stock of Borrowers........................................................43
SECTION 5.07. Negative Pledge..........................................................................43
SECTION 5.08. Consolidations, Mergers and Sales of Assets..............................................44
SECTION 5.09. Fixed Charge Coverage....................................................................45
SECTION 5.10. Debt Coverage............................................................................45
SECTION 5.11. Minimum Consolidated Net Worth...........................................................45
SECTION 5.12. Transactions with Affiliates.............................................................45
SECTION 5.13. Use of Proceeds..........................................................................45
SECTION 5.14. Restricted Payments......................................................................46
ARTICLE 6
DEFAULTS
SECTION 6.01. Events of Default........................................................................46
SECTION 6.02. Notice of Default........................................................................49
ARTICLE 7
THE AGENTS
SECTION 7.01. Appointment and Authorization............................................................49
SECTION 7.02. Agents and Affiliates....................................................................49
</TABLE>
D-ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
SECTION 7.03. Action by Agents.........................................................................49
SECTION 7.04. Consultation with Experts................................................................50
SECTION 7.05. Liability of Agents......................................................................50
SECTION 7.06. Indemnification..........................................................................50
SECTION 7.07. Credit Decision..........................................................................50
SECTION 7.08. Agency Fees..............................................................................51
SECTION 7.09. Successor Agents.........................................................................51
SECTION 7.10. Co-Agents................................................................................51
ARTICLE 8
CHANGES IN CIRCUMSTANCES AFFECTING FIXED RATE LOANS
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair.................................51
SECTION 8.02. Illegality...............................................................................52
SECTION 8.03. Increased Cost...........................................................................52
SECTION 8.04. Base Rate Loans Substituted for Affected Loans...........................................54
ARTICLE 9
GUARANTEE
SECTION 9.01. The Guarantee............................................................................55
SECTION 9.02. Guarantee Unconditional..................................................................55
SECTION 9.03. Discharge Only upon Payment in Full; Reinstatement in
Certain Circumstances..........................................................................56
SECTION 9.04. Waiver...................................................................................57
SECTION 9.05. Subrogation and Contribution.............................................................57
SECTION 9.06. Stay of Acceleration.....................................................................57
ARTICLE 10
JUDICIAL PROCEEDINGS
SECTION 10.01. Consent to Jurisdiction.................................................................57
SECTION 10.02. Enforcement of Judgments................................................................57
SECTION 10.03. Service of Process......................................................................58
SECTION 10.04. No Limitation on Service or Suit........................................................58
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Notices.................................................................................58
SECTION 11.02. No Waiver...............................................................................58
</TABLE>
D-iii
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 11.03. Expenses; Documentary Taxes; Indemnification for
Litigation.....................................................................................59
SECTION 11.04. Amendments and Waivers..................................................................59
SECTION 11.05. Sharing of Set-offs.....................................................................60
SECTION 11.06. New York Law............................................................................60
SECTION 11.07. Successors and Assigns..................................................................60
SECTION 11.08. Collateral..............................................................................62
SECTION 11.09. Counterparts............................................................................62
SECTION 11.10. WAIVER OF JURY TRIAL....................................................................62
</TABLE>
<PAGE>
SUBSIDIARY GUARANTY AGREEMENT
AGREEMENT dated as of January 7, 1998 among ARAMARK Services, Inc., a
Delaware corporation ("ARAMARK Services"), ARAMARK Uniform Services Group, Inc.,
a Delaware corporation ("ARAMARK Uniform" and together with ARAMARK Services,
the "Borrowers"), ARAMARK Corporation, a Delaware corporation (the "Parent
Guarantor"), and each of the Subsidiary Guarantors listed on the signature pages
hereof under the caption "Subsidiary Guarantors" and each Person that shall, at
any time after the date hereof, become an additional "Subsidiary Guarantor"
pursuant to Section 3.01 hereof (collectively, the "Subsidiary Guarantors").
WHEREAS, the Borrowers and the Parent Guarantor have entered into a
Credit and Guaranty Agreement (as the same may be amended from time to time, the
"Credit Agreement") dated as of January 7, 1998 among the Borrowers, the Parent
Guarantor, the banks party thereto and The Chase Manhattan Bank and Morgan
Guaranty Trust Company of New York, as Agents, pursuant to which the Borrowers
are entitled, subject to certain conditions, to jointly borrow up to
$1,400,000,000 and pursuant to which the payment when due of all principal,
interest and other amounts thereunder is guaranteed by the Parent Guarantor;
WHEREAS, as a condition to the effectiveness of the Credit Agreement,
each of the entities listed on Schedule I hereto and each Wholly Owned Domestic
Material Subsidiary of the Parent Guarantor is required to execute and deliver
to the Administrative Agent, on behalf of the Banks, a Subsidiary Guaranty
Agreement whereby such entity or Wholly Owned Domestic Material Subsidiary shall
guarantee the payment when due of all principal, interest, and other amounts
that shall be at any time payable by a Borrower under the Credit Agreement; and
WHEREAS, ARAMARK Services has in the past and the Borrowers may in the
future become obligated to one or more of said banks under one or more Interest
Rate Agreements;
WHEREAS, in conjunction with the transactions contemplated by the
Credit Agreement and in consideration of the financial and other support that
the Borrowers have provided, and such financial and other support as the
Borrowers and the Parent Guarantor may in the future provide, to the Subsidiary
Guarantors, and in order to induce the Banks to enter into the Credit Agreement
and any Interest Rate Agreements, the Subsidiary Guarantors are willing to
guarantee the obligations of the Borrowers thereunder;
NOW, THEREFORE, the parties hereto agree as follows:
<PAGE>
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. Terms defined in the Credit Agreement and
not otherwise defined herein are used herein as therein defined.
ARTICLE 2
GUARANTEES
SECTION 2.01. Guarantees. Subject to Section 2.03, the Subsidiary
Guarantors hereby jointly, severally, unconditionally and irrevocably guarantee
to the Banks, and to each of them, the due and punctual payment of all present
and future indebtedness of the Borrowers evidenced by or arising out of the
Financing Documents and any Interest Rate Agreements, including, but not limited
to, the due and punctual payment of principal of and interest on the Notes, the
due and punctual payment of all other sums now or hereafter owed by each
Borrower under any Financing Document as and when the same shall become due and
payable, whether at maturity, by declaration or otherwise, according to the
terms thereof and the due and punctual payment of any Interest Rate
Indebtedness. In case of failure by a Borrower punctually to pay the
indebtedness guaranteed hereby, the Subsidiary Guarantors, subject to Section
2.03, hereby jointly, severally and unconditionally agree to cause such payment
to be made punctually as and when the same shall become due and payable, whether
at maturity or by declaration or otherwise, and as if such payment were made by
such Borrower.
SECTION 2.02. Guarantees Unconditional. The obligations of each
Subsidiary Guarantor under this Article II shall be unconditional and absolute
and, without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of any other Obligor under any
Financing Document or any Interest Rate Agreement, by operation of law
or otherwise;
(b) any modification or amendment of or supplement to any
Financing Document or any Interest Rate Agreement;
(c) any modification, amendment, waiver, release, non-perfection
or invalidity of any direct or indirect security, or of any
D-2
<PAGE>
guarantee or other liability of any third party, for any obligation of
any other Obligor under any Financing Document or any Interest Rate
Agreement;
(d) any change in the corporate existence, structure or ownership
of any other Obligor, or any insolvency, bankruptcy, reorganization or
other similar proceeding affecting any other Obligor or its assets or
any resulting release or discharge of any obligation of any other
Obligor contained in any Financing Document or any Interest Rate
Agreement;
(e) the existence of any claim, set-off or other rights which any
Subsidiary Guarantor may have at any time against any other Obligor,
the Administrative Agent, any Bank or any other Person, whether or not
arising in connection with the Financing Documents or any Interest Rate
Agreement, provided that nothing herein shall prevent the assertion of
any such claim by separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against any
other Obligor for any reason of any Financing Document or any Interest
Rate Agreement, or any provision of applicable law or regulation
purporting to prohibit the payment by any other Obligor of the
principal of or interest on any Note or any other amount payable by any
other Obligor under the Financing Documents or any Interest Rate
Agreement; or
(g) any other act or omission to act or delay of any kind by any
other Obligor, the Administrative Agent, any Bank or any other Person
or any other circumstance whatsoever that might, but for the provisions
of this paragraph, constitute a legal or equitable discharge of the
obligations of any Subsidiary Guarantor under this Article II.
SECTION 2.03. Limit of Liability. Each Subsidiary Guarantor shall be
liable under this Agreement only for amounts aggregating up to the largest
amount that would not render its obligations hereunder subject to avoidance
under Section 548 of the United States Bankruptcy Code or any comparable
provisions of any applicable state law.
SECTION 2.04. Discharge; Reinstatement in Certain Circumstances. (a)
Subject to Section 2.03 and paragraph (b) of this Section 2.04, each Subsidiary
Guarantor's obligations under this Article II shall remain in full force and
effect, except as otherwise agreed with the consent of the Required Banks, until
the Commitments are terminated and the principal of and interest on the Notes
and all other amounts payable by the Borrowers under the Financing Documents
shall have been paid in full. If at any time any payment of the principal of or
interest
D-3
<PAGE>
on any Note or any other amount payable by a Borrower under any Financing
Document is rescinded or must be otherwise restored or returned upon the
insolvency, bankruptcy or reorganization of any other Obligor or otherwise, each
Subsidiary Guarantor's obligations under this Article II with respect to such
payment shall be reinstated at such time as though such payment had become due
but had not been made at such time.
(b) In the event that any capital stock of any Subsidiary Guarantor
shall be disposed of with the effect that such Subsidiary Guarantor shall cease
to be a Subsidiary of the Parent Guarantor, such Subsidiary Guarantor shall be
released and discharged from any obligation under this Agreement; provided that
no such disposition shall be made unless, immediately after such disposition,
and giving effect thereto, no Event of Default shall have occurred and be
continuing; and provided further that such Subsidiary Guarantor's obligations
under this Agreement shall be immediately reinstated if at any time after such
disposition it becomes a Subsidiary of the Parent Guarantor. The obligations
hereunder of any Subsidiary Guarantor the capital stock of which has been so
disposed of shall be unenforceable for so long as it shall be released and
discharged of its obligations pursuant to this Section 2.04(b).
SECTION 2.05. Waiver. Each Subsidiary Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against any other Obligor or any other Person.
SECTION 2.06. Subrogation and Contribution. Each Subsidiary Guarantor
irrevocably waives, until such time as all amounts under the Financing Documents
and any Interest Rate Agreement have been indefeasibly paid in full, any and all
rights to which it may be entitled, by operation of law or otherwise, upon
making any payment hereunder (i) to be subrogated to the rights of the payee
against a Borrower with respect to such payment or otherwise to be reimbursed,
indemnified or exonerated by such Borrower in respect thereof or (ii) to receive
any payment, in the nature of contribution or for any other reason, from any
other Obligor with respect to such payment.
SECTION 2.07. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by a Borrower under the Financing Documents is
stayed upon the insolvency, bankruptcy or reorganization of such Borrower, all
such amounts otherwise subject to acceleration under the terms of the Financing
Documents shall nonetheless be payable by each Subsidiary Guarantor hereunder
forthwith on demand by the Administrative Agent made at the request of the
requisite number of Banks specified in the Financing Documents.
D-4
<PAGE>
ARTICLE 3
COVENANT OF THE COMPANY AND THE PARENT GUARANTOR
SECTION 3.01. Additional Subsidiary Guarantors. The Parent Guarantor
and each Borrower jointly and severally agree to cause each Person that shall,
at any time after the date hereof, become a Wholly Owned Domestic Material
Subsidiary of the Parent Guarantor to enter into this Agreement not later than
30 days after the date on which such Person shall have become a Wholly Owned
Domestic Material Subsidiary.
ARTICLE 4
MISCELLANEOUS
SECTION 4.01. Notices. Unless otherwise specified herein, all notices,
requests and other communications to any party hereunder shall be in writing
(including bank wire, telex, facsimile transmission or similar writing) and
shall be given to such party at its address or telex or facsimile number set
forth on the signature pages hereof (or, in the case of any Subsidiary Guarantor
as to which no such address or telex or facsimile number is so set forth, to it
at the address or telex or facsimile number of the Parent Guarantor set forth on
the signature pages hereof) or such other address or telex or facsimile number
as such party may hereafter specify for the purpose by notice to the
Administrative Agent. Each such notice, request or other communication shall be
effective (i) if given by telex, when such telex is transmitted to the
appropriate answerback is received, (ii) if given by mail, five days after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the address specified in this Section 4.01.
SECTION 4.02. No Waiver. No failure or delay by the Administrative
Agent or any Bank in exercising any right, power or privilege under this
Agreement or any other Financing Document shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein and therein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 4.03. Amendments and Waivers. Any provision of this Agreement
may be amended or waived if, and only if, such amendment or waiver is in writing
and is signed by the Parent Guarantor, each Borrower, each
D-5
<PAGE>
Subsidiary Guarantor and the Administrative Agent with the prior written consent
of the Required Banks.
SECTION 4.04. New York Law. This Agreement shall be construed in
accordance with and governed by the law of the State of New York. Each of the
Subsidiary Guarantors hereby agrees to be bound by each of Article X and Section
11.10 of the Credit Agreement to the same extent as if it were a party thereto.
SECTION 4.05. Successors and Assigns. All the provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that no Subsidiary Guarantor
may assign or transfer any of its rights or obligations under this Agreement.
SECTION 4.06. Counterpars; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, and all of
which taken together shall constitute a single instrument, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when the Administrative Agent shall have
received a counterpart hereof signed by each Borrower, the Parent Guarantor and
one or more of the Subsidiary Guarantors. Thereafter, upon execution and
delivery of this Agreement on behalf of any other Subsidiary Guarantor, this
Agreement shall become effective with respect to such Subsidiary Guarantor as of
the date of such delivery.
D-6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date first above
written.
ARAMARK SERVICES, INC.
By:
----------------------------------------
Title:
ARAMARK Tower
1101 Market Street
Philadelphia, Pennsylvania 19107
Facsimile number: (215) 238-3284
(215) 238-3282
ARAMARK UNIFORM SERVICES GROUP,
INC.
By:
----------------------------------------
Title:
ARAMARK Tower
1101 Market Street
Philadelphia, Pennsylvania 19107
Facsimile number: (215) 238-3284
(215) 238-3282
ARAMARK CORPORATION
By:
----------------------------------------
Title:
ARAMARK Tower
1101 Market Street
Philadelphia, Pennsylvania 19107
Facsimile number: (215) 238-3284
(215) 238-3282
D-7
<PAGE>
SUBSIDIARY GUARANTORS
---------------------
ARAMARK EDUCATIONAL GROUP, INC.
By:
----------------------------------------
Title:
ARAMARK HEALTH & EDUCATION
SERVICES, INC.
By:
----------------------------------------
Title:
ARAMARK HEALTHCARE SUPPORT
SERVICES, INC.
By:
----------------------------------------
Title:
ARAMARK SPORTS AND ENTERTAINMENT
GROUP, INC.
By:
----------------------------------------
Title:
ARAMARK MAGAZINE & BOOK
SERVICES, INC.
By
-----------------------------------------
Title:
ARAMARK REFRESHMENT SERVICES, INC.
By:
----------------------------------------
Title:
D-8
<PAGE>
ARAMARK SENIOR NOTES COMPANY
By:
----------------------------------------
Title:
ARAMARK SERVICES, INC.
By:
----------------------------------------
Title:
ARAMARK UNIFORM SERVICES, INC.
By:
----------------------------------------
Title:
ARAMARK UNIFORM SERVICES
GROUP, INC.
By:
----------------------------------------
Title:
D-9
<PAGE>
Schedule
SUBSIDIARY GUARANTORS
ARAMARK EDUCATIONAL GROUP, INC.
ARAMARK HEALTH & EDUCATION SERVICES, INC.
ARAMARK HEALTHCARE SUPPORT SERVICES, INC.
ARAMARK SPORTS AND ENTERTAINMENT GROUP, INC.
ARAMARK MAGAZINE & BOOK SERVICES, INC.
ARAMARK REFRESHMENT SERVICES, INC.
ARAMARK SENIOR NOTES COMPANY
ARAMARK SERVICES, INC.
ARAMARK UNIFORM SERVICES, INC.
ARAMARK UNIFORM SERVICES GROUP, INC.
D-10
<PAGE>
EXHIBIT E
MANAGEMENT EQUITY NOTE
[To be provided by Borrower]
<PAGE>
EXHIBIT F
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes to [ARAMARK Services,
Inc./ARAMARK Uniform Services Group, Inc.] (the "Borrower")
Pursuant to Section 2.03 of the Credit and Guaranty Agreement (as
amended from time to time, the "Credit Agreement") dated as of January 7, 1998
among the Borrower, [ARAMARK Uniform Services Group, Inc./ARAMARK Services,
Inc.], ARAMARK Corporation, the Banks party thereto and The Chase Manhattan Bank
and Morgan Guaranty Trust Company of New York, as Agents, we are pleased to
invite you to submit Money Market Quotes to us for the following proposed Money
Market Borrowing(s):
Date of Borrowing:
-----------------------
Principal Amount(1) Interest Period(2)
- ------------------- ------------------
$
Such Money Market Quotes should offer a Money Market Rate.
Please respond to this invitation by no later than 10:00 A.M. (New York
City time) on [date].
Terms used herein have the meanings assigned to them in the Credit
Agreement.
[ARAMARK SERVICES, INC./ARAMARK
UNIFORM SERVICES GROUP, INC.]
By
------------------------------------
Title:
- --------
(1) Amount must be $5,000,000 or a larger multiple of $1,000,000.
(2) Not less than 7 nor more than 270 days, subject to the provisions of the
definition of Interest Period.
<PAGE>
EXHIBIT G
Form of Money Market Quote
[ARAMARK SERVICES, INC./
ARAMARK UNIFORM SERVICES
GROUP, INC.]
ARAMARK Tower
1101 Market Street
Philadelphia, Pennsylvania 19107
Attention:
Re: Money Market Quote to [ARAMARK Services, Inc./ARAMARK
Uniform Services Group, Inc.] (the "Borrower")
In response to your invitation dated _____________, 19__, we hereby make
the following Money Market Quote on the following terms:
1. Quoting Bank:
2. Person to contact at Quoting Bank (including telephone number):
3. Date of Borrowing:
4. We hereby offer to make Money Market Loan(s) in the following
principal amounts, for the following Interest Periods and at the following
rates:
G-1
<PAGE>
Principal Interest Money Market
Amount(1) Period(2) Rate(3)
- ------------------------------------------------------------------------------
$
$
[Provided, that the aggregate principal amount of Money Market Loans
for which the above offers may be accepted shall not exceed
$__________.]*
We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in the Credit
and Guaranty Agreement dated as of January 7, 1998 among the Borrower,
[ARAMARK Uniform Services Group, Inc./ARAMARK Services, Inc.], ARAMARK
Corporation, the Banks party thereto and The Chase Manhattan Bank and
Morgan Guaranty Trust Company of New York, as Agents (as amended from
time to time, the "Credit Agreement"), irrevocably obligates us to make
the Money Market Loan(s) for which any offer(s) are accepted, in whole
or in part.
Terms used herein have the meanings assigned to them in the Credit
Agreement.
Very truly yours,
[NAME OF BANK]
Dated: By:
------------------------ --------------------------------
Authorized Officer
- --------
(1) Principal amount bid for each Interest Period may not exceed principal
amount requested. Specify aggregate limitation if the sum of the individual
offers exceeds the amount the Bank is willing to lend. Bids must be made for
$5,000,000 or a larger multiple of $1,000,000.
(2) Not less than 7 nor more than 270 days, as specified in the related
Invitation. No more than five bids are permitted for each Interest Period. on.
(3) Specify rate of interest per annum (specified to 1/10,000th of 1%).
G-2
<PAGE>
EXHIBIT 10.8
AMENDED AND RESTATED CREDIT AGREEMENT
[CONFORMED COPY]
AMENDED AND RESTATED CREDIT AGREEMENT dated as of September 10, 1998
among ARAMARK SERVICES, INC., ARAMARK UNIFORM SERVICES GROUP, INC., ARAMARK
CORPORATION, the BANKS listed on the signature pages hereof and THE CHASE
MANHATTAN BANK and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agents.
W I T N E S S E T H :
WHEREAS, certain of the parties hereto have heretofore entered into a
Credit and Guaranty Agreement dated as of January 7, 1998 (as heretofore
amended, the "Agreement");
WHEREAS, no Domestic Loans or Euro-Dollar Loans are outstanding under
the Agreement at the date hereof; and
WHEREAS, the parties hereto desire to amend the Agreement as set forth
herein and to restate the Agreement in its entirety to read as set forth in the
Agreement with the amendments specified below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Agreement shall
have the meaning assigned to such term in the Agreement. Each reference to
"hereof", "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in the Agreement shall from and after the date hereof refer to the
Agreement as amended hereby. The term "Note" defined in the Agreement shall
include from and after the date hereof each of the New Notes as defined below.
SECTION 2. Amendment of the Agreement.
(a) Subsections (b)(i) and (c) of Section 2.10 of the Agreement are
deleted.
(b) Subsections (b)(ii), (d), (e) and (f) of Section 2.10 (together
with all cross references thereto elsewhere in the Agreement) are hereby
redesignated as subsections (b), (c), (d) and (e), respectively.
1
<PAGE>
SECTION 3. Changes in Commitments. The aggregate amount of the
Commitments is decreased to $1,000,000,000. With effect from and including the
date this Amended and Restated Credit Agreement becomes effective in accordance
with Section 6 hereof, (a) each Person listed on the signature pages hereof
which is not a party to the Agreement (a "New Bank") shall each become a Bank
party to the Agreement and (b) the Commitment of each Bank shall be the amount
set forth opposite the name of such Bank on the signature pages hereof, as such
amount may be reduced from time to time pursuant to Section 2.10 of the
Agreement. Any Bank whose commitment is changed to zero shall upon such
effectiveness cease to be a Bank party to the Agreement, and all accrued fees
and other amounts payable under the Agreement for the account of such Bank shall
be due and payable on such date; provided that the provisions of Sections 8.03
and 11.03 of the Agreement shall continue to inure to the benefit of each such
Bank.
SECTION 4. Representations and Warranties. Each of the Parent Guarantor
and the Borrowers hereby represents and warrants that as of the date hereof and
after giving effect hereto:
(a) no Default has occurred and is continuing; and
(b) each representation and warranty of each Obligor set forth in the
Financing Documents is true and correct after giving effect to this Amended and
Restated Credit Agreement as though made on and as of such date.
SECTION 5. Governing Law. This Amended and Restated Credit Agreement
shall be governed by and construed in accordance with the laws of the State of
New York.
SECTION 6. Counterparts; Effectiveness. This Amended and Restated
Credit Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Amended and Restated Credit Agreement
shall become effective as of the date hereof when the Administrative Agent shall
have received (i) duly executed counterparts hereof signed by each of the Parent
Guarantor, the Borrowers and the Banks (or, in the case of any party as to which
an executed counterpart shall not have been received, the Administrative Agent
shall have received telegraphic, telex or other written confirmation from such
party of execution of a counterpart hereof by such party), (ii) a duly executed
Note for each of the New Banks (a "New Note") dated on or before the date of
effectiveness hereof and otherwise in compliance with Section 2.07 of the
Agreement, and (iii) an opinion of the General Counsel or Associate General
Counsel of the Parent Guarantor (or such other counsel for the Parent Guarantor
and the Borrowers as may be acceptable to the Administrative Agent)
substantially in the form of Exhibit B to the Agreement with reference to this
Amended and Restated Credit Agreement, the Agreement as amended and restated
hereby and the other Financing Documents.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Credit Agreement to be duly executed as of the date first above
written.
ARAMARK SERVICES, INC.
By: /s/ Barbara A. Austell
-----------------------------------
Name: Barbara A. Austell
Title: Treasurer
ARAMARK UNIFORM SERVICES GROUP, INC.
By: /s/ Barbara A. Austell
-----------------------------------
Name: Barbara A. Austell
Title: Treasurer
ARAMARK CORPORATION
By: /s/ Barbara A. Austell
-----------------------------------
Name: Barbara A. Austell
Title: Senior Vice President, Finance
and Treasurer
Commitments Agents
- ----------- ------
$90,000,000 THE CHASE MANHATTAN BANK
By: /s/ Karen May Sharf
-------------------------------------
Name: Karen May Sharf
Title: Vice President
<PAGE>
$90,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ Diana H. Imhof
----------------------------
Name: Diana H. Imhof
Title: Vice President
Co-Agents
---------
$62,000,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ John W. Pocalyko
----------------------------
Name: John W. Pocalyko
Title: Managing Director
$62,000,000 THE BANK OF NEW YORK
By: /s/ Peter H. Abdill
----------------------------
Name: Peter H. Abdill
Title: Vice President
$62,000,000 CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Vladimir Labun
----------------------------
Name: Vladimir Labun
Title: First Vice President-
Manager
<PAGE>
$62,000,000 FIRST UNION NATIONAL BANK
By: /s/ Wynelle Farlow
----------------------------
Name: Wynelle Farlow
Title: Vice President
$62,000,000 PNC BANK NATIONAL ASSOCIATION
By: /s/ Daniel K. Fitzpatrick
----------------------------
Name: Daniel K. Fitzpatrick
Title: Vice President &
Senior Relationship
Manager
$62,000,000 THE SUMITOMO BANK, LIMITED
NEW YORK BRANCH
By: /s/ John C. Kissinger
----------------------------
Name: John C. Kissinger
Title: General Manager
$62,000,000 WACHOVIA BANK, N.A.
By: /s/ James F. McCreary
----------------------------
Name: James F. McCreary
Title: Senior Vice President
<PAGE>
Participants
------------
$30,000,000 CIBC INC.
By: /s/ Gerald J. Girardi
----------------------------
Name: Gerald Girardi
Title: Executive Director
CIBC Oppenheimer
Corp., AS AGENT
$30,000,000 FLEET NATIONAL BANK
By: /s/ Peter Dorfman
---------------------------
Name: Peter Dorfman
Title: Vice President
$30,000,000 KBC BANK N.V.
By: /s/ Robert M. Surdam, Jr.
---------------------------
Name: Robert M. Surdam, Jr.
Title: Vice President
By: /s/ Robert Snauffer
---------------------------
Name: Robert Snauffer
Title: First Vice President
<PAGE>
$30,000,000 THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., NEW YORK BRANCH
By: /s/ Gregory L. Hong
---------------------------
Name: Gregory L. Hong
Title: Deputy General Manager
$30,000,000 MELLON BANK, N.A.
By: /s/ Laurie G. Dunn
---------------------------
Name: Laurie G. Dunn
Title: Vice President
$24,000,000 BANKBOSTON, N.A.
By: /s/ Maura Wadlinger
----------------------------
Name: Maura Wadlinger
Title: Vice President
$24,000,000 BANK OF HAWAII
By: /s/ Mark C. Joseph
----------------------------
Name: Mark C. Joseph
Title: Vice President
<PAGE>
$24,000,000 NATIONAL WESTMINSTER BANK PLC
By: /s/ Peter J. Stringer
-----------------------------
Name: Peter J. Stringer
Title: Senior Vice President
$24,000,000 U.S. BANK NATIONAL ASSOCIATION
By: /s/ Mark R. Olmon
---------------------------
Name: Mark R. Olmon
Title: Vice President
$20,000,000 THE BANK OF NOVA SCOTIA
By: /s/ J. Alan Edwards
----------------------------
Name: J. Alan Edwards
Title: Authorized Signatory
$20,000,000 BANK ONE, N.A.
By: /s/ David A. Hammond
----------------------------
Name: David A. Hammond
Title: Vice President
<PAGE>
$20,000,000 BHF-BANK AKTIENGESELLSCHAFT
By: /s/ Michael T. Pellerito
----------------------------
Name: Michael T. Pellerito
Title: Assistant Treasurer
By: /s/ Hans-Juergen Scholz
-------------------------------
Name: Hans-Juergen Scholz
Title: Assistant Vice President
$20,000,000 COMERICA BANK
By: /s/ Kimberly S. Kersten
----------------------------
Name: Kimberly S. Kersten
Title: Vice President
$20,000,000 COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND",
NEW YORK BRANCH
By: /s/ Dana W. Hemenway
---------------------------
Name: Dana W. Hemenway
Title: Vice President
By: /s/ W. Pieter C. Kodde
---------------------------
Name: W. Pieter C. Kodde
Title: Vice President
<PAGE>
$20,000,000 FIRST AMERICAN NATIONAL BANK
By: /s/ Alexis Griffin
---------------------------
Name: Alexis Griffin
Title: Bank Officer
$20,000,000 PARIBAS
By: /s/ Duane Helkowski
---------------------------
Name: Duane Helkowski
Title: Vice President
By: /s/ David I. Canavan
----------------------------
Name: David I. Canavan
Title: Director
- -0- CORESTATES BANK, N.A.(Now Known
as FIRST UNION NATIONAL BANK)
By: /s/ Wynelle Farlow
----------------------------
Name: Wynelle Farlow
Title: Vice President
- -0- NATIONSBANK, N.A.
By: /s/ John E. Williams
----------------------------
Name: John E. Williams
Title: Senior Vice President
- -------------------
Total Commitments
$1,000,000,000
===================
<PAGE>
THE CHASE MANHATTAN BANK, as Agent
By: /s/ Karen May Sharf
---------------------------
Name: Karen May Sharf
Title: Vice President
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By: /s/ Diana H. Imhof
---------------------------
Name: Diana H. Imhof
Title: Vice President
<PAGE>
EXHIBIT 10.8
AMENDMENT NO. 1 TO CREDIT AGREEMENT
AMENDMENT dated as of May 7, 1998 to the Credit Agreement dated as of
January 7, 1998 (the "Credit Agreement") among ARAMARK SERVICES, INC., ARAMARK
UNIFORM SERVICES GROUP, INC. and ARAMARK CORPORATION, the BANKS party thereto
and THE CHASE MANHATTAN BANK and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Agents.
W I T N E S S E T H :
WHEREAS, the parties hereto desire to amend the Credit Agreement as
set forth below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Defined Terms; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Credit Agreement
has the meaning assigned to such term in the Credit Agreement. Each reference to
"hereof", "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in the Credit Agreement shall, after this Amendment becomes effective,
refer to the Credit Agreement as amended hereby.
SECTION 2. Definition Amendment. Section 1.01 of the Credit Agreement
is amended by adding the following definition:
"Tender Offer" means an offer by the Parent Guarantor to buy
its shares of common stock from the holders thereof at a price and upon
terms and conditions to be determined by the board of directors of the
Parent Guarantor or an authorized committee thereof, and the subsequent
purchase by the Parent Guarantor of such shares, all of which shall be
completed no later than August 15, 1998.
SECTION 3. Covenant Amendment. (a) Section 5.11 of the Credit
Agreement is amended to read in its entirety as follows:
SECTION 5.11. Minimum Consolidated Net Worth Consolidated Net
Worth shall (i) at no date on or after October 3, 1997 be less than
negative $300,000,000, (ii) at no date on or after October 2, 1998 be
less than negative $250,000,000, (iii) at no date on or after October
1, 1999 be
<PAGE>
less than negative $150,000,000, (iv) at no date on or after September
29, 2000 be less than negative $50,000,000 and (v) at no date on or
after September 28, 2001 be less than negative $50,000,000 plus an
amount equal to 50% of Consolidated Net Income for each Fiscal Year
ending on or after September 29, 2001 but prior to the date of
determination for which Consolidated Net Income is positive (but with
no deduction on account of negative Consolidated Net Income for any
fiscal year of the Parent Guarantor); provided, however, that the
amounts set forth in clause (i) through (v) inclusive shall be adjusted
upward by $25,000,000 for each full multiple of $25,000,000 by which
the actual cost of funding the Tender Offer is less than $700,000,000.
The Parent Guarantor will provide to the Agents a certificate of a
Principal Officer setting forth the calculation of the actual cost of
the Tender Offer within ten Domestic Business Days of the completion of
such Tender Offer.
(b) The first sentence of Section 5.13 of the Credit Agreement is
amended to read in its entirety as follows:
The proceeds of Credits hereunder will be used for general
corporate purposes, including in connection with the Tender Offer or
other repurchases of shares.
SECTION 4. Representations and Warranties. The Parent Guarantor and
Borrowers jointly and severally represent and warrant that (i) the
representations and warranties set forth in Article 4 of the Credit Agreement
will be true on and as of the Amendment Effective Date and (ii) no Default will
have occurred and be continuing on such date.
SECTION 5. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 6. Counterparts. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 7. Effectiveness. This Amendment shall become effective on the
later of (i) the completion of the Tender Offer upon terms and conditions
approved by the board of directors of the Parent Guarantor, or an authorized
committee thereof, and (ii) the date when the Agents shall have received from
each of the Parent Guarantor, the Borrowers and Banks comprising the Required
Banks a counterpart hereof signed by such party or facsimile or other written
confirmation (in form satisfactory to the Agents) that such party has signed a
counterpart hereof.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.
ARAMARK SERVICES, INC.
By: /s/ B.A. Austell
-------------------------------
Title: Treasurer
ARAMARK UNIFORM SERVICES
GROUP, INC.
By: /s/ B.A. Austell
-------------------------------
Title: Treasurer
ARAMARK CORPORATION
By: /s/ B.A. Austell
-------------------------------
Title: Treasurer
THE CHASE MANHATTAN BANK
By: /s/ Karen M. Sharf
-------------------------------
Title: Vice President
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/ Diana H. Imhof
-------------------------------
Title: Vice President
3
<PAGE>
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By: /s/ John W. Pocalyko
-------------------------------
Title: Managing Director
CORESTATES BANK, N.A.
By: /s/ Donna J. Emhart
-------------------------------
Title: Vice President
CREDIT LYONNAIS
NEW YORK BRANCH
By: /s/ Vladimir Labun
-------------------------------
Title: First Vice President-
Manager
FIRST UNION NATIONAL BANK
By: /s/ Wynelle Farlow
-------------------------------
Title: Vice President
NATIONSBANK, N.A.
By: /s/ John E. Williams
-------------------------------
Title: Senior Vice President
4
<PAGE>
PNC BANK NATIONAL ASSOCIATION
By: /s/ Daniel K. Fitzpatrick
-------------------------------
Title: Vice President & Senior
Relationship Manager
THE BANK OF NEW YORK
By: /s/ Peter Abdill
-------------------------------
Title: Vice President
THE SUMITOMO BANK, LIMITED
NEW YORK BRANCH
By: /s/ John C. Kissinger
-------------------------------
Title: Joint General Manager
WACHOVIA BANK, N.A.
By: /s/ Henry H. Hagan
-------------------------------
Title: Senior Vice President
BANK OF HAWAII
By: /s/ Joseph T. Donalson
-------------------------------
Title: Vice President
5
<PAGE>
THE BANK OF NOVA SCOTIA
By: /s/ J. Alan Edwards
-------------------------------
Title: Authorized Signatory
BANK ONE, N.A.
By: /s/ David A. Hammond
-------------------------------
Title: Vice President
BANKBOSTON, N.A.
By: /s/ Maura C. Wadlinger
-------------------------------
Title: Vice President
BHF-BANK AKTIENGESELLSCHAFT
By: /s/ Linda Pace
-------------------------------
Title: Vice President
By: /s/ John Sykes
-------------------------------
Title: Vice President
CIBC INC.
By: /s/ Paul T. LaHiff, Jr.
-------------------------------
Title: As Agent
6
<PAGE>
COMERICA BANK
By: /s/ Dan M. Roman
-------------------------------
Title: Vice President
FLEET NATIONAL BANK
By: /s/ Peter Dorfman
-------------------------------
Title: Vice President
KREDIETBANK N.V.
By: /s/ Robert M. Surdam, Jr.
-------------------------------
Title: Vice President
By: /s/ Robert Snauffer
-------------------------------
Title: Vice President
MELLON BANK, N.A.
By: /s/ Laurie G. Dunn
-------------------------------
Title: Vice President
NATIONAL WESTMINSTER BANK PLC
By: /s/ Peter J. Stringer
-------------------------------
Title: Senior Vice President
7
<PAGE>
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND",
NEW YORK BRANCH
By: /s/ Angelo J. Balestrieri
-------------------------------
Title: Vice President
By: /s/ Jeff Vollack
-------------------------------
Title: Senior Vice President
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., NEW YORK BRANCH
By: /s/ Gregory L. Hong
-------------------------------
Title: Deputy General Manager
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Mark R. Olmon
-------------------------------
Title: Vice President
8
<PAGE>
EXHIBIT 12
ARAMARK CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (A)
(In thousands)
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------------------------------------------------
October 2, October 3, September 27, September 29, September 30,
1998 1997 1996 1995 1994
---------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Income before income taxes
and minority interest $215,772 $215,847 $179,159 $167,577 $163,484
Fixed charges, excluding
capitalized interest 169,997 163,404 160,740 152,991 150,432
Other, net (2,063) (67) (371) 1,502 (477)
--------- -------- -------- -------- --------
Earnings, as adjusted $383,706 $379,184 $339,528 $322,070 $313,439
========= ======== ======== ======== ========
Interest expense $122,681 $119,284 $117,856 $111,605 $110,040
Capitalized interest 3 223 414 79 27
Portion of operating lease
rentals representative
of interest factor 47,316 44,120 42,884 41,386 40,392
--------- -------- -------- -------- --------
Fixed charges $170,000 $163,627 $161,154 $153,070 $150,459
========= ======== ======== ======== ========
Ratio of earnings to
fixed charges 2.3x 2.3x 2.1x 2.1x 2.1x
======== ======== ======== ======== ========
</TABLE>
- ----------
(A) For the purpose of determining the ratio of earnings to fixed charges,
earnings include pre-tax income plus fixed charges (excluding capitalized
interest). Fixed charges consist of interest on all indebtedness (including
capitalized interest) plus that portion of operating lease rentals
representative of the interest factor (deemed to be one-third of operating
lease rentals).
<PAGE>
Subsidiaries of Registrant
EXHIBIT 21
Advertising & Display Services, Inc.
ARAMARK Advertising Services, ltd.
ARAMARK Bay Area Group, Inc.
ARAMARK Business Dining Services of Texas, Inc.
ARAMARK Cleanroom Services, Inc.
ARAMARK Consumer Discount Company
ARAMARK Convention Services, Inc.
ARAMARK Correctional Services, Inc.
ARAMARK Delaware, Inc.
ARAMARK Educational Group, Inc.
ARAMARK Educational Resources, Inc.
ARAMARK Educational Services of Texas, Inc.
ARAMARK Educational Services of Vermont, Inc.
ARAMARK Educational Services, Inc.
ARAMARK Facilities Management, Inc.
ARAMARK Facility Services, Inc.
ARAMARK Food and Support Services Group, Inc.
ARAMARK Health & Education Services, Inc.
ARAMARK Healthcare Support Services of Puerto Rico, Inc.
ARAMARK Healthcare Support Services of Texas, Inc.
ARAMARK Healthcare Support Services of the Virgin Islands, Inc.
ARAMARK Healthcare Support Services, Inc.
ARAMARK Industrial Services, Inc.
ARAMARK Kitty Hawk, Inc.
ARAMARK Magazine & Book Services, Inc.
ARAMARK Marketing Services Group, Inc.
ARAMARK Pittsburgh Limited
ARAMARK Pittsburgh Stadium Concessions, Inc.
ARAMARK RBI, Inc.
ARAMARK Refreshment Services, Inc.
ARAMARK Senior Notes Company
ARAMARK Services of Kansas, Inc.
ARAMARK Services of Puerto Rico, Inc.
ARAMARK Services, Inc.
ARAMARK Share 100, Inc.
ARAMARK Sports and Entertainment Group, Inc.
ARAMARK Sports and Entertainment Services of Texas, Inc.
ARAMARK Sports and Entertainment Services, Inc.
ARAMARK Summer Games 1996, Inc.
ARAMARK Uniform & Career Apparel, Inc.
ARAMARK Uniform Manufacturing Company
ARAMARK Uniform Services Group, Inc.
ARAMARK Venue Services, Inc.
<PAGE>
ARAMARK/Gall's Group, Inc.
ARAMARK/HMS Company
CWLC Brokerage, Inc.
D.G. Maren II, Inc.
Davre's, Inc.
Delsac VI, Inc.
Delsac VII, Inc.
Delsac VIII, Inc.
Delsac X, Inc.
Dragon Wagon, Inc.
E.T. Wright Corporation
Fashion-Tex Services, Inc.
Gall's, Inc.
H.M.S. Delaware, Inc.
Harry M. Stevens, Inc.
Harry M. Stevens, Inc. of New Jersey
Harry M. Stevens, Inc. of Penn.
Landy Textile Rental Services, Inc.
Linen Supply Service, Inc.
Main, Inc.
Merced News Company
Smithsub, Inc.
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated November 9, 1998 included in this Form 10-K for the fiscal year
ended October 2, 1998 into the Company's previously filed Registration
Statements on Form S-8, Registration Nos. 33-11818, 33-30879, 33-33329,
33-44002, 33-57825 and 333-53163, and on Form S-3, Registration Nos. 33-47564,
333-53161, and 333-63427.
Philadelphia, Pennsylvania
November 25, 1998
<PAGE>
EXHIBIT 24
JOSEPH NEUBAUER
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints James E. Ksansnak, Martin W. Spector and Donald S.
Morton as his Attorney-in-Fact and hereby grants to each of them acting alone
without the others, for him and in his name as such director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
October 2, 1998, and amendments thereto which the Company may
file with the Securities and Exchange Commission pursuant to
the requirements of Section 13 and/or Section 15(d) of the
Securities Exchange Act of 1934; and
(b) perform every other action which any such Attorney-in-fact may
deem necessary or proper in connection with any of such
reports or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
November 10, 1998 /s/ Joseph Neubauer
-------------------
Joseph Neubauer
<PAGE>
EXHIBIT 24
ROBERT J. CALLANDER
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
October 2, 1998, and amendments thereto which the Company may
file with the Securities and Exchange Commission pursuant to
the requirements of Section 13 and/or Section 15(d) of the
Securities Exchange Act of 1934; and
(b) perform every other action which any such Attorney-in-fact may
deem necessary or proper in connection with any of such
reports or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
November 10, 1998 /s/ Robert J. Callander
-----------------------
Robert J. Callander
<PAGE>
EXHIBIT 24
RONALD R. DAVENPORT
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
October 2, 1998, and amendments thereto which the Company may
file with the Securities and Exchange Commission pursuant to
the requirements of Section 13 and/or Section 15(d) of the
Securities Exchange Act of 1934; and
(b) perform every other action which any such Attorney-in-fact may
deem necessary or proper in connection with any of such
reports or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
November 10, 1998 /s/ Ronald R. Davenport
-----------------------
Ronald R. Davenport
<PAGE>
EXHIBIT 24
PATRICIA C. BARRON
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for her and in her name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
October 2, 1998, amendments thereto which the Company may file
with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the
Securities Exchange Act of 1934; and
(b) perform every other action which any such Attorney-in-fact may
deem necessary or proper in connection with any of such
reports or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
November 10, 1998 /s/ Patricia C. Barron
----------------------
Patricia C. Barron
<PAGE>
EXHIBIT 24
LEE F. DRISCOLL, JR.
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
October 2, 1998, amendments thereto which the Company may file
with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the
Securities Exchange Act of 1934; and
(b) perform every other action which any such Attorney-in-fact may
deem necessary or proper in connection with any of such
reports or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
November 10, 1998 /s/ Lee F. Driscoll, Jr.
------------------------
Lee F. Driscoll, Jr.
<PAGE>
EXHIBIT 24
MITCHELL S. FROMSTEIN
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
October 2, 1998, amendments thereto which the Company may file
with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the
Securities Exchange Act of 1934; and
(b) perform every other action which any such Attorney-in-fact may
deem necessary or proper in connection with any of such
reports or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
November 9, 1998 /s/ Mitchell S. Fromstein
-------------------------
Mitchell S. Fromstein
<PAGE>
EXHIBIT 24
EDWARD G. JORDAN
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
October 2, 1998, amendments thereto which the Company may file
with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the
Securities Exchange Act of 1934; and
(b) perform every other action which any such Attorney-in-fact may
deem necessary or proper in connection with any of such
reports or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
November 9, 1998 /s/ Edward G. Jordan
------------------
Edward G. Jordan
<PAGE>
EXHIBIT 24
THOMAS H. KEAN
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
October 2, 1998, amendments thereto which the Company may file
with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the
Securities Exchange Act of 1934; and
(b) perform every other action which any such Attorney-in-fact may
deem necessary or proper in connection with any of such
reports or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
November 9, 1998 /s/ Thomas H. Kean
------------------
Thomas H. Kean
<PAGE>
EXHIBIT 24
REYNOLD C. MACDONALD
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
October 2, 1998, amendments thereto which the Company may file
with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the
Securities Exchange Act of 1934; and
(b) perform every other action which any such Attorney-in-fact may
deem necessary or proper in connection with any of such
reports or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
November 10, 1998 /s/ Reynold C. MacDonald
------------------------
Reynold C. MacDonald
<PAGE>
EXHIBIT 24
JAMES E. PRESTON
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
October 2, 1998, amendments thereto which the Company may file
with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the
Securities Exchange Act of 1934; and
(b) perform every other action which any such Attorney-in-fact may
deem necessary or proper in connection with any of such
reports or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
November 10, 1998 /s/ James E. Preston
--------------------
James E. Preston
<PAGE>
EXHIBIT 24
JAMES E. KSANSNAK
POWER OF ATTORNEY
The undersigned director of ARAMARK Corporation, a Delaware corporation (the
"Company"), hereby appoints Joseph Neubauer, James E. Ksansnak, Martin W.
Spector and Donald S. Morton as his Attorney-in-Fact and hereby grants to each
of them acting alone without the others, for him and in his name as such
director, full power to:
(a) sign the Annual Report on Form 10-K for the fiscal year ended
October 2, 1998, amendments thereto which the Company may file
with the Securities and Exchange Commission pursuant to the
requirements of Section 13 and/or Section 15(d) of the
Securities Exchange Act of 1934; and
(b) perform every other action which any such Attorney-in-fact may
deem necessary or proper in connection with any of such
reports or amendments
(all as approved by the Company's principal executive, financial and accounting
officers whose signatures to such report or amendment thereto shall be
conclusive evidence of such approval).
November 10, 1998 /s/ James E. Ksansnak
---------------------
James E.Ksansnak
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM THE CONSOLIDATED
BALANCE SHEET AND CONSOLIDATED STATEMENT OF INCOME FILED AS PART OF FORM 10-K
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-K.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-02-1998
<PERIOD-START> OCT-04-1997
<PERIOD-END> OCT-02-1998
<CASH> 20,614
<SECURITIES> 0
<RECEIVABLES> 526,506
<ALLOWANCES> 24,457
<INVENTORY> 361,451
<CURRENT-ASSETS> 969,305
<PP&E> 1,748,215
<DEPRECIATION> 873,822
<TOTAL-ASSETS> 2,741,299
<CURRENT-LIABILITIES> 900,738
<BONDS> 1,705,049
0
0
<COMMON> 654
<OTHER-SE> (79,530)
<TOTAL-LIABILITY-AND-EQUITY> 2,741,299
<SALES> 0
<TOTAL-REVENUES> 6,377,276
<CGS> 0
<TOTAL-COSTS> 5,760,697
<OTHER-EXPENSES> 195,770
<LOSS-PROVISION> 12,209
<INTEREST-EXPENSE> 117,357
<INCOME-PRETAX> 215,772
<INCOME-TAX> 82,062
<INCOME-CONTINUING> 133,710
<DISCONTINUED> 0
<EXTRAORDINARY> (4,474)
<CHANGES> 0
<NET-INCOME> 129,236
<EPS-PRIMARY> 1.14<F1><F2>
<EPS-DILUTED> 1.06<F1><F2>
<FN>
<F1>Earnings per share have been prepared in accordance with SFAS No. 128,
"Earnings Per Share" and therefore basic and diluted earnings per share have
been entered in place of primary and fully diluted EPS, respectively.
<F2>Earnings Per Share amounts reflect a three-for-one stock split declared on
August 11, 1998 and effective September 1, 1998. Prior financial data schedules
have not been restated.
</FN>
</TABLE>
