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[ARAMARK LOGO]
PROSPECTUS ISPO 1998
ARAMARK CORPORATION
ARAMARK Ownership Program
Installment Stock Purchase Opportunities
47,573,369 Shares
Common Stock, Class B
We are offering you an opportunity to participate in the ownership of
ARAMARK through a purchase opportunity to acquire Company stock.
In general, a purchase opportunity permits you to purchase shares of
stock of ARAMARK at the appraisal price for the stock at the time you received
the grant.
To facilitate your ability to purchase stock, we have developed a
program that permits you to defer varying amounts up to 75% of the purchase
price of the stock you buy. In addition to purchasing stock by personal check,
you may sell or exchange stock of ARAMARK that you already own.
Your ability to transfer stock which you purchase will be limited
because ARAMARK's stock is not traded publicly and because by exercising your
right to purchase stock through a purchase opportunity, you will become bound by
the terms of a Stockholders' Agreement.
This prospectus provides you with detailed information about stock
purchase opportunities. In addition, you may obtain information about ARAMARK
from documents that we have filed with the United States Securities and Exchange
Commission ("SEC"). We encourage you to read this entire document carefully.
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See Page B-1 for Forms and Instructions
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Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved
these securities or determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
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The date of this prospectus is December 1, 1998. You should not assume
that the information contained in this prospectus is accurate as of any date
other than such date, and neither the delivery of this prospectus nor any sale
made through its use shall create any implication to the contrary. This
prospectus does not constitute an offer or solicitation in any jurisdiction in
which such offer or solicitation is not authorized or in any jurisdiction in
which ARAMARK is not qualified to make such an offer or solicitation or to
anyone to whom it is unlawful to make such offer or solicitation.
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TABLE OF CONTENTS
Where You Can Find More Information............................ 2
Prospectus Summary............................................. 3
Frequently Asked Questions..................................... 4
About This Prospectus.......................................... 22
The ARAMARK Ownership Program.................................. 22
The Deferred Payment Program................................... 23
U.S. Income Tax Considerations................................. 24
Description of Equity Securities............................... 25
Experts........................................................ 26
Documents Incorporated by Reference............................ 26
Annex A -- Amended and Restated Stockholders' Agreement........ A-1
Annex B -- Exercise Forms and Instructions..................... B-1
WHERE YOU CAN FIND MORE INFORMATION
ARAMARK files annual, quarterly and special reports, and other
information with the SEC. You may read and copy any reports, statements or other
information the Company files at the SEC's public reference rooms in Washington,
DC, New York, New York and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from commercial document retrieval
services and at the web site maintained by the SEC at "http://www.sec.gov."
ARAMARK has filed registration statements to register with the SEC the
Common Stock to be issued when you exercise a purchase opportunity granted under
the ARAMARK Ownership Program. As allowed by SEC rules, this prospectus does not
contain in it all the information you can find in the registration statements or
exhibits or amendments to the registration statements.
The Company will provide without charge to each person holding a
purchase opportunity granted under the ARAMARK Ownership Program, upon the
request of such person, a copy of any or all of the documents that are
incorporated by reference herein, other than exhibits to such documents. Written
or telephone requests should be directed to ARAMARK Shareholder Services Group
at First Union National Bank toll free at 1-888-96-OWNER (1-888-966-9637) at 123
South Broad Street, MCPA 1328, Philadelphia, PA USA 19109.
If you have not received a copy of ARAMARK`s most recent annual report
on Form 10-K, or if you have any questions about the ARAMARK Ownership Program
or would like to obtain further information, you should call the ARAMARK
Shareholder Services Group at First Union National Bank toll free at
1-888-96-OWNER (1-888-966-9637) at 123 South Broad Street, MCPA 1328,
Philadelphia, PA USA 19109.
ARAMARK Corporation is a Delaware corporation with its principal
offices located at ARAMARK Tower, 1101 Market Street, Philadelphia, PA 19107
(telephone 215-238-3000). When we use the word "Company" herein to describe
ARAMARK, we are referring to ARAMARK Corporation and its subsidiaries unless the
context otherwise requires.
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PROSPECTUS SUMMARY
This summary highlights selected information from this document and may
not contain all of the information that is important to you. You should read
carefully this entire document and the documents we have referred you to. See
"Where You Can Find More Information."
The Company
ARAMARK is a world leader in managed services including food and
support services, uniform and career apparel and educational resources.
The ARAMARK Ownership Program
The ARAMARK Ownership Program provides you with an opportunity to
purchase shares of the Company at a price determined at the time your purchase
opportunity is granted.
Under the program you have received a grant certificate that entitles
you to purchase a specific number of shares.
Each Installment Stock Purchase Opportunity ("ISPO") has an installment
schedule that limits the number of shares of Common Stock that you may purchase
during each annual installment exercise period. Unless you exercise the first
installment by its expiration date for at least 100 shares, your entire purchase
opportunity for all installments will be canceled. You may exercise any
subsequent annual installment for up to the maximum number of shares specified
in your certificate for that installment. However, you may not exercise any
subsequent installment for less than 100 shares. Any portion of an annual
installment you do not exercise by the appropriate expiration date is canceled.
Stockholders' Agreement
By purchasing stock under the program you will be agreeing to be bound
by the terms of a Stockholders' Agreement to which all management stockholders
are parties.
Under the Stockholders' Agreement, the stock owned by you can only be
transferred in limited circumstances. In addition, upon your termination of
employment, the Company may, but is not generally obligated to, repurchase your
shares.
A copy of the Stockholders' Agreement is attached as Annex A to this
prospectus.
How to Purchase Shares
To purchase stock under the program you must (1) complete the
appropriate forms (see page B-1) and (2) pay the aggregate purchase price for
the stock plus the aggregate amount of taxes required to be withheld (as
computed in the exercise form).
Payment for the Shares
You may pay for your stock (including any applicable withholding taxes)
using any combination of the following:
(1) defer varying amounts up to 75% of the total purchase price under
the ARAMARK Deferred Payment Program.
(2) sell ARAMARK shares that you already own if the Internal Market is
open at that time.
(3) use ARAMARK shares that you currently own in a stock-for-stock
exchange for up to the purchase price (not including required withholding
taxes).
(4) by personal check.
Other Factors
Before you make a decision to invest in our Company, we urge you to
read this prospectus and the Company's most recent annual report on Form 10-K
and other information that we have filed with the SEC. See "Where You Can Find
More Information."
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FREQUENTLY ASKED QUESTIONS (FAQ)
To assist you in better understanding purchase opportunities and the
ARAMARK Ownership Program, we have answered certain frequently asked questions.
For more complete answers to your questions, you should read the text of the
Stockholders' Agreement (references to which appear in the answers) attached as
Annex A to this prospectus. For your convenience, we have grouped the questions
and answers by topic.
Topic Q/A Nos.
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General....................................................... 1 - 3
Stock Purchase Opportunities
General.................................................... 4 - 9
Installment Stock Purchase Opportunities (ISPOs)........... 10 - 16
How to Purchase and Pay Taxes Due
General.................................................... 17 - 23
Deferred Payment Program................................... 24 - 36
Borrowing.................................................. 37
Sale of Currently-Owned Shares............................. 38 - 39
Stock-for-Stock Exchanges.................................. 40 - 46
Stock Ownership
General.................................................... 47 - 50
Transferring Shares........................................ 51 - 54
Pledging Shares............................................ 55 - 57
Appraisal Price............................................ 58 - 63
Sales While Employed
General.................................................... 64 - 66
Internal Market............................................ 67
Emergency Buy-Back Program................................. 68
Offer-to-Sell.............................................. 69
Sales Upon Termination of Employment
General.................................................... 70 - 76
Special One-Time Deferral Election......................... 77 - 78
Stock Repurchase Policy.................................... 79 - 82
Installment Notes.......................................... 83 - 85
EMPLOYEES BASED IN COUNTRIES OTHER THAN THE UNITED STATES
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The laws of your country may differ from U.S. laws in ways which affect the
stock purchase opportunities and the ARAMARK Ownership Program. Although the
answers to most of the following questions are generally applicable to employees
based in countries other than the U.S., as well as U.S. based employees, the
answers to certain questions have been changed, and certain additional questions
and answers have been added to reflect the application of your country's tax and
securities laws. These questions and answers are identified by shading and
should be read in conjunction with the unshaded, generally applicable
information to which they relate.
The application of your country's laws to the various aspects of the ARAMARK
Ownership Program can be complex and can produce unintended results. We have had
the ARAMARK Ownership Program and these questions and answers reviewed by legal
and tax advisors from the jurisdictions indicated. However, ARAMARK cannot
guaranty the accuracy of the answers or their applicability to your personal
situation. You are urged to consult legal and tax advisors familiar with your
country's laws.
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GENERAL
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1. Q: What is ARAMARK Corporation?
A: ARAMARK Corporation, through its subsidiaries, provides and manages
services, including food and support services, uniform and career
apparel, and educational resources.
ARAMARK is an employee-owned company: Management employees of ARAMARK and
its subsidiaries directly own more than 72% of the equity of ARAMARK, and
employee benefit plans own an additional 18% of the equity.
2. Q: What is the ARAMARK Ownership Program?
A: The ARAMARK Ownership Program is the name used generally to describe the
various documents, practices and policies under which ARAMARK provides
opportunities to participate in the ownership of ARAMARK to selected
management and other key employees.
The Program comprises
o the Restated Certificate of Incorporation and the Stockholders'
Agreement, which govern the rights of ARAMARK stockholders generally,
o the Combined Stock Ownership Plan and the other ownership and option
plans, which govern the grants of purchase opportunities, and
o the various ARAMARK practices and policies from time to time in effect,
such as the internal market, the emergency buyback program, the deferred
payment program, the special one-time deferral election and the stock
repurchase policy.
3. Q: Who administers the ARAMARK Ownership Program?
A: Generally, the Corporate Compensation and Benefits Department, under the
direction of the Human Resources, Compensation and Public Affairs
Committee of the Board of Directors (the Committee) administers the
ARAMARK Ownership Program. (Section 3.03) Decisions and interpretations
of the Committee, or of the Department, regarding the Program are final
and binding on all participants as long as they do not conflict with the
specific terms of the Stockholders' Agreement, of ARAMARK's ownership and
option plans, or of specific grant certificates. In addition, unless
prohibited by specific terms of the Stockholders' Agreement, of ARAMARK's
option plans, or of specific grant certificates, the Committee may amend,
modify, discontinue, or vary the terms of the Program at any time for all
transactions generally or for any specific transaction.
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STOCK PURCHASE OPPORTUNITIES
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4. Q: What is a Stock Purchase Opportunity?
A: The Board of Directors (or the Committee), upon the advice and
recommendation of senior management, approves the grant of opportunities
to participate in the ownership of ARAMARK to selected management
employees. This opportunity to purchase ARAMARK Common Stock is called a
Stock Purchase Opportunity and is made in the form of a grant
certificate.
Individual grants are generally made in connection with hires, promotions
and other forms of recognition of performance.
5. Q: Are the shares of Common Stock being offered the same as the shares owned
by current management investors?
A: Yes, they are shares of Class B Common Stock with the same rights and
obligations to which current management investors are subject under the
Stockholders' Agreement.
6. Q: Am I obligated to purchase shares?
A: No. Any exercise of all or any portion of your purchase opportunity by
you is strictly voluntary.
7. Q: What is the purchase price per share?
A: The price per share for your purchase opportunity is set at the time your
purchase opportunity is granted. The grant price per share appears on
your grant certificate and represents the Appraisal Price based on the
most recent available independent appraisal at the time of grant. The
grant price per share
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remains fixed subject to adjustments for stock dividends, stock splits,
reorganizations, mergers, or the like as described in Question 8.
8. Q: Is my purchase opportunity adjusted in the event of a Common Stock
dividend, split, reorganization, merger, or the like?
A: In such cases your purchase opportunity will be equitably adjusted, if
appropriate, as determined by the Human Resources, Compensation and
Public Affairs Committee of the Board of Directors.
For unexercised purchase opportunities granted prior to September 1,
1998, the grant price per share has been divided by three, and the number
of shares subject to the purchase opportunity has been multiplied by
three, as a result of the three-for-one stock split declared as of that
date. ARAMARK annually distributes statements with the terms of each
holder's purchase opportunities, adjusted if appropriate, for activity
since the prior statement.
Employees based in countries other than the U.S.:
9. Q: Is there any U.S. dollar exchange risk in investing in ARAMARK Common
Stock?
A: Yes. Since the shares are valued in U.S. dollars, the currency exchange
risk is borne by the employee.
Generally, this exchange risk represents the change in your country's
currency as compared to the U.S. dollar between the dates of purchase of
the stock and the sale of the stock.
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- -- INSTALLMENT STOCK PURCHASE OPPORTUNITIES (ISPOS)
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10. Q: When can I exercise my ISPO and purchase shares?
A: You may exercise your ISPO only in the installments authorized on your
grant certificate and only during the corresponding installment exercise
periods. There is a minimum and maximum number of shares you can purchase
in each installment. Generally, an ISPO is granted with six annual
installments. The normal installment exercise period is December 15 -
January 15 of each year. You should refer to your grant certificate for
the installment exercise periods applicable to your ISPO.
11. Q: Can I exercise an installment prior to its corresponding installment
exercise period?
A: No. You may exercise an installment, and thereby purchase shares, only
during its corresponding installment exercise period.
12. Q: How many shares can I purchase in each installment?
A: In any installment, you may exercise up to the maximum number of shares
set forth for such installment on your grant certificate, but not less
than 100 shares.
For unexercised ISPOs granted prior to September 1, 1998, the number of
shares has been multiplied by three as a result of the three-for-one
stock split declared as of that date. Statements with the terms of each
holder's purchase opportunities are distributed annually, adjusted if
appropriate, for activity since the prior statement.
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13. Q: Can I still exercise a subsequent installment even if I do not exercise
the first installment?
A: No. Unless you exercise the first installment for at least 100 shares,
the entire purchase opportunity for all installments will be canceled
upon the expiration of the first exercise period.
14. Q: If I exercise the first installment, must I exercise additional
installments?
A: No. Exercise of any installment does not obligate you to exercise any
other installment.
15. Q: If I do not exercise an installment for the maximum, what happens to the
unexercised portion of the installment?
A: Any unexercised portion of any installment will be canceled upon
expiration of the corresponding exercise period.
16. Q: What if my employment is terminated?
A: Your entire remaining unexercised ISPO is canceled if your employment
with ARAMARK and its subsidiaries (or any entity designated by the Board
of Directors in which ARAMARK continues to own an equity interest) is
terminated for any reason.
You will own any shares you purchased pursuant to any prior exercises of
installments. However, all of the shares you own will be subject to
ARAMARK's right to repurchase pursuant to the Stockholder's Agreement.
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HOW TO PURCHASE AND PAY TAXES DUE
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17. Q: How do I purchase shares of Common Stock?
A: To exercise an installment of your purchase opportunity and purchase
shares, you must deliver to ARAMARK at the Philadelphia address shown in
the mailing instructions o your properly completed exercise forms and o
payment of the correct purchase price in U.S. dollars plus the aggregate
amount of applicable taxes required to be withheld or collected.
You must deliver these items before the last day of the exercise period.
Instructions for computing taxes required to be withheld are included on
the exercise form.
Employees based in countries other than the U.S. and Canada:
To better assure that your forms are properly completed and received
timely by ARAMARK, you should forward your completed exercise forms and
payment in your own country's currency to the local ARAMARK address that
appears on the mailing instructions for preliminary review by your
ARAMARK manager. Your ARAMARK manager will review your forms, convert
your payment into U.S. dollars, and forward the forms and payment to
ARAMARK in Philadelphia. Withholding tax on your exercise will be paid to
the appropriate taxing authority and your payroll and tax records will be
updated for the exercise by the ARAMARK subsidiary company for which you
work. Your purchase occurs at the time your properly completed forms and
your correct purchase price payment are received and processed by ARAMARK
in Philadelphia. To ensure that you meet the deadline for submission of
your exercise materials to Philadelphia, you should deliver your
completed forms and payment to your ARAMARK manager no later than January
11, 1999.
Canada based employees:
As in prior years, the check you send to exercise your opportunities
should be drawn in U.S. dollars and should be sent to the Philadelphia
address shown in the mailing instructions.
Spain based employees:
As well as completing the exercise forms, ARAMARK understands that you
will be required to complete form MC-10A and file it with the Directorate
for Foreign Investments and Commercial Transactions.
In addition, if the aggregate purchase price for the purchase
opportunities that you are exercising is more than 1,000,000 ptas.
(including required withholding), then you are also required to complete
form B3 and file it with your employer.
In addition, if the aggregate purchase price for the purchase
opportunities that you are exercising is more than 500,000 ptas.
(including required withholding) and you are obtaining all or part of the
purchase price from a bank, then you must notify the bank of the details
of the transaction.
Copies of the required forms and form of notification are available from
your employer. If you complete and forward to your ARAMARK manager these
government required forms along with your completed exercise forms and
payment, then your ARAMARK manager will file the completed forms on your
behalf.
18. Q: How do I make payment for the purchase price?
A: You may be eligible to use a combination of any of the following means to
pay for the aggregate purchase price (including any required withholding
taxes) upon exercise of your purchase opportunity:
o by personal check,
o the ARAMARK Deferred Payment Program,
o the use of proceeds from borrowing from Wachovia Bank or another
lending institution,
o the sale of shares of Common Stock, and
o the use of shares of Common Stock that you currently own in a
stock-for-stock exchange for up to the purchase price (not including any
required withholding taxes).
Employees based in countries other than the U.S.:
The program with Wachovia Bank, discussed elsewhere in this prospectus,
is not available for employees based in countries other than the United
States. You may, however, borrow from other lending institutions to pay
your purchase price. Your payment to ARAMARK for the purchase price of
your shares must be in U.S. currency. If your exercise is subject to
withholding taxes, your payment for the withholding taxes must be in
your local currency. Please see the instructions in Annex B and the end
of this prospectus.
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Employees based in countries other than the U.S. and Canada:
ARAMARK understands that laws of countries outside the U.S. and Canada do
not permit the variable "like-kind" tax treatment accorded to
stock-for-stock exercises in the U.S. and Canada. Accordingly,
stock-for-stock exercises will not be available to employees outside of
the U.S. and Canada.
19. Q: What taxes will I owe when I exercise a purchase opportunity?
A: All outstanding purchase opportunities are non-qualified options for U.S.
income tax purposes. Under current U.S. tax laws, granting of such
options is not a taxable event. When you exercise a purchase opportunity,
the difference (if any) between the exercise price and any higher
Appraisal Price of the Common Stock at the time of the exercise is
considered ordinary taxable income. ARAMARK is required to withhold taxes
at the time of the exercise. These taxes include a required 28% for U.S.
income taxes, plus social security taxes (if appropriate) and applicable
state income and unemployment taxes (depending on the state in which you
are employed). Based on present law, an amount equal to 38% of the
difference (spread) between exercise price and Appraisal Price is
normally withheld by ARAMARK and applied toward these taxes. This amount
is not necessarily the entire amount of tax that you will owe as a result
of this exercise. Additional tax, including additional withholding and
estimated tax payments, may be required to meet your full tax liability
due to this exercise. You should discuss your particular situation with
your tax advisor.
Belgium based employees:
ARAMARK understands that, under current Belgian income tax laws:
o no income will be recognized by the employee at time of grant; and
o upon exercise of a purchase opportunity, you must treat as taxable
income any excess (spread) of the Appraisal Price over the exercise
price.
Canada based employees:
ARAMARK understands that, under current Canadian federal income tax laws:
o no income will be recognized by the employee at the time of grant;
o upon exercise of a purchase opportunity, the employee must treat as a
taxable benefit from employment any excess (spread) of the Appraisal
Price over the exercise price of the purchase opportunity; and
o the employee may be entitled to deduct one-quarter of the benefit in
computing taxable income.
Czech Republic based employees:
ARAMARK understands that under current Czech income tax laws:
o at the time of grant you will not recognize any taxable income; and
o upon exercise of a purchase opportunity, you must treat as employment
type of income any excess (spread) of the Appraisal Price over the
exercise price.
Germany based employees:
ARAMARK understands that under current German income tax laws:
o at the time of grant you will not recognize any taxable income; and
o upon exercise of a purchase opportunity, you must treat as taxable
income any excess (spread) of the Appraisal Price over the exercise
price; and
o if the spread is less than one-half the Appraisal Price and is less
than DM300, the entire spread may be excluded from income, provided that
the acquired shares are held at least six years.
Spain based employees:
ARAMARK understands that under current Spanish income tax laws:
o at the time of grant you will not recognize any taxable income; and
o upon exercise of a purchase opportunity, you must treat as taxable
salary compensation in kind any excess (spread) of the Appraisal Price
over the exercise price. (For exercises of purchase opportunities more
than one year after the opportunities were granted, the resulting
"spread" is treated as irregular taxable salary compensation in kind
which, ARAMARK understands, may be taxed at more favorable rates than
regular taxable salary compensation in kind.)
United Kingdom based employees:
ARAMARK understands that under current United Kingdom income tax laws:
o at the time of grant you will not recognize any taxable income; and
o upon exercise of a purchase opportunity, you must treat as taxable
income any excess (spread) of the Appraisal Price over the exercise
price.
20. Q: Will ARAMARK report the taxable income (if any) that I realize upon the
exercise of my purchase opportunity?
A: For U.S. based employees, the taxable income (if any) and the taxes
withheld will be reported to the IRS on your W-2 form for the year in
which the purchase occurs. The purchase occurs at the time your
completed exercise forms and your purchase price payment are received
and processed by ARAMARK.
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For example, if your exercise forms and purchase price payment for the
appropriate installment are received by ARAMARK in December 1998, the
taxable income and the taxes collected will be reported on your W-2 form
for 1998; and if they are received in January 1999, the taxable income
and the taxes collected will be reported on your W-2 form for 1999. You
may wish to consult with your tax advisor when considering the time,
within an installment exercise period, to exercise a purchase
opportunity.
Belgium based employees:
If you exercise a purchase opportunity, then ARAMARK will report any
taxable income and any taxes withheld on your salary slip (281.10) and
summary form (325.10) for the year in which the purchase occurs.
Canada based employees:
If you exercise a purchase opportunity, then ARAMARK will report any
taxable income and any available one - quarter deduction to Revenue
Canada on a T-4 form for the year in which the purchase occurs. Reporting
to provincial tax authorities will also be made, as required.
Czech Republic based employees:
If you exercise a purchase opportunity, then ARAMARK will report to the
financial authorities the taxable income derived from employment and any
taxes withheld for the year in which the purchase occurs.
Germany based employees:
If you exercise a purchase opportunity, then ARAMARK will report the
taxable income and any taxes withheld on your wage tax card for the year
in which the purchase occurs.
Spain based employees:
If you exercise a purchase opportunity, then the taxable salary
compensation and any taxes withheld will be reported by ARAMARK for the
year in which the purchase occurs.
United Kingdom based employees:
If you exercise a purchase opportunity, then ARAMARK will report the
details of the transaction to the Inland Revenue.
21. Q: How do I compute the amount of withholding tax I must deposit with
ARAMARK when exercising an installment?
A: A portion of the exercise form (included in this prospectus as Annex B)
guides you through the computation of the estimated amount to be withheld
or collected to cover applicable taxes.
22. Q: How are estimated withholding taxes collected?
A: It is possible (depending on your personal situation and the state in
which you are employed) that the amount estimated at 38% to be withheld
or collected will not be sufficient to cover the actual taxes ARAMARK is
required to withhold at the time of exercise. In such event, additional
taxes may be withheld from subsequent paychecks. If the actual amount
required to be withheld is less than the estimated amount, the difference
will be refunded in a subsequent paycheck.
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Belgium based employees:
ARAMARK is required to withhold taxes at a rate based on all of your
income derived from employment.
For exercises of purchase opportunities, ARAMARK will require you to
deposit 38% of the spread as an estimate of the required withholding
taxes.
This amount is not necessarily the entire amount of tax that you will owe
as a result of this exercise. Additional tax may be required to meet your
full tax liability due to this grant or exercise. You should discuss your
particular situation with your tax advisor.
It is possible (depending on your personal situation) that the amount
estimated at 38% to be withheld or collected will not be sufficient to
cover the actual taxes ARAMARK is required to withhold at the time of
grant or exercise. In such event, additional taxes may be withheld from
subsequent paychecks. If the actual amount required to be withheld is
less than the estimated amount, the difference will be refunded in a
subsequent paycheck.
Canada based employees:
ARAMARK understands that it is the administrative position of Revenue
Canada that a taxable benefit recognized upon the exercise of a purchase
opportunity is not subject to tax withholding. ARAMARK will, therefore,
require no deposit from you to cover taxes due to your exercise. You are
responsible for paying any required tax, including any personal tax
installments. You are urged to discuss your particular situation with
your tax advisor.
Czech Republic based employees:
ARAMARK understands that it is required to withhold taxes for employment
type of income at the rate used for all of your income derived from
employment. ARAMARK will require you to deposit 38% of the spread as an
estimate of the required withholding taxes. This amount is not
necessarily the entire amount of tax that you will owe as a result of
this exercise. Additional tax may be required to meet your full tax
liability due to this exercise. You should discuss your particular
situation with your tax advisor.
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It is possible (depending on your personal situation) that the amount
estimated at 38% to be withheld or collected will not be sufficient to
cover the actual taxes ARAMARK is required to withhold at the time of
exercise. In such event, additional taxes may be withheld from subsequent
paychecks. If the actual amount required to be withheld is less than the
estimated amount, the difference will be refunded in a subsequent
paycheck.
Germany based employees:
ARAMARK understands that it is required to withhold taxes for this income
at a rate based on all of your income derived from employment. ARAMARK
will require you to deposit 38% of the spread as an estimate of the
required withholding taxes. This amount is not necessarily the entire
amount of tax that you will owe as a result of this exercise. Additional
tax may be required to meet your full tax liability due to this exercise.
You should discuss your particular situation with your tax advisor.
It is possible (depending on your personal situation) that the amount
estimated at 38% to be withheld or collected will not be sufficient to
cover the actual taxes ARAMARK is required to withhold at the time of
exercise. In such event, additional taxes may be withheld from subsequent
paychecks. If the actual amount required to be withheld is less than the
estimated amount, the difference will be refunded in a subsequent
paycheck.
Spain based employees:
ARAMARK understands that it is required to withhold taxes for taxable
salary compensation in kind at the same rates as ordinary cash salary.
For exercises of purchase opportunities, ARAMARK will require you to
deposit 38% of the spread as an estimate of the required withholding
taxes. This amount is not necessarily the entire amount of tax that you
will owe as a result of this exercise. Additional tax may be required to
meet your full tax liability due to this grant or exercise. You should
discuss your particular situation with your tax advisor.
It is possible (depending on your personal situation) that the amount
estimated at 38% to be withheld or collected will not be sufficient to
cover the actual taxes ARAMARK is required to withhold at the time of
exercise. In such event, additional taxes may be withheld from subsequent
paychecks. If the actual amount required to be withheld is less than the
estimated amount, the difference will be refunded in a subsequent
paycheck.
United Kingdom based employees:
ARAMARK understands that it is required to account for the income tax
arising on exercise via the PAYE system, in line with your salary and
other payments. ARAMARK will require you to deposit 38% of the spread as
an estimate of the required withholding taxes.
It is possible (depending on your personal situation) that the amount
estimated at 38% to be withheld or collected will not be sufficient to
cover the actual taxes ARAMARK is required to withhold at the time of
exercise. In such event, additional taxes may be withheld from subsequent
paychecks. If the actual amount required to be withheld is less than the
estimated amount, the difference will be refunded in a subsequent
paycheck.
By signing your exercise form, you will be giving ARAMARK your
authorization to collect 38% tax withholding at the exercise and to make
any additional tax withholding from your subsequent pay checks required
to meet your PAYE obligation following your exercise.
23. Q: How will I know what the Appraisal Price of the Common Stock is
during the exercise period when I can exercise a stock purchase
opportunity?
A: ARAMARK's current practice is to have the Common Stock independently
appraised quarterly (December 1, March 1, June 1, September 1) by an
independent appraiser. The Appraisal Price at December 1, 1998 was $11.90
(see Questions 58 through 63).
- --------------------------------------------------------------------------------
- -- DEFERRED PAYMENT PROGRAM
- --------------------------------------------------------------------------------
24. Q: What is the Deferred Payment Program?
A: The Deferred Payment Program is an ARAMARK program that allows you to
purchase shares of Common Stock for certain installments pursuant to your
exercise of an ISPO and to defer paying a portion of the purchase price.
25. Q: Who is eligible to participate in the Deferred Payment Program?
A: Generally, you may participate in the Deferred Payment Program for the
second or subsequent installment exercise for any ISPO.
10
<PAGE>
26. Q: Will the Deferred Payment Program be offered for exercises in the future?
A: ARAMARK anticipates the Deferred Payment Program will be offered
annually. However, the Board of Directors may cancel or modify the
Deferred Payment Program at any time.
27. Q: Do I have to participate in the Deferred Payment Program?
A: No. Any participation by you is strictly voluntary.
28. Q: How much of the purchase price payment may I defer under the Deferred
Payment Program?
A: You may defer payment of up to the following percentages of the total
purchase price (including required withholding taxes) for the shares you
are purchasing through exercise of your purchase opportunity:
o to purchase any or all shares exercised in installment #2 for up to
25% of the total purchase price of such shares,
o to purchase any or all shares exercised in installment #3 for up to
50% of the total purchase price of such shares, and
o to purchase any or all shares exercised in installments #4 through #6
for up to 75% of the total purchase price of such shares.
29. Q: How do I elect to participate in the Deferred Payment Program?
A: The exercise forms included in Annex B provide for your electing to
participate in the Deferred Payment Program. A portion of the exercise
form guides you through the election and computation of the amount of
payment you may defer.
30. Q: What are the terms of the Deferred Payment Program?
A: The deferred payment, plus interest, is due on the March 15 next
following the third anniversary of the date the purchase opportunity is
exercised. For example, for a purchase opportunity exercised in January
1999, the deferred payment is due on March 15, 2002. Interest accrues at
an interest rate to be set at the time the purchase opportunity is
exercised and is payable at the same time the deferred payment is due.
(The interest rate is based on the U.S. prime rate at the time the rate
is set.) Shares with an aggregate Appraisal Price equal to 133% of the
amount of the deferred payment are pledged to secure the deferred payment
obligation. If you sell or otherwise transfer any of such shares, the
entire deferred payment becomes due at the time of the sale. If payment
is not received when due, ARAMARK will repurchase a sufficient number of
shares to cover the amount due.
Deferred obligations are demand obligations and, as such, may be called
at any time by ARAMARK. ARAMARK does not intend, but reserves the right,
to call obligations under the Deferred Payment Program.
31. Q: Can I delay the payment of my deferred payment obligation beyond the
maturity date?
A: On the maturity due date, you may choose to delay the payment of the
principal amount for an additional three years subject to the payment of
interest on the original maturity date. You may extend a deferred
obligation only once. Interest must still be paid on the original due
date. At the time of the extension, a new interest rate will be set for
the extension period. ARAMARK will make available the required extension
forms prior to maturity.
32. Q: Will I be able to sell shares to pay my deferred payment obligation at
the time it becomes due?
A: ARAMARK intends to allow you to sell shares at that time. However, all
repurchases of shares by ARAMARK must be approved by the Board of
Directors and are subject to the ability of ARAMARK to do so under its
financing agreements.
33. Q: Can I prepay my deferred payment obligation?
A: Yes. You may prepay all or a part of your deferred payment obligation
at any time before it becomes due. Partial payments are applied first to
interest due and then reduction of principal.
34. Q: What are the anticipated income tax consequences to me for participation
in the Deferred Payment Program?
A: The tax consequences of exercising your purchase opportunity installment
will not change. Generally, for U.S. based employees, the interest paid
at the time of making the deferred payment would be treated under U.S.
income tax law as investment interest. Accordingly, it may be deductible,
but only to the extent of investment income received during the year the
interest is paid. "Investment income" does not include any income taxed
at the favorable capital gains rate. As a result, you may not be able, or
wish, to deduct deferred payment interest when you pay it. However,
investment interest expense, including deferred payment interest, that is
not deducted for U.S. income tax purposes may be carried forward
indefinitely until it is used. You are urged to discuss this matter with
your tax advisor.
11
<PAGE>
Belgium based employees:
ARAMARK understands that under current Belgian law, the interest would
not be deductible in your personal income tax.
Canada based employees:
ARAMARK understands that generally, under current Canadian law, interest
is deductible where it is paid to acquire income-producing property.
ARAMARK does not now regularly pay dividends on its stock, nor are such
dividend payments planned for the foreseeable future. As a result,
ARAMARK believes there may be an issue as to whether interest paid under
the Deferred Payment Program would be deductible against Canadian income
tax. You are urged to discuss this matter with your tax advisor.
Czech Republic based employees:
ARAMARK understands that under current Czech law, the interest you pay
would not be deductible in your personal income tax.
Germany based employees:
ARAMARK understands that under current German tax law, interest paid to
acquire a capital asset such as ARAMARK stock is deductible only to the
extent that ordinary income, such as dividends, is derived from that
investment. ARAMARK does not now regularly pay dividends on its stock,
nor are such dividend payments planned for the foreseeable future. As a
result, ARAMARK believes that interest paid under the Deferred Payment
Program probably would not be deductible against German income tax. You
are urged to discuss this matter with your tax advisor.
Spain based employees:
ARAMARK understands that under current Spanish law, the interest you pay
would not be deductible in your personal income tax.
United Kingdom based employees:
ARAMARK understands that under current United Kingdom law, the interest
you pay would not be a deductible expense for income tax purposes.
35. Q: Will my obligation to pay the deferred payment be treated as debt for my
personal credit purposes?
A: Any decision regarding your personal credit, whether for a home
mortgage or otherwise, would be made by a lender. ARAMARK understands
that generally the deferred payment obligation would be treated as debt
for personal credit purposes by lenders.
36. Q: May I participate in the Deferred Payment Program if I am also
participating in the Wachovia Bank loan program referred to in Question
37?
A: Yes. However, your eligibility for the Wachovia Bank loan program is
determined solely by the bank.
- --------------------------------------------------------------------------------
- -- BORROWING
- --------------------------------------------------------------------------------
37. Q: Can I borrow money to purchase the shares covered by my purchase
opportunity?
A: Yes. Generally, if you wish to borrow money to purchase shares, you must
make your own financing arrangements with outside lenders. See Questions
55 through 57 concerning your ability to pledge your shares to a lender.
Wachovia Bank has developed a special loan program for ARAMARK U.S. based
employees for the period of December 15, 1998 to January 15, 1999.
Information concerning the loan program is available from Stephen Gray or
Steve Slewitzke at 1-800-724-8865. Eligibility for the program is
determined by Wachovia Bank.
<PAGE>
- --------------------------------------------------------------------------------
- -- SALE OF CURRENTLY-OWNED SHARES
- --------------------------------------------------------------------------------
38. Q: How can I sell shares of Common Stock that I currently own to pay the
purchase price?
A: You may sell shares of Common Stock in the internal market that is being
conducted concurrently with the December 15 to January 15 installment
exercise period (see Question 67). If you exercise your purchase
opportunity during such internal market period, you may have the cash
proceeds of such sale applied to pay all or a portion of the purchase
price. The necessary forms and instructions are included in Annex B.
39. Q: What are the tax consequences if I sell shares to raise cash to exercise
my purchase opportunity?
A: For U.S. based employees, the sale of Common Stock is a taxable event. In
most cases, any gain or loss upon disposition of shares (measured by
reference to the Appraisal Price of the shares on the date of exercise)
may be treated as capital gain or loss. The tax consequences of selling
shares are not affected by whether or not you use the proceeds of such
sale to exercise other purchase opportunities. Taxes due from the sale of
shares must be paid in addition to the taxes due on the exercise of
purchase opportunities. Again, you are urged to discuss your particular
situation with your tax advisor.
12
<PAGE>
- --------------------------------------------------------------------------------
- -- STOCK-FOR-STOCK EXCHANGES
- --------------------------------------------------------------------------------
Employees based in countries other than the U.S. and Canada:
ARAMARK understands that laws of countries outside the U.S. and Canada do
not permit the favorable "like-kind" tax treatment allowed for
stock-for-stock exercises in the U.S. and Canada. Accordingly,
stock-for-stock exercises are not beneficial to employees outside the
U.S. and Canada and, therefore, will not be available to them.
Stock-for-stock exercises in other countries would be taxed the same as
actual sales of shares of common stock to pay for the exercise of
purchase opportunities. If you wish to use the value of shares you
already hold to help pay for your exercise, you should actually sell
shares in the Internal Market, using the forms included in Annex B. You
are encouraged to consult your tax advisor regarding your country's
specific rules for such exercises.
40. Q: What is a stock-for-stock exchange?
A: The effect of a stock-for-stock exchange is much the same as if you sold
shares and used the cash proceeds to pay a portion of the purchase price.
However, in countries where stock-for-stock exchange is permitted, there
is a significant tax difference in that no taxable capital gain is
currently generated by the use of a stock-for-stock exchange.
41. Q: What is the benefit of using the stock-for-stock exchange method?
A: Where stock-for-stock exchange is permitted, you can avoid recognizing
any gain for income tax purposes that you would otherwise recognize if
you sold shares that you currently own and then used the cash proceeds to
pay the exercise price.
42. Q: What are the tax consequences if I use the stock-for-stock exchange
method?
A: Where stock-for-stock exchange is permitted, your taxable income from the
stock-for-stock exchange is the same as if it were an exercise for cash:
Namely, your taxable income is equal to the difference between the
exercise price and the Appraisal Price and is taxable at ordinary rates
and subject to withholding.
The U.S. tax basis and holding period for the shares that you currently
own and use in the stock-for-stock exchange remain unchanged. The tax
basis of the additional shares you receive in the exercise is equal to
the current Appraisal Price at the time of the exercise, and their
holding period commences with the date of exercise.
Canada based employees:
ARAMARK understands that taxable income results only from the exercise
and is calculated as explained in Question 19. There should be no capital
gain or loss on the disposition of the old shares. The tax cost of the
new shares you receive on the exercise will be equal to the tax cost of
the old shares plus the amount of the taxable benefit (not reduced by the
deduction allowed for one-quarter of the income realized on exercise)
included in your income in respect of the new shares (plus any other cash
you pay towards the purchase price). This tax cost is then averaged with
the tax cost of other identical shares held by the employee.
43. Q: How do I use the stock-for-stock exchange method?
A: A portion of the exercise form in Annex B guides you through the
computation of how many currently owned shares will be needed in your
stock-for-stock exchange. You may use any shares that you (or you and
your spouse jointly) have owned for more than six months in a
stock-for-stock exchange -- even shares that are pledged to ARAMARK in
the Deferred Payment Program.
44. Q: Who is eligible to use a stock-for-stock exchange?
A: Generally, U.S. based and Canada based employees may use the
stock-for-stock exchange method for any installment of an ISPO.
45. Q: How much of the purchase price can be paid using the stock-for-stock
exchange method?
A: You may use the stock-for-stock exchange method to cover up to, but not
more than, the exercise price (not including any applicable withholding
taxes). For example, if the exercise price for 100 shares is $3.25 per
share (or $325.00) and the Appraisal Price at exercise is $10.00 per
share, then you may use 32 shares that you currently own in the
stock-for-stock exchange method to pay $320.00 of the exercise price with
the balance of $5.00 (plus required withholding taxes) being paid through
the other available methods. You may not use 33 shares, because 33 times
$10.00 (or $330.00) exceeds the exercise price of $325.00.
13
<PAGE>
46. Q: What are the restrictions on the shares I use in a stock-for-stock
exchange?
A: You may use shares in a stock-for-stock exchange only if the shares are
owned by you (or you and your spouse jointly) and only if the shares have
been owned for more than six months. In addition, shares that you use in
the stock-for-stock exchange method, like the shares you acquire in an
exercise of a purchase opportunity, are not eligible for sale in the
internal market during the six months after the exercise.
- --------------------------------------------------------------------------------
STOCK OWNERSHIP
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -- GENERAL
- --------------------------------------------------------------------------------
47. Q: Will I receive a stock certificate for the shares of Common Stock that I
purchase?
A: No. All shares will be issued in uncertificated form. ARAMARK will send a
profile report to you in place of a certificate after each transaction.
ARAMARK also distributes each December annual statements with the stock
holdings and terms of each holder's outstanding purchase opportunities.
48. Q: Can I have the shares registered jointly in my name and my spouse's name?
A: Yes. You can register shares in the names of you and your spouse as joint
tenants, provided both you and your spouse sign the exercise form.
(Introduction to the Stockholders' Agreement) See questions 51 through 54
for more information.
If you are utilizing the Deferred Payment Program, both of you must also
sign the Obligation Note, which is included with the exercise forms.
Canada based employees:
To register shares as joint tenants in your name and your spouse's name
you must first transfer the shares to such joint holding following your
exercise of your purchase opportunity. Canadian securities laws generally
do not permit a trade of shares by Canadian-resident holders. However,
ARAMARK has obtained relief from each of the Ontario and Quebec
Securities Commissions from restrictions on transfer that otherwise would
apply. The relief granted by the Commissions permits Employees to
transfer shares to prescribed groups of persons, including their spouse
(see Question 52). To register shares in the names of you and your spouse
as joint tenants, both you and your spouse must sign the exercise form.
(Introduction to the Stockholders' Agreement)
There may be tax consequences from registering shares in joint name that
differ from the consequences of registering them in solely the employee's
name. You are urged to consult with your tax advisor if you are
considering registration in joint name.
49. Q: Will I receive dividends on the Common Stock?
A: If the Board of Directors declares a dividend, holders of Common Stock on
the dividend record date will be entitled to receive that dividend.
50. Q: Will I be entitled to vote on any matters submitted to a vote of ARAMARK
Corporation stockholders?
A: Yes. You will generally be free to vote your shares in any manner you
choose on any matters properly presented to the stockholders. (Sections
12 and 16.04)
- --------------------------------------------------------------------------------
- -- TRANSFERRING SHARES
- --------------------------------------------------------------------------------
51. Q: May I transfer my shares of Common Stock?
A: Generally, you may not sell or otherwise transfer your shares of Common
Stock (other than in certain limited instances). (Section 2.01)
52. Q: May I transfer my shares of Common Stock for estate or tax planning
purposes?
A: Yes. You may transfer your shares for estate or tax planning purposes as
gifts to your spouse, child, grandchild or parent or a trust for the
benefit of any of them or to a qualifying charitable organization. You
may also make other transfers to your family members, their trusts or
other entities if the transfer is approved by ARAMARK's Board of
Directors. (Section 3.01)
Canada based employees:
Canadian securities laws generally do not permit trades of shares by
Canadian-resident holders. ARAMARK has obtained certain relief from each
of the Ontario and Quebec Securities Commissions from restrictions on
transfer that otherwise would apply.
14
<PAGE>
The relief granted by the Ontario Securities Commission permits
Ontario-resident employees and senior officers of ARAMARK Canada Ltd. and
its subsidiaries (collectively called "Employees") to transfer shares
only to "Eligible Persons" provided it is done in compliance with the
Stockholders' Agreement. Subsequent transfers of shares are similarly
restricted to other Eligible Persons. "Eligible Persons" are: (i) spouses
of Employees, (ii) minor children of Employees, (iii) corporations
controlled by Employees and/or their spouses where the Employee is an
officer and director of the corporation and where all the shares of the
corporation are owned at all times by any combination of the Employee,
the spouse of the Employee and children of the Employee and/or the
children of the Employee's spouse or the respective offspring of the
children of the Employee, (iv) trusts where all the beneficiaries are any
combination of the Employee, the spouse of the Employee, the children of
the Employee and/or children of the Employee's spouse and the offspring
of the children of the Employee, and where at least one of the trustees
is the Employee, and (v) registered retirement savings plans of the
Employee or Eligible Person and/or personal holding corporations of the
Employee or Eligible Persons.
The relief granted by the Quebec Securities Commission permits
Quebec-resident holders of shares to transfer shares in accordance with
the Stockholders' Agreement. Pursuant to the Stockholders' Agreement, you
may transfer your shares for estate or tax planning purposes as gifts to
your spouse, child, grandchild or parent or a trust for the benefit of
any of them or to a qualifying charitable organization. Pursuant to the
Stockholders' Agreement, you may also make other transfers to your family
members, their trusts or other entities if the transfer is approved by
ARAMARK's Board of Directors. (Section 3.01)
ARAMARK understands that where shares are gifted to permitted
transferees, a taxable disposition may be deemed to occur, depending upon
the employee's relationship to the permitted transferee. Furthermore,
subsequent dividends paid on shares gifted to permitted transferees and
gains realized from subsequent sales of gifted shares may be attributed
back to the employee, again depending on the employee's relationship to
the permitted transferee. You are urged to discuss with your tax advisor
the tax consequences of any gift of shares that you may consider making.
Spain based employees:
ARAMARK understands that transfers of shares to permitted transferees may
be treated as taxable dispositions of those shares, subject to capital
gain taxation. You are urged to discuss with your tax advisor the tax
consequences of any gift of shares that you may consider making.
UK based employees:
ARAMARK understands that transfers of shares to permitted transferees may
be treated as taxable dispositions of those shares, subject to capital
gain taxation, depending upon the employee's relationship to the
permitted transferee. You are urged to discuss with your tax advisor the
tax consequences of any gift of shares that you may consider making.
53. Q: Are these permitted transfers subject to any conditions?
A: Yes. The transferee must sign a form available from ARAMARK confirming
that he or she is acquiring the shares subject to all the terms and
conditions of the Stockholders' Agreement, and such form must be
delivered to ARAMARK before the transfer. (Section 2.03(a))
54. Q: When will I be able to transfer my shares freely without having to
comply with the restrictions on transfer contained in the Stockholders'
Agreement?
A: Generally, the Stockholders' Agreement will continue in force unless the
stockholders who are parties to the Agreement and ARAMARK vote to
terminate or change it. (Section 11)
- --------------------------------------------------------------------------------
- -- PLEDGING SHARES
- --------------------------------------------------------------------------------
55. Q: May I pledge my shares of ARAMARK Common Stock?
A: Yes. You may pledge your shares to a commercial bank, savings and loan
institution, or any other lending or financial institution as security
for your indebtedness. However, you may do so only if the lender agrees
that, upon realization of its security, the lender will dispose of the
shares only in compliance with the terms of the Stockholders' Agreement.
(Section 3.02) If you are eligible and elect to participate in ARAMARK's
Deferred Payment Program, you will be required to pledge shares to
ARAMARK (see Question 30).
56. Q: Will the pledged shares be subject to the Stockholders' Agreement?
A: Yes.
15
<PAGE>
57. Q: Will I be able to sell pledged shares in the internal market or under the
Emergency Buyback Program?
A: Yes. However, for shares pledged to ARAMARK under the Deferred Payment
Program, your entire deferred payment obligation will become due at the
time of such sale.
- --------------------------------------------------------------------------------
- -- APPRAISAL PRICE
- --------------------------------------------------------------------------------
58. Q: What is the Appraisal Price of the Common Stock used for?
A: The Appraisal Price is the price at which ARAMARK grants stock purchase
opportunities to employees and the price at which ARAMARK repurchases
Common Stock under the Stockholders' Agreement. (Section 1.02)
59. Q: How will I know what the Appraisal Price of the Common Stock is?
A: ARAMARK's current practice is to have the Common Stock independently
appraised quarterly (December 1, March 1, June 1, September 1) by an
independent appraiser. The Appraisal Price at December 1, 1998 was
$11.90.
This information is generally communicated with the Chairman's quarterly
letter to shareholders. Additionally, recorded updates in the Appraisal
Price can be obtained by calling 1-888-96-OWNER.
60. Q: How has the Appraisal Price performed?
A: The Appraisal Price (adjusted for stock splits) has increased
continually since the 1984 management buyout at a compound annual rate
of more than 30%. Of course, past performance is no guaranty of future
results.
61. Q: Who determines the Appraisal Price?
A: Each year the Board of Directors selects an independent appraisal firm to
act as Appraiser of the Common Stock. Houlihan Lokey Howard & Zukin
Financial Advisors, Inc. (HLHZ) is the current Appraiser. ARAMARK has
used HLHZ for its quarterly appraisals since 1994.
62. Q: What information does the Appraiser consider in rendering its appraisals?
A: In rendering its appraisals, HLHZ
o generally holds interviews and discussions with key senior corporate
officers at ARAMARK's corporate headquarters in Philadelphia,
Pennsylvania,
o reviews the history and nature of ARAMARK,
o reviews the financial data bearing upon recent and prospective
operations, including ARAMARK's 10-K and 10-Q filings with the SEC, other
recent filings with the SEC, audited and interim financial statements,
and internal financial and operating segment data as well as long-term
financial forecasts of ARAMARK,
o reviews and analyzes ARAMARK's operating segments and their prospects,
o examines industry and capital market information deemed relevant to the
assessment of investment risk and investment return attributes of the
Common Stock, and return attributes of the Common Stock, and
o analyzes any other factors that it considers necessary under the
circumstances.
ARAMARK data and forecasts reviewed by HLHZ include operating results,
business plans and strategic plans that are not made generally available
to the stockholders of ARAMARK.
63. Q: How does the Appraiser determine the Appraisal Price?
A: The Appraiser determines the appropriate methodology for its appraisal.
HLHZ currently bases its appraisals on market capitalization approaches
and on income approaches, including discounted cash flow analysis, to
arrive at an aggregate equity value. HLHZ also gives consideration to
various qualitative factor considerations, including limitations on the
marketability of the Common Stock resulting in part from the restrictions
imposed by the Stockholders' Agreement. The most recent appraisal, dated
December 1, 1998, included an approximate 40% discount from aggregate
equity value with respect to qualitative factor considerations.
- --------------------------------------------------------------------------------
SALES WHILE EMPLOYED
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -- GENERAL
- --------------------------------------------------------------------------------
64. Q: Will I be able to sell shares back to ARAMARK?
A: Yes. Primarily, you will be able to sell your shares to ARAMARK in the
internal market.
16
<PAGE>
ARAMARK also provides an Emergency Buyback Program to accommodate certain
limited instances when unanticipated emergencies arise. ARAMARK
anticipates that the combination of the internal market and the emergency
buyback program should provide adequate liquidity to all management
investors in an orderly and equitable basis. ARAMARK also provides an
offer-to-sell procedure that could be used. These three methods for
realizing liquidity are described more fully below (see Questions 67, 68
and 69). Of course, the ability of ARAMARK to repurchase any shares is
subject to ARAMARK's continued strong operating and financial
performance. (Section 3.03)
65. Q: Will ARAMARK inform me prior to the time that I purchase from ARAMARK
(through the exercise of a purchase opportunity or otherwise) or sell to
ARAMARK (in the internal market or otherwise) any of my shares of stock
of any pending or potential transaction that could increase or decrease
the value of the stock?
A: No. ARAMARK will not disclose any pending or potential transaction in
connection with your decision to purchase from or sell to ARAMARK any
shares of ARAMARK stock owned by you. It is in the best interests of
ARAMARK and the stockholders taken as a whole for ARAMARK to be able to
conduct orderly transactions in Common Stock on a continual basis
(including in connection with the internal market and repurchases upon
termination of employment) and for ARAMARK concurrently to be able to
consider from time to time on a confidential basis potential transactions
that could affect the fair market value or the Appraisal Price of the
shares, or both. ARAMARK does not disclose publicly its projections or
the status of any transaction that may be under consideration. (Section
8)
66. Q: What are the tax consequences if I sell shares?
A: For U.S. based employees, the sale of Common Stock is a taxable event. In
most cases, any gain or loss upon disposition of shares (measured by
reference to the Appraisal Price of the shares on the date of exercise)
may be treated as capital gain or loss. You are urged to discuss your
particular situation with your tax advisor.
Belgium based employees:
ARAMARK understands that any gain is exempt from the Belgian income tax.
Canada based employees:
ARAMARK understands that, under current Canadian federal income tax laws,
the sale of shares is a taxable event with the following effect.
The amount by which the proceeds of disposition exceed (or are exceeded
by) the adjusted cost base of the shares, plus any costs of disposition,
will be treated as capital gain (or capital loss) of the employee.
The adjusted cost base of the shares acquired on the exercise of the
purchase opportunity will be equal to the exercise price plus the amount
of the taxable benefit realized. The adjusted cost base of the shares
will be computed in Canadian dollars, using the Canada-U.S. exchange rate
prevailing on the date of exercise. The adjusted cost base of all shares
received on the exercise of a purchase opportunity will then be averaged
with the adjusted cost base of other identical shares owned by the
employee.
The tax consequences of selling shares is not affected by whether or not
you use the proceeds of such sale to exercise other purchase
opportunities. Taxes due from the sale of shares must be paid in addition
to the taxes due on the exercise of purchase opportunities.
You are urged to discuss your particular situation with your tax advisor,
including the records you need to keep to properly determine, from time
to time, the average adjusted cost base of your shares.
Czech Republic based employees:
ARAMARK understands that if you sell the shares more than six months
after you exercise your purchase opportunity, then any gain is exempt
from the Czech income tax.
Germany based employees:
ARAMARK understands that if you sell the shares more than six months
after you exercise your purchase opportunity, then any gain is exempt
from the German income tax.
Spain based employees:
ARAMARK understands that for Spanish income tax purposes, the sale of
Common Stock is a taxable event. In most cases, any gain or loss upon
disposition of shares (measured by reference to the Appraisal Price of
the shares on the date of exercise) may be treated as capital gain or
loss. ARAMARK understands that capital gains may be taxed in Spain under
several alternative rules, depending upon how long you held the shares
and the amount of your total annual proceeds from sales. You are urged to
discuss your particular situation with your tax advisor.
As well as completing the internal market forms, you will be required to
complete form MC-10B and file it with the Directorate for Foreign
Investments and Commercial Transactions.
17
<PAGE>
In addition, if the aggregate sale price for the shares that you are
selling is more than 1,000,000 ptas., then you are also required to
complete form B3 and file it with a registered financial entity.
In addition, if the aggregate sale price for the purchase opportunities
that you are exercising is more than 500,000 ptas. (including required
withholding) and you are depositing all or part of the sale price into a
bank, then you must notify the bank of the details of the transaction.
You should consult with your tax advisor to help you complete and file
any required forms and notices. Accurate reporting of the transaction is
your obligation.
United Kingdom based employees:
ARAMARK understands that selling shares is a taxable event under capital
gains rules. Capital gains tax from the sale would be calculated on the
proceeds less the Appraisal
The annual exemption, currently (pound)6,800, may be available to offset
this charge. You should discuss your particular situation with your tax
advisor.
- --------------------------------------------------------------------------------
- -- INTERNAL MARKET
- --------------------------------------------------------------------------------
67. Q: What is the internal market?
A: The internal market is a process whereby ARAMARK, on a periodic basis,
offers to purchase some of your shares of Common Stock. At the time of
the offer, each management owner will then be able to decide whether to
accept or reject the offer. The internal market provides the primary way
for management owners to sell some of their stock holdings.
The Internal Market Policy approved for 1999 consists of four quarterly
repurchase periods, and subject to further review and approval by the
Board of Directors prior to each subsequent annual offering, is as
follows:
- --------------------------------------------------------------------------------
INTERNAL MARKET
<TABLE>
<CAPTION>
<S> <C>
Offering Periods: December 15 to January 15; March 15 to April 15;
June 15 to July 15; September 15 to October 15.
Offerees: All management owners.
Purchase Price: The most recent available Appraisal Price as of
December 1, March 1, June 1, September 1.
Payment Terms: Cash.
Individual Guideline for Up to $250,000. Requests for larger sales can be made by
each Offering Period: contacting either Marie Paschall (215-238-3194) or Russell
Garrison (215-238-3238).
Required Holding Period: Shares owned for less than six months or used in a
stock-for-stock exchange within the prior six months are not
eligible for resale in the internal market.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -- EMERGENCY BUYBACK PROGRAM
- --------------------------------------------------------------------------------
68. Q: What is the Emergency Buyback Program?
A: From time to time there may be compelling circumstances when an
unanticipated emergency arises, which may cause a management owner to
request ARAMARK to repurchase shares. Each request will be reviewed
individually, taking into account all relevant circumstances.
- --------------------------------------------------------------------------------
- -- OFFER-TO-SELL
- --------------------------------------------------------------------------------
69. Q: Will I be able to sell my shares in any other way?
A: The anticipated normal procedure for selling shares is through the
internal market. However, you may also offer a portion of your shares to
ARAMARK at the current Appraisal Price of the Common Stock. In the event
your shares were not purchased by ARAMARK, you could offer to sell your
shares within the next 90 days to a third party who agrees to abide by
all the terms of the Stockholders' Agreement, on the same terms offered
to ARAMARK. (Section 4)
Upon termination for any reason, subject to ARAMARK's right to Call your
shares (see Question 70), you could offer to sell your shares as
described above.
18
<PAGE>
Canada based employees:
ARAMARK understands that the Canadian securities laws generally do not
allow any sale of shares other than sales back to ARAMARK. However, as
described under Question 52 above, ARAMARK has obtained certain relief
from Canadian securities laws that would permit, in the case of
Ontario-resident Employees, a sale of shares to Eligible Persons and, in
the case of Quebec-resident holders of shares, a sale of shares to a
third party, provided that: (i) the transfers are made in compliance with
the Stockholders' Agreement and (ii) further trades by such transferees
will be subject to the same limitations.
- --------------------------------------------------------------------------------
SALES UPON TERMINATION OF EMPLOYMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -- GENERAL
- --------------------------------------------------------------------------------
70. Q: If my employment with ARAMARK and its subsidiaries is terminated for
any reason, does ARAMARK have the right to require me to sell my shares
to ARAMARK?
A: Yes. This right of ARAMARK to require you to sell your shares is
described as a Call. At any time during the 10 years following the
termination of your employment, ARAMARK has the right to Call any or all
of your shares and any or all of the shares of all of your Permitted
Transferees. ARAMARK's intention, subject to the Special One-Time
Deferral Election described in Question 77, is to exercise promptly its
Call right for all shares if you are terminated for any reason. (Section
6)
71. Q: Do the Call rights apply to a termination of my employment with ARAMARK
and its subsidiaries that is beyond my control?
A: Yes. The Call rights apply to all terminations of employment with ARAMARK
and its subsidiaries without regard to cause, including death, permanent
and complete disability, voluntary or involuntary termination of
employment, and retirement. For example, if ARAMARK were to sell the
division or subsidiary in which you work, then the Call rights would
apply even though you were continuing to work in the same division or
subsidiary. (Section 6)
72. Q: How will I be paid for my shares when they are Called?
A: ARAMARK, in almost all cases, will purchase your shares at the Appraisal
Price of the Common Stock in effect as of your date of termination of
employment. If ARAMARK gives notice that it is exercising the Call more
than 120 days after the time of termination of employment, ARAMARK will
repurchase your shares at the lesser of the Appraisal Price at the time
of termination plus 8% simple interest to the time of such notice, or the
Appraisal Price at the time of such notice. (Section 6.02) See Questions
79 through 85 for a description of the payment terms.
73. Q: What if ARAMARK cannot repurchase my shares pursuant to the exercise
of a Put or a Call because it would cause a default under one of
ARAMARK's loan agreements or would violate applicable law?
A: Your shares would be repurchased on the earliest practicable date when
such repurchase could be effected in compliance with such loan agreement
and applicable law. The price to be paid could be affected because of
such delay. (Section 10.01)
74. Q: If I voluntarily terminate my employment, ARAMARK has the right to
call my shares of Common Stock. Will ARAMARK inform me prior to the time
I terminate my employment of any pending or potential transaction that
could increase the value of the Common Stock?
A: No. ARAMARK will not disclose any pending or potential transaction in
connection with your decision to terminate your employment (or in
connection with your decision to exercise a Put or in any other
circumstance). It is in the best interests of ARAMARK and the
stockholders taken as a whole for ARAMARK to be able to conduct orderly
transactions in Common Stock on a continual basis (including in
connection with the internal market and repurchases upon termination of
employment) and for ARAMARK concurrently to be able to consider from time
to time on a confidential basis potential transactions that could affect
the fair market value or the Appraisal Price of the shares, or both.
ARAMARK does not disclose publicly its projections or the status of any
transaction that may be under consideration. (Section 8)
75. Q: Will I be able to require ARAMARK to repurchase shares?
A: Generally, no. However, upon your death, Complete Disability or Normal
Retirement, you or your estate, as appropriate, subject to ARAMARK's
financing agreements, can require ARAMARK to purchase up to 30% of your
shares. This right to require ARAMARK to purchase shares is described as
a Put. ARAMARK will be required to purchase these shares for cash at the
current Appraisal Price
19
<PAGE>
of the Common Stock. ARAMARK intends to purchase (Call) your remaining
shares (see Question 70). However, in the event ARAMARK does not Call
your shares, then you could offer to sell the remaining shares (see
Question 69). (Section 5)
76. Q: What are the tax consequences if I sell shares?
A: The tax consequences from the sale of shares upon termination of
employment are substantially similar to the tax consequences of sales
while employed. See the answers to Question 66 which address the
applicable tax consequences to U.S. based and employees based in
countries other than the United States, respectively. See Question 85
regarding installment treatment in cases where an installment note is
used to pay a portion of the sale price. You are urged to discuss your
particular situation with your tax advisor.
- --------------------------------------------------------------------------------
- -- SPECIAL ONE-TIME DEFERRAL ELECTION
- --------------------------------------------------------------------------------
77. Q: What is the Special One-Time Deferral Election?
A: Upon your termination of employment at any time prior to August 31, 1999,
you may elect to have ARAMARK delay exercising its Call until October 15,
1999. Upon your termination of employment, you will receive instructions
to enable you to make this election.
If you make the election, it will apply to all shares held by you and
your Permitted Transferees. You cannot make the election for a portion of
your shares.
ARAMARK currently intends to Call all shares owned by you and your
Permitted Transferees at the time of your termination of employment
unless you make such election, and on October 15, 1999, or shortly
thereafter, if you do make such election.
ARAMARK could extend the Special One-Time Deferral Election or provide
additional elections in the future, but is under no obligation to do so.
78. Q: If I make a Special One-Time Deferral Election, can I sell any shares
prior to October 15, 1999?
A: Yes. You could sell shares pursuant to the internal market (see Question
67).
In addition, you could revoke the Special One-Time Deferral Election for
all of the shares that you and your Permitted Transferees own. ARAMARK
currently intends to Call all shares owned by you and your Permitted
Transferees at the time you revoke your election at the Appraisal Price
in effect at the time of such Call.
<PAGE>
- --------------------------------------------------------------------------------
- -- STOCK REPURCHASE POLICY
- --------------------------------------------------------------------------------
79. Q: What is the Stock Repurchase Policy?
A: ARAMARK's Stock Repurchase Policy provides for payment terms that are
generally more favorable to you than the payment terms provided for in
the Stockholders' Agreement. (Section 1.08) This Policy, which is
described below (see Questions 80 through 82), may be amended,
discontinued or varied for all repurchase transactions generally or for
any specific repurchase transaction at any time by ARAMARK without
notice. The Policy does not affect the total repurchase price that you
will be paid for your shares.
80. Q: If I terminate before Normal Retirement and my shares are Called, what
does the Stock Repurchase Policy currently provide?
A: The initial cash payment will be $300,000 (or your total holdings, if
less than $600,000). The remainder of the total repurchase price will be
paid in annual principal installments on an installment note. Each annual
principal payment under the installment note will be $300,000 (or the
remaining balance, if less than $600,000) with any remaining balance paid
in the tenth annual installment or the last installment before you reach
age 66, whichever comes first.
81. Q: If I terminate through Normal Retirement and my shares are Called (or
if I exercise my Put and the remainder of my shares are Called), what
does the Stock Repurchase Policy currently provide?
A: Generally, Normal Retirement means you are at least age 60 and you retire
from active employment. (Section 1.06) The initial cash payment will be
30% of the total repurchase price (minimum of $300,000 or your total
holdings if less than $600,000). The remainder of the total repurchase
price will be paid in equal annual principal installments on an
installment note. Each annual principal payment under the installment
note will be a minimum of $300,000 (or the remaining balance if less than
$600,000). The number of installments is set so that the last installment
is payable before you reach 66 (or if you are 63 or over, so that there
are no more than three annual installments).
20
<PAGE>
82. Q: If I die or become Completely Disabled and my shares are Called
(or if my estate exercises its Put and the remainder of my shares are
Called), what does the Stock Repurchase Policy currently provide?
A: The initial cash payment will be 30% of the total repurchase price
(minimum of $300,000 or your total holdings if less than $600,000). The
remainder of the total repurchase price will be paid in equal annual
principal installments on an installment note. Each annual principal
payment under the installment note will be a minimum of $300,000 (or the
remaining balance if less than $600,000). The number of installments is
set so that there are no more than three annual installments.
- --------------------------------------------------------------------------------
- -- Installment Notes
- --------------------------------------------------------------------------------
83. Q: What are the terms of the installment notes?
A: The annual principal payments on the installment notes are set pursuant
to the Stock Repurchase Policy (see Questions 79 through 82). Interest
will be paid semi-annually and the rate will be fixed at the Applicable
Federal Rate which currently varies approximately from 4.28% to 5.18%,
depending upon the term of the note. (Section 1.08) The form of
installment note, including the subordination terms, is set forth in
Exhibit A to the Stockholders' Agreement.
84. Q: Does the Stock Repurchase Policy provide for an alternative interest rate
on the promissory note?
A: Yes. In lieu of a fixed interest rate (equal to the Applicable Federal
Rate at the time of the repurchase) for the entire life of the promissory
note, you may make a one-time irrevocable election at the time of
repurchase for the rate to reset annually on the date of each principal
payment to the Applicable Federal Rate then in effect.
85. Q: If ARAMARK purchases my shares using, in part, an installment note, will
I have to pay tax on the entire gain in the first year?
A: You may be able to defer tax on some or all of your gain. For U.S. based
employees, the purchase using a note usually will qualify for installment
treatment under the U.S. income tax laws. You should be able to recognize
taxable gain in proportion to the cash payments of principal you will
receive over the years. You should consult with your tax advisor to
determine if installment sale treatment is advantageous to you and how
you should report it on your tax returns.
Belgium based employees:
ARAMARK understands that gain on the sale of shares is tax-exempt. The
interest payable on the installment note, however, is treated as movable
income and is taxable at a rate of 15%. Also, there may be an additional
15% withheld under U.S. tax laws. You should consult with your tax
advisor to determine if installment sale treatment is advantageous to you
and how you should report it on your tax returns.
Canada based employees:
ARAMARK understands that you may be able to defer tax on some or all of
your gain. The purchase using a note usually will qualify for installment
treatment under the Canadian income tax laws. You should be able to
recognize the taxable gain in proportion to the cumulative cash payments
of principal you will receive over the years if you file Revenue Canada
form T2017 with your tax returns, but at a minimum you must recognize one
fifth of the gain each year for five years. The interest payable on the
installment is subject to a withholding tax of 10%, which can be claimed
as a foreign tax credit or deducted on your tax return. You should
consult with your tax advisor to determine if installment sale treatment
is advantageous to you and how you should report it on your tax returns.
Czech Republic based employees:
ARAMARK understands that if the shares have been held at least six
months, the gain is tax-exempt. The interest paid on the installment
note, however, is treated as your capital income. You should consult with
your tax advisor to determine if installment sale treatment is
advantageous to you and how you should report it on your tax returns.
Germany based employees:
ARAMARK understands that if the shares have been held at least six
months, the gain is tax-exempt. The interest payable on the installment
note, however, is treated as interest income. Any interest income from
the installment note is taxable income to the extent your total dividend
and interest income in any calendar year exceeds DM 6,100 (or DM 12,200
for jointly filing married employees). You should consult with your tax
advisor to determine if installment sale treatment is advantageous to
you and how you should report it on your tax returns.
21
<PAGE>
Spain based employees:
ARAMARK understands that you may be able to defer tax on some or all of
your gain. The purchase using a note usually will qualify for installment
treatment under Spanish income tax laws. You should be able to recognize
taxable gain in proportion to the cash payments of principal you will
receive over the years. The interest payable on the installment is
subject to a withholding tax of 10% which you may be able to claim as a
foreign tax credit or deduct on your tax return. You should consult with
your tax advisor to determine if installment sale treatment is
advantageous to you and how you should report it on your tax returns.
United Kingdom based employees:
ARAMARK understands that you may not be able to defer tax on your gain.
The selling of shares for an installment note is a taxable event under
United Kingdom capital gains tax laws. In addition, any interest paid on
the note will be subject to income tax. You should consult with your tax
advisor to determine if installment sale treatment is advantageous to you
and how you should report it on your self assessment form.
ABOUT THIS PROSPECTUS
This prospectus relates to a maximum of 47,573,369 shares of the Common
Stock , $.01 par value ("Common Stock" or "Class B Common Stock"), of ARAMARK
Corporation ("ARAMARK" or the "Company") being offered to eligible employees of
the Company and its subsidiaries under the ARAMARK Ownership Program (the
"Program"). The Program consists of the 1984 Stock Option Plan (the "1984 Option
Plan"), the 1987 Stock Option Plan (the "1987 Option Plan") and the 1991 Stock
Ownership Plan (the "1991 Ownership Plan"). The latter two Plans have been
combined into the Combined Stock Ownership Plan.
THE ARAMARK OWNERSHIP PROGRAM
We have designed the ARAMARK Ownership Program (the "Program") to
provide an opportunity for selected management employees of the Company and its
subsidiaries to acquire an ownership interest in the Company and thereby give
them a more direct and continuing interest in the future success of the
Company's business.
Under the Program, the direct ownership in the Company has increased
from 62 original management investors in 1984 to approximately 2,200 management
investors today owning directly approximately 72% of the equity. In addition, at
October 2, 1998, management employees held installment stock purchase
opportunities and stock options for an additional 24,701,205 shares.
The Company's senior management believes that management ownership has
significantly contributed to the Company's success, and intends to continue to
use the Program to expand both the number of management investors and their
percentage ownership.
The Program has used or uses the 1984 Stock Option Plan and the
Combined Stock Ownership Plan. These Plans allow the Company to offer, and under
the Program the Company has offered, stock purchase opportunities to selected
employees in three different ways: the direct sale of shares, the grant of stock
purchase opportunities, and the grant of stock options.
This prospectus relates to the grant and exercise of installment stock
purchase opportunities. Through installment stock purchase opportunities, the
Company granted to more than 5,000 management employees an opportunity to invest
in or increase their investment in, the Company. Shares for installment stock
purchase opportunities have been granted from the 1984 Option Plan and have been
or may be granted from the Combined Stock Ownership Plan.
1984 Option Plan. The Board of Directors adopted and the stockholders
approved the 1984 Option Plan in December 1984 in connection with the management
buyout. The stockholders approved amendments to the Plan in February 1987. The
Plan provides for the issuance of shares of Common Stock through the granting of
incentive stock options and/or non-qualified options. On October 2, 1998,
869,700 options were outstanding under the Plan. No additional options can be
granted under the Plan.
1987 Option Plan. The Board of Directors adopted the 1987 Option Plan
in May 1987 and stockholders approved the Plan in February 1988. In February
1996, the Plan became part of the Combined Stock Ownership Plan. The Plan
provides for the issuance of up to 26,439,573 shares of Common Stock through the
granting of incentive stock options and/or non-qualified options. On October 2,
1998, 4,574,682 options were outstanding under the Plan. No additional options
can be granted under the plan.
1991 Ownership Plan. The Board of Directors adopted the 1991 Ownership
Plan in November 1991 and amended it in 1994. Stockholders approved the Plan in
February 1995. In February 1996, the Plan became part of the Combined Stock
Ownership Plan. The Plan provides for the issuance of up to 63,465,777 shares of
Common Stock through the granting of non-qualified options. On October 2, 1998,
18,800,376 options were outstanding under the Plan and 23,328,611 shares were
available for the grant of future options.
22
<PAGE>
Combined Stock Ownership Plan. The Board of Directors adopted in 1995
and the stockholders approved in February 1996 the Combined Stock Ownership Plan
which amends and combines the 1987 Stock Option Plan and the 1991 Stock
Ownership Plan.
1996 Directors Stock Ownership Plan. The Board of Directors approved
the Directors Plan in February 1996. The Directors Plan provides for the
issuance of up to 750,000 shares of Common Stock through the granting of
nonqualified options to directors who are not employees of the Company. On
October 2, 1998, 456,447 options were outstanding under the Directors Plan and
258,450 were available for the grant of future options. This prospectus does not
relate to the grant or exercise of stock purchase opportunities under the
Directors Plan, and references to the Plans do not include the Directors Plan.
In accordance with the terms of the Plans, the purchase price for
shares subject to purchase opportunities granted under the Plans will not be
less than the fair market value of the shares (based upon the most recent
available independent appraisal) on the date of the grant. Shares issued
pursuant to the Plans are subject to the Stockholders' Agreement. The Plans
provide that the terms of options and purchase opportunities outstanding under
the Plans and the number of shares authorized under the Plans will be
appropriately adjusted upon the declaration of stock dividends and upon the
occurrence of certain other events.
The Plans grant certain authority to the Human Resources, Compensation
and Public Affairs Committee (the "Committee") which consists of five members of
the Board.
The Committee is authorized to grant purchase opportunities and to
determine the number of shares to be offered thereby to each selected key
employee. The term "key employee" is not defined in the Plans, and subject to
the express provisions of the Plans, the Committee has complete authority to
determine the employees who receive purchase opportunities thereunder. As a
result, the number of employees eligible to participate in the Plans is not
determinable.
Purchase opportunities generally are not transferable. No purchase
opportunity can be subject to attachment, execution or levy of any kind. Each
purchase opportunity shall be exercisable only by the employee to whom it is
granted and only while an employee of ARAMARK or a subsidiary (or any other
entity in which ARAMARK continues to own an equity interest and which the Board
of Directors designates).
ARAMARK will use the net proceeds from the sale of shares pursuant to
exercises of purchase opportunities for general corporate purposes.
The Plans are not subject to any provisions of the Employee Retirement
Income Security Act of 1974 and are not "qualified" within the meaning of
Section 401(a) of the Internal Revenue Code.
The Board of ARAMARK or the Committee may establish appropriate
procedures for the administration of the Plans. It may also include at the time
a purchase opportunity is granted such additional terms and conditions as it
deems desirable to the extent such are not inconsistent with the Plans. The
decision of the Committee, or the Board for certain matters described in the
Plans, shall be final and binding upon all persons in interest, including
employees, ARAMARK and its stockholders.
The Board may amend the Plans from time to time as it deems desirable,
except that certain amendments would require stockholder approval.
Neither the Plans nor any purchase opportunity granted under the Plans
gives any employee the right to continue in the employ of ARAMARK or its
subsidiaries or limits in any respect the right of ARAMARK or any subsidiary to
terminate such employee.
The appraised fair market value of the Common Stock, as of December 1,
1998, was $11.90 Houlihan Lokey Howard & Zukin ("Houlihan"), a professional
independent appraiser, provided the appraisal of the fair market value of the
shares of Common Stock. Such appraisal was based on the financial condition and
results of operations of ARAMARK, a comparison of ARAMARK with other companies
with similar characteristics, and other factors prevailing at the time it made
such determination.
The Company has paid fees of approximately $500,000 plus reimbursement
of certain expenses to Houlihan for appraisal and other services rendered to the
Company during the 12 months prior to the date of this prospectus. In addition,
the Company has agreed to indemnify Houlihan against certain liabilities which
it might incur in connection with the preparation of the appraisal referred to
above or otherwise as a result of the services which it rendered.
23
<PAGE>
THE DEFERRED PAYMENT PROGRAM
We designed the Deferred Payment Program to facilitate exercise of
installment stock purchase opportunities by giving employees the alternative to
defer payment of a portion of the purchase price generally beginning with the
second and subsequent installments (a Covered Installment).
We anticipate that the Deferred Payment Program will continue to be
offered. However, we may cancel or modify it at any time.
The Deferred Payment Program currently in effect will permit the holder
of a purchase opportunity to defer payment of up to 25, 50 or 75% of the total
purchase price (including required withholding taxes) for the shares being
purchased under the second, third or fourth and subsequent Covered Installments.
Accordingly, payment may be deferred initially for up to 39 months in some
cases. (In order to comply more clearly with certain laws which may be
applicable, ARAMARK has the right to require the payment on demand. However,
ARAMARK has no intention of exercising such right but reserves the right to do
so.) Interest will accrue on any deferred payment at a fixed annual rate
(currently 7.75% simple interest), and will be payable at the time the deferred
payment is due. ARAMARK may from time to time select a different interest rate
for use in future deferred payment obligations. However, the interest rate at
the time a deferred payment obligation is entered into is fixed for the entire
term of the obligation. The Company will hold as collateral shares with an
aggregate Appraisal Price equal to 133% of the amount of the deferred payment
(rounded up to whole shares) under any purchase opportunity in which a portion
of the purchase price is financed under the Deferred Payment Program until the
deferred payment is received by the Company. Failure to pay either principal
and/or interest when due will result in the sale of a sufficient number of
shares to satisfy the obligation.
Deferred payment obligations may be prepaid at any time at the election
of the employee and will become due immediately in the event any shares securing
the deferred payment obligation are sold or otherwise transferred by the
stockholder (whether pursuant to a call of such shares by ARAMARK upon
termination of employment or otherwise). Holders of installment stock purchase
opportunities are not required to use the Deferred Payment Program.
If you have any questions about the Deferred Payment Program, you
should call Marie Paschall at the ARAMARK Corporate Compensation and Benefits
Department (telephone: 215-238-3194) or ARAMARK Shareholder Services Group at
toll-free 1-888-96-OWNER (1-888-966-9637).
You may elect to defer the payment of the principal amount of your
Deferred Payment Obligation for one additional three year period. If the payment
date is extended, interest will accrue at a new interest rate set at the time of
the extension. You must pay the interest amount due on the original maturity
date and execute documentation required by the Company to effect the payment
extension and the new interest rate. Failure to execute extension documentation
and/or pay the interest due by the maturity date will result in the sale of a
sufficient number of shares to cover the balance due.
U.S. INCOME TAX CONSIDERATIONS
The following discussion is not intended to be a complete statement of
the U.S. income tax consequences of the granting and exercise of purchase
opportunities pursuant to the Plans or the disposition of shares acquired upon
exercise of such purchase opportunities. Because of the complexities of the U.S.
income tax law, you are urged to consult your own tax advisor. If you are an
employee based in a country other than the U.S., you should consult with your
tax advisor about tax law requirements in your country.
ARAMARK understands that, under current U.S. income tax laws
o No income will be recognized to the employee at the time of grant
o Upon exercise of a purchase opportunity, the employee must treat as ordinary
income the difference, if any, between the exercise price and any higher
fair market value of the Common Stock on the date of exercise
o Assuming the shares received upon exercise of such purchase opportunity
constitute capital assets in the employee's hands, any gain or loss upon
disposition of shares (measured by reference to the fair market value of the
shares on the date of exercise) may be treated as capital gain or loss.
These results would apply whether or not shares are disposed of by the
employee to raise cash to exercise purchase opportunities. The Company is
required to report to the IRS the amount of gross proceeds received from the
disposition of stock and the employee is required to report that amount in
his/her tax return.
None of the income from exercise of purchase opportunities or gain from the sale
of stock acquired through exercise of such purchase opportunities would be an
item of tax preference subject to AMT.
24
<PAGE>
ARAMARK understands that tendering shares already owned by the holder
of a purchase opportunity in order to exercise such purchase opportunity (a
"stock-for-stock exchange," so called) would be considered a "like-kind
exchange" of existing shares for new shares and would not be considered a sale
of such previously acquired shares that would result in the recognition of
capital gain or loss by the employee. For tax purposes, an employee electing to
make a stock-for-stock exchange would be considered to receive from the exercise
o The shares tendered, with the same basis and holding period to the employee
as the shares had prior to being tendered,
o The additional shares resulting from the exercise with a tax basis to the
employee equal to their current fair market value and a holding period
commencing with the date of exercise, and
o Ordinary taxable income equal to the difference between the exercise price
and the current fair market value of all of the shares acquired through the
exercise.
ARAMARK further understands that income recognized upon the exercise of
a purchase opportunity is subject to tax withholding and that it is obligated to
withhold or collect an amount equal to a portion of the tax applicable to such
income.
Consequently, ARAMARK requires the exercising employee to deposit with ARAMARK
an amount of taxes (38% of the difference between the exercise price and the
current fair market value of shares acquired) intended to cover all taxes
required to be withheld or collected. The Company is required to report to the
IRS the amount of ordinary income generated by the exercise of a purchase
opportunity by including that amount as compensation in the employee's form W-2,
and the employee is required to report that amount in his/her tax return.
If payment of a portion of the exercise price is deferred under the
Deferred Payment Program, the interest paid would be treated as "investment
interest". Accordingly, it may be deductible, but only to the extent of
investment income received during the year the interest is paid. "Investment
income" does not include any income taxed at the favorable capital gains rate.
As a result, you may not be able, or wish, to deduct deferred payment interest
when you pay it. However, investment interest that is not deducted can be
carried forward and be deductible in future years to the extent of the holder's
investment income in such years. You are urged to discuss this matter with your
tax advisor. Similarly, to the extent that purchase opportunities are exercised
using other borrowed funds, the interest incurred on such borrowing may be
treated as "investment interest". You are urged to discuss this matter as well
with your tax advisor.
DESCRIPTION OF EQUITY SECURITIES
General
The authorized capital of the Company consists of 185,000,000 shares,
which includes 150,000,000 shares of Common Stock, Class B, par value $.01 per
share ("Common Stock" or "Class B Common Stock"); 25,000,000 shares of Common
Stock, Class A, par value $.01 per share ("Class A Common Stock"); 10,000,000
shares of Series Preferred Stock, par value $1.00 per share ("Series Preferred
Stock"). As of October 2, 1998, 62,927,645 shares of Class B Common Stock were
issued and outstanding (not including 26,639,550 shares subject to options,
installment stock purchase opportunities and deferred stock units granted and
outstanding under the Company's Plans), and 2,516,081 shares of Class A Common
Stock were issued and outstanding. No shares of series preferred stock are
issued and outstanding.
Management investors (approximately 2,200 persons at the date of this
prospectus) hold all of the shares of outstanding Class B Common Stock of the
Company. There is no established public trading market for the Common Stock of
the Company.
The following is a summary of certain provisions of the Restated
Certificate of Incorporation of the Company (the "Certificate of Incorporation")
and the By-Laws of the Company, as amended. The summary is qualified in its
entirety by reference to such documents filed as exhibits to the Registration
Statement of which this prospectus is a part.
The Class A Common Stock and the Class B Common Stock
Voting. Each share of Class A Common Stock and each share of Class B
Common Stock entitles the holder thereof to one vote on all matters submitted to
the stockholders.
All actions submitted to a vote of stockholders are voted upon by
holders of Class A Common Stock and Class B Common Stock voting together except
that the holders of Class A Common Stock and Class B Common Stock vote
separately as classes with respect to amendments to the Company's Certificate of
Incorporation that may alter or change the powers, preferences or special rights
of their respective classes of stock so as to affect them adversely, and
such other matters as may require class votes under the Delaware General
Corporation Law.
25
<PAGE>
There is no provision in the Certificate of Incorporation permitting
cumulative voting.
Dividends and Other Distributions (including Distributions upon
Liquidation of the Company). Dividends on the Class A Common Stock and the Class
B Common Stock are paid when, as and if declared by the Board of Directors and
permitted under the Company's loan agreements. In respect of rights to dividends
and other distributions in cash, stock or property of the Company (including
distributions upon liquidation of the Company, after provision for creditors of
the Company and any shares of the Company's capital stock having a preference on
liquidation, dissolution or winding up of the Company), each share of Class A
Common Stock is entitled to ten times the dividends and other distributions
payable on each share of Class B Common Stock when, as and if such dividends or
distributions may be declared and/or paid; provided, however, that in the case
of dividends or other distributions payable on the Class A Common Stock and the
Class B Common Stock in capital stock of the Company other than Preferred Stock,
including distributions pursuant to split-ups or divisions of the Class A Common
Stock or the Class B Common Stock, only Class A Common Stock is distributed with
respect to Class A Common Stock and only Class B Common Stock is distributed
with respect to Class B Common Stock. In no event may either Class A Common
Stock or Class B Common Stock be split, divided or combined unless the other is
split, divided or combined equally.
Convertibility. The Class A Common Stock is not convertible. Subject to
the prior approval of the Board of Directors, the Class B Common Stock is
convertible at all times, in whole or in part, and without cost to the
stockholder, into Class A Common Stock on the basis of ten shares of Class B
Common Stock for each share of Class A Common Stock. Only full-time employees
and directors of the Company (and their Permitted Transferees while the
transferor is a full-time employee or director) may hold Class B Common Stock.
Upon any holder of Class B Common Stock ceasing to be a full-time employee or
director of the Company, such holder's Class B Common Stock automatically
converts into Class A Common Stock, on the basis of ten shares of Class B Common
Stock for each share of Class A Common Stock. ARAMARK has proposed to eliminate
the foregoing conversion of Class B Stock into Class A Common Stock upon
termination of employment. The Board of Directors may at any time order the
conversion of all the Class B Common Stock into Class A Common Stock on a
ten-for-one basis.
Other. The Class A Common Stock and Class B Common Stock do not carry
any preemptive rights enabling a holder to subscribe for or receive shares of
stock of the Company of any class or any other securities convertible into
shares of stock of the Company.
EXPERTS
The audited consolidated financial statements and related notes and
schedules included in the Company's Annual Report on Form 10-K for the year
ended October 2, 1998, incorporated by reference herein, have been audited by
Arthur Andersen LLP, independent public accountants, as set forth in their
report also incorporated herein by reference. The financial statements and
schedules referred to above have been incorporated by reference herein in
reliance upon the reports of said firms and upon the authority of said firms as
experts. Subsequent audited financial statements of the Company and the reports
thereon of the Company's independent public accountants, to the extent
incorporated herein by reference, also will be so incorporated in reliance upon
the reports of those accountants and upon the authority of those accountants as
experts to the extent such accountants have audited those financial statements
and consented to the use in this prospectus of their reports thereon.
The appraisal of Houlihan Lokey Howard & Zukin, independent securities
appraisers, and references thereto included in this prospectus have been
included herein in reliance upon the authority of said firm as an expert in
securities valuations.
26
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
The SEC permits us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to part of this prospectus, except for
information superseded by information in this prospectus. This prospectus
incorporates by reference the documents set forth below that we have previously
filed with the SEC. These documents contain important information about our
Company and its finances.
(1) the Company's latest annual report on Form 10-K filed pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended.
(2) All other reports filed by the Company pursuant to Section 13(a) or 15(d) of
the Exchange Act since the end of the fiscal year of the annual report
referred to in (1) above.
(3) All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act.
27
<PAGE>
ANNEX A
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
OF
ARAMARK CORPORATION
AMENDED AND RESTATED STOCK- HOLDERS' AGREEMENT dated as of the 14th day
of December, 1994, which further amends and restates the Amended and Restated
Stockholders' Agreement dated as of December 14, 1984 (the "Agreement"), by and
among ARAMARK CORPORATION (formerly The ARA Group, Inc. and ARA Holding
Company), a Delaware corporation ("ARAMARK"), and the parties identified on the
books of ARAMARK as "Management Investors" or their "Permitted Transferees" or
as "Individual Investors" or "Institutional Investors".
In consideration of the terms and conditions herein contained, the
parties hereto mutually agree as follows:
The parties hereto (other than ARAMARK) and any other person who
hereafter acquires equity securities of ARAMARK pursuant to the provisions of,
and subject to the restrictions and rights set forth in, this Agreement are
sometimes hereinafter referred to collectively, as the "Stockholders" or,
individually, as a "Stockholder." The Management Investors and the Individual
Investors are sometimes hereinafter referred to collectively as the "Investor
Group." Institutional Investors and Individual Investors are sometimes
hereinafter referred to collectively as "Outside Investors." Unless otherwise
explicitly set forth herein, the term "Management Investors" shall mean only
those individuals so identified on the books of ARAMARK, exclusive of such
individuals' respective heirs, Permitted Transferees (as identified on the books
of ARAMARK) or other Transferees (as defined in Section 2.03(a) hereof);
provided that the Board of Directors of ARAMARK may, from time to time and in
its sole discretion, designate any Stockholder then employed by ARAMARK or its
Subsidiaries a "Management Investor." Stockholders who are Permitted Transferees
are identified as such on the books of ARAMARK, along with the identity of their
respective transferors. Where a full-time employee or director has acquired or
acquires equity securities of ARAMARK in joint tenancy with their spouses or in
any other manner other than sole direct ownership, such employee or director is
deemed to be a Management Investor and such record owner is deemed to be his or
her Permitted Transferee.
A Transferee who is not already a party to this Agreement, by executing
the document referred to in Section 2.03(a) hereof, shall thereby become
entitled to the benefits of this Agreement and shall be deemed to be an
"Institutional Investor", except: if such Transferee is an employee of ARAMARK,
then he or she shall be deemed to be a "Management Investor"; if such Transferee
is a Transferee pursuant to Section 3.01 of an Individual Investor, then he or
she shall be deemed to be an "Individual Investor"; if such Transferee is a
Transferee pursuant to Section 3.01 of a Management Investor (or of his or her
Permitted Transferee), then he or she shall be deemed to be a "Permitted
Transferee" of such Management Investor. Determination of the classification of
a Stockholder by the Board of Directors shall be conclusive and binding on all
parties hereto.
ARAMARK's Class B Common Stock, par value $.01 per share ("Class B Common
Stock"), and Class A Common Stock, par value $.01 per share ("Class A Common
Stock") are collectively referred to herein as the "Common Stock," and when so
referred to shall be treated as one class to which all the provisions of this
Agreement apply.
Pursuant to ARAMARK's Restated Certificate of Incorporation (the
"Certificate of Incorporation"), upon the termination of employment of a
Management Investor, the shares of Class B Common Stock held by such Management
Investor and his or her Permitted Transferees shall be converted into shares of
Class A Common Stock; and upon any transfer of shares of Class B Common Stock in
accordance with the terms of this Agreement other than to a Management Investor
or Permitted Transferee of a Management Investor, such shares shall be converted
into shares of Class A Common Stock. Shares so converted shall continue to be
subject to the terms and conditions of this Agreement.
For purposes of this Agreement only, the employment of a Management
Investor shall be deemed terminated if he or she shall cease to be a director or
an active, full-time employee of ARAMARK or its Subsidiaries. Such termination
of employment shall not change the designation of such person as a Management
Investor.
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AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
<PAGE>
The parties hereto desire to restrict the sale, assignment, transfer,
encumbrance or other disposition of the Common Stock, including issued and
outstanding shares of Common Stock as well as shares of Common Stock which may
be issued hereafter, or which may become issuable pursuant to the exercise of
options, and to provide for certain rights and obligations with respect thereto
as hereinafter provided.
1. Certain Definitions.
1.01 "Affiliate" shall mean a Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with another Person.
1.02 "Appraisal Price" of shares of Common Stock shall mean the fair
market value of such shares, as determined by an Appraiser according to the most
recent existing appraisal of shares of Common Stock, which appraisal shall be as
of a date not more than six months prior to the use thereof. Such determination
by the Appraiser shall be conclusive and binding on all Stockholders and
ARAMARK. With respect to shares of Class A Common Stock resulting from the
conversion of shares of Class B Common Stock pursuant to the terms of the
Certificate of Incorporation, the "Appraisal Price of (an equivalent number of)
shares of Class B Common Stock" shall mean the Appraisal Price, had the
conversion not occurred, of such shares of Class B Common Stock.
1.03 "Appraiser" shall mean a firm headquartered in the United States of
nationally recognized standing in the business of appraisal or valuation of
securities which does not own any stock of ARAMARK and which has been selected
by the Board of Directors to act as an independent appraiser. The Board of
Directors shall review its selection of an Appraiser annually.
1.04 "Call" or "Called" shall mean ARAMARK's option to purchase Common
Stock from the holder thereof referred to in Sections 6 and 7 hereof.
1.05 "Completely Disabled" and "Complete Disability" shall mean a
"permanent and total disability" as now defined in Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended (the "Code").
1.06 "Normal Retirement" shall mean voluntary termination of employment
with ARAMARK after attaining the age of 60, on at least 90 days prior written
notice of such termination, where the retiree does not intend to, at the time of
termination, and in fact does not, engage in full-time employment following such
termination other than employment that is with a governmental or a charitable,
non-profit organization and that is not competitive with ARAMARK.
1.07 "Person" shall mean a corporation, an association, a partnership,
an organization, a business, an individual, a government or political
subdivision thereof or a governmental agency.
1.08 "Promissory Note" shall mean a subordinated installment note of
ARAMARK substantially in the form of Exhibit A to this Agreement, with a stated
annual rate of interest equal to the Applicable Federal Rate (as such term is
defined in the Code) as of the issue date of the Promissory Note, as determined
by ARAMARK; with equal annual installments of principal equal in amount to the
least of (1) 10% of the original principal amount of the Promissory Note, (2)
the Management Investor's highest annual base salary as an employee of ARAMARK,
or (3) $100,000; and with the final installment of principal equal to the
outstanding balance and due at the final maturity; and with the first
installment of principal due on the April 15 or October 15 occurring closest to
the first anniversary of the issue date of the Promissory Note; and with the
final maturity no later than the tenth anniversary of the Management Investor's
termination of employment; and with such other insertions as ARAMARK shall
reasonably make.
1.09 "Put" shall mean the option of the holder to cause ARA to purchase
Common Stock referred to in Section 5 hereof.
1.10 "Subsidiary" shall mean any corporation or other entity of which
ARAMARK shall, directly or indirectly, own 50% or more of the equity, as
determined for purposes of this Agreement by the ARAMARK Board of Directors and
any other corporation or other entity in which ARAMARK shall directly or
indirectly have an equity investment and which the ARAMARK Board of Directors
shall in its sole discretion designate.
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AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
<PAGE>
2. Limitations on Transfers of Shares.
2.01 Transfers Prohibited Unless Specifically Permitted. No Stockholder
shall transfer any shares of Common Stock at any time, unless such sale,
assignment, pledge or encumbrance or other transfer shall have been effected in
accordance with the terms of Section 3, 4, 5, 6 or 7 of this Agreement. ARAMARK
shall not transfer upon its books any shares of Common Stock held or owned by
any of the Stockholders to any person except in accordance with this Agreement.
2.02 Inconsistent Agreements Prohibited. Unless approved by the Board of
Directors, no Stockholder shall grant any proxy or enter into or agree to be
bound by any voting trust with respect to Common Stock nor shall any Stockholder
enter into any stockholder agreement or arrangement of any kind with any person
with respect to Common Stock inconsistent with the provisions of this Agreement
(whether or not such agreement and arrangement is with other Stockholders or
holders of Common Stock that are not parties to this Agreement), including but
not limited to, any agreement or arrangement with respect to the acquisition,
disposition or voting of shares of Common Stock, or act, for any reason, as a
member of a group or in concert with any other persons in connection with the
acquisition, disposition or voting of shares of Common Stock in any manner which
is inconsistent with the provisions of this Agreement.
2.03 Requirements for all Transfers.
(a) Transferee Must Agree to be Bound by Agreement. Unless
otherwise explicitly provided herein, no Stockholder shall sell, assign, pledge,
encumber or otherwise transfer any shares of Common Stock to any person (all
such persons, regardless of the method of transfer, shall be referred to
collectively as "Transferees" and individually as a "Transferee") unless (a)
such Transferee shall have executed, as a condition to its acquisition of shares
(or, in the case of a Transferee by will or the laws of descent, record
ownership on the books of ARAMARK) of Common Stock, an appropriate document
confirming that such Transferee takes such shares subject to all the terms and
conditions of this Agreement and (b) such document shall have been delivered to
and approved by ARAMARK prior to such Transferee's acquisition of shares (or, in
the case of a Transferee by will or the laws of descent, record ownership on the
books of ARAMARK) of Common Stock. ARAMARK shall not unreasonably withhold or
delay its approval of any such document.
(b) Transfer Must Comply with Securities Laws. No Stockholder
shall sell, assign, pledge, encumber or otherwise transfer any shares of Common
Stock at any time if such action would constitute a violation of any federal or
state securities or blue sky laws or a breach of the conditions to any exemption
from registration of the Common Stock under any such laws or a breach of any
undertaking or agreement of such Stockholder entered into pursuant to such laws
or in connection with obtaining an exemption thereunder. Any Stockholder who
proposes to sell, assign, pledge, encumber or transfer any shares of Common
Stock may deliver to ARAMARK an opinion of counsel that such action would not
result in any such violation or breach. The delivery of such opinion shall be
deemed to establish compliance with the provisions of this Section 2.03(b)
unless, within ten days after the receipt by ARAMARK of such opinion, counsel
for ARAMARK shall deliver an opinion that such action would result in any such
violation or breach (such opinion to state the basis of the legal conclusions
reached therein).
(c) Endorsement of Stock Certificates. Each certificate
representing shares of Common Stock shall bear endorsements reading
substantially as follows:
"The securities represented by this certificate are subject to the right of the
Corporation to repurchase such securities on the terms and conditions set forth
in a Stockholders' Agreement dated as of December 14, 1984, as the same may be
amended from time to time, a copy of which may be obtained from the Corporation
or from the holder of this instrument. No transfer of such securities will be
made on the books of the Corporation unless accompanied by evidence of
compliance with the terms of such Agreement."
Such certificate shall bear any additional endorsement which may be
required for compliance with federal or state securities or blue sky laws. In
the case of uncertificated shares of Common Stock, the books of ARAMARK shall
bear appropriate notations reflecting the foregoing.
3. Certain Permitted Transfers of Shares.
3.01 Estate Planning Transfers, etc. Subject to the restrictions set
forth in Section 2.03 and Section 4.06, a Stockholder shall be entitled to make
the following transfers of shares of Common Stock: (A) if made for nominal
consideration or as gifts: (i) any transfer or assignment to any one or more of
A-3
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
<PAGE>
the following relatives of the Stockholder - spouse, child, grandchild, parent -
or to a trust of which there are and continue to be, during the term of this
Agreement no principal beneficiaries other than one or more of such relatives;
(ii) any transfer to any charitable organization which qualifies as such under
Section 501 (c) (3) or any successor provision of the Code; (iii) any transfer
to a legal representative in the event any Stockholder becomes mentally
incompetent; (iv) any transfer of record title to any nominee or custodian,
provided that the Stockholder so transferring such shares remains the beneficial
owner thereof; (B) any transfer among members of a family, their trusts or other
entities, if approved by the Board of Directors; (C) any transfer among
Institutional Investors which became Stockholders in December 1984; and (D) with
respect to a corporate or partnership Stockholder transfer between an Affiliate
and such corporate or partnership Stockholder (it being understood with respect
to such Affiliate that the later sale of such Affiliate as part of a sale or
series of sales of substantial assets other than Common Stock would not
constitute an indirect sale of Common Stock by such corporate or partnership
Stockholder, and need not be made within the terms of this Agreement, provided
that an officer of such institution certifies that such sale is not being
undertaken to evade the transfer restrictions herein).
3.02 Permitted Pledges. A Stockholder shall be entitled to pledge his or
her shares of Common Stock to ARAMARK, a commercial bank, savings and loan
institution or any other lending or financial institution as security for any
indebtedness of such Stockholder to such lender; provided that such lender shall
first agree not to dispose of such shares except in compliance with the
provisions of this Agreement.
3.03 Authority of Board of Directors to Approve Transfers; Actions by
Board of Directors. Notwithstanding any other provision of this Agreement, the
Board of Directors shall have the authority to approve any transfer, or class,
category or type of transfer, of Common Stock. Such authority of the Board of
Directors shall extend to, among other things, (i) the authority to create an
internal market for shares of the Company's stock pursuant to which Management
Investors would be offered the opportunity to sell a portion of their shares at
the times and on the terms set by the Board of Directors, and (ii) the authority
to waive entirely the restrictions (including, without limitation, restrictions
relating to rights of first offer and reoffer, calls upon termination of
employment and sales, transfers and other dispositions of shares) set forth in
this Agreement which relate to Management Investors and which do not relate to
Outside Investors. Any such approval may be revoked by the Board at any time
without notice and such revocation shall be effective with respect to any
action, including any or all transfers or proposed transfers, unless, prior to
such revocation, the shares have been presented to the transfer agent for the
purpose of registering such transfer, in proper form and satisfying the
requirements of Section 8-401 of the Uniform Commercial Code or such other
applicable law relating to the duty of an issuer to register securities
transfers.
The Board of Directors may delegate any and all authority it has under
this Agreement to any committee thereof and/or to any authorized officer or
agent.
4. Rights of First Offer and Reoffer of Shares.
4.01 Transfers by Management Investors.
(a) A Management Investor or Permitted Transferee may sell
shares of Common Stock, by complying with the terms of this Section 4. The
selling Management Investor shall first give written notice (a "Management
Investor's Notice") to ARAMARK stating such selling Management Investor's desire
to make such transfer, the number of shares of Common Stock to be transferred
(the "Offered Management Shares"), and the price which the selling Management
Investor proposes to be paid for the Offered Management Shares, which proposed
price shall not be greater than the Appraisal Price of (an equivalent number of)
shares of Class B Common Stock (the "First Offer Price").
(b) Upon receipt of the Management Investor's Notice, ARAMARK
shall have the irrevocable and exclusive option to buy up to all of the Offered
Management Shares at the First Offer Price; provided, however, that ARAMARK
shall not have the right to purchase any of the Offered Management Shares unless
either (i) ARAMARK purchases all such Offered Management Shares, or (ii) such
selling Management Investor consents to the purchase of less than all of the
Offered Management Shares. ARAMARK's option under this Section 4.01(b) shall be
A-4
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
<PAGE>
exercisable by a written notice to such selling Management Investor, given
within 45 days from the date of receipt of the Management Investor's Notice.
4.02 Transfers by Outside Investors.
(a) An Outside Investor may sell shares of Common Stock,
including pursuant to the registration rights under Section 2.1 of ARAMARK's
Amended and Restated Registration Rights Agreement amended and restated as of
April 7, 1988 (the "Registration Rights Agreement"), by complying with the terms
of this Section 4. The selling Outside Investor shall first give written notice
(a "Seller's Notice") to ARAMARK stating such selling Outside Investor's desire
to make such transfer, the number of shares of Common Stock to be transferred
(the "Offered Investors' Shares"), and the price which the selling Outside
Investor proposes to be paid for the Offered Investors' Shares (the "First Offer
Investors' Price").
(b) Upon receipt of the Seller's Notice, ARAMARK shall have the
irrevocable and exclusive option to buy up to all of the Offered Investors'
Shares at the First Offer Investors' Price; provided, however, that ARAMARK
shall not have the right to purchase any of the Offered Investors' Shares unless
either (i) ARAMARK purchases all such Offered Investors' Shares, or (ii) such
selling Outside Investor consents to the purchase of less than all of the
Offered Investors' Shares. ARAMARK's option under this Section 4.02(b) shall be
exercisable by a written notice to such selling Outside Investor, given within
45 days from the date of the receipt of Seller's Notice.
4.03 Transfer of Offered Shares to Third Parties. If the Management
Investor's Notice or the Seller's Notice (collectively, the "Notice") required
to be given pursuant to Section 4.01 or 4.02, as the case may be, has been duly
given, and ARAMARK determines not to exercise its option to purchase the Offered
Management Shares or the Offered Investors' Shares (collectively, the "Offered
Shares") or determines (with the consent of the Stockholder who has made the
First Offer) to exercise its option to purchase less than all the Offered
Shares, then the Stockholder who has made such First Offer shall be free, for a
period of 90 days from the earlier of (i) the expiration of the option period
with respect to such First Offer pursuant to Section 4.01 or 4.02, as the case
may be, or (ii) the date such Stockholder shall have received written notice
from ARAMARK stating that ARAMARK intends not to exercise in whole or in part
the option granted under Section 4.01 or 4.02, as the case may be, to sell to
any third-party Transferees the remaining Offered Shares, at a price equal to or
greater than the First Offer Price, in the case of Management Investors or their
Permitted Transferees, and the First Offer Investors' Price, in the case of
Outside Investors; provided, however, that the Transferee complies with the
provisions of Section 2.03; and provided further that, in the case where such
selling Stockholder is a Management Investor or a Permitted Transferee, such
Transferee shall have been approved by ARAMARK as a suitable investor in a
privately-owned services management company. ARAMARK shall not unreasonably
withhold or delay such approval. Anything herein to the contrary
notwithstanding, the 90-day period described in this Section 4.03 shall be
extended until the completion of all sales pursuant to a registration statement,
a request for which was made substantially concurrently with the Notice.
4.04 Reoffers. In the event the proposed purchase price of a third-party
Transferee for the Offered Shares is less than the First Offer Price or the
First Offer Investors' Price, as the case may be, the Stockholder desiring to
sell at such lesser price shall not sell or otherwise transfer any of the
Offered Shares unless such selling Stockholder shall first reoffer the Offered
Shares at such lesser price to ARAMARK by giving written notice (the "Reoffer
Notice") to ARAMARK of such selling Stockholder's intention to make such
transfer at such lower price (the "Reoffer Price"). ARAMARK shall then have an
irrevocable and exclusive option to purchase all or part of the Offered Shares
at the Reoffer Price, exercisable in the same manner as provided in Section 4.01
or 4.02, as the case may be. In the event ARAMARK does not then elect to
purchase all the remaining Offered Shares, or ARAMARK elects (with the consent
of the Stockholder desiring to sell) to purchase less than all the remaining
Offered Shares, the remaining Offered Shares may be sold by such selling
Stockholder within 30 days following the earlier of (i) the expiration of the
option period with respect to such Reoffer pursuant to Section 4.01 or 4.02, as
the case may be, or (ii) the last date on which such selling Stockholder shall
have received written notice from ARAMARK stating that ARAMARK intends not to
exercise in whole or in part the option granted in this Section 4.04, at a price
equal to or greater than the Reoffer Price; provided, however, that the
Transferee complies with the provisions of Section 2.03; and provided further
that, in the case where such selling Stockholder is a Management Investor or a
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AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
<PAGE>
Management Investor's Permitted Transferee, such Transferee shall have been
approved by ARAMARK as a suitable investor in a privately-owned services
management company. ARAMARK shall not unreasonably withhold or delay such
approval.
4.05 Waiting Period With Respect to Subsequent Transfers. In the event
that ARAMARK does not exercise its option to purchase any or all of the Offered
Shares at the First Offer Price or the First Offer Investors' Price, as the case
may be, or at the Reoffer Price, and the Stockholder desiring to sell shall not
have sold the remaining Offered Shares to any Transferee for any reason before
the expiration of the 30 day period described in Section 4.04 in the event of a
Reoffer, or, if no Reoffer Notice is given, the 90 day period described in
Section 4.03, then such selling Stockholder shall not sell any shares of Common
Stock to any Transferee or other Stockholder (other than to Permitted
Transferees pursuant to Section 3.01) at any price for a period of three months
from the last day of such 30 or 90 day period, as the case may be.
4.06 No Sales of Control.
(a) Subject to Section 4.06(b) and except as provided in
Section 3.03 (transfers approved by the Board of Directors), no Person or group
of Persons, as defined in Section 13 (d) (3) of the Securities Exchange Act of
1934 (the "Exchange Act"), including for the purposes of this paragraph as part
of such Person's group, Transferees pursuant to Section 3.01, shall become
(whether through the purchase of shares pursuant to this Agreement or otherwise
or through any other action) the holder, directly or indirectly, of 10% or more
of either the outstanding shares of Class A Common Stock or the outstanding
shares of Class B Common Stock. Any transaction resulting in a violation of this
Section 4.06(a) shall be void, and of no effect against ARAMARK, and ARAMARK
shall not record any such purported transfer on its books. Two or more
Stockholders owning in the aggregate 10% or more of such outstanding shares
shall not be deemed to be a group of Persons for the purposes of this Section
4.06 solely because such Stockholders are parties to this Agreement or because
such Stockholders are related by blood or marriage and/or because such
Stockholders are officers or directors of ARAMARK.
(b) The provisions of Section 4.06(a) shall not apply to the
acquisition by ARAMARK, directly or indirectly, of shares of Common Stock,
notwithstanding that as a result of such acquisition any Person or group of
Persons acting in concert would own 10% or more of such outstanding shares
subsequent to such an acquisition, but shall apply to any subsequent acquisition
or other action by such Person or group of Persons.
4.07 Form of Consideration for Shares. No offer to purchase or to sell
shares of Common Stock shall be deemed to be a valid offer under this Section 4
unless the purchase price of such offer is payable in cash or securities that
can be readily valued by reference to quoted trading prices. The purchase price
of shares upon exercise of an option under this Section 4 in respect of a Notice
which specifies only cash as the form of consideration shall be payable only in
cash.
4.08 Merger Transaction. Subject to any applicable provisions of the
Certificate of Incorporation or any loan agreement or instruments to which
ARAMARK is a party, ARAMARK may enter into any agreement of merger to merge with
or into any other corporation; and, in such event, Sections 4.01 through 4.07 of
this Agreement shall not be applicable to such merger and all shares may be
transferred for such consideration as approved by the Board of Directors and the
Stockholders in accordance with applicable law.
4.09 Transfers in a Public Offering. In the event a request is made
under Section 2.1 of the Registration Rights Agreement for a demand
registration, then the procedures set forth in Sections 4.02 through 4.05 shall
be modified in the following respects:
(a) Such request shall also provide the information required to
be stated in a Seller's Notice, and shall also constitute a Seller's Notice.
(b) Prior to the expiration of the 21 day period under the
Registration Rights Agreement within which ARAMARK is to file a registration
statement covering the shares the holder of which requested a demand
registration, ARAMARK shall have the irrevocable and exclusive option to buy all
(and only all) of the Offered Investors' Shares at the First Offer Investors'
Price, which shall be the proposed public offering price after reduction for
commissions, discounts and the like.
(c) In the event the public offering price (after reduction for
commissions, discounts and the like) is more than 10% lower than the First Offer
Investors' Price, or the number of shares included in the offering is reduced to
less than 75% of the shares as to which the Seller's Notice was delivered
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AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
<PAGE>
(otherwise than by reason of a cut down by the Underwriter) then Section 4.04
shall apply, but such section shall not otherwise apply to any sale pursuant to
a registration statement.
(d) In the event all of the Offered Investors' Shares are
elected to be purchased, the demand registration shall be held in abeyance
pending the closing of such purchase in accordance with this Agreement.
5. Put of Shares upon Death, Complete Disability or Normal Retirement.
5.01 Put in Event of Death, Complete Disability or Normal Retirement.
Subject to any instruments or agreements of ARAMARK from time to time in effect
restricting or otherwise governing the repurchase or retirement of shares of
ARAMARK's capital stock (the "Loan Agreements") and to applicable law, unless a
Call pursuant to Section 6.01 shall have been exercised by ARAMARK, upon the
death, Complete Disability or Normal Retirement of any Investor Group member, at
the option of such Investor Group member, such Investor Group member's estate,
heirs or personal representative, and such Investor Group member's Permitted
Transferees (other than Permitted Transferees specified in Section 3.01(A)(ii))
(collectively, the "Holders" of such Investor Group member's shares) and within
30 days of receipt by ARAMARK of a Seller's Notice from such Holders, which
notice must be given within 30 days from the date of the appointment of a
personal representative of such Investor Group member, the date he or she became
Completely Disabled, or the date of his or her Normal Retirement, ARAMARK shall
purchase from such Holders the shares of Common Stock held by such Holders
specified in such Seller's Notice up to 30% of such shares so held at a purchase
price determined in accordance with Section 5.02. ARAMARK shall be under no
obligation to purchase such shares unless it shall have received a Seller's
Notice from such Holders in accordance with this Section 5.01.
5.02 Purchase Price of Put Shares. The purchase price for the shares of
Common Stock purchased pursuant to Section 5.01 shall be the Appraisal Price of
(an equivalent number of) shares of Class B Common Stock, for the shares of a
Holder of a Management Investor's shares, and shall be the Appraisal Price of
shares of Class A Common Stock for the shares of a Holder of an Individual
Investor's shares. ARAMARK shall satisfy its obligation to purchase shares upon
the exercise of any Put granted under Section 5.01 with cash.
6. Call of Shares upon Termination of Employment.
6.01 Call in Event of Termination. Unless the shares of Common Stock
held by a Management Investor and his or her Permitted Transferees have been
earlier sold pursuant to Section 4 (rights of first offer and reoffer),
including the earlier recording of the transfer of such shares on the books of
ARAMARK, ARAMARK shall have an exclusive and irrevocable option, at any time and
from time to time during the period of 10 years following the termination of
employment of such Management Investor for any reason whatsoever (including
without limitation death, Complete Disability or Normal Retirement) to make a
purchase or purchases of up to all of the shares of Common Stock owned by such
Management Investor and his or her Permitted Transferees, at a purchase price,
with respect to any such exercise, determined in accordance with Section 6.02.
6.02 Purchase Price. The purchase price per share for any shares of
Common Stock purchased pursuant to Section 6.01 shall be the lesser of (i) the
Appraisal Price of (an equivalent number of) shares of Class B Common Stock at
the time ARAMARK gives notice that it is exercising its Call option and (ii) the
Appraisal Price of (an equivalent number of) shares of Class B Common Stock at
the date of termination of employment, plus in the case where ARAMARK gives
notice it is exercising its Call option more than 120 days after the date of
termination of employment, 8% simple interest on such amount from the date of
termination of employment through the date ARAMARK gives notice that it is
exercising its Call option. ARAMARK shall satisfy its obligations to purchase
shares upon the exercise of such Calls with cash up to the least of $100,000, or
the Management Investor's highest annual base salary as an employee of ARAMARK,
or 10% of the aggregate purchase price for such Called shares and, at the
Company's option, with cash and/or Promissory Notes valued at their principal
amount for the remainder.
7. Involuntary Transfer of Shares.
7.01 Certain Involuntary Transfers; Seller's Notice. Except for
involuntary transfers (by foreclosure or otherwise) to ARAMARK of shares of
Common Stock pledged to ARAMARK, in the event a Stockholder shall involuntarily
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AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
<PAGE>
transfer directly or indirectly any or all of his or her shares, for any reason
other than as a result of those events specified in Section 6, such Stockholder
shall give written notice within 30 days of such involuntary transfer (the
"Stockholder Notice") to ARAMARK, with a copy to the Transferee, stating the
fact that the involuntary transfer occurred, the reason therefor, the date of
the transfer, the name and address of the Transferee and the number of shares
acquired by the Transferee (the "Acquired Shares"). For purposes of this Section
7 an involuntary transfer shall include, without limitation, a court-ordered
transfer, constructive trust or other device designed to transfer economic
benefit of share ownership.
7.02 Right to Repurchase. For a period of 60 days from the date of
receipt of the Stockholder Notice or, failing receipt of such notice, 60 days
from the date ARAMARK sends written notice to the Transferee that the transfer
is deemed to be an involuntary transfer subject to repurchase under this
Agreement, ARAMARK shall have an irrevocable and exclusive option to buy all of
the Acquired Shares, exercisable in the same manner as provided in Section 4.01,
and the provisions of such applicable Section shall be followed in their
entirety except that the purchase price shall be as provided in Section 7.03.
7.03 Purchase Price. The purchase price for shares purchased pursuant to
Section 7.02 shall be payable in cash and shall be equal to the Appraisal Price
of (an equivalent number of) shares of Class B Common Stock at the time ARAMARK
gives notice that it is exercising its Call option.
8. Limited Access to Information.
8.01 No Duty to Disclose Information. Each of the parties to this
Agreement acknowledges and agrees that it is in the best interests of ARAMARK
and the Stockholders taken as a whole for ARAMARK to be able to conduct orderly
transactions in Common Stock on a continual basis (including in connection with
the internal market and repurchases upon termination of employment and
otherwise), and for ARAMARK concurrently to be able to consider from time to
time on a confidential basis potential transactions which could affect the fair
market value and/or the Appraisal Price of the Common Stock. Each of the parties
to this Agreement acknowledges and agrees that, at the time of a sale by a
Stockholder of shares of Common Stock pursuant to this Agreement, there may have
occurred or be proposed or pending an event or a transaction that could affect
the Appraisal Price of the Common Stock, and that the Appraisal Price of the
Common Stock (and, accordingly, the repurchase price) may be substantially less
than the fair market value as of the current date, and further acknowledges and
agrees that ARAMARK may have valid business reasons not to, and in any case
shall not be required to, disclose any event or transaction that may have
occurred or be proposed or pending at the time of any such sale.
8.02 Sale of ARAMARK Following Call. In the event that any entity,
person, or any group of persons acting in concert (excluding the Management
Investors as a group), acquires in any manner shares of Common Stock with 50% of
the ordinary voting rights of the outstanding shares of Common Stock or in the
event of the redemption or repurchase of all the shares of Common Stock in
connection with a sale of all or substantially all the assets of ARAMARK, or the
winding up, dissolution or liquidation of ARAMARK, within 90 days from the date
of a sale pursuant to Section 6.01 then, subject to the Loan Agreements, ARAMARK
and/or the purchaser of such shares of Common Stock with 50% of the ordinary
voting rights of the outstanding shares of Common Stock shall pay to the Holders
whose shares have been so purchased the excess, if any, of the amount per share
realized by ARAMARK's stockholders upon such acquisition, redemption,
repurchase, winding up, dissolution or liquidation over the purchase price per
share paid to such Holders pursuant to Section 6 less the interest paid on any
Promissory Notes paid as consideration for such stock and less a financing cost
for carrying such stock for any cash received, based on an interest rate equal
to the rate paid by ARAMARK under the Loan Agreements at the date of payment
hereunder, for the period from the date of payment to such Holders pursuant to
Section 6 to the date of such acquisition, redemption, repurchase, winding up,
dissolution or liquidation, for each share purchased by ARAMARK. Determination
of whether or not any such payment is appropriate, and the amount of such
payment, shall be made by the Board of Directors; and such determination shall
be conclusive and binding on all parties hereto.
9. No Right to Continued Employment. Neither this Agreement nor the ownership of
Common Stock by a Management Investor shall confer upon any Management Investor
any right to continue in the employ of ARAMARK or any of its Subsidiaries or
limit in any respect the right of ARAMARK or its Subsidiaries to terminate his
or her employment at any time.
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AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
<PAGE>
10. Closing.
10.01 Closing Date; Purchase Price. Any selling Stockholder and ARAMARK,
as purchaser, of shares of Common Stock pursuant to Section 4, 5, 6 or 7 shall
mutually determine a closing date (the "Closing Date") which, unless this
Agreement otherwise explicitly provides, shall be not more than 60 business days
after ARAMARK gives notice that it will purchase such shares; provided, however,
that absent agreement, the Closing Date shall be the business day determined by
ARAMARK. In respect of shares of Common Stock distributed by any employee
benefit plan upon termination of employment, the Closing Date shall be such date
selected by ARAMARK consistent with the orderly administration of such plan.
Notwithstanding anything in this Agreement to the contrary, the Closing
Date may be delayed in any case in which ARAMARK cannot, in compliance with the
Loan Agreements or applicable law, purchase any shares of Common Stock that it
is otherwise obligated to purchase until the earliest practicable date when such
closing may be effected in compliance with such Loan Agreements or applicable
law. The closing shall be held at 11:00 a.m., local time, at the offices of
ARAMARK or at such other time or place as the parties may agree.
The determination date of the Appraisal Price shall be appropriately
changed if the Closing Date is delayed in accordance with the foregoing
paragraph.
10.02 Shares No Longer Outstanding. If a selling Stockholder shall fail
to deliver the certificates representing the shares of Common Stock to be sold
or shall otherwise fail to perform any obligation required to be performed at
the closing and ARAMARK shall have been ready to purchase such shares at the
closing, then effective at the closing, such shares shall no longer be deemed to
be outstanding, and all rights of the holder thereof as stockholder of ARAMARK
(except the right to receive from ARAMARK the purchase price therefor) shall
cease.
10.03 Deliveries at Closing; Method of Payment of Purchase Price. On the
Closing Date, any selling Stockholder shall deliver certificates with
appropriate transfer tax stamps affixed and with stock powers endorsed in blank,
representing the shares of Common Stock to be purchased, and ARAMARK, as
purchaser shall deliver to such Stockholder the purchase price which is payable
in cash (or by wire transfer or check) and the other consideration, if any, to
be given in exchange for such shares. In addition, if the person selling shares
is the personal representative of a deceased Stockholder, the personal
representative shall also deliver to the purchaser or purchasers (i) copies of
letters testamentary or letters of administration evidencing his or her
appointment and qualification, (ii) a certificate issued by the Internal Revenue
Service pursuant to Section 6325 of the Code discharging the shares being sold
from liens imposed by the Code and (iii) an estate tax waiver issued by the
state of the decedent's domicile.
11. Term. The terms and provisions of this Agreement which relate to Management
Investors may be terminated by an instrument in writing signed by Management
Investors who hold, in combination with their Permitted Transferees, at least
the majority of the Common Stock held by Management Investors and their
Permitted Transferees and by ARAMARK. The terms and provisions of this Agreement
which relate to Outside Investors shall terminate on April 7, 2008 or, if
earlier, on the closing date of the first to occur of (i) any merger or other
business combination of ARAMARK with or into any other corporations, except a
merger or other business combination in which the stockholders of ARAMARK
immediately prior thereto constitute more than a majority of the stockholders
(by value of equity securities held) following such merger, and (ii) the sale of
shares of Class A Common Stock to the public pursuant to an underwritten,
registered public offering under the Securities Act of 1993, as amended (the
"Securities Act") as a result of which offering the public (including for this
purpose all purchasers in the underwriting irrespective of any relationship with
ARAMARK) owns 10% or more of the outstanding shares of Class A Common Stock,
provided such shares have a fair market value equal to at least $25,000,000 at
the time of the offering.
Notwithstanding the foregoing, the restrictive terms and provisions set
forth herein with respect to the rights and obligations of Management Investors
shall terminate, effective upon or after the occurrence of a public offering
pursuant to clause (ii) above, to the extent the existence of such terms and
provisions would impair the ability of ARAMARK to list its Common Stock on the
New York Stock Exchange or, in the written opinion of the lead underwriter,
significantly impair the value of the Common Stock proposed to be sold in a
public offering.
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AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
<PAGE>
12. Registration of Common Stock. In the event of any registration under the
Securities Act and public offering of Common Stock, each Stockholder shall, at a
meeting convened for the purpose of amending the Certificate of Incorporation,
vote to increase the authorized number of shares of Common Stock and, if
necessary, to subdivide the outstanding shares of Common Stock of ARAMARK, in
both instances as recommended by a majority of the members of the Board in order
to effectuate such public offering.
13. Injunctive Relief. It is acknowledged that it will be impossible to measure
in money the damages that would be suffered if the parties fail to comply with
any of the obligations herein imposed on them and that in the event of any such
failure, an aggrieved person will be irreparably damaged and will not have an
adequate remedy at law. Any such person shall, therefore, be entitled to
injunctive relief, including specific performance, to enforce such obligations,
and if any action should be brought in equity to enforce any of the provisions
of this Agreement, none of the parties hereto shall raise the defense that there
is an adequate remedy at law.
14. Notices. All notices, statements, instructions or other documents required
to be given hereunder, shall be in writing and shall be given either personally,
or by mailing the same in a sealed envelope, first-class mail, postage prepaid,
addressed to ARAMARK at its principal offices to the attention of the General
Counsel and to the other parties at their addresses reflected in the stock
records of ARAMARK, or sent by telegram, telex, telecopy or similar form of
telecommunication. Each Stockholder, by written notice given to ARAMARK in
accordance with this Section 14 may change the address to which notices,
statements, instructions or other documents are to be sent to such Stockholder.
All notices, statements, instructions and other documents hereunder that are
mailed shall be deemed to have been given on the date of mailing.
15. Cooperation. ARAMARK agrees that it will use all reasonable efforts under
the circumstances to help any Stockholder desiring to dispose of its Common
Stock pursuant to the provisions of this Agreement to do so.
16. Miscellaneous.
16.01 Successor and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties, and their respective successors and
assigns. The provisions of this Agreement are for the sole benefit of the
parties hereto and their heirs, executors, administrators, legal
representatives, successors and assigns, and they shall not be construed as
conferring any rights on any other persons. If any Transferee of any Stockholder
shall acquire any shares of Common Stock, in any manner, whether by operation of
law or otherwise, such shares shall be held subject to all of the terms of this
Agreement, and by taking and holding such shares such person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement.
ARAMARK may assign to any other Person its rights with respect to any
specific transaction pursuant to Section 4, 5, 6 or 7, provided that Person
complies with the provisions of Section 2.03.
16.02 Governing Law. Regardless of the place of execution, this
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware applicable to agreements made and to be wholly performed in
such State.
16.03 Headings. Paragraph headings are inserted herein for convenience
only and do not form a part of this Agreement.
16.04 Entire Agreement; Amendment. This Agreement contains the entire
agreement among the parties hereto with respect to the transactions contemplated
herein, supersedes all prior written agreements and negotiations and oral
understandings, if any, and may not be amended, supplemented or discharged
except by performance or by an instrument in writing signed by the holders of at
least three-fourths of the Common Stock held by the Institutional and Individual
Investors (taken as a whole), and by Management Investors who hold (in
combination with their Permitted Transferees) at least a majority of the Common
Stock held by Management Investors and their Permitted Transferees, and by
ARAMARK. In the event of the amendment or modification of this Agreement in
accordance with its terms, the Stockholders shall cause the Board of Directors
of ARAMARK to meet within 30 days following such amendment or modification or as
soon thereafter as is practicable for the purpose of amending the Certificate of
Incorporation and By-Laws of ARAMARK, as may be required as a result of such
amendment or modification, and proposing such amendments to the stockholders of
ARAMARK entitled to vote thereon, and such action shall be the first action to
be taken at such meeting.
A-10
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
<PAGE>
This amended and restated Agreement shall become effective upon the
later of (i) December 14, 1994 and (ii) the date ARAMARK has received and holds
duly executed (and not previously rescinded) instruments in writing approving
such amended and restated Agreement from the required parties as provided in
this Section 16.04.
16.05 Inspection. A copy of this Agreement shall be filed with the
Secretary of ARAMARK and kept with the records of ARAMARK and shall be made
available for inspection by any stockholder of ARAMARK at the principal offices
of ARAMARK.
16.06 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[Signature Pages Omitted]
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AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
<PAGE>
EXHIBIT A
(to Amended and Restated
Stockholders' Agreement)
THIS NOTE IS NOT TRANSFERABLE UNLESS AS A CONDITION
PRECEDENT TO THE EFFECTIVENESS OF ANY TRANSFER THE
PAYEE HAS OBTAINED THE WRITTEN CONSENT OF THE
COMPANY AS TO THE PROPOSED TRANSFER.
$__________
Philadelphia, Pennsylvania
________, 19__
SUBORDINATED INSTALLMENT NOTE
1. For value received, ARAMARK CORPORATION (formerly The ARA Group, Inc.
and ARA Holding Company), a Delaware corporation (the "Company"), hereby
promises to pay to (the "Payee") the sum of $ in equal, annual installments of $
and one final installment of $ on each [April/October] 15 commencing on
[April/October] 15, 19 , and to pay simple interest at the rate of % per annum
on the unpaid balance thereof, semi-annually in arrears on each April 15 and
October 15.
2. The Payee may not sell, assign or otherwise transfer or encumber any
portion of this Note or interest herein without first procuring the written
consent of the Company, which consent the Company is under no obligation to
provide. No transfer of this Note shall be effective unless such transfer is in
compliance with the foregoing, including the requirements set forth in the
legend provided for above.
3. Both the principal of this Note and interest thereon are payable in
lawful money of the United States of America at 1101 Market Street,
Philadelphia, PA 19107, or such address of any subsequent principal executive
office of the Company within the United States of America as the Company shall
designate in writing to the Payee, or at the option of the Company, by check
mailed to the Payee at such address for the Payee as is indicated on the books
of the Company.
4. This Note may be prepaid in full, or in part, any time, without
premium or penalty. All prepayments shall be applied first to accrued interest
and then to installments of principal in the order of their maturities.
5. The indebtedness evidenced by this Note and the payment of the
principal of and interest on this Note are hereby expressly subordinated, to the
extent and in the manner hereinafter set forth, to the prior payment in full of
all Senior Indebtedness.
5.1 "Senior Indebtedness" means the principal of, premium, if any,
interest and any other amounts due on (1) all Indebtedness incurred, assumed or
guaranteed by the Company, either before or after the date hereof, (excluding
any debt which by the terms of the instrument creating or evidencing the same is
not superior in right of payment to this Note), including, without limitation,
(a) any amount payable with respect to any lease, conditional sale or
installment sale agreement or other financing instrument or agreement which in
accordance with generally accepted accounting principles is, at the date hereof
or at the time the lease, conditional sale or installment sale agreement or
other financing instrument or agreement is entered into, or assumed or
guaranteed by, directly or indirectly, the Company, required to be reflected as
a liability on the face of the balance sheet of the Company, (b) any amounts
payable in respect to any interest rate exchange agreement, currency exchange
agreement or similar agreement and (c) any subordinated indebtedness of a
corporation merged with or into or acquired by the Company; and (2) any renewals
or extensions or refunding of any such Senior Indebtedness or evidences of
indebtedness issued in exchange for such Senior Indebtedness.
<PAGE>
5.2 "Indebtedness" means (a) all items, except items of capital stock or
of surplus or of general contingency reserves or of reserves for deferred income
taxes, which in accordance with generally accepted accounting principles in
effect on the date hereof should be included in determining total liabilities as
shown on the liability side of a balance sheet of the Company as at the date of
which Indebtedness is to be determined, (b) all indebtedness secured by any
mortgage, pledge, lien or conditional sale or other title retention agreement
existing on any property or asset owned or held by the Company, whether or not
such indebtedness shall have been assumed, and (c) all indebtedness of others
which the Company has directly or indirectly guaranteed, endorsed, discounted or
agreed (contingently or otherwise) to purchase or repurchase or otherwise
acquire, or in respect of which the Company has agreed to supply or advance
funds or otherwise to become liable directly or indirectly with respect thereto,
including, without limitation, indebtedness arising out of the sale or transfer
of accounts or notes receivable or any moneys due or to become due.
6. In the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether voluntary or involuntary and whether in
bankruptcy, insolvency or receivership proceedings, or upon an assignment for
the benefit of creditors or any readjustment of debt, arrangement or composition
among creditors or any other marshalling of the assets and liabilities of the
Company or otherwise), then holders of Senior Indebtedness shall first be paid
in full, or provision made for such payment, before any payment or distribution,
directly or indirectly (including by way of set off) is made upon the principal
of or interest on this Note, and to that end the holders of Senior Indebtedness
shall be entitled to receive in payment thereof any payment or distribution of
assets of the Company, whether in cash or property or securities, which may be
payable or deliverable in any such proceeding in respect of this Note. The Payee
irrevocably authorizes, empowers and directs all receivers, custodians, trustee,
liquidators, conservators and others having authority in the premises to effect
all such payments and deliveries. Notwithstanding any statute, including without
limitation the Federal Bankruptcy Code, any rule of law or bankruptcy procedures
to the contrary, the right of the holders of the Senior Indebtedness to have all
of the Senior Indebtedness paid and satisfied in full prior to the payment of
any amounts due the payee under this Note shall include, without limitation, the
right of the holders of the Senior Indebtedness to be paid in full all interest
accruing on the Senior Indebtedness due them after the filing of any petition by
or against the Company in connection with any bankruptcy or similar proceeding
or any other proceeding referred to in paragraph 6 hereof, prior to the payment
of any amounts in respect of the Note, including, without limitation, any
interest due to the Payee accruing after such date.
7. No payment, directly or indirectly (including by way of set off),
shall be made by the Company with respect to the principal of or interest on
this Note if (i) an event of default has happened with respect to any Senior
Indebtedness, as defined therein or in the instrument under which the same is
outstanding which if occurring prior to the stated maturity of such Senior
Indebtedness, permits holders thereof upon the giving of notice or passage of
time, or both, to accelerate the maturity thereof ("Senior Indebtedness
Default") and has not been cured, (ii) a payment by the Company to or for the
benefit of Payee would, immediately after giving effect thereto, result in a
Senior Indebtedness Default, or (iii) full payment of all amounts then due for
principal of (or premium, if any), interest or any other amounts due on Senior
Indebtedness shall not then have been made or duly provided for. Upon the
occurrence of any events described in (i), (ii) or (iii) described above,
notwithstanding any event of default under this Note by the Company, the Payee
may not accelerate the maturity of all or any portion of this Note, or take any
action towards collection of all or any portion of this Note or enforcement of
any rights, powers or remedies under this Note, or applicable law until the
earlier of the date on which a Senior Indebtedness Default (or in the case of
(iii) required payments shall have been duly provided for) have been cured or
such Senior Indebtedness has been paid in full.
8. In the event that, notwithstanding the foregoing, the Company shall
make any payment prohibited by Section 6 or 7, then, except as hereinafter in
this Section otherwise provided, unless and until any such Senior Indebtedness
Default shall have been cured or waived or shall cease to exist, such payment
shall be held in trust for the benefit of and shall be paid over to the holders
of Senior Indebtedness or their representative or representatives or to the
2
EXHIBIT A TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
<PAGE>
trustee or trustees under any indenture under which any instrument evidencing
the Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay in full all Senior Indebtedness then due,
after giving effect to any concurrent payment to the holders of such Senior
Indebtedness.
9. Subject to the payment in full of all Senior Indebtedness at the time
outstanding, the Payee shall be subrogated to the rights of the holders of
Senior Indebtedness to receive payments or distributions of assets of the
Company applicable to the Senior Indebtedness until this Note shall be paid in
full, and no payments or distributions to the holders of Senior Indebtedness by
or on behalf of the Company from the proceeds that would otherwise be payable to
the Payee, or by or on behalf of the Payee, shall as between the Company and the
Payee, be deemed to be a payment by the Company to or for the account of holders
of Senior Indebtedness.
10. No holder of Senior Indebtedness shall be prejudiced in his or her
right to enforce subordination of this Note by any act on the part of the
Company. The above provisions in regard to subordination are intended solely for
the purpose of defining the relative rights of the Payee on the one hand, and
the holders of Senior Indebtedness, on the other hand, and nothing contained in
this Note is intended to or shall impair, as between the Company, its creditors
other than the holders of Senior Indebtedness and the Payee, the obligation of
the Company, which is absolute and unconditional, to pay to the Payee, subject
to the rights of the holders of Senior Indebtedness, the principal of and
interest on this Note as and when the same shall become due and payable in
accordance with its terms, subject to the rights, if any, under the above
subordination provisions, of holders of Senior Indebtedness to receive cash,
property or securities of the Company payable in respect thereof.
11. The principal of this Note and accrued unpaid interest thereon shall
(if not already due and payable) upon written demand by the Payee become due and
payable forthwith, if there shall have been a default in the payment of any
interest on, or principal of, this Note when it becomes due and payable (but
only if such payment is not prohibited by the provisions of this Note), and such
default shall have continued for a period of 30 days after written notice of
such default shall have been given to the Company and shall be continuing at the
time of such written demand.
12. No course of dealing between the Company and the Payee or any delay
on the part of the Payee in exercising any rights under this Note shall operate
as a waiver of any rights of the Payee.
13. All notices and other communications hereunder shall be in writing
and shall be deemed to have been given when delivered, or deposited in the
mails, first-class, postage prepaid, or delivered to a telegraph office for
transmission, if to the Payee, at such address for the Payee as is indicated on
the books of the Company or if to the Company, at the address of the principal
executive offices of the Company as provided above.
14. This Note shall be governed by the laws of the State of Delaware.
ARAMARK CORPORATION
By:
-----------------------
Treasurer
3
EXHIBIT A TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
<PAGE>
ANNEX B
GENERAL INSTRUCTIONS TO FORMS - ISPO - B-1
In this section, you will find the forms that you will need in order to complete
all of your stock-related transactions. Several copies of each form have
been included. These forms have been color-coded for ease of reference. As you
complete the forms, have your Ownership Statement handy, as you will need to
transfer information from it onto the form(s).
We urge you to carefully read this Prospectus, as well as all of the other
materials you have received, so that you will be fully informed of the terms and
conditions of the stock purchase program and the payment options available to
you.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
There are up to four ways to finance your stock purchase under the Program. Of course, you may choose to utilize a combination of
the methods listed below.
- -----------------------------------------------------------------------------------------------------------------------------------
DEFERRED INTERNAL STOCK-FOR-
CASH PAYMENT MARKET STOCK
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Who Is Eligible? All grant holders. Those exercising the 2nd, 3rd, All owners who have held Owners who have held
4th, 5th, or 6th installments shares at least 6 months from shares at least 6
of a grant. purchase or from months. Can be used
stock-for-stock exchange date. for any ISPO
installment. Only
available to employees
in U.S. and Canada.
- -----------------------------------------------------------------------------------------------------------------------------------
What Is It? Payment in full at Postponing payment for up to 75% Selling shares back to the Exchanging shares you
the time of of your purchase amount, company and applying all or own (at the current
exercise. including withholding taxes (% part of the proceeds toward appraisal price), for
varies by installment number). the purchase of more shares. new ones (at your grant
Interest, due at the end of the exercise price).
deferal period, will be charged.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE FOLLOWING CHART LISTS THE FORMS TO BE COMPLETED AND RETURNED ACCORDING
TO THE INSTRUCTIONS AT THE BOTTOM OF THE PAGE.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FOR THIS TRANSACTION . . . COMPLETE AND SUBMIT THESE FORMS . . . AND ALSO SEND IN . . .
- -----------------------------------------------------------------------------------------------------------------------------------
Stock
Certificates or
Deferred Internal Confirmation
Payment Market Your Check Statements For
Obligation Note(2) Worksheet/ Stock-For- Payable To Shares
Exercise (White) - On Request Stock ARAMARK To Be Sold,
Form(1) Reverse Of Form(2)(3) Worksheet For Any Exchanged, Or
(Beige) Note Worksheet (Green) (Gray)(2) Balance(4) Held
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Stock Exercise (Purchase) X X
- -----------------------------------------------------------------------------------------------------------------------------------
Deferred Payment X X X X
- -----------------------------------------------------------------------------------------------------------------------------------
Bank Loan X X
(Worksheet Only)
- -----------------------------------------------------------------------------------------------------------------------------------
Stock Sale(3) (If applied to purchase) X X X X
- -----------------------------------------------------------------------------------------------------------------------------------
Stock-For-Stock Exercise X X X X
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Complete a separate form for each exercise. (3) If you are not applying proceeds toward a purchase,
(2) For multiple transactions, compile onto one form per only submit the Internal Market form and the Stock
registered owner. (Note: If shares are held jointly in Certificate(s) (or confirmation statement) for the
your and your spouse's names, that is considered as one shares you are selling.
owner. (4) Contact the person listed for your country on Page B-2.
</TABLE>
See Page B-2, Contact List and Mailing Instructions, for payment and mailing
instructions as well as the date that your exercise forms and payment must be
received by ARAMARK or your country's headquarters, if applicable.
<PAGE>
CONTACT LIST AND MAILING INSTRUCTIONS
United States, Puerto Rico, Virgin Islands, Canada and Mexico - Must be received
by ARAMARK by no later than January 15, 1999. Payment must be made to ARAMARK in
U.S. dollars.
<TABLE>
<S> <C>
Contact: Shareholder Services Mail to: First Union National Bank, N.A.
Group Shareholder Services Group
1-888-96-OWNER
(1-888-966-9637) . . . at one of the following addresses:
o If using regular mail: P. O. Box 13675
Philadelphia, PA 19101-9024
o If using Certified/Return Receipt
or Overnight Mail: 123 South Broad Street, MCPA 1328
Philadelphia, PA 19109
</TABLE>
- -------------------------------------------------------------------------------
For the countries listed below, contact the representative indicated
to obtain the exchange rate and any instructions
regarding your stock transactions and payment.
- -------------------------------------------------------------------------------
United Kingdom and Scotland - Must be received by ARAMARK Plc no later than
January 11, 1999.
Contact: Gordon Campbell Mail to: Gordon Campbell
Phone: 011-44-1189-596761 ARAMARK Plc
FAX: 011-44-1189-580039 Honey End Lane, Tilehurst,
Reading, Berks RG3 4QL,
England
- -------------------------------------------------------------------------------
Germany and Czech Republic - Must be received by ARAMARK GmbH no later than
January 11, 1999.
Contact: Uli Boepple Mail to: Uli Boepple
Phone:(xx49/61 02) 745 280 ARAMARK GmbH
FAX: (xx49/61 02) 745 200 Martin - Behaim - Strasse 6, 63263
Neu Isenburg, Germany
E-mail: [email protected]
- -------------------------------------------------------------------------------
Belgium - Must be received by ARAMARK Belgium no later than January 11, 1999.
Contact: Jean-Paul Fajgenblat Mail to: Jean-Paul Fajgenblat
Phone: 02/663.49.40 ARAMARK Belgium
FAX: 02-663.49.60 Europe House, Rue Maurice
Charlent, 53, 1160
BRUXELLES, Belgium
- -------------------------------------------------------------------------------
Spain - Must be received by ARAMARK Spain no later than January 11, 1999.
Contact: Agustin Riviere Mail to: Agustin Riviere
Phone: 011-34-93-240-2141 ARAMARK Spain
FAX: 011-34-93-240-2450 C/Aribau 200-210 5(degree),
Barcelona 08036, Spain
<PAGE>
EXERCISE FORM -- See General Instructions, page B-1
SECTION I - WORKSHEET (Expires 1/15/99)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
-----------------------------------------------
DETERMINING YOUR COST FOR SHARES
-----------------------------------------------
DEFINITION SOURCE ISPO
---------- ------
1 Grant Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ownership Statement . . . . . . . . . . . . . . 1
------
2 This Year's Installment Number . . . . . . . . . . . . . . . . . . Ownership Statemen. . . . . . . . . . . . . . . 2
------
3 Number of Shares Now Exercisable . . . . . . . . . . . . . . . . . Ownership Statement . . . . . . . . . . . . . . 3
------
4 Grant Price Per Share . . . . . . . . . . . . . . . . . . . . . . . Ownership Statement . . . . . . . . . . . . . . 4 $
------
5 Number of Shares You Want To Exercise . . . . . . . . . . . . . . . Minimum 100 - Maximum can't exceed Line 3 . . . 5
------
6 Total Cost of Shares . . . . . . . . . . . . . . . . . . . . . Line 4 x Line 5 . . . . . . . . . . . . . . . . 6 $
------
- ----------------------------------
CALCULATING YOUR TAX
- ----------------------------------
7 Current Appraisal Price Per Share (December Quarterly Appraisal) . . . . . . . . . . . . . . . . . . . . . . . . . 7 $11.90
------
8 Appraisal Price x Shares Exercised . . . . . . . . . . . . . . . . Line 5 x Line 7 . . . . . . . . . . . . . . . . 8 $
------
9 Total Appreciation Subject To Taxes . . . . . . . . . . . . . . . . Line 8 - Line 6 . . . . . . . . . . . . . . . . 9 $
------
10 Total Withholding Tax Due At Purchase . . . . . . . . . . . . . . . Line 9 x .38 (Canada-based employees enter "0") 10 $
------
11 Total Amount Due . . . . . . . . . . . . . . . . . . . . . . . Line 6 + Line 10 . . . . . . . . . . . . . . . 11 $
------
-------------------------------------------------------------------------------------------------------------------------
DETERMINING YOUR DEFERRAL -- INSTALLMENTS 2, 3, 4, 5 OR 6 ONLY (Also complete White Deferred Payment Obligation Note)
-------------------------------------------------------------------------------------------------------------------------
12 Payment Amount You Want To Defer . . . . . . . . . . . . . . . . . Line 6, White Deferred Payment Worksheet. . . . 12 $
------
13 Balance After Deferral . . . . . . . . . . . . . . . . . . . . . . Line 11 - Line 12 . . . . . . . . . . . . . . . 13 $
------
-----------------------------------------------------------
EXCHANGING OR SELLING SHARES OR BANK LOANS
-----------------------------------------------------------
14 Number Of Shares Exchanged (U.S. and Canada Employees Only) . . . . Line 6, gray Stock-For-Stock Worksheet. . . . . 14 $
------
15 Appraisal Price x Shares Exchanged . . . . . . . . . . . . . . . . Line 7, gray Stock-For-Stock Worksheet . . . . 15 $
------
16 Proceeds From Internal Market - Enclose certificates & green Line 5, green Internal Market Worksheet . . . . 16 $
worksheet ------
17 Proceeds From Authorized Bank Loan For This Exercise (If applicable) Bank Name _____________________________ 17 $
(Be sure to complete Items 11 and 12 on white Deferred Payment Obligation Worksheet) ------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
--------------------------
EXERCISE SUMMARY
--------------------------
18 Total Cash Due (Everyone Must Complete): . . . . . . . . . . . . . Line 13 - Line 15 - Line 16 - Line 17 . . . . . 18 $
------
19 Employees Outside U.S. And Canada: Currency Exchange Rate*. . Units of your country's currency per U.S.
Dollar. . . . . . . . . . . . . . . . . . . . . 19
------
20 Employees Outside U.S. And Canada: Total Cash Due (send check for
this amount in your own country's currency to the contact person
listed on page B-2). . . . . . . . . . . . . . . . . . . . . . . . Line 18 x Line 19 (Local Currency). . . . . . . 20
------
21 Shares Exercised . . . . . . . . . . . . . . . . . . . . . . . . . Line 5 . . . . . . . . . . . . . . . . . . . . 21
------
22 Shares Exchanged - Enclose Certificates And Gray Worksheet . . . . Line 14 . . . . . . . . . . . . . . . . . . . . 22
------
23 Number Of New Shares Acquired . . . . . . . . . . . . . . . . . . . Line 21 - Line 22 . . . . . . . . . . . . . . . 23
------
- ------------------------------------------------------------------------------------------------------------------------------------
COMPANY USE ONLY FOR EMPLOYEES OUTSIDE THE U.S. AND CANADA
24 Withholding Tax Paid By Employee . . . . . . . . . . . . . . . . . Lesser of Line 10 and Line 18 . . . . . . . . . 24 $
------
25 Withholding Tax Payable By Parent Company. . . . . . . . . . . . . Line 10 - Line 24 . . . . . . . . . . . . . . . 25 $
------
26 Withholding Tax Payable To Local Government . . . . . . . . . . . . Line 19 x (Line 24 + Line 25) (Local Currency). 26
------
27 Purchase Price Paid By Employee . . . . . . . . . . . . . . . . . . Line 18 - Line 24 . . . . . . . . . . . . . . . 27 $
------
28 Net Due To (From) Parent Company. . . . . . . . . . . . . . . . . . Line 27 - Line 25 . . . . . . . . . . . . . . . 28 $
------
29 Employee's Taxable Income From Exercise . . . . . . . . . . . . . . Line 9 x Line 19 (Local Currency) . . . . . . . 29
------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Available from contact listed on page B-2, Contact List and Mailing
Instructions.
<PAGE>
SECTION II - REGISTRATION AND SIGNATURES
Shares must be registered initially either in your name or in the names of you
and your spouse, as joint tenants. If shares are to be registered jointly in the
names of both you and your spouse, you must print both names below, enter your
Social Security number, if applicable, and you both must sign. If you are
deferring payment, you (and your spouse, if applicable) must also complete and
sign the Deferred Payment Obligation form. Your shares will be registered to the
address to which the Prospectus containing the exercise form was mailed. If you
have moved or the address is otherwise incorrect, please complete and return the
blue Address Change Card.
I/We hereby represent, warrant, and agree as follows:
A. I/We have received and read copies of (a) the Prospectus dated December 1,
1998, including the Amended and Restated Stockholders' Agreement and (b)
ARAMARK's annual report on Form 10-K.
B. I/We have full power and authority to enter into the Amended and Restated
Stockholders' Agreement.
C. By signing below, I/We hereby execute and deliver and agree to be bound by
the Amended and Restated Stockholders' Agreement.
D. I/We will, upon request, execute any additional documents necessary or
desirable for me/us to become a party to the Amended and Restated Stockholders'
Agreement.
E. By signing below, I/we agree to permit additional amounts to be withheld
and/or refunded in subsequent pay periods to meet tax withholding calculated by
the company.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Print Name(s) Signature(s) Social Security Number Date
- ----------------------------------- ----------------------------------- ----------------------- -----------------
- ----------------------------------- ----------------------------------- ----------------------- -----------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Home Phone #: Business Phone #: Business Unit: Component #:
--------------- -------------- --------------- ---------------
</TABLE>
See Page B-2, Contact List and Mailing Instructions, for payment and mailing
instructions as well as the date that your exercise forms and payment must be
received by ARAMARK or your country's headquarters, if applicable.
<PAGE>
DEFERRED PAYMENT OBLIGATION -- See General Instructions, page B-1
- -------------------------------------------------------------------------------
INSTRUCTIONS
1. Insert the Total Amount Being Deferred (Line 7 from the Deferred Payment
Obligation Note Worksheet on the reverse) in the first paragraph below.
2. Insert the Total Shares Pledged to ARAMARK (Line 18 from the Deferred
Payment Obligation Note Worksheet on the reverse) in the second paragraph
below.
3. Print and sign your name exactly as on the Note Worksheet and applicable
Exercise Forms. If your spouse signed the Exercise Form, he/she must also
sign this Deferred Payment Obligation form. By signing this form, your
spouse joins in the agreement you are making to pay the amount of the
Deferred Payment Obligation.
- -------------------------------------------------------------------------------
I/We promise to pay to the order of ARAMARK CD Company (a subsidiary of ARAMARK
Corporation) if deferring less than $5,000 or ARAMARK Corporation if deferring
$5,000 or more, $__________, and to pay interest from the date the associated
exercise is effected at the rate of 7.75% per year, simple interest. Payment of
the deferred obligation and interest will be due March 15, 2002, or on demand by
the applicable payee, and may be prepaid at any time.
I/We grant to the applicable payee a security interest in_____________ shares of
ARAMARK Common Stock (the "Pledged Shares") and agree that the Pledged Shares
will be held as collateral by the applicable payee until the amount is paid in
full. I/We understand and agree that, with respect to the Pledged Shares,
ARAMARK Corporation will comply with instructions from the applicable payee
without my/our further consent. If the amount is not paid when due, the
applicable payee will be entitled to exercise the legal remedies available under
applicable law. If any of the Pledged Shares are to be sold or otherwise
transferred, then the amount will become due immediately.
This agreement may be assigned by the applicable payee at any time and will be
governed by the laws of the Commonwealth of Pennsylvania.
- ------------------------------------ ---------------------------------------
(Print Name) (Print Name)
- ------------------------------------ ---------------------------------------
(Signature) (Signature)
- ------------------------------------ ---------------------------------------
(Date) (Date)
See Page B-2, Contact List and Mailing Instructions, for payment and mailing
instructions as well as the date that your forms and payment must be received by
ARAMARK or your country's headquarters, if applicable.
<PAGE>
DEFERRED PAYMENT OBLIGATION NOTE WORKSHEET
All Deferred Payment Obligations must be in same registration name. Complete
separate worksheet and Note per registration.
Registration Name (Please print) Social Security/Account # Date
- -------------------------------- ------------------------- ---------
- -------------------------------- ------------------------- ---------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Use one Column for each exercise involving a Deferred Payment Obligation
-------------------------------------------------
Exercise
-------------------------------------------------
Line # Source #1 #2 #3 #4 #5
-------------------------------------------------
1 Grant Date Line 1 on beige exercise form
-------------------------------------------------
-------------------------------------------------
2 Installment # Line 2 on beige exercise form
-------------------------------------------------
-------------------------------------------------
3 Total Amount Due Line 11 on beige exercise form
-------------------------------------------------
-------------------------------------------------
4 Maximum Percent Select applicable percent based
Deferral Allowed upon answer on line 2 -------------------------------------------------
-------------------------------------------------
Contact Marie Paschall (215) 238-3194 for further details.
-------------------------------------------------
5 Maximum Dollar Line 3 multiplied by Line 4
Deferral Allowed -------------------------------------------------
-------------------------------------------------
6 Actual Amount Cannot exceed Line 5. Enter on Line
You Want to Defer 12 of beige exercise form -------------------------------------------------
Total Payment Amount You Want to Defer to be posted to the Deferred Payment Obligation Note.
7 Total Amount being Add all amounts on Line 6. Record
Deferred this amount on the reverse side of this ----------
Deferred Obligation Note as the total amount being deferred. 7
----------
Calculation of shares to be held by ARAMARK for Deferred Payment Obligation
----------
8 Minimum Value of Collateral Required (Line #7 multiplied by 1.33) 8
----------
9 Current Appraisal Price Per Share (December 1, 1998 appraisal price) 9 $11.90
----------
10 Number of Shares Needed as Collateral (Line #8 divided by Line #9; round up to next whole share) 10
----------
11 Bank providing loan Name of bank recorded on Line #17 of beige exercise form 11
(if applicable) ---------------------------
12 Number of shares required by outside bank (per bank documentation) from current exercises to be held ----------
as collateral. 12
----------
------------------------------------------------------------
13 Shares being acquired Line 23 of beige exercise form 13
in each exercise ------------------------------------------------------------
----------
14 Total shares being acquired Add Line 13 for all exercises 14
----------
----------
15 Shares remaining from current exercises available for use as collateral (Line 14 minus Line 12) 15
----------
<PAGE>
16 Additional shares, if any, needed to collateralize ARAMARK deferral (Line 15 less Line 10)
----------
If the result is zero or more, fill in number on Line 16A 16A
----------
----------
If the result is less than 0 (meaning you have a collateral 16B
shortage), fill in number on Line 16B and complete Line 17 ----------
until Line 17G equals Line 16B
17 Other shares to be Identify other previously acquired Cert/Conf# #shares
pledged to ARAMARK shares that are to be held ---------- --------
17A
---------- --------
by ARAMARK by 17B
---------- --------
Certificate or 17C
---------- --------
Confirmation #. Shares 17D
---------- --------
cannot be pledged for 17E
---------- --------
any other deferred 17F
obligation or loan ---------- -------- ----------
Total 17A through 17F . . . . . . . . . . . . . . . . 17G
----------
18 Total Shares
Pledged to ARAMARK Line 17G + Line 15 (must equal Line 10) Record this amount on reverse as ----------
Total Shares Pledged 18
----------
</TABLE>
<PAGE>
SECTION I -- INTERNAL MARKET SALE REQUEST FORM
Use one form per registered owner.
INSTRUCTIONS: In this Section, you will be listing the certificate(s) or
confirmation statement(s) that you are enclosing, and indicating the number of
shares listed on each, and the number of shares you would like to sell.
NAME (PLEASE PRINT) ACCOUNT OR SOCIAL SECURITY NUMBER
- ----------------------------------- ----------------------------------
- ----------------------------------- ----------------------------------
- ------------------------------------------------
SALE OF COMMON SHARES -- CLASS B
- ------------------------------------------------
<TABLE>
<CAPTION>
NO. OF SHARES NO. OF SHARES TO
CERTIFICATE/ SHOWN ON THIS BE SOLD FROM THIS
LINE STATEMENT LINE CERTIFICATE/ LINE CERTIFICATE/
NO. NUMBER ENCLOSED NO. STATEMENT NO. STATEMENT
--- --------------- --- --------- --- ---------
<S> <C> <C>
1a 1a 1a
- ----------------------------------------------------------------------------------------------------------
1b 1b 1b
- ----------------------------------------------------------------------------------------------------------
1c 1c 1c
- ----------------------------------------------------------------------------------------------------------
1d 1d 1d
- ----------------------------------------------------------------------------------------------------------
1e 1e 1e
- ----------------------------------------------------------------------------------------------------------
1f 1f 1f
- ----------------------------------------------------------------------------------------------------------
1g 1g 1g
- ----------------------------------------------------------------------------------------------------------
1h 1h 1h
- ----------------------------------------------------------------------------------------------------------
1i 1i 1i
- ----------------------------------------------------------------------------------------------------------
1j 1j 1j
- ----------------------------------------------------------------------------------------------------------
(TOTAL SHARES TO BE SOLD
- COPY 1l TO LINE 1 ON
(TOTAL SHARES SHOWN) REVERSE)
- ---------- ---------------------------
1k TOTAL SHARES 1k 1l
(ADD 1a - 1j IN EACH COLUMN)
- ----------------------------------------------------------------------------------------------------------
TOTAL COMMON SHARES LEFT OVER (1k
MINUS 1l) 1m
- ------------------------------------------------------------------------
</TABLE>
Note: Shares used in stock-for-stock exchange or purchased within prior six (6)
months cannot be sold. If shares to be sold are pledged under a prior Deferred
Payment Obligation, Lines 4a, b, and c on front of form must also be completed.
Complete Sections II and III on reverse side of this form.
(Please see reverse.)
<PAGE>
SECTION II -- INTERNAL MARKET WORKSHEET -- See General Instructions, p. B-1
PLEASE COMPLETE THE REVERSE SIDE FIRST. (Use one form per registered owner.)
<TABLE>
<CAPTION>
<S> <C> <C>
- -----------------------------------
SALE OF COMMON SHARES
- -----------------------------------
1 Number of Common Shares to be Sold (Section I, Line 1l):................................. 1
--------
2 Sale Price Per Common Share (December 1, 1998 appraisal price):.......................... 2 $11.90
--------
3 Total Sale Price of Common Shares (Line 1 x Line 2)...................................... 3 $
Note: If shares to be sold are pledged under a prior Deferred Payment Obligation, Lines 4a, b, and c must also be completed.
-----
- ---------------------------------------------
DISTRIBUTION OF TOTAL PROCEEDS
- ---------------------------------------------
4 Amount to be Applied to Pay Off Related Deferred Payment Obligation* (write "N/A" if not applicable)
(a) Principal Due: ...................................................................... 4(a) $
-----
(b) Accrued Interest Due: ............................................................... 4(b) $
-----
(c) Total Deferred Payment Due (Line 4a + Line 4b): ..................................... 4(c) $
-----
5 Amount to be Applied to Current Exercise (if applicable)
(a) Grant Date:__________................................................................ 5(a) $
-----
(b) Grant Date:__________................................................................ 5(b) $
-----
(c) Grant Date:__________................................................................ 5(c) $
-----
(d) Grant Date:__________................................................................ 5(d) $
-----
(e) Grant Date:__________................................................................ 5(e) $
-----
(f) Total (Lines 5a + 5b + 5c + 5d + 5e):................................................ 5(f) $
-----
6 Cash Back to You (Line 3 minus Line 4c minus Line 5f):................................... 6 $
-----
7 Total Distribution (Line 4c + Line 5f + Line 6) - Total must equal Line 3:............... 7 $
-----
</TABLE>
<PAGE>
SECTION III -- INTERNAL MARKET REQUEST FORM
- -------------------
SIGNATURES
- -------------------
By signing below, you are offering to sell to ARAMARK the shares indicated in
Line 1, subject to the terms and conditions of the Internal Market. You also are
acknowledging that: you have full authority to sell the shares; you have
received and read Form 10-K for fiscal 1998; you are under no obligation to
sell; and the offer price is the most recent appraisal price, reflecting the
shares' current lack of marketability and is substantially less than it would be
if the shares were publicly traded. The Board reserves the right to reduce on a
pro rata basis the number of Class B shares sold by all management owners in the
Internal Market, depending upon the overall number of Class B shares submitted
to the Company for sale. Subject to complying with applicable laws and
regulations (including SEC Rule 13e-3), the Company will not repurchase shares
of Class B Common stock from any stockholder if the repurchase causes such
shares to be held of record by less than 300 holders. Please sign below exactly
as your name(s) appear on the stock certificate(s).
Print Name(s) Social Security or Account Number(s)
- ---------------------------------- ------------------------------------
- ---------------------------------- ------------------------------------
Signature(s) Date
- ---------------------------------- ------------------------------------
- ---------------------------------- ------------------------------------
- -------------------------------
DELIVERY ADDRESS(ES)
- -------------------------------
================================================================================
Send Check For Net Sale Proceeds To: Send Stock Certificate(s)** To:
- ------------------------------------ ------------------------------------
- ------------------------------------ ------------------------------------
================================================================================
* Call the ARAMARK Shareholder Services Group at 1-888-96-OWNER to obtain the
exact amounts of Principal Due and Accrued Interest Due.
** In cases where the number of shares on the stock certificate(s) or
confirmation statement(s) you are submitting exceeds the number of shares you
are selling, a certificate for the balance will be sent to you upon request,
by indicating an address above. If your shares are pledged to an outside
lender, the lender may require that the stock certificate for unsold shares
be returned to the lender.
See Page B-2, Contact List and Mailing Instructions, for mailing instructions as
well as the date that your forms must be received by ARAMARK or your country's
headquarters, if applicable.
EXPIRATION: January 15, 1999
<PAGE>
STOCK-FOR-STOCK WORKSHEET -- See General Instructions, p. B-1
Note: Stock-for-stock transactions are available for all Installments. (Use one
form per registered owner.) Stock-for-stock exchanges are advantageous
for only U.S. and Canada based employees under current tax laws,
therefore they are not available to employees based in countries other
than the U.S. and Canada.
<TABLE>
<CAPTION>
<S> <C> <C>
- ----------------------------------------------------------- ---------------------------------------------- ------------------------
Employee Name (please print) Social Security or Account Number Date
- ----------------------------------------------------------- ---------------------------------------------- ------------------------
</TABLE>
<TABLE>
<CAPTION>
Use One Column For Each Exercise
Involving a Stock-For-Stock Exchange
--------------------------------------------------------
EXERCISE
--------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Line
# Definition Source #1 #2 #3 #4 #5 Total
-----------------------------------------------------------------
1 Grant Date Line 1 on beige Exercise
Form
N/A
-----------------------------------------------------------------
-----------------------------------------------------------------
2 This Year's Installment # Line 2 on beige Exercise
Form
N/A
-----------------------------------------------------------------
-----------------------------------------------------------------
3 Maximum Dollar Amount Line 6 on beige Exercise
Eligible To Be Covered By Form
Exchange $ $ $ $ $ $
-----------------------------------------------------------------
-----------------------------------------------------------------
4 Approximate Dollar Value Of Amount of Line 3 you wish
Shares You Wish To Exchange to cover via
Stock-For-Stock (can't
exceed Line 3) $ $ $ $ $ $
-----------------------------------------------------------------
-----------------------------------------------------------------
5 Current Appraisal Price Per
Share (December Quarterly
Appraisal) $11.90 $11.90 $11.90 $11.90 $11.90 $11.90
-----------------------------------------------------------------
-----------------------------------------------------------------
6 Number Of Shares To Be Line 4 (above) / Line 5
Exchanged (above). Rounded down to
next full share
-----------------------------------------------------------------
(Transfer to Line 14 of beige Exercise Form)
-----------------------------------------------------------------
7 Appraisal Price x Shares Line 5 (above) x Line 6
Exchanged (above)
$ $ $ $ $ $
-----------------------------------------------------------------
(Transfer to Line 15 of beige Exercise Form)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARE EXCHANGE SUMMARY
----------------------
NUMBER OF SHARES TO BE EXCHANGED
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Certificate Shares Shown On
Number(s) This
Enclosed Certificate #1 #2 #3 #4 #5 Total
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Note: Use additional ------------------------------------------------------------------------------------------------
Stock-For-Stock Worksheets
if you are submitting more than ------------------------------------------------------------------------------------------------
5 stock certificates
------------------------------------------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
Totals
-----------------------------------------------------------------
Must Equal Line 6 Above For Each Exercise And In Total
-----------------------------------------------------------------
</TABLE>
