<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 25, 1997
REGISTRATION NO. 333-37475
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SC INTERNATIONAL SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 6719 75-2607219
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
FOR INFORMATION REGARDING ADDITIONAL REGISTRANTS, SEE "TABLE OF ADDITIONAL
REGISTRANTS."
------------------------
<TABLE>
<S> <C>
524 E. LAMAR BOULEVARD MR. PATRICK W. TOLBERT
ARLINGTON, TEXAS 76011-3999 EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL
(817) 792-2123 AND ADMINISTRATIVE OFFICER
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE SC INTERNATIONAL SERVICES, INC.
NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S 524 E. LAMAR BOULEVARD
PRINCIPAL EXECUTIVE OFFICES) ARLINGTON, TEXAS 76011-3999
(817) 792-2123
(NAME, ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
</TABLE>
COPIES OF COMMUNICATIONS TO:
JOEL I. GREENBERG, ESQ.
KAYE, SCHOLER, FIERMAN, HAYS & HANDLER, LLP
425 PARK AVENUE
NEW YORK, NEW YORK 10022
(212) 836-8201
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
=======================================================================================================
STATE OR OTHER PRIMARY STANDARD
JURISDICTION OF INDUSTRIAL I.R.S. EMPLOYER
EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS INCORPORATION OR CLASSIFICATION IDENTIFICATION
CHARTER ORGANIZATION CODE NUMBER NO.
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sky Chefs, Inc................................ Delaware 5812 13-1318387
- -------------------------------------------------------------------------------------------------------
Caterair International, Inc. (II)............. Delaware 5812 75-2607218
- -------------------------------------------------------------------------------------------------------
Caterair International Corporation............ Delaware 6512 52-1640561
- -------------------------------------------------------------------------------------------------------
Arlington Services, Inc. ..................... Delaware 6794 51-0344713
- -------------------------------------------------------------------------------------------------------
Arlington Services Holding Corporation........ Delaware 6719 51-0368977
- -------------------------------------------------------------------------------------------------------
JFK Caterers, Inc. ........................... Delaware 6719 52-1312557
- -------------------------------------------------------------------------------------------------------
Caterair Consulting Services Corporation...... Delaware 5812 52-0936585
- -------------------------------------------------------------------------------------------------------
Western Aire Chef, Inc. ...................... Delaware 6719 52-0974724
- -------------------------------------------------------------------------------------------------------
Bethesda Services, Inc. ...................... Delaware 6794 51-0369138
- -------------------------------------------------------------------------------------------------------
Caterair New Zealand Limited.................. Delaware 6719 51-0369139
- -------------------------------------------------------------------------------------------------------
Onex Ohio Finance Corp. ...................... Delaware 6141 75-2184952
- -------------------------------------------------------------------------------------------------------
Onex Ohio Finance Corp. II.................... Delaware 6141 75-2228384
- -------------------------------------------------------------------------------------------------------
Onex Ohio Equity Corp. ....................... Delaware 6141 75-2184952
- -------------------------------------------------------------------------------------------------------
Onex Ohio Equity Corp. II..................... Delaware 6141 75-2641451
- -------------------------------------------------------------------------------------------------------
Onex Ohio Credit Corp. ....................... Delaware 6141 75-2137074
- -------------------------------------------------------------------------------------------------------
Onex Ohio Credit Corp. II..................... Delaware 6141 75-2641443
- -------------------------------------------------------------------------------------------------------
Onex Ohio Acceptance Corporation.............. Delaware 6141 75-2137075
- -------------------------------------------------------------------------------------------------------
Onex Ohio Capital Corp. ...................... Delaware 6141 75-2344670
- -------------------------------------------------------------------------------------------------------
Onex Ohio Capital Corp. II.................... Delaware 6141 75-2641452
- -------------------------------------------------------------------------------------------------------
Onex Ohio Fiscal Corp. ....................... Delaware 6141 75-2273325
- -------------------------------------------------------------------------------------------------------
Onex Ohio Fiscal Corp. II..................... Delaware 6141 75-2641448
- -------------------------------------------------------------------------------------------------------
Onex Ohio Funds Corp. ........................ Delaware 6141 75-2272625
- -------------------------------------------------------------------------------------------------------
Onex Ohio Funds Corp. II...................... Delaware 6141 75-2641444
- -------------------------------------------------------------------------------------------------------
Caterair International Transition
Corporation................................. Delaware 5812 52-1947041
- -------------------------------------------------------------------------------------------------------
Sky Chefs International Corp. ................ Delaware 6719 13-3800220
- -------------------------------------------------------------------------------------------------------
Caterair Airport Properties, Inc. ............ Delaware 6719 52-1047952
- -------------------------------------------------------------------------------------------------------
Caterair St. Thomas Holdings Corporation...... Delaware 6719 52-1805211
- -------------------------------------------------------------------------------------------------------
Sky Chefs Argentine Inc. ..................... Delaware 6719 52-1689276
=======================================================================================================
</TABLE>
The address, including zip code, and telephone number, including area code,
of the principal executive offices of, and the name, address, including zip
code, and telephone number, including area code, of agent for service for, each
of the Additional Registrants other than Caterair International, Inc. (II),
Arlington Services, Inc., Arlington Services Holding Corporation, Bethesda
Services, Inc. and Caterair New Zealand Limited is the same as for SC
International Services, Inc., as set forth on the facing page of this
Registration Statement. The address, including zip code, and telephone number,
including area code, of the principal executive offices of Caterair
International, Inc. (II) is 6550 Rock Spring Drive, Bethesda, Maryland 20817
(telephone number (301) 897-7800), and the agent for service for Caterair
International, Inc. (II) is Thomas A. Statas, Vice President, Caterair
International, Inc. (II), 6550 Rock Spring Drive, Bethesda, Maryland 20817
(telephone number (301) 897-7800). The address, including zip code, and
telephone number, including area code, of the principal executive offices of
each of Arlington Services, Inc., Arlington Services Holding Corporation,
Bethesda Services, Inc. and Caterair New Zealand Limited is 300 Delaware Avenue,
Third Floor, Suite 315, Wilmington, Delaware 19801 (telephone number for
Arlington Services, Inc. and Arlington Services Holding Corporation (302)
427-7860 and telephone number for Bethesda Services, Inc. and Caterair New
Zealand Limited (302) 427-7863), and the agent for service for each of Arlington
Services, Inc., Arlington Services Holding Corporation, Bethesda Services, Inc.
and Caterair New Zealand Limited is Steven R. Director, Morris, James, Hitchens
& Williams, 222 Delaware Avenue, P.O. Box 2306, Wilmington, Delaware 19899
(telephone number (302) 888-6800). Copies of communications to any Additional
Registrant should be sent to Joel I. Greenberg, Esq., Kaye, Scholer, Fierman,
Hays & Handler, LLP, 425 Park Avenue, New York, NY 10022 (telephone number (212)
836-8201).
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES
MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED NOVEMBER 25, 1997
PRELIMINARY PROSPECTUS
[LSG/SKYCHEFS LOGO] [CATERAIR INTERNATIONAL LOGO]
[SCIS LOGO]
SC INTERNATIONAL SERVICES, INC.
OFFER TO EXCHANGE
9 1/4% SENIOR SUBORDINATED NOTES DUE 2007, SERIES B
FOR ALL OUTSTANDING
9 1/4% SENIOR SUBORDINATED NOTES DUE 2007, SERIES A
------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED.
------------------------
SC International Services, Inc., a Delaware corporation (the "Issuer" or
"SCIS"), is hereby offering (the "Exchange Offer"), upon the terms and subject
to the conditions set forth in this Prospectus and the accompanying Letter of
Transmittal (the "Letter of Transmittal"), to exchange $1,000 principal amount
of its registered 9 1/4% Senior Subordinated Notes due 2007, Series B (the
"Exchange Notes"), for each $1,000 principal amount of its outstanding
unregistered 9 1/4% Senior Subordinated Notes due 2007, Series A (the "Private
Notes"), of which $300,000,000 in aggregate principal amount was issued on
August 28, 1997 and is outstanding as of the date hereof. The form and the terms
of the Exchange Notes are identical in all material respects to those of the
Private Notes, except for certain transfer restrictions and registration rights
relating to the Private Notes and except for certain interest provisions related
to such registration rights. The Exchange Notes will evidence the same
indebtedness as the Private Notes (which they replace) and will be issued
pursuant to, and entitled to the benefits of, an Indenture, dated as of August
15, 1997, governing the Private Notes and the Exchange Notes (the "Indenture").
The Private Notes and the Exchange Notes are sometimes referred to herein,
collectively, as the "Notes." See "The Exchange Offer" and "Description of
Notes."
Interest on the Notes will be payable semi-annually on March 1 and
September 1 of each year commencing March 1, 1998, at the rate of 9 1/4% per
annum. The Notes will be redeemable, in whole or in part, at the option of the
Issuer, at any time on or after September 1, 2002, at the redemption prices set
forth herein (payable in cash), plus accrued interest to the date of redemption.
In addition, on or prior to September 1, 2000, the Issuer may redeem in the
aggregate up to $105,000,000 in principal amount of the Notes with the net cash
proceeds of one or more Public Equity Offerings (as defined herein) at a
redemption price of 109.25% of the principal amount of such Notes (payable in
cash), plus accrued interest to the date of redemption; provided that at least
$195,000,000 in principal amount of the Notes remains outstanding immediately
after any such redemption.
The Notes are general unsecured obligations of the Issuer, and are
subordinated in right of payment to all existing and future Senior Debt (as
defined herein) of the Issuer, including the Issuer's obligations under the
Senior Bank Financing (as defined herein). The Notes are unconditionally
guaranteed (the "Guarantees") on a joint and several senior subordinated basis
by Caterair International Corporation ("Caterair") and certain domestic
subsidiaries of the Issuer (collectively, the "Guarantors"). The Guarantees are
general unsecured obligations of the Guarantors, and are subordinated in right
of payment to all existing and future Guarantor Senior Debt (as defined herein)
of the Guarantors, including guarantees and borrowings under the Senior Bank
Financing. At September 30, 1997, the aggregate amount of outstanding Senior
Debt of the Issuer (including borrowings and guarantees under the Senior Bank
Financing but excluding advances by Caterair to SCIS and letters of credit) was
approximately $250.0 million and the aggregate amount of outstanding Guarantor
Senior Debt (excluding borrowings and guarantees under the Senior Bank Financing
and the loan by SCIS to Caterair) was approximately $31.5 million. LSG Lufthansa
Service GmbH is not an obligor on the Notes.
(continued on next page)
------------------------
SEE "RISK FACTORS," BEGINNING ON PAGE 19, FOR A DISCUSSION OF CERTAIN
RISKS THAT INVESTORS SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER AND
AN INVESTMENT IN THE EXCHANGE NOTES.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is , 1997
<PAGE> 4
(continued from previous page)
If a Change of Control (as defined herein) occurs, the Issuer will be
required to offer to repurchase the Notes at a purchase price equal to 101% of
the principal amount thereof, plus accrued interest to the date of repurchase.
There can be no assurance that the Issuer will have the financial ability or
will be permitted by its other indebtedness agreements to repurchase the Notes
upon a Change of Control. In addition, the Issuer and, under certain
circumstances, Caterair, will be required to offer to repurchase Notes with the
net cash proceeds of certain asset sales at a purchase price equal to 100% of
the principal amount thereof, plus accrued interest to the date of repurchase.
See "Description of Notes."
The Exchange Notes are being offered hereunder in order to satisfy certain
obligations of the Issuer and the Guarantors contained in the Registration
Rights Agreement, dated as of August 28, 1997 (the "Registration Rights
Agreement"), among the Issuer, the Guarantors, and BT Securities Corporation,
J.P. Morgan Securities Inc., Credit Suisse First Boston Corporation, Goldman,
Sachs & Co., Smith Barney Inc. and Bankers Trust International PLC, as the
initial purchasers (the "Initial Purchasers") of the Private Notes.
Based upon interpretations by the staff of the Securities and Exchange
Commission (the "Commission") set forth in no-action letters issued to third
parties unrelated to the Issuer, the Issuer believes that the Exchange Notes
issued pursuant to the Exchange Offer in exchange for Private Notes may be
offered for resale, resold and otherwise transferred by a holder thereof (other
than (i) any person who is an "affiliate" of the Issuer within the meaning of
Rule 405 under the Securities Act of 1933, as amended (the "Securities Act"), or
(ii) a broker-dealer who purchases Notes from the Issuer to resell pursuant to
Rule 144A under the Securities Act or any other available exemption under the
Securities Act) without compliance with the registration and prospectus delivery
provisions of the Securities Act; provided that such holder is acquiring the
Exchange Notes in the ordinary course of its business and such holder is not
engaging, and has no intention to engage, and has no arrangement or
understanding with any person to participate, in the distribution of the
Exchange Notes. Holders of Private Notes wishing to accept the Exchange Offer
must represent to the Issuer that such conditions have been met. Each
broker-dealer that will receive Exchange Notes for its own account in exchange
for Private Notes must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by such a broker-dealer in connection with resales of
Exchange Notes received in exchange for Private Notes, where such Private Notes
were acquired by such broker-dealer as a result of market-making or other
trading activities. The Issuer has agreed to make this Prospectus, as it may be
amended or supplemented from time to time, available to any such broker-dealer
that requests copies of such Prospectus in the Letter of Transmittal for use in
connection with any such resale for a period of up to 90 days after the
Expiration Date (as defined herein). See "The Exchange Offer" and "Plan of
Distribution."
The Issuer will not receive any proceeds from, and has agreed to bear the
expenses of, the Exchange Offer. No underwriter is being used in connection with
the Exchange Offer.
The Exchange Offer will expire at 5:00 p.m., New York City time, on
, 1997, unless the Exchange Offer is extended by the Issuer in its
sole discretion. The Exchange Offer is not conditioned upon any minimum
aggregate principal amount of Private Notes being tendered for exchange.
The National Association of Securities Dealers, Inc. ("NASD") has
designated the Private Notes as securities eligible for trading in the Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL") market of
the NASD, and the Issuer has been advised that the Initial Purchasers have
heretofore acted as market makers for the Private Notes. Holders of Private
Notes whose Private Notes are not tendered and accepted in the Exchange Offer
will continue to hold such Private Notes and will be entitled to all the rights
and preferences and will be subject to the limitations applicable thereto under
the Indenture. Following consummation of the Exchange Offer, the holders of
Private Notes will continue to be subject to the existing restrictions upon
transfer thereof and the Issuer, subject to limited exceptions, will have no
further
(ii)
<PAGE> 5
obligation to such holders to provide for the registration under the Securities
Act of the Private Notes held by them. To the extent that any Private Notes are
tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Private Notes could be adversely affected. No assurances can be given
as to the liquidity of the trading market for the Private Notes.
Prior to the Exchange Offer, there has been no public market for the
Exchange Notes. There can be no assurance as to the liquidity of any market that
may develop for the Exchange Notes, the ability of holders to sell the Exchange
Notes, or the price at which holders would be able to sell the Exchange Notes.
Each of the Initial Purchasers has advised the Issuer that it currently intends
to make a market in the Exchange Notes. The Initial Purchasers are not obligated
to do so, however, and any market-making activities with respect to the Exchange
Notes may be discontinued at any time without notice. Future trading prices of
the Exchange Notes will depend on many factors, including among other things,
prevailing interest rates, the Issuer's and the Guarantors' operating results
and the market for similar securities. Historically, the market for securities
similar to the Exchange Notes, including non-investment grade debt, has been
subject to disruptions that have caused substantial volatility in the prices of
such securities. There can be no assurance that any market for the Exchange
Notes, if such a market develops, will not be subject to similar disruptions.
See "Risk Factors -- Lack of Public Market for the Notes."
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE ISSUER ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF PRIVATE NOTES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND THE LETTER OF
TRANSMITTAL IN CONNECTION WITH THE EXCHANGE OFFER, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE ISSUER OR ANY OF THE GUARANTORS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN
THOSE TO WHICH IT RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR THE
SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR THE EXCHANGE PROPOSED TO BE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE ISSUER OR ANY OF THE GUARANTORS SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act. The Issuer and the Guarantors are hereby
providing cautionary statements identifying important factors that could cause
the Issuer's and the Guarantors' actual results to differ materially from those
projected in forward-looking statements made in this Prospectus. Any statements
that express, or involve discussions as to, expectations, beliefs, plans,
objectives, assumptions or future events or performance (often, but not always,
through the use of words or phrases such as "will likely result," "are expected
to," "will continue," "is anticipated," "estimate," "intends," "plans,"
"projection" and "outlook") are not historical facts and may be forward-looking
and, accordingly, such statements involve estimates, assumptions and
uncertainties which could cause actual results to differ materially from those
expressed in the forward-looking statements. Accordingly, any such statements
are qualified in their entirety by reference to, and are accompanied by, the
(iii)
<PAGE> 6
factors discussed throughout this Prospectus, and particularly in the risk
factors set forth herein under "Risk Factors." Among the key factors that have a
direct bearing on the Issuer's and the Guarantors' results of operations are the
substantial indebtedness and significant debt service obligations of the Issuer
and the Guarantors; changes in the airline industry, the airline catering
industry and the catering industry generally; acceptance of new business
initiatives; the Issuer's and the Guarantors' ability to implement their
business strategies and to successfully integrate acquired companies;
availability of key personnel; intensified competition; changes in general
economic conditions; fluctuations in foreign currency exchange rates; changes in
operating costs or volume; availability of funds; the loss of a significant
customer; product liability litigation; and changes in government regulation.
These and other factors are discussed herein under "Risk Factors," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
elsewhere in this Prospectus.
The risk factors described herein could cause actual results or outcomes to
differ materially from those expressed in any forward-looking statements of the
Issuer and the Guarantors or made by or on behalf of the Issuer and the
Guarantors, and investors, therefore, should not place undue reliance on any
such forward-looking statements. Further, any forward-looking statement speaks
only as of the date on which such statement is made, and the Issuer and the
Guarantors undertake no obligation to update any forward-looking statement or
statements to reflect events or circumstances after the date on which such
statement is made or to reflect the occurrence of unanticipated events. New
factors emerge from time to time, and it is not possible for management to
predict all of such factors. Further, management cannot assess the impact of
each such factor on the Issuer's and the Guarantors' businesses or the extent to
which any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
(iv)
<PAGE> 7
SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial data, including
the Financial Statements and notes thereto, appearing elsewhere in this
Prospectus. Unless the context otherwise requires, the "Company" refers to (i)
subsequent to September 29, 1995, the combined businesses of SC International
Services, Inc. ("SCIS" or the "Issuer") and Caterair International Corporation
("Caterair") and their subsidiaries and (ii) until September 29, 1995, the
business of Sky Chefs, Inc. ("Sky Chefs"). The term "Guarantors" refers to Sky
Chefs and Caterair International, Inc. (II) ("CII"), both wholly-owned
subsidiaries of the Issuer, certain other indirectly wholly-owned domestic
subsidiaries of SCIS, and Caterair.
THE COMPANY
The Company is the world's largest provider of airline catering services
with food service revenues (as defined herein) for the year ended December 31,
1996 of approximately $1.56 billion. Management believes that these revenues are
more than 50% higher than those of its next largest competitor in the airline
catering industry. The Company had Adjusted EBITDA (as defined herein) for the
twelve months ended September 30, 1997 of approximately $176 million. See
"-- Summary Unaudited Combined Pro Forma Financial Data" and "Selected
Historical Financial Data." The Company currently operates, directly or through
joint ventures, 139 kitchens located at or adjacent to 117 airports in 28
countries. Approximately 60% of the Company's food service revenues for the
twelve months ended September 30, 1997 were derived from United States
operations and 40% from international operations. On a daily basis, the Company
services an average of approximately 7,000 domestic and international airline
flights and prepares an average of 650,000 meals. SCIS is a Delaware
corporation, incorporated in 1995 in connection with the transactions which
effectuated the combination of the businesses of Sky Chefs and Caterair (the
"Combination"). See "Certain Transactions -- The Combination."
STRENGTHS
The Company believes that the following factors contribute to its position
as the world's market leader in the airline catering industry:
- - WORLDWIDE COVERAGE. The Company is the only airline caterer with a
significant operating presence in both the United States and international
markets. Management believes that the Company's global network of kitchens,
strategically located to service major international airlines, provides
significant competitive advantages. As a result, management believes the
Company is well positioned to take advantage of the anticipated growth in
international airline traffic and the higher and more stable food service
levels provided on long-haul flights (over two and one-half hours), some of
which offer up to three meals. Management also believes that the breadth of
the global network operated by the Company and its strategic marketing
partner, LSG Lufthansa Service GmbH ("LSG"), provides a significant
opportunity to attract international airlines with a single supplier
approach worldwide. The Company currently operates kitchens at or adjacent
to 25 international gateway airports, including substantially all of the
international gateway airports in the United States, Latin America and
Australia, and the Company or LSG also operate kitchens at a significant
number of international gateway airports in Europe, including London,
Paris, Frankfurt and Rome. See "Business -- Strategy -- Promote Single
Supplier Approach."
- - LSG STRATEGIC ALLIANCE. The Company's worldwide coverage is enhanced through
a strategic marketing alliance formed in 1993 with LSG, the airline
catering subsidiary of Lufthansa German Airlines ("Lufthansa"). The
alliance creates an international marketing network with kitchens at or
near 157 airports in 40 countries, including 29 international gateway
airports. The Company and LSG, while remaining separate companies,
generally conduct operations under the "LSG Lufthansa Service/SKY Chefs"
name and logo and organize their respective marketing activities with the
goal of achieving a coordinated approach to customers on a worldwide basis.
See "Business -- Strategy -- Promote Single Supplier Approach" and "Certain
Transactions -- LSG Lufthansa Service GmbH."
<PAGE> 8
- - DIVERSE AND STABLE CUSTOMER BASE. The Company provides airline catering
services to over 250 airlines, comprising substantially all of the world's
major airlines. The Company's five largest North American customers are
American Airlines ("American"), Delta Air Lines ("Delta"), Northwest
Airlines, United Airlines and Canadian Airlines and the Company's five
largest international customers are Qantas Airways, British Airways, Japan
Air Lines, Lufthansa and Cathay Pacific Airlines. The Company has conducted
business with each of these customers for at least ten years. Since its
acquisition from AMR Corporation ("AMR"), the parent of American, in 1986,
Sky Chefs has provided services to American under long-term contracts. The
current Sky Chefs contract with American runs through the end of 2003 and,
together with Caterair's contract with American, which runs through the end
of 2001, accounted for approximately 30% of the Company's 1996 food service
revenues. No other customer of the Company accounted for more than six
percent of its 1996 food service revenues. See "Risk Factors -- Dependence
on Key Customers" and "Business -- Customers -- Contracts."
- - LOW COST STRUCTURE. In 1992, Sky Chefs implemented an extensive operating
improvement plan which reduced annual operating costs by approximately $47
million in 1994 as compared with 1992. Due in large part to its operating
improvement plan, Sky Chefs increased EBITDA from $29 million in 1992 to
$59 million in 1994 and improved EBITDA as a percentage of revenues from
6.1% to 12.6% over the same period. As part of the Combination which was
consummated on September 29, 1995, management estimated that approximately
$55 million of net cost savings on an annualized basis were achievable by
the end of the third year of combined operations of Sky Chefs and Caterair.
Management believes that as of September 30, 1997 a significant portion of
these net cost savings have been achieved as evidenced by an increase in
the combined companies' Adjusted EBITDA from $123 million for the year
ended December 31, 1994 to $176 million for the twelve months ended
September 30, 1997 and an improvement in Adjusted EBITDA as a percentage of
the combined companies' revenues from 8.0% for the year ended December 31,
1994 to 11.0% for the twelve months ended September 30, 1997. See
"-- Summary Unaudited Combined Pro Forma Financial Data" and "Selected
Historical Financial Data." These net cost savings have been achieved
through, among other things, increasing labor productivity and reducing
labor and employee costs at certain of the kitchens formerly operated by
Caterair (the "Caterair Kitchens"); consolidating certain corporate level
management and administrative functions of Sky Chefs and Caterair; reducing
food waste spoilage and shrinkage at certain of the Caterair Kitchens;
eliminating redundant kitchens; and reducing other kitchen operating
expenses at certain of the Caterair Kitchens. In order to achieve these net
cost savings, the Company incurred approximately $52 million in
non-recurring costs through September 1997 principally relating to (i)
severance payments and other employee costs, (ii) external consulting
services primarily associated with the implementation of labor savings
programs and (iii) other items in connection with the integration of the
business of Sky Chefs and Caterair. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Business --
Strengths -- Low Cost Structure," "Selected Historical Financial Data --
SCIS" and "Certain Transactions -- The Combination."
STRATEGY
The Company's business strategy is to: (i) promote a single supplier
approach to the marketing of services through the Company's worldwide network
with LSG; (ii) expand international operations by pursuing new business at
existing locations and by expanding to new locations at international gateway
airports; (iii) develop non-airline catering opportunities; and (iv) achieve
additional net cost savings, while maintaining service quality.
- - PROMOTE SINGLE SUPPLIER APPROACH. The Company and LSG, through their
respective global kitchen networks, intend to continue to promote the
benefits that a global catering network can offer to worldwide airlines.
These benefits include enabling customers to streamline planning for meals
and service scheduling, as well as enhancing communications with airline
caterers and improving their capacity to monitor the quality of catering
services. This approach has enabled the Company and LSG to obtain long-term
contracts with Delta, Northwest Airlines and Canadian Airlines and the
Company and LSG
2
<PAGE> 9
intend to continue to pursue long-term contracts with other existing and
new customers. See "Business -- Strengths -- LSG Strategic Alliance" and
"Certain Transactions -- LSG Lufthansa Service GmbH."
- - EXPAND INTERNATIONAL OPERATIONS. The Company intends to continue to pursue
an international market development program by competing for new business
at international gateway airports where it currently operates, engaging in
strategic acquisitions of international airline caterers and stand-alone
kitchens, and entering into joint venture arrangements with airlines and
other parties in markets outside the United States. In particular, the
Company plans to focus on the development of opportunities at international
gateway airports. Such a plan is expected to provide the Company with the
benefit of higher and more stable food service levels from long-haul
flights and greater access to international airline traffic from such
airports. During 1997, the Company acquired a 49% interest in an airline
catering business in Mexico and acquired the airline catering business of
Air New Zealand at Auckland, Wellington, Christchurch and Rarotonga. Since
September 1995, the Company has also acquired airline catering businesses
in Bogota, Colombia, Asuncion, Paraguay and Guayaquil, Ecuador through an
existing joint venture.
- - DEVELOP NON-AIRLINE CATERING OPPORTUNITIES. The Company is pursuing a
strategy to sell food services to non-airline customers in order to further
diversify its revenue base. The Company will focus on developing the
business of preparing and delivering meals from its kitchens to
supermarkets and convenience stores in the United States and employee
cafeterias at industrial plants and office buildings in Latin America. The
Company currently produces fresh food products in two major geographic
markets for The Southland Corporation for sale in 7-Eleven stores and is
operating a pilot program with a subsidiary of The Sara Lee Corporation for
the production of home meal solutions. The United States market for
supermarket and convenience store home meal solutions was approximately $8
billion in 1996 and is expected to grow rapidly as dual income families
seek alternatives to in-home preparation of meals and restaurant dining.
The Company believes that these alternative markets, particularly the
United States home meal solutions market, represent substantial future
opportunities. See "Business -- Non-Airline Catering Operations."
- - ACHIEVE ADDITIONAL NET COST SAVINGS. The Company will continue to implement
its operating improvement plan in an effort to achieve additional net cost
savings. See "-- Low Cost Structure."
PRINCIPAL STOCKHOLDERS
The Company is controlled by Onex Corporation ("Onex") and its affiliates.
Onex, based in Toronto, Canada, is a publicly listed (on the Toronto Stock
Exchange and the Montreal Exchange) diversified holding company that operates
through autonomous subsidiaries and strategic partnerships. In addition to its
interests in the Company, as of September 30, 1997, Onex had investments in a
broad range of companies, including Celestica Inc., ProSource, Inc., Tower
Automotive, Inc., Dura Automotive Systems, Inc., Scotsman Industries, Inc.,
Phoenix Pictures Inc., BC Sugar Refinery and Vencap, Inc. Onex had consolidated
revenues of C$10.6 billion for the twelve months ended September 30, 1997 and
consolidated assets of C$5.3 billion at September 30, 1997.
LSG is the airline catering subsidiary of Lufthansa. In connection with the
formation of the strategic marketing alliance with Sky Chefs, LSG acquired from
stockholders of Onex Food Services, Inc. ("OFSI"), the parent of SCIS, a 23.3%
interest in OFSI for $75 million. See "Certain Transactions -- LSG Lufthansa
Service GmbH." Neither Onex nor LSG is an obligor on the Notes.
HISTORICAL BACKGROUND
Sky Chefs was formed in 1941 as the captive airline catering subsidiary of
American and was acquired in 1986 from AMR, the parent of American, by Onex
Capital Corporation ("Onex Capital"), the indirect parent of OFSI and an
affiliate of Onex, and members of Sky Chefs' management.
Marriott Corporation ("Marriott") founded the airline catering industry in
1937 when it began providing meals on commercial airline flights in the
Washington, D.C. area. Caterair acquired Marriott's airline catering business in
December 1989 through a management-led buy-out.
3
<PAGE> 10
On September 29, 1995, the Sky Chefs and Caterair businesses were combined,
creating the world's largest airline catering business. See "Certain
Transactions -- The Combination."
The principal executive offices of SCIS and the Guarantors (other than CII)
are located at 524 East Lamar Blvd., Arlington, Texas 76011 (telephone number
(817) 792-2123). The principal executive offices of CII are located at 6550 Rock
Spring Drive, Bethesda, Maryland 20817 (telephone number (301) 897-7800).
THE REFINANCING
On August 28, 1997, the Issuer and the Guarantors consummated an offering
of the Private Notes and the related Guarantees in a transaction exempt from the
registration requirements of the Securities Act (the "Offering"). The price to
investors of the Private Notes was $299.6 million in the aggregate and the
principal amount of the Private Notes is $300.0 million in the aggregate.
The net proceeds to SCIS from the Offering, after deduction of discounts
and offering expenses, were approximately $289.9 million. SCIS used $209.4
million of the net proceeds to repay and retire all of its outstanding term loan
indebtedness under the Credit Agreement, dated as of September 29, 1995, among
SCIS, Caterair, Caterair Holdings Corporation ("Caterair Holdings"), the parent
of Caterair, OFSI and the lenders named therein (the "Old Credit Agreement").
The indebtedness of SCIS under the Old Credit Agreement which was repaid had
maturities ranging from September 15, 1997 to September 15, 2003 and accrued
interest at fluctuating rates (an average weighted rate of 8.7% per year at
August 21, 1997).
On August 25, 1997, SCIS commenced a tender offer for all of its $125.0
million principal amount of 13% Senior Subordinated Notes due 2005 (the
"Existing Notes"). In connection therewith, SCIS offered to purchase all of the
Existing Notes at a price equal to 117% of the principal amount thereof plus
accrued and unpaid interest to the date of purchase and solicited consents to
certain amendments (the "Existing Indenture Amendments") to the Indenture
relating to the Existing Notes from the holders thereof (collectively, the
"Offer to Purchase"). Holders of Existing Notes who consented to the Existing
Indenture Amendments received a payment equal to 2% of the principal amount of
the Existing Notes for which a consent was delivered. Holders of the Existing
Notes were not permitted to tender their Existing Notes without consenting to
the Existing Indenture Amendments or to consent to the Existing Indenture
Amendments without tendering their Existing Notes.
The Offer to Purchase expired on September 24, 1997. All of the Existing
Notes were tendered by the holders thereof and accepted for payment by SCIS in
connection with the Offer to Purchase. SCIS paid $148.75 million (excluding
$7.85 million of accrued interest) in the aggregate in consideration of the
repurchase of the Existing Notes and the related consents. SCIS used
approximately $80.50 million of the net proceeds from the Offering and
approximately $68.25 million of borrowings under the Term Loan Agreement (as
defined herein) to fund such payments.
In connection with the Offering, SCIS, certain other parties and certain
lenders entered into a senior secured revolving credit agreement (the "Revolving
Credit Agreement"), and Caterair, SCIS, certain other parties and certain
lenders entered into a senior secured credit agreement (the "Term Loan
Agreement," and together with the Revolving Credit Agreement, the "Senior Bank
Financing"). See "Description of Certain Indebtedness -- Senior Bank Financing."
Concurrently with the Offering, Caterair, a Guarantor of the Notes, repaid
and retired all of its outstanding indebtedness under the Old Credit Agreement
(approximately $155.9 million) with borrowings under the Term Loan Agreement
(the "Caterair Refinancing"). See "Description of Certain Indebtedness -- Senior
Bank Financing."
4
<PAGE> 11
CORPORATE STRUCTURE
The following chart summarizes the ownership structure of OFSI, SCIS, Sky
Chefs, CII, Caterair and Caterair Holdings and certain of their subsidiaries,
and certain relationships among such parties.
[Ownership Structure Chart]
- ---------------
(1) Represents shares (including shares acquirable upon the exercise of the OFSI
Warrants (as defined herein)) indirectly owned by Onex and shares for which
Onex has voting control.
(2) Onex indirectly also holds in excess of 25% of the shares of Class A
non-voting common stock of Caterair Holdings.
(3) Certain indirectly wholly-owned domestic subsidiaries of SCIS are Guarantors
of the Notes. See "Description of Notes -- Unconditional Joint and Several
Senior Subordinated Guarantees."
6
<PAGE> 12
THE EXCHANGE OFFER
The Exchange Offer......... The Issuer is hereby offering to exchange $1,000
principal amount of Exchange Notes for each $1,000
principal amount of Private Notes that are properly
tendered and accepted. The Issuer will issue
Exchange Notes on or as promptly as practicable
after the Expiration Date. As of the date hereof,
there is $300,000,000 aggregate principal amount of
Private Notes outstanding. See "The Exchange
Offer." The Exchange Offer is not conditioned upon
any minimum aggregate principal amount of Private
Notes being tendered for exchange.
Based upon interpretations by the staff of the
Commission set forth in no-action letters issued to
third parties unrelated to the Issuer, the Issuer
believes that the Exchange Notes issued pursuant to
the Exchange Offer in exchange for Private Notes
may be offered for resale, resold and otherwise
transferred by a holder thereof (other than (i) any
person who is an "affiliate" of the Issuer within
the meaning of Rule 405 under the Securities Act or
(ii) a broker-dealer who purchases Notes from the
Issuer to resell pursuant to Rule 144A under the
Securities Act or any other available exemption
under the Securities Act) without compliance with
the registration and prospectus delivery provisions
of the Securities Act; provided that such holder is
acquiring the Exchange Notes in the ordinary course
of its business and such holder is not engaging,
and has no intention to engage, and has no
arrangement or understanding with any person to
participate, in the distribution of the Exchange
Notes. Holders of Private Notes wishing to accept
the Exchange Offer must represent to the Issuer
that such conditions have been met. Each broker-
dealer that will receive Exchange Notes for its own
account in exchange for Private Notes, where such
Private Notes were acquired by such broker-dealer
as a result of market-making or other trading
activities, must acknowledge in the Letter of
Transmittal that it will deliver a prospectus in
connection with any resale of such Exchange Notes;
however by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to
time, may be used by such a broker-dealer in
connection with resales of Exchange Notes received
in exchange for Private Notes acquired by such
broker-dealer as a result of market-making or other
trading activities. See "The Exchange
Offer -- Resale of the Exchange Notes" and "Plan of
Distribution."
In addition, to comply with the securities laws of
certain jurisdictions, if applicable, the Exchange
Notes may not be offered or sold unless they have
been registered or qualified for sale in such
jurisdictions or an exemption from registration or
qualification is available and complied with. The
Issuer and the Guarantors have agreed, pursuant to
the Registration Rights Agreement (subject to
certain specified limitations set forth therein),
to use their reasonable best efforts to register or
qualify the Exchange Notes for offer or sale under
the securities or blue sky laws of such
jurisdictions as any holder of the Notes reasonably
requests in writing.
Registration Rights
Agreement.................. The Private Notes and the related Guarantees were
sold by the Issuer and the Guarantors to the
Initial Purchasers in a transaction exempt from the
registration requirements of the Securities Act on
August 28, 1997 pursuant to a Purchase Agreement,
dated August 22, 1997, by and
7
<PAGE> 13
among the Issuer, the Guarantors and the Initial
Purchasers (the "Purchase Agreement"). Pursuant to
the Purchase Agreement, the Issuer, the Guarantors
and the Initial Purchasers entered into a
Registration Rights Agreement, dated August 28,
1997, which grants the holders of the Private Notes
certain exchange and registration rights. The
Exchange Offer is intended to satisfy such rights,
which terminate upon consummation of the Exchange
Offer. The holders of Exchange Notes will not be
entitled to any exchange or registration rights
with respect to the Exchange Notes. See "The
Exchange Offer -- Termination of Certain Rights."
Expiration Date............ The Exchange Offer will expire at 5:00 p.m., New
York City time, on , 1997, unless the Exchange
Offer is extended by the Issuer in its sole
discretion, in which case the term "Expiration
Date" shall mean the latest date and time to which
the Exchange Offer is extended. See "The Exchange
Offer -- Expiration Date; Extensions; Termination."
Conditions to the
Exchange Offer........... The Exchange Offer is subject to certain customary
conditions, certain of which may be waived by the
Issuer. See "The Exchange Offer -- Certain
Conditions to the Exchange Offer." The Issuer
reserves the right to terminate or amend the
Exchange Offer at any time prior to the Expiration
Date upon the occurrence of any such conditions.
Procedures for Tendering
Private Notes.............. Each holder of Private Notes wishing to accept the
Exchange Offer must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver such
Letter of Transmittal, or such facsimile, together
with the Private Notes and any other required
documentation to The Bank of New York, as exchange
agent (the "Exchange Agent"), at the address set
forth herein. Private Notes may be physically
delivered, but physical delivery is not required if
a confirmation of a book-entry transfer of such
Private Notes to the Exchange Agent's account at
The Depository Trust Company ("DTC" or the
"Depositary") is delivered in a timely fashion. By
executing the Letter of Transmittal, each holder of
Private Notes will represent to and agree with the
Issuer that, among other things, (i) the Exchange
Notes to be acquired pursuant to the Exchange Offer
are being acquired in the ordinary course of
business of the person receiving such Exchange
Notes, whether or not such person is the holder,
(ii) that neither the holder nor any such other
person is engaged in, or intends to engage in, or
has an arrangement or understanding with any person
to participate in, the distribution of the Exchange
Notes, and (iii) that neither the holder nor any
such other person is an "affiliate" of the Issuer
within the meaning of Rule 405 under the Securities
Act (or, if such holder or other person is an
affiliate, that it will comply with the
registration and prospectus delivery requirements
of the Securities Act to the extent applicable).
Each broker-dealer that will receive Exchange Notes
for its own account in exchange for Private Notes,
where such Private Notes were acquired by such
broker-dealer as a result of market-making or other
trading activities, must acknowledge in the Letter
of Transmittal that it will deliver a prospectus in
connection with any resale of such Exchange Notes;
however, by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the
meaning of the
8
<PAGE> 14
Securities Act. See "The Exchange
Offer -- Procedures for Tendering" and "Plan of
Distribution."
Special Procedures for
Beneficial Owner........... Any beneficial owner whose Private Notes are held
through a broker, dealer, commercial bank, trust
company or other nominee and who wishes to tender
such Private Notes in the Exchange Offer should
contact such intermediary promptly and instruct
such intermediary to tender on such beneficial
owner's behalf. See "The Exchange Offer --
Procedures for Tendering."
Guaranteed Delivery
Procedures............... Holders of Private Notes who wish to tender their
Private Notes and whose Private Notes are not
immediately available or who cannot deliver their
Private Notes, the Letter of Transmittal or any
other documentation required by the Letter of
Transmittal to the Exchange Agent prior to the
Expiration Date, must tender their Private Notes
according to the guaranteed delivery procedures set
forth under "The Exchange Offer -- Guaranteed
Delivery Procedures."
Acceptance of the Private
Notes and Delivery of the
Exchange Notes........... Subject to the satisfaction or waiver of the
conditions to the Exchange Offer, the Issuer will
accept for exchange any and all Private Notes that
are properly tendered in the Exchange Offer prior
to the Expiration Date. The Exchange Notes issued
pursuant to the Exchange Offer will be delivered on
the earliest practicable date following the
Expiration Date. See "The Exchange Offer -- Terms
of the Exchange Offer."
Withdrawal Rights.......... Tenders of Private Notes may be withdrawn at any
time prior to the Expiration Date. See "The
Exchange Offer -- Withdrawal of Tenders."
Certain Federal Income Tax
Considerations........... For a discussion of certain federal income tax
considerations relating to the exchange of the
Private Notes for the Exchange Notes, see "Certain
Federal Income Tax Considerations -- Tax
Consequences of the Exchange Offer."
Exchange Agent............. The Bank of New York is serving as the Exchange
Agent in connection with the Exchange Offer. See
"The Exchange Offer -- Exchange Agent." The Bank of
New York also serves as trustee under the
Indenture.
9
<PAGE> 15
THE NOTES
The Exchange Offer applies to $300,000,000 aggregate principal amount of
the Private Notes. The form and terms of the Exchange Notes are identical in all
material respects to the form and terms of the Private Notes except that the
Exchange Notes will have been registered under the Securities Act and,
therefore, the Exchange Notes will not bear legends restricting the transfer
thereof and holders of the Exchange Notes will not be entitled to any of the
registration rights of holders of the Private Notes under the Registration
Rights Agreement (or related rights to certain interest payments upon the
failure of the Issuer to fulfill certain conditions set forth in the
Registration Rights Agreement), which rights will terminate upon consummation of
the Exchange Offer. The Exchange Notes will evidence the same indebtedness as
the Private Notes (which they replace), and will be issued under, and be
entitled to the benefits of, the Indenture. The Private Notes and the Exchange
Notes will be considered collectively to be a single class for all purposes
under the Indenture. See "Description of Notes."
Issuer..................... SC International Services, Inc., a Delaware
corporation.
Securities Offered......... $300.0 million aggregate principal amount of 9 1/4%
Senior Subordinated Notes due 2007.
Maturity Date.............. September 1, 2007.
Interest Rate and
Payment Dates............ The Notes bear interest at a rate of 9 1/4% per
annum. Interest will accrue from the date of
original issuance and will be payable semi-annually
on each March 1 and September 1, commencing on
March 1, 1998.
Sinking Fund............... None.
Optional Redemption........ The Notes will be redeemable at the option of the
Issuer at any time, in whole or in part, on or
after September 1, 2002, at the redemption prices
set forth herein (payable in cash), plus accrued
interest to the date of redemption. In addition, at
any time on or prior to September 1, 2000, the
Issuer may redeem in the aggregate up to $105.0
million in principal amount of the Notes with the
net cash proceeds of one or more Public Equity
Offerings at the redemption price set forth herein
(payable in cash), plus accrued interest to the
date of redemption; provided that (i) at least
$195.0 million in principal amount of the Notes
remains outstanding immediately after any such
redemption and (ii) such redemption is effected not
more than 60 days after the consummation of such
Public Equity Offering. See "Description of Notes
-- Redemption."
Change of Control.......... If a Change of Control occurs, the Issuer will be
required to offer to repurchase the Notes at a
purchase price equal to 101% of the principal
amount thereof, plus accrued interest to the date
of repurchase. Prior to making any such offer to
repurchase the Notes, the Issuer and/or Caterair
are required to repay in full all indebtedness
under the Senior Bank Financing and the Issuer may
be required to repay other Senior Debt of the
Issuer, the terms of which require repayment upon a
Change of Control, or obtain the requisite consents
under the Senior Bank Financing and any such other
Senior Debt to consummate such offer. At September
30, 1997, the aggregate amount of outstanding
Senior Debt of the Issuer (including borrowings and
guarantees under the Senior Bank Financing) was
approximately $250.0 million (excluding advances by
Caterair to SCIS and $24.7 million of letters of
credit). After repayment of all indebtedness under
the Senior Bank Financing and all such other Senior
Debt, there can be no assurance that the Issuer
would have sufficient funds available or would be
permitted under its other indebtedness agreements
to repurchase the Notes upon the occurrence of a
10
<PAGE> 16
Change of Control. See "Risk Factors -- Impact of a
Change of Control" and "Description of Notes --
Change of Control."
Offers to Purchase......... The Issuer and, under certain circumstances,
Caterair, will be required to offer to repurchase
Notes with the net cash proceeds of certain asset
sales at a purchase price equal to 100% of the
principal amount thereof, plus accrued interest to
the date of repurchase. See "Description of Notes
-- Certain Covenants -- Limitation on Asset Sales."
Unconditional Joint and
Several Senior Subordinated
Guarantees............... The Private Notes are, and the Exchange Notes will
be, unconditionally guaranteed (the "Guarantees")
by Sky Chefs, CII, certain other indirectly
wholly-owned domestic subsidiaries of SCIS, and
Caterair, on a joint and several senior
subordinated basis. The Guarantees are general
unsecured obligations of the Guarantors, and are
subordinated in right of payment to all existing
and future Guarantor Senior Debt. See "Description
of Notes -- Unconditional Joint and Several Senior
Subordinated Guarantees."
Ranking.................... The Notes are general unsecured obligations of the
Issuer, and are subordinated in right of payment to
all existing and future Senior Debt of the Issuer,
including the Issuer's obligations under the Senior
Bank Financing. At September 30, 1997, the
aggregate amount of outstanding Senior Debt of the
Issuer (including borrowings and guarantees under
the Senior Bank Financing) was approximately $250.0
million (excluding advances by Caterair to SCIS and
$24.7 million of letters of credit) and the Issuer
had approximately $65.3 million available to be
borrowed pursuant to the Revolving Credit
Agreement, and the Guarantors had approximately
$31.5 million of Guarantor Senior Debt outstanding
(excluding the loan by SCIS to Caterair and the
Guarantors' borrowings and guarantees under the
Senior Bank Financing). In addition, the Notes are
structurally subordinated to all liabilities of the
Issuer's subsidiaries (other than subsidiaries
which are Guarantors) because these liabilities
have priority over the claims of the Issuer as the
stockholder of such subsidiaries. Accordingly, any
right of the Issuer to receive assets of any of its
subsidiaries (other than a subsidiary which is a
Guarantor) upon such subsidiary's liquidation or
reorganization (and the consequent right of the
holders of Notes to participate in those assets)
will be subordinated to the claims of such
subsidiary's creditors. The Senior Bank Financing
also is secured by substantially all of the assets
of the Issuer and Caterair and their respective
domestic subsidiaries. See "Description of Notes --
Subordination."
Certain Covenants.......... The Indenture governing the Notes contains
covenants which, among other things, impose certain
limitations on the ability of the Issuer and its
Restricted Subsidiaries (as defined herein) and
Caterair and its subsidiaries to incur additional
indebtedness, incur liens, pay dividends or make
certain other restricted payments, consummate
certain asset sales, enter into certain
transactions with affiliates, merge or consolidate
with any other person or sell, assign, transfer,
lease, convey or otherwise dispose of all or
substantially all of the assets of the Issuer. Upon
consummation of the Exchange Offer, the Issuer will
be in material compliance with all financial and
operating covenants contained in its principal
indebtedness agreements.
11
<PAGE> 17
For additional information regarding the Notes and the Guarantees, see
"Description of Notes."
USE OF PROCEEDS
The Issuer will not receive any proceeds from, and has agreed to bear the
expenses of, the Exchange Offer.
RISK FACTORS
See "Risk Factors" for a discussion of certain risks that investors should
consider in connection with the Exchange Offer and an investment in the Exchange
Notes.
11
<PAGE> 18
SUMMARY UNAUDITED COMBINED PRO FORMA FINANCIAL DATA
The following summary unaudited combined pro forma financial data of SCIS
(including consolidated financial data for Sky Chefs and CII) and Caterair for
the periods set forth below are based on the historical financial statements of
SCIS and Caterair. The information under the caption Combined Financial Data has
been adjusted to give effect to the Combination as if it had occurred on January
1, 1994. The information under the caption Offering Pro Forma Data has been
adjusted to give effect to the Offering and the application of the net proceeds
therefrom, SCIS' Offer to Purchase and the Senior Bank Financing, including the
Caterair Refinancing, as if such transactions had occurred on January 1, 1996.
See "The Refinancing" and "Capitalization." Management believes that the
following presentation will assist potential investors in evaluating the ability
of SCIS and the Guarantors to meet debt service requirements and other
obligations.
The summary unaudited combined pro forma financial data does not
necessarily reflect the results of operations or the financial position of SCIS
and the Guarantors that actually would have resulted had the Combination, the
Offering, SCIS' Offer to Purchase and the Senior Bank Financing, including the
Caterair Refinancing, been consummated as of the dates referred to above.
Accordingly, such data should not be viewed as fully representative of the past
performance of SCIS and the Guarantors or indicative of future results. The
summary unaudited combined pro forma financial data has not been prepared in
accordance with generally accepted accounting principles. See "The Refinancing,"
"Capitalization," "Selected Historical Financial Data," "Certain
Transactions -- The Combination" and the Financial Statements and notes thereto
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
---------------------------------------- -------------------------
1994 1995 1996 1996 1997 1997
---------- ---------- ---------- ---------- ---------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
TWELVE
<-> MONTHS ENDED
SEPTEMBER
30,
------------
COMBINED FINANCIAL DATA(1):
Food service revenues(2)........... $1,534,185 $1,541,162 $1,559,555 $1,172,084 $1,200,687 $1,588,158
EBITDA(3)(4)....................... 123,151(5) 76,574 119,628 85,398 119,331 153,561
Adjusted EBITDA(3)(4).............. 123,151 128,418 149,989 107,295 133,105 175,799
Net cash flows from:
Operating activities............. 23,672 15,453 70,847 75,898 (5,814) (10,865)
Investing activities............. (108,873) (59,539) (39,200) 6,733 (54,217) (70,418)
Financing activities............. 65,543 (28,339) 3,891 (2,566) (7,763) (1,306)
Depreciation and amortization...... 51,046 50,118 46,434 34,179 37,115 48,608
Capital expenditures............... 46,379 26,802 39,200 23,100 19,000 35,100
OFFERING PRO FORMA DATA(6):
Cash interest expense(7)........... -- -- $ 57,643 $ 43,283 $ 44,550 $ 58,910
Ratio of Adjusted EBITDA to cash
interest expense(7).............. -- -- 2.6x 2.5x 3.0x 2.9x
Ratio (deficiency) of earnings to
fixed charges(8)................. -- -- 1.2x 1.1x 1.5x 1.4x
Net combined debt(9)............... -- -- -- -- -- $ 553,043
Ratio of net combined debt to
Adjusted EBITDA.................. -- -- -- -- -- 3.2x
OPERATING STATISTICS(10):
Number of flights
serviced(000's).................. 2,590 2,572 2,567 1,936 1,901 2,532
Number of airports served at end of
period........................... 103 100 102 102 117 117
</TABLE>
- ---------------
(1) Data set forth under the caption Combined Financial Data has been adjusted
to give effect to the Combination as if it had occurred on January 1, 1994.
(2) Represents pro forma revenues of SCIS and Caterair (including revenues from
discontinued operations of Caterair resulting from the Combination) and
excludes lease, license and other revenues of the Guarantors of $19.6
million and $79.4 million for the years ended December 31, 1995 and 1996,
$58.9 million and $56.8 million for the nine months ended September 30,
1996 and 1997, and $77.3 million for the twelve months ended September 30,
1997, respectively. Food service revenues exclude certain variable rent
costs historically netted against revenues by Caterair but classified as
cost of operations by Sky Chefs of $42.4 million and $28.8 million for the
years ended December 31, 1994 and 1995, respectively.
(3) EBITDA represents earnings before interest expense, provision (benefit) for
income taxes, depreciation and amortization and other (income) expense.
Adjusted EBITDA excludes costs associated with the Combination including
consulting, transfer, severance and relocation costs and other transition
costs including a customer consent fee. EBITDA and Adjusted EBITDA are
presented because management
12
<PAGE> 19
believes they provide useful information regarding SCIS' and the
Guarantors' ability to incur and/or service debt. Neither EBITDA nor
Adjusted EBITDA should be considered in isolation nor as a substitute for
operating income, cash flows from operating activities and other income or
cash flow statement data prepared in accordance with generally accepted
accounting principles or as a measure of SCIS' and the Guarantors'
profitability or liquidity.
Calculation of Adjusted EBITDA for the periods presented is as follows:
<TABLE>
<CAPTION>
TWELVE
MONTHS ENDED
NINE MONTHS ENDED SEPTEMBER
YEAR ENDED DECEMBER 31, SEPTEMBER 30, 30,
---------------------------------- --------------------- ------------
1994 1995 1996 1996 1997 1997
-------- -------- -------- -------- -------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
EBITDA................................ $123,151 $76,574 $119,628 $ 85,378 $119,331 $153,561
Adjustments:
Integration expenses................ -- 8,200 30,361 21,897 13,774 22,238
Idle kitchen accruals............... -- 17,229 -- -- -- --
Write-down of investment in
subsidiary........................ -- 3,215 -- -- -- --
Other transition expenses........... -- 23,200 -- -- -- --
-------- -------- -------- -------- -------- --------
Adjusted EBITDA....................... $123,151 $128,418 $149,989 $107,295 $133,105 $175,799
======== ======== ======== ======== ======== ========
</TABLE>
(4) EBITDA and Adjusted EBITDA reflect pro forma adjustments for combined
operations which are not reflected in the historical financial information
of SCIS and Caterair included elsewhere in this Prospectus. Net pro forma
adjustments of $0.4 million, $0.4 million and $(3.3) million for the years
ended December 31, 1994, 1995 and 1996, $(2.3) million for each of the nine
month periods ended September 30, 1996 and 1997, and $(3.3) million for the
twelve months ended September 30, 1997, respectively, reflect the exclusion
of non-compete payments made by SCIS to Caterair, reductions in rent
expense related to certain facilities which in January 1996 were deemed to
be redundant as a result of the Combination and increases in cost of
operations attributable to the restructuring of a joint venture agreement.
(5) During 1996 the Company determined that, as a result of the Combination,
certain facilities were redundant. Therefore, pro forma combined EBITDA as
reported in SCIS' prospectus for the Existing Notes, dated September 25,
1995, has been increased by $4.7 million for the year ended December 31,
1994 to reflect a reduction in rent expense related to these facilities.
(6) Data set forth under the caption Offering Pro Forma Data has been adjusted
to give effect to the Offering and the application of the proceeds
therefrom, SCIS' Offer to Purchase (pursuant to which all of the $125.0
million in aggregate principal amount of the Existing Notes were tendered
and retired) and the Senior Bank Financing, including the Caterair
Refinancing, as if such transactions had occurred on January 1, 1996. See
"The Refinancing" and "Capitalization."
(7) Excludes amortization of deferred financing fees and other noncash interest
expense of $1.5 million for the year ended December 31, 1996, $1.1 million
and $1.6 million for the nine months ended September 30, 1996 and 1997, and
$2.0 million for the twelve months ended September 30, 1997, respectively.
(8) For purposes of computing the ratio (deficiency) of earnings to fixed
charges, "earnings" consist of the combined earnings (loss) before income
taxes and fixed charges before capitalized interest of SCIS and Caterair.
"Fixed charges" consist of the combined interest expense and the combined
portion of operating lease rental payments (29%) deemed representative of
the interest factor of SCIS and Caterair.
(9) Net combined debt of SCIS and Caterair includes $560.0 million in combined
debt of SCIS and Caterair, $31.5 million in combined capital lease
obligations of SCIS and Caterair less $38.5 million of combined cash of
SCIS and Caterair. Net combined debt excludes $24.7 million of letters of
credit, a loan from SCIS to Caterair of $44.1 million at September 30,
1997, advances by Caterair to SCIS of $13.0 million at September 30, 1997
and SCIS' and its subsidiaries' guarantees of Caterair's indebtedness and
Caterair's guarantees of SCIS' indebtedness.
(10) Operating statistics are management estimates for the periods presented and
represent combined pro forma amounts after giving effect to the Combination
as if it had occurred on January 1, 1994.
13
<PAGE> 20
SUMMARY HISTORICAL FINANCIAL DATA
SCIS
The following table presents selected historical financial data of SCIS as
of and for each of the five years ended December 31, 1996, and the nine months
ended September 30, 1996 and 1997. For all periods presented prior to the
Combination, the consolidated financial information only reflects the
consolidated financial position, results of operations and cash flows of Sky
Chefs. The information presented for each of the five years ended December 31,
1996, except for the operating statistics, has been derived from the financial
statements of SCIS as audited by Coopers & Lybrand L.L.P., independent
accountants. The information presented for the nine months ended September 30,
1996 and 1997 has been derived from unaudited interim financial statements of
SCIS and, in the opinion of management, reflects a fair presentation of SCIS'
financial information. The following information should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements of SCIS and notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------------- -----------------------
1992 1993 1994 1995(1) 1996(1) 1996(1) 1997(1)
-------- -------- -------- --------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues.................................... $465,902 $458,317 $468,608 $ 739,102 $1,529,816 $1,142,102 $1,198,190
Cost of operations.......................... 411,726 391,669 388,276 634,375 1,352,359 1,014,782 1,046,467
-------- -------- -------- --------- ---------- ---------- ----------
Gross profit................................ 54,176 66,648 80,332 104,727 177,457 127,320 151,723
Depreciation and amortization............. 14,364 17,144 15,503 21,338 37,928 27,504 31,245
Selling, general and administrative....... 18,025 16,085 17,125 28,076 48,854 35,761 37,594
Integration expenses...................... -- -- -- 28,644 30,361 21,897 13,774
Other costs and expenses.................. 7,642 5,667 4,345 29,882 23,721 17,251 12,105
-------- -------- -------- --------- ---------- ---------- ----------
Operating income (loss)..................... 14,145 27,752 43,359 (3,213) 36,593 24,907 57,005
Interest income........................... (669) (507) (204) (2,458) (7,896) (5,303) (4,789)
Interest expense.......................... 8,223 6,703 5,748 19,715 50,431 38,870 39,589
Other (income) expense.................... 934 948 1,225 2,099 4,679 4,785 8,107
-------- -------- -------- --------- ---------- ---------- ----------
Earnings (loss) before income taxes......... 5,657 20,608 36,590 (22,569) (10,621) (13,445) 14,098
Provision (benefit) for income taxes...... 1,075 7,033 13,385 (6,525) 420 (4,800) 11,235
Extraordinary loss, net of tax(2)......... (15,573) -- -- -- -- -- (20,745)
-------- -------- -------- --------- ---------- ---------- ----------
Net income (loss)........................... $(10,991) $13,575 $23,205 $ (16,044) $ (11,041) $ (8,645) $ (17,882)
======== ======== ======== ========= ========== ========= =========
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets................................ $222,046 $211,903 $243,016 $ 828,793 $ 853,456 $ 866,500 $ 888,866
Total debt and capital lease obligations.... 52,811 44,582 46,370 392,059 380,229 384,818 429,716
Shareholder's equity........................ 31,214 26,255 49,460 54,570 46,731 44,963 29,141
OTHER FINANCIAL DATA:
EBITDA(3)................................... $28,509 $44,896 $58,862 $ 18,125 $ 74,521 $ 52,411 $ 88,250
EBITDA margin(4)............................ 6.1% 9.8% 12.6% 2.5% 4.9% 4.6% 7.4%
Adjusted EBITDA(3).......................... $28,509 $44,896 $58,862 $ 64,769 $ 104,882 $ 74,308 $ 102,024
Adjusted EBITDA margin(4)................... 6.1% 9.8% 12.6% 8.8% 6.9% 6.5% 8.5%
Net cash flows from:
Operating activities...................... $ 2,600 $31,329 $21,159 $ 59,108 $ 39,182 $ 44,332 $ (22,524)
Investing activities...................... (9,298) (8,807) (23,357) (259,145) (31,352) 14,866 (41,039)
Financing activities...................... 6,114 (26,585) 9,233 242,411 (7,001) (11,355) 46,232
Cash interest expense(5).................... 8,223 6,703 5,748 19,190 47,515 27,400 37,646
Capital expenditures........................ 10,717 6,032 11,775 9,575 36,900 20,699 18,962
Ratio of Adjusted EBITDA to cash interest
expense(5)................................ 3.4x 2.2 x 2.7x 2.7x
Ratio (deficiency) of earnings to fixed
charges(6)................................ 1.3 x 2.2 x 3.2 x $ (22,569) $ (10,621) $ (13,445) 1.2x
Pro forma ratio (deficiency) of earnings to
fixed charges(6).......................... -- -- -- -- $ (6,719) $ (11,424) 1.3x
OPERATING STATISTICS(7):
Number of flights serviced (000's).......... 751 720 740 2,572 2,567 1,936 1,901
Number of airports served at end of
period.................................... 32 30 32 100 102 102 117
</TABLE>
- ---------------
(1) Results for the years ended December 31, 1995 and 1996 and for the nine
months ended September 30, 1996 and 1997 include the results of operations
acquired, licensed, leased and subleased from Caterair in connection with
the Combination consummated on September 29, 1995. See "Certain
Transactions -- The Combination."
14
<PAGE> 21
(2) Effective January 1, 1992, Sky Chefs adopted the provisions of Statement of
Financial Accounting Standards No. 106, "Accounting for Postretirement
Benefits Other Than Pensions," which required the accrual of postretirement
benefits other than pensions during the employees' service with Sky Chefs.
The cumulative effect of this change in accounting principle was a decrease
in net income of $15.6 million in 1992. The extraordinary loss of $20.7
million for the nine months ended September 30, 1997 was the result of the
write off of $6.4 million of deferred financing fees (net of a $4.3 million
tax benefit) due to the retirement of SCIS' term loan indebtedness under the
Old Credit Agreement and the Existing Notes and the premium paid to retire
the Existing Notes of $14.3 million (net of a $9.5 million tax benefit).
(3) EBITDA represents earnings before interest expense, provision (benefit) for
income taxes, depreciation and amortization and other (income) expense.
Adjusted EBITDA excludes costs associated with the Combination including
consulting, transfer, severance and relocation costs and other transition
costs including a customer consent fee. EBITDA and Adjusted EBITDA are
presented because management believes they provide useful information
regarding SCIS' ability to incur and/or service debt. Neither EBITDA nor
Adjusted EBITDA should be considered in isolation nor as a substitute for
operating income, cash flows from operating activities and other income or
cash flow statement data prepared in accordance with generally accepted
accounting principles or as a measure of SCIS' profitability or liquidity.
Calculation of Adjusted EBITDA for the periods presented is as follows:
<TABLE>
<CAPTION>
NINE
MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------- -------------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- -------- ------- --------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
EBITDA......................................... $28,509 $44,896 $58,862 $18,125 $ 74,521 $52,411 $ 88,250
Adjustments:
Integration expenses......................... -- -- -- 8,200 30,361 21,897 13,774
Idle kitchen accruals........................ -- -- -- 17,229 -- -- --
Write-down of investment in subsidiary....... -- -- -- 3,215 -- -- --
Other transition expenses.................... -- -- -- 18,000 -- -- --
------- ------- ------- ------- -------- ------- --------
Adjusted EBITDA................................ $28,509 $44,896 $58,862 $64,769 $104,882 $74,308 $102,024
======= ======= ======= ======= ======== ======= ========
</TABLE>
(4) EBITDA margin represents EBITDA as a percentage of revenues. Adjusted EBITDA
margin represents Adjusted EBITDA as a percentage of revenues.
(5) Cash interest expense represents interest expense excluding the amortization
of deferred financing fees and other non-cash interest amounts of $0.5
million and $2.9 million for the years ended December 31, 1995 and 1996, and
$2.2 million and $2.0 million for the nine months ended September 30, 1996
and 1997, respectively.
(6) For purposes of computing the ratio (deficiency) of earnings to fixed
charges and pro forma ratio (deficiency) of earnings to fixed charges,
"earnings" consist of earnings (loss) before income taxes and fixed charges
before capitalized interest. "Fixed charges" consist of interest expense and
the portion of operating lease rental payments (29%) deemed representative
of the interest factor. The ratio (deficiency) of earnings to fixed charges
and pro forma ratio (deficiency) of earnings to fixed charges exclude the
guarantees by SCIS and certain of its subsidiaries of indebtedness of
Caterair. See the Financial Statements of SCIS and notes thereto included
elsewhere in this Prospectus.
(7) Operating statistics are management estimates for the periods presented.
15
<PAGE> 22
CATERAIR
The following table presents selected historical financial data of Caterair
as of and for each of the five years ended December 31, 1996 and the nine months
ended September 30, 1996 and 1997. The information presented for the three years
ended December 31, 1994 has been derived from the financial statements of
Caterair as audited by Arthur Andersen LLP, independent public accountants. The
information presented for the years ended December 31, 1995 and 1996 has been
derived from the financial statements of Caterair as audited by Coopers &
Lybrand L.L.P., independent accountants. The information presented for the nine
months ended September 30, 1996 and 1997 has been derived from unaudited interim
financial statements of Caterair and, in the opinion of management, reflects a
fair presentation of Caterair's financial information. The following information
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Financial Statements of
Caterair and notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE
MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------------------- ----------------------
1992 1993 1994 1995 1996 1996 1997
-------- --------- --------- --------- --------- --------- --------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA(1):
Total revenues............... $ $ $ $ 18,953 $ 77,958 $ 58,876 $ 56,415
Cost of operations........... -- -- -- 7,649 30,416 24,082 22,207
-------- --------- --------- --------- --------- --------- --------
Gross profit................. -- -- -- 11,304 47,542 34,794 34,208
Depreciation and
amortization............. -- -- -- 3,400 11,806 9,023 8,218
Selling, general and
administrative........... -- -- -- 125 1,393 1,806 593
-------- --------- --------- --------- --------- --------- --------
Operating income............. -- -- -- 7,779 34,343 23,965 25,397
Interest income............ -- -- -- (264) (208) (155) (372)
Interest expense........... -- -- -- 4,979 18,450 14,308 13,443
Other (income) expense..... -- -- -- -- -- -- (611)
Income tax provision
(benefit)(2)............. -- -- -- (50,380) 8,044 3,527 3,622
-------- --------- --------- --------- --------- --------- --------
Income from continuing
operations................. -- -- -- 53,444 8,057 6,285 9,315
Income (loss) from
discontinued
operations............... (406) (251,745) (23,847) 27,244 1,682 2,837 (470)
Extraordinary loss, net of
tax(3)................... -- -- -- (4,319) -- -- (3,044)
-------- --------- --------- --------- --------- --------- --------
Net income (loss)............ $ (406) $(251,745) $ (23,847) $ 76,369 $ 9,739 $ 9,122 $ 5,801
======== ========= ========= ========= ========= ========= ========
BALANCE SHEET DATA
(AT END OF PERIOD):
Total assets(4).............. $722,197 $ 498,734 $ 498,828 $ 194,277 $ 173,948 $ 184,139 $164,217
Total debt and capital lease
obligations(5)............. 432,342 407,968 416,714 225,542 211,031 214,509 205,864
Shareholder's equity
(deficit).................. 124,166 (129,558) (155,908) (111,752) (101,990) (102,630) (96,189)
OTHER FINANCIAL DATA:
EBITDA(6).................... $ -- $ -- $ -- $ 11,179 $ 46,149 $ 32,988 $ 33,615
EBITDA margin(7)............. -- -- -- 59.0% 59.2% 56.0% 59.6%
Adjusted EBITDA(8)........... $102,095 $ 46,218 $ 63,918 $ 63,235 $ 48,407 $ 35,335 $ 33,429
Adjusted EBITDA margin(7).... 9.2% 4.4% 6.2% 8.0% 44.4% 39.8% 56.4%
Net cash flows from:
Operating activities....... $ 47,905 $ 18,541 $ 29,403 $ (67,591) $ 31,665 $ 31,566 $ 16,710
Investing activities....... (23,037) (17,133) (34,611) 196,755 (7,848) (8,133) (13,178)
Financing activities....... (24,607) 5,330 8,554 (141,566) (17,601) (21,420) (10,244)
Cash interest expense(9)..... -- -- -- 3,969 14,343 11,278 10,323
Capital expenditures(10)..... -- -- -- 6,128 2,300 2,300 --
Ratio of EBITDA to cash
interest expense(9)........ -- -- -- 2.8x 3.2x 2.9x 3.3x
Ratio of earnings to fixed
charges(11)................ -- -- -- 1.4x 1.6x 1.5x 1.6x
</TABLE>
- ---------------
(1) In connection with the Combination, Caterair discontinued most of its
airline catering services business and engaged in the business of leasing,
subleasing and licensing domestic property to its affiliates, Sky Chefs and
CII. See "Certain Transactions -- The Combination." Accordingly, all
operations prior to September 30, 1995 have been reflected as discontinued.
Identifiable revenues and expenses from discontinued operations have been
reclassified on the table above presenting summary historical
16
<PAGE> 23
financial data from their historical classification to separately identify
them as discontinued operations for the five years ended December 31, 1996,
and the nine months ended September 30, 1996 and 1997, respectively.
Discontinued operations include allocations of general and administrative
and interest expenses that were determined to be directly related to such
operations. Summary operating results for the discontinued operations are
as follows:
<TABLE>
<CAPTION>
NINE
MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------------------- -----------------
1992 1993 1994 1995 1996 1996 1997
---------- ---------- ---------- -------- ------- ------- ------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Total revenues............... $1,103,746 $1,056,598 $1,023,143 $773,243 $31,169 $29,982 $2,872
Cost of operations........... 969,259 953,914 916,422 698,689 27,854 27,635 3,058
---------- ---------- ---------- -------- ------- ------- ------
Gross profit................. 134,487 102,684 106,721 74,554 3,315 2,347 (186)
Depreciation and
amortization............. 49,270 49,296 30,890 21,821 -- -- --
Selling, general and
administrative........... 32,392 46,055 42,803 27,698 1,057 -- --
Goodwill write-off and
restructuring charges.... -- 192,311 -- -- -- -- --
---------- ---------- ---------- -------- ------- ------- ------
Operating income............. 52,825 (184,978) 33,028 25,035 2,258 2,347 (186)
Interest expense, net...... 47,055 44,829 50,962 45,626 18 (13) 11
Other...................... 5,151 5,266 890 (674) 920 (1,003) 494
---------- ---------- ---------- -------- ------- ------- ------
Income (loss) before income
taxes...................... 619 (235,073) (18,824) (19,917) 1,320 1,331 (691)
Provision (benefit) for
income taxes............. 3,652 16,672 5,023 5,513 416 (262) (221)
Cumulative effect of change
in accounting
principle................ 2,627 -- -- -- -- -- --
---------- ---------- ---------- -------- ------- ------- ------
Income (loss) from
discontinued operations.... (406) (251,745) (23,847) (25,430) 904 1,593 (470)
Gain on disposition of
discontinued operations.... -- -- -- 52,674 778 1,244 --
---------- ---------- ---------- -------- ------- ------- ------
Income (loss) from
discontinued operations.... $ (406) $ (251,745) $ (23,847) $ 27,244 $ 1,682 $ 2,837 $ (470)
========= ========= ========= ======== ======= ======= ======
</TABLE>
Operating income in 1993 includes the impact of a $181.9 million impairment
of Caterair's goodwill related to United States operations and $10.4
million in charges for restructuring costs from a management reorganization
and kitchen consolidation, consisting primarily of severance and early
retirement expense.
(2) In connection with the Combination, Caterair evaluated the potential for
the realization of its deferred tax assets and subsequently recognized a
deferred income tax benefit of $50.5 million in 1995 for the realization of
a portion of the net deferred tax assets. The deferred benefit was offset
by $0.1 million of current tax expense.
(3) In connection with the Combination, Caterair repaid all of its indebtedness
outstanding prior to the Combination. Caterair recorded an extraordinary
loss of $4.3 million in 1995 consisting of the difference between amounts
paid to lenders for full extinguishment of debt and the carrying amounts of
debt including deferred financing costs and accrued interest. The
extraordinary loss of $3.0 million (net of a $1.2 million tax benefit) for
the nine months ended September 30, 1997 was due to the write off of
deferred financing fees as a result of the retirement of Caterair's term
loan indebtedness under the Old Credit Agreement.
(4) The decrease of $223.5 million in total assets in 1993 is primarily due to
the $181.9 million impairment of Caterair's goodwill related to United
States operations, a $9.4 million decrease in fixed assets due to the
acceleration of depreciation for six kitchen facilities resulting from a
change in business conditions at these locations, a $6.5 million increase
in the provision for bad debt expense resulting from the deteriorating
financial position of certain customers, as well as a $4.0 million
write-off of development costs for two international locations.
(5) Total debt and capital lease obligations represent current portion of
long-term debt, current portion of obligations under capital leases,
long-term debt, obligations under capital leases and the note payable by
17
<PAGE> 24
Caterair to SCIS made in connection with the Combination. See "Certain
Transactions -- The Combination."
(6) EBITDA represents earnings from continuing operations before interest
expense, provision (benefit) for income taxes, depreciation and
amortization and other (income) expense. EBITDA is presented because
management believes it provides useful information regarding Caterair's
ability to incur and/or service debt. EBITDA should not be considered in
isolation or as a substitute for operating income, cash flows from
operating activities and other income or cash flow statement data prepared
in accordance with generally accepted accounting principles or as a measure
of Caterair's profitability or liquidity.
(7) EBITDA margin represents EBITDA as a percentage of total revenues from
continuing operations. Adjusted EBITDA margin represents Adjusted EBITDA as
a percentage of total revenues from continuing and discontinued operations.
(8) Adjusted EBITDA includes earnings from continuing and discontinued
operations (as presented in Note 1) before interest expense, provision for
income taxes, depreciation and amortization and other (income) expense, and
excludes other transition expenses associated with the Combination
including consulting, severance, and other costs. Adjusted EBITDA is
presented because management believes it provides useful information
regarding Caterair's ability to incur and/or service debt. Adjusted EBITDA
should not be considered in isolation or as a substitute for operating
income, cash flows from operating activities and other income or cash flow
statement data prepared in accordance with generally accepted accounting
principles or as a measure of Caterair's profitability or liquidity.
Calculation of Adjusted EBITDA for the periods presented is as follows:
<TABLE>
<CAPTION>
NINE
MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------ -----------------
1992 1993 1994 1995 1996 1996 1997
-------- ------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
EBITDA from continuing operations........... $ -- $ -- $ -- $11,179 $46,149 $32,988 $33,615
EBITDA from discontinued operations......... 102,095 46,218 63,918 46,856 2,258 2,347 (186)
Adjustments:
Other transition expenses................. -- -- -- 5,200 -- -- --
-------- ------- ------- ------- ------- ------- -------
Adjusted EBITDA............................. $102,095 $46,218 $63,918 $63,235 $48,407 $35,335 $33,429
======== ======= ======= ======= ======= ======= =======
</TABLE>
(9) Cash interest expense from continuing operations excludes the amortization
of deferred financing fees and interest expense on the note payable to SCIS
of $1.1 million and $4.1 million for the years ended December 31, 1995 and
1996, and $3.0 million and $3.1 million for the nine months ended September
30, 1996 and 1997, respectively. Cash interest expense included in income
(loss) from discontinued operations was $42.9 million, $40.8 million, $42.9
million and $39.6 million for the years ended December 31, 1992, 1993, 1994
and 1995, respectively.
(10) Capital expenditures from discontinued operations were $22.4 million, $21.8
million, $34.6 million and $11.1 million for the years ended December 31,
1992, 1993, 1994 and 1995, respectively.
(11) For purposes of computing the ratio of earnings to fixed charges,
"earnings" consist of earnings from continuing operations before income
taxes and fixed charges before capitalized interest. "Fixed charges"
consist of interest expense and the portion of operating lease rental
payments (29%) deemed representative of the interest factor. The ratio of
earnings to fixed charges excludes the guarantees by Caterair of
indebtedness of SCIS. See the Financial Statements of Caterair and notes
thereto included elsewhere in this Prospectus.
18
<PAGE> 25
RISK FACTORS
The risk factors set forth below, as well as the other information set
forth in this Prospectus, should be carefully considered before deciding to
surrender the Private Notes in exchange for Exchange Notes pursuant to the
Exchange Offer.
SUBSTANTIAL LEVERAGE
The Company has significant indebtedness. At September 30, 1997, the
Company had total combined indebtedness of approximately $591.5 million
(excluding the loan by SCIS to Caterair, advances by Caterair to SCIS,
guarantees of indebtedness and $24.7 million of letters of credit). In addition,
the Company may borrow additional amounts under the Senior Bank Financing or
otherwise. See "The Refinancing," "Capitalization," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Description of
Certain Indebtedness -- Senior Bank Financing" and the Financial Statements and
notes thereto included elsewhere in this Prospectus.
The degree to which the Company is leveraged could have important
consequences to holders of the Notes including, but not limited to, the
following: (i) the Company's ability to obtain additional financing in the
future for working capital, capital expenditures, acquisitions, general
corporate or other purposes may be limited; (ii) a substantial portion of the
Company's cash flow from operations will be dedicated to the payment of the
principal of, and interest on, its indebtedness; (iii) the agreements governing
the Company's indebtedness will contain certain restrictive financial and
operating covenants that could limit the Company's ability to compete and
expand; and (iv) the Company's substantial leverage may make it more vulnerable
to economic downturns, limit its ability to withstand competitive pressures and
reduce its flexibility in responding to changing business and economic
conditions. The ability of the Company to pay interest and principal on the
Notes, to satisfy its other debt obligations and to make planned expenditures
will be dependent on the future operating performance of the Company, which
could be affected by changes in economic conditions and other factors, including
factors beyond the control of the Company. A failure to comply with the
covenants and other provisions of its debt instruments could result in events of
default under such instruments, which could permit acceleration of the debt
under such instruments and in some cases acceleration of debt under other
instruments that contain cross-default or cross-acceleration provisions. The
Company believes that cash flow from operations will be sufficient to cover its
debt service requirements and other requirements. However, if the Company is at
any time unable to generate sufficient cash flow from operations to service its
indebtedness, it may be required to seek to renegotiate the terms of the
instruments relating to that indebtedness or seek to refinance all or a portion
of that indebtedness or to obtain additional financing. There can be no
assurance that the Company will be able to successfully renegotiate such terms
or that any such refinancing would be possible or that any additional financing
could be obtained, or obtained on terms that are favorable or acceptable to the
Company. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Description of Certain Indebtedness -- Senior Bank
Financing."
SUBORDINATION OF THE NOTES AND GUARANTEES
The payment of principal, premium, if any, and interest on, and any other
amounts owing in respect of, the Notes is subordinated to the prior payment in
full of all existing and future Senior Debt of the Issuer, including the
Issuer's obligations under the Senior Bank Financing. In the event of the
bankruptcy, liquidation, dissolution, reorganization or other winding up of the
Issuer, or the acceleration of indebtedness under the Senior Bank Financing, the
assets of the Issuer will be available to pay obligations on the Notes only
after all Senior Debt of the Issuer has been paid in full, and there may not be
sufficient assets remaining to pay any or all amounts due on the Notes. In
addition, under certain circumstances, the Issuer may not pay principal of,
premium, if any, or interest on, or any other amounts owing in respect of, the
Notes, or purchase, redeem or otherwise retire the Notes, if a payment default
or a non-payment default exists with respect to certain Senior Debt of the
Issuer and, in the case of a non-payment default, a payment blockage notice has
been received by the Trustee. See "Description of Notes -- Subordination." Each
Guarantor's Guarantee is subordinated in right of payment to the prior payment
in full of all existing and future Guarantor Senior Debt of such Guarantors,
including guarantees or borrowings under the Senior Bank Financing. At September
30, 1997, the Issuer had approximately $250.0 million of Senior Debt (including
borrowings and guarantees under
19
<PAGE> 26
the Senior Bank Financing but excluding advances by Caterair to SCIS and $24.7
million of letters of credit) and had approximately $65.3 million available to
be borrowed pursuant to the Senior Bank Financing, and the Guarantors had
approximately $31.5 million of Guarantor Senior Debt outstanding (excluding the
loan by SCIS to Caterair and the Guarantors' borrowings and guarantees under the
Senior Bank Financing). In addition, the Notes are structurally subordinated to
all liabilities of the subsidiaries of the Issuer which are not Guarantors. The
Indenture will limit, but not prohibit, the incurrence by the Issuer and the
Guarantors of additional indebtedness, including Senior Debt or Guarantor Senior
Debt, as the case may be.
NON-GUARANTOR SUBSIDIARIES' CREDITORS' CLAIMS EFFECTIVELY SENIOR TO THE NOTES
Substantially all operations of the Issuer are conducted through its
subsidiaries and substantially all of its assets are owned or leased by those
subsidiaries. Accordingly, the Issuer's cash flow and consequent ability to meet
its obligations depends to a significant extent upon the earnings of those
subsidiaries and the availability of those earnings to the Issuer by way of
dividends, distributions or repayment of advances. Claims of creditors
(including trade creditors) of those subsidiaries may reduce significantly the
funds otherwise available from the operations of such subsidiaries. Certain
domestic subsidiaries of the Issuer have jointly and severally guaranteed the
Notes on a basis that is subordinated to the guarantees provided under the
Senior Bank Financing. Subject to the considerations described below under "--
Fraudulent Conveyance Considerations; Avoidance of Guarantees," the Guarantees
provide the holders of the Notes with a subordinated direct claim to the assets
of such subsidiaries. Substantially all of the assets of the Issuer and the
Guarantors are subject to security interests in favor of the lenders securing
the indebtedness under the Senior Bank Financing. See "Description of Certain
Indebtedness -- Senior Bank Financing" and "Description of
Notes -- Unconditional Joint and Several Senior Subordinated Guarantees."
REPATRIATION AND CURRENCY RISKS
A significant portion of the Company's earnings is generated outside the
United States. International operations are subject to a number of special risks
that may increase in significance to the Company in future years if the
Company's international operations expand. These special risks include currency
exchange rate fluctuations, trade barriers, and political and economic risks in
less developed countries such as hyperinflation, governmental expropriation and
exchange controls, and other governmental restrictions that may limit the
ability to repatriate funds, and consequently reduce the cash flow available to
meet debt service requirements and other obligations of the Company, including
payments of principal, premium, if any, and interest on the Notes.
The Company's revenues and expenses for its international operations
generally are denominated in local currency. The Company generally is exposed to
foreign currency exchange rate fluctuations to the extent that such fluctuations
affect the amount that may be repatriated from international subsidiaries and
affiliates to the United States through dividends or management fee
arrangements.
In addition, the earnings of international subsidiaries and affiliates paid
out to the Company through dividends and fee arrangements may be subject to
foreign withholding taxes that reduce the cash flow available to meet debt
service requirements and other obligations of the Company.
OPERATIONS THROUGH FOREIGN SUBSIDIARIES
The Company conducts its foreign operations principally through foreign
subsidiaries and affiliates and substantial assets are owned by those
subsidiaries and affiliates. Many of the foreign operations are conducted
through joint ventures, over which the Company may not have operational or
financial control. Approximately 40% of the Company's food service revenues for
the twelve months ended September 30, 1997 was derived from foreign operations.
Accordingly, the Company's cash flows and consequent ability to meet its
obligations will depend to a significant extent upon the earnings of those
foreign subsidiaries and joint ventures and the availability of those earnings
to the Company by way of dividends, distributions, payment of fees or repayment
of advances. In addition, the Indenture permits foreign subsidiaries of the
Issuer to incur certain indebtedness containing provisions restricting such
foreign subsidiaries from making funds available to the Issuer by way of
20
<PAGE> 27
dividends, distributions, payment of fees or repayment of advances. Repatriation
and currency risks, claims of creditors (including trade creditors) of those
subsidiaries and joint ventures may reduce significantly the funds otherwise
available to the Company from the operations of such subsidiaries and
affiliates. See "-- Repatriation and Currency Risks."
RESTRICTIONS UNDER INDEBTEDNESS AND OTHER AGREEMENTS
The Indenture contains covenants which, among other things, impose certain
limitations on the ability of the Issuer and its Restricted Subsidiaries and
Caterair and its subsidiaries to incur additional indebtedness, incur liens, pay
dividends or make certain other restricted payments, consummate certain asset
sales, enter into certain transactions with affiliates, merge or consolidate
with any other person or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of their respective assets. The Term Loan
Agreement contains restrictions similar to the foregoing. In addition, the
Revolving Credit Agreement contains restrictive covenants which, generally, are
more restrictive than those contained in the Indenture, and prohibits the Issuer
from prepaying its subordinated indebtedness. The Revolving Credit Agreement
also requires the Issuer and Caterair to maintain specified combined financial
ratios and satisfy certain combined financial tests. Certain other agreements of
the Issuer and the Guarantors require the Issuer and/or the Guarantors to
maintain certain financial ratios and satisfy certain financial tests. The
Issuer's and the Guarantors' ability to meet those financial ratios and
financial tests can be affected by events beyond their control, and there can be
no assurance that the Issuer and/or any Guarantor will meet those tests. A
breach of any of these covenants could result in a default under the Senior Bank
Financing, the Indenture and/or other agreements. If an event of default occurs
under the Senior Bank Financing, the lenders could elect to declare all amounts
outstanding thereunder, together with accrued interest, to be immediately due
and payable. If the Issuer and/or Caterair are unable to repay those amounts,
the lenders could proceed against the collateral granted to them to secure the
indebtedness outstanding under the Senior Bank Financing. Substantially all the
assets of the Issuer and Caterair and their respective domestic subsidiaries are
pledged as security under the Senior Bank Financing. See "Description of Certain
Indebtedness -- Senior Bank Financing." A default under certain other agreements
to which the Issuer or a Guarantor is a party could have a material adverse
effect on the Issuer or the Guarantors.
DEPENDENCE ON KEY PERSONNEL
The Company's success depends to a significant extent on the performance
and continued service of Messrs. Kay, Tolbert and Boyd. The loss of the services
of any of such persons could have a material adverse effect on the business and
operations of the Company. Certain of the Company's executive officers have
entered into employment agreements with the Company which expire on December 31,
2001. See "Management" and "Executive Compensation."
DEPENDENCE ON AIRLINE INDUSTRY TRENDS
The Company's revenues are largely dependent upon the number of passengers
who travel on airlines, the number of airline flights serviced by the Company
and the level of meal service provided to passengers. As a result, a decline in
the number of airline flights or in passenger traffic, or a reduction or
downgrading of airline meal services, as has been the case recently with many
North American carriers, or an increase in the number of no-frills airlines, or
the flights or passengers serviced by such airlines, could have a significant
adverse effect on the Company's revenues and earnings. See "The Airline Catering
Industry" and "Business -- Customers." Problems similar to those facing the
North American airline industry have begun to affect the worldwide airline
industry, which could take similar actions in response. Such actions by the
worldwide airline industry could have a significant adverse effect on the
Company's revenues and earnings for its international operations. Certain
events, including economic slowdowns, increased aviation fuel costs, airline
labor strikes, acts of terrorism against airlines, airline accidents, and war,
historically have had a significant negative impact on airline profitability
and, to a lesser extent, traffic. These matters are beyond the Company's
control, and the likelihood that they may occur and their effect on the Company
cannot be predicted.
21
<PAGE> 28
IMPACT OF CUSTOMER BANKRUPTCY OR CESSATION OF OPERATIONS
In the past several years, a number of United States airlines have merged
with other airlines, sought protection under federal bankruptcy laws or ceased
operating altogether. To the extent that the Company has a significant business
relationship with an airline that reduces or ceases operations, and passengers
that frequented that airline elect to fly on another airline with which the
Company does not have a significant business relationship or which provides a
lesser level of meal service, the Company will lose revenues, and that loss may
be significant. In addition, the filing of a bankruptcy petition or the
cessation of operations by an airline may result in the nonpayment of some or
all accounts receivable owed by that airline to the Company. See "The Airline
Catering Industry."
DEPENDENCE ON KEY CUSTOMERS
During 1996, services provided to American accounted for 30% of the
Company's food service revenues. The loss of a significant customer, including
American, or a large portion of the business with a significant customer, could
have a material adverse effect on the Company's financial condition, results of
operations and cash flows.
Although the Company has two long-term contracts with American, these
contracts specify quality performance standards; failure to comply with these
standards may result in financial penalties or termination of such contracts at
the affected airport (or in some cases, at a comparable airport), and, in
certain cases, the purchase of the kitchen at the affected airport by American.
During 1997, American terminated the Company's services at six Caterair Kitchens
due to the Company's failure to comply with those quality standards. Based on
current service levels, the Company estimates that such terminations will result
in a reduction of annual revenues of approximately $34 million. See "Business --
Customers -- Contracts."
A substantial portion of the Company's revenues are derived from customers
with whom the Company does not have long-term contracts. These customers are
thus not restricted by contract from ceasing to do business with the Company on
little or no notice. There can be no assurance that historic levels of business
from any customer of the Company will be maintained in the future. See "Business
- -- Customers."
COMPETITION
The airline catering business is highly competitive. The Company competes
in substantially all of its markets with other airline catering companies and,
at certain airports, with airport terminal concession operations. In addition,
there is unutilized kitchen capacity at many airports which may lead to
increased competition among airline caterers and gives airlines leverage in
negotiating contracts with all caterers located at such airports. Furthermore,
there are few competitive restraints for a new caterer or an airline to begin
catering in any market. The Company competes primarily with other independent
caterers, and to some extent with captive caterers, in the United States market.
Most major airports outside the United States are dominated by the local flag
carriers, which have historically maintained their own catering operations to
serve locations where they have a significant share of air passenger traffic.
See "Business -- Competition." A substantial portion of the Company's revenues
is derived from customers with whom the Company does not have long-term
contracts. See "Business -- Customers."
CONTROL OF THE COMPANY
Onex owns (or has voting control over) approximately 78% of the OFSI Class
A Common Stock (including shares acquirable under the OFSI Warrants) and 100% of
the OFSI Class B Common Stock. SCIS, Sky Chefs and CII are each direct or
indirect wholly-owned subsidiaries of OFSI. In addition, Onex and its affiliates
own more than 51% of the outstanding voting capital stock, and 25% of the
outstanding non-voting capital stock, of Caterair Holdings. Caterair is a
wholly-owned subsidiary of Caterair Holdings.
As a result of the foregoing relationships, Onex and its affiliates
indirectly effectively control the affairs of SCIS and Caterair. Therefore, Onex
and its affiliates have the ability to determine the outcome of most corporate
actions requiring stockholder approval, including, among other things, the
election of the board of
25
<PAGE> 29
directors of SCIS and Caterair, the adoption of amendments to SCIS' and
Caterair's respective certificates of incorporation and the approval of mergers
and sales of all or substantially all of SCIS' and Caterair's assets. Mr. Gerald
W. Schwartz, the Chairman, President and Chief Executive Officer of Onex, owns
stock with a majority of the voting power of Onex and its affiliates and,
therefore, effectively controls the affairs of SCIS and Caterair.
IMPACT OF A CHANGE OF CONTROL
Upon a Change of Control, the Issuer will be required to offer to
repurchase all of the outstanding Notes at 101% of the principal amount thereof,
plus accrued interest to the date of repurchase. There can be no assurance that
the Issuer will have sufficient funds available or will be permitted by its
other indebtedness agreements to repurchase the Notes upon the occurrence of a
Change of Control. In particular, a Change of Control constitutes a default
under the Senior Bank Financing and may cause an acceleration under certain
other Senior Debt of the Issuer, if any, in which case the subordination
provisions of the Notes would require payment in full of all such Senior Debt of
the Issuer before repurchase of the Notes. See "Description of Notes -- Change
of Control" and "Description of Notes -- Subordination." The inability to repay
Senior Debt of the Issuer, if accelerated, and to repurchase all of the tendered
Notes, would constitute an event of default under the Indenture.
FRAUDULENT CONVEYANCE CONSIDERATIONS; AVOIDANCE OF GUARANTEES
Various fraudulent conveyance laws have been enacted for the protection of
creditors and may be utilized by a court to subordinate or avoid the Notes or
any Guarantee in favor of other existing or future creditors of the Issuer or a
Guarantor.
The incurrence by the Issuer of the Notes is subject to review under
relevant federal and state fraudulent conveyance laws in a bankruptcy case or a
lawsuit by or on behalf of unpaid creditors of the Issuer or a representative of
such creditors, such as a trustee or the Issuer as debtor-in-possession. Under
such laws, if a court were to find that, at the time the Notes were issued,
either (i) the Issuer issued the Notes with the intent of hindering, delaying or
defrauding creditors, or (ii) the Issuer received less than a reasonably
equivalent value or fair consideration for issuing the Notes and the Issuer (a)
was insolvent or rendered insolvent by reason of the issuance of the Notes, (b)
was engaged in business or a transaction, or was about to engage in business or
a transaction, for which any property remaining with the Issuer after issuance
of the Notes constituted an unreasonably small amount of capital, (c) intended
to incur, or believed that it would incur, debts beyond its ability to pay as
they matured or (d) was a defendant in an action for money damages or had a
judgment for money damages docketed against it (if, in either case, after final
judgment, the judgment is unsatisfied), such court could void the Issuer's
obligations under the Notes and direct the repayment of any amounts paid
thereunder to the Issuer to a fund for the benefit of the Issuer's creditors, or
take other action detrimental to the holders of the Notes. Such other action
could include subordinating the Notes to claims of existing or future creditors
of the Issuer.
Similarly, indebtedness under the Guarantees of the Notes also may be
subject to review under relevant federal and state fraudulent conveyance laws in
a bankruptcy of a Guarantor or in a lawsuit brought by or on behalf of creditors
of a Guarantor under the same standards described above. Pursuant to the terms
of the Guarantees, the liability of each Guarantor is limited to the maximum
amount of indebtedness permitted, at the time of the grant of such Guarantee, to
be incurred in compliance with fraudulent conveyance or similar laws.
To the extent any Guarantee was avoided as a fraudulent conveyance, limited
as described above, or held unenforceable for any other reason, holders of the
Notes would, to such extent, cease to have a claim in respect of such Guarantee
and, to such extent, would be creditors solely of the Issuer and any Guarantor
whose Guarantee was not avoided, limited, or held unenforceable. In such event,
the claims of the holders of the Notes against the issuer of an avoided, limited
or unenforceable Guarantee would be subject to the prior payment of all
liabilities of such Guarantor. There can be no assurance that, after providing
for all prior claims, there would be sufficient assets to satisfy the claims of
the holders of Notes.
26
<PAGE> 30
LACK OF PUBLIC MARKET FOR THE NOTES
The Exchange Notes are a new issue of securities for which there is
currently no market. There can be no assurance regarding the future development
of a market for the Exchange Notes, or the ability of holders of the Exchange
Notes to sell their Exchange Notes or the price at which such holders may be
able to sell their Exchange Notes. If such a market were to develop, the
Exchange Notes could trade at prices that may be higher or lower than their
principal amount depending on many factors, including prevailing interest rates,
the Issuer's and the Guarantors' operating results and the market for similar
securities. Each of the Initial Purchasers has advised the Issuer that it
currently intends to make a market in the Exchange Notes. The Initial Purchasers
are not obligated to do so, however, and any market-making activities with
respect to the Exchange Notes may be discontinued at any time without notice.
Therefore, there is no assurance as to the liquidity of any trading market for
the Exchange Notes or that an active public market for the Exchange Notes will
develop. The Issuer does not intend to apply for listing or quotation of the
Exchange Notes on any securities exchange or stock market.
Historically, the market for noninvestment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of such
securities. There is no assurance that the market for the Exchange Notes will
not be subject to similar disruptions. Any such disruption may have an adverse
effect on holders of the Exchange Notes.
CONSEQUENCES OF FAILURE TO COMPLY WITH PROCEDURES FOR TENDER OF PRIVATE NOTES
The Exchange Notes will be issued in exchange for the Private Notes only
after timely receipt by the Exchange Agent of such Private Notes, a properly
completed and duly executed Letter of Transmittal and all other required
documentation. Therefore, holders of Private Notes desiring to tender such
Private Notes in exchange for Exchange Notes should allow sufficient time to
ensure timely delivery. Neither the Exchange Agent nor the Issuer is under any
duty to give notification of defects or irregularities with respect to tenders
of Private Notes for exchange. Private Notes that are not tendered or are
tendered but not accepted will, following consummation of the Exchange Offer,
continue to be subject to the existing restrictions upon transfer thereof. In
addition, any holder of Private Notes who tenders in the Exchange Offer for the
purpose of participating in a distribution of the Exchange Notes will be
required to comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction. See "The Exchange
Offer" and "Plan of Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE PRIVATE NOTES
The Private Notes have not been registered under the Securities Act and are
subject to substantial restrictions on transfer. Private Notes that are not
tendered in exchange for Exchange Notes or are tendered but not accepted will,
following consummation of the Exchange Offer, continue to be subject to the
existing restrictions upon transfer thereof. The Issuer does not currently
anticipate that it will register the Private Notes under the Securities Act. To
the extent that Private Notes are tendered and accepted in the Exchange Offer,
the trading market for untendered and tendered but unaccepted Private Notes
could be adversely affected due to the limited amount, or "float," of the
Private Notes that are expected to remain outstanding following the Exchange
Offer. Generally, a lower "float" of a security could result in less demand to
purchase such security and could, therefore, result in lower prices for such
security. For the same reason, to the extent that a large amount of Private
Notes are not tendered or are tendered and not accepted in the Exchange Offer,
the trading market for the Exchange Notes could be adversely affected. See "The
Exchange Offer" and "Plan of Distribution."
27
<PAGE> 31
USE OF PROCEEDS
This Exchange Offer is intended to satisfy certain obligations of SCIS and
the Guarantors under the Registration Rights Agreement. SCIS will not receive
any cash proceeds from, and has agreed to bear the expenses of, the Exchange
Offer. In consideration for issuing the Exchange Notes as contemplated in this
Prospectus, SCIS will receive, in exchange, Private Notes in like principal
amount. The Private Notes surrendered in exchange for the Exchange Notes will be
retired and cancelled. Accordingly, issuance of the Exchange Notes will not
result in any increase in the outstanding indebtedness of SCIS and the
Guarantors.
THE REFINANCING
On August 28, 1997, the Issuer and the Guarantors consummated the Offering
in a transaction exempt from the registration requirements of the Securities
Act. The price to investors of the Private Notes was $299.6 million in the
aggregate and the principal amount of the Private Notes is $300.0 million in the
aggregate.
The net proceeds to SCIS from the Offering, after deduction of discounts
and offering expenses, were approximately $289.9 million. SCIS used $209.4
million of the net proceeds to repay and retire all of its outstanding term loan
indebtedness under the Old Credit Agreement. The indebtedness of SCIS under the
Old Credit Agreement which was repaid had maturities ranging from September 15,
1997 to September 15, 2003 and accrued interest at fluctuating rates (an average
weighted rate of 8.7% per year at August 21, 1997).
On August 25, 1997, SCIS commenced a tender offer for all of the Existing
Notes. In connection therewith, SCIS offered to purchase all of the Existing
Notes at a price equal to 117% of the principal amount thereof plus accrued and
unpaid interest to the date of purchase and solicited consents to the Existing
Indenture Amendments. Holders of Existing Notes who consented to the Existing
Indenture Amendments received a payment equal to 2% of the principal amount of
the Existing Notes for which a consent was delivered. Holders of the Existing
Notes were not permitted to tender their Existing Notes without consenting to
the Existing Indenture Amendments or to consent to the Existing Indenture
Amendments without tendering their Existing Notes.
The Offer to Purchase expired on September 24, 1997. All of the Existing
Notes were tendered by the holders thereof and accepted for payment by SCIS in
connection with the Offer to Purchase. SCIS paid $148.75 million (excluding
$7.85 million of accrued interest) in the aggregate in consideration of the
repurchase of the Existing Notes and the related consents. SCIS used
approximately $80.50 million of the net proceeds from the Offering and
approximately $68.25 million of borrowings under the Term Loan Agreement to fund
such payments.
In connection with the Offering, SCIS, certain other parties and certain
lenders entered into the Revolving Credit Agreement, and Caterair, SCIS, certain
other parties and certain lenders entered into the Term Loan Agreement. The
Revolving Credit Agreement, together with the Term Loan Agreement, constitute
the Senior Bank Financing. See "Description of Certain Indebtedness -- Senior
Bank Financing."
Concurrently with the Offering, Caterair, a Guarantor of the Notes, repaid
and retired all of its outstanding indebtedness under the Old Credit Agreement
(approximately $155.9 million) with borrowings under the Term Loan Agreement.
See "Description of Certain Indebtedness -- Senior Bank Financing."
28
<PAGE> 32
CAPITALIZATION
The following table sets forth the historical capitalization of SCIS and
Caterair as of September 30, 1997. See "The Refinancing." The following table
should be read in conjunction with the Financial Statements and the notes
thereto included elsewhere in this Prospectus and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1997
------------------------
(DOLLARS IN THOUSANDS)
<S> <C>
SCIS
Total debt and capital lease obligations:
Borrowings under the Revolving Credit Agreement(1)................. $ --
Borrowings under the Term Loan Agreement........................... 90,000
Foreign loans...................................................... 10,015
9 1/4% Senior Subordinated Notes due 2007.......................... 300,000
Capital lease obligations.......................................... 29,701
--------
Total debt and capital lease obligations(2)................... 429,716
Shareholder's equity.......................................... 29,141
--------
Total capitalization.......................................... $458,857
========
CATERAIR
Total debt and capital lease obligations:
Borrowings under the Term Loan Agreement........................... $160,000
Loan from SCIS..................................................... 44,075
Capital lease obligations.......................................... 1,788
--------
Total debt and capital lease obligations(3)................... 205,863
Shareholder's deficit......................................... (96,189)
--------
Total capitalization.......................................... $109,674
========
</TABLE>
- ---------------
(1) Excludes $24.7 million of letters of credit.
(2) Excludes guarantees of Caterair's indebtedness.
(3) Excludes guarantees of SCIS' indebtedness.
29
<PAGE> 33
SELECTED HISTORICAL FINANCIAL DATA
SCIS
The following table presents selected historical financial data of SCIS as
of and for each of the five years ended December 31, 1996, and the nine months
ended September 30, 1996 and 1997. For all periods presented prior to the
Combination the consolidated financial information only reflects consolidated
financial position, results of operations and cash flows of Sky Chefs. The
information presented for each of the five years ended December 31, 1996, except
for the operating statistics, has been derived from the financial statements of
SCIS as audited by Coopers & Lybrand L.L.P., independent accountants. The
information presented for the nine months ended September 30, 1996 and 1997 has
been derived from unaudited interim financial statements of SCIS and, in the
opinion of management, reflects a fair presentation of SCIS' financial
information. The following information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements of SCIS and notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------------------------- ------------------------
1992 1993 1994 1995(1) 1996(1) 1996(1) 1997(1)
-------- -------- -------- --------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues........................... $465,902 $458,317 $468,608 $ 739,102 $1,529,816 $1,142,102 $1,198,190
Cost of operations................. 411,726 391,669 388,276 634,375 1,352,359 1,014,782 1,046,467
-------- -------- -------- --------- ---------- ---------- ----------
Gross profit....................... 54,176 66,648 80,332 104,727 177,457 127,320 151,723
Depreciation and amortization.... 14,364 17,144 15,503 21,338 37,928 27,504 31,245
Selling, general and
administrative................. 18,025 16,085 17,125 28,076 48,854 35,761 37,594
Integration expenses............. -- -- -- 28,644 30,361 21,897 13,774
Other costs and expenses......... 7,642 5,667 4,345 29,882 23,721 17,251 12,105
-------- -------- -------- --------- ---------- ---------- ----------
Operating income (loss)............ 14,145 27,752 43,359 (3,213) 36,593 24,907 57,005
Interest income.................. (669) (507) (204) (2,458) (7,896) (5,303) (4,789)
Interest expense................. 8,223 6,703 5,748 19,715 50,431 38,870 39,589
Other (income) expense........... 934 948 1,225 2,099 4,679 4,785 8,107
-------- -------- -------- --------- ---------- ---------- ----------
Earnings (loss) before income
taxes............................ 5,657 20,608 36,590 (22,569) (10,621) (13,445) 14,098
Provision (benefit) for income
taxes.......................... 1,075 7,033 13,385 (6,525) 420 (4,800) 11,235
Extraordinary loss, net of
tax(2)......................... (15,573) -- -- -- -- -- (20,745)
-------- -------- -------- --------- ---------- ---------- ----------
Net income (loss).................. $(10,991) $ 13,575 $ 23,205 $ (16,044) $ (11,041) $ (8,645) $ (17,882)
======== ======== ======== ========= ========= ========= =========
BALANCE SHEET DATA (AT END OF
PERIOD):
Total assets....................... $222,046 $211,903 $243,016 $ 828,793 $ 853,456 $ 866,500 $ 888,866
Total debt and capital lease
obligations...................... 52,811 44,582 46,370 392,059 380,229 384,818 429,716
Shareholder's equity............... 31,214 26,255 49,460 54,570 46,731 44,963 29,141
OTHER FINANCIAL DATA:
EBITDA(3).......................... $ 28,509 $ 44,896 $ 58,862 $ 18,125 $ 74,521 $ 52,411 $ 88,250
EBITDA margin(4)................... 6.1% 9.8% 12.6% 2.5% 4.9% 4.6% 7.4%
Adjusted EBITDA(3)................. $ 28,509 $ 44,896 $ 58,862 $ 64,769 $ 104,882 $ 74,308 $ 102,024
Adjusted EBITDA margin(4).......... 6.1% 9.8% 12.6% 8.8% 6.9% 6.5% 8.5%
Net cash flows from:
Operating activities............. $ 2,600 $ 31,329 $ 21,159 $ 59,108 $ 39,182 $ 44,332 $ (22,524)
Investing activities............. (9,298) (8,807) (23,357) (259,145) (31,352) 14,866 (41,039)
Financing activities............. 6,114 (26,585) 9,233 242,411 (7,001) (11,355) 46,232
Cash interest expense(5)........... 8,223 6,703 5,748 19,190 47,515 27,400 37,646
Capital expenditures............... 10,717 6,032 11,775 9,575 36,900 20,699 18,962
Ratio of Adjusted EBITDA to cash
interest expense(5).............. 3.5x 6.7x 10.2x 3.4x 2.2x 2.7x 2.7x
Ratio (deficiency) of earnings to
fixed charges(6)................. 1.3x 2.2x 3.2x $ (22,569) $ (10,621) $ (13,445) 1.2x
Pro forma ratio (deficiency) of
earnings to fixed charges(6)..... -- -- -- -- $ (6,719) $ (11,424) 1.3x
OPERATING STATISTICS(7):
Number of flights serviced
(000's).......................... 751 720 740 2,572 2,567 1,936 1,901
Number of airports served at end of
period........................... 32 30 32 100 102 102 117
</TABLE>
- ---------------
(1) Results for the years ended December 31, 1995 and 1996 and for the nine
months ended September 30, 1996 and 1997 include the results of operations
acquired, licensed, leased and subleased from Caterair in connection with
the Combination consummated on September 29, 1995. See "Certain
Transactions -- The Combination."
27
<PAGE> 34
(2) Effective January 1, 1992, Sky Chefs adopted the provisions of Statement of
Financial Accounting Standards No. 106, "Accounting for Postretirement
Benefits Other Than Pensions," which required the accrual of postretirement
benefits other than pensions during the employees' service with Sky Chefs.
The cumulative effect of this change in accounting principle was a decrease
in net income of $15.6 million in 1992. The extraordinary loss of 20.7
million for the nine months ended September 30, 1997 was the result of the
writeoff of $6.4 million of deferred financing fees (net of a $4.3 million
tax benefit) due to the retirement of SCIS' term loan indebtedness under the
Old Credit Agreement and the Existing Notes and the premium paid to retire
the Existing Notes of $14.3 million (net of a $9.5 million tax benefit).
(3) EBITDA represents earnings before interest expense, provision (benefit) for
income taxes, depreciation and amortization and other (income) expense.
Adjusted EBITDA excludes costs associated with the Combination including
consulting, transfer, severance and relocation costs and other transition
costs including a customer consent fee. EBITDA and Adjusted EBITDA are
presented because management believes they provide useful information
regarding SCIS' ability to incur and/or service debt. Neither EBITDA nor
Adjusted EBITDA should be considered in isolation nor as a substitute for
operating income, cash flows from operating activities and other income or
cash flow statement data prepared in accordance with generally accepted
accounting principles or as a measure of SCIS' profitability or liquidity.
Calculation of Adjusted EBITDA for the periods presented is as follows:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------ ------------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- -------- ------- --------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
EBITDA........................................... $28,509 $44,896 $58,862 $18,125 $ 74,521 $52,411 $ 88,250
Adjustments:
Integration expenses........................... -- -- -- 8,200 30,361 21,897 13,774
Idle kitchen accruals.......................... -- -- -- 17,229 -- -- --
Writedown of investment in subsidiary.......... -- -- -- 3,215 -- -- --
Other transition expenses...................... -- -- -- 18,000 -- -- --
------- ------- ------- ------- ------- ------- -------
Adjusted EBITDA.................................. $28,509 $44,896 $58,862 $64,769 $104,882 $74,308 $102,024
======= ======= ======= ======= ======= ======= =======
</TABLE>
(4) EBITDA margin represents EBITDA as a percentage of revenues. Adjusted EBITDA
margin represents Adjusted EBITDA as a percentage of revenues.
(5) Cash interest expense represents interest expense excluding the amortization
of deferred financing fees and other non-cash interest amounts of $0.5
million and $2.9 million for the years ended December 31, 1995 and 1996, and
$2.2 million and $2.0 million for the nine months ended September 30, 1996
and 1997, respectively.
(6) For purposes of computing the ratio (deficiency) of earnings to fixed
charges and pro forma ratio (deficiency) of earnings to fixed charges,
"earnings" consist of earnings before income taxes and fixed charges before
capitalized interest. "Fixed charges" consist of interest expense and the
portion of operating lease rental payments (29%) deemed representative of
the interest factor. The ratio (deficiency) of earnings to fixed charges and
pro forma ratio (deficiency) of earnings to fixed charges exclude the
guarantees by SCIS and certain of its subsidiaries of indebtedness of
Caterair. See the Financial Statements of SCIS and notes thereto included
elsewhere in this Prospectus.
(7) Operating statistics are management estimates for the periods presented.
28
<PAGE> 35
CATERAIR
The following table presents selected historical financial data of Caterair
as of and for each of the five years ended December 31, 1996 and the nine months
ended September 30, 1996 and 1997. The information presented for the three years
ended December 31, 1994 has been derived from the financial statements of
Caterair as audited by Arthur Andersen LLP, independent public accountants. The
information presented for the years ended December 31, 1995 and 1996 has been
derived from the financial statements of Caterair as audited by Coopers &
Lybrand L.L.P., independent accountants. The information presented for the nine
months ended September 30, 1996 and 1997 has been derived from unaudited interim
financial statements of Caterair and, in the opinion of management, reflects a
fair presentation of Caterair's financial information. The following information
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Financial Statements of
Caterair and notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
----------------------------------------------------------------- ----------------------
1992 1993 1994 1995 1996 1996 1997
-------- --------- ---------- --------- --------- --------- --------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA(1):
Total revenues.............. $ $ $ $ 18,953 $ 77,958 $ 58,876 $ 56,415
Cost of operations.......... -- -- -- 7,649 30,416 24,082 22,207
-------- --------- ---------- --------- --------- --------- --------
Gross profit................ -- -- -- 11,304 47,542 34,794 34,208
Depreciation and
amortization............ -- -- -- 3,400 11,806 9,023 8,218
Selling, general and
administrative.......... -- -- -- 125 1,393 1,806 593
-------- --------- ---------- --------- --------- --------- --------
Operating income............ -- -- -- 7,779 34,343 23,965 25,397
Interest income........... -- -- -- (264) (208) (155) (372)
Interest expense.......... -- -- -- 4,979 18,450 14,308 13,443
Other (income) expense.... -- -- -- -- -- -- (611)
Income tax provision
(benefit)(2)............ -- -- -- (50,380) 8,044 3,527 3,622
-------- --------- ---------- --------- --------- --------- --------
Income from continuing
operations................ -- -- -- 53,444 8,057 6,285 9,315
Income (loss) from
discontinued
operations.............. (406) (251,745) (23,847) 27,244 1,682 2,837 (470)
Extraordinary loss, net of
tax(3).................. -- -- -- (4,319) -- -- (3,044)
-------- --------- ---------- --------- --------- --------- --------
Net income (loss)........... $ (406) $(251,745) $ (23,847) $ 76,369 $ 9,739 $ 9,122 $ 5,801
======== ========= ========= ========= ========= ========= ========
BALANCE SHEET DATA (AT END OF
PERIOD):
Total assets(4)............. $722,197 $ 498,734 $ 498,828 $ 194,277 $ 173,948 $ 184,139 $164,217
Total debt and capital lease
obligations(5)............ 432,342 407,968 416,714 225,542 211,031 214,509 205,864
Shareholder's equity
(deficit)................. 124,166 (129,558) (155,908) (111,752) (101,990) (102,630) (96,189)
OTHER FINANCIAL DATA:
EBITDA(6)................... $ -- $ -- $ -- $ 11,179 $ 46,149 $ 32,988 $ 33,615
EBITDA margin(7)............ -- -- -- 59.0% 59.2% 56.0% 59.6%
Adjusted EBITDA(8).......... $102,095 $ 46,218 $ 63,918 $ 63,235 $ 48,407 $ 35,335 $ 33,429
Adjusted EBITDA margin(7)... 9.2% 4.4% 6.2% 8.0% 44.4% 39.8% 56.4%
Net cash flows from:
Operating activities...... $ 47,905 $ 18,541 $ 29,403 $ (67,591) $ 31,665 $ 31,566 $ 16,710
Investing activities...... (23,037) (17,133) (34,611) 196,755 (7,848) (8,133) (13,178)
Financing activities...... (24,607) 5,330 8,554 (141,566) (17,601) (21,420) (10,244)
Cash interest expense(9).... -- -- -- 3,969 14,343 11,278 10,323
Capital expenditures(10).... -- -- -- 6,128 2,300 2,300 --
Ratio of EBITDA to cash
interest expense(9)....... -- -- -- 2.8x 3.2x 2.9x 3.3x
Ratio of earnings to fixed
charges(11)............... -- -- -- 1.4x 1.6x 1.5x 1.6x
</TABLE>
- ---------------
(1) In connection with the Combination, Caterair discontinued most of its
airline catering services business and engaged in the business of leasing,
subleasing and licensing domestic property to its affiliates, Sky Chefs and
CII. See "Certain Transactions -- The Combination." Accordingly, all
operations prior to September 30, 1995 have been reflected as discontinued.
Identifiable revenues and expenses from
29
<PAGE> 36
discontinued operations have been reclassified on the table above
presenting summary historical financial data from their historical
classification to separately identify them as discontinued operations for
the five years ended December 31, 1996, and the nine months ended September
30, 1996 and 1997, respectively. Discontinued operations include
allocations of general and administrative and interest expenses that were
determined to be directly related to such operations. Summary operating
results for the discontinued operations are as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------------------------------- -----------------
1992 1993 1994 1995 1996 1996 1997
---------- ---------- ---------- -------- ------- ------- ------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Total revenues............... $1,103,746 $1,056,598 $1,023,143 $773,243 $31,169 $29,982 $2,872
Cost of operations........... 969,259 953,914 916,422 698,689 27,854 27,635 3,058
---------- ---------- ---------- -------- ------- ------- ------
Gross profit................. 134,487 102,684 106,721 74,554 3,315 2,347 (186)
Depreciation and
amortization............. 49,270 49,296 30,890 21,821 -- -- --
Selling, general and
administrative........... 32,392 46,055 42,803 27,698 1,057 -- --
Goodwill write-off and
restructuring charges.... -- 192,311 -- -- -- -- --
---------- ---------- ---------- -------- ------- ------- ------
Operating income............. 52,825 (184,978) 33,028 25,035 2,258 2,347 (186)
Interest expense, net...... 47,055 44,829 50,962 45,626 18 (13) 11
Other...................... 5,151 5,266 890 (674) 920 (1,003) 494
---------- ---------- ---------- -------- ------- ------- ------
Income (loss) before income
taxes...................... 619 (235,073) (18,824) (19,917) 1,320 1,331 (691)
Provision (benefit) for
income taxes............. 3,652 16,672 5,023 5,513 416 (262) (221)
Cumulative effect of change
in accounting
principle................ 2,627 -- -- -- -- -- --
---------- ---------- ---------- -------- ------- ------- ------
Income (loss) from
discontinued operations.... (406) (251,745) (23,847) (25,430) 904 1,593 (470)
Gain on disposition of
discontinued operations.... -- -- -- 52,674 778 1,244 --
---------- ---------- ---------- -------- ------- ------- ------
Income (loss) from
discontinued operations.... $ (406) $ (251,745) $ (23,847) $ 27,244 $ 1,682 $ 2,837 $ (470)
========= ========= ========= ======== ======= ======= ======
</TABLE>
Operating income in 1993 includes the impact of a $181.9 million impairment
of Caterair's goodwill related to United States operations and $10.4
million in charges for restructuring costs from a management reorganization
and kitchen consolidation, consisting primarily of severance and early
retirement expense.
(2) In connection with the Combination, Caterair evaluated the potential for
the realization of its deferred tax assets and subsequently recognized a
deferred income tax benefit of $50.5 million in 1995 for the realization of
a portion of the net deferred tax assets. The deferred benefit was offset
by $0.1 million of current tax expense.
(3) In connection with the Combination, Caterair repaid all of its indebtedness
outstanding prior to the Combination. Caterair recorded an extraordinary
loss of $4.3 million in 1995 consisting of the difference between amounts
paid to lenders for full extinguishment of debt and the carrying amounts of
debt including deferred financing costs and accrued interest. The
extraordinary loss of $3.0 million (net of a $1.2 million tax benefit) for
the nine months ended September 30, 1997 was due to the write off of
deferred financing fees as a result of the retirement of Caterair's term
loan indebtedness under the Old Credit Amendment.
(4) The decrease of $223.5 million in total assets in 1993 is primarily due to
the $181.9 million goodwill related to United States operations, a $9.4
million decrease in fixed assets due to the acceleration of depreciation
for six kitchen facilities resulting from a change in business conditions
at these locations, a $6.5 million increase in the provision for bad debt
expense resulting from the deteriorating financial position of certain
customers, as well as a $4.0 million write-off of development costs for two
international locations.
30
<PAGE> 37
(5) Total debt and capital lease obligations represent current portion of
long-term debt, current portion of obligations under capital leases,
long-term debt, obligations under capital leases and the note payable by
Caterair to SCIS made in connection with the Combination. See "Certain
Transactions -- The Combination."
(6) EBITDA represents earnings from continuing operations before interest
expense, provision (benefit) for income taxes, depreciation and
amortization and other (income) expense. EBITDA is presented because
management believes it provides useful information regarding Caterair's
ability to incur and/or service debt. EBITDA should not be considered in
isolation or as a substitute for operating income, cash flows from
operating activities and other income or cash flow statement data prepared
in accordance with generally accepted accounting principles or as a measure
of Caterair's profitability or liquidity.
(7) EBITDA margin represents EBITDA as a percentage of total revenues from
continuing operations. Adjusted EBITDA margin represents Adjusted EBITDA as
a percentage of total revenues from continuing operations and discontinued
operations.
(8) Adjusted EBITDA includes earnings from continuing and discontinued
operations (as presented in Note 1) before interest expense, provision for
income taxes, depreciation and amortization and other (income) expense, and
excludes other transition expenses associated with the Combination
including consulting, severance and other costs. Adjusted EBITDA is
presented because management believes it provides useful information
regarding Caterair's ability to incur and/or service debt. Adjusted EBITDA
should not be considered in isolation or as a substitute for operating
income, cash flows from operating activities and other income or cash flow
statement data prepared in accordance with generally accepted accounting
principles or as a measure of Caterair's profitability or liquidity.
Calculation of Adjusted EBITDA for the periods presented is as follows:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
------------------------------------------------ -------------------
1992 1993 1994 1995 1996 1996 1997
-------- ------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
EBITDA from continuing
operations...................... $ -- $ -- $ -- $11,179 $46,149 $32,988 $33,615
EBITDA from
discontinued operations......... 102,095 46,218 63,918 46,856 2,258 2,347 (186)
Adjustments:
Other transition expenses....... -- -- -- 5,200 -- -- --
-------- ------- ------- ------- ------- ------- -------
Adjusted EBITDA................... $102,095 $46,218 $63,918 $63,235 $48,407 $35,335 $33,429
======== ======= ======= ======= ======= ======= =======
</TABLE>
(9) Cash interest expense from continuing operations excludes the amortization
of deferred financing fees and interest expense on the note payable to SCIS
of $1.1 million and $4.1 million for the years ended December 31, 1995 and
1996, and $3.0 million and $3.1 million for the nine months ended September
30, 1996 and 1997, respectively. Cash interest expense included in income
(loss) from discontinued operations was $42.9 million, $40.8 million, $42.9
million and $39.6 million for the years ended December 31, 1992, 1993, 1994
and 1995, respectively.
(10) Capital expenditures from discontinued operations were $22.4 million,
$21.8 million, $34.6 million and $11.1 million for the years ended
December 31, 1992, 1993, 1994 and 1995, respectively.
(11) For purposes of computing the ratio of earnings to fixed charges,
"earnings" consist of earnings from continuing operations before income
taxes and fixed charges before capitalized interest. "Fixed charges"
consist of interest expense and the portion of operating lease rental
payments (29%) deemed representative of the interest factor. The ratio of
earnings to fixed charges excludes the guarantees by Caterair of
indebtedness of SCIS. See the Financial Statements of Caterair and notes
thereto included elsewhere in this Prospectus.
31
<PAGE> 38
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The discussion and analysis below relates to (i) the historical
consolidated financial statements and results of operations of SCIS, (ii) the
historical consolidated financial statements and results of operations of
Caterair, which is not a subsidiary of SCIS, and (iii) the liquidity and capital
resources of SCIS and Caterair. The following discussion should be read in
conjunction with the Financial Statements and the notes thereto contained
elsewhere in this Prospectus.
On September 29, 1995, SCIS and Caterair consummated the Combination
pursuant to which SCIS and its subsidiaries acquired, licensed, leased or
subleased substantially all of the worldwide business and assets of Caterair.
See "Certain Transactions -- The Combination."
In connection with the Combination, pursuant to several leases (the
"Domestic Leases"), Sky Chefs and CII, a wholly-owned subsidiary of SCIS, leased
and subleased from Caterair substantially all of its domestic tangible assets
for a six-year term (expiring in 2001). In the event that Caterair's lease of
such assets was for less than six years, the applicable Domestic Lease is for
such shorter period. Sky Chefs and CII have options to purchase all or a portion
of the assets of Caterair covered by the Domestic Leases for amounts determined
under formulas in the Domestic Leases that were intended to result in exercise
prices equal to the estimated fair market value of such assets at the time or
times of exercise of any such options. The options are exercisable until the
date which is 30 days after termination of the applicable Domestic Lease. It is
not certain that such purchase options will be exercised. See "Certain
Transactions -- The Combination" and the Financial Statements and notes thereto
included elsewhere in this Prospectus.
In addition, in connection with the Combination, pursuant to license
agreements (the "License Agreements"), Sky Chefs and CII licensed Caterair's
rights under certain customer contracts for a six-year term (expiring in 2001).
Sky Chefs and CII each have options to purchase all or a portion of the customer
contract rights covered by the License Agreements for amounts determined under
formulas in the License Agreements that were intended to result in exercise
prices equal to the estimated fair market value of such rights at the time or
times of exercise of any such options. The options are exercisable until the
date which is 90 days after termination of the applicable License Agreement. It
is not certain that such purchase options will be exercised. See "Certain
Transactions -- The Combination" and the Financial Statements and notes thereto
included elsewhere in this Prospectus.
In addition, in connection with the Combination, pursuant to a non-compete
agreement, Caterair agreed not to compete with Sky Chefs in the airline catering
business for a six-year term (expiring in 2001) and Sky Chefs is obligated to
pay Caterair $4.0 million per year. See "Certain Transactions -- The
Combination" and the Financial Statements and notes thereto included elsewhere
in this Prospectus.
Over the past several years there has been a significant reduction in food
service levels on domestic flights which has affected all domestic airline
caterers, including the Company. Despite a decline in total airline food
expenditures in the United States since 1992, the Company has been able to
increase its revenues and profitability due to (i) increases in volume
attributable to passenger growth, (ii) new business awards, (iii) price
increases related to inflation and (iv) the implementation of its operating
improvement plan. In 1992, Sky Chefs implemented the Total Cycle Time(TM)
program and other programs, as part of an extensive operating improvement plan,
which reduced annual operating costs by approximately $47 million in 1994 as
compared with 1992. The Total Cycle Time(TM) program is a methodology designed
to raise efficiency levels. The program is based on measuring, monitoring and
improving the total cycle time (i.e., the time necessary to complete a business
process) of various processes throughout an organization -- the total elapsed
time from when work commences on a project through completion; such as the time
elapsed from taking the first steps to prepare a meal to delivery of the meal to
an airplane. The total cycle time approach was designed to enable the Company to
significantly increase the efficiency with which it utilizes labor and other
resources and to allow increased flexibility to react to customer needs. Due in
large part to its operating improvement plan, Sky Chefs increased EBITDA from
$29 million in 1992 to $59 million in 1994 and improved EBITDA as a percentage
of
32
<PAGE> 39
revenues from 6.1% to 12.6% over the same period. As part of the Combination
which was consummated on September 29, 1995, management estimated that
approximately $55 million of net cost savings on an annualized basis were
achievable by the end of the third year of combined operations of Sky Chefs and
Caterair. Management believes that as of September 30, 1997 a significant
portion of these net cost savings have been achieved as evidenced by an increase
in the combined companies' Adjusted EBITDA from $123 million for the year ended
December 31, 1994 to $176 million for the twelve months ended September 30, 1997
and an improvement in Adjusted EBITDA as a percentage of the combined companies'
revenues from 8.0% for the year ended December 31, 1994 to 11.0% for the twelve
months ended September 30, 1997. See "Summary Unaudited Combined Pro Forma
Financial Data" and "Selected Historical Financial Data." These net cost savings
have been achieved through, among other things, increasing labor productivity
and reducing labor and employee costs at certain of the Caterair Kitchens;
consolidating certain corporate level management and administrative functions of
Sky Chefs and Caterair; reducing food waste spoilage and shrinkage at certain of
the Caterair Kitchens; eliminating redundant kitchens; and reducing other
kitchen operating expenses at certain of the Caterair Kitchens. In order to
achieve these net cost savings, the Company incurred approximately $52 million
in non-recurring costs through September 1997 principally relating to (i)
severance payments and other employee costs, (ii) external consulting services
primarily associated with the implementation of labor savings programs and (iii)
other items in connection with the integration of the business of Sky Chefs and
Caterair. See "Business -- Strengths -- Low Cost Structure," "Selected
Historical Financial Data -- SCIS" and "Certain Transactions -- The
Combination."
Integration costs were primarily incurred as a result of the Combination
and the implementation of the Company's operating improvement plan at the
Caterair Kitchens. The severance payments, which were a portion of these
integration costs, included compensation paid to non-hourly management and
administrative employees whose jobs were terminated due to efficiencies
generated by the Company's operating improvement plan and to eliminate redundant
positions resulting from the Combination. Integration costs also related to the
movement of management personnel between Company locations. Further integration
costs included expenses relating to external consultants who provided services
in connection with the implementation of the Company's operating improvement
plan and the evaluation, training, and replacement of management employees. As a
result of the Combination, SCIS determined that certain of its idle facilities
would not be utilized in the future and accelerated the recognition of rent
expense relating to these facilities and wrote-down related property and
equipment. These items were also included in integration costs. Due to the large
number and geographic diversity of the Caterair Kitchens, the implementation of
the Company's operating improvement plan at the Caterair Kitchens has been a
lengthy process, conducted in various stages. Thus, integration costs have been
incurred since September 29, 1995, the date on which the Combination was
consummated. SCIS expects to incur approximately $2.3 million of additional
integration costs related to the Combination through December 31, 1997. As a
result of the implementation of the Company's operating improvement plan at the
Caterair Kitchens, SCIS has increased its general and administrative staff at
headquarters for training employees and increased expenditures for safety and
other operating programs. The costs associated with these matters will be
included in general and administrative expenses commencing with periods after
December 31, 1997.
RESULTS OF OPERATIONS OF SCIS
SCIS and CII, a wholly owned operating subsidiary of SCIS, were formed in
connection with the Combination. Sky Chefs (including its subsidiaries) was the
only direct subsidiary of SCIS which conducted substantial operations prior to
September 29, 1995. Thus, unless otherwise indicated, the discussion of results
of operations relates to the operations of Sky Chefs for periods prior to
September 29, 1995 and operations of SCIS and its subsidiaries thereafter. The
acquisition of substantially all of the foreign operations of Caterair,
Caterair's trade name and domestic working capital and the assumption of certain
Caterair liabilities in the Combination was accounted for using the purchase
method of accounting. Accordingly, the historical consolidated financial
statements for the period ended December 31, 1995 include the acquired assets
and liabilities and three months and one day of airline catering operations of
the business formerly conducted by Caterair. The Combination resulted in a
material change in the financial position of SCIS.
33
<PAGE> 40
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 1996
Revenues. Revenues for the first nine months of 1997 increased $56.1
million or by 4.9% to $1,198.2 million from $1,142.1 million for the nine months
ended September 30, 1996. This increase was primarily the result of $55.2
million in additional revenues generated during the first nine months of 1997
from new airline catering contracts and business, $10.2 million from additional
non-airline catering business and $13.0 million attributable to price increases.
In addition, revenues from two kitchens subleased/licensed from Caterair on May
31, 1996 increased $22.1 million in the first nine months of 1997 as compared to
the first nine months of 1996 as only four months of revenues from these
kitchens was included in the first nine months of 1996. This increase in
revenues was offset by a $44.4 million decline in revenues related to lost
business and other factors, including an $18.1 million decrease in revenues
relating to American's termination during 1997 of the Company's services at six
Caterair Kitchens due to the Company's failure to comply with quality standards
specified in Caterair's contract with American. Based on current service levels,
the Company estimates that the terminations by American at the six Caterair
Kitchens will result in a reduction of revenues on an annualized basis of
approximately $34.0 million. In September, 1997, Mr. Robert Crandall, the
Chairman and Chief Executive Officer of AMR, the parent of American, was
reported to have stated to financial analysts that in his opinion American's
contracts with the Company "[produce] a cost disadvantage relative to other
caterers" and that American will seek to eliminate its perceived cost
disadvantage. The Company and American periodically discuss issues surrounding
the terms of these contracts and such discussions have continued following Mr.
Crandall's remarks. The loss of the business with American, or a large portion
of such business, could have a material adverse effect on SCIS' financial
condition, results of operations and cash flows. See
"Business -- Customers -- Contracts."
Cost of Operations. Cost of operations increased $31.7 million or by 3.1%
to $1,046.5 million in the first nine months of 1997 from $1,014.8 million in
the first nine months of 1996. Cost of operations as a percentage of revenues
decreased from 88.9% for the first nine months of 1996 to 87.3% for the first
nine months of 1997 primarily as a result of a decrease in labor costs due to
SCIS' ongoing operating improvement plan.
Depreciation and Amortization. Depreciation and amortization expenses
increased $3.7 million or by 13.5% to $31.2 million for the first nine months of
1997 from $27.5 million for the first nine months of 1996. This increase is a
result of additional capital expenditures of $19.0 million made during the first
nine months of 1997 and amortization expenses of $0.7 million related to the
acquisition of kitchens in New Zealand.
Selling, General and Administrative. Selling, general and administrative
expenses increased $1.8 million or 5.0% to $37.6 million for the first nine
months of 1997 from $35.8 million for the first nine months of 1996 primarily as
a result of the inclusion of nine months of expenses in 1997 for two kitchens
subleased/licensed from Caterair on May 31, 1996 compared to only four months in
1996.
Integration Expenses. Integration expenses decreased $8.1 million or by
37.0% to $13.8 million for the first nine months of 1997 from $21.9 million for
the first nine months of 1996. The integration expenses were significantly
higher for the 1996 period as SCIS focused on integrating Caterair's operations
immediately following the Combination. See "-- General."
Other Costs and Expenses. Other costs and expenses decreased $5.2 million
or by 30.0% to $12.1 million for the first nine months of 1997 from $17.3
million for the first nine months of 1996.
Operating Income. Operating income increased $32.1 million to $57.0 million
for the first nine months of 1997 from $24.9 million for the first nine months
of 1996 primarily due to the integration of the businesses of SCIS and Caterair
and SCIS' operating improvement plan.
Interest Income. Interest and dividend income decreased $0.5 million to
$4.8 million for the first nine months of 1997 from $5.3 million for the first
nine months of 1996.
Interest Expense. Interest expense increased $0.7 million to $39.6 million
for the first nine months of 1997 from $38.9 million for the first nine months
of 1996.
Other Income (Expense). Other expenses for the first nine months of 1997
increased by $3.3 million to $8.1 million from $4.8 million for the first nine
months of 1996 primarily due to a $1.4 million increase in
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foreign exchange losses. Additionally, there was a $1.4 million increase in
minority interest expense resulting from the recapitalization of a subsidiary.
Earnings (Loss) Before Income Taxes. SCIS' income before income taxes
increased $27.6 million to $14.1 million for the first nine months of 1997
compared to a loss of $13.5 million for the first nine months of 1996 primarily
as a result of the factors discussed above.
Provision (Benefit) for Income Taxes. The provision for income taxes was
$11.2 million for the first nine months of 1997 compared to a benefit of $4.8
million for the first nine months of 1996. This fluctuation in income taxes was
primarily a result of the increase in operating income and operating losses
generated by certain foreign operations which SCIS has been unable to utilize to
offset income taxes relating to income generated by other operations. Management
expects to incur operating losses in the foreseeable future at certain foreign
locations for which it will not recognize tax benefits.
Extraordinary Loss. The extraordinary loss of $20.7 million for the nine
months ended September 30, 1997 was the result of the write off of $6.4 million
of deferred financing fees (net of a $4.3 million tax benefit) relating to the
retirement of the Existing Notes and SCIS' term loan indebtedness under the Old
Credit Agreement and the premium paid to retire the Existing Notes of $14.3
million (net of a $9.5 million tax benefit).
Net Income (Loss). SCIS' net loss increased $9.3 million to $17.9 million
for the first nine months of 1997 from $8.6 million for the first nine months of
1996 primarily as a result of the factors discussed above.
1996 COMPARED WITH 1995
Combined Results. The information set forth in this paragraph has not been
prepared in accordance with generally accepted accounting principles and is not
indicative of past performance or future results of SCIS. Such information
should be read together with the other information set forth within
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." Revenues for the combined food service operations of SCIS and
Caterair, including operations reported on a discontinued basis by Caterair, for
1996 compared with 1995 increased $18.8 million or by 1.2% to $1,560.0 million
in 1996 from $1,541.2 million in 1995. Cost of operations decreased $12.3
million or by 0.9% to $1,336.1 million in 1996 from $1,348.4 million in 1995.
Cost of operations as a percentage of revenues decreased to 85.6% in 1996 from
87.5% in 1995. Operating income on a combined basis increased $46.7 million to
$73.2 million in 1996 from $26.5 million in 1995. Operating income as a
percentage of revenues increased to 4.7% in 1996 from 1.7% in 1995.
Revenues. Revenues for 1996 increased $790.7 million or by 107.0% to
$1,529.8 million from $739.1 million in 1995. The primary reason for this
increase was the inclusion of revenues from the operations acquired, licensed,
leased and subleased from Caterair for a full year in 1996 versus only three
months in 1995. Also included in the 1996 revenue increase was $38.6 million
derived from two kitchens which were subleased/licensed from Caterair on May 31,
1996. Revenues from three domestic kitchens acquired from a subsidiary of LSG in
August and November 1995 (the "LSG Acquisition") increased $25.9 million in 1996
over 1995 primarily as a result of the inclusion of these operations for a full
year in 1996 versus only a partial year in 1995.
Cost of Operations. Cost of operations increased $718.0 million or by
113.2% to $1,352.4 million in 1996 from $634.4 million in 1995. The primary
reason for this increase was the inclusion of the cost of operations of the
business acquired, licensed, leased and subleased from Caterair for a full year
in 1996 versus only three months in 1995. In addition, costs of operations
increased $35.4 million in 1996 as compared to 1995 due to the inclusion of
operating costs associated with the two kitchens subleased/licensed from
Caterair on May 31, 1996. Further, operating costs of the three kitchens
acquired from LSG in 1995 increased $25.8 million in 1996 over 1995 primarily as
a result of the inclusion of these operations for a full year in 1996 versus
only a partial year in 1995.
Depreciation and Amortization. Depreciation and amortization expenses
increased $16.6 million or by 77.9% to $37.9 million in 1996 from $21.3 million
in 1995 primarily due to the inclusion for the full year of 1996 of depreciation
and amortization expenses for the assets acquired from Caterair versus only
three months
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in 1995. SCIS also incurred approximately $7.2 million of capital expenditures
related to the deferred maintenance of the assets acquired from Caterair of
which a portion was depreciated in 1996.
Selling, General and Administrative. Selling, general and administrative
expenses increased $20.9 million or by 74.0% to $49.0 million in 1996 from $28.1
million in 1995 primarily as a result of the inclusion of a full year of
operating expenses associated with the operations acquired, licensed, leased and
subleased from Caterair in 1996 versus only three months of 1995.
Integration Expenses. Integration expenses increased $1.8 million or by
6.3% to $30.4 million for 1996 from $28.6 million in 1995. The increase is
primarily due to a full year's expenses recognized in 1996 compared to only
three months in 1995. Offsetting the increase was a one-time charge to
integration expenses of $17.2 million in 1995 relating to the acceleration of
the recognition of rent expense relating to idle kitchens and the write-down of
related fixed assets. See "-- General."
Other Costs and Expenses. Other costs and expenses decreased $6.2 million
or by 20.7% to $23.7 million in 1996 from $29.9 million in 1995. Other costs and
expenses for 1995 reflect the inclusion of $18.0 million for a customer consent
fee related to the Combination. Excluding this fee, other costs and expenses
increased in 1996 primarily as a result of the inclusion of a full year of
operating expenses associated with the operations acquired, licensed, leased and
subleased from Caterair versus only three months in 1995.
Operating Income. SCIS' operating income increased $39.8 million to $36.6
million in 1996 from a $3.2 million loss in 1995 primarily as a result of the
factors discussed above.
Interest Income. Interest and dividend income increased $5.4 million to
$7.9 million in 1996 from $2.5 million in 1995 primarily as a result of interest
income on the $37.8 million loan made by SCIS to Caterair in connection with the
Combination and higher average investment balances throughout 1996.
Interest Expense. Interest expense increased $30.7 million to $50.4 million
in 1996 from $19.7 million in 1995 primarily as a result of increased debt
balances related to the Combination being outstanding for the entire year in
1996 versus only three months in 1995.
Other Income (Expense). Other expenses increased $2.6 million to $4.7
million in 1996 from $2.1 million in 1995 primarily as a result of the inclusion
of a full year of other expenses associated with the operations acquired,
licensed, leased and subleased from Caterair versus only three months in 1995.
Earnings (Loss) Before Income Taxes. SCIS' loss before income taxes
decreased $12.0 million to $10.6 million in 1996 as compared to a loss before
income taxes of $22.6 million in 1995 primarily as a result of the factors
discussed above.
Provision (Benefit) for Income Tax. The income tax expense for 1996 was
$0.4 million compared to an income tax benefit of $6.5 million in 1995. The
increase in income tax expense in 1996 versus 1995 is attributable to increased
pre-tax earnings in domestic United States operations and at certain foreign
subsidiaries, for which income taxes are payable and the expense has been
recorded, offset by losses in other foreign subsidiaries where SCIS has been
unable to recognize tax benefits. The majority of the foreign subsidiaries were
acquired at September 29, 1995, and therefore, their results are included for
three months of 1995 versus a full year in 1996. This limited ability to
recognize tax benefits results in a disproportionate increase in consolidated
income tax expense relative to the improvement in consolidated pre-tax earnings.
Net Income (Loss). SCIS' net loss decreased $5.0 million to $11.0 million
in 1996 as compared to a net loss of $16.0 million in 1995 primarily as a result
of the factors discussed above.
1995 COMPARED WITH 1994
Revenues. Revenues for 1995 increased $270.5 million or by 57.7% to $739.1
million from $468.6 million in 1994. Approximately $243.3 million or 89.9% of
this increase was due to the inclusion of revenues derived from the operations
acquired, licensed, leased or subleased from Caterair in connection with the
Combination for three months in 1995. An additional $29.0 million of this
increase was primarily due to the inclusion of revenues from the Sao Paulo,
Brazil kitchen which was acquired in October 1994 (the "Brazil Acquisition") for
a full year in 1995 versus only a partial year in 1994 and the inclusion of
revenues for a partial year in 1995 from the three domestic kitchens acquired by
SCIS in connection with the LSG Acquisition. This increase in
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revenues was offset by a decrease in revenues derived from facilities operated
by SCIS for the full years of 1994 and 1995 of $1.8 million from $463.1 million
in 1994 to $461.3 million in 1995.
Costs of Operations. Costs of operations increased $246.1 million or by
63.4% to $634.4 million in 1995 from $388.3 million in 1994. This increase was
primarily associated with the operations acquired, licensed, leased and
subleased from Caterair in connection with the Combination. Other components of
the increase in costs of operations include a $31.1 million increase in
operating costs and expenses primarily due to increases in food costs, payroll
and other operating and administrative expenses associated with the kitchens
acquired by SCIS in the LSG Acquisition and the Brazil Acquisition. Costs of
operations for facilities owned by SCIS for the full years of 1994 and 1995
decreased by $23.7 million from $382.7 million in 1994 to $359.0 million in
1995, with a relatively flat revenue base, as a result of SCIS' operating
improvement plan.
Depreciation and Amortization. Depreciation and amortization expenses
increased $5.8 million or by 37.4% to $21.3 million in 1995 from $15.5 million
in 1994 primarily due to the amortization of intangible and capital lease assets
acquired in the Combination and the Brazil Acquisition.
Selling, General and Administrative. Selling, general and administrative
expenses increased $11.0 million or by 64.3% to $28.1 million in 1995 from $17.1
million in 1994 primarily due to the inclusion of the operations acquired,
licensed, leased and subleased from Caterair in connection with the Combination.
Integration Expenses. SCIS incurred $28.6 million of Combination related
expenses in 1995. These integration expenses included employee relocation,
severance costs, the cost of implementing cycle time improvements at certain of
the Caterair Kitchens and $17.2 million relating to the acceleration of the
recognition of rent expense relating to idle kitchens and the write-down of
related fixed assets. No integration expenses were incurred in 1994.
Other Costs and Expenses. Other costs and expenses increased $25.6 million
to $29.9 million in 1995 from $4.3 million in 1994. This increase includes costs
associated with the operations acquired, licensed, leased and subleased from
Caterair and an $18.0 million charge for a consent fee payable to a major
customer in connection with the Combination.
Operating Income. SCIS' operating income decreased $46.6 million or by
107.4% to a $3.2 million loss in 1995 from $43.4 million in earnings in 1994
primarily as a result of integration expenses incurred in connection with the
Combination as well as the other factors discussed above.
Interest Income. Interest and dividend income increased $2.3 million to
$2.5 million in 1995 from $0.2 million in 1994.
Interest Expense. Interest expense increased $13.9 million to $19.7 million
in 1995 from $5.8 million in 1994 primarily as a result of higher debt balances
resulting from borrowings related to the Combination.
Other Income (Expense). Other expense increased by $0.9 million to $2.1
million in 1995 from $1.2 million in 1994 primarily as a result of an increase
in foreign exchange losses.
Earnings (Loss) Before Income Taxes. SCIS' loss before income taxes was
$22.6 million in 1995 compared to earnings before income taxes of $36.6 million
in 1994 primarily as a result of the factors discussed above.
Provision (Benefit) for Income Taxes. The income tax benefit for 1995 was
$6.5 million compared to income tax expense of $13.4 million in 1994. This
fluctuation in income taxes is a result of decreased income from operations and
operating losses generated by certain foreign operations which SCIS has been
unable to utilize to offset income taxes relating to income generated by other
operations.
Net Income (Loss). SCIS' net loss was $16.0 million in 1995 compared to net
income of $23.2 million in 1994 primarily as a result of the factors discussed
above.
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RESULTS OF OPERATIONS OF CATERAIR
Caterair's discontinued operations for the reporting periods presented are
not readily comparable to one another. Fiscal year 1995 discontinued operations
reflect the termination of substantially all of Caterair's former domestic
airline catering operations and disposition of substantially all of Caterair's
former international airline catering operations and assets, its tradename and
domestic working capital in connection with the Combination effective September
29, 1995.
In connection with the Combination, Caterair sold, licensed, leased and
subleased substantially all of its worldwide business to SCIS and its
subsidiaries. Consequently, Caterair's principal source of revenues is the
receipt of rents, royalties and non-compete related payments from subsidiaries
of SCIS under the Domestic Leases, the License Agreements and the non-compete
agreement. See "-- General" and "Certain Transactions -- The Combination."
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 1996
Total Revenues. Total revenues for the nine months ended September 30,
1997 decreased $2.5 million to $56.4 million from $58.9 million for the nine
months ended September 30, 1996. This decrease in total revenues was primarily
due to a reduction in rental income under the Domestic Leases as certain leases
expired or lease terms changed.
Cost of Operations. Cost of operations for the nine months ended September
30, 1997 decreased $1.9 million to $22.2 million from $24.1 million for the nine
months ended September 30, 1996 primarily due to a reduction in the rent expense
for leased kitchens as certain leases expired or lease terms changed.
Selling, General and Administrative. Selling, general and administrative
expenses were $0.6 million for the nine months ended September 30, 1997 compared
to $1.8 million for the nine months ended September 30, 1996. These expenses
consist primarily of fees paid to SCIS for corporate and administrative
services.
Depreciation and Amortization. Depreciation and amortization expenses were
$8.2 million for the nine months ended September 30, 1997 compared to $9.0
million for the nine months ended September 30, 1996.
Operating Income. Operating income increased to $25.4 million for the nine
months ended September 30, 1997 from $23.9 million for the nine months ended
September 30, 1996 primarily as a result of the factors discussed above.
Interest Income. Interest income increased $0.2 million to $0.4 million
for the nine months ended September 30, 1997 from $0.2 million for the nine
months ended September 30, 1996.
Interest Expense. Interest expense decreased $0.9 million to $13.4 million
for the nine months ended September 30, 1997 from $14.3 million for the nine
months ended September 30, 1996.
Other (Income) Expense. Other income of $0.6 million for the nine months
ended September 30, 1997 was the result of the gain on the disposal of certain
fixed assets. No other income or expenses were realized during the nine months
ended September 30, 1996.
Income (Loss) from Discontinued Operations. Caterair incurred a $0.5
million loss on discontinued operations for the nine months ended September 30,
1997 compared to $2.8 million of income for the nine months ended September 30,
1996. Caterair realized approximately $1.6 million of income for the nine months
ended September 30, 1996 from the assumption by SCIS on May 31, 1996 of
liabilities associated with certain discontinued operations (consisting of the
two kitchens leased/licensed by SCIS) and approximately $1.5 million of gain on
the disposal of assets relating to discontinued operations. The remaining losses
from discontinued operations of $0.5 million and $0.2 million for the nine
months ended September 30, 1997 and the nine months ended September 30, 1996,
respectively, are related to Caterair's operations in Portugal which have been
discontinued.
Income Tax Provision (Benefit). The income tax provision increased
slightly to $3.6 million for the nine months ended September 30, 1997 from $3.5
million for the nine months ended September 30, 1996 as a result of increased
income from continuing operations.
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Extraordinary Loss. The extraordinary loss of $3.0 million (net of a $1.2
million tax benefit) for the nine months ended September 30, 1997 was a result
of the write off of deferred financing fees relating to the retirement of
Caterair's indebtedness under the Old Credit Agreement in connection with the
Caterair Refinancing.
Net Income (Loss). Caterair's net income for the nine months ended
September 30, 1997 decreased $3.3 million to $5.8 million from $9.1 million for
the nine months ended September 30, 1996 primarily as a result of the factors
discussed above.
1996 COMPARED WITH 1995
Operating results for 1996 reflect a full year of leasing and licensing
operations. Operating results for 1995 include leasing and licensing operations
for only three months and one day, after the effective date of the Combination
on September 29, 1995. The results for the first nine months of 1995 are
presented as discontinued operations. As such, the operating results for these
two years are not comparable. Therefore, 1996 operating results presented below
are compared to the annualized results for 1995 as if the leasing and licensing
operations were in effect for the full year.
Total Revenues. Actual total revenues were $78.0 million in 1996 versus
actual total revenues of $19.0 million in 1995. Annualized total revenues for
1995 would have been $75.8 million. The increase in 1996 total revenues over
annualized 1995 total revenues was primarily due to payments received by
Caterair from SCIS in 1996 under the License Agreements relating to the
operations of two kitchens subleased/licensed by SCIS from Caterair on May 31,
1996.
Cost of Operations. Actual cost of operations increased to $30.4 million
in 1996 from $7.6 million in 1995. Annualized cost of operations for 1995 would
have been $30.6 million.
Selling, General and Administrative. Actual selling, general and
administrative expenses were $1.4 million in 1996 compared to $0.1 million in
1995. Annualized 1995 selling, general and administrative expenses would have
been $0.5 million. The increase in actual 1996 selling, general and
administrative expenses over the annualized 1995 selling, general and
administrative expenses was due to additional legal and consulting fees incurred
in 1996 related to the Combination.
Depreciation and Amortization. Actual depreciation and amortization
expenses increased to $11.8 million in 1996 from $3.4 million in 1995.
Annualized 1995 depreciation and amortization expenses would have been $13.6
million. The decrease in actual 1996 depreciation and amortization expenses from
annualized 1995 depreciation and amortization expenses is due to certain assets
of Caterair becoming fully depreciated during 1996.
Operating Income. Actual operating income increased to $34.3 million from
$7.8 million in 1995. Annualized operating income for 1995 would have been $31.1
million. The increase in actual 1996 operating income from annualized 1995
operating income is primarily attributable to increased revenues derived under
the License Agreements and lower depreciation and amortization expenses during
1996 than 1995 as certain assets of Caterair became fully depreciated during
1996.
Interest Income. Actual interest income decreased $0.1 million to $0.2
million in 1996 from $0.3 million in 1995.
Interest Expense. Actual interest expense increased to $18.5 million in
1996 from $5.0 million in 1995. Annualized 1995 interest expense would have been
$20.0 million. The decrease in actual interest expense in 1996 from annualized
interest expense for 1995 is a result of the reduction of outstanding debt due
to repayments made during 1996.
Income (Loss) from Discontinued Operations. Income from discontinued
operations decreased $25.5 million to $1.7 million in 1996 from $27.2 million in
1995. The decrease in income from discontinued operations is primarily the
result of the gain from the sale during 1995 of most of the net assets and
liabilities of Caterair in connection with the Combination.
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Income Tax Provision (Benefit). The income tax provision for 1996 was $8.0
million compared to an income tax benefit of $50.4 million recorded in 1995.
Prior to the Combination, Caterair had a valuation allowance to fully reserve
for its gross deferred tax assets because of the uncertainties surrounding the
losses of operations to be sustained for income tax reporting purposes. In
connection with the Combination, Caterair evaluated the potential for the
realization of a portion or all of the deferred tax assets. Caterair determined,
based upon the weight of evidence, it was more likely than not that a portion of
the deferred tax assets would be realized. In the fourth quarter of 1995,
Caterair recognized an income tax benefit of $50.5 million for the realization
of a portion of the net deferred tax assets.
Net Income (Loss). Caterair's net income for 1996 decreased $66.6 million
to $9.7 million from $76.4 million primarily due to the factors discussed above.
1995 COMPARED WITH 1994
Income from Continuing Operations. The results from operations for 1995
include three months of leasing and licensing activity. No leasing and licensing
activity was conducted in 1994, thus the results of operations for 1995 and 1994
are not comparable.
Income (Loss) from Discontinued Operations. In 1995, Caterair recorded a
$27.2 million gain on discontinued operations compared to a $23.8 million loss
in 1994. The gain on discontinued operations in 1995 is a result of the sale of
most of Caterair's assets and liabilities of the discontinued operations
included in the Combination. The loss in 1994 reflects the results of all of
Caterair's operations for a full year.
LIQUIDITY AND CAPITAL RESOURCES
SCIS
SCIS' principal sources of liquidity are expected to be cash flow from
operations and amounts available under the Revolving Credit Agreement. See
"Description of Certain Indebtedness -- Senior Bank Financing." It is
anticipated that SCIS' principal uses of liquidity will be to provide working
capital, to finance capital expenditures, to meet debt service requirements, to
fund non-recurring costs associated with the Combination and to pay for acquired
businesses. In addition, SCIS expects to use approximately $12.9 million in the
first quarter of 1998 and approximately $14.7 million in the first quarter of
1999 to fund management bonuses approved in the fourth quarter of 1997 by SCIS'
board of directors. There can be no assurances that these bonuses will be paid
or as to the amounts thereof.
As a result of the Combination, the Offering and the Senior Bank Financing,
including the Caterair Refinancing, SCIS is highly leveraged. At September 30,
1997, the aggregate amount of outstanding indebtedness of SCIS (including
borrowings and guarantees under the Senior Bank Financing but excluding advances
by Caterair to SCIS and $24.7 million of letters of credit) was approximately
$589.7 million. The Senior Bank Financing provides SCIS with up to $180.0
million of senior secured financing, consisting of $90.0 million of term loans
under the Term Loan Agreement and up to $90.0 million of availability under the
Revolving Credit Agreement (including up to $50.0 million of availability for
letters of credit) and provides Caterair with $160.0 million of senior secured
term loans under the Term Loan Agreement. SCIS guaranteed Caterair's obligations
under the Term Loan Agreement. As of September 30, 1997, approximately $24.7
million of letters of credit issued primarily to insurance carriers providing
workers' compensation coverage and related to surety bonds and leases was
outstanding under the Revolving Credit Agreement. As of September 30, 1997,
Caterair advanced $13.0 million to SCIS; this advance bears interest at the rate
of 8.25% per annum and SCIS anticipates that it will repay such advance prior to
December 31, 1997. During the twelve month period ending September 30, 1998,
SCIS expects to make approximately $68.0 million in capital expenditures, which
are more significant than in prior periods. The increase in capital expenditures
will primarily relate to the expansion, improvement and maintenance of SCIS'
kitchens, particularly those located at international gateway airports, and the
upgrade of SCIS' information systems, during 1998.
The Revolving Credit Agreement, which is the most restrictive of SCIS'
indebtedness agreements, the Indenture relating to the Notes as well as the Term
Loan Agreement contain a number of covenants that, among other things, restrict
the ability of SCIS and Caterair to dispose of assets, incur additional
indebtedness, guarantee obligations, repay indebtedness or amend debt
instruments, pay dividends, create liens on assets, make investments, make
acquisitions, engage in mergers or consolidations, make capital expendi-
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tures, and otherwise restrict certain corporate activities. For a more detailed
description of the Senior Bank Financing, see "Description of Certain
Indebtedness -- Senior Bank Financing" and for a more detailed description of
the Indenture relating to the Notes, see "Description of Notes." The Senior Bank
Financing also contains provisions which limit Sky Chefs', CII's and the other
Guarantors' (excluding Caterair) ability to make distributions to SCIS other
than in the form of cash dividends and, under certain circumstances, capital
stock. SCIS does not expect that such provisions will have a material impact on
the ability of SCIS to meet its cash obligations. In addition, the Revolving
Credit Agreement requires compliance with specified financial tests based on the
combined financial position of SCIS and Caterair. Certain other agreements of
SCIS and the Guarantors require SCIS and/or the Guarantors to maintain certain
financial ratios and satisfy certain financial tests. Management believes SCIS
and the Guarantors are currently in compliance with all material covenants and
restrictions contained in all material agreements to which SCIS and/or a
Guarantor is a party.
Based upon current levels of operations, SCIS believes that cash flow from
operations, together with available borrowings under the Revolving Credit
Agreement, will be adequate to meet anticipated requirements for working
capital, capital expenditures, debt service requirements, Combination-related
costs and to pay for acquired businesses. There can be no assurance, however,
that SCIS will continue to generate cash flow at or above current levels or SCIS
will be able to meet its anticipated needs for working capital, capital
expenditures, debt service, Combination-related costs or funding to pay for
acquired businesses.
SCIS expects to expend approximately $3.3 million in connection with the
implementation of a new management stock plan during 1998 and 1999. There can be
no assurances that the management stock plan will be implemented.
Net cash provided by (used in) operating activities for the nine months
ended September 30, 1997 declined to ($22.5) million from $44.3 million for the
nine months ended September 30, 1996 primarily as a result of lower than usual
levels of accounts payable and accrued expenses at December 31, 1995. Net cash
used in investing activities increased to $41.0 million during the nine months
ended September 30, 1997 from $14.9 million during the nine months ended
September 30, 1996 primarily as a result of acquisitions of businesses during
the nine months ended September 30, 1997. Net cash provided by (used in)
financing activities increased to $46.2 million during the nine months ended
September 30, 1997 from ($11.4) million during the nine months ended September
30, 1996.
CATERAIR
Caterair's principal sources of liquidity are expected to be cash flows
from rents, royalties and non-compete related payments from Sky Chefs and CII
under the Domestic Leases, the License Agreements and the non-compete agreement
described herein. It is anticipated that Caterair's principal uses of liquidity
will be to provide working capital, to meet debt service requirements and to
make lease payments.
As a result of the Combination, the Offering, and the Senior Bank
Financing, including the Caterair Refinancing, Caterair is highly leveraged. At
September 30, 1997, the aggregate amount of outstanding indebtedness of Caterair
(including borrowings and guarantees of SCIS' indebtedness but excluding the
loan by SCIS to Caterair and $24.7 million of letters of credit) was
approximately $551.8 million. In connection with the Combination, SCIS loaned
Caterair $37.8 million. This loan bears interest at the rate of 8.0% per annum
(payable-in-kind), matures in 2001 and is secured by a lien on all of Caterair's
assets, which is subordinated to the lien securing the obligations under the
Senior Bank Financing. As of September 30, 1997, the outstanding principal
amount of this loan was $44.1 million. In the third quarter of 1997, Caterair
advanced SCIS $13.0 million; this advance bears interest at the rate of 8.25%
per annum and SCIS anticipates that it will repay such advance prior to December
31, 1997. During the twelve months ending September 30, 1998, Caterair will be
required to make approximately $29.3 million in respect of lease payments.
Caterair anticipates that minimal capital expenditures will be made during the
next twelve months. See "Description of Certain Indebtedness -- Senior Bank
Financing," and the Financial Statements and notes thereto included elsewhere in
this Prospectus.
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The continuation of Caterair's operations is substantially dependent upon
Sky Chefs' and CII's ability to make payments under the Domestic Leases, the
License Agreements and the non-compete agreement. The Term Loan Agreement under
the Senior Bank Financing provides Caterair with $160.0 million of senior
secured term loans, and the Senior Bank Financing provides SCIS with up to
$180.0 million of senior secured financing, consisting of $90.0 million of term
loans under the Term Loan Agreement and up to $90.0 million of availability
under the Revolving Credit Agreement (including up to $50.0 million of
availability for letters of credit). As of September 30, 1997, approximately
$24.7 million of letters of credit issued primarily to insurance carriers
providing workers' compensation coverage and related surety bonds and leases was
outstanding under the Revolving Credit Agreement. Caterair guaranteed SCIS'
obligations under the Senior Bank Financing and the Notes.
Based upon the current levels of operations after the Combination, the
Offering, SCIS' Offer to Purchase and the Senior Bank Financing, including the
Caterair Refinancing, Caterair believes that cash flows from operations will be
adequate to meet anticipated requirements for working capital, debt service and
lease payments. There can be no assurance, however, that cash flows will be
sufficient to meet such obligations.
SEASONALITY
During 1996, the Company recognized 22.8%, 24.4%, 27.5% and 25.3% of its
food service revenues and (9.5)%, 9.9%, 66.9% and 32.7% of its operating income
during the first, second, third and fourth quarter, respectively.
IMPACT OF INFLATION
The Company's food, labor and other operating costs are affected by a
number of factors beyond the Company's control, including inflation. The Company
generally is able to recover increases in food costs due to inflation from its
customers. However, it may not be able to recover similar increases in labor or
other operating costs from such customers.
The Company operates in a number of countries that experience high rates of
inflation. The Company generally has been successful in mitigating the adverse
effects of such inflation through measures such as indexing contractual price
rates to inflation and providing for payments in local currencies. There can be
no assurance that the Company will always be successful in mitigating the risks
associated with inflation or that the Company may not be adversely affected when
it seeks to exchange funds in local currencies of countries with high rates of
inflation into United States currency.
RECENT ACCOUNTING STANDARDS
During June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130 "Reporting Comprehensive Income" and
Statement of Financial Accounting Standards No. 131 "Disclosures About Segments
of an Enterprise and Related Information." Preliminary analysis of these new
standards by the Company indicates that the standards will not have a material
impact on the Company. The standards are effective for financial statements for
fiscal years beginning after December 15, 1997.
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THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Private Notes were sold by the Issuer on August 28, 1997 (the "Issue
Date") to the Initial Purchasers pursuant to the Purchase Agreement. The Initial
Purchasers subsequently sold the Private Notes in the United States to
"qualified institutional buyers" ("QIBs"), as defined in Rule 144A under the
Securities Act ("Rule 144A"), in reliance on Rule 144A, and outside the United
States in compliance with Regulation S under the Securities Act. As a condition
to the sale of the Private Notes, the Issuer, the Guarantors and the Initial
Purchasers entered into the Registration Rights Agreement on the Issue Date.
Pursuant to the Registration Rights Agreement, each of the Issuer and the
Guarantors agreed that they would, at their cost, to the extent not prohibited
by any applicable law or applicable interpretation of the staff of the
Commission, (i) prepare and, on or prior to 45 days after the Issue Date, file
with the Commission a Registration Statement under the Securities Act with
respect to the Exchange Offer, (ii) use their reasonable best efforts to cause
the Registration Statement relating to the Exchange Offer to be declared
effective by the Commission under the Securities Act on or prior to 150 days
after the Issue Date, and (iii) commence the Exchange Offer and use their
reasonable best efforts to issue, on or prior to 195 days after the Issue Date,
the Exchange Notes. A copy of the Registration Rights Agreement has been filed
as an exhibit to the Registration Statement of which this Prospectus is a part.
The Registration Statement is intended to satisfy certain of the Issuer's and
the Guarantors' obligations under the Registration Rights Agreement and the
Purchase Agreement. See "-- Resale of the Exchange Notes."
Pursuant to the Registration Rights Agreement, if, (i) because of any
change in law or in currently prevailing interpretations of the staff of the
Commission, the Issuer and the Guarantors are not permitted to effect the
Exchange Offer, (ii) the Exchange Offer is not consummated within 195 days of
the Issue Date, (iii) in certain circumstances, certain holders of unregistered
Exchange Notes so request, or (iv) in the case of any holder of Private Notes
that participates in the Exchange Offer, such holder does not receive Exchange
Notes on the date of the exchange that may be sold without restriction under
state and federal securities laws (other than due solely to the status of such
holder as an affiliate of the Issuer within the meaning of the Securities Act),
then in each case, the Issuer and the Guarantors will (x) promptly deliver to
the holders of Private Notes and the Trustee under the Indenture written notice
thereof and (y) at their sole expense, (a) file a shelf registration statement
covering resales of the Private Notes (the "Shelf Registration Statement"), (b)
use their reasonable best efforts to cause the Shelf Registration Statement to
be declared effective under the Securities Act and (c) use their reasonable best
efforts to, subject to certain exceptions, keep effective the Shelf Registration
Statement until the earlier of two years after the Issue Date or such time as
all of the applicable Private Notes have been sold thereunder. Pursuant to the
Registration Rights Agreement, the Issuer will, in the event that a Shelf
Registration Statement is filed, provide to each holder of Private Notes copies
of the prospectus that is a part of the Shelf Registration Statement, notify
each such holder when the Shelf Registration Statement for the Private Notes has
become effective and take certain other actions as are required to permit
unrestricted resales of the Private Notes. A holder of Private Notes that sells
Private Notes pursuant to the Shelf Registration Statement will be required to
be named as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under Securities Act in connection with such sales and will be bound
by the provisions of the Registration Rights Agreement that are applicable to
such a holder (including certain indemnification rights and obligations).
Additional interest (the "Additional Interest") shall become payable by the
Issuer and the Guarantor in respect of the Private Notes:
(i) if (A) neither the Registration Statement relating to the Exchange
Offer (the "Exchange Offer Registration Statement") nor the Shelf
Registration Statement is filed with the Commission on or prior to the date
required by the Registration Rights Agreement or (B) notwithstanding that
the Issuer and the Guarantors have consummated or will consummate an
Exchange Offer, the Issuer and the Guarantors are required to file a Shelf
Registration Statement and such Shelf Registration Statement is not filed
on or prior to the date required by the Registration Rights Agreement, then
commencing on the day after either such required filing date, Additional
Interest shall accrue on the principal amount of the Private
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<PAGE> 50
Notes at a rate of 0.50% per annum for the first 90 days immediately
following each such filing date, such Additional Interest rate increasing
by an additional 0.50% per annum at the beginning of each subsequent 90-day
period; or
(ii) if (A) the Exchange Offer Registration Statement is not declared
effective within 150 days after the Issue Date or a Shelf Registration
Statement is not declared effective by the Commission on or prior to 90
days after the filing thereof or (B) notwithstanding that the Issuer and
the Guarantors have consummated or will consummate an Exchange Offer, the
Issuer and the Guarantors are required to file a Shelf Registration
Statement and such Shelf Registration Statement is not declared effective
by the Commission on or prior to the 90th day following the date such Shelf
Registration Statement was filed, then, commencing on the day after the
date on which the applicable Registration Statement was required to be
declared effective, Additional Interest shall accrue on the principal
amount of the Private Notes at a rate of 0.50% per annum for the first 90
days immediately following such date, such Additional Interest rate
increasing by an additional 0.50% per annum at the beginning of each
subsequent 90-day period; or
(iii) if (A) the Issuer and the Guarantors have not exchanged Exchange
Notes for all Private Notes validly tendered in accordance with the terms
of the Exchange Offer on or prior to the 195th day after the Issue Date or
(B) if applicable, the Shelf Registration Statement has been declared
effective and such Shelf Registration Statement ceases to be effective at
any time prior to the second anniversary of the Issue Date (other than as
permitted by the Registration Rights Agreement or after such time as all
Private Notes have been disposed of thereunder), then Additional Interest
shall accrue on the principal amount of the Private Notes at a rate of
0.50% per annum for the first 90 days commencing on (x) the 195th day after
the Issue Date, in the case of (A) above, or (y) the day such Shelf
Registration Statement ceases to be effective in the case of (B) above
(other than as permitted by the Registration Rights Agreement), such
Additional Interest rate increasing by an additional 0.50% per annum at the
beginning of each subsequent 90-day period;
provided, however, that the Additional Interest rate on the Private Notes may
not exceed at any one time in the aggregate 1.50% per annum; and provided,
further, that (1) upon the filing of the Exchange Offer Registration Statement
or a Shelf Registration Statement (in the case of clause (i) above), (2) upon
the effectiveness of the Exchange Offer Registration Statement or a Shelf
Registration Statement (in the case of clause (ii) above), or (3) upon the
exchange of Exchange Notes for all Private Notes tendered (in the case of clause
(iii)(A) above), or upon the effectiveness of the Shelf Registration Statement
which had ceased to remain effective (in the case of clause (iii)(B) above),
Additional Interest on the Private Notes as a result of such clause (or the
relevant subclause thereof), as the case may be, shall cease to accrue and, in
any case, such Additional Interest shall not be payable in respect of more than
one of the preceding provisions at any one time.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and the Letter of Transmittal, the Issuer will accept any and all Private Notes
validly tendered and not withdrawn prior to the Expiration Date.
The Issuer will issue $1,000 principal amount of Exchange Notes in exchange
for each $1,000 principal amount of outstanding Private Notes validly tendered
pursuant to the Exchange Offer and not withdrawn prior to the Expiration Date.
Holders may tender some or all of their Private Notes pursuant to the Exchange
Offer; provided, however, that Private Notes may be tendered only in integral
multiples of $1,000. The Exchange Offer is not conditioned upon any minimum
aggregate principal amount of Private Notes being tendered for exchange.
The form and terms of the Exchange Notes are identical in all material
respects to the form and terms of the Private Notes except that the Exchange
Notes will have been registered under the Securities Act and, therefore, the
Exchange Notes will not bear legends restricting the transfer thereof and
holders of the Exchange Notes will not be entitled to any of the registration
rights of holders of Private Notes under the Registration Rights Agreement (or
related rights to certain interest payments upon the failure of the Issuer to
fulfill certain conditions set forth in the Registration Rights Agreement),
which rights will terminate upon the consummation of the Exchange Offer. The
Exchange Notes will evidence the same indebtedness as the Private Notes (which
they replace), and will be issued under, and be entitled to the benefits of, the
Indenture,
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<PAGE> 51
which also authorized the issuance of the Private Notes, such that both series
of Notes will be treated as a single class of debt securities under the
Indenture. See "-- Resale of the Exchange Notes."
Interest on each Exchange Note will accrue (A) from the later of (i) the
last interest payment date on which interest was paid on the Private Note
surrendered in exchange therefor or (ii) if the Private Note is surrendered for
exchange on a date in a period on or after the record date for an interest
payment date to occur on or after the date of such exchange and as to which
interest will be paid, the date of such interest payment date or (B) if no
interest has been paid on the Private Notes, from the Issue Date.
As of the date of this Prospectus, $300,000,000 aggregate principal amount
of the Private Notes is outstanding, all of which is registered in the name of
Cede & Co., as nominee of the Depositary. Only a registered holder of the
Private Notes (or such holder's legal representative or attorney-in-fact) as
reflected on the records of DTC or the Trustee under the Indenture may
participate in the Exchange Offer. Solely for reasons of administration, the
Issuer has fixed the close of business on , 1997 as the record date
for the Exchange Offer for purposes of determining the persons to whom this
Prospectus and the Letter of Transmittal will be mailed initially. There will be
no fixed record date for determining registered holders of the Private Notes
entitled to participate in the Exchange Offer.
Holders of the Private Notes do not have any appraisal or dissenters'
rights under the General Corporation Law of the State of Delaware or the
Indenture in connection with the Exchange Offer. The Issuer intends to conduct
the Exchange Offer in accordance with the provisions of the Registration Rights
Agreement and the applicable requirements of the Securities Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations of the Commission thereunder.
The Issuer shall be deemed to have accepted validly tendered Private Notes
when, as and if the Issuer has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
of Private Notes for the purposes of receiving the Exchange Notes from the
Issuer.
Holders who tender Private Notes in the Exchange Offer will not be required
to pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Private
Notes pursuant to the Exchange Offer. The Issuer will pay all charges and
expenses, other than certain applicable taxes described below, in connection
with the Exchange Offer. See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; TERMINATION
The term "Expiration Date" shall mean 5:00 p.m., New York City time on
, 1997, unless the Issuer, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Issuer will (i) notify the
Exchange Agent of any extension by oral or written notice and (ii) will make a
public announcement thereof (which shall include disclosure of the approximate
number of Private Notes deposited to date), each prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date.
The Issuer expressly reserves the right, in its sole discretion, (i) to
delay accepting any Private Notes, (ii) to extend the Exchange Offer, (iii) if
any conditions set forth below under "-- Certain Conditions to the Exchange
Offer" shall not have been satisfied (or shall occur), to terminate the Exchange
Offer by giving oral or written notice of such delay, extension or termination
to the Exchange Agent or (iv) to amend the terms of the Exchange Offer in any
manner. Any such delay in acceptance, extension, termination or amendment will
be followed as promptly as practicable by a press release or other public
announcement thereof. If the Exchange Offer is amended in a manner determined by
the Issuer to constitute a material change, the Issuer will promptly disclose
such amendment by means of a prospectus supplement that will be distributed to
the registered holders of Private Notes, and the Issuer will extend the Exchange
Offer for a period of five to ten business days, depending upon the significance
of the amendment and the manner of disclosure to such registered holders, if the
Exchange Offer would otherwise expire during such five to ten business day
period. The rights reserved by the Issuer in this paragraph are in addition to
the Issuer's rights set forth below under the caption "-- Certain Conditions to
the Exchange Offer."
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Without limiting the manner in which the Issuer may choose to make a public
announcement of any delay, extension, amendment or termination of the Exchange
Offer, the Issuer shall have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by making a timely release
to an appropriate news agency.
If the Issuer extends the period of time during which the Exchange Offer is
open, or if it is delayed in accepting for exchange of, or in issuing and
exchanging the Exchange Notes for, any Private Notes, or is unable to accept for
exchange of, or issue Exchange Notes for, any Private Notes pursuant to the
Exchange Offer for any reason, then, without prejudice to the Issuer's rights
under the Exchange Offer, the Exchange Agent may, on behalf of the Issuer,
retain all Private Notes tendered, and such Private Notes may not be withdrawn
except as otherwise provided below in "-- Withdrawal of Tenders." The adoption
by the Issuer of the right to delay acceptance for exchange of, or the issuance
and the exchange of the Exchange Notes, for any Private Notes is subject to
applicable law, including Rule 14e-1(c) under the Exchange Act, which requires
that the Issuer pay the consideration offered or return the Private Notes
deposited by or on behalf of the holders thereof promptly after the termination
or withdrawal of the Exchange Offer.
RESALE OF THE EXCHANGE NOTES
The Issuer is making the Exchange Offer in reliance on the interpretations
of the staff of the Commission as set forth in no-action letters issued to third
parties unrelated to the Issuer. However, the Issuer has not sought its own
no-action letter and there can be no assurance that the staff of the Commission
would make a similar determination with respect to the Exchange Offer as it has
in such no-action letters issued to such third parties. With respect to the
Exchange Notes, based upon these interpretations by the staff of the Commission,
the Issuer believes that a holder (other than (i) any person who is an
"affiliate" of the Issuer within the meaning of Rule 405 under the Securities
Act or (ii) a broker-dealer that purchases Notes from the Issuer to resell
pursuant to Rule 144A under the Securities Act or any other available exemption
under the Securities Act) who exchanges Private Notes for Exchange Notes in the
ordinary course of its business and is not engaging, and has no intention to
engage, and has no arrangement or understanding with any person to participate,
in the distribution of the Exchange Notes, will be allowed to resell the
Exchange Notes without further registration under the Securities Act and without
delivering to the purchasers of the Exchange Notes a prospectus that satisfies
the requirements of Section 10 of the Securities Act. However, if any holder
acquires Exchange Notes in the Exchange Offer for the purpose of distributing or
participating in the distribution of the Exchange Notes or is a broker-dealer,
such holder cannot rely on the position of the staff of the Commission described
above and must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with any resale transaction, unless an
exemption from registration is otherwise available. A broker-dealer that will
receive Exchange Notes for its own account in exchange for Private Notes, where
such Private Notes were acquired by such broker-dealer as a result of
market-making or other trading activities, may be deemed to be an "underwriter"
within the meaning of the Securities Act and must therefore, deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such Exchange Notes. Each such broker-dealer that receives Exchange
Notes for its own account in exchange for Private Notes, where such Private
Notes were acquired by such broker-dealer as a result of market-making or other
trading activities, must acknowledge in the Letter of Transmittal that it will
deliver a prospectus in connection with any resale of such Exchange Notes. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by such a
broker-dealer in connection with resales of any Exchange Notes received in
exchange for Private Notes acquired by such a broker-dealer for its own account,
as a result of market-making or other trading activities. Pursuant to the
Registration Rights Agreement, the Issuer has agreed to make this Prospectus, as
it may be amended or supplemented from time to time, available to any such
broker-dealer that requests copies of such Prospectus in the Letter of
Transmittal for use in connection with any such resale for a period of up to 90
days after the Expiration Date. See "Plan of Distribution."
In addition, to comply with the securities laws of certain jurisdictions,
if applicable, the Exchange Notes may not be offered or sold unless they have
been registered or qualified for sale in such jurisdictions or an exemption from
registration or qualification is available and complied with. The Issuer and the
Guarantors
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have agreed, pursuant to the Registration Rights Agreement (subject to certain
specified limitations set forth therein), to use their reasonable best efforts
to register or qualify the Exchange Notes for offer or sale under the securities
or blue sky laws of such jurisdictions as any holder of the Notes reasonably
requests in writing.
PROCEDURES FOR TENDERING
Subject to the terms and conditions hereof and the Letter of Transmittal,
only a registered holder of Private Notes may tender such Private Notes in the
Exchange Offer. To tender in the Exchange Offer, a holder of Private Notes must
complete, sign and date the Letter of Transmittal, or facsimile thereof, have
the signature thereon guaranteed if required by the Letter of Transmittal, and
mail or otherwise deliver such Letter of Transmittal or such facsimile to the
Exchange Agent at the address set forth below under "-- Exchange Agent" for
receipt prior to the Expiration Date. In addition, either (i) certificates for
such Private Notes must be received by the Exchange Agent along with the Letter
of Transmittal, (ii) a timely confirmation of a book-entry transfer (a
"Book-Entry Confirmation") of such Private Notes into the Exchange Agent's
account at DTC pursuant to the procedure for book-entry transfer described
below, must be received by the Exchange Agent prior to the Expiration Date, or
(iii) the holder must comply with the guaranteed delivery procedures described
below.
THE METHOD OF DELIVERY OF PRIVATE NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTATION TO THE EXCHANGE AGENT IS AT THE ELECTION AND
RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS
USE AN OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY
TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR
PRIVATE NOTES SHOULD BE SENT TO THE ISSUER. HOLDERS MAY REQUEST THEIR RESPECTIVE
BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE
ABOVE TRANSACTIONS FOR SUCH HOLDERS.
The tender by a holder which is not withdrawn prior to the Expiration Date
will constitute a binding agreement between such holder and the Issuer in
accordance with the terms and subject to the conditions set forth herein and in
the Letter of Transmittal.
Any beneficial owner of the Private Notes whose Private Notes are held
through a broker, dealer, commercial bank, trust company or other nominee and
who wishes to tender should contact such intermediary promptly and instruct such
intermediary to tender on such beneficial owner's behalf.
Signatures on a Letter of Transmittal or a notice of withdrawal described
below (see "-- Withdrawal of Tenders"), as the case may be, must be guaranteed
by an Eligible Institution unless the Private Notes tendered pursuant thereto
are tendered (i) by a registered holder who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on the Letter
of Transmittal or (ii) for the account of an Eligible Institution. In the event
that signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, such guarantee must be made by a
member firm of a registered national securities exchange or of the NASD, a
commercial bank or trust company having an office or correspondent in the United
States, or another "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act (any of the foregoing, an "Eligible
Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Private Notes (which term includes any participants in
DTC whose name appears on a security position listing as the owner of Private
Notes) or if delivery of the Notes is to be made to a person other than the
registered holder, such Private Notes must be endorsed or accompanied by a
properly completed bond power, in either case, signed by such registered holder
exactly as the name or names of such registered holder or holders name appear(s)
on such Private Notes with the signature on the Private Notes or the bond power
guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Private Notes or assignments or bond
powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
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representative capacity, such persons should so indicate when signing, and
unless waived by the Issuer, evidence satisfactory to the Issuer of their
authority to so act must be submitted with the Letter of Transmittal.
The Exchange Agent and the Depositary have confirmed that any financial
institution that is a participant in the Depositary's system may utilize the
Depositary's Automated Tender Offer Program to tender Private Notes.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Private Notes will be determined
by the Issuer in its sole discretion, which determination will be final and
binding. The Issuer reserves the absolute right to reject any and all Private
Notes not properly tendered or any Private Notes, the Issuer's acceptance of
which would be unlawful. The Issuer also reserves the right to waive any
defects, irregularities or conditions of tender as to particular Private Notes.
The Issuer's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Private Notes must be cured within such time as the
Issuer shall determine. Although the Issuer intends to request the Exchange
Agent to notify holders of defects or irregularities with respect to tenders of
Private Notes, neither the Issuer, the Exchange Agent nor any other person shall
incur any liability for failure to give such notification. Tenders of Private
Notes will not be deemed to have been made until such defects or irregularities
have been cured or waived.
While the Issuer has no present plan to acquire any Private Notes which are
not tendered in the Exchange Offer or to file a registration statement to permit
resales of any Private Notes which are not tendered pursuant to the Exchange
Offer, the Issuer reserves the right in its sole discretion to purchase or make
offers for any Private Notes that remain outstanding subsequent to the
Expiration Date or, as set forth herein under "-- Expiration Date; Extensions;
Termination" and "-- Certain Conditions to the Exchange Offer," to terminate the
Exchange Offer and, to the extent permitted by applicable law, purchase Private
Notes in the open market, in privately negotiated transactions or otherwise. The
terms of any such purchases or offers could differ from the terms of the
Exchange Offer.
By tendering Private Notes pursuant to the Exchange Offer and executing a
Letter of Transmittal, each holder of Private Notes will represent to and agree
with the Issuer that, among other things, (i) the Exchange Notes to be acquired
in connection with the Exchange Offer are being acquired in the ordinary course
of business of the person receiving such Exchange Notes, whether or not such
person is the holder, (ii) that neither the holder nor any such other person has
an arrangement or understanding with any person to participate in the
distribution of the Exchange Notes, (iii) such holder acknowledges and agrees
that any person who is a broker-dealer registered under the Exchange Act or is
participating in the Exchange Offer for the purpose of distributing the Exchange
Notes must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale of the Exchange Notes
acquired by such person and cannot rely on the position of the staff of the
Commission set forth in certain no-action letters described herein, (iv) such
holder understands that a secondary resale transaction described in clause (iii)
above and any resales of Exchange Notes obtained by such holder in exchange for
Private Notes acquired by such holder directly from the Issuer should be covered
by an effective registration statement containing the selling securityholder
information required by Item 507 or Item 508, as applicable, of Regulation S-K
of the Commission, and (v) such holder or such other person is not an
"affiliate" of the Issuer within the meaning of Rule 405 under the Securities
Act (or, if it is an affiliate, that such holder or other person will comply
with the registration and prospectus delivery requirements of the Securities Act
to the extent applicable). If the holder is a broker-dealer that will receive
Exchange Notes for such holder's own account in exchange for Private Notes,
where such Private Notes were acquired by such broker-dealer as a result of
market-making or other trading activities, such holder must acknowledge in the
Letter of Transmittal that such holder will deliver a prospectus in connection
with any resale of such Exchange Notes; however, by so acknowledging and by
delivering a prospectus, such holder will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. See "Plan of
Distribution."
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RETURN OF PRIVATE NOTES
If any tendered Private Notes are not accepted for exchange because of an
invalid tender, or due to the occurrence of certain other events set forth
herein or any other reason set forth in the terms and conditions of the Exchange
Offer or if Private Notes are withdrawn or are submitted for a greater principal
amount than the holders desire to exchange, such unaccepted, withdrawn or
nonexchanged Private Notes will be returned without expense to the tendering
holder thereof (or, in the case of Private Notes tendered by book-entry transfer
into the Exchange Agent's account at the Depositary pursuant to the book-entry
transfer procedures described below, such Private Notes will be credited to an
account maintained with the Depositary) as promptly as practicable.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Private Notes at the Depositary for purposes of the Exchange Offer within
two business days after the date of this Prospectus, and any financial
institution that is a participant in the Depositary's system may make book-entry
delivery of Private Notes by causing the Depositary to transfer such Private
Notes into the Exchange Agent's account at the Depositary in accordance with the
Depositary's procedures for transfer. However, although delivery of Private
Notes may be effected through book-entry transfer at the Depositary, the Letter
of Transmittal or facsimile thereof, with any required signature guarantees and
any other required documentation, must, in any case, be transmitted to and
received by the Exchange Agent at the address set forth below under "-- Exchange
Agent" on or prior to the Expiration Date or pursuant to the guaranteed delivery
procedures described below.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Private Notes and (i) whose Private Notes
are not immediately available or (ii) who cannot deliver their Private Notes (or
complete the procedures for book-entry transfer), the Letter of Transmittal or
any other required documentation to the Exchange Agent prior to the Expiration
Date, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by the Issuer (by
facsimile transmission (receipt confirmed by telephone and an original
delivered by guaranteed overnight courier), mail or hand delivery) setting
forth the name and address of the holder, the certificate number(s) of such
Private Notes (if applicable) and the principal amount of Private Notes
tendered, stating that the tender is being made thereby and guaranteeing
that, within five New York Stock Exchange trading days after the Expiration
Date, the Letter of Transmittal (or a facsimile thereof), together with the
certificate(s) representing the Private Notes in proper form for transfer
or a Book-Entry Confirmation, as the case may be, and any other
documentation required by the Letter of Transmittal, will be deposited by
the Eligible Institution with the Exchange Agent; and
(c) Such properly executed Letter of Transmittal (or a facsimile
thereof), as well as the certificate(s) representing all tendered Private
Notes in proper form for transfer or a Book-Entry Confirmation, as the case
may be, and all other documentation required by the Letter of Transmittal
are received by the Exchange Agent within five New York Stock Exchange
trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Private Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Private Notes may be
withdrawn at any time prior to the Expiration Date.
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<PAGE> 56
Any holder who has tendered Private Notes may withdraw the tender by
delivering written notice of withdrawal (which may be sent by facsimile
transmission (receipt confirmed by telephone and an original delivered by
guaranteed overnight courier) or hand delivery) to the Exchange Agent prior to
the Expiration Date. For a withdrawal to be effective, a written notice of
withdrawal must be received by the Exchange Agent at its address set forth
herein prior to the Expiration Date. Any such notice of withdrawal must (i)
specify the name of the person having tendered the Private Notes to be withdrawn
(the "Depositor"), (ii) identify the Private Notes to be withdrawn (including
the certificate number or numbers and principal amount of such Private Notes),
(iii) be timely received and signed by the holder in the same manner as the
original signature on the Letter of Transmittal by which such Private Notes were
tendered or as otherwise set forth in the instructions to the Letter of
Transmittal (including any required signature guarantees), or be accompanied by
documents of transfer sufficient to have the Trustee under the Indenture
register the transfer of such Private Notes pursuant to the terms of the
Indenture into the name of the person withdrawing the tender and (iv) specify
the name in which any such Private Notes are to be registered, if different from
that of the Depositor. If Private Notes have been tendered pursuant to the
procedure for book-entry transfer, any notice of withdrawal must specify the
name and number of the account at the book-entry transfer facility to be
credited with the withdrawn Private Notes or otherwise comply with the
book-entry transfer facility's procedures. All questions as to the validity,
form and eligibility (including time of receipt) of such notices will be
determined by the Issuer, in its sole discretion, whose determination shall be
final and binding on all parties. None of the Issuer, any Guarantor, any
employees, agents, affiliates or assigns of the Issuer, or any Guarantor, the
Exchange Agent or any other person shall be under any duty to give any
notification of any irregularities in any notice of withdrawal or incur any
liability for failure to give such notification. Any Private Notes so withdrawn
will be deemed not to have been validly tendered for purposes of the Exchange
Offer and no Exchange Notes will be issued with respect thereto unless the
Private Notes so withdrawn are validly retendered. Properly withdrawn Private
Notes may be retendered by following one of the procedures described above under
"-- Procedures for Tendering" at any time prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, the Issuer shall not
be required to accept for exchange, or exchange the Exchange Notes for, any
Private Notes not theretofore accepted for exchange, and may terminate or amend
the Exchange Offer as provided herein before the acceptance of such Private
Notes, if any of the following events shall occur:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency which would be reasonably likely to
materially impair the ability of the Issuer to proceed with the Exchange
Offer or there shall have occurred any material adverse development in any
existing action or proceeding with respect to the Issuer or any of its
subsidiaries; or
(b) the Exchange Offer shall violate any applicable law, rule,
regulation or interpretation of the staff of the Commission; or
(c) any governmental approval which the Issuer shall deem necessary
for the consummation of the Exchange Offer as contemplated hereby shall
have not been obtained.
If the Issuer determines in its reasonable discretion that any of these
conditions are not satisfied (or any of such events shall have occurred), the
Issuer may (i) refuse to accept any Private Notes and return all tendered
Private Notes to the tendering holders and/or terminate the Exchange Offer, (ii)
extend the Exchange Offer and retain all Private Notes tendered prior to the
expiration of the Exchange Offer, subject, however, to the rights of holders to
withdraw such Private Notes (see "-- Withdrawal of Tenders") or (iii) waive such
unsatisfied conditions with respect to the Exchange Offer and accept all
properly tendered Private Notes which have not been withdrawn. If such waiver
constitutes a material change to the Exchange Offer, the Issuer will promptly
disclose such waiver by means of a prospectus supplement that will be
distributed to the registered holders of the Private Notes, and the Issuer will
extend the Exchange Offer for a period of five to ten business days, depending
upon the significance of the waiver and the manner of disclosure to the
registered holders, if the Exchange Offer would otherwise expire during such
five to ten business day period.
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<PAGE> 57
Holders may have certain rights and remedies against the Issuer under the
Registration Rights Agreement should the Issuer fail to consummate the Exchange
Offer, notwithstanding a failure of the conditions stated above. Such conditions
are not intended to modify those rights or remedies in any respect.
The foregoing conditions are for the sole benefit of the Issuer and may be
asserted by the Issuer regardless of the circumstances giving rise to such
condition or may be waived by the Issuer in whole or in part at any time and
from time to time in the Issuer's reasonable discretion. The failure by the
Issuer at any time to exercise the foregoing rights shall not be deemed a waiver
of any such right and each such right shall be deemed an ongoing right which may
be asserted at any time and from time to time.
TERMINATION OF CERTAIN RIGHTS
All registration rights under the Registration Rights Agreement of holders
of the Private Notes eligible to participate in the Exchange Offer (and all
rights to receive Additional Interest as described under "-- Purpose of the
Exchange Offer") will terminate upon consummation of the Exchange Offer except
with respect to the Issuer's continuing obligations (i) to indemnify the holders
(including any broker-dealers) and certain parties related to the holders
against certain liabilities (including liabilities under the Securities Act),
and (ii) for a period of up to 90 days after the Expiration Date, to use its
reasonable best efforts to keep the Registration Statement effective and to
provide copies of the latest version of the Prospectus to any broker-dealer that
requests copies of such Prospectus in the Letter of Transmittal for use in
connection with any resale by such broker-dealer of Exchange Notes received for
its own account pursuant to the Exchange Offer. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted pursuant to the
foregoing provisions, the Issuer has been informed that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Questions and requests for assistance as well as all correspondence in
connection with the Exchange Offer and the Letter of Transmittal should be
addressed to the Exchange Agent, as follows:
<TABLE>
<S> <C> <C>
By Hand Or Overnight Delivery: Facsimile Transmissions: By Registered Or Certified Mail:
The Bank of New York (Eligible Institutions The Bank of New York
101 Barclay Street Only) 101 Barclay Street, 7E
Corporate Trust Services Window (212) 815-6339 New York, New York 10286
Ground Level Attention: Reorganization
Attention: Reorganization To Confirm by Telephone or Section
Section for Information Call: Odell Romeo
Odell Romeo (212) 815-6337
</TABLE>
Requests for additional copies of this Prospectus, the Letter of
Transmittal or the Notice of Guaranteed Delivery should be directed to the
Exchange Agent.
The Bank of New York also serves as Trustee under the Indenture.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Issuer. The
principal solicitation is being made by mail; however, additional solicitation
may be made by facsimile transmission, telephone or in person by officers and
regular employees of the Issuer, the Guarantors and their affiliates.
The Issuer has not retained any dealer-manager or other soliciting agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others soliciting acceptance of the Exchange Offer. The Issuer,
however, will pay the Exchange Agent reasonable and customary fees for its
services and will reimburse it for its reasonable out-of-pocket expenses in
connection with the Exchange Offer.
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<PAGE> 58
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Issuer and are estimated in the aggregate to be approximately
$550,000. Such expenses include fees and expenses of the Exchange Agent and
Trustee, accounting and legal fees and printing costs, among others.
The Issuer will pay all transfer taxes, if any, applicable to the transfer
of Private Notes to it or its order pursuant to the Exchange Offer. If, however,
a transfer tax is imposed for any reason other than the exchange of Private
Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or any other persons) will be payable
by the tendering holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with the Letter of Transmittal, the amount
of such transfer taxes will be billed directly to such tendering holder of
Private Notes.
CONSEQUENCE OF FAILURE TO EXCHANGE
Participation in the Exchange Offer is voluntary. Holders of the Private
Notes are urged to consult their financial and tax advisors in making their own
decisions on what action to take.
Private Notes that are not exchanged for the Exchange Notes pursuant to the
Exchange Offer will remain "restricted securities" within the meaning of Rule
144(a)(3)(iv) of the Securities Act. Accordingly, such Private Notes will remain
subject to the restrictions on transfer of such Private Notes as set forth in
the legend thereon and may not be offered, sold, pledged or otherwise
transferred except (i) to a person whom the seller reasonably believes is a QIB
purchasing for its own account or for the account of a QIB in a transaction
meeting the requirements of Rule 144A under the Securities Act, (ii) in an
offshore transaction complying with Rule 903 or Rule 904 of Regulation S under
the Securities Act, (iii) pursuant to an exemption from registration under the
Securities Act provided by Rule 144 thereunder (if available), (iv) pursuant to
an effective registration statement under the Securities Act or (v) pursuant to
another available exemption from the registration requirements of the Securities
Act, and, in each case, in accordance with all other applicable securities laws.
See "Risk Factors -- Consequences of Failure to Exchange Private Notes."
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the
Private Notes as reflected in the Issuer's accounting records on the date of the
exchange. Accordingly, no gain or loss for accounting purposes will be
recognized. The expenses of the Exchange Offer will be amortized over the term
of the Exchange Notes.
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<PAGE> 59
THE AIRLINE CATERING INDUSTRY
Revenues of airline caterers are dependent primarily upon the number of
airline passengers, the number of airline flights served by caterers and the
level of food service (beverage, snack or meal) provided. Catering profitability
has historically been less volatile than airline profitability, due to the
catering business' highly variable cost structure. The primary operating cost
components of airline caterers are food and labor, both of which are highly
variable and more easily adjusted to business cycles than the airlines'
operating costs.
Since airline deregulation in 1978, the airline catering industry has
benefitted from the increase in total United States airline food expenditures
which have grown at a compound annual rate of approximately 6.9%. Beginning in
1992, airlines accelerated their efforts to reduce costs and improve
productivity as a response to cumulative losses incurred as a result of intense
ticket price competition. Airline cost reductions included downgrading the level
of food services, such as switching from hot meal service to snack service,
eliminating individual tray service in favor of bulk meal service and reducing
or eliminating food service on certain flights. The aggregate level of airline
food expenditures in the United States decreased from $2.7 billion in 1992 to
$2.4 billion in 1995 due primarily to the reduction in food expenditures per
passenger, offset partially by an increase in revenue passenger enplanements. In
1996, airline food expenditures in the United States remained constant at the
1995 level of $2.4 billion as declines in food expenditures per revenue
passenger slowed and increases in revenue passenger enplanements continued.
During the first quarter of 1997, airline food expenditures in the United States
increased 2.8% over the comparable period of 1996 as food expenditures per
revenue passenger declined slightly and revenue passenger enplanements
increased.
The following table sets forth revenue passenger enplanements, total food
expenditures and food expenditure per revenue passenger for the United States
airline industry from 1990 through 1996.
<TABLE>
<CAPTION>
TOTAL FOOD
REVENUE PASSENGER EXPENDITURES
ENPLANEMENTS (IN FOOD EXPENDITURES PER
YEAR ENDED DECEMBER 31, (IN MILLIONS) MILLIONS) REVENUE PASSENGER
- --------------------------------------------- ----------------- ------------ ---------------------
<S> <C> <C> <C>
1990......................................... 465 $2,419 $5.20
1991......................................... 453 2,528 5.58
1992......................................... 473 2,734 5.78
1993......................................... 479 2,528 5.28
1994......................................... 518 2,527 4.88
1995......................................... 545 2,418 4.44
1996......................................... 574 2,419 4.21
</TABLE>
- ---------------
Source: Department of Transportation -- Form 41
The following table sets forth revenue passenger enplanements, total food
expenditures and food expenditure per revenue passenger for the United States
airline industry for the three months ended March 31 for each of the years
presented below.
<TABLE>
<CAPTION>
TOTAL FOOD
REVENUE PASSENGER EXPENDITURES
ENPLANEMENTS (IN FOOD EXPENDITURES PER
THREE MONTHS ENDED MARCH 31, (IN MILLIONS) MILLIONS) REVENUE PASSENGER
- --------------------------------------------- ----------------- ------------ ---------------------
<S> <C> <C> <C>
1990......................................... 112 $550 $4.90
1991......................................... 105 554 5.27
1992......................................... 108 634 5.87
1993......................................... 113 623 5.49
1994......................................... 122 601 4.93
1995......................................... 130 562 4.32
1996......................................... 140 565 4.04
1997......................................... 144 581 4.03
</TABLE>
- ---------------
Source: Department of Transportation -- Form 41
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<PAGE> 60
The sources of potential future growth for the airline catering industry
include: (i) a growing demand for air transportation worldwide; (ii) the
increasing proportion of long-haul flights (greater than two and one-half hours)
in the United States and in international markets, which generally offer a
higher level of food service; and (iii) the worldwide trend towards outsourcing
of food service from captive caterers to independent caterers.
Growing Demand for Air Transportation. In the United States, air traffic,
as measured by revenue passenger enplanements, grew at a compound annual rate of
approximately 4.3%, from 267 million in 1978 to 574 million in 1996. Over the
same period, the number of revenue passenger enplanements increased each year,
with the exception of 1991 during which the Gulf War and the recession in the
United States economy caused the first reduction in airline traffic in the
post-deregulation era. In recent years, traffic has grown at higher rates
outside of North America. According to industry data, worldwide revenue
passenger miles are projected to grow at a compound rate of 5.5% from 1996 to
2006. According to 1997 Federal Aviation Administration Aviation Forecast data,
revenue passenger enplanements in the United States are projected to grow at a
compound annual rate of 4.1% through the year 2006.
Increasing Long-Haul Flights; Higher Levels of Food Service. From 1986 to
1996, the number of departing seats (as a measure of capacity) offered on
long-haul flights worldwide increased 97%, and expressed as a percentage of
departing seats on all flights, increased from 21% to 27%. Over the same period,
the number of departing seats offered on long-haul flights in the United States
increased 66%, and expressed as a percentage of departing seats on all flights,
increased from 21% to 30%. The growing proportion of long-haul flights benefits
the airline catering industry because food service levels are generally higher
on long-haul flights than on short-haul flights.
Trend Towards Outsourcing. The airline catering industry is comprised of
two distinct groups of caterers: (i) independent caterers, such as the Company,
which are not owned by an airline; and (ii) captive caterers, which are owned by
an airline. Although captive caterers were formerly a significant factor in the
United States airline catering industry, the Company believes that independent
caterers now provide substantially all of the meals served on flights in the
United States. Airline catering at most major airports outside the United States
has been traditionally dominated by the local flag carriers, which have
typically maintained their own catering operations to serve locations where they
have had a significant share of air passenger traffic. In recent years, however,
certain governments have begun to reduce their ownership stakes in local flag
carriers and increase the landing privileges of other airlines. The Company
expects that increasing airline competition in international markets will
precipitate more cost-consciousness among foreign airlines, accelerating the
trend towards catering outsourcing which has come to dominate the United States
market. As further evidence of this trend, the Company has entered into an
agreement with Air New Zealand to acquire its airline catering business at four
locations in New Zealand and to provide airline catering services to Air New
Zealand from these locations.
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<PAGE> 61
BUSINESS
INTRODUCTION
The Company is the world's largest provider of airline catering services
with food service revenues for the twelve months ended December 31, 1996 of
approximately $1.56 billion. Management believes that these revenues are more
than 50% higher than those of its next largest competitor in the airline
catering industry. The Company had Adjusted EBITDA for the twelve months ended
September 30, 1997 of approximately $176 million. See "Summary Unaudited
Combined Pro Forma Financial Data" and "Selected Historical Financial Data." The
Company currently operates, directly or through joint ventures, 139 kitchens
located at or adjacent to 117 airports in 28 countries. Approximately 60% of the
Company's food service revenues for the twelve months ended September 30, 1997
were derived from United States operations and 40% from international
operations. On a daily basis, the Company services an average of approximately
7,000 domestic and international airline flights and prepares an average of
650,000 meals. SCIS is a Delaware corporation, incorporated in 1995 in
connection with the transactions which effectuated the combination of the
businesses of Sky Chefs and Caterair. See "Certain Transactions -- The
Combination."
STRENGTHS
The Company believes that the following factors contribute to its position
as the world's market leader in the airline catering industry:
WORLDWIDE COVERAGE
The Company is the only airline caterer with a significant operating
presence in both the United States and international markets. Management
believes that the Company's global network of kitchens, strategically located to
service major international airlines, provides significant competitive
advantages. As a result, management believes the Company is well positioned to
take advantage of the anticipated growth in international airline traffic and
the higher and more stable food service levels provided on long-haul flights
(over two and one-half hours), some of which offer up to three meals. Management
also believes that the breadth of the global network operated by the Company and
its strategic marketing partner, LSG, provides a significant opportunity to
attract international airlines with a single supplier approach worldwide. The
Company currently operates kitchens at or adjacent to 25 international gateway
airports, including substantially all of the international gateway airports in
the United States, Latin America and Australia, and the Company or LSG also
operate kitchens at a significant number of international gateway airports in
Europe, including London, Paris, Frankfurt and Rome. See "-- Strategy -- Promote
Single Supplier Approach."
LSG STRATEGIC ALLIANCE
The Company's worldwide coverage is enhanced through a strategic marketing
alliance formed in 1993 with LSG, the airline catering subsidiary of Lufthansa.
The alliance creates an international marketing network with kitchens at or near
157 airports in 40 countries, including 29 international gateway airports. The
Company and LSG, while remaining separate companies, generally conduct
operations under the "LSG Lufthansa Service/SKY Chefs" name and logo and
organize their respective marketing activities with the goal of achieving a
coordinated approach to customers on a worldwide basis. The Company and LSG have
agreed to offer each other the right to participate in the development of
business in new geographic markets and not to compete with each other's catering
operations outside of the United States and the European Community. See "--
Strategy -- Promote Single Supplier Approach" and "Certain Transactions -- LSG
Lufthansa Service GmbH."
DIVERSE AND STABLE CUSTOMER BASE
The Company provides airline catering services to over 250 airlines,
comprising substantially all of the world's major airlines. The Company's five
largest North American customers are American, Delta, Northwest Airlines, United
Airlines and Canadian Airlines and the Company's five largest international
customers are Qantas Airways, British Airways, Japan Air Lines, Lufthansa and
Cathay Pacific Airlines. The
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<PAGE> 62
Company has conducted business with each of these customers for at least ten
years. Since its acquisition from AMR, the parent of American, in 1986, Sky
Chefs has provided services to American under long-term contracts. The current
Sky Chefs contract with American runs through the end of 2003 and, together with
Caterair's contract with American, which runs through the end of 2001, accounted
for approximately 30% of the Company's 1996 food service revenues. No other
customer of the Company accounted for more than six percent of its 1996 food
service revenues. See "Risk Factors -- Dependence on Key Customers" and "--
Customers -- Contracts."
LOW COST STRUCTURE
In 1992, Sky Chefs implemented an extensive operating improvement plan
which reduced annual operating costs by approximately $47 million in 1994 as
compared with 1992. Due in large part to its operating improvement plan, Sky
Chefs increased EBITDA from $29 million in 1992 to $59 million in 1994 and
improved EBITDA as a percentage of revenues from 6.1% to 12.6% over the same
period. As part of the Combination which was consummated on September 29, 1995,
management estimated that approximately $55 million of net cost savings on an
annualized basis were achievable by the end of the third year of combined
operations of Sky Chefs and Caterair. Management believes that as of September
30, 1997 a significant portion of these net cost savings have been achieved as
evidenced by an increase in the combined companies' Adjusted EBITDA from $123
million for the year ended December 31, 1994 to $176 million for the twelve
months ended September 30, 1997 and an improvement in Adjusted EBITDA as a
percentage of the combined companies' revenues from 8.0% for the year ended
December 31, 1994 to 11.0% for the twelve months ended September 30, 1997. See
"Summary Unaudited Combined Pro Forma Financial Data" and "Selected Historical
Financial Data." These net cost savings have been achieved through, among other
things, increasing labor productivity and reducing labor and employee costs at
certain of the Caterair Kitchens; consolidating certain corporate level
management and administrative functions of Sky Chefs and Caterair; reducing food
waste spoilage and shrinkage at certain of the Caterair Kitchens; eliminating
redundant kitchens; and reducing other kitchen operating expenses at certain of
the Caterair Kitchens. In order to achieve these net cost savings, the Company
incurred approximately $52 million in non-recurring costs through September 1997
principally relating to (i) severance payments and other employee costs, (ii)
external consulting services primarily associated with the implementation of
labor savings programs and (iii) other items in connection with the integration
of the business of Sky Chefs and Caterair. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Selected Historical
Financial Data -- SCIS" and "Certain Transactions -- The Combination."
STRATEGY
The Company's business strategy is to: (i) promote a single supplier
approach to the marketing of services through the Company's worldwide network
with LSG; (ii) expand international operations by pursuing new business at
existing locations and by expanding to new locations at international gateway
airports; (iii) develop non-airline catering opportunities; and (iv) achieve
additional net cost savings, while maintaining service quality.
PROMOTE SINGLE SUPPLIER APPROACH
The Company and LSG, through their respective global kitchen networks,
intend to continue to promote the benefits that a global catering network can
offer to worldwide airlines. These benefits include enabling customers to
streamline planning for meals and service scheduling, as well as enhancing
communications with airline caterers and improving their capacity to monitor the
quality of catering services. This approach has enabled the Company and LSG to
obtain long-term contracts with Delta, Northwest Airlines and Canadian Airlines
and the Company and LSG intend to continue to pursue long-term contacts with
other existing and new customers. See "-- Strengths -- LSG Strategic Alliance"
and "Certain Transactions -- LSG Lufthansa Service GmbH."
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<PAGE> 63
EXPAND INTERNATIONAL OPERATIONS
The Company intends to continue to pursue an international market
development program by competing for new business at international gateway
airports where it currently operates, engaging in strategic acquisitions of
international airline caterers and stand-alone kitchens, and entering into joint
venture arrangements with airlines and other parties in markets outside the
United States. In particular, the Company plans to focus on the development of
opportunities at international gateway airports. Such a plan is expected to
provide the Company with the benefit of higher and more stable food service
levels from long-haul flights and greater access to international airline
traffic from such airports. During 1997, the Company acquired a 49% interest in
an airline catering business in Mexico and acquired the airline catering
business of Air New Zealand at Auckland, Wellington, Christchurch and Rarotonga.
Since September 1995, the Company has also acquired airline catering businesses
in Bogota, Colombia, Asuncion, Paraguay and Guayaquil, Ecuador through an
existing joint venture.
DEVELOP NON-AIRLINE CATERING OPPORTUNITIES
The Company is pursuing a strategy to sell food services to non-airline
customers in order to further diversify its revenue base. The Company will focus
on developing the business of preparing and delivering meals from its kitchens
to supermarkets and convenience stores in the United States and employee
cafeterias at industrial plants and office buildings in Latin America. The
Company currently produces fresh food products in two major geographic markets
for The Southland Corporation for sale in 7-Eleven stores and is operating a
pilot program with a subsidiary of The Sara Lee Corporation for the production
of home meal solutions. The United States market for supermarket and convenience
store home meal solutions was approximately $8 billion in 1996 and is expected
to grow rapidly as dual income families seek alternatives to in-home preparation
of meals and restaurant dining. The Company believes that these alternative
markets, particularly the United States home meal solutions market, represent
substantial future opportunities. See "-- Non-Airline Catering Operations."
ACHIEVE ADDITIONAL NET COST SAVINGS
The Company will continue to implement its operating improvement plan in an
effort to achieve additional net cost savings. See "-- Low Cost Structure."
HISTORICAL BACKGROUND
Sky Chefs. Sky Chefs was formed in 1941 as the captive airline catering
subsidiary of American and was acquired in 1986 from AMR, the parent of
American, by Onex Capital and members of Sky Chefs' management. Sky Chefs is a
corporation organized under the laws of the State of Delaware. Onex, based in
Toronto, Canada, is a publicly listed (on the Toronto Stock Exchange and the
Montreal Exchange) diversified holding company that operates through autonomous
subsidiaries and strategic partnerships. The principal executive offices of Sky
Chefs are located at 524 East Lamar Blvd., Arlington, Texas 76011 (telephone
number (817) 792-2123).
Caterair. Marriott founded the airline catering industry in 1937 when it
began providing meals on commercial airline flights in the Washington, D.C.
area. Caterair, a Delaware corporation formed in 1989, acquired Marriott's
airline catering business in December 1989 through a management-led buy-out. The
principal executive offices of Caterair are located at 524 East Lamar Blvd.,
Arlington, Texas 76011 (telephone number (817) 792-2123).
SCIS and CII. SCIS and CII are each Delaware corporations formed in 1989.
SCIS was formed in connection with the Combination to hold the capital stock of
Sky Chefs and CII. CII was formed in connection with the Combination to sublease
certain Caterair Kitchens, and license and purchase certain assets from
Caterair, and conduct operations at such Caterair Kitchens. CII constitutes a
separate operating company from Sky Chefs. The principal executive offices of
SCIS and CII are located at 524 East Lamar, Arlington, Texas 76011 (telephone
number (817) 792-2123) and 6550 Rock Spring Drive, Bethesda, Maryland, 20817
(telephone number (301) 897-7800), respectively.
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<PAGE> 64
On September 29, 1995, the Sky Chefs and Caterair businesses were combined,
creating the world's largest airline catering business. See "Certain
Transactions -- The Combination."
AIRLINE CATERING OPERATIONS
Catering Services. The Company conducts airline catering services out of
kitchens at or near airports for airline customers which include: (i) designing
and planning menus; (ii) purchasing food products, beverages and other items in
accordance with customer specifications; (iii) preparing and assembling
individual meals; (iv) stocking liquor and beverage service carts; (v) loading
meals and service carts onto trucks which transport them from the kitchen to the
airplane; (vi) unloading and cleaning plates, utensils and other accessories
from airplanes on which meals have been served; (vii) providing linens, ice and
duty free items; and (viii) providing inventory management and storing
airline-owned dining equipment, which includes plates, utensils, trays, carts,
glasses and various other items.
In the United States, a substantial portion of the food products,
non-alcoholic beverages and other items used by the Company is purchased under
contracts negotiated and specified by airlines and, generally, the cost of food
products, non-alcoholic beverages and such other items are passed through to
airline customers without profit. However, in its international operations, food
products, beverages and other items are generally purchased locally under
contracts negotiated by the Company.
For information relating to the amounts of revenues, operating profit or
loss and identifiable assets attributable to each of SCIS' and Caterair's
geographic areas, see the Financial Statements and notes thereto included
elsewhere in this Prospectus.
Domestic Operations. The Company is the largest provider of airline
catering services in the United States with 1996 food service revenues in the
United States of approximately $979 million. The Company conducts operations at
72 kitchens serving 56 airports in the United States, including 21 of the 25
busiest airports, as measured by passenger enplanements. According to industry
data, during 1996, these 21 airports accounted for approximately 63% of total
United States air traffic. The 56 United States airports at which the Company
operates account for approximately 84% of total United States air traffic. See
"-- Competition."
International Operations. Outside the United States, the Company currently
operates, directly or through joint ventures, 67 kitchens at or near 61 airports
in 27 countries, including England, France, Spain, Australia, Venezuela, Brazil,
Chile, Portugal, Argentina, Canada, Mexico, New Zealand and Russia and 26
kitchens in Central America and the Caribbean for which the Company has
technical services or management agreements. The Company generally initiates and
conducts its international operations through acquisitions of existing catering
businesses and joint ventures with airline carriers or other local partners,
including Qantas Airways in Australia, Aeroflot in Russia, Goddard Enterprises,
Ltd. in the Caribbean and parts of Central and South America, TAP in Portugal, a
consortium of Persian Gulf carriers in England and certain individuals in
Mexico.
A typical joint venture arrangement with an airline provides for initial
capital investments by the Company and its joint venture partner for
construction of a kitchen and for a long-term management agreement under which
the Company receives a fee for operating the kitchen as well as a long-term
catering contract with the customer/partner. The joint venture arrangement
permits the Company to service other carriers as well as its joint venture
partner. In most cases, the airline joint venture partner commits to purchase
all of its airline catering requirements from the Company at the airports
covered by the joint venture.
NON-AIRLINE CATERING OPERATIONS
The Company is also involved in non-airline catering operations which have
accounted for a relatively small portion of its food service revenues
historically (approximately 3.4% in 1996). Non-airline catering operations in
the United States involve primarily the preparation and delivery of meals to
convenience stores and supermarkets. These activities are conducted from the
Company's existing kitchens. Outside the United States, the Company principally
operates employee cafeterias at industrial plants, office buildings and other
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facilities. In 1996, food service revenues from these activities outside the
United States totaled approximately $41.8 million, with the Company's activities
in South America representing the majority of such sales.
The Company is pursuing a strategy to sell food services to non-airline
customers in order to further diversify its revenue base. The Company will focus
on developing the business of preparing and delivering meals from its kitchens
to supermarkets and convenience stores in the United States and employee
cafeterias at industrial plants and office buildings in Latin America. The
Company currently produces fresh food products in two major geographic markets
for The Southland Corporation for sale in 7-Eleven stores and is operating a
pilot program with a subsidiary of The Sara Lee Corporation for the production
of home meal solutions. The United States market for supermarket and convenience
store home meal solutions was approximately $8 billion in 1996 and is expected
to grow rapidly as dual income families seek alternatives to in-home preparation
of meals and restaurant dining. The Company believes that these alternative
markets, particularly the United States home meal solutions market, represent
substantial future opportunities.
In connection with the formation of Caterair in 1989, Caterair Holdings and
Marriott International, Inc. entered into a non-competition agreement which
prohibits Caterair, subject to certain limited exceptions, from participating in
the food, beverage, merchandise and duty free shop businesses and similar
businesses operated in airport terminals or related facilities and certain food
and service management businesses conducted by Marriott International, Inc. in
1989, other than the airline catering service business, until December 15, 2001.
The Company does not believe that the non-competition agreement will materially
impair its ability to carry out its strategy of developing non-airline catering
opportunities. See "-- Strategy -- Develop Non-Airline Catering Opportunities,"
"-- Competition" and "Certain Transactions -- Caterair."
CUSTOMERS
The Company is the only airline caterer with a significant operating
presence in both the United States and international markets. The Company
provides airline catering services to over 250 airlines, comprising
substantially all of the world's major airlines. The Company's five largest
North American customers are American, Delta, Northwest Airlines, United
Airlines and Canadian Airlines and the Company's five largest international
customers are Qantas Airways, British Airways, Japan Air Lines, Lufthansa and
Cathay Pacific Airlines. The Company has conducted business with each of these
customers for at least ten years. Since its acquisition from AMR, the parent of
American, in 1986, Sky Chefs has provided services to American under long-term
contracts. The current Sky Chefs' contract with American runs through the end of
2003, subject to adjustment based on performance, and, together with Caterair's
contract with American, which runs through the end of 2001, accounted for
approximately 30% of the Company's 1996 food service revenues. No other customer
of the Company accounted for more than six percent of its 1996 food service
revenues.
The Company believes that its size and diversification, both in terms of
geography and customer base, reduce the impact that the failure of any one
airline or the reduction or elimination in food service by any one airline would
have on its overall profitability.
The Company's mix of customers outside of the United States and Canada is
substantially more diversified than in the United States and Canada. The
Company's five largest North American customers accounted for 72% of 1996 food
services revenues in the United States and Canada while its five largest
international customers accounted for only 33% of 1996 food services revenues
outside the United States and Canada.
Contracts. Sky Chefs has a catering services contract with American which
expires at the end of 2003, subject to adjustment based on performance. In 1992,
Sky Chefs negotiated a ten-year contract with American (which replaced a ten
year contract negotiated in 1986 in connection with the acquisition of Sky Chefs
from AMR) and in 1994, Sky Chefs obtained a two-year extension of this contract.
Caterair has a catering services contract with American which expires at the end
of 2001, subject to adjustment based on performance. In September, 1997, Mr.
Robert Crandall, the Chairman and Chief Executive Officer of AMR, the parent of
American, was reported to have stated to financial analysts that in his opinion
American's contracts with the Company "[produce] a cost disadvantage relative to
other caterers" and that American will seek to eliminate its perceived cost
disadvantage. The Company and American periodically discuss issues surrounding
the terms of these contracts and such discussions have continued following Mr.
Crandall's
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remarks. From time to time the contracts with American have been amended and/or
extended, and such contracts may be further amended and/or extended in the
future. The contracts with American specify pricing and quality performance
standards; failure to comply with the quality standards may result in financial
penalties or termination of the contract at the affected airport (or in some
cases, at a comparable airport), and, in certain cases, the purchase of the
kitchen at the affected airport by American.
During 1997, American terminated the Company's services at six of the
Caterair Kitchens due to the Company's failure to comply with these quality
standards. Based on current service levels, the Company estimates that such
terminations will result in reductions of annual revenues of approximately $34
million. Despite the loss of these revenues, management estimates that the
Company continues to provide approximately 86% of American's domestic airline
catering requirements. The loss of the business with American or a significant
portion of such business would have a material adverse effect on the business of
the Company. See "Risk Factors -- Dependence on Key Customers," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Certain Transactions -- AMR and American."
In addition to the contracts with American, the Company has entered into
contracts with durations of five years or more with each of Canadian Airlines,
Delta, Northwest Airlines, United Airlines, USAir and Alaska Airlines, which in
the aggregate provided approximately 22% of the Company's 1996 food service
revenues.
COMPETITION
The airline catering industry is highly competitive. Several large United
States and international caterers, as well as a number of small caterers
operating at one or more locations and, at certain locations, airport terminal
concession operations, compete for airline catering business. The Company
competes primarily with other independent caterers, and to some extent with
captive caterers, on the basis of price, service and performance. The Company's
principal competitors in the United States are Dobbs International Services,
Inc., a subsidiary of Viad Inc, and Ogden Allied Aviation Services Division, a
subsidiary of Ogden Corporation. The Company's principal competitors outside the
United States are Alpha Airport Group PLC, Gate Gourmet, the airline catering
subsidiary of Swissair, and other captive caterers.
The busiest airports have numerous kitchens operated by major caterers. At
some of these airports, unutilized capacity exists, which leads to increased
competition among caterers and gives airlines leverage in negotiating contracts
with all caterers with facilities located there. On the other hand, some other
airports are serviced by only one caterer. For example, the Company is the only
airline caterer at Oklahoma City, Tucson, Phoenix, San Diego, Nashville, El Paso
and Milwaukee and various other airports. Competitive factors in the airports
where there is only one caterer include the airlines' ability to cater their
planes at other airports and the possibility that other caterers may be
encouraged to enter that particular airport if the existing caterer is not
competitive.
Airline catering at most major airports outside the United States was
traditionally dominated by the local flag carriers, which typically maintained
their own catering operations to serve locations where they had a significant
share of air passenger traffic. In recent years, however, governments generally
have reduced their control over local flag carriers and increased the landing
privileges of other airlines. The Company expects this trend, which is likely to
be reinforced by deregulation of the European market and the potential
privatization of captive airline catering companies, to continue and to make the
international catering business more accessible to independent caterers such as
the Company. However, there can be no assurance that such a trend will continue
or that the Company will be successful in obtaining additional operations in
international markets.
In connection with the formation of Caterair in 1989, Marriott and Caterair
Holdings entered into a non-competition agreement which prohibits Marriott,
subject to certain exceptions, from participating in the airline catering
business until December 15, 2001.
EMPLOYEES
At September 30, 1997, Sky Chefs had approximately 11,000 workers at 59
United States kitchens and its corporate headquarters, of which approximately
10,000 were unionized under the Railway Labor Act ("RLA"), the federal labor law
administered by the National Mediation Board governing labor relations for
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employees in the airline and railroad industries. Sky Chefs' foreign operations
include kitchens in Canada, Europe, and Latin America, and employ approximately
12,000 persons.
With respect to its operations in the United States, Sky Chefs has operated
for approximately 28 years under the RLA, which provides for a system-wide
bargaining unit and representation by a single union of covered hourly workers.
The Hotel Employees and Restaurant Employees International Union ("HEREIU")
represents all covered hourly Sky Chefs' employees at all United States kitchen
locations under a Master National Agreement ("MNA") which has been in existence
since 1969. Under the MNA, system-wide bargaining with HEREIU generally occurs
every five years (unless otherwise agreed), with local wage rates at individual
kitchens determined periodically through local wage supplements. In 1995, Sky
Chefs and HEREIU reached a five-year agreement to modify system-wide fringe
benefit provisions of the MNA relating to health and retirement coverage and to
implement cost-containment initiatives that management believes are advantageous
to the operations of Sky Chefs. Sky Chefs believes that its relations with its
employees and HEREIU are good, and that the prohibition on strikes, as well as
the stability and workplace practices provided for under the MNA, have
contributed significantly to the success of Sky Chefs' operations to date. Since
the purchase of Sky Chefs by Onex in 1986, Sky Chefs has not suffered any strike
or work stoppage by its employees. With respect to its foreign operations,
employees are unionized under host country foreign labor laws.
In 1995, SCIS created CII, a separate, wholly owned subsidiary, to operate
certain Caterair Kitchens. While CII and Sky Chefs have a common corporate
parent, each operates as an independent entity, with separate marketing, labor
and personnel functions. Upon the consummation of the Combination, 13 Caterair
Kitchens were acquired by CII. At September 30, 1997, CII had approximately
2,400 full-time domestic workers at 13 United States kitchens, of which 12
United States kitchens were represented by three different unions under the
National Labor Relations Act, the federal labor law administered by the National
Labor Relations Board governing a broad range of industries.
In July 1997, Sky Chefs acquired the Boston operations of CII and, in
October 1997, Sky Chefs acquired the Baltimore, Oakland and Salt Lake City
operations of CII. All kitchens acquired by Sky Chefs will be operated under the
RLA and the MNA with HEREIU. CII believes that its relations with its employees
and their unions are good, although there can be no assurance that objections to
the acquisition of CII operations by Sky Chefs, and the coverage of former CII
employees under the MNA and RLA, will not be raised by affected employees or
unions. SCIS is continuing to review other potential opportunities for
consolidation of Sky Chefs and CII operations.
PROPERTIES
United States Properties. At September 30, 1997, the Company operated 72
kitchens, which served 56 airports throughout the United States with
approximately 4.8 million square feet of building area. The Company owns four of
its kitchens; the remaining 68 are leased. The kitchens are located at or near
major airports and range in size from approximately 6,700 square feet to
approximately 209,800 square feet of building area and operate 20 to 24 hours a
day. The size and structure of the Company's kitchens vary depending upon the
number of meals to be produced by each kitchen. Most of the Company's kitchens
are leased on a long-term basis from airport authorities, American and another
third party (generally for initial terms of 15 to 20 years). The Caterair
Kitchens have been subleased by Caterair to Sky Chefs and CII pursuant to the
Domestic Leases. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Certain Transactions -- The
Combination."
The Company's leasehold improvements with respect to these properties
revert to the lessors upon termination of the leases. In the past, the Company
has not has experienced any difficulty in renewing leases for kitchens on
satisfactory terms, and the Company does not anticipate any significant problems
with respect to renewing leases expiring in the near future. However, there can
be no assurance that it will be successful in renewing any such leases.
Nearly all kitchen leases on airport property in the United States require
the Company to pay ground rent, which ranges from an annual rate of $0.10 to
$15.89 per square foot. Most kitchen leases with airport authorities require the
payment of a percentage concession or royalty fee generally ranging from 2.0% to
13.8%
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of gross revenues, which is typically passed through to customers. Approximately
one-half of the Company's kitchen leases in the United States require the
payment of the greater of the percentage fee or the ground rent amount. Most of
the other kitchen leases require the payment of ground rent plus the percentage
fee. Many of the fixed rental kitchen leases have escalation clauses that
provide for periodic increases tied to the Consumer Price Index. The majority of
kitchen leases entered into by the Company during the past ten years provide for
periodic adjustment of ground rent which is either fixed or is based upon an
appraisal. The Company also pays building rent in connection with several of its
kitchen leases in the United States and expects that upon renewal of certain of
its kitchen leases, airport authorities will require the payment of building
rent in addition to ground rent. The Company is currently negotiating or
renegotiating certain of its kitchen leases.
The Company leases approximately 65,193 square feet at 524 East Lamar,
Arlington, Texas 76011, which houses SCIS', Sky Chefs' and Caterair's corporate
headquarters. This lease expires in March 2003. In addition, the Company leases
and subleases until 2004 approximately 44,500 square feet at 6550 Rock Spring
Drive, Bethesda, Maryland 20817, which houses CII's corporate headquarters.
The Company owns or leases, and operates, a fleet of approximately 1,250
special-purpose catering vehicles to deliver its catering services to airplanes
in the United States and approximately 475 utility vehicles, vans and cars.
The Company also owns or leases land or facilities at 21 locations that are
not in operation, of which four are currently being subleased.
International Properties. At September 30, 1997, the Company operated,
directly or through joint ventures, 67 kitchens at or near 61 airports in 27
foreign countries with approximately 2,400,000 square feet of building area. The
kitchens are located at or near airports and range in size from approximately
4,000 square feet to approximately 160,000 square feet of building area. Any
leases in connection with the land on or the buildings in which the kitchens are
located are generally with airport authorities under long-term leases (generally
for initial terms of 10 years or more).
The Company owns or leases, and operates, a fleet of approximately 580
special-purpose catering vehicles to deliver its catering services to airplanes
outside the United States and approximately 425 utility vehicles, vans and cars.
LEGAL PROCEEDINGS
The Company is involved in routine litigation, including a number of
workers' compensation and related claims, that have arisen in the ordinary
course of business. The Company does not believe that this routine litigation is
material to its financial condition or results of operations.
INSURANCE
The Company maintains insurance policies to cover public liabilities and is
effectively self-insured for workers' compensation liabilities. The Company
establishes reserves, which management believes are adequate, for uninsured
liabilities. Due to the unpredictable nature of events in many foreign
countries, the Company has maintained insurance against political risk in
certain countries and has added such other insurance as available and as
reasonably necessary to keep the Company adequately insured against such risk.
GOVERNMENT REGULATION
General. Each of the Company's United States kitchens is subject to
federal, state and local laws and regulations, governing health, sanitation,
safety, customs and security. In addition, the design and construction of new
kitchens are affected by federal, state and local laws and regulations regarding
food and health matters, environmental matters, zoning and land use. Kitchens
outside the United States are subject to various foreign laws and regulations.
None of these domestic and foreign laws and regulations has had a material
adverse effect on the Company's operations taken as a whole, and the Company has
not experienced any significant difficulties in obtaining material licenses and
approvals necessary to its operations. More stringent and varied laws,
regulations and requirements, however, could result in increases in the cost and
time required to open
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new kitchens, as well as increases in the cost of operating kitchens. In
addition, difficulties in obtaining necessary licenses or permits could cause
delays in the opening of, or limit the Company's ability to open, new kitchens.
There can be no assurance that the Company will in the future be able to obtain
necessary licenses and approvals or that it will remain in compliance with
applicable laws and regulations or that such laws and regulations will not have
a material adverse effect on the Company's operations.
Environmental. Under various federal, state and local laws and
regulations, a current or previous owner or operator, manager or developer of
real estate may be liable for the costs of removing and remediating certain
hazardous or toxic substances on the property. These laws often impose liability
without regard to whether the owner or operator knew of, or was responsible for,
the presence of the hazardous or toxic substances. The costs of removing or
remediating these substances may be substantial and the presence of these
substances, or the failure to remediate conditions affected by the substances
promptly, may adversely affect the owner's or operator's ability to sell or
lease the real estate or to borrow using the real estate as collateral. Persons
who arrange for the disposal or treatment of hazardous or toxic substances may
also be liable for the costs of removing or remediating the substances at the
disposal or treatment facility. Certain laws impose liability for the release of
asbestos into the air and owners or operators of real properties may be sued for
personal injury associated with alleged exposure to asbestos. In connection with
its ownership or leasing and operation of its properties, the Company may be
potentially liable for these costs. In addition, the presence of hazardous or
toxic substances at a site adjacent to or in the vicinity of a property could
require the property owner or user to participate in remediation activities in
certain cases or could have an adverse effect on the value of such property. The
Company believes that it is in substantial compliance in all material respects
with applicable federal, state and local regulations regarding hazardous or
toxic substances and is not subject to liability thereunder which would have a
material adverse effect on its business or financial condition.
The Company maintains underground storage tanks used to store fuel for its
trucks at a number of kitchens located in the United States and other countries.
Under federal and state regulations, the Company is subject to various
requirements applicable to underground fuel storage tanks, including
requirements for upgrading tanks, operating standards, release detection
requirements, and financial responsibility requirements. In the past, a number
of the Company's underground storage tanks have discharged fuel. The Company has
removed all tanks where it was aware of such discharges and remediated, or is in
the process of remediating, any contamination resulting from such discharges and
has removed all but one of its remaining underground storage tanks located in
the United States. The Company is not aware of any liability that it has in
connection with the existing or previous ownership or operation of underground
storage tanks that would have a material adverse effect on the Company's
business or financial condition.
Federal Regulation of Food Services. In addition to applicable state and
local regulations, the Company's domestic kitchens are subject to regulation and
inspection by the United States Food Drug and Administration (the "FDA"). Every
kitchen in the United States must meet the FDA's minimum standards relating to
the handling, preparation and delivery of food, including requirements relating
to the temperature of food and the cleanliness of the kitchen and the hygiene of
its personnel. Leftover and discarded food arriving in the United States on
incoming international flights must be disposed of in accordance with
requirements established by the United States Department of Agriculture
("USDA"), which has the right to inspect the Company's food disposal procedures.
Kitchens are also subject to USDA inspections.
Customs and Security. The Company and its operations are subject to
certain federal laws and regulations which are designed to prevent certain
criminal activities, primarily smuggling and terrorism. In an effort to prevent
such activities, the Federal Aviation Administration requires a five-year
background investigation of all employees of the Company who have access to the
airport ramps and loading docks from which meals are delivered and boarded onto
aircraft. The United States Customs Service, in addition to requiring a similar
background investigation, has the right to inspect all items removed from
incoming international flights, including food trays and related equipment.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name, age and position(s) of each person
who serves as an executive officer and/or director of SCIS or a Guarantor:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --- -------------------------------------------------
<S> <C> <C>
Gerald W. Schwartz................. 55 Director of SCIS and Sky Chefs
Ewout Heersink..................... 47 Director of SCIS and Sky Chefs
Helmut Woelki...................... 47 Director of SCIS and Sky Chefs
Gunter Rothig...................... 61 Director of SCIS and Sky Chefs
Helmut Bleckmann................... 57 Director of SCIS and Sky Chefs
James J. O'Neill................... 63 Director of SCIS and CII, Vice Chairman of the
Board and Chief Executive Officer of SCIS and
Chairman of the Board of CII
Michael Z. Kay..................... 58 Director of SCIS and Sky Chefs and President and
Chief Executive Officer of Sky Chefs
Patrick W. Tolbert................. 52 Director, Executive Vice President and Chief
Financial and Administrative Officer of SCIS and
Sky Chefs
Randall C. Boyd.................... 39 Senior Vice President-Marketing and Customer
Service of Sky Chefs
William S. Woodside................ 75 Director of SCIS and Sky Chefs and Vice Chairman
of Sky Chefs
Daniel J. Altobello................ 56 Director and Chairman of the Board of SCIS and
Chief Executive Officer and President of Caterair
Thomas J. Lee...................... 45 Director-Financial Accounting of SCIS and Sky
Chefs
Eric J. Rosen...................... 36 Director of CII
J. Thomas Markley.................. 64 Director of CII
Aaron Gellman...................... 67 Director of CII
Anthony R. Melman.................. 50 Director of Caterair
Donald F. West..................... 59 Director of certain Guarantors
Norman J. Shuman................... 65 Director of certain Guarantors
</TABLE>
Gerald W. Schwartz has been a director, Chairman of the Board, President
and Chief Executive Officer of Onex and Onex Capital since their formation in
1983. Mr. Schwartz has been a director of OFSI and Sky Chefs since May 1986 and
a director of SCIS since its formation. Mr. Schwartz serves on the board of
directors of ProSource, Inc. and Alliance Communication Corporation.
Ewout Heersink has been Vice President and Chief Financial Officer of Onex
for the past six years and has held various positions at Onex since March 1987.
Mr. Heersink has been a director of OFSI and Sky Chefs since October 1992. Mr.
Heersink has been a director of SCIS since its formation. Mr. Heersink also
serves on the boards of directors of certain Guarantors which are indirectly
wholly-owned subsidiaries of SCIS.
Helmut Woelki has been Chairman of the Executive Board of LSG since April
1989. Mr. Woelki was elected to the boards of directors of OFSI and Sky Chefs in
August 1993. Mr. Woelki has been a director of SCIS since its formation.
Helmut Bleckmann has been Vice President Corporate Strategy/Business
Development of LSG for more than five years. Mr. Bleckmann was elected to the
boards of directors of SCIS, OFSI and Sky Chefs in October 1995.
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Gunter Rothig was appointed Vice Chairman of the Executive Board of LSG in
1989. Mr. Rothig was elected to the boards of directors of OFSI and Sky Chefs in
February 1994. Mr. Rothig has been a director of SCIS since its formation.
James J. O'Neill was named President of Sky Chefs in April 1980. He was
elected to the boards of directors of Sky Chefs and OFSI in May 1986. He was
named Chairman of the Board and Chief Executive Officer of Sky Chefs in March
1994. Prior to joining Sky Chefs, Mr. O'Neill served as Vice President--Data
Processing and Communication Services for American. Mr. O'Neill serves on the
Board of Trustees of the American Management Association, and is a member of the
Executive Committee and Board of Directors of the North Texas Commission. Mr.
O'Neill has been a director and the Chief Executive Officer of SCIS since its
formation. In September 1995, Mr. O'Neill resigned as director, Chief Executive
Officer and Chairman of the Board of Sky Chefs and was elected to the board of
directors and appointed Chairman of the Board of CII. Mr. O'Neill also serves on
the boards of directors of certain Guarantors which are indirectly wholly-owned
subsidiaries of SCIS.
Michael Z. Kay was named President and Chief Operating Officer, and became
a director, of Sky Chefs in September 1991. Mr. Kay was elected to the board of
directors of OFSI in September 1991. From June 1990 until joining Sky Chefs, Mr.
Kay served as Executive Vice President and management consultant for Charter
Medical Corporation. From January 1990 to April 1990, Mr. Kay was President and
Chief Operating Officer of Portman Hotel Company. Mr. Kay has been a director of
SCIS since its formation. Mr. Kay also serves on the board of directors of a
Guarantor which is an indirectly wholly-owned subsidiary of SCIS.
Patrick W. Tolbert was named Executive Vice President and Chief Financial
Officer, and became a director, of Sky Chefs in June 1992. Mr. Tolbert was
elected to the board of directors of OFSI in June 1992. Mr. Tolbert was
appointed Chief Financial and Administrative Officer of Sky Chefs in December
1992. From March 1990 through June 1992, Mr. Tolbert was Senior Vice President
and Chief Financial Officer of Sunbelt Beverage Corporation. Prior thereto, he
served in various executive capacities for The Sara Lee Corporation and several
of its subsidiaries and affiliates, including JP Foodservice, Inc., PYA/Monarch,
Booth Fisheries Corporation and The Electrolux Corporation. Mr. Tolbert has been
a director, and Executive Vice President and Chief Financial and Administrative
Officer, of SCIS since its formation. Mr. Tolbert also serves on the boards of
directors of certain Guarantors which are indirectly wholly-owned subsidiaries
of SCIS.
Randall C. Boyd was named Vice President-Marketing and Customer Service of
Sky Chefs in September 1989 and Mr. Boyd was named Senior Vice
President-Marketing and Customer Service of Sky Chefs in July 1991. Prior to
joining Sky Chefs, Mr. Boyd spent ten years with IBM Corporation in marketing,
strategic planning and sales.
William S. Woodside has been a director of OFSI and Sky Chefs, and Vice
Chairman of Sky Chefs, since May 1987. Mr. Woodside was formerly the Chairman
and Chief Executive Officer of American Can Company. Mr. Woodside serves as a
director of American Capital Mutual Funds. Mr. Woodside has been a director of
SCIS since its formation.
Daniel J. Altobello has been President of Caterair and Caterair Holdings
since December 1989. He has also served as Chief Executive Officer and Chairman
of the Board of Directors of Caterair and Caterair Holdings since December 1989.
Prior thereto, Mr. Altobello worked at Marriott, where he served as Executive
Vice President of Marriott and Chief Operating Officer of Marriott's airline
catering business. Mr. Altobello serves as a director of American Management
Systems, Inc. and as a member of the advisory board of Thayer Capital Partners.
As of September 29, 1995, Mr. Altobello was elected Chairman of the Board of
Directors of OFSI. Mr. Altobello also serves on the boards of directors of
certain Guarantors which are indirectly wholly-owned subsidiaries of SCIS.
Anthony R. Melman became the sole director of Caterair on September 29,
1995. Mr. Melman has been Vice President of Onex for more than five years and
has held various executive offices at Onex since its formation. Mr. Melman
serves on the board of directors of ProSource, Inc. Mr. Melman also serves on
the boards of directors of certain Guarantors which are indirectly wholly-owned
subsidiaries of SCIS.
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Thomas J. Lee has been Director-Financial Accounting of Sky Chefs for more
than five years. Mr. Lee has been Director-Financial Accounting of SCIS since
its formation. Mr. Lee also serves on the boards of directors of certain
Guarantors which are indirectly wholly-owned subsidiaries of SCIS.
Aaron Gellman was named a director of CII on September 29, 1995. Since
January 1992, Mr. Gellman has been the Director of the Transportation Center at
Northwestern University. Since 1995, Mr. Gellman has been a member of the
Federal Aviation Administration Research, Engineering and Development Advisory
Committee. Mr. Gellman is also currently a Professor of Management and Strategy
at the J.L. Kellogg Graduate School of Management and a Professor of Industrial
Engineering at the Robert R. McCormick School of Engineering and Applied
Science. Mr. Gellman also serves on occasion as a consultant to various
companies in the United States and abroad in the areas of transportation and
technological change.
J. Thomas Markley was named a director of CII on September 29, 1995. Mr.
Markley is currently serving as President and Chief Executive Officer of XEL
Communications, Inc. and as Senior Vice President of SALIENT(3) Communications,
Inc., and has served in such capacities since October 1996 and July 1996,
respectively. From 1984 through July 1996, Mr. Markley was President and Chief
Executive Officer of JTM Inc., a consulting firm.
Eric J. Rosen was named a director of CII on September 29, 1995. Mr. Rosen
is currently Managing Director of Onex Investment Corp. and has been employed by
Onex since 1989. Prior thereto, Mr. Rosen worked at Kidder, Peabody & Co. in
both the mergers and acquisitions and merchant banking groups. Mr. Rosen is
currently on the boards of directors of Tower Automotive, Inc., Dura Automotive
Systems, Inc., Ripplewood Holdings L.L.C., Phoenix Pictures Inc. and Worldbridge
Broadland Services Inc.
Donald F. West is currently a tax consultant for Onex Management U.S. Inc.,
an affiliate of Onex, and has been employed in various capacities by Onex since
1989. Mr. West has served on the boards of directors of certain Guarantors which
are indirectly wholly-owned subsidiaries of SCIS since November 24, 1993.
Norman J. Shuman is a certified public accountant and has practiced with
the firm of Belfint, Lyons & Shuman, P.A. since 1958, and is currently a
Director and the President of such firm. Mr. Shuman has served on the boards of
directors of certain Guarantors which are indirectly wholly-owned subsidiaries
of SCIS since December 8, 1992.
Directors of SCIS, Sky Chefs, CII, Caterair and the other Guarantors are
elected at each annual meeting of stockholders of the relevant corporation to
serve for one year or until their successors are elected and qualified.
Executive officers hold their offices for such terms as determined by the board
of directors of the relevant corporation and until their respective successors
are chosen and qualified. Messrs. Woelki, Rothig and Bleckmann were selected to
serve on the board of directors of OFSI, SCIS and Sky Chefs by LSG pursuant to
the LSG Stockholders' Agreement. See "Certain Transactions -- LSG Lufthansa
Service GmbH."
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<PAGE> 73
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth information concerning
annual and long-term compensation (for 1996, 1995 and 1994) awarded to, earned
by, or paid to each of SCIS', Sky Chefs', CII's and Caterair's chief executive
officer and each of such entities' (and their subsidiaries') four most highly
compensated executive officers (other than the chief executive officer),
including certain former executive officers, whose total annual salary and bonus
for the year ended December 31, 1996 was in excess of $100,000 (the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------- AWARD
OTHER ---------------
ANNUAL SECURITIES ALL OTHER
NAME AND SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
PRINCIPAL POSITION(S) YEAR(1) ($)(2) ($)(3) ($)(4) OPTIONS/SARS(5) ($)
- ---------------------------- ------- -------- -------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
James J. O'Neill 1996 495,000(10) 551,571 308,200(11) -0- 3,750(13)
Chief Executive 1995 495,000(10) 404,809 321,400(11) -0- 3,750(13)
Officer of SCIS and 1994 485,000(10) 391,180 331,000(11) -0- 4,620(13)
Chairman of the Board
of CII(6)
Michael Z. Kay 1996 600,000 670,929 86,000(11) -0- 3,750(13)
President and Chief 1995 395,000 328,309 61,000(11) -0- 3,750(13)
Operating Officer 1994 370,000 300,618 62,000(11) -0- 4,620(13)
of Sky Chefs(6)
Patrick W. Tolbert 1996 400,000(10) 485,929 38,400(11) -0- 3,750(13)
Executive Vice President 1995 245,000(10) 274,094 32,400(11) -0- 3,750(13)
and Chief Financial and 1994 230,000(10) 169,243 34,400(11) -0- 2,390(13)
Administrative Officer of
SCIS and Sky Chefs(6)
Randall C. Boyd 1996 275,000 369,571 20,800(11) -0- 3,750(13)
Senior Vice President- 1995 170,000 141,734 18,600(11) -0- 3,750(13)
Marketing and Customer 1994 160,000 116,243 19,600(11) -0- 2,165(13)
Service of Sky Chefs(6)
Thomas J. Lee 1996 78,269 31,367 -0- -0- 2,640(13)
Director - Financial 1995 75,989 25,836 -0- -0- 2,639(13)
Accounting of 1994 73,066 24,108 -0- -0- 1,827(13)
SCIS and Sky Chefs(6)
Daniel J. Altobello 1996 525,000 -0- 45,000 -0- 982,572(14)
Chief Executive 1995 414,306 -0- 37,130(12) -0- 1,503,822(15)
Officer and 1994 525,000 -0- 46,137(12) -0- -0-
President of Caterair(7)
Angelo D. Bizzarro 1996 295,000 481,732 22,650(12) -0- -0-
Former Executive 1995 295,000 -0- 25,000(12) 36.04 735,000(16)
Vice President and 1994 293,462 -0- 25,777(12) -0- -0-
Chief Operating
Officer of Caterair
and Former Chief Executive
Officer and President of
CII(8)
John C. Carr 1996 79,006 34,200 5,000(12) -0- 193,538(17)
Former Senior Vice 1995 119,404 -0- 16,154 10.81 135,000(18)
President and General 1994 130,688 -0- 18,262(12) -0- -0-
Counsel of Caterair and
Former General Counsel
of SCIS(9)
</TABLE>
- ---------------
(1) Prior to September 30, 1995, the Named Executive Officers other than
Messrs. Altobello, Bizzarro and Carr were employed and compensated by Sky
Chefs and Messrs. Altobello and Bizzarro were compensated by Caterair.
Prior to October 31, 1995, Mr. Carr was employed and compensated by
Caterair. See "Management -- Directors and Executive Officers." From
September 30, 1995, Mr. O'Neill was employed and compensated by SCIS and
CII, and Messrs. Tolbert and Lee were employed or compensated by SCIS and
Sky Chefs. For all periods shown, Messrs. Kay and Boyd were employed and
compensated by Sky Chefs. From October 1, 1995, Mr. Bizzarro was employed
and
67
<PAGE> 74
compensated by CII; however, he resigned in March 1997. From November 1,
1995, Mr. Carr was employed by SCIS and Caterair and compensated by SCIS;
however, he resigned in June 1996. From October 1, 1995, Mr. Altobello was
employed and compensated by OFSI. No officer of any Guarantor (other than
Sky Chefs, CII and Caterair) receive compensation for serving in such
capacity.
(2) Amounts shown include the dollar value of base salary (cash and noncash)
earned and received by the Named Executive Officers. Amounts shown for
Messrs. Altobello, Bizzarro and Carr include Caterair's contributions to
Caterair's Retirement Savings and Investment Plan (401(k) Plan) and
Executive Deferred Compensation Plan for periods during which such Named
Executive Officers were compensated by Caterair.
(3) Amounts shown include the dollar value of bonuses earned by the Named
Executive Officers during such year although a portion of such bonuses were
paid in the subsequent year. Such bonuses were determined in accordance
with Sky Chefs' Performance Reward Plan for periods during which the Named
Executive Officers were compensated by SCIS, Sky Chefs or CII.
(4) Amounts shown for the Named Executive Officers (other than for Messrs.
Altobello, Bizzarro and Carr) for all periods, and for Mr. Carr from
November 1, 1995 through June 1996, include reimbursement for automobile
allowance, country club membership fees and mortgage differential.
(5) Amounts shown indicate number of units granted to such individual pursuant
to the Phantom Stock Plan. See "-- Phantom Stock Plan" and "Aggregated
Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Option/SAR
Values."
(6) Messrs. O'Neill, Kay, Tolbert, Boyd and Lee are parties to the Management
Shareholders' Agreement (the "Management Shareholders' Agreement"), dated
as of May 29, 1986, as amended, among OFSI, an affiliate of Onex and
certain employees, officers and directors of SCIS (the "Management
Shareholders"). See "Certain Transactions -- Management Shareholders'
Agreement."
(7) Includes compensation paid to Mr. Altobello through September 29, 1995 by
Caterair. Excludes $131,250 paid to Mr. Altobello from September 30, 1995
through December 31, 1995 by OFSI for services performed by Mr. Altobello
under his employment contract with OFSI. Subsequent to September 29, 1995,
Mr. Altobello has been compensated by OFSI. See "-- Employment
Agreements -- Daniel J. Altobello" and "Certain
Transactions -- Transactions with Certain Caterair Persons."
(8) Includes compensation paid to Mr. Bizzarro through September 29, 1995 by
Caterair. Mr. Bizzarro resigned from his positions with Caterair on
September 29, 1995 and entered into an employment agreement with CII which
became effective following the consummation of the Combination. See
"Certain Transactions -- Transactions with Certain Caterair Persons." From
October 1, 1995, Mr. Bizzarro was compensated by CII. Mr. Bizzarro resigned
from his positions with CII effective as of March 1997.
(9) From 1993 through March 1994, Mr. Carr was Vice President and Associate
General Counsel of Caterair. From April 1994 through June 1996, Mr. Carr
served as Senior Vice President and General Counsel of Caterair. From
September 29, 1995 through June 1996, Mr. Carr served as General Counsel of
SCIS. Mr. Carr was compensated by Caterair through October 31, 1995 and
from November 1, 1995 through June 1996 by SCIS. Mr. Carr resigned from his
positions with SCIS and Caterair effective as of June 1996.
(10) Amounts shown include a $60,000 fee for serving on OFSI's board of
directors.
(11) Includes the amounts accrued but not funded or paid with respect to the
Named Executive Officers under Sky Chefs Supplemental Retirement Plan. Such
amounts include $292,000, $307,000 and $306,000 for 1996, 1995 and 1994,
respectively, for Mr. O'Neill; $74,000, $49,000 and $50,000 for 1996, 1995
and 1994, respectively, for Mr. Kay; $27,000, $21,000 and $23,000 for 1996,
1995 and 1994, respectively, for Mr. Tolbert; and $10,000, $6,000 and
$7,000 for 1996, 1995 and 1994, respectively, for Mr. Boyd.
75
<PAGE> 75
(12) All or a portion of amounts shown are for payments made under the Caterair
International Flexible Perquisite Plan and if applicable, include
Caterair's contributions to the Retirement Savings and Investment Plan
(401(k) Plan).
(13) Amounts shown include the contributions made to Sky Chefs' Retirement
Savings and Investment Plan (401(k) Plan).
(14) Includes a $978,822 payment made to Mr. Altobello by OFSI on January 1,
1996 in respect of severance payments otherwise due under Mr. Altobello's
former employment agreement with Caterair and $3,750 of contributions made
by SCIS pursuant to Sky Chefs' Retirement Savings and Investment Plan
(401(k) Plan). See "-- Employment Agreements -- Daniel J. Altobello,"
"-- Employee Plans" and "Certain Transactions -- Transactions with Certain
Caterair Persons."
(15) Includes (i) a $525,000 restructuring payment pursuant to the Caterair Key
Employee Retention Plan and (ii) a $978,822 severance payment under Mr.
Altobello's former employment contract with Caterair. See "-- Employment
Agreements -- Daniel J. Altobello," "-- Employee Plans" and "Certain
Transactions -- Transactions with Certain Caterair Persons."
(16) Includes a $440,000 severance payment and a $295,000 retention payment
pursuant to the Caterair Key Employee Retention Plan. See "-- Employee
Plans" and "Certain Transactions -- Transactions with Certain Caterair
Persons." Excludes any payment to be made under the Phantom Stock Plan.
See "-- Phantom Stock Plan" and "Aggregated Option/SAR Exercises in Last
Fiscal Year and Fiscal Year-End Option/SAR Values."
(17) Includes a $160,000 payment pursuant to the Caterair Key Employee
Retention Plan and a $33,538 payment in respect of accrued but unused
vacation time through the date of termination of employment. See
"-- Employee Plans." Excludes any payment to be made under the Phantom
Stock Plan. See "-- Phantom Stock Plan" and "Aggregated Option/SAR
Exercises in Last Fiscal Year and Fiscal Year-End Option/SAR Values."
(18) Includes a $135,000 retention payment pursuant to the Caterair Key
Employee Retention Plan. See " -- Employee Plans."
COMPENSATION OF DIRECTORS
The directors of SCIS and Sky Chefs do not receive any compensation for
serving as directors. However, Messrs. Woelki, Bleckmann and Rothig receive
annual compensation of $30,000, and Messrs. O'Neill and Tolbert receive annual
compensation of $60,000, for serving on OFSI's board of directors. Messrs.
Schwartz, Heersink, Kay, Woodside and Altobello do not receive any compensation
for serving on OFSI's board of directors. Directors of SCIS and Sky Chefs are
reimbursed by SCIS and Sky Chefs, respectively, for expenses incurred by them in
connection with board meetings.
Mr. Melman does not receive any compensation for serving on Caterair's
board of directors.
Mr. O'Neill does not receive any compensation for serving as a director of
CII. Messrs. Rosen, Markley and Gellman receive annual compensation of $50,000,
$15,000 and $15,000, respectively, for serving on CII's board of directors.
Messrs. Markley and Gellman also receive $1,000 for each board meeting they
attend. Directors of CII are reimbursed for expenses incurred by them in
connection with CII board meetings.
Except as described in the preceding paragraphs, the directors of the
Guarantors do not receive compensation for serving in such capacity.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISION
The members of the compensation committee of each of SCIS and Sky Chefs
during the year ended December 31, 1996 were Messrs. Woodside, Heersink and
Rothig. No such person is or was an officer or employee of SCIS or Sky Chefs.
Such compensation committees are responsible for establishing the levels of
compensation and benefits for SCIS' and Sky Chefs' officers and employees.
76
<PAGE> 76
No member of Caterair's board of directors during the year ended December
31, 1996 is or was an officer or employee of Caterair. The board of directors of
Caterair is responsible for establishing the levels of compensation and benefits
for Caterair's officers and employees.
No member of CII's board of directors during the year ended December 31,
1996, other than Mr. Bizzarro (who resigned in March 1997), is or was an officer
or employee of CII. The board of directors of CII is responsible for
establishing the levels of compensation and benefits for CII's officers and
employees. Mr. Bizzarro's compensation was determined pursuant to his employment
agreement and he did not participate in deliberations regarding any
discretionary components of his compensation. See "Certain
Transactions -- Transactions with Certain Caterair Persons."
EMPLOYMENT AGREEMENTS
James J. O'Neill. The employment agreement, dated as of January 1, 1997,
between James J. O'Neill and OFSI, provides that Mr. O'Neill shall receive an
annual salary of $250,000, certain benefits and a perquisites allowance of
$30,000. Mr. O'Neill's employment may be terminated by OFSI only for good cause
(as defined in the employment agreement) prior to January 31, 1999. Mr. O'Neill
is entitled to receive his salary through January 31, 1999 in the event that (i)
OFSI terminates Mr. O'Neill's employment other than for good cause or (ii) Mr.
O'Neill terminates his own employment due to a material violation or failure of
OFSI to perform a material provision of his employment agreement prior to
January 31, 1999 (approximately $373,333 if termination of employment had
occurred as of September 30, 1997). Mr. O'Neill also agreed not to compete with
SCIS for two years following termination of his employment.
Michael Z. Kay. The employment agreement, dated as of January 1, 1997,
between Michael Z. Kay and Sky Chefs provides that Mr. Kay, as President and
Chief Executive Officer of Sky Chefs, shall receive an annual salary of $600,000
(subject to increase), a bonus calculated in accordance with Sky Chefs'
incentive bonus plan, certain benefits and a perquisites allowance of $30,000.
The agreement expires on December 31, 2001. Mr. Kay is entitled to receive
during each year following termination, payment of his salary, payment of an
amount equal to the average of the annual incentive bonuses received by Mr. Kay
for the two years preceding the date of termination and certain benefits for a
period beginning on the date of termination and ending on December 31, 2001
(approximately $4,800,881 if termination of employment had occurred as of
September 30, 1997) ("Severance Payment") in the event that (i) Sky Chefs
terminates Mr. Kay's employment other than for good cause or (ii) Mr. Kay
terminates his own employment due to a material violation or failure of Sky
Chefs to perform a material provision of his employment agreement. On January 2,
2001, Sky Chefs and Mr. Kay are obligated to begin good faith negotiations for
the renewal or extension of Mr. Kay's employment. If mutually acceptable renewal
terms are not agreed upon by June 30, 2001, Mr. Kay is entitled to receive for
one year thereafter payments including components substantially the same as
those that would be included in his Severance Payment. The employment agreement
contains non-compete provisions.
Patrick W. Tolbert. The employment agreement, dated as of January 1, 1997,
between Patrick W. Tolbert and Sky Chefs provides that Mr. Tolbert, as Executive
Vice President and Chief Financial and Administrative Officer of Sky Chefs,
shall receive an annual salary of $340,000 (subject to increase), a bonus
calculated in accordance with Sky Chefs' incentive bonus plan, certain benefits
and a perquisites allowance of $30,000. The agreement expires on December 31,
2001. Mr. Tolbert is entitled to receive during each year following termination,
payment of his salary, an amount equal to the average of the annual incentive
bonuses received by Mr. Tolbert for the two years preceding the date of
termination and certain benefits for a period beginning on the date of
termination and ending on December 31, 2001 (approximately $3,442,549 if
termination of employment had occurred as of September 30, 1997) in the event
that (i) Sky Chefs terminates Mr. Tolbert's employment other than for good cause
or (ii) Mr. Tolbert terminates his own employment due to a material violation or
failure of Sky Chefs to perform a material provision of his employment
agreement. The employment agreement contains non-compete provisions.
Randall C. Boyd. The employment agreement, dated as of January 1, 1997,
between Randall C. Boyd and Sky Chefs provides that Mr. Boyd, as Senior Vice
President Marketing and Customer Services of Sky
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<PAGE> 77
Chefs, shall receive an annual salary of $275,000 (subject to increase), a bonus
calculated in accordance with Sky Chefs' incentive bonus plan, certain benefits
and a perquisites allowance of $30,000. The agreement expires on December 31,
2001. Mr. Boyd is entitled to receive during each year following termination,
payment of his salary, an amount equal to the average of the annual incentive
bonuses received by Mr. Boyd for the two years preceding the date of termination
and certain benefits for a period beginning on the date of termination and
ending on December 31, 2001 (approximately $2,382,775 if termination of
employment had occurred as of September 30, 1997) in the event that (i) Sky
Chefs terminates Mr. Boyd's employment other than for good cause or (ii) Mr.
Boyd terminates his own employment due to a material violation or failure of Sky
Chefs to perform a material provision of his employment agreement. The
employment agreement contains non-compete provisions.
Daniel J. Altobello. Mr. Altobello had an employment agreement with
Caterair which was terminated on September 29, 1995. Mr. Altobello received a
change of control payment of $525,000 pursuant to the Caterair Key Employee
Retention Plan and a severance payment of $978,822 under his former employment
agreement with Caterair upon the consummation of the Combination. In addition,
on January 1, 1996, Mr. Altobello received an additional $978,822 payment from
OFSI in respect of severance payments otherwise due under his former employment
agreement with Caterair. In connection with the Combination, Mr. Altobello
entered into a new employment agreement with OFSI. See "-- Employee Plans,"
"-- Summary Compensation Table" and "Certain Transactions -- Transactions with
Certain Caterair Persons."
EMPLOYEE PLANS
In September 1994, the board of directors of Caterair adopted the Caterair
Key Employee Retention Plan in order to provide an incentive to certain officers
and other key executive and management employees to remain in the employ of
Caterair while Caterair attempted to restructure its debt and equity. Each
eligible participant in the Caterair Key Employee Retention Plan was entitled to
receive certain severance benefits if (i) a change of control occurred, and (ii)
during the three years following such change of control, the participant was
terminated other than for cause or resigned with good reason. Severance benefits
for eligible persons ranged from six months to two years of the participant's
salary and benefits. Payments relating to severance under the Caterair Key
Employee Retention Plan, to the extent they exceeded amounts payable under any
participant's employment agreement, were in lieu of any payments due under such
employment agreement. The consummation of the Combination constituted a change
of control under the Caterair Key Employee Retention Plan. In connection with
the Combination, severance benefits in the aggregate amount of approximately
$2.7 million were paid by Caterair. As of September 30, 1997, the maximum
additional amount payable under the Caterair Key Employee Retention Plan was
$0.5 million (assuming all remaining eligible participants terminated their
employment prior to September 29, 1998 in a manner which would entitle them to
payments thereunder). All amounts payable under the Caterair Key Employee
Retention Plan were accrued as of September 30, 1997.
In connection with the Combination, retention payments to certain Caterair
employees in the aggregate amount of $2.8 million were paid by Caterair under
the Caterair Key Employee Retention Plan.
In July 1995, Caterair adopted the Caterair International Transition
Severance Plan in order to provide an incentive to key personnel to remain in
the employ of Caterair through the consummation of the Combination. Each
eligible participant in the Caterair International Transition Severance Plan who
remained an employee of Caterair until at least September 30, 1995 and whose
employment with Caterair was terminated before September 30, 1996 was entitled
to receive certain severance benefits. Caterair paid $0.9 million pursuant to
the Caterair International Transition Severance Plan.
PHANTOM STOCK PLAN
In 1995, certain officers, and other employees of Caterair received awards
under OFSI's Phantom Stock Plan for Management Employees (the "Phantom Stock
Plan") of a number of units equal to the quotient obtained by dividing (i) the
cost basis of the Caterair Holdings stock held by such participant by (ii) the
quotient obtained by dividing $425,000,000 by the number of shares of OFSI Class
A Common Stock
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<PAGE> 78
outstanding immediately prior to the Combination. The Phantom Stock Plan
provides that upon termination of employment of a participant, such participant
will be entitled to receive an amount per unit equal to the sum of (i) the
dividends paid on a share of OFSI Class A Common Stock during the period from
the date of the award of such unit through the end of the fiscal quarter
immediately prior to termination of employment, (ii) the net increase in
stockholders' equity (which shall be negative if stockholders' equity decreases)
attributable to a share of OFSI Class A Common Stock from the date of the award
of such unit through the end of the fiscal quarter immediately prior to
termination of employment and (iii) 100% of the initial value of the unit;
provided, that if before September 29, 1997, (x) the participant voluntarily
terminates his or her employment with OFSI or (y) the participant's employment
with OFSI is terminated "for cause" (as defined in the Phantom Stock Plan) such
participant will forfeit 50% of the initial value of such participant's units
and receive payments as if the references to "100%" in clause (iii) were "50%."
If a participant's employment is terminated at any time prior to September 29,
1997, payment for such participant's units shall not be made until November 29,
1997. In the event of a sale by Onex or certain affiliates thereof to a third
party purchaser of shares of OFSI Class A Common Stock, participants in the
Phantom Stock Plan are entitled to "tag-along" and subject to "drag-along"
rights.
Upon an initial public offering of OFSI, each participant would receive a
distribution in respect of each unit held thereby (in cash, OFSI stock or a
combination of both) having a value equal to the closing price of a share of
OFSI Class A Common Stock on the first day of trading following the
effectiveness of the registration statement relating to such initial public
offering, plus an amount equal to the dividends that were paid on a share of
OFSI Class A Common Stock during the period from the date of the award of such
unit to immediately prior to the initial public offering. Upon the dissolution
or liquidation of OFSI or certain business combinations involving OFSI, each
participant would receive in respect of each unit an amount equal to the sum of
(i) the dividends paid on a share of OFSI Class A Common Stock during the period
from the date of the award of such unit through the end of the fiscal quarter
immediately prior to such dissolution or liquidation or business combination
transaction, (ii) the net increase in stockholders' equity (which shall be
negative if stockholders' equity decreases) attributable to a share of OFSI
Class A Common Stock from the date of the award of such unit through the end of
the fiscal quarter immediately prior to such dissolution or liquidation or
business combination transaction and (iii) 100% of the initial value of such
unit.
The Phantom Stock Plan became effective as of September 29, 1995 and will
continue in effect until terminated or suspended by OFSI's board of directors.
However, no termination, modification or amendment of the Phantom Stock Plan by
OFSI's board of directors may adversely affect the accrued rights of a
participant thereunder. If not previously terminated, the Phantom Stock Plan
shall terminate ten business days following the closing of an initial public
offering of OFSI or 60 days after the closing of certain business combinations
and other events enumerated in the Phantom Stock Plan, all of which trigger
redemption of the units issued thereunder.
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<PAGE> 79
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FISCAL YEAR-END AT FISCAL YEAR-
SHARES VALUE (#) END($)
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME(1) EXERCISE(#) ($) UNEXERCISABLE(2)(3) UNEXERCISABLE
- --------------------------------------------- ----------- -------- ------------------- ---------------
<S> <C> <C> <C> <C>
Angelo D. Bizzaro
Former Executive Vice President and Chief
Operating Officer of Caterair and Chief
Executive Officer of CII................... -- -- 36.04(4) --
John C. Carr
Former Senior Vice President and General
Counsel of Caterair and Former General
Counsel of SCIS............................ -- -- 10.81(5) --
</TABLE>
- ---------------
(1) No Named Executive Officer other than Messrs. Bizzarro and Carr have been
granted any stock options (or tandem SARs) or freestanding SARs by SCIS or
any Guarantor.
(2) Amounts shown indicate number of units granted to such individual pursuant
to the Phantom Stock Plan. See "-- Phantom Stock Plan."
(3) None of the SARs were exercisable as of December 31, 1996.
(4) Mr. Bizzarro voluntarily terminated his employment with CII in March 1997.
Accordingly, Mr. Bizzarro is entitled to receive $38,105 on November 29,
1997 in respect of the units held by him under the Phantom Stock Plan. See
"-- Phantom Stock Plan."
(5) Mr. Carr's employment with SCIS was terminated in June 1996. Accordingly,
Mr. Carr is entitled to receive $26,273 on November 29, 1997 in respect of
the units held by him under the Phantom Stock Plan. See " -- Phantom Stock
Plan."
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<PAGE> 80
SECURITY OWNERSHIP
The following table sets forth certain information regarding OFSI's
outstanding shares of Class A and Class B Common Stock which is beneficially
owned, as of September 30, 1997, by (i) each person who owns 5% or more of the
outstanding shares of OFSI Class A Common Stock or OFSI Class B Common Stock,
(ii) each current, and each nominee to become a, director of SCIS and each
Guarantor, (iii) each of the Named Executive Officers and (iv) all directors and
executive officers of SCIS and each Guarantor as a group.
<TABLE>
<CAPTION>
OFSI CLASS A COMMON OFSI CLASS B COMMON
STOCK(1) STOCK(1)
------------------------ ------------------------
NUMBER OF PERCENTAGE NUMBER OF PERCENTAGE
BENEFICIAL OWNER(2) SHARES OF CLASS SHARES OF CLASS
- ------------------------------------------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Onex (3)(4)(5)............................. 136,623.67 77.98% 12,753.50 100.00%
161 Bay Street
Toronto, Ontario
Canada
OnCap Holdings Corp.(5).................... 136,623.67 77.98% 12,753.50 100.00%
161 Bay Street
Toronto, Ontario
Canada
LSG(4)(6)(7)............................... 38,326.36 23.71% -- --
Am Holzweg 26
65830 Kriftel
Federal Republic of Germany
Gerald W. Schwartz(5)(8)................... 136,623.67 77.98% 12,753.50 100.00%
161 Bay Street
Toronto, Ontario
Canada
Helmut Woelki(9)(10)....................... 1,611.90 * -- --
Helmut Bleckmann(9)(11).................... 135.00 * -- --
Gunter Rothig.............................. -- -- -- --
Ewout Heersink............................. -- -- -- --
James J. O'Neill(9)(12).................... 3,442.62 2.13% 219.30 1.72%
Michael Z. Kay(9)(13)...................... 1,147.54 * 150.00 1.17%
Patrick W. Tolbert(9)(14).................. 918.03 * 120.00 *
Randall C. Boyd(9)(15)..................... 573.77 * -- --
William S. Woodside(9)(16)................. 2,295.08 1.42% -- --
Daniel J. Altobello(17).................... 14.81 * -- --
Thomas J. Lee(9)(18)....................... 160.66 * -- --
Eric J. Rosen.............................. -- -- -- --
J. Thomas Markley.......................... -- -- -- --
Aaron Gellman.............................. -- -- -- --
Anthony R. Melman.......................... -- -- -- --
Donald F. West............................. -- -- -- --
Norman J. Shuman........................... -- -- -- --
All directors and executive
officers of SCIS and each
Guarantor as a group..................... -- -- -- --
(18 persons as a group)(5)(8)(19)........ 136,623.67 77.98% 12,753.50 100.00%
</TABLE>
- ---------------
* Less than 1%
(1) Each holder of OFSI Class A Common Stock is entitled to one vote for each
share of OFSI Class A Common Stock held by such holder and each holder of
OFSI Class B Common Stock is entitled to one vote for every two shares of
OFSI Class B Common Stock held by such holder. The holders of all
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classes of OFSI Common Stock (including OFSI Class AA Common Stock) vote
together, as one class, on all matters submitted to a vote of the
stockholders of OFSI, except as otherwise required by the General
Corporation Law of the State of Delaware.
(2) Except as otherwise indicated, each beneficial owner has the sole power to
vote, and dispose of all shares of OFSI Class A Common Stock or OFSI Class
B Common Stock owned by such beneficial owner.
(3) Includes 103,442.71 shares of OFSI Class A Common Stock and 12,256.20
shares of OFSI Class B Common Stock which may be acquired from OnCap
Holdings Corp. and 13,586.99 shares of OFSI Class A Common Stock, subject
to adjustment, which an affiliate of Onex may acquire under the OFSI
Warrants at the price of $3,109 per share, subject to adjustment, until
September 29, 2000. See "Certain Transactions -- OFSI Securityholders'
Agreement."
(4) LSG and Onex, among others, are parties to the LSG Stockholders'
Agreement. See "Certain Transactions -- LSG Lufthansa Service GmbH."
(5) Includes 19,593.97 shares of OFSI Class A Common Stock (including 438.12
shares of OFSI Class A Common Stock which Management Shareholders are
entitled to sell to LSG) and 497.30 shares of OFSI Class B Common Stock
owned by Management Shareholders and over which Onex, OnCap Holdings Corp.
and Gerald W. Schwartz share voting control pursuant to the Management
Shareholders' Agreement. Includes up to 438.12 shares of OFSI Class A
Common Stock which may be sold by an affiliate of Onex to LSG in the event
Management Shareholders do not exercise their right to sell a like number
of shares to LSG. See "Certain Transactions -- LSG Lufthansa Service
GmbH."
(6) Excludes 4,474.22 additional shares of OFSI Class A Common Stock which LSG
has the right to acquire at an exercise price of $2,175.93 per share in
the event that the OFSI Warrants are exercised.
(7) LSG beneficially owns 38,326.36 shares of OFSI Class AA Common Stock which
represents 100% of the issued and outstanding OFSI Class AA Common Stock
and are presently convertible at the option of the holder into 38,326.36
shares of OFSI Class A Common Stock. Each share of OFSI Class AA Common
Stock is entitled to one vote for each share, and with the exception of
dividend rights, the designations, powers, preferences and relative rights
of shares of OFSI Class AA Common Stock are substantially the same as
those associated with the shares of OFSI Class A Common Stock.
(8) Includes shares beneficially owned by Onex and OnCap Holdings Corp., with
respect to which Mr. Schwartz may be deemed to be the beneficial owner.
(9) Certain Management Shareholders, including Messrs. Woelki, Bleckmann,
O'Neill, Kay, Tolbert, Boyd, Woodside and Lee, who own an aggregate of
19,593.97 shares of OFSI Class A Common Stock (including 438.12 shares of
OFSI Class A Common Stock which such Management Shareholders are entitled
to sell to LSG) and 497.30 shares of OFSI Class B Common Stock have
entered into the Management Shareholders' Agreement pursuant to which they
have agreed to vote their shares in the same manner as the shares of OFSI
Class A Common Stock and OFSI Class B Common Stock owned by Onex and its
affiliates are voted.
(10) Excludes 38,326.36 shares of OFSI Class A Common Stock (and 38,326.36
shares of OFSI Class AA Common Stock) beneficially owned by LSG as to
which Mr. Woelki, the Chairman of the Executive Board of LSG, disclaims
beneficial ownership. Includes 36.04 shares of OFSI Class A Common Stock
which Mr. Woelki has the right to sell to LSG.
(11) Excludes 38,326.36 shares of OFSI Class A Common Stock (and 38,326.36
shares of OFSI Class AA Common Stock) beneficially owned by LSG as to
which Mr. Bleckmann, the Vice President Corporate Strategy/Business
Development of LSG, disclaims beneficial ownership. Includes 3.01 shares
of OFSI Class A Common Stock which Mr. Bleckmann has the right to sell to
LSG.
(12) Includes 76.97 shares of OFSI Class A Common Stock which Mr. O'Neill has
the right to sell to LSG.
(13) Includes 25.66 shares of OFSI Class A Common Stock which Mr. Kay has the
right to sell to LSG.
(14) Includes 20.53 shares of OFSI Class A Common Stock which Mr. Tolbert has
the right to sell to LSG.
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(15) Includes 12.83 shares of OFSI Class A Common Stock which Mr. Boyd has a
right to sell to LSG.
(16) Includes 51.31 shares of OFSI Class A Common Stock which Mr. Woodside has
the right to sell to LSG.
(17) Shares of OFSI Class A Common Stock held by Mr. Altobello (and certain of
his affiliates) are subject to the transfer restrictions set forth in the
Management Shareholders' Agreement. See "Certain
Transactions -- Management Shareholders' Agreement."
(18) Includes 3.59 shares of OFSI Class A Common Stock which Mr. Lee has the
right to sell to LSG.
(19) Includes 230.27 shares of OFSI Class A Common Stock which the directors
and executive officers of SCIS and each Guarantor as a group have the
right to sell to LSG.
OFSI is the sole stockholder of SCIS. OFSI has pledged all of the issued
and outstanding shares of SCIS to secure certain obligations under the Senior
Bank Financing. SCIS directly or indirectly owns all of the shares of capital
stock of each Guarantor other than Caterair. SCIS (or a subsidiary thereof) has
pledged all of the issued and outstanding shares of each such Guarantor to
secure certain obligations under the Senior Bank Financing. Caterair Holdings
owns 100% of the issued and outstanding shares of Caterair. Caterair Holdings
has pledged all of the issued and outstanding shares of Caterair to secure
certain obligations under the Senior Bank Financing.
All information with respect to beneficial ownership of OFSI's capital
stock has been furnished by the respective stockholders of OFSI.
In addition, as of November 20, 1997, Messrs. Schwartz, Melman, Rosen and
Heersink beneficially owned 13,251,878, 31,000, 108,972 and 33,500 subordinate
voting shares of Onex ("Subordinate Voting Shares"), respectively, representing
approximately 27.8% of the outstanding Subordinate Voting Shares in the case of
Mr. Schwartz, and less than 1% of the outstanding Subordinate Voting Shares in
the case of Messrs. Melman, Rosen and Heersink. All directors and executive
officers of SCIS, Sky Chefs, CII and Caterair as a group owned 13,425,350
Subordinate Voting Shares, representing approximately 28.1% of the outstanding
Subordinate Voting Shares. Subordinate Voting Shares beneficially owned includes
shares which Messrs. Schwartz (200,000), Melman (31,000), Rosen (63,000) and
Heersink (31,000) may have the right to acquire through the exercise of options
within 60 days (the options become exercisable in the event that the average
market price of the Subordinate Voting Shares exceeds the exercise price of the
options (Cdn. $13.25) by at least 25%). Mr. Schwartz also beneficially owns
100,000 multiple voting shares of Onex ("Multiple Voting Shares"), representing
all of the outstanding Multiple Voting Shares. Subordinate Voting Shares carry
one vote per share and as a class are entitled to 40% of the aggregate votes
attached to all voting shares of Onex, to elect 40% of Onex's Board of
Directors, and to appoint auditors. Multiple Voting Shares are entitled to elect
60% of Onex's Board of Directors and carry such number of votes in the aggregate
as represents 60% of the aggregate votes attached to all voting shares of Onex.
All information with respect to the beneficial ownership of Onex capital stock
has been furnished by the respective stockholders of Onex.
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CERTAIN TRANSACTIONS
ONEX ADVISORY AND TRANSACTION FEES
In 1986, in connection with the acquisition of Sky Chefs by Onex and
certain members of management, Sky Chefs and Onex entered into an agreement
pursuant to which Sky Chefs is required to pay an annual management fee to Onex.
The management fees paid by Sky Chefs to Onex during 1994, 1995 and 1996 were
approximately $671,000, $694,000 and $1,500,000, respectively. The management
fee payable by Sky Chefs to Onex for 1997 will be $1.5 million. In connection
with rendering certain advisory services relating to the Combination, Sky Chefs
paid Onex a $4.0 million fee during 1995. Sky Chefs also repaid an $11.0 million
loan from OFSI during 1995. Sky Chefs paid interest on such loan at the rate of
LIBOR plus 1% per annum. In addition, certain officers of Onex and its
affiliates participate in Sky Chefs' employee benefit plans. During 1994, 1995
and 1996, Sky Chefs received reimbursements from Onex and its affiliates for the
cost of benefits provided aggregating approximately $14,000, $72,000 and
$61,000, respectively. The reimbursements received exceeded the costs of
benefits provided in each year.
THE COMBINATION
On September 29, 1995, OFSI, SCIS, Caterair and Caterair Holdings
consummated the Combination whereby (i) SCIS, through Sky Chefs and CII,
acquired, licensed, leased and subleased substantially all of the worldwide
business and assets of Caterair, (ii) OFSI and an affiliate thereof exchanged
common stock and OFSI Warrants for certain stock and debt held by Caterair
Holdings' shareholders and creditor, as a result of which OFSI and its affiliate
acquired more than 50% of the total outstanding voting shares, and 25% of the
total outstanding nonvoting shares, of Caterair Holdings, (iii) SCIS and
Caterair repaid approximately $392.3 million of Caterair's outstanding
indebtedness (excluding accrued interest) and SCIS and its subsidiaries assumed
certain other liabilities of Caterair, (iv) SCIS extended a $37.8 million loan
to Caterair (which will mature in 2001, bears interest at 8% per annum (payable
in kind) and is secured by a second priority lien), (v) Caterair Holdings'
indebtedness was restructured and (vi) Caterair agreed not to compete with Sky
Chefs in the airline catering business for a six-year term (expiring in 2001)
and Sky Chefs agreed to pay Caterair $4.0 million per year in respect of such
agreement. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Financial Statements and notes thereto included
elsewhere in this Prospectus.
In connection with the Combination, pursuant to the Domestic Leases, Sky
Chefs and CII leased and subleased from Caterair substantially all of its
domestic tangible assets for a six-year term (expiring in 2001). In the event
that Caterair's lease of such assets was for less than six years, the applicable
Domestic Lease is for such shorter period. Sky Chefs and CII each have options
to purchase all or a portion of the assets of Caterair covered by the Domestic
Leases for amounts determined under formulas in the Domestic Leases that were
intended to result in exercise prices equal to the estimated fair market value
of such assets at the time or times of exercise of any such options. The options
are exercisable until the date which is 30 days after termination of the
applicable Domestic Lease. It is not certain that such purchase options will be
exercised. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the Financial Statements and notes thereto included
elsewhere in this Prospectus.
In connection with the Combination, pursuant to the License Agreements, Sky
Chefs and CII licensed Caterair's rights under certain customer contracts for a
six-year term (expiring in 2001). Sky Chefs and CII each have options to
purchase all or a portion of the customer contract rights covered by the License
Agreements for amounts determined under formulas in the License Agreements that
were intended to result in exercise prices equal to the estimated fair market
value of such rights at the time or times of exercise of any such options. The
options are exercisable at any time until the date which is 90 days after
termination of the applicable License Agreement. It is not certain that such
purchase options will be exercised. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Financial Statements and
notes thereto included elsewhere in this Prospectus.
In connection with the Combination, Caterair paid Marriott International,
Inc. $4.2 million to satisfy Caterair Holdings' obligations relating to accrued
payments under a non-competition agreement entered into in connection with the
acquisition of Caterair in 1989. In addition, Caterair and OFSI agreed to pay
approximately
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$4.8 million (plus interest thereon) to Marriott International, Inc. over a
six-year period, which is the balance of amounts payable under such
non-competition agreement. During 1995 and 1996, payments to Marriott
International, Inc. relating to the non-competition agreement were $4.2 million
and $1.0 million, respectively.
As part of the Combination, SCIS, Caterair, OFSI and Caterair Holdings
entered into the Old Credit Agreement with certain lenders. Caterair, Caterair
Holdings, OFSI (on a limited basis), an affiliate of OFSI (on a limited basis)
and certain subsidiaries of SCIS guaranteed SCIS' obligations under the Old
Credit Agreement and SCIS, Caterair Holdings, OFSI (on limited basis), an
affiliate of OFSI (on a limited basis) and certain of subsidiaries of SCIS
guaranteed Caterair's obligations thereunder. Additionally, Caterair (and Sky
Chefs and CII) guaranteed SCIS' obligations under the Existing Notes. Effective
as of December 29, 1995, SCIS entered into an interest rate swap agreement to
reduce interest rate exposure on long-term debt. The agreement covered a
notional amount of $351 million at December 31, 1996, and has a stated maturity
in 2001. Caterair assumed a ratable participating interest (based upon the
respective principal amounts of term loans outstanding under the Old Credit
Agreement) in SCIS' rights and obligations under the interest swap. This
agreement was terminated as of September 10, 1997.
Subsequent to the consummation of the Combination, Caterair continued to
provide airline catering services at certain kitchens where consents to the
Combination had not been obtained. Sky Chefs and Caterair entered into a
management services agreement with respect to the operations conducted at these
kitchens whereby Caterair continued to operate such kitchens using its own
employees with Sky Chefs providing management and administrative services in
exchange for a management fee equal to 4.0% of the net sales from such kitchens
and the reimbursement of expenses incurred in connection with the performance of
such services. However, during the second quarter of 1996, Caterair obtained the
necessary consents and on May 31, 1996 Sky Chefs leased/licensed such kitchens
from Caterair pursuant to the Domestic Leases and the License Agreements. During
1995 and 1996, Caterair paid Sky Chefs $0.6 million and $1.0 million,
respectively, under such agreement.
Subsequent to the consummation of the Combination, SCIS rendered certain
corporate and administrative services for Caterair. During 1995 and 1996,
Caterair paid SCIS $0.1 million and $0.5 million, respectively, for such
services.
During the third quarter of 1997, Caterair advanced $13.0 million to SCIS.
LSG LUFTHANSA SERVICE GMBH
The following paragraphs summarize certain material provisions of (i) the
Stockholders' Agreement, dated as of December 6, 1993, among Onex, OFSI, OnCap
Holdings U.S., Inc., OMI Quebec Inc., LSG and LSG Lufthansa Service USA
Corporation (the "LSG Stockholders' Agreement"), as amended, (ii) the Agreement,
dated as of October 5, 1993, among Onex, Lufthansa and LSG, (iii) the Agreement,
dated as of October 5, 1993, between LSG and Sky Chefs and (iv) the Arbitration
Agreement, dated as of October 5, 1993, among Onex, OFSI, OnCap Holdings U.S.,
Inc., OMI Quebec Inc., Sky Chefs, Lufthansa and LSG. The Company believes that
the following summary is accurate in all material respects.
In late 1993, OFSI, Sky Chefs and affiliated companies entered into a
series of transactions with LSG. Pursuant to a cooperation agreement, Sky Chefs
and LSG generally conduct operations under the "LSG Lufthansa Service/SKY Chefs"
name and logo and Sky Chefs and LSG agreed to cooperate in the marketing of
their services on a coordinated basis and to offer each other the right to
participate equally in the development of business in new geographic markets.
The parties also agreed to not compete with each others' existing catering
operations outside of the United States and the European Community. At the same
time in 1993, LSG purchased approximately 23.3% of the OFSI Class A Common Stock
from existing shareholders for a cash price of $75.0 million; of which $10.0
million was paid during 1996. LSG, OFSI and the principal stockholders of OFSI
entered into the LSG Stockholders' Agreement pursuant to which LSG and such
stockholders agreed to certain restrictions on the transfer of their shares of
OFSI common stock and LSG was provided representation on the board of directors
of OFSI. The LSG Stockholders Agreement requires that certain actions by OFSI
and its subsidiaries (including SCIS and Sky Chefs) be approved by at least one
of the LSG representatives on the OFSI board of directors and, subject to
certain limitations, that dividends be paid to LSG in stipulated amounts. OFSI
is also entitled to representation on the Supervisory Board of LSG.
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<PAGE> 85
The parties also agreed to negotiate a merger of Sky Chefs and LSG if Lufthansa
is privatized on a basis satisfactory to Onex. Any such merger would be subject
to an initial public offering of the merged company upon consummation of the
merger on terms satisfactory to both Onex and Lufthansa. The German Federal
government has been proceeding with the privatization of Lufthansa. The
agreement terminates on December 31, 1997 and no negotiations with respect to a
merger of Sky Chefs and LSG are occurring.
In connection with the Combination, LSG was granted the option to acquire a
50% interest in the catering business acquired by SCIS from Caterair in Europe
for a price to be negotiated on a basis consistent with the valuation of the
entire Caterair business implicit in the Combination. This option has expired.
However, LSG and the Company are engaged in discussions with a view to reaching
agreement for the sale by the Company to LSG of 50% of the Company's European
catering business for a price estimated to be $50.0 million. There can be no
assurance that such sale will occur or if it does occur as to the timing, price
or other terms thereof.
Certain OFSI stockholders granted LSG the option to acquire 2,595.20 shares
of OFSI Class A Common Stock at an exercise price of $2,431.21 per share (the
"OFSI Stockholder Option"). OFSI also granted LSG the option to acquire 4,474.22
additional shares of OFSI Class A Common Stock, subject to adjustment, at an
exercise price of $2,175.93 per share in the event the OFSI Warrants are
exercised.
On March 29, 1996, LSG purchased the 2,595.20 shares of OFSI Class A Common
Stock subject to the OFSI Stockholder Option for an aggregate purchase price of
$6,441,354.59 (including certain interest payments). Pursuant to the Management
Shareholders' Agreement, Management Shareholders, including Messrs. Kay,
O'Neill, Woodside and Woelki, will be entitled to participate in such sale to
LSG by transferring a proportionate number of the shares of OFSI Class A Common
Stock owned thereby in exchange for a proportionate amount of the total
consideration received in connection with the exercise of the OFSI Stockholder
Option. Messrs. Kay, O'Neill, Woodside and Woelki may transfer 25.86, 76.97,
51.31 and 36.04 shares of OFSI Class A Common Stock, respectively, in exchange
for consideration of $64,185, $191,042, $127,353 and $89,452, respectively.
As of December 28, 1996, pursuant to an agreement with OFSI, LSG exchanged
its shares of OFSI Class A Common Stock for a like number of shares of OFSI
Class AA Common Stock. During 1997, OFSI paid a $1.8 million dividend to LSG in
respect of the OFSI Class AA Common Stock.
During 1994, 1995 and 1996, catering sales by Sky Chefs to Lufthansa were
approximately $10.3 million, $12.9 million and $22.3 million, respectively.
Accounts receivable due to Sky Chefs from Lufthansa were approximately $2.6
million at December 31, 1996.
In 1995, Sky Chefs purchased from LSG, for an aggregate purchase price of
approximately $5.1 million, assets associated with catering kitchens at San
Francisco International Airport, Miami International Airport and John F. Kennedy
International Airport.
AMR AND AMERICAN
During 1994, OFSI paid $19.0 million to AMR, the parent company of
American, to acquire for cancellation a warrant to purchase up to approximately
20% of the outstanding capital stock of OFSI, which was issued in connection
with the acquisition of Sky Chefs in 1986 and $1.0 million for a two-year
extension of Sky Chefs' catering agreement with American. During 1994, Sky Chefs
repaid $16.2 million in indebtedness owing to AMR under a promissory note by Sky
Chefs. Such note accrued interest at the rate of 9.5% per year. During 1994,
catering sales by Sky Chefs to American were approximately $347.9 million. See
"Business--Customers--Contracts." During 1994, Sky Chefs also paid $17.6 million
to American for the subleasing of certain flight kitchens and other properties
at Chicago-O'Hare, Raleigh-Durham, Nashville, Tulsa, Dallas/Fort Worth, Los
Angeles, and New York-John F. Kennedy.
OFSI SECURITYHOLDERS' AGREEMENT
In connection with the Combination, OFSI, an affiliate of OFSI and certain
Caterair Holdings' stockholders (the "Securityholders") who received OFSI Class
A Common Stock and warrants ("OFSI Warrants") to acquire OFSI Class A Common
Stock (including Host Marriott Corporation) entered into a securityholders
agreement (the "OFSI Securityholders' Agreement") which provided limitations on
transfera-
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<PAGE> 86
bility, co-sale rights, "drag-along" obligations, registration rights and
put/call arrangements with respect to such OFSI Class A Common Stock and OFSI
Warrants. Prior to June 30, 1997, Onex U.S. LLC, an affiliate of OFSI and Onex,
purchased substantially all of the OFSI Class A Common Stock and OFSI Warrants
from such Securityholders and, subject to a limited exception, the OFSI
Securityholders' Agreement was terminated with respect to each Securityholder,
and Onex U.S. LLC became a party to the OFSI Securityholders' Agreement.
The OFSI Securityholders' Agreement provides Onex U.S. LLC with demand and
"piggy-back" registration rights relating to the OFSI Class A Common Stock and
OFSI Warrants acquired from the Securityholders in certain circumstances.
However, if Onex U.S. LLC exercises its right to demand a registration, in lieu
of acceding to such demand, OFSI may purchase the OFSI Class A Common Stock and
OFSI Warrants which are the subject of such demand at their fair market value
less an amount equal to certain selling expenses. In the event that as of
September 29, 2000 there has not been an initial public offering of OFSI's
equity securities meeting certain criteria, Onex U.S. LLC shall have the right
to cause OFSI to purchase all of the OFSI Class A Common Stock that Onex U.S.
LLC purchased from the Securityholders (excluding OFSI Class A Common Stock
acquired under OFSI Warrants) at the fair market value thereof less an amount
equal to certain selling expenses. If OFSI is unable to purchase all of the OFSI
Class A Common Stock which it would otherwise be required to purchase due to
covenants in the agreements relating to the debt of OFSI or SCIS (including the
Indenture), then OFSI will be obligated to purchase as many shares of OFSI Class
A Common Stock as it is then permitted to purchase and its obligations to
purchase any remaining shares will be deferred until such time as OFSI is
permitted to purchase such shares. Interest will accrue on the unpaid amounts at
a specified rate.
The OFSI Securityholders' Agreement terminates on the earlier of the date
on which Onex affiliates cease to hold 50% of the outstanding capital stock of
OFSI and December 31, 2002. Certain of the provisions thereof terminate upon the
occurrence of an initial public offering of OFSI's equity securities meeting
certain criteria.
Onex U.S. LLC acquired from the Securityholders OFSI Warrants to purchase
13,586.99 shares of OFSI Class A Common Stock, subject to adjustment. The
exercise price of the OFSI Warrants is $3,109 per share, subject to adjustment.
The OFSI Warrants expire on September 29, 2000.
OFSI LOANS
OFSI has provided financing to members of management and certain directors
of Sky Chefs, including Messrs. O'Neill, Kay, Tolbert, Boyd, Woodside, Woelki,
Bleckmann and Lee, for all or a portion of the purchase price for the
acquisition of shares of common stock from OFSI. Such loans are fully recourse
to the borrower, secured by the shares purchased and bear interest at the
prevailing federal funds rate.
MANAGEMENT SHAREHOLDERS' AGREEMENT
The following summarizes certain material provisions of the Management
Shareholders' Agreement, dated as of May 29, 1986, as amended, among OFSI, an
affiliate of Onex and certain employees and directors of SCIS and Sky Chefs. The
Company believes that the following summary is accurate in all material
respects.
The Management Shareholders' Agreement governs the manner and means by
which the OFSI common stock held by the Management Shareholders may be
transferred, voted and otherwise dealt with. Pursuant to such Agreement, at any
time after OFSI's capital stock is registered under the Exchange Act, a
Management Shareholder will be permitted, subject to specified time and volume
limitations, to sell shares of OFSI Class A Common Stock held by him through the
public market but such Management Shareholder must first offer OFSI the
opportunity to purchase such OFSI Common Stock. In the event a Management
Shareholder ceases to be a full-time employee of Sky Chefs or a subsidiary
thereof, Onex or an affiliate thereof shall purchase such Management
Shareholder's OFSI Class A Common Stock. In connection with such purchase, Onex
or its affiliates shall also have the option to purchase the OFSI Class B Common
Stock of such holder. Pursuant to the Management Shareholders' Agreement, each
Management Shareholder is required to vote his OFSI Common Stock in the same
manner as the shares of OFSI Common Stock owned by Onex and its
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<PAGE> 87
affiliates are voted on the election of directors and on all other matters which
are submitted to a vote (or consent in lieu of voting) of OFSI's stockholders.
The Management Shareholders' Agreement also provides the Management
Shareholders with the option to participate on a pro rata basis with Onex and
its affiliates in sales to third parties of shares of OFSI Common Stock. The
Management Shareholders' Agreement provides Onex and its affiliates the right to
compel the participation of the Management Shareholders in sales of OFSI Common
Stock.
In addition to the above-described provisions, the Management Shareholders'
Agreement contains provisions which provide the Management Shareholders with
registration rights in certain circumstances as well as provisions which prevent
the dilution of the Management Shareholders' respective holdings of the OFSI
Common Stock in the event OFSI intends to sell additional equity securities to
Onex or its affiliates. Under the Management Shareholders' Agreement, OFSI may
not engage in certain business combination transactions unless certain
conditions are fulfilled.
The Management Shareholders' Agreement will terminate if Onex and its
affiliates cease to hold, in the aggregate, 30% of the outstanding capital stock
of OFSI and the provisions governing the voting of the Management Shareholders'
OFSI Common Stock terminate on December 3, 2003.
REPURCHASE OF OFSI CLASS B COMMON STOCK
During December 1995 and January 1996, OFSI repurchased shares of OFSI
Class B Common Stock from officers and employees of OFSI and its subsidiaries at
a price of $2,757 per share. Messrs. Woodside and Boyd sold 300.00 and 75.00
shares of OFSI Class B Common Stock in connection with such repurchase,
respectively, and received $827,100 and $206,775, respectively. During August
1997, OFSI repurchased 219.30 shares of OFSI Class B Common Stock from Mr.
O'Neill for an aggregate price of $1,176,764.
TRANSACTIONS WITH CERTAIN CATERAIR PERSONS
Daniel J. Altobello. Concurrently with the consummation of the
Combination, Daniel J. Altobello entered into an employment contract with OFSI.
Such employment agreement, as amended, expires on September 30, 2000. The
agreement, as amended, provides that Mr. Altobello, as Chairman of the Board of
OFSI and an officer of certain related companies, shall receive an annual salary
of $150,000 and certain fringe benefits. In connection with the consummation of
the Combination, Mr. Altobello received (i) from Caterair, on September 29,
1995, a $525,000 restructuring payment under Caterair's Key Employee Retention
Plan, (ii) from Caterair, on September 29, 1995, a $978,822 severance payment
pursuant to the change-of-control provision of his former employment agreement
with Caterair and (iii) from OFSI, on January 1, 1996, $978,822 in respect of
severance payments otherwise due under Mr. Altobello's former employment
agreement with Caterair.
In connection with the Combination, Mr. Altobello and the Altobello Family
Limited Partnership exchanged all of the shares of common and preferred stock of
Caterair Holdings held by them for 435.71 shares of OFSI Class A Common Stock.
Mr. Altobello's employment contract provides that Mr. Altobello shall hold such
shares subject to certain restrictions on transfer contained in the Management
Shareholders Agreement. On February 27, 1997, the Altobello Family Limited
Partnership (of which Mr. Altobello is the general partner) sold 420.90 shares
of OFSI Class A Common Stock to Onex U.S. LLC for $877,997.40.
Angelo D. Bizzarro. Prior to the consummation of the Combination, Angelo
D. Bizzarro was a director of each of Caterair and Caterair Holdings; in
connection with the Combination, he resigned from such positions and entered
into a three-year employment contract with CII to serve as President and Chief
Executive Officer of CII. Under such agreement, Mr. Bizzarro received an annual
salary of $295,000, an annual cash benefit allowance of $25,000, a bonus ranging
between 45% and 90% of his salary and certain benefits. Mr. Bizzarro resigned
during March 1997.
Frederic V. Malek. Prior to the consummation of the Combination, Frederic
V. Malek was a director of each of Caterair and Caterair Holdings; in connection
with the Combination, he resigned from such positions and entered into a
consulting agreement with SCIS. Such consulting agreement has a five-year term
and entitles Mr. Malek to an annual consulting fee of $100,000.
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CATERAIR
Caterair entered into various agreements with Marriott International, Inc.
in connection with the acquisition of its airline catering business in 1989,
including certain non-competition agreements and various service agreements. See
"Business -- Non-Airline Catering Operations" and "Business -- Competition."
Under a distribution agreement, Marriott International, Inc. purchased,
warehoused, distributed and sold to Caterair certain food, beverage and supply
products. The agreement required Caterair to make payments to Marriott
International, Inc. based on the cost incurred by Marriott International, Inc.
with respect to the goods and services provided, plus a percentage markup which
varied based on the type of product. Subsequent to the consummation of the
Combination, Marriott International, Inc. has provided these services under such
agreement to CII. The agreement will continue until terminated by either party.
Purchases by Caterair under this agreement in 1994 and 1995 totaled
approximately $13.4 million and $8.5 million, respectively, and purchases by CII
under this agreement in 1995 and 1996 totaled approximately $1.4 million and
$5.7 million, respectively. Amounts payable by CII to Marriott International,
Inc. thereunder through September 30, 1997 totaled $3.5 million. At the end of
1991, Caterair entered into a payroll services agreement with Marriott
International, Inc. Under this agreement, Marriott International, Inc. provided
payroll payment and information reporting services, beginning with the first pay
cycle of the 1992 tax calendar year. The agreement required Caterair to make
service fee payments based on the number of employees of Caterair and the amount
of service time. This agreement expired on December 31, 1996. Subsequent to the
consummation of the Combination, Marriott International, Inc. had been providing
services under such agreement to CII. Payments under such agreement by Caterair
to Marriott International, Inc. for 1994 and 1995 totaled $1.1 million and $1.0
million, respectively. CII made no payments to Marriott International, Inc.
thereunder for 1995, however, CII made payments under such agreement to Marriott
International, Inc. totaling $0.2 million for 1996.
Frederic V. Malek, a director of Caterair and Caterair Holdings until
September 29, 1995, is a director of Northwest Airlines and served as President
and Vice Chairman of Northwest Airlines from September 1989 until December 1991.
Sales to Northwest Airlines by Caterair were approximately $83.9 million, and
$76.1 million in 1994 and 1995, respectively.
In May 1993, Caterair retained American Management Systems, Inc. ("AMS"), a
software development and management consulting firm, to provide Caterair with
consulting services related to the implementation of a corporate information
technology strategy. Total services rendered by AMS to Caterair during 1994
amounted to approximately $0.6 million. Charles O. Rossotti, a director of
Caterair and Caterair Holdings until September 29, 1995 served as Chairman of
the board of directors of AMS. In addition, Messrs. Altobello and Malek (a
director of Caterair and Caterair Holdings until September 29, 1995) are both
members of the board of directors of AMS and have been granted stock options in
AMS, some of which are vested and exercisable. Mr. Malek also owns less than 5%
of the common stock of AMS.
The information set forth in this Certain Transaction section sets forth
information with regard to relationships of, and certain transactions between,
(A)(i) any director (or nominee for director) or executive officer of SCIS, Sky
Chefs, CII or Caterair, (ii) any securityholder who held beneficially or of
record more than five percent of any of SCIS', Sky Chefs', CII's or Caterair's
voting securities and (iii) any member of the immediate family of any of the
foregoing persons, on the one hand (each as "Interested Party"), and (B) SCIS,
Sky Chefs, CII or Caterair, on the other, only for those portions of the period
since January 1, 1994 that any such Interested Party was a director (or nominee
for director) or executive officer of SCIS, Sky Chefs, CII or Caterair, a
securityholder who held beneficially or of record more than five percent of
SCIS', Sky Chefs', CII's or Caterair's voting securities or was a member of the
immediate family of such a person, and only with respect to relationships of,
and certain transactions between, an Interested Party and the entity of which
such Interested Party was a director, executive officer or securityholder during
the relevant period.
The Company believes that each of the transactions involving SCIS, Sky
Chefs, CII or Caterair, as applicable, described under the caption "Certain
Transactions" were on terms no less favorable to SCIS, Sky Chefs, CII or
Caterair, as applicable, than could have been obtained with unrelated third
parties.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
TAX CONSEQUENCES OF THE EXCHANGE OFFER
The following description of the material anticipated federal income tax
consequences of the Exchange Offer is based upon the provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the final, temporary and proposed
regulations promulgated thereunder, and administrative rulings and judicial
decisions now in effect, all of which are subject to change (possibly with
retroactive effect) or different interpretations. Holders of Notes should note
the following description is not binding on the Internal Revenue Service (the
"Service") and there can be no assurance that the Service will take a similar
view with respect to the tax consequences described below. No ruling has been or
will be requested by the Issuer from the Service on any tax matters relating to
the Private Notes or the Exchange Notes. This description is not intended to be
applicable to all categories of investors, some of which, such as dealers in
securities, financial institutions, insurance companies and tax-exempt
organizations, may be subject to special rules. ALL HOLDERS OF NOTES ARE ADVISED
TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND
FOREIGN TAX CONSEQUENCES OF EXCHANGING PRIVATE NOTES FOR EXCHANGE NOTES.
The exchange of the Exchange Notes for the Private Notes pursuant to the
Exchange Offer should not be treated as an "exchange" for federal income tax
purposes because Exchange Notes should not be considered to differ materially in
kind or extent from Private Notes. Rather, Exchange Notes received by a holder
should be treated as a continuation of Private Notes in the hands of such
holder. As a result, there will be no federal income tax consequences to holders
exchanging Private Notes for the Exchange Notes pursuant to the Exchange Offer.
If, however, the exchange of the Private Notes for the Exchange Notes were
treated as an "exchange" for federal income tax purposes, such exchange would
constitute a recapitalization for federal income tax purposes. Holders
exchanging the Private Notes pursuant to such recapitalization would not
recognize any gain or loss upon the exchange.
TAX CONSIDERATIONS RELATING TO THE COMBINATION
THE FOLLOWING IS A DISCUSSION OF CERTAIN OF THE MORE SIGNIFICANT FEDERAL
INCOME TAX CONSEQUENCES OF THE COMBINATION TO SCIS AND ITS AFFILIATES AND TO
CATERAIR BASED ON THE TAX LAWS IN EFFECT AS OF THE DATE OF THIS PROSPECTUS.
THERE CAN BE NO ASSURANCE THAT THE SERVICE WILL NOT DISAGREE WITH ANY OR ALL OF
THE DESCRIPTIONS OF TAX CONSEQUENCES OF THE COMBINATION CONTAINED HEREIN, OR
THAT A CHALLENGE BASED ON SUCH A DISAGREEMENT, IF ASSERTED, WILL NOT BE
SUSTAINED. IF SUCH A CHALLENGE IS ASSERTED AND IS SUCCESSFUL, THE TAX LIABILITY
OF SCIS AND CATERAIR AND THEIR RESPECTIVE CONSOLIDATED GROUPS MAY BE
SIGNIFICANTLY GREATER THAN EXPECTED AND MAY REDUCE FUNDS AVAILABLE TO SCIS AND
TO CATERAIR FOR PAYMENT OF THEIR DEBT SERVICE OBLIGATIONS, INCLUDING PAYMENTS OF
PRINCIPAL, INTEREST AND PREMIUM, IF ANY, ON THE NOTES OR PAYMENTS OF THE
GUARANTORS UNDER THEIR RESPECTIVE GUARANTEES. MOREOVER, THE TAX CONSEQUENCES OF
CERTAIN ASPECTS OF THE COMBINATION ARE UNCERTAIN DUE TO THE LACK OF APPLICABLE
LEGAL PRECEDENT AND THE POSSIBILITY OF CHANGES IN LAW OR REGULATORY
INTERPRETATION. THE DISCUSSION AND CONCLUSIONS PRESENTED BELOW MAY BE AFFECTED
BY MATTERS NOT DISCUSSED THEREIN.
Characterization of the Combination. The Combination was structured so
that it would be treated, for federal income tax purposes, as a combination of
(i) a purchase by Sky Chefs and CII of certain assets of Caterair, (ii) a lease
by Sky Chefs and CII of Caterair's tangible property (both real and personal)
for a six-year term, together with an option to purchase those assets from
Caterair, and (iii) a license by Sky Chefs and CII of Caterair's customer
relationships and contracts with an option to purchase those intangible assets
from Caterair. Whether the characterization of components of the Combination as
a lease and a license will be respected for federal income tax purposes depends
on whether the purported lessor or licensor retained
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significant benefits and burdens of ownership. If significant benefits and
burdens of ownership were not retained, the Combination will be treated as a
current sale. In determining whether such benefits and burdens were retained, a
significant factor is whether the lease and license arrangements created an
economic compulsion, on Sky Chefs' and CII's part, to exercise the purchase
options. Whether a compulsion to exercise the purchase options existed depends
in large part on the relationships between the payments called for by the
Domestic Leases and the License Agreements to fair market rents and royalties,
respectively, and the relationships between the purchase option exercise prices
called for under the Domestic Leases and License Agreements and the expected
fair market value of the assets subject to those purchase options at the time of
exercise. If the rent and royalty payments were at present fair market value
levels and the purchase option exercise prices were at expected fair market
levels, then the treatment of the Combination as a true purchase, lease and
license (rather than solely as a purchase of Caterair's assets) is more assured.
Further, in this case, despite the existence of the 1995 loan by SCIS to
Caterair and the guarantee by SCIS, Sky Chefs and CII of Caterair's debt,
projections indicated that, at the end of the six-year lease term and license
term, Sky Chefs and CII would still have to make an investment decision as to
whether to exercise the purchase options and there is a significant possibility
that such options might not be exercised. SCIS received opinions from Price
Waterhouse LLP and Kaye, Scholer, Fierman, Hays & Handler, LLP to the effect
that, based on the assumptions and subject to the qualifications set forth in
such opinions, the Combination will more likely than not be treated as a
combination of purchase, license and lease rather than as a purchase of all of
Caterair's assets. If, notwithstanding such opinions, the Service successfully
challenges such treatment (whether premised on a challenge of the values upon
which the lease, license and purchase option payments were structured or on any
theory of law that conflicts with the theories relied on by SCIS and Caterair
and their advisors), SCIS and Caterair could be liable for significant federal
income taxes with respect to the Combination at an earlier time than projected
and may have substantially greater tax liability than projected which would
reduce funds available to SCIS and Caterair for payment of their debt service
obligations, including payments of principal, interest and premium, if any, on
the Notes or payment by the Guarantors under their respective Guarantees.
Section 382. Section 382 of the Internal Revenue Code of 1986, as amended,
limits a corporate taxpayer's use of its net operating loss carryovers ("NOLs")
in years following the occurrence of an "ownership change" with respect to that
corporation. An ownership change occurs when, over a three-year period, the
percentage interests in the value of the corporation held by shareholders each
of whom owns at least 5 percent of the value of the outstanding stock of the
corporation increases by more than 50 percentage points over the lowest
percentage interests for such shareholders during such period. In the case of an
ownership change, an annual limitation, calculated by multiplying the equity
value of the corporation immediately before the ownership change occurred by a
"long-term tax exempt rate" determined and published by the Internal Revenue
Service (which at the time of the Combination was 5.75 percent), is imposed on
the use of NOLs carried over from periods preceding the ownership change.
Caterair believes that the Combination did not result in the occurrence of
an ownership change because, although OFSI and an affiliate acquired 51 percent
of the voting common stock of Caterair Holdings, it and its affiliate acquired
significantly less than 50 percent of the value of the stock of Caterair
Holdings or of Caterair and the test for an ownership change is based solely on
value.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
SENIOR BANK FINANCING
Concurrently with the Offering, SCIS and Caterair consummated the Senior
Bank Financing. Set forth below is a summary description of certain provisions
of the Senior Bank Financing. While the Company believes that the summary
contained herein of certain provisions of the Senior Bank Financing is accurate
in all material respects, it does not purport to be complete, is subject to, and
is qualified in its entirety by, all of the provisions of the documents
governing the Senior Bank Financing, copies of which have been filed as exhibits
to the Registration Statement of which this Prospectus is a part, and are
incorporated herein by reference.
Pursuant to the Senior Bank Financing, Bankers Trust Company, Morgan
Guaranty Trust Company of New York and certain other lenders provided (i) SCIS
with loans under the Revolving Credit Agreement in an amount up to $90.0 million
(including a sub-limit of $50.0 million for letters of credit) on a revolving
credit basis for working capital and general corporate purposes of SCIS,
Caterair and their respective subsidiaries (such Revolving Credit Agreement
expires on August 28, 2002), (ii) Caterair with a nine and one-half year term
loan under the Term Loan Agreement in an aggregate principal amount of $160.0
million for purposes of refinancing Caterair's indebtedness under the Old Credit
Agreement and funding payment of related transaction costs and (iii) SCIS with a
nine and one-half year term loan under the Term Loan Agreement in an aggregate
principal amount of $90.0 million for purposes of financing, in part, SCIS'
Offer to Purchase, funding payment of related transaction costs and general
corporate purposes.
All of the indebtedness under the Revolving Credit Agreement and the Term
Loan Agreement is senior secured indebtedness. The Revolving Credit Agreement
does not require scheduled amortization or scheduled commitment reductions. The
Term Loan Agreement requires scheduled amortization payments. Each of the
Revolving Credit Agreement and the Term Loan Agreement, under certain
circumstances, requires SCIS or Caterair, as the case may be, to make mandatory
prepayments and commitment reductions. In addition, each of SCIS and Caterair
may make optional prepayments and commitment reductions pursuant to the terms of
the Revolving Credit Agreement or the Term Loan Agreement, as the case may be.
Obligations under the Senior Bank Financing are jointly and severally
guaranteed by OFSI (on a limited basis), an affiliate of OFSI (on a limited
basis), SCIS, Caterair, Sky Chefs, CII and certain other domestic subsidiaries
of SCIS (including the Guarantors). In addition, obligations under the Senior
Bank Financing are secured by (i) first priority security interests in virtually
all tangible and intangible assets of SCIS, Caterair, and their respective
wholly-owned domestic subsidiaries (including the Guarantors) and (ii) pledges
of all capital stock of SCIS and Caterair and all capital stock and notes owned
by SCIS, Caterair and their respective domestic subsidiaries (limited in the
case of capital stock of foreign subsidiaries to 65% of such capital stock).
Each of the loans under the Senior Bank Financing bear interest at
specified margins over the applicable eurodollar rate or base rate.
The documents governing the Senior Bank Financing contain a number of
covenants that, among other things, restrict the ability of SCIS, Caterair and
their respective subsidiaries to dispose of assets, incur additional
indebtedness, incur guarantee obligations, repay indebtedness or amend debt
instruments, pay dividends, create liens on assets, make investments, make
acquisitions, engage in mergers or consolidations, make capital expenditures, or
engage in certain transactions with subsidiaries and affiliates and otherwise
restrict corporate activities. In addition, the documents governing the Senior
Bank Financing require compliance with financial tests based on combined results
for SCIS and Caterair.
Effective as of September 12, 1997, SCIS entered into an interest rate swap
agreement to reduce interest rate exposure on its long-term debt. The agreement
covers a notional amount of $90.0 million at September 12, 1997, and has a
stated maturity of September 15, 2002. Effective as of September 12, 1997,
Caterair entered into an interest swap agreement to reduce interest rate
exposure on its long-term debt. The agreement covers a notional amount of $160.0
million at September 12, 1997 and has a stated maturity of September 15, 2002.
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DESCRIPTION OF NOTES
The Private Notes were, and the Exchange Notes will be, issued under the
Indenture, dated as of August 15, 1997, by and among the Issuer, the Guarantors
and The Bank of New York, as Trustee (the "Trustee"). A copy of which has been
filed as an exhibit to the Registration Statement of which this Prospectus is a
part. The following summary of the material provisions of the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Trust Indenture Act of 1939, as amended (the "TIA"), and to
all of the provisions of the Indenture, which are hereby incorporated herein by
reference, including the definitions of certain terms therein and those terms
made a part of the Indenture by reference to the TIA as in effect on the date of
the Indenture. The definitions of certain capitalized terms used in the
following summary are set forth below under "Certain Definitions." For purposes
of this section and the Indenture, references to the "Issuer" include only the
Issuer and not its subsidiaries.
The Notes are unsecured obligations of the Issuer, ranking subordinate in
right of payment to all Senior Debt of the Issuer and pari passu in right of
payment to existing and future senior subordinated indebtedness. The Notes are
guaranteed on a senior subordinated basis by the Guarantors.
The Notes will be issued in fully registered form only, without coupons, in
denominations of $1,000 and integral multiples thereof. Initially, the Trustee
will act as Paying Agent and Registrar for the Notes. The Notes may be presented
for registration or transfer and exchange at the offices of the Registrar, which
initially will be the Trustee's corporate trust office. The Issuer may change
any Paying Agent and Registrar without notice to holders of the Notes (the
"Holders"). The Issuer will pay principal (and premium, if any) on the Notes at
the Trustee's corporate trust office in New York, New York. At the Issuer's
option, interest may be paid at the Trustee's corporate trust office or by check
mailed to the registered address of Holders.
The form and terms of the Exchange Notes are identical in all material
respects to the form and terms of the Private Notes except that the Exchange
Notes will have been registered under the Securities Act and, therefore, the
Exchange Notes will not bear legends restricting the transfer thereof and
holders of the Exchange Notes will not be entitled to any of the registration
rights of holders of the Private Notes under the Registration Rights Agreement
(or related rights to certain interest payments upon the failure of the Issuer
to fulfill certain conditions set forth in the Registration Rights Agreement),
which rights will terminate upon consummation of the Exchange Offer. The
Exchange Notes will evidence the same indebtedness as the Private Notes (which
they replace), and will be issued under, and be entitled to the benefits of, the
Indenture. The Private Notes and the Exchange Notes will be considered
collectively to be a single class for all purposes under the Indenture,
including, without limitation, waivers, amendments, redemptions and offers to
purchase.
PRINCIPAL, MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $300,000,000 and
will mature on September 1, 2007. Interest on the Notes accrues at the rate of
9 1/4% per annum and is payable semiannually in cash on each March 1 and
September 1, commencing on March 1, 1998, to the Persons who are registered
Holders at the close of business on the February 15 and August 15 immediately
preceding the applicable interest payment date. Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of issuance. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months.
REDEMPTION
Optional Redemption. The Notes will be redeemable, at the Issuer's option,
in whole at any time or in part from time to time, on and after September 1,
2002, upon not less than 30 nor more than 60 days' notice, at the following
redemption prices (expressed as percentages of the principal amount thereof)
(payable in
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cash) if redeemed during the twelve-month period commencing on September 1 of
the year set forth below, plus, in each case, accrued and unpaid interest to the
date of redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
-------------------------------------------------------- ----------
<S> <C>
2002.................................................... 104.635%
2003.................................................... 103.476%
2004.................................................... 102.318%
2005.................................................... 101.159%
2006 and thereafter..................................... 100.000%
</TABLE>
Optional Redemption Upon Public Equity Offerings. At any time or from time
to time, on or prior to September 1, 2000, the Issuer may, at its option, use
the net cash proceeds of one or more Public Equity Offerings to redeem in the
aggregate up to $105 million in principal amount of the Notes at a redemption
price of 109.25% of the principal amount thereof (payable in cash) plus accrued
interest to the date of redemption; provided that (i) at least $195 million in
principal amount of the Notes remains outstanding immediately after any such
redemption and (ii) such redemption is effected not more than 60 days after the
consummation of such Public Equity Offering.
SELECTION AND NOTICE
In case of a partial redemption, selection of the Notes or portions thereof
for redemption shall be made by the Trustee by lot, pro rata or in such manner
as it shall deem appropriate and fair and in such manner as complies with any
applicable legal requirements; provided, however, that if a partial redemption
is made with the proceeds of a Public Equity Offering, selection of the Notes or
portion thereof for redemption shall be made by the Trustee only on a pro rata
basis, unless such method is otherwise prohibited. Notes may be redeemed in part
in multiples of $1,000 principal amount only. Notice of redemption will be sent,
by first class mail, postage prepaid, at least 30 days and not more than 60 days
prior to the date fixed for redemption to each Holder whose Notes are to be
redeemed at the last address for such Holder then shown on the registry books.
In order to effect a redemption with the proceeds of a Public Equity Offering,
the Issuer shall make such redemption not more than 60 days after the
consummation of any such Public Equity Offering. If any Note is to be redeemed
in part only, the notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed. A new Note in principal
amount equal to the unredeemed portion thereof will be issued in the name of the
Holder thereof upon cancellation of the original Note. On and after any
redemption date, interest will cease to accrue on the Notes or parts thereof
called for redemption as long as the Issuer has deposited with the Paying Agent
funds in satisfaction of the redemption price pursuant to the Indenture.
SUBORDINATION
The payment of all Obligations on the Notes is subordinated in right of
payment to the prior payment in full in cash or Cash Equivalents (or such
payment shall be duly provided for to the satisfaction of the holders of the
Senior Debt) of all Obligations on the Senior Debt. Upon any payment or
distribution of assets of the Issuer of any kind or character, whether in cash,
property or securities, to creditors upon any total or partial liquidation,
dissolution, winding up, reorganization, assignment for the benefit of creditors
or marshaling of assets of the Issuer or in a bankruptcy, reorganization,
insolvency, receivership or other similar proceeding relating to the Issuer or
its property, whether voluntary or involuntary, all Obligations due or to become
due upon all Senior Debt shall first be paid in full in cash or Cash Equivalents
(or such payment duly provided for to the satisfaction of the holders of the
Senior Debt) before any payment or distribution of any kind or character is made
on account of any Obligations on the Notes, or for the acquisition of any of the
Notes for cash or property or otherwise. If any default occurs and is continuing
in the payment when due, whether at maturity, upon any redemption, by
declaration or otherwise, of any principal of, interest on, unpaid drawings for
letters of credit issued in respect of, or regularly accruing fees with respect
to, any Senior Debt (including for this purpose any such default in payment by
Caterair or any other borrower under the Senior Bank Financing which is a
Subsidiary of the Issuer with respect to its Obligations under the Senior Bank
Financing
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or any Interest Swap Obligations related thereto), no payment of any kind or
character shall be made by or on behalf of the Issuer or any other Person on its
or their behalf with respect to any Obligations on the Notes or to acquire any
of the Notes for cash or property or otherwise.
In addition, if any other event of default occurs and is continuing with
respect to any Designated Senior Debt, as such event of default is defined in
the instrument creating or evidencing such Designated Senior Debt, permitting
the holders of such Designated Senior Debt then outstanding to accelerate the
maturity thereof and if the Representative for the respective issue of
Designated Senior Debt gives written notice of the event of default to the
Trustee (a "Default Notice"), then, unless and until all events of default have
been cured or waived or have ceased to exist or the Trustee receives notice from
the Representative for the respective issue of Designated Senior Debt
terminating the Blockage Period (as defined below), during the 180 days after
the delivery of such Default Notice (the "Blockage Period"), neither the Issuer
nor any other Person on its behalf shall (x) make any payment of any kind or
character with respect to any Obligations on the Notes or (y) acquire any of the
Notes for cash or property or otherwise. Notwithstanding anything herein to the
contrary, in no event will a Blockage Period extend beyond 180 days from the
date such Blockage Period was commenced and only one such Blockage Period may be
commenced within any 360 consecutive days. No event of default which existed or
was continuing on the date of the commencement of any Blockage Period with
respect to the Designated Senior Debt shall be, or be made, the basis for
commencement of a second Blockage Period by the Representative of such
Designated Senior Debt whether or not within a period of 360 consecutive days,
unless such event of default shall have been cured or waived for a period of not
less than 90 consecutive days (it being acknowledged that any subsequent action,
or any breach of any financial covenants for a period commencing after the date
of commencement of such Blockage Period that, in either case, would give rise to
an event of default pursuant to any provision under which an event of default
previously existed or was continuing shall constitute a new event of default for
this purpose).
By reason of such subordination, in the event of the liquidation or
insolvency of the Issuer, creditors of the Issuer who are not holders of Senior
Debt, including the Holders of the Notes, may recover less, ratably, than
holders of Senior Debt.
The Company has significant indebtedness. At September 30, 1997, the
Company had total combined indebtedness of approximately $591.5 million
(excluding the loan by SCIS to Caterair, advances by Caterair to SCIS,
guarantees of indebtedness and $24.7 million of letters of credit). In addition,
the Company may borrow additional amounts under the Revolving Credit Agreement
or otherwise. See "The Refinancing," "Capitalization," "Management's Discussion
and Analysis of Financial Condition and Results of Operations," "Description of
Certain Indebtedness -- Senior Bank Financing" and the Financial Statements and
notes thereto included elsewhere in this Prospectus. At September 30, 1997, the
Issuer had approximately $250.0 million of Senior Debt (including borrowings and
guarantees under the Senior Bank Financing but excluding advances by Caterair to
SCIS and $24.7 million of letters of credit) and had approximately $65.3 million
available to be borrowed pursuant to the Senior Bank Financing, and the
Guarantors had approximately $31.5 million of Guarantor Senior Debt outstanding
(excluding the loan by SCIS to Caterair and the Guarantors' borrowings and
guarantees under the Senior Bank Financing). In addition, the Notes are
structurally subordinated to all liabilities of the subsidiaries of the Issuer
which are not Guarantors.
UNCONDITIONAL JOINT AND SEVERAL SENIOR SUBORDINATED GUARANTEES
Each Guarantor unconditionally guaranteed, jointly and severally, the
Issuer's obligations under the Notes on a senior subordinated unsecured basis
(the "Guarantees"). The Indebtedness represented by each Guarantee (including
the payment of Obligations on the Notes) is subordinated on the same basis to
Guarantor Senior Debt (defined with respect to the Indebtedness of a Guarantor
in the same manner as Senior Debt is defined with respect to the Issuer) as the
Notes are subordinated to Senior Debt. See "-- Subordination."
Upon (i) the release by the lenders under the Senior Bank Financing,
related documents and future refinancings thereof of all guarantees of a
Guarantor (other than Caterair) and all Liens on the property and assets of such
Guarantor relating to such Indebtedness, or (ii) the sale or disposition
(whether by merger, stock purchase, asset sale or otherwise) of a Guarantor (or
substantially all of its assets) to an entity which is not a Subsidiary of the
Issuer or Caterair (which sale or disposition is otherwise in compliance with
the
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Indenture), such Guarantor shall be deemed released from all of its obligations
under its Guarantee; provided, however, that any such termination shall occur
only to the extent that all obligations of such Guarantor under the Senior Bank
Financing and all of its guarantees of, and under all of its pledges of assets
or other security interests which secure, such Indebtedness of the Issuer shall
also terminate upon such release, sale or transfer.
Each Guarantor may consolidate with or merge into or sell all or
substantially all of its assets to the Issuer or another Guarantor (other than
Caterair) without limitation. The Indenture further provides that a Guarantor
may consolidate with or merge into or sell all or substantially all of its
assets to a corporation other than the Issuer or another Guarantor (whether or
not affiliated with such Guarantor, but subject to the provisions described in
the immediately preceding paragraph); provided that (a)(i) such transaction is
treated as an Asset Sale or Caterair Asset Sale, as the case may be, for
purposes of the "Limitation on Asset Sales" covenant or (ii) if the surviving
corporation is not such Guarantor, the surviving corporation agrees to assume
such Guarantor's obligations under its Guarantee and all of its obligations
under the Indenture and (b) such transaction does not (i) violate any covenants
set forth in the Indenture or (ii) result in a Default or Event of Default under
the Indenture immediately thereafter that is continuing.
The obligations of each Guarantor under its Guarantee are limited to the
maximum amount as will, after giving effect to all other contingent and fixed
liabilities of such Guarantor (other than liabilities of such Guarantor under
Indebtedness which constitutes Subordinated Indebtedness with respect to its
Guarantee) and after giving effect to any collections from or payments made by
or on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guarantee or pursuant to its contribution obligations under
the Indenture, result in the obligations of such Guarantor under such Guarantee
not constituting a fraudulent conveyance or fraudulent transfer under federal or
state law. Each Guarantor that makes a payment or distribution under a Guarantee
shall be entitled to a contribution from each other Guarantor in a pro rata
amount based on the Adjusted Net Assets of each Guarantor.
In addition to Sky Chefs, CII and Caterair, the following indirectly
wholly-owned domestic subsidiaries of SCIS are Guarantors: Sky Chefs
International Corp., Arlington Services, Inc., Arlington Services Holding
Corporation, Bethesda Services, Inc., Caterair New Zealand Limited, Caterair
Consulting Services Corporation, JFK Caterers, Inc., Caterair St. Thomas
Holdings Corporation, Western Aire Chef, Inc., Caterair Airport Properties,
Inc., Sky Chefs Argentine, Inc., Onex Ohio Acceptance Corporation, Onex Ohio
Credit Corp., Onex Ohio Equity Corp., Onex Ohio Finance Corp., Onex Ohio Finance
Corp. II, Onex Ohio Capital Corp., Onex Ohio Fiscal Corp., Onex Ohio Funds
Corp., Onex Ohio Credit Corp. II, Onex Ohio Funds Corp. II, Onex Ohio Fiscal
Corp. II, Onex Ohio Equity Corp. II, Onex Ohio Capital Corp. II and Caterair
International Transition Corporation.
CHANGE OF CONTROL
The Indenture provides that upon the occurrence of a Change of Control,
each Holder will have the right to require that the Issuer repurchase all or a
portion of such Holder's Notes pursuant to the offer described below (the
"Change of Control Offer"), at a purchase price equal to 101% of the principal
amount thereof, plus accrued interest to the date of repurchase.
The Indenture provides that, prior to the mailing of the notice referred to
below, but in any event within 30 days following any Change of Control, the
Issuer covenants to (i) repay in full all Indebtedness under the Senior Bank
Financing (and terminate all commitments thereunder) and all other Senior Debt
the terms of which require repayment upon a Change of Control or offer to repay
in full all Indebtedness under the Senior Bank Financing (and terminate all
commitments thereunder) and all such other Senior Debt and to repay the
Indebtedness owed to (and terminate the commitments of) each lender which has
accepted such offer or (ii) obtain the requisite consents under the Senior Bank
Financing and all such other Senior Debt to permit the repurchase of the Notes
as provided below. The Issuer shall first comply with the covenant in the
immediately preceding sentence before it shall be required to repurchase Notes
pursuant to the provisions described below. The Issuer's failure to comply with
the covenant described in the immediately preceding sentence resulting in a
failure to mail the notice referred to below shall constitute an Event of
Default described in clause (iii) and not in clause (ii) under "Events of
Default" below.
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The Indenture provides that within 30 days following the date upon which
the Change of Control occurred, the Issuer must send, by first class mail, a
notice to each holder, with a copy to the Trustee, which notice shall govern the
terms of the Change of Control Offer. Such notice shall state, among other
things, the repurchase date, which must be no earlier than 30 days nor later
than 45 days from the date such notice is mailed, other than as may be required
by law (the "Change of Control Payment Date"). Holders electing to have a Note
repurchased pursuant to a Change of Control Offer will be required to surrender
the Note, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Note completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the third business day prior to the
Change of Control Payment Date.
If a Change of Control Offer is made, there can be no assurance that the
Issuer will have available funds sufficient to pay the Change of Control
purchase price for all the Notes that might be delivered by Holders seeking to
accept the Change of Control Offer together with any other notes which the
Issuer may be obligated to purchase pursuant to change of control provisions in
agreements governing other senior subordinated Indebtedness of the Issuer. In
the event the Issuer is required to repurchase outstanding Notes pursuant to a
Change of Control Offer, the Issuer expects that it would seek third party
financing to the extent it does not have available funds to meet its repurchase
obligations. However, there can be no assurance that the Issuer would be able to
obtain such financing.
Neither the Board of Directors of the Issuer nor the Trustee may waive the
covenant relating to a Holder's right to require the Issuer to repurchase such
Holder's Notes upon a Change of Control. Restrictions in the Indenture described
herein on the ability of the Issuer and its Restricted Subsidiaries to incur
additional Indebtedness, to grant Liens on their respective properties, to make
Restricted Payments and to make Asset Sales may also make more difficult or
discourage a takeover of the Issuer, whether favored or opposed by the
management of the Issuer. Such restrictions and the restrictions on transactions
with Affiliates may, in certain circumstances, make more difficult or discourage
any leveraged buyout of the Issuer or any of its Subsidiaries by the management
of the Issuer. While such restrictions cover a wide variety of arrangements
which have traditionally been used to effect highly leveraged transactions, the
Indenture may not afford the Holders of Notes protection in all circumstances
from the adverse aspects of a highly leveraged transaction, reorganization,
restructuring, merger or similar transaction.
With respect to the sale of assets, the phrase "all or substantially all"
as used in the Indenture varies according to the facts and circumstances of the
subject transaction, has no clearly established meaning under relevant law and
is subject to judicial interpretation. Accordingly, in certain circumstances,
there may be a degree of uncertainty in ascertaining whether a particular
transaction would involve a disposition of "all or substantially all" of the
assets of a Person and therefore it may be unclear whether a Change of Control
has occurred and whether Notes are subject to a Change of Control Offer.
The Issuer will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with the "Change
of Control" provisions of the Indenture, the Issuer shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the "Change of Control" provisions of the
Indenture by virtue thereof.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Restricted Payments. The Issuer will not, and will not cause
or permit any of its Restricted Subsidiaries to, directly or indirectly, (a)
declare or pay any dividend or make any distribution (other than dividends or
distributions payable in Qualified Capital Stock of the Issuer) on or in respect
of shares of the Issuer's Capital Stock to holders of such Capital Stock, (b)
purchase, redeem or otherwise acquire or retire for value any Capital Stock of
the Issuer or any warrants, rights or options to purchase or acquire shares of
any class of such Capital Stock, other than the exchange of such Capital Stock
or any warrants, rights or options to acquire shares of any class of such
Capital Stock for Qualified Capital Stock of
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the Issuer or warrants, rights or options to acquire such Qualified Capital
Stock, (c) make any principal payment on, purchase, defease, redeem, prepay,
decrease or otherwise acquire or retire for value, prior to any scheduled final
maturity, scheduled repayment or scheduled sinking fund payment, any
Indebtedness of the Issuer or its Restricted Subsidiaries that is subordinate or
junior in right of payment to the Notes, or (d) make any Investment (other than
Permitted Investments) (each of the foregoing actions set forth in clauses (a),
(b), (c) and (d) being referred to as a "Restricted Payment"), if at the time of
such Restricted Payment or immediately after giving effect thereto, (i) a
Default or an Event of Default shall have occurred and be continuing, (ii) the
Issuer is not able to incur at least $1.00 of additional Indebtedness (other
than Permitted Indebtedness) in compliance with the "Limitation on Incurrence of
Additional Indebtedness" covenant, or (iii) the aggregate amount of Restricted
Payments made subsequent to the Issue Date (the amount expended for such
purposes, if other than in cash, being the fair market value of such property as
determined by the Board of Directors of the Issuer in good faith) shall exceed
the sum of: (x) 50% of the cumulative Consolidated Net Income (or if cumulative
Consolidated Net Income shall be a loss, minus 100% of such loss) of the Issuer
earned subsequent to the Issue Date and on or prior to the date the Restricted
Payment occurs (the "Reference Date") (treating such period as a single
accounting period); plus (y) 100% of the aggregate Net Cash Proceeds received by
the Issuer from any Person (other than a Subsidiary of the Issuer) from the
issuance and sale subsequent to the Issue Date and on or prior to the Reference
Date of Qualified Capital Stock of the Issuer (including proceeds from the
issuance and sale of any securities of the Issuer convertible into or
exchangeable for Qualified Capital Stock of the Issuer to the extent such
securities are so converted or exchanged and including any additional proceeds
received by the Issuer upon such conversion or exchange); plus (z) without
duplication of any amounts included in clause (iii)(y) above, 100% of the
aggregate Net Cash Proceeds received by the Issuer as capital contributions
subsequent to the Issue Date and on or prior to the Reference Date.
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph do not prohibit: (1) the payment of any dividend or the
consummation of any irrevocable redemption within 60 days after the date of
declaration of such dividend or notice of such redemption if the dividend or
payment of the redemption price, as the case may be, would have been permitted
on the date of declaration or notice; (2) the acquisition of any shares of
Capital Stock of the Issuer or warrants, options or other rights to acquire
Capital Stock of the Issuer, either (i) solely in exchange for shares of
Qualified Capital Stock of the Issuer or warrants, options or other rights to
acquire such Qualified Capital Stock, or (ii) through the application of the net
proceeds of a substantially concurrent sale for cash (other than to a Subsidiary
of the Issuer) of shares of Qualified Capital Stock of the Issuer or warrants,
options or other rights to acquire such Qualified Capital Stock; (3) the
acquisition of Indebtedness of the Issuer that is subordinate or junior in right
of payment to the Notes, either (i) solely in exchange for shares of Qualified
Capital Stock of the Issuer or warrants, options or other rights to acquire such
Qualified Capital Stock or for Indebtedness of the Issuer which is subordinate
or junior in right of payment to the Notes, at least to the extent that the
Indebtedness being acquired is subordinated to the Notes, and has a Weighted
Average Life to Maturity no less than that of the Indebtedness being acquired or
(ii) through the application of the net proceeds of a substantially concurrent
sale for cash (other than to a Subsidiary of the Issuer) of shares of Qualified
Capital Stock of the Issuer or warrants, options or other rights to acquire such
Qualified Capital Stock or Indebtedness of the Issuer which is subordinate or
junior in right of payment to the Notes, at least to the extent that the
Indebtedness being acquired is subordinated to the Notes, and has a Weighted
Average Life to Maturity no less than that of the Indebtedness being refinanced;
(4) payments by the Issuer to OFSI to enable OFSI to pay a dividend to LSG (or a
Subsidiary thereof), in an aggregate amount not to exceed $2.5 million in any
12-month period; provided that any unused portion of such amount may be carried
over to any subsequent 12-month period; (5) payments by the Issuer to OFSI on or
after January 1, 1997 to enable OFSI to pay dividends to stockholders of OFSI
other than LSG (or a Subsidiary thereof), in an amount not to exceed $6 million
in any 12-month period; provided that any unused portion of such amount may be
carried over to any subsequent 12-month period; (6) payments by the Issuer or
any of its Subsidiaries to OFSI pursuant to the OFSI Tax Sharing Agreement; (7)
payments by the Issuer to OFSI sufficient to enable OFSI to (i) pay franchise
taxes and other fees and expenses necessary to maintain its corporate existence,
(ii) pay reasonable fees to its directors and (iii) perform accounting, legal,
corporate reporting and administrative functions in the ordinary course of
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business, other than those functions which are related exclusively to OFSI's
investments in Persons other than the Issuer and Subsidiaries of the Issuer; (8)
payments by the Issuer or any of its Subsidiaries to OFSI in an aggregate amount
not to exceed $6 million in any 12-month period, the proceeds of which are used
by OFSI to repurchase outstanding shares of OFSI's common stock from current or
former employees or directors of the Issuer or any of its Subsidiaries (A)
following the death, disability or termination of any such person or (B)
pursuant to one or more written plans approved by the Board of Directors of
OFSI; and (9) payments by the Issuer or any of its Subsidiaries to OFSI, the
proceeds of which are used by OFSI to fund payments under a plan implemented to
compensate management of the Issuer and its Subsidiaries based on the value of
OFSI's common stock; provided, however, that in the case of clauses (4), (5) and
(8)(B), no Default or Event of Default shall have occurred or be continuing at
the time of such payment or as a result thereof. In determining the aggregate
amount of Restricted Payments made subsequent to the Issue Date in accordance
with clause (iii) of the immediately preceding paragraph, (x) 100% of each of
the payments described in clauses (1), (4) and (5) above (to the extent such
expenditure is in the form of cash) and (y) 50% of the payments described in
clauses (8)(A) and (8)(B) above (to the extent such expenditure is in the form
of cash), other than amounts paid to the Issuer or a Subsidiary of the Issuer by
OFSI or such employee in satisfaction of loans or advances made by the Issuer or
such Subsidiary pursuant to clause (v) (A) of the definition of "Permitted
Investments" (which shall not be included in such calculation or in the
calculation of payments made pursuant to clause (8)), shall be included in such
calculation.
Caterair will not, and will not cause or permit any of its Subsidiaries to,
directly or indirectly, (a) declare or pay any dividend or make any distribution
on or in respect of shares of Caterair's Capital Stock to holders of such
Capital Stock, (b) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of Caterair or any warrants, rights or options to purchase or
acquire shares of any class of such Capital Stock, (c) make any principal
payment on, purchase, defease, redeem, prepay, decrease or otherwise acquire or
retire for value, prior to any scheduled final maturity, scheduled repayment or
scheduling sinking fund payment, any Indebtedness of Caterair or its
Subsidiaries that is subordinate or junior in right of payment to the Notes, or
(d) make any Investment (other than Permitted Investments) (each of the
foregoing actions set forth in clauses (a), (b), (c) and (d) being referred to
as a "Caterair Restricted Payment").
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph do not prohibit: (1) the payment of any dividend within 30
days after the date of declaration of such dividend if the dividend would have
been permitted on the date of declaration; (2) payments by Caterair to Caterair
Holdings sufficient to enable Caterair Holdings to (i) pay franchise taxes and
other fees and expenses necessary to maintain its corporate existence, (ii) pay
reasonable fees to its directors and (iii) perform accounting, legal, corporate
reporting and administrative functions in the ordinary course of business; (3)
payments by Caterair or any of its Subsidiaries to Caterair Holdings pursuant to
the Caterair Tax Sharing Agreement; and (4) payments by Caterair or any
Subsidiary of Caterair to the Issuer or any Restricted Subsidiary of the Issuer.
Limitation on Incurrence of Additional Indebtedness. The Issuer will not,
and will not permit any of its Restricted Subsidiaries to, and Caterair will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
create, incur, assume, guarantee, acquire, become liable, contingently or
otherwise, with respect to, or otherwise become responsible for payment of
(collectively, "incur") any Indebtedness (other than Permitted Indebtedness);
provided, however, that if no Default or Event of Default shall have occurred
and be continuing at the time or as a consequence of the incurrence of any such
Indebtedness, the Issuer, Caterair or any Restricted Subsidiary of the Issuer
may incur Indebtedness if on the date of the incurrence of such Indebtedness,
after giving effect to the incurrence thereof, the Consolidated Fixed Charge
Coverage Ratio of the Issuer is greater than 2.00 to 1.0.
Limitations on Transactions with Affiliates. The Issuer will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, enter
into or permit to exist any transaction or series of related transactions
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with, or for the benefit of, any of
its Affiliates (an "Affiliate Transaction"), other than (x) Affiliate
Transactions permitted under the paragraph below and (y) Affiliate Transactions
on terms that are no less favorable than those that might reasonably have been
obtained in a comparable transaction at such time on an arm's-length basis from
a Person that is not an Affiliate; provided, however, that for a
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transaction or series of related transactions with an aggregate value of $5
million or more (i) such determination shall be made in good faith by a majority
of the disinterested members of the Board of Directors of the Issuer or (ii) the
Board of Directors of the Issuer shall have received an opinion from a
nationally recognized investment banking firm that such Affiliate Transaction is
on terms no less favorable than those that might reasonably have been obtained
in a comparable transaction at such time on an arm's-length basis from a Person
that is not an Affiliate; and provided, further, that for a transaction or
series of related transactions with an aggregate value of $10 million or more,
the Board of Directors of the Issuer shall have received an opinion from a
nationally recognized investment banking firm that such Affiliate Transaction is
on terms no less favorable than those that might reasonably have been obtained
in a comparable transaction at such time on an arm's-length basis from a Person
that is not an Affiliate.
The restrictions set forth in the preceding paragraph shall not apply to
(1) reasonable fees and compensation paid to and indemnity provided on behalf
of, officers, directors, employees or consultants of the Issuer or any
Subsidiary of the Issuer as determined in good faith by the Issuer's Board of
Directors or senior management; (2) transactions between or among the Issuer or
any Restricted Subsidiary of the Issuer, on the one hand, and any Subsidiary of
the Issuer or other Person controlled (as such term is defined in the definition
of "Affiliate") by the Issuer, on the other hand, so long as no portion of the
remaining interest in such Subsidiary or other Person is owned by a Person who
controls (as such term is defined in the definition of "Affiliate") the Issuer,
or between or among such Subsidiaries and Persons, provided such transactions
are not otherwise prohibited by the Indenture; (3) any agreement as in effect as
of the Issue Date or any amendment thereto or any transaction contemplated
thereby (including pursuant to any amendment thereto) in any replacement
agreement thereto so long as any such amendment or replacement agreement is not
more disadvantageous to the Holders in any material respect than the original
agreement as in effect on the Issue Date; (4) transactions between the Issuer or
any Restricted Subsidiary of the Issuer, on the one hand, and Caterair or any
Subsidiary of Caterair, on the other hand; and (5) Restricted Payments permitted
by the Indenture.
Caterair will not, and will not permit any of its Subsidiaries to, directly
or indirectly, enter into or permit to exist any transaction or series of
related transactions (including, without limitation, the purchase, sale, lease
or exchange of any property or the rendering of any service) with, or for the
benefit of, any of its Affiliates.
The restrictions set forth in the preceding paragraph shall not apply to
(1) transactions between Caterair or any Subsidiary of Caterair, on the one
hand, and the Issuer or any Restricted Subsidiary of the Issuer, on the other
hand; (2) transactions between or among Caterair or any Subsidiary of Caterair,
on the one hand, and any Subsidiary of Caterair or other Person controlled (as
such term is defined in the definition of "Affiliate") by Caterair, on the other
hand, so long as no portion of the remaining interest in such Subsidiary or
other Person is owned by a Person who controls (as such term is defined in the
definition of "Affiliate") Caterair, or between or among such Subsidiaries and
Persons, provided such transactions are not otherwise prohibited by the
Indenture; (3) reasonable fees and compensation paid to and indemnity provided
on behalf of, officers, directors, employees or consultants of Caterair or any
Subsidiary of Caterair as determined in good faith by Caterair's Board of
Directors or senior management; (4) any agreement as in effect as of the Issue
Date or any amendment thereto or any transaction contemplated thereby (including
pursuant to any amendment thereto) in any replacement agreement thereto so long
as any such amendment or replacement agreement is not more disadvantageous to
the Holders in any material respect than the original agreement as in effect on
the Issue Date; and (5) Caterair Restricted Payments permitted by the Indenture.
Limitation on Liens. The Issuer will not, and will not permit any of its
Restricted Subsidiaries to, create, incur, assume or suffer to exist any Liens
of any kind against or upon any of its property or assets, or any proceeds
therefrom, except for (A) Liens securing Senior Debt and/or Guarantor Senior
Debt and (B) Permitted Liens, unless (i) in the case of Liens securing
Indebtedness that is expressly subordinate or junior in right of payment to the
Notes, the Notes are secured by a Lien on such property, assets or proceeds that
is senior in priority to such Liens and (ii) in all other cases, the Notes are
equally and ratably secured.
Caterair will not, and will not permit any of its Subsidiaries to create,
incur, assume or suffer to exist any Liens of any kind against or upon any of
its property or assets, or any proceeds therefrom, except for
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(i) Permitted Liens, (ii) Liens securing Senior Debt and/or Guarantor Senior
Debt and (iii) Liens in favor of the Issuer or any Restricted Subsidiary of the
Issuer.
Prohibition on Incurrence of Senior Subordinated Debt. Neither the Issuer
nor any Guarantor will, directly or indirectly, incur any Indebtedness
(including Acquired Indebtedness) that is senior in right of payment to the
Notes or its Guarantee, as the case may be, and expressly subordinate in right
of payment to any other Indebtedness of the Issuer or such Guarantor, as the
case may be.
Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Issuer will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary of the Issuer to (a) pay dividends or make any other
distributions on or in respect of its Capital Stock; (b) make loans or advances
to or pay any Indebtedness or other obligation owed to the Issuer or any other
Restricted Subsidiary of the Issuer; or (c) transfer any of its property or
assets to the Issuer or any other Restricted Subsidiary of the Issuer, except
for such encumbrances or restrictions existing under or by reason of: (1)
applicable law; (2) the Indenture; (3) customary non-assignment provisions of
any contract or any lease entered into in the ordinary course of business; (4)
any agreement or instrument governing Acquired Indebtedness, which encumbrance
or restriction is not applicable to any Person, or the properties or assets of
any Person, other than the Person or the properties or assets of the Person so
acquired; (5) any agreement existing on the Issue Date (including, without
limitation, the Senior Bank Financing); (6) in the case of clause (c) above, (A)
restrictions on the transfer of assets subject to any Lien permitted under the
Indenture imposed by the holder of such Lien and (B) restrictions on the
transfer of assets imposed by any agreement, lease or permit entered into or
obtained in the ordinary course of business in connection with the operation of
flight kitchens; (7) (A) restrictions imposed by any agreement to sell assets
permitted under the Indenture to any Person pending the closing of such sale,
(B) any agreement or instrument governing Capital Stock of any Person that is
acquired or (C) any joint venture, stockholder or similar agreements; (8)
encumbrances and restrictions imposed by any agreement or instrument governing
Indebtedness (including any collateral or related documents) of any Restricted
Subsidiary of the Issuer conducting substantially all of its business outside
the United States; provided, however, that such Restricted Subsidiaries of the
Issuer, in the aggregate, did not account for more than 10% of Consolidated
EBITDA of the Issuer (after giving pro forma effect to inclusion of any
additional Restricted Subsidiary proposing to enter into such an agreement or
instrument) during the four full fiscal quarter period ending immediately prior
to the date of determination thereof; or (9) an agreement effecting an
amendment, refinancing, replacement or substitution of Indebtedness issued,
assumed or incurred pursuant to an agreement referred to in clause (2), (4) or
(5) above or any other agreement evidencing Indebtedness permitted under the
Indenture; provided, however, that the provisions relating to such encumbrance
or restriction contained in any such amendment, refinancing, replacement or
substitution agreement or any such other agreement are not less favorable to the
Issuer in any material respect as determined by the Board of Directors of the
Issuer than the provisions relating to such encumbrance or restriction contained
in agreements referred to in such clause (2), (4) or (5).
Caterair will not, and will not permit any of its Subsidiaries to, directly
or indirectly, create or otherwise cause or permit to exist or become effective
any encumbrance or restriction on the ability of any Subsidiary of Caterair to
(a) pay dividends or make any other distributions on or in respect of its
Capital Stock; (b) make loans or advances or to pay any Indebtedness or other
obligation owed to Caterair or any other Subsidiary of Caterair; or (c) transfer
any of its property or assets to Caterair or any other Subsidiary of Caterair,
except for such encumbrances or restrictions existing under or by reason of: (1)
applicable law; (2) the Indenture; (3) customary non-assignment provisions of
any contract or any lease entered into in the ordinary course of business; (4)
any agreement or instrument governing Acquired Indebtedness, which encumbrance
or restriction is not applicable to any Person, or the properties or assets of
any Person, other than the Person or the properties or assets of the Person so
acquired; (5) any agreement existing on the Issue Date (including, without
limitation, the Senior Bank Financing); (6) in the case of clause (c) above, (A)
restrictions on the transfer of assets subject to any Lien permitted under the
Indenture imposed by the holder of such Lien and (B) restrictions on the
transfer of assets imposed by any agreement, lease or permit entered into or
obtained in the ordinary course of business in connection with the operation of
flight kitchens; (7) restrictions imposed by
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any agreement to sell assets permitted under the Indenture to any Person pending
the closing of such sale; or (8) an agreement effecting an amendment, a
refinancing, replacement or substitution of Indebtedness issued, assumed or
incurred pursuant to an agreement referred to in clause (2), (4) or (5) above;
provided, however, that the provisions relating to such encumbrance or
restriction contained in any such amendment, refinancing, replacement or
substitution agreement are not less favorable to Caterair in any material
respect as determined by the Board of Directors of Caterair than the provisions
relating to such encumbrance or restriction contained in agreements referred to
in such clause (2), (4) or (5).
Limitation on Preferred Stock of Subsidiaries. The Issuer will not permit
any of its Restricted Subsidiaries to issue any Preferred Stock to any Person or
permit any Person to own any Preferred Stock of a Restricted Subsidiary of the
Issuer, unless the Issuer's percentage interest in the Preferred Stock of such
Restricted Subsidiary is equal to or greater than the Issuer's percentage
interest in the common equity of such Restricted Subsidiary.
Caterair will not permit any of its Subsidiaries to issue any Preferred
Stock (other than to the Issuer, a Wholly Owned Restricted Subsidiary of the
Issuer, Caterair or a Wholly Owned Subsidiary of Caterair) or permit any Person
(other than the Issuer, a Wholly Owned Restricted Subsidiary of the Issuer,
Caterair or a Wholly Owned Subsidiary of Caterair) to own any Preferred Stock of
any Subsidiary of Caterair.
Merger, Consolidation and Sale of Assets. The Issuer will not, in a single
transaction or a series of related transactions, consolidate with or merge with
or into, or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets to, another Person or Persons or adopt a Plan of
Liquidation unless (i) either (A) the Issuer shall be the survivor of such
merger or consolidation or (B) the surviving or transferee Person is a
corporation, partnership or trust organized and existing under the laws of the
United States, any state thereof or the District of Columbia and such surviving
or transferee Person shall expressly assume all the obligations of the Issuer
under the Notes and the Indenture pursuant to a supplemental indenture; (ii)
except in the case of a transaction between the Issuer and a Guarantor,
immediately after giving effect to such transaction (on a pro forma basis,
including any Indebtedness incurred or anticipated to be incurred in connection
with such transaction), the Issuer or the surviving Person is able to incur at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with the "Limitation on Incurrence of Additional Indebtedness"
covenant; (iii) immediately before and immediately after giving effect to such
transaction (including any Indebtedness incurred or anticipated to be incurred
in connection with the transaction), no Default or Event of Default shall have
occurred and be continuing; and (iv) the Issuer has delivered to the Trustee an
Officers' Certificate and Opinion of Counsel, each stating that such
consolidation, merger or transfer complies with the Indenture, that the
surviving or transferee Person agrees pursuant to a supplemental indenture to be
bound thereby, and that all conditions precedent in the Indenture relating to
such transaction have been satisfied. For purposes of the foregoing, the
transfer (by lease, assignment, sale or otherwise, in a single transaction or
series of related transactions) of all or substantially all of the properties
and assets of one or more Subsidiaries of the Issuer, the Capital Stock of which
constitutes all or substantially all of the properties and assets of the Issuer,
shall be deemed to be the transfer of all or substantially all of the properties
and assets of the Issuer.
Upon any consolidation or merger or any transfer of all or substantially
all of the assets of the Issuer or any adoption of a Plan of Liquidation by the
Issuer in accordance with the preceding paragraph, the surviving or transferee
Person shall succeed to, and be substituted for, and may exercise every right
and power of, the Issuer under the Indenture with the same effect as if such
surviving or transferee Person had been named as the Issuer therein; provided,
however, that solely for purposes of computing amounts described in clause (iii)
of the first paragraph of the "Limitation on Restricted Payments" covenant, any
such surviving or transferee Person shall only be deemed to have succeeded to
and be substituted for the Issuer with respect to periods subsequent to the
effective time of such merger, consolidation or transfer of assets.
Limitation on Asset Sales. The Issuer will not, and will not permit any of
its Restricted Subsidiaries to, consummate an Asset Sale unless (i) other than
with respect to the Australian Assets, the Issuer or the applicable Restricted
Subsidiary, as the case may be, receives consideration at the time of such Asset
Sale at least equal to the fair market value of the assets sold or otherwise
disposed of (as determined in good faith by
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the Issuer's Board of Directors); (ii) at least 75% of the consideration
received by the Issuer or such Restricted Subsidiary, as the case may be, from
such Asset Sale shall be cash or Cash Equivalents and is received at the time of
such disposition; and (iii) upon the consummation of an Asset Sale, the Issuer
shall apply, or cause such Restricted Subsidiary to apply, the Net Cash Proceeds
relating to such Asset Sale within 365 days of receipt thereof either (A) to
prepay (or, in the case of letters of credit or Eurodollar loans under the
Senior Bank Financing, cash collateralize) any Senior Debt or Guarantor Senior
Debt or, in the case of any Senior Debt or Guarantor Senior Debt under any
revolving credit facility, effect a permanent reduction in the availability
under such revolving credit facility, (B) to reinvest in Productive Assets, or
(C) a combination of prepayment, reduction and investment permitted by the
foregoing clauses (iii)(A) and (iii)(B). On the 366th day after an Asset Sale or
such earlier date, if any, as the Board of Directors of the Issuer or of such
Restricted Subsidiary determines not to apply the Net Cash Proceeds relating to
such Asset Sale as set forth in clauses (iii)(A), (iii)(B) and/or (iii)(C) of
the next preceding sentence (each, a "Net Proceeds Offer Trigger Date"), such
aggregate amount of Net Cash Proceeds which have not been applied on or before
such Net Proceeds Offer Trigger Date as permitted in clauses (iii)(A), (iii)(B)
and/or (iii)(C) of the next preceding sentence (each a "Net Proceeds Offer
Amount") shall be applied by the Issuer or such Restricted Subsidiary to make an
offer to repurchase (the "Net Proceeds Offer") on a date not less than 30 nor
more than 45 days following the applicable Net Proceeds Offer Trigger Date, from
all Holders on a pro rata basis that amount of Notes equal to the excess, if
any, of (x) the Net Proceeds Offer Amount over (y) the amount of any such Net
Cash Proceeds required to be used by the Issuer or such Restricted Subsidiary to
repurchase any senior subordinated Indebtedness of the Issuer outstanding on the
Issue Date (other than Indebtedness evidenced by the Notes) at a price equal to
100% of the principal amount of the Notes to be repurchased, plus accrued
interest to the date of repurchase; provided, however, that if at any time any
non-cash consideration received by the Issuer or any Restricted Subsidiary of
the Issuer, as the case may be, in connection with any Asset Sale is converted
into or sold or otherwise disposed of for cash, then such conversion or
disposition shall be deemed to constitute an Asset Sale hereunder and the Net
Cash Proceeds thereof shall be applied in accordance with this covenant.
Notwithstanding the foregoing, if a Net Proceeds Offer Amount is less than
$10 million, the application of the Net Cash Proceeds constituting such Net
Proceeds Offer Amount to a Net Proceeds Offer may be deferred until such time as
such Net Proceeds Offer Amount plus the aggregate amount of all Net Proceeds
Offer Amounts arising subsequent to the Net Proceeds Offer Trigger Date relating
to such initial Net Proceeds Offer Amount from all Asset Sales by the Issuer and
its Restricted Subsidiaries aggregates at least $10 million, at which time the
Issuer or such Restricted Subsidiary shall apply all Net Cash Proceeds
constituting all Net Proceeds Offer Amounts that have been so deferred to make a
Net Proceeds Offer (the first date the aggregate of all such deferred Net
Proceeds Offer Amounts is equal to $10 million or more shall be deemed to be a
"Net Proceeds Offer Trigger Date").
Notwithstanding the two immediately preceding paragraphs, the Issuer and
its Restricted Subsidiaries will be permitted to consummate an Asset Sale
without complying with such paragraphs to the extent (i) at least 75% of the
consideration for such Asset Sale constitutes Productive Assets and (ii) such
Asset Sale is for fair market value (as determined in good faith by the Board of
Directors of the Issuer); provided that the Net Cash Proceeds, if any, received
by the Issuer or any of its Restricted Subsidiaries in connection with any Asset
Sale permitted to be consummated under this paragraph shall constitute Net Cash
Proceeds subject to the provisions of the two preceding paragraphs.
Caterair will not, and will not permit any of its Subsidiaries to,
consummate a Caterair Asset Sale unless (i) Caterair or the applicable
Subsidiary, as the case may be, receives consideration at the time of such
Caterair Asset Sale at least equal to the fair market value of the assets sold
or otherwise disposed of (as determined in good faith by Caterair's Board of
Directors); (ii) at least 75% of the consideration received by Caterair or such
Subsidiary, as the case may be, from such Caterair Asset Sale shall be cash or
Cash Equivalents and is received at the time of such disposition; and (iii) upon
the consummation of a Caterair Asset Sale, Caterair shall apply, or cause such
Subsidiary to apply, the Net Cash Proceeds relating to such Caterair Asset Sale
within 365 days of receipt thereof either (A) to prepay any Guarantor Senior
Debt or, in the case of any Guarantor Senior Debt under any revolving credit
facility, effect a permanent reduction in the
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availability under such revolving credit facility, or, if there is no Guarantor
Senior Debt outstanding, to prepay Senior Debt or, in the case of any Senior
Debt under any revolving credit facility, effect a permanent reduction in the
availability under such revolving credit facility, (B) to repay the Caterair
Promissory Note; provided that the Issuer treats the proceeds received from such
repayment as proceeds of an Asset Sale by the Issuer in compliance with the
first paragraph of this covenant, (C) to reinvest in Productive Assets, or (D) a
combination of prepayment, repayment, reduction and investment permitted by the
foregoing clauses (iii)(A), (iii)(B) and (iii)(C). On the 366th day after a
Caterair Asset Sale or such earlier date, if any, as the Board of Directors of
Caterair or of such Subsidiary determines not to apply the Net Cash Proceeds
relating to such Caterair Asset Sale as set forth in clause (iii) of the next
preceding sentence (each, a "Caterair Net Proceeds Offer Trigger Date"), such
aggregate amount of Net Cash Proceeds which have not been applied on or before
such Caterair Net Proceeds Offer Trigger Date as permitted in clauses (iii)(A),
(iii)(B), (iii)(C) and/or (iii)(D) of the next preceding sentence (each, a
"Caterair Net Proceeds Offer Amount") shall be applied by Caterair or such
Subsidiary to make an offer to repurchase (the "Caterair Net Proceeds Offer") on
a date not less than 30 nor more than 45 days following the applicable Caterair
Net Proceeds Offer Trigger Date, from all Holders on a pro rata basis that
amount of Notes equal to the excess, if any, of (x) the Caterair Net Proceeds
Offer Amount over (y) the amount of any such Net Cash Proceeds required to be
used by Caterair to repurchase any senior subordinated Indebtedness of the
Issuer outstanding on the Issue Date (other than Indebtedness evidenced by the
Notes) at a price equal to 100% of the principal amount of the Notes to be
repurchased, plus accrued interest to the date of repurchase; provided, however,
that if at any time any non-cash consideration received by Caterair or any
Subsidiary of Caterair, as the case may be, in connection with any Caterair
Asset Sale is converted into or sold or otherwise disposed of for cash, then
such conversion or disposition shall be deemed to constitute a Caterair Asset
Sale hereunder and the Net Cash Proceeds thereof shall be applied in accordance
with this covenant. Caterair shall not resell or otherwise dispose of any Notes
repurchased pursuant to a Caterair Net Proceeds Offer, other than to the Issuer
for cancellation.
Each Net Proceeds Offer or Caterair Net Proceeds Offer, as the case may be,
will be mailed to the record Holders as shown on the register of Holders within
25 days following the Net Proceeds Offer Trigger Date or Caterair Net Proceeds
Offer Trigger Date, as the case may be, with a copy to the Trustee, and shall
comply with the procedures set forth in the Indenture. Upon receiving notice of
the Net Proceeds Offer or Caterair Net Proceeds Offer, as the case may be,
Holders may elect to tender their Notes in whole or in part in integral
multiples of $1,000 in exchange for cash. To the extent Holders properly tender
Notes in an amount exceeding the Net Proceeds Offer Amount or Caterair Net
Proceeds Offer Amount, as the case may be, Notes of tendering Holders will be
repurchased on a pro rata basis (based on amounts tendered). A Net Proceeds
Offer or Caterair Net Proceeds Offer, as the case may be, shall remain open for
a period of 20 business days or such longer period as may be required by law.
The Issuer or Caterair, as the case may be, will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of Notes pursuant to a Net Proceeds
Offer or Caterair Net Proceeds Offer, as the case may be. To the extent that the
provisions of any securities laws or regulations conflict with the "Asset Sale"
provisions of the Indenture, the Issuer or Caterair, as the case may be, shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under the "Asset Sale" provisions of the
Indenture by virtue thereof.
Guarantees of Certain Indebtedness. The Issuer will not permit any of its
domestic Restricted Subsidiaries, directly or indirectly, to incur, guarantee or
secure through the granting of Liens the payment of any Indebtedness under the
Senior Bank Financing or any refunding or refinancing thereof, in each case
unless such Restricted Subsidiary, the Issuer and the Trustee execute and
deliver a supplemental indenture evidencing such Restricted Subsidiary's
Guarantee, such Guarantee to be a senior subordinated unsecured obligation of
such Restricted Subsidiary. Neither the Issuer nor any such Guarantor shall be
required to make a notation on the Notes or the Guarantees to reflect any such
subsequent Guarantee. Nothing in this covenant shall be construed to permit any
Restricted Subsidiary of the Issuer to incur Indebtedness otherwise prohibited
by the "Limitation on Incurrence of Additional Indebtedness" covenant.
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Caterair will not permit any of its domestic Subsidiaries, directly or
indirectly, to incur, guarantee or secure through the granting of Liens the
payment of any Indebtedness under the Senior Bank Financing or any refunding or
refinancing thereof, in each case unless such Subsidiary, the Issuer and the
Trustee execute and deliver a supplemental indenture evidencing such
Subsidiary's Guarantee, such Guarantee to be a senior subordinated unsecured
obligation of such Subsidiary. Neither the Issuer nor any such Guarantor shall
be required to make a notation on the Notes or the Guarantees to reflect any
such subsequent Guarantee. Nothing in this covenant shall be construed to permit
any Subsidiary of Caterair to incur Indebtedness otherwise prohibited by the
"Limitation on Incurrence of Additional Indebtedness" covenant.
Conduct of Business of the Issuer and Its Restricted Subsidiaries. The
Issuer will not, and will not permit any of its Restricted Subsidiaries to,
engage in any business other than (i) the businesses in which the Issuer,
Caterair and their respective Subsidiaries and joint ventures are engaged on the
Issue Date; (ii) the businesses of (A) producing, distributing, selling or
delivering, or providing management or other services with respect to, meals or
other food products, (B) providing catering services, (C) providing goods or
services to Persons
engaged in providing transportation services, including, but not limited to,
Persons engaged in the airline or other passenger transportation business, or
(D) providing goods or services to or at, transportation terminals and other
facilities, including, but not limited to, airports, train stations, bus
stations or roadside service facilities (including, but not limited to,
providing goods or services to any Person who conducts operations at any such
facility); or (iii) any business which is determined in good faith by the
Issuer's board of directors to be similar, ancillary, complimentary or related
to, or an extension of, any business described in clause (i) or (ii) above.
Conduct of Business of Caterair. So long as any Caterair Lease or Caterair
License that is in effect on the Issue Date remains in effect, Caterair will
not, and will not permit any of its Subsidiaries to, engage in any business
other than the leasing of the Caterair Leased Property pursuant to the Caterair
Lease and the licensing of the Caterair Licensed Property pursuant to the
Caterair License; provided, however, that Caterair may continue to operate
certain of its flight kitchens if Caterair has not received as of the Issue Date
the requisite consents to lease such flight kitchens to the Issuer or a
Subsidiary of the Issuer.
Guarantor Capital Stock. The Issuer or a Subsidiary Guarantor will own all
of the Capital Stock of each Guarantor (other than Caterair).
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default":
(i) the failure to pay interest on any Notes when the same becomes due and
payable and the default continues for a period of 30 days (whether or not such
payment shall be prohibited by the subordination provisions of the Indenture);
(ii) the failure to pay the principal on any Notes, when such principal becomes
due and payable, at maturity, upon redemption or otherwise (including the
failure to make a payment to repurchase Notes tendered pursuant to a Change of
Control Offer or a Net Proceeds Offer or a Caterair Net Proceeds Offer) (whether
or not such payment shall be prohibited by the subordination provisions of the
Indenture); (iii) a default in the observance or performance of any other
covenant or agreement contained in the Indenture which default continues for a
period of 45 days after the Issuer receives written notice specifying the
default (and demanding that such default be remedied) from the Trustee or the
Holders of at least 25% of the outstanding principal amount of the Notes; (iv)
the failure to pay at final stated maturity (giving effect to any extensions
thereof) the principal amount of any Indebtedness of (A) the Issuer, (B)
Caterair, (C) any Significant Subsidiary of the Issuer or Caterair or (D) any
combination of two or more Non-Significant Subsidiaries of the Issuer which at
the time of determination own on a combined basis more than 10% of the
consolidated assets of the Issuer (determined on a basis consistent with the
definition of "Significant Subsidiary") and such failure continues for a period
of 20 days or more, or the acceleration of the final stated maturity of any such
Indebtedness (which acceleration is not rescinded, annulled or otherwise cured
within 20 days of receipt by the Issuer, Caterair, such Significant Subsidiary
or such Non-Significant Subsidiaries, as the case may be, of notice of any such
acceleration) if, in either case, the aggregate principal amount of such
Indebtedness, together with the principal amount of any other such Indebtedness
in default for failure to pay principal at final stated maturity or which has
been accelerated, in each case with respect to which the 20-day period described
above has passed, aggregates $15
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million or more at any time; (v) one or more judgments in an aggregate amount in
excess of $15 million (which are not paid or covered by third-party insurance by
financially sound insurers that have not disclaimed coverage) shall have been
rendered against the Issuer, Caterair or any Significant Subsidiary of the
Issuer or Caterair and such judgments remain undischarged, unpaid or unstayed
for a period of 60 days after such judgment or judgments become final and
non-appealable; (vi) except as permitted by the Indenture, the Guarantee of
Caterair or of a Significant Subsidiary of the Issuer or Caterair shall be held
in any judicial proceeding to be unenforceable or invalid and such holding has
become final and non-appealable or the Guarantee of Caterair or of a Significant
Subsidiary of the Issuer or Caterair shall cease for any other reason to be in
full force and effect; and (vii) certain events of bankruptcy affecting the
Issuer, Caterair or any Significant Subsidiary of the Issuer or Caterair.
Upon the happening and during the continuance of any Event of Default
specified in the Indenture, the Trustee or the Holders of at least 25% in
principal amount of outstanding Notes may declare the principal of and accrued
interest on all the Notes to be due and payable by notice in writing to the
Issuer and the Trustee specifying the respective Event of Default and that it is
a "notice of acceleration" (the "Acceleration Notice"), and the same (i) shall
become immediately due and payable or (ii) if there are any amounts outstanding
under the Senior Bank Financing, shall become immediately due and payable upon
the first to occur of an acceleration under the Senior Bank Financing or 5
business days after receipt by the Issuer and the Representative under the
Senior Bank Financing of such Acceleration Notice but only if such Event of
Default is then continuing. If an Event of Default with respect to bankruptcy
proceedings of the Issuer occurs and is continuing, then such amount shall ipso
facto become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any holder of Notes.
The Indenture provides that, at any time after a declaration of
acceleration with respect to the Notes as described in the preceding paragraph,
the Holders of a majority in principal amount of the Notes may rescind and
cancel such declaration and its consequences (i) if the rescission would not
conflict with any judgment or decree, (ii) if all existing Events of Default
have been cured or waived except nonpayment of principal or interest that has
become due solely because of the acceleration, (iii) to the extent the payment
of such interest is lawful, interest on overdue installments of interest and
overdue principal, which has become due otherwise than by such declaration of
acceleration, has been paid, (iv) if the Issuer has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (v) in the event of the cure or waiver of an
Event of Default of the type described in clause (vi) of the description above
of Events of Default, the Trustee shall have received an Officers' Certificate
and an Opinion of Counsel that such Event of Default has been cured or waived.
The holders of a majority in principal amount of the Notes may waive any
existing Default or Event of Default under the Indenture, and its consequences,
except a default in the payment of the principal of or interest on any Notes.
The Indenture provides that if a Default or Event of Default occurs and is
continuing and is known to the Trustee, the Trustee shall mail to each Holder of
the Notes notice of the uncured Default or Event of Default within 90 days after
it occurs. In certain circumstances, the Trustee may withhold notice if and so
long as its Board of Directors or a committee of its trust officers in good
faith determines that withholding notice is in the interest of the Holders of
the Notes. In addition, the Issuer and Caterair are each required to deliver to
the Trustee, within 120 days after the end of their respective fiscal year, a
certificate indicating whether the signers thereof know of any Default or Event
of Default that occurred during the previous year.
DEFEASANCE
The Indenture will cease to be of further effect as to all outstanding
Notes (except as to (i) rights of registration of transfer, substitution and
exchange of Notes, (ii) rights of Holders to receive payments of principal of,
premium, if any, and interest on the Notes and any other rights of the Holders
with respect to such amounts, (iii) the rights, obligations and immunities of
the Trustee under the Indenture and (iv) certain other specified provisions in
the Indenture (the foregoing exceptions (i) through (iv) are collectively
referred to as the "Reserved Rights")) if: (a) the Issuer irrevocably deposits,
or causes to be deposited, with the Trustee, in trust for the benefit of the
Holders pursuant to an irrevocable trust and security agreement in form and
substance reasonably satisfactory to the Trustee (i) U.S. Legal Tender, (ii)
U.S. Government Obligations
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or (iii) a combination thereof, in an amount sufficient after payment of all
federal, state and local taxes or other charges or assessments in respect
thereof payable by the Trustee, which through the payment of interest and
principal will provide, not later than one day before the due date of payment in
respect of the Notes, U.S. Legal Tender in an amount which, in the opinion of a
nationally recognized firm of independent certified public accountants expressed
in a written certification thereof (in form and substance reasonably
satisfactory to the Trustee) delivered to the Trustee, is sufficient to pay the
principal of, premium, if any, and interest on the Notes then outstanding on the
dates on which any such payments are due and payable in accordance with the
terms of the Indenture and of the Notes; provided that (i) the trustee of the
irrevocable trust shall have been irrevocably instructed to pay such money or
the proceeds of such U.S. Government Obligations to the Trustee and (ii) the
Trustee shall have been irrevocably instructed to apply such money or the
proceeds of such U.S. Government Obligations to the payment of said principal
and interest with respect to the Notes; (b) no Default or Event of Default shall
have occurred or be continuing on the date of such deposit and such deposit will
not result in a Default or Event of Default under the Indenture or a breach or
violation of, or constitute a default under, any other instrument to which the
Issuer or any Subsidiary of the Issuer is a party or by which it or its property
is bound; (c) the Issuer shall have delivered to the Trustee an Opinion of
Counsel from independent counsel reasonably satisfactory to the Trustee or a tax
ruling from the Internal Revenue Service to the effect that the holders will not
recognize income, gain or loss for federal income tax purposes as a result of
such deposit and defeasance and will be subject to federal income tax in the
same amounts and in the same manner and at the same times as would have been the
case if such deposit and defeasance had not occurred; (d) the Issuer shall have
delivered to the Trustee an Opinion of Counsel to the effect that after the 91st
day following the deposit, such money or the proceeds of such U.S. Government
Obligations will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; and (e) the Issuer has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each in form and substance reasonably
satisfactory to the Trustee, each stating that all conditions precedent relating
to the satisfaction and discharge of the Indenture have been complied with. In
addition, the Issuer may terminate all of its obligations and the Guarantors'
obligations under the Indenture (except as to certain of the Reserved Rights)
when (i) all outstanding Notes theretofore authenticated have been delivered to
the Trustee for cancellation and the Issuer has paid or caused to be paid all
sums payable under the Indenture by the Issuer or (ii) the Issuer has called for
redemption pursuant to the Indenture all of the Notes under arrangements
satisfactory to the Trustee, the amounts described in clause (a) above have been
deposited as described therein, the conditions in clauses (i) and (ii) of the
proviso to such clause (a) have been satisfied and the certificate and opinion
described in clause (e) above have been delivered.
MODIFICATION OF THE INDENTURE
From time to time, the Issuer, the Guarantors and the Trustee, without the
consent of the Holders of the Notes, may amend the Indenture for certain
specified purposes, including curing ambiguities, defects or inconsistencies, so
long as such change does not, in the opinion of the Trustee, adversely affect
the rights of any of the Holders in any material respect. In formulating its
opinion on such matters, the Trustee will be entitled to rely on such evidence
as it deems appropriate, including, without limitation, solely on an Opinion of
Counsel. Other modifications and amendments of the Indenture may be made with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes issued under the Indenture, except that (i) without the
consent of each holder of the Notes affected thereby, no amendment may: (1)
reduce the amount of Notes whose holders must consent to an amendment; (2)
reduce the rate of or change or have the effect of changing the time for payment
of interest, including defaulted interest, on any Notes; (3) reduce the
principal of or change or have the effect of changing the fixed maturity of any
Notes, or, except with respect to the matters described in clause (ii)(1) below,
change the date on which any Notes may be subject to redemption or repurchase,
or reduce the redemption or repurchase price therefor; (4) make any Notes
payable in money other than that stated in the Notes; (5) make any change in
provisions of the Indenture protecting the right of each holder of a Note to
receive payment of principal of and interest on such Note on or after the due
date thereof or to bring suit to enforce such payment, or permitting holders of
a majority in principal amount of a class of Notes to waive Defaults or Events
of Default (other than Defaults or Events of Default with respect to the payment
of principal of or interest on the Notes); or (6) modify the subordination
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provisions of the Indenture to adversely affect the Holders of Notes, and (ii)
without the consent of the Holders of at least 75% in aggregate principal amount
of the then outstanding Notes issued under the Indenture, no amendment may: (1)
amend, change or modify the obligation of (A) the Issuer to make and consummate
a Change of Control Offer in the event of a Change of Control that has been
consummated or make and consummate a Net Proceeds Offer with respect to any
Asset Sale that has been consummated or modify any of the provisions or
definitions with respect thereto or (B) Caterair to make and consummate a
Caterair Net Proceeds Offer with respect to any Caterair Asset Sale that has
been consummated or modify any of the provisions or definitions with respect
thereto; or (2) release Caterair or any other Guarantor which is a Significant
Subsidiary of the Issuer or Caterair from any of its obligations under its
Guarantee or the Indenture other than in accordance with the terms of such
Guarantee and the Indenture.
ADDITIONAL INFORMATION
The Indenture provides that the Issuer will deliver to the Trustee within
15 days after the filing of the same with the Commission, copies of the
quarterly and annual reports and of the information, documents and other
reports, if any, which the Issuer is required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act. The Indenture further
provides that, notwithstanding that the Issuer may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Issuer
will provide the Trustee, Holders and qualified institutional buyers (as defined
in Rule 144A under the Securities Act) which request such information from the
Issuer and indicate a bona fide interest in purchasing Notes with consolidated
financial statements of the Issuer and a related "Management's Discussion and
Analysis of Financial Condition and Results of Operations" comparable to those
which would have been required to appear in quarterly or annual reports of the
Issuer and, to holders of Private Notes, any other information set forth in Rule
144A(d)(4) or any successor provision under the Securities Act. In addition, the
Issuer will provide the Trustee and Holders with unaudited combined financial
data of the Issuer and the Guarantors, substantially in the form provided under
the caption "Summary -- Summary Unaudited Pro Forma Financial Data" (excluding
the information under the caption "Operating Statistics") in this Prospectus,
for each fiscal year of the Issuer and for the first three fiscal quarters of
each fiscal year of the Issuer. The Issuer will also comply with the other
provisions of TIA sec. 314(a).
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of
the Issuer or a Subsidiary of Caterair, as the case may be, or at the time it
merges or consolidates with the Issuer or any Subsidiary of the Issuer or
Caterair or any Subsidiary of Caterair, as the case may be, or assumed in
connection with the acquisition of assets from such Person and not incurred by
such Person in connection with, or in anticipation or contemplation of, such
Person becoming a Restricted Subsidiary of the Issuer or a Subsidiary of
Caterair, as the case may be, or such acquisition, merger or consolidation.
"Adjusted Net Assets" of a Guarantor at any date means the lesser of the
amount by which (x) the fair value of the property of such Guarantor exceeds the
total amount of liabilities, including, without limitation, contingent
liabilities (after giving effect to all other fixed and contingent liabilities
incurred or assumed on such date), but excluding liabilities under its
Guarantee, of such Guarantor at such date and (y) the present fair salable value
of the assets of such Guarantor at such date exceeds the amount that will be
required to pay the probable liability of such Guarantor on its debts (after
giving effect to all other fixed and contingent liabilities incurred or assumed
on such date and after giving effect to any collection from any Subsidiary of
such Guarantor in respect of the obligations of such Subsidiary under the
Guarantee of such Guarantor), excluding Subordinated Indebtedness and debt in
respect of its Guarantee as they become absolute and matured.
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"Affiliate" means a Person who directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
another Person. The term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by contract or
otherwise.
"Airline Catering Joint Venture" means any joint venture, partnership,
limited liability company or other Person engaged in the business of providing
airline catering services.
"Asset Acquisition" means (a) an Investment by the Issuer or any Restricted
Subsidiary of the Issuer in any other Person pursuant to which such Person shall
become a Restricted Subsidiary of the Issuer or a Subsidiary of any Restricted
Subsidiary of the Issuer, or shall be merged with or into the Issuer or any
Restricted Subsidiary of the Issuer, or (b) the acquisition by the Issuer or any
Restricted Subsidiary of the Issuer of the assets of any Person which constitute
all or substantially all of the assets of such Person, any division or line of
business of such Person or any other properties or assets of such Person other
than in the ordinary course of business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than pursuant to operating leases of real or personal
property entered into in the ordinary course of business), assignment or other
transfer for value by the Issuer or any Restricted Subsidiary of the Issuer
(including any Sale and Leaseback Transaction) to any Person other than the
Issuer or a Restricted Subsidiary of the Issuer of (a) any Capital Stock of any
Restricted Subsidiary of the Issuer or (b) any other property or assets of the
Issuer or any Restricted Subsidiary of the Issuer other than in the ordinary
course of business; provided, however, that an Asset Sale shall not include (i)
a transaction or series of related transactions for which the Issuer or its
Restricted Subsidiaries receive aggregate consideration of less than $1 million,
(ii) the sale or discount, in each case without recourse (other than recourse
for breach of a representation or warranty), of accounts receivable arising in
the ordinary course of business, but only in connection with the compromise or
collection thereof, (iii) the factoring or securitization of accounts receivable
arising in the ordinary course of business, (iv) the sale, lease, conveyance,
disposition or other transfer of all or substantially all of the assets of the
Issuer as permitted under the "Merger, Consolidation and Sale of Assets"
covenant and (v) the sale or other disposition in the ordinary course of
business of equipment or materials which, in the reasonable judgment of such
Person, are obsolete, worn out or otherwise no longer useful in the conduct of
such Person's business.
"Australian Assets" means any of the shares of Caterair Airport Services
Pty Limited owned by Caterair Australia Pty Limited which Qantas Flight Catering
Holdings Limited has the option to acquire pursuant to the exercise of the call
options respectively described in clauses 19A, 19B and 19C of the Restated
Shareholders Deed made on December 18, 1996 among Caterair Airport Services Pty
Limited, Caterair Australia Pty Limited, CII, OFSI, Qantas Airways Limited and
Qantas Flight Catering Holdings Limited.
"Board of Directors" means, as to any Person, the board of directors of
such Person or any duly authorized committee thereof.
"Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required for financial reporting purposes to
be classified and accounted for as capital lease obligations under GAAP and, for
purposes of this definition, the amount of such obligations at any date shall be
the capitalized amount of such obligations at such date, determined in
accordance with GAAP.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated) of corporate stock, including each class of common stock
and preferred stock of such Person and (ii) with respect to any Person that is
not a corporation, any and all partnership or other equity interests of such
Person.
"Cash Equivalents" means (i) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation or Moody's Investors
Service, Inc.; (iii) commercial paper maturing no more than one year from the
date of creation thereof and, at the time of acquisition, having a rating of at
least A-1 from Standard &
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Poor's Corporation or at least P-1 from Moody's Investors Service, Inc.; (iv)
time deposits, certificates of deposit or bankers' acceptances (or, with respect
to foreign banks, similar instruments) maturing within one year from the date of
acquisition thereof issued by any bank organized under the laws of the United
States of America or any state thereof or the District of Columbia or any U.S.
branch of a foreign bank having at the date of acquisition thereof combined
capital and surplus of not less than $200 million; provided that instruments
issued by banks not having one of the two highest ratings obtainable from either
Standard & Poor's Corporation or Moody's Investors Services, Inc. shall not
constitute "Cash Equivalents" for purposes of the subordination provisions of
the Indenture; (v) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (i) above
entered into with any bank meeting the qualifications specified in clause (iv)
above; (vi) except for purposes of the subordination provisions of the
Indenture, investments in money market funds substantially all of whose assets
are comprised of securities of the types described in clauses (i) through (v)
above; and (vii) overnight deposits and demand deposits maintained in the
ordinary course of business.
"Caterair Asset Sale" means any direct or indirect sale, issuance,
conveyance, transfer, lease (other than pursuant to operating leases of real or
personal property entered into in the ordinary course of business), assignment
or other transfer for value by Caterair or any Subsidiary of Caterair (including
any Sale and Leaseback Transaction) to any Person other than Caterair or a
Wholly Owned Subsidiary of Caterair of (a) any Capital Stock of any Subsidiary
of Caterair or (b) any other property or assets of Caterair or any Subsidiary of
Caterair other than in the ordinary course of business; provided, however, that
Caterair Asset Sale shall not include (i) a transaction or series of related
transactions for which Caterair or its Subsidiaries receive aggregate
consideration of less than $1 million, (ii) the sale or discount, in each case
without recourse (other than recourse for breach of a representation or
warranty), of accounts receivable arising in the ordinary course of business,
but only in connection with the compromise or collection thereof, (iii) the
factoring or securitization of accounts receivable arising in the ordinary
course of business, (iv) the sale or other disposition in the ordinary course of
business of equipment or materials which, in the reasonable judgment of such
Person, are obsolete, worn out or otherwise no longer useful in the conduct of
such Person's business and (v) the sale of assets to the Issuer or any
Restricted Subsidiary of the Issuer in connection with the exercise of the
purchase options for the Caterair Leased Property pursuant to the Caterair Lease
and the Caterair Licensed Property pursuant to the Caterair License.
"Caterair Lease" means collectively the lease and sublease agreements
pursuant to which the Caterair Leased Property is leased to the Issuer or
Subsidiaries of the Issuer.
"Caterair Leased Property" means (i) the property and assets listed on
Schedule 2.2(k) to the Master Agreement and (ii) all other property and assets
acquired by Caterair and substantially contemporaneously with such acquisition
leased by Caterair to the Issuer or Subsidiaries of the Issuer.
"Caterair License" means collectively the license agreements pursuant to
which the Caterair Licensed Property is licensed to the Issuer or Subsidiaries
of the Issuer.
"Caterair Licensed Property" means (i) the property and assets listed on
Schedule 2.2(o) to the Master Agreement and (ii) all other property and assets
acquired by Caterair and substantially contemporaneously with such acquisition
licensed by Caterair to the Issuer or Subsidiaries of the Issuer.
"Caterair Promissory Note" means the 8% Pay-in-Kind Promissory Note due
2001 of Caterair.
"Caterair Tax Sharing Agreement" means the Income Tax Sharing Agreement
dated December 15, 1989, among Marriott Corporation, Caterair Holdings and
Caterair.
"Change of Control" means the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all of the assets of the
Issuer or OFSI, as the case may be, to any Person or group of related Persons
for purposes of Section 13(d) of the Exchange Act (a "Group") (whether or not
otherwise in compliance with the provisions of the Indenture), other than a
Permitted Holder or Holders; or (ii) if the Permitted Holders do not own,
directly or indirectly, beneficially (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act) or of record, shares representing more than 50% of the
aggregate ordinary voting power represented by the issued and outstanding
Capital Stock of the Issuer or OFSI, as the case may be, (A) any Person or
Group, other than a Permitted Holder or Holders, shall become the owner,
directly or indirectly, beneficially (as defined in Rules
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13d-3 and 13d-5 under the Exchange Act) or of record, of shares representing
more than 50% of the aggregate ordinary voting power represented by the issued
and outstanding Capital Stock of the Issuer or OFSI, as the case may be, or (B)
the replacement of a majority of the Board of Directors of either the Issuer or
OFSI, as the case may be, over a two-year period from the directors who
constituted the Board of Directors of such Person at the beginning of such
period, and such replacement shall not have been approved by a vote of at least
a majority of the Board of Directors of such Person then still in office who
either were members of the Board of Directors of such Person at the beginning of
such period or whose election as a member of the Board of Directors of such
Person was previously so approved.
"Consolidated Amortization Expense" means, with respect to any Person for
any period, the consolidated amortization expense of such Person for such
period, determined on a consolidated basis for such Person and its Restricted
Subsidiaries (and, in the case of the Issuer, Caterair and its Subsidiaries) in
conformity with GAAP.
"Consolidated Depreciation Expense" means, with respect to any Person for
any period, the consolidated depreciation expense of such Person for such
period, determined on a consolidated basis for such Person and its Restricted
Subsidiaries (and, in the case of the Issuer, Caterair and its Subsidiaries) in
conformity with GAAP.
"Consolidated EBITDA" means, with respect to any Person for any period,
the sum, without duplication, of (i) Consolidated Net Income, (ii) to the extent
Consolidated Net Income has been reduced thereby, all income taxes of such
Person and its Restricted Subsidiaries (and, in the case of the Issuer, Caterair
and its Subsidiaries) paid or accrued in conformity with GAAP for such period
(other than income taxes attributable to extraordinary or nonrecurring gains or
losses), (iii) Consolidated Interest Expense, (iv) Consolidated Amortization
Expense, (v) Consolidated Depreciation Expense and (vi) Consolidated Non-cash
Charges.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
such Person for the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to (i) the incurrence or
repayment of any Indebtedness (excluding the incurrence of Indebtedness under
any revolving credit facility and including repayment of Indebtedness under any
revolving credit facility only to the extent that such repayment effects a
permanent reduction in the availability thereunder) of such Person or any of its
Restricted Subsidiaries (and, in the case of the Issuer, Caterair and its
Subsidiaries, other than Indebtedness between the Issuer or any Subsidiary of
the Issuer and Caterair or any Subsidiary of Caterair) (and the application of
the proceeds thereof) giving rise to the need to make such calculation and any
incurrence or repayment of other Indebtedness (and the application of the
proceeds thereof) at any time subsequent to the first day of the Four Quarter
Period and on or prior to the Transaction Date, as if such incurrence or
repayment, as the case may be (and the application of the proceeds thereof),
occurred on the first day of the Four Quarter Period and (ii) any Asset Sales or
Asset Acquisitions (including, without limitation, any Asset Acquisition giving
rise to the need to make such calculation as a result of such Person or one of
its Restricted Subsidiaries (including any Person who becomes a Restricted
Subsidiary as a result of the Asset Acquisition) incurring, assuming or
otherwise being liable for Acquired Indebtedness and also including any
Consolidated EBITDA (including any pro forma expense and cost reductions
calculated on a basis consistent with Regulation S-X under the Securities Act)
attributable to the assets which are the subject of the Asset Acquisition or
Asset Sale during the Four Quarter Period) occurring during the Four Quarter
Period or at any time subsequent to the last day of the Four Quarter Period and
on or prior to the Transaction Date, as if such Asset Sale or Asset Acquisition
(including the incurrence, assumption or liability for any such Indebtedness or
Acquired Indebtedness) occurred on the first day of the Four Quarter Period. If
such Person or any of its Restricted Subsidiaries directly or indirectly
guarantees Indebtedness of a third Person, the preceding sentence shall give
effect to the incurrence of such guaranteed Indebtedness as if such Person or
any Restricted Subsidiary of such Person had directly incurred or otherwise
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assumed such guaranteed Indebtedness. Furthermore, in calculating "Consolidated
Fixed Charges" for purposes of determining the denominator (but not the
numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1) interest on
outstanding Indebtedness determined on a fluctuating basis as of the Transaction
Date and which will continue to be so determined thereafter shall be deemed to
have accrued at a fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Transaction Date; (2) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rates, then the interest rate in
effect on the Transaction Date will be deemed to have been in effect during the
Four Quarter Period; (3) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Swap Obligations, shall be deemed to
accrue at the rate per annum (not in excess of the maximum possible rate if such
agreement is an interest rate cap, interest rate collar or similar agreement)
resulting after giving effect to the operation of such agreements; and (4) the
permanent retirement of any Indebtedness during the Four Quarter Period or at
any time subsequent to the last day of the Four Quarter Period and on or prior
to the Transaction Date shall be given effect as if it occurred at the beginning
of such Four Quarter Period.
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense
(including amortization or write-off of debt issuance costs), plus (ii) the
product of (x) the amount of all dividend payments on any series of Preferred
Stock of such Person (other than dividends paid in common stock) paid, accrued
or scheduled to be paid or accrued during such period and (y) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current effective consolidated federal, state and local tax rate of such Person
expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum, without duplication, of (i) the aggregate of all cash and
non-cash interest expense with respect to all outstanding Indebtedness of such
Person and its Restricted Subsidiaries (and, in the case of the Issuer, Caterair
and its Subsidiaries), including the net costs associated with Interest Swap
Obligations and capitalized interest, for such period determined on a
consolidated basis in conformity with GAAP; and (ii) the interest component of
Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or
accrued by such Person and its Restricted Subsidiaries (and, in the case of the
Issuer, Caterair and its Subsidiaries) during such period as determined on a
consolidated basis in accordance with GAAP. In addition, in calculating the
Consolidated Interest Expense of the Issuer, interest expense with respect to
Indebtedness between the Issuer or any Subsidiary of the Issuer and Caterair or
any Subsidiary of Caterair shall be excluded therefrom.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate net income (or loss) of such Person and its Subsidiaries (and, in
the case of the Issuer, Caterair) for such period on a consolidated basis,
determined in accordance with GAAP; provided that there shall be excluded
therefrom (a) gains and losses from Asset Sales (without regard to the $1
million limitation set forth in the definition thereof) and Caterair Asset Sales
(without regard to the $1 million limitation set forth in the definition
thereof) or abandonments or reserves relating thereto and the related tax
effects, (b) items classified as extraordinary or nonrecurring gains and losses,
and the related tax effects according to GAAP, (c) the net income (or loss) of
any Person acquired in a pooling of interests transaction accrued prior to the
date it becomes a Subsidiary of such first Person or is merged or consolidated
with such first Person or any Subsidiary of such first Person, (d) the net
income of any Subsidiary of such Person to the extent that the declaration of
dividends or similar distributions by that Subsidiary of that income is
restricted by contract, operation of law or otherwise, (e) the net loss of any
Person, other than a Restricted Subsidiary of such first Person and (f) the net
income of any Person, other than a Restricted Subsidiary of such first Person,
in which such first Person has an equity interest, except to the extent of cash
dividends or distributions paid to such first Person or a Restricted Subsidiary
of such first Person. Notwithstanding the foregoing, in calculating the
Consolidated Net Income of the Issuer, (i) charges incurred by the Issuer in
connection with the consummation of the transactions contemplated by the Master
Agreement (including, without limitation, (A) severance payments and other
employee costs and (B) external consulting services primarily associated with
the implementation of labor savings programs) shall not be deducted therefrom,
(ii) the goodwill and the increases in amortization and depreciation resulting
from the consummation of the transactions contemplated by the Master Agreement
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shall not be deducted therefrom and (iii) interest payments or accruals on the
Caterair Promissory Note shall not be taken into account.
"Consolidated Non-cash Charges" means, with respect to any Person for any
period, the aggregate depreciation, amortization and other non-cash expenses of
such Person and its Restricted Subsidiaries (and, in the case of the Issuer,
Caterair and its Subsidiaries) reducing Consolidated Net Income of such Person
and its Restricted Subsidiaries (and, in the case of the Issuer, Caterair and
its Subsidiaries) for such period, determined on a consolidated basis in
conformity with GAAP (excluding any such charges constituting an extraordinary
item or loss or any such charge which requires an accrual of or a reserve for
cash charges for any future period).
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement to which the Issuer or any
Restricted Subsidiary of the Issuer or Caterair or any Subsidiary of Caterair,
as the case may be, is a party designed to protect the Issuer or any Restricted
Subsidiary of the Issuer or Caterair or any Subsidiary of Caterair, as the case
may be, against fluctuations in currency values.
"Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of Default.
"Designated Senior Debt" means (i) Indebtedness under or in respect of the
Senior Bank Financing and (ii) any other Indebtedness constituting Senior Debt
which, at the time of determination, has an aggregate principal amount of at
least $10 million and is specifically designated in the instrument evidencing
such Senior Debt as "Designated Senior Debt" by the Issuer.
"Disqualified Capital Stock" means any Capital Stock which, by its terms
(or by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event (other than an event which
would constitute a Change of Control), matures (excluding any maturity as the
result of an optional redemption by the issuer thereof) or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the sole option of the holder thereof (except, in each case, upon the
occurrence of a Change of Control), in whole or in part, on or prior to the
final maturity date of the Notes.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the date of the Indenture, including, without
limitation, those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession.
"Guarantors" means (i) each of Sky Chefs, CII and Caterair, (ii) each
Restricted Subsidiary of the Issuer or Subsidiary of Caterair which becomes a
guarantor of the Notes in compliance with the provisions set forth under
"-- Certain Covenants -- Guarantees of Certain Indebtedness" and each Subsidiary
of the Issuer identified in the last paragraph under the caption "-- Guarantees"
and (iii) each Restricted Subsidiary of the Issuer or Subsidiary of Caterair
executing a supplemental indenture in which such Restricted Subsidiary or
Subsidiary, as the case may be, agrees to be bound by the terms of the Notes and
the Indenture.
"Indebtedness" means with respect to any Person, without duplication, (i)
all obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all Capitalized Lease Obligations of such Person, (iv) all obligations of such
Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all obligations under any title retention
agreement (but excluding trade accounts payable and accrued expenses arising in
the ordinary course of business), (v) all obligations for the reimbursement of
any obligor on any letter of credit, banker's acceptance or similar credit
transaction, (vi) guarantees and other contingent obligations in respect of
Indebtedness referred to in clauses (i) through (v) above and clause (viii)
below, (vii) all obligations of any other Person of the type referred to in
clauses (i) through (vi) which are secured by any lien on any property or asset
of such Person, the amount of such obligation being deemed to be the amount of
the obligation so secured, (viii) all obligations under currency agreements and
interest swap agreements of such
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Person, and (ix) all Disqualified Capital Stock issued by such Person with the
amount of Indebtedness represented by such Disqualified Capital Stock being
equal to the greater of its voluntary or involuntary liquidation preference and
its maximum fixed repurchase price, but excluding accrued dividends, if any. For
purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value shall be determined reasonably and in good
faith by the Board of Directors of the issuer of such Disqualified Capital
Stock. The amount of Indebtedness of any Person at any date shall be the
outstanding principal amount of all unconditional obligations described above,
as such amount would be reflected on a balance sheet prepared in conformity with
GAAP, and the maximum liability at such date of such Person for any contingent
obligations described above.
"Interest Swap Obligations" means the obligations of any Person, pursuant
to any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated by
applying a fixed or a floating rate of interest on the same notional amount.
"Investment" means, with respect to any Person any direct or indirect loan
or other extension of credit (including, without limitation, a guarantee) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any Person. "Investment" shall exclude extensions of trade credit by the
Issuer and its Restricted Subsidiaries and Caterair and its Subsidiaries on
commercially reasonable terms in accordance with normal trade practices of the
Issuer and its Restricted Subsidiaries or Caterair and its Subsidiaries, as the
case may be. In no event shall this definition of "Investment" include payments
by the Issuer to a trust established in connection with a Voluntary Employees'
Beneficiary Association (as referred to in Section 501(c)(9) of the Internal
Revenue Code of 1986). For the purposes of the "Limitation on Restricted
Payments" covenant, (i) an "Investment" shall include and be valued at the fair
market value of the net assets of any Restricted Subsidiary of the Issuer at the
time that such Restricted Subsidiary is designated an Unrestricted Subsidiary of
the Issuer and shall exclude the fair market value of the net assets of any
Unrestricted Subsidiary of the Issuer at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary of the Issuer and (ii) the
amount of any Investment shall be the original cost of such Investment plus the
cost of all additional Investments by the Issuer or any Restricted Subsidiary of
the Issuer or Caterair or any Subsidiary of Caterair, as the case may be,
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment, reduced by the
payment of dividends or distributions (including tax sharing payments) in
connection with such Investment or any other amounts received in respect of such
Investment, to the extent constituting a return on capital in conformity with
GAAP.
"Issue Date" means the date of first issuance of the Private Notes under
the Indenture.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof and any agreement to give
any security interest, but excluding operating leases of real or personal
property).
"Net Cash Proceeds" means, (i) with respect to any Asset Sale or Caterair
Asset Sale, as the case may be, the proceeds in the form of cash or Cash
Equivalents including payments in respect of deferred payment obligations when
received in the form of cash or Cash Equivalents (other than the portion of any
such deferred payment constituting interest) received by the Issuer or any
Restricted Subsidiary of the Issuer or Caterair or any Subsidiary of Caterair,
as the case may be, from such Asset Sale or Caterair Asset Sale, as the case may
be, net of (a) out-of-pocket expenses and fees relating to such Asset Sale or
Caterair Asset Sale, as the case may be (including, without limitation, legal,
accounting and investment banking fees and sales commissions), (b) any and all
taxes paid or payable after taking into account any reduction in consolidated
tax liability due to
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available tax credits or deductions and any tax sharing arrangements, (c)
repayment of Indebtedness that is required to be repaid in connection with such
Asset Sale or Caterair Asset Sale, as the case may be, (d) any portion of cash
proceeds which the Issuer or Caterair, as the case may be, determines in good
faith should be reserved for post-closing adjustments or indemnities, it being
understood and agreed that on the day that all such post-closing adjustments or
indemnities have been determined, the amount (if any) by which the reserved
amount in respect of such Asset Sale or Caterair Asset Sale, as the case may be,
exceeds the actual post-closing adjustments or indemnities payable by the Issuer
or any Restricted Subsidiary of the Issuer or Caterair or any Subsidiary of
Caterair, as the case may be, shall constitute Net Cash Proceeds on such date or
(ii) with respect to the sale of Capital Stock by any Person not constituting an
Asset Sale or Caterair Asset Sale, as the case may be, the aggregate net cash
proceeds received by such Person after payment of expenses, commissions and
other similar charges incurred in connection therewith.
"Non-Significant Subsidiary" of any Person means any Restricted Subsidiary
of such Person which at the time of determination is not a Significant
Subsidiary of such Person.
"Obligations" means all obligations for, or guaranteeing the payment of,
principal, premium, interest, penalties, fees, indemnifications, reimbursements,
damages and other liabilities payable under the documentation governing any
Indebtedness, without duplication.
"OFSI Tax Sharing Agreement" means the Tax Sharing Agreement, dated the
Issue Date, among OFSI, the Issuer, Sky Chefs and CII.
"Permitted Holder" means (i) Lufthansa, (ii) LSG/Lufthansa, (iii) Gerald W.
Schwartz, (iv) Onex and/or (v) Oncap Holdings Corp.
"Permitted Indebtedness" means, without duplication, (i) the Notes, (ii)
the Guarantees, (iii) Indebtedness incurred pursuant to the Senior Bank
Financing, the aggregate outstanding principal amount of which shall not at any
time exceed the sum of the aggregate commitments pursuant to the Senior Bank
Financing as in effect on the Issue Date (A) less the amount of all mandatory
principal payments actually made in respect of the term loan thereunder and (B)
reduced by any required repayments (which are accompanied by a corresponding
permanent commitment reduction) thereunder actually effected in satisfaction of
the application of the Net Cash Proceeds requirement described under the
"Limitation on Asset Sales" covenant, (iv) other Indebtedness of the Issuer,
Caterair and their respective Subsidiaries outstanding on the Issue Date, (v)
Interest Swap Obligations covering Indebtedness of the Issuer, Caterair or any
of their respective Subsidiaries; provided that any Indebtedness to which any
such Interest Swap Obligations correspond is otherwise permitted to be incurred
under the Indenture; provided, further, that such Interest Swap Obligations are
entered into, in the judgment of the Issuer or Caterair, as the case may be, to
protect the Issuer or any Subsidiary of the Issuer or Caterair or any Subsidiary
of Caterair, as the case may be, from fluctuations in interest rates on their
respective outstanding Indebtedness, (vi) Indebtedness under Currency
Agreements, (vii) (A) intercompany Indebtedness owed by the Issuer to any Wholly
Owned Restricted Subsidiary of the Issuer or by any Restricted Subsidiary of the
Issuer to the Issuer or any Wholly Owned Restricted Subsidiary of the Issuer,
(B) intercompany Indebtedness owed by Caterair to any Wholly Owned Subsidiary of
Caterair or by any Subsidiary of Caterair to Caterair or any Wholly Owned
Subsidiary of Caterair and (C) Indebtedness between the Issuer or any Wholly
Owned Restricted Subsidiary of the Issuer, on the one hand, and Caterair or any
Wholly Owned Subsidiary of Caterair, on the other hand, (viii) Acquired
Indebtedness to the extent the Issuer could have incurred such Indebtedness in
accordance with the "Limitation on Incurrence of Additional Indebtedness"
covenant, (ix) (A) performance bonds, completion guarantees and similar
obligations (exclusive of obligations for the payment of borrowed money), (B)
guarantees pursuant to the "Guarantees of Certain Indebtedness" covenant and
(C)(1) guarantees by the Issuer or any Wholly Owned Restricted Subsidiary of the
Issuer of Indebtedness of Caterair or any Wholly Owned Subsidiary of Caterair,
(2) guarantees by Caterair or any Wholly Owned Subsidiary of Caterair of
Indebtedness of the Issuer or any Wholly Owned Restricted Subsidiary of the
Issuer, (3) guarantees by the Issuer and its Wholly Owned Restricted
Subsidiaries of each other's Indebtedness and (4) guarantees by Caterair and its
Wholly Owned Subsidiaries of each other's Indebtedness; provided that in the
case of each guarantee of Indebtedness pursuant to clauses(C)(1), (C)(2), (C)(3)
or (C)(4), such Indebtedness is incurred in accordance with the provisions of
the Indenture, (x) in addition to Capitalized Lease Obligations
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permitted under any other clause of this definition, purchase money Indebtedness
and Indebtedness evidenced by Capitalized Lease Obligations not to exceed an
aggregate of $10 million at any one time outstanding, (xi) any refinancing,
modification, replacement, renewal, restatement, refunding, deferral, extension,
substitution, supplement, reissuance or resale of existing or future
Indebtedness, including Capitalized Lease Obligations incurred after the
repayment of all or a portion of the Capitalized Lease Obligations outstanding
as of the Issue Date so long as the aggregate amount of Capitalized Lease
Obligations incurred and outstanding at any time pursuant to clause (iv) above
and this clause (xi) does not exceed the amount of Capitalized Lease Obligations
outstanding on the Issue Date, and any additional Indebtedness incurred to pay
premiums required by the instruments governing such existing or future
Indebtedness as in effect at the time of issuance thereof ("Required Premiums")
and fees in connection therewith; provided that any such event shall not (1)
result in an increase in the aggregate principal amount of Permitted
Indebtedness (except to the extent such increase is a result of a simultaneous
incurrence of additional Indebtedness (A) to pay Required Premiums and related
fees or (B) otherwise permitted to be incurred under the Indenture) of the
Issuer, Caterair and their respective Subsidiaries and (2) create Indebtedness
with a Weighted Average Life to Maturity at the time such Indebtedness is
incurred that is less than the Weighted Average Life to Maturity at such time of
the Indebtedness being refinanced, modified, replaced, renewed, restated,
refunded, deferred, extended, substituted, supplemented, reissued or resold
(except that this subclause (2) will not apply in the event the Indebtedness
being refinanced, modified, replaced, renewed, restated, refunded, deferred,
extended, substituted, supplemented, reissued or resold was originally incurred
in reliance upon clause (iii), (xi) or (xiii) of this definition), (xii)
Indebtedness incurred in connection with the exercise of the purchase options
for the Caterair Leased Property pursuant to the Caterair Lease and the Caterair
Licensed Property pursuant to the Caterair License; provided that any payment
made to Caterair in connection with the exercise of such options is used by
Caterair to prepay Guarantor Senior Debt or, if there is no Guarantor Senior
Debt outstanding, to prepay Senior Debt and/or to repay the Caterair Promissory
Note; provided that if Caterair elects to repay the Caterair Promissory Note,
the Issuer immediately uses the proceeds received from such repayment to prepay
Senior Debt, and (xiii) additional Indebtedness of the Issuer, Caterair and
Restricted Subsidiaries of the Issuer in an aggregate principal amount not to
exceed $75 million at any one time outstanding (which amount may, but need not,
be incurred in whole or in part under the Senior Bank Financing).
"Permitted Investments" means (i)(A) Investments by the Issuer or any
Restricted Subsidiary of the Issuer in, or for the benefit of, any Restricted
Subsidiary of the Issuer (whether existing on the Issue Date or created
thereafter and including Investments in any Person, if after giving effect to
such Investment, such Person would be a Restricted Subsidiary of the Issuer) and
Investments in, or for the benefit of, the Issuer by any Restricted Subsidiary
of the Issuer and (B) Investments by Caterair in, or for the benefit of, any
Wholly Owned Subsidiary of Caterair and Investments in, or for the benefit of,
Caterair by any Subsidiary of Caterair, (ii) cash and Cash Equivalents, (iii)
Investments existing on the Issue Date, except for Investments in Restricted
Subsidiaries of the Issuer which shall be governed by clause (i)(A) above, (iv)
Investments in securities of trade creditors or customers received pursuant to
any plan of reorganization or similar arrangement upon the bankruptcy or
insolvency of such trade creditors or customers, (v) loans and advances by the
Issuer and its Subsidiaries to their respective employees (A) the proceeds of
which are used to purchase common stock of OFSI and which proceeds are
contributed by OFSI to the Issuer (which contribution shall not be included as a
capital contribution for purposes of clause (iii)(z) of the first paragraph of
the "Limitation on Restricted Payments" covenant) or (B) in the ordinary course
of business, which loans or advances do not exceed $3 million at any one time
outstanding, (vi) the Guarantees, (vii) any Investment that qualifies as
Permitted Indebtedness, (viii) Investments by the Issuer or any Restricted
Subsidiary of the Issuer in Unrestricted Subsidiaries of the Issuer or in other
Persons in an amount not to exceed $30 million at any one time outstanding,
(ix)(A) Investments by the Issuer or any Restricted Subsidiary of the Issuer in
Caterair or any Wholly Owned Subsidiary of Caterair and (B) Investments by
Caterair or any Subsidiary of Caterair in the Issuer or any Restricted
Subsidiary of the Issuer, (x) Investments received by the Issuer or any
Restricted Subsidiary of the Issuer or Caterair or any Subsidiary of Caterair,
as the case may be, as consideration for asset sales, including Asset Sales or
Caterair Asset Sales; provided that in the case of an Asset Sale or Caterair
Asset Sale, such Asset Sale or Caterair Asset Sale is effected in compliance
with the
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"Limitation on Asset Sales" covenant and (xi) in addition to Investments
permitted under clause (viii) above, Investments in Unrestricted Subsidiaries
that are engaged in the business of providing airline catering services and
Airline Catering Joint Ventures in an aggregate amount not to exceed $50 million
at any one time outstanding.
"Permitted Liens" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims
either (a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which the Issuer or its Restricted Subsidiaries or
Caterair or its Subsidiaries, as the case may be, shall have set aside on
its books such reserves as may be required in conformity with GAAP;
(ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business, as well as deposits to secure
each of the foregoing, for sums not yet delinquent more than 60 days or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP for financial reporting
purposes shall have been made in respect thereof;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, including any Lien securing letters of
credit issued in the ordinary course of business consistent with past
practice in connection therewith, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(iv) judgment Liens not giving rise to an Event of Default;
(v) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Issuer
and its Restricted Subsidiaries, taken as a whole, or of Caterair and its
Subsidiaries, taken as a whole, as the case may be;
(vi) any interest or title of a lessor under any Capitalized Lease
Obligation and precautionary filings made for informational purposes in
connection with true leases, consignments and similar arrangements;
(vii) purchase money Liens to finance property or assets of the Issuer
or any Restricted Subsidiary of the Issuer or Caterair or any Subsidiary of
Caterair, as the case may be, acquired in the ordinary course of business;
provided, however, that (A) the related purchase money Indebtedness shall
not exceed the cost of such property or assets and shall not be secured by
any property or assets of the Issuer or any Restricted Subsidiary of the
Issuer or Caterair or any Subsidiary of Caterair, as the case may be, other
than the property and assets so acquired and (B) the Lien securing such
Indebtedness shall be created within 90 days of such acquisition;
(viii) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment, or storage of such inventory or other
goods;
(ix) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(x) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of the Issuer
or any Restricted Subsidiary of the Issuer or Caterair or any Subsidiary of
Caterair, as the case may be, including rights of offset and set-off;
(xi) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under the
Indenture;
(xii) Liens securing Indebtedness under Currency Agreements;
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(xiii) Liens existing on the Issue Date, together with any Liens
securing Indebtedness incurred in reliance on clause (xi) of the definition
of Permitted Indebtedness; provided that the Liens securing the refinancing
Indebtedness shall not extend to property other than that pledged under the
Liens securing the Indebtedness being refinanced;
(xiv) Liens securing Indebtedness incurred in reliance on clause
(xiii) of the definition of Permitted Indebtedness;
(xv) Liens in favor of the Trustee to secure the Issuer's payment
obligations to the Trustee; and
(xvi) non-consensual Liens which do not individually or in the
aggregate materially detract from the value or transferability of the
property or assets of the Issuer, any Restricted Subsidiary of the Issuer,
Caterair or any Subsidiary of Caterair, or materially impair the use of any
such property or assets in the operation of the respective businesses of
the Issuer, any Restricted Subsidiary of the Issuer, Caterair or any
Subsidiary of Caterair.
"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
"Plan of Liquidation" means, with respect to any Person, a plan that
provides for, contemplates or the effectuation of which is preceded or
accompanied by (whether or not substantially contemporaneously, in phases or
otherwise) (i) the sale, lease, conveyance or other disposition of all or
substantially all of the assets of such Person otherwise than as an entirety or
substantially as an entirety and (ii) the distribution of all or substantially
all of the proceeds of such sale, lease, conveyance or other disposition and all
or substantially all of the remaining assets of such person to holders of
Capital Stock of such Person.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"Productive Assets" means assets of a kind used or usable in the businesses
of the Issuer and its Restricted Subsidiaries or Caterair and its Subsidiaries,
as the case may be, or similar, ancillary, complementary or related to such
businesses, as conducted on the date of the relevant Asset Sale or Caterair
Asset Sale, as the case may be including, without limitation, equity interests
and other assets the acquisition of which would constitute a "Permitted
Investment" under clause (i)(A) of the definition thereof.
"pro forma" means, with respect to any calculation made or required to be
made pursuant to the terms of the Indenture, a calculation in accordance with
Article 11 of Regulation S-X under the Securities Act.
"Public Equity Offering" means an underwritten public offering of Qualified
Capital Stock of OFSI or the Issuer pursuant to a registration statement filed
with the Commission in accordance with the Securities Act; provided that in the
event of a Public Equity Offering by OFSI, OFSI contributes to the capital of
the Issuer net cash proceeds of such Public Equity Offering in an amount
sufficient to redeem the Notes called for redemption in accordance with the
terms thereof.
"Qualified Capital Stock" means any stock that is not Disqualified Capital
Stock.
"Representative" means the indenture trustee or other trustee, agent or
representative in respect of any Designated Senior Debt; provided that if, and
for so long as, any Designated Senior Debt lacks such a representative, then the
Representative for such Designated Senior Debt shall at all times constitute the
holders of a majority in outstanding principal amount of such Designated Senior
Debt in respect of any Designated Senior Debt.
"Restricted Subsidiary" of any Person means any Subsidiary of such Person
which at the time of determination is not an Unrestricted Subsidiary of such
Person.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to the Issuer or a Restricted Subsidiary of the Issuer or Caterair or a
Subsidiary of Caterair, as the case may be, of any property, whether owned by
the Issuer or a Restricted Subsidiary of the Issuer or Caterair or a Subsidiary
of Caterair, as the case may be, at
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the Issue Date or later acquired, which has been or is to be sold or transferred
by the Issuer or a Restricted Subsidiary of the Issuer or Caterair or a
Subsidiary of Caterair, as the case may be, to such Person or to any other
Person from whom funds have been or are to be advanced by such Person on the
security of such Property.
"Senior Bank Financing" means the Term Loan Agreement, dated as of the
Issue Date, among each of SCIS and Caterair as borrowers, the guarantors
thereunder, the lenders party thereto from time to time in their capacities as
lenders thereunder and Morgan Guaranty Trust Company of New York, as
administrative agent, J.P. Morgan Securities Inc. and Bankers Trust Company, as
co-arrangers, and Bankers Trust Company, as syndication agent, and the Revolving
Credit Facility, dated as of the Issue Date, among the Issuer, as borrower, the
guarantors thereunder, the lenders party thereto from time to time in their
capacities as lenders thereunder, and Morgan Guaranty Trust Company of New York,
as administrative agent, J.P. Morgan Securities Inc. and Bankers Trust Company,
as co-arrangers, and Bankers Trust Company, as syndication agent, together, in
each case, with the related documents thereto (including, without limitation,
any guarantee agreements and security documents), in each case as such
agreements may be amended (including any amendment and restatement thereof),
supplemented or otherwise modified from time to time, including any agreement
extending the maturity of, increasing the total commitment under, refinancing,
replacing or otherwise restructuring (including adding Restricted Subsidiaries
of the Issuer and Subsidiaries of Caterair as additional borrowers or guarantors
thereunder) all or any portion of the Indebtedness under any such agreement or
any successor or replacement agreement to any thereof and whether by the same or
any other syndication agent, documentation agent, administrative agent, lender
or group of lenders.
"Senior Debt" means the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on, and
all other obligations with respect to, any Indebtedness of the Issuer, whether
outstanding on the Issue Date or thereafter created, incurred or assumed,
unless, in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to the
Notes. Without limiting the generality of the foregoing, "Senior Debt" shall
also include the principal of, premium, if any, interest (including any interest
accruing subsequent to the filing of a petition of bankruptcy at the rate
provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law) on, and all other amounts
owing in respect of, (x) all monetary obligations of every nature of the Issuer
under the Senior Bank Financing, including, without limitation, (a) obligations
to pay principal and interest, reimbursement obligations under letters of
credit, fees, expenses and indemnities and (b) guarantees by the Issuer of
Obligations under the Senior Bank Financing where the direct borrower is
Caterair or a Subsidiary of the Issuer, (y) all Interest Swap Obligations and
(z) all obligations under Currency Agreements, in each case whether outstanding
on the Issue Date or thereafter incurred. Notwithstanding the foregoing, Senior
Debt shall not include (i) any Indebtedness, if the instrument creating or
evidencing the same or the assumption or guarantee thereof expressly provides
that such Indebtedness shall not be senior in right of payment to the Notes,
(ii) any Indebtedness of the Issuer to a Subsidiary of the Issuer, (iii)
Indebtedness to, or guaranteed on behalf of, any director, officer or employee
of the Issuer or any Subsidiary of the Issuer (including, without limitation,
amounts owed for compensation), (iv) Indebtedness to trade creditors and other
amounts incurred in connection with obtaining goods, materials or services, (v)
Indebtedness represented by Disqualified Capital Stock, (vi) any liability for
federal, state, local or other taxes owed or owing by the Issuer, (vii) that
portion of any Indebtedness incurred in violation of the Indenture provisions
set forth under the "Limitation on Incurrence of Additional Indebtedness"
covenant (but, as to any such obligation, no such violation shall be deemed to
exist for purposes of this clause (vii) if the holder(s) of such obligation or
their representative and the Trustee shall have received an Officers'
Certificate of the Issuer to the effect that the incurrence of such Indebtedness
does not (or, in the case of revolving credit Indebtedness, that the incurrence
of the entire committed amount thereof at the date on which the initial
borrowing thereunder is made) would not violate such provisions of the
Indenture); and (viii) any Indebtedness which is, by its express terms,
subordinated in right of payment to any other Indebtedness of the Issuer.
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"Significant Subsidiary" means, as of any date of determination, for any
Person, each Subsidiary of such Person (or, in the case of the Issuer, each
Restricted Subsidiary of the Issuer) which (i) for the most recent fiscal year
of such Person accounted for more than 10% of consolidated revenues or 10% of
Consolidated EBITDA of such Person or (ii) as at the end of such fiscal year,
was the owner of more than 10% of the consolidated assets of such Person.
"Subordinated Indebtedness" means, with respect to any Guarantor,
Indebtedness of such Guarantor which is subordinated in right of payment to the
Guarantee of such Guarantor.
"Subsidiary", with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Subsidiary Guarantors" means Sky Chefs, CII and any other Restricted
Subsidiary of the Issuer which was a Guarantor as of the Issue Date or becomes a
Guarantor of the Notes.
"Unrestricted Subsidiary" of any Person means (i) any Subsidiary of such
Person that at the time of determination shall be or continue to be designated
an Unrestricted Subsidiary by the Board of Directors of such Person in the
manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The
Board of Directors of the Issuer may designate any Subsidiary of the Issuer
(including any newly acquired or newly formed Subsidiary), other than a
Subsidiary Guarantor, to be an Unrestricted Subsidiary of the Issuer unless such
Subsidiary of the Issuer owns any Capital Stock of, or owns or holds any Lien on
any property of, the Issuer or any other Subsidiary of the Issuer that is not a
Subsidiary of the Subsidiary to be so designated; provided that (x) the Issuer
certifies to the Trustee that such designation complies with the "Limitation on
Restricted Payments" covenant and (y) each Subsidiary of the Issuer to be so
designated and each of its Subsidiaries has not at the time of designation, and
does not thereafter, create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable with respect to any Indebtedness pursuant to which
the lender has recourse to any of the assets of the Issuer or any of its
Restricted Subsidiaries. Notwithstanding the foregoing, the Issuer or a
Restricted Subsidiary of the Issuer may guarantee Indebtedness of an
Unrestricted Subsidiary of the Issuer if such guarantee is made in accordance
with the "Limitation on Restricted Payments" covenant. The Board of Directors of
the Issuer may designate any Unrestricted Subsidiary of the Issuer to be a
Restricted Subsidiary of the Issuer only if (x) immediately after giving effect
to such designation, the Issuer is able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with the
"Limitation on Incurrence of Additional Indebtedness" covenant and (y)
immediately before and immediately after giving effect to such designation, no
Default or Event of Default shall have occurred and be continuing. Any such
designation by the Board of Directors of the Issuer shall be evidenced to the
Trustee by promptly filing with the Trustee a copy of the resolution giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing provisions.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the sum of the total of
the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" of any Person means any Restricted
Subsidiary of such Person of which all the outstanding voting securities (other
than directors' qualifying shares) are owned by such Person or any Wholly Owned
Restricted Subsidiary of such Person.
"Wholly Owned Subsidiary" of any Person means any Subsidiary of such Person
of which all the outstanding voting securities (other than directors' qualifying
shares) are owned by such Person or any Wholly Owned Subsidiary of such Person.
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BOOK-ENTRY; DELIVERY AND FORM
Except as described in the next paragraph, the Exchange Notes initially
will be represented by one or more permanent global certificates in definitive,
fully registered form (each a "Global Note"). Each Global Note will be deposited
upon issuance with, or on behalf of, DTC and registered in the name of a nominee
of DTC. Except as set forth below, each Global Note may be transferred, in whole
and not in part, only to another nominee of the Depositary or to a successor of
the Depositary or its nominee.
The Global Notes. The Issuer expects that pursuant to procedures
established by DTC (i) upon the issuance of a Global Note, DTC or its custodian
will credit, on its internal system, the principal amount of Exchange Notes of
the individual beneficial interests represented by such Global Note to the
respective accounts of persons who have accounts with such depositary and (ii)
ownership of beneficial interests in a Global Note will be shown on, and the
transfer of such ownership will be effected only through, records maintained by
DTC or its nominee (with respect to interests of Participants (as defined
herein)) and the records of Participants (with respect to interests of persons
other than Participants). Ownership of beneficial interests in a Global Note
will be limited to persons who have accounts with DTC ("Participants") or
persons who hold interests through Participants.
So long as DTC, or its nominee, is the registered owner or holder of
Exchange Notes, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Exchange Notes represented by such Global Note for
all purposes under the Indenture. No beneficial owner of an interest in a Global
Note will be able to transfer that interest except in accordance with DTC's
procedures, in addition to those provided for under the Indenture with respect
to the Exchange Notes.
Payments of the principal of, premium (if any), and interest on, a Global
Note will be made to DTC or its nominee, as the case may be, as the registered
owner thereof. None of the Issuer, the Trustee or any Paying Agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Note or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interest.
The Issuer expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, or interest on a Global Note, will credit
Participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of a Global Note as
shown on the records of DTC or its nominee. The Issuer also expects that
payments by Participants to owners of beneficial interests in a Global Note held
through such Participants will be governed by standing instructions and
customary practice, as is now the case with securities held for the accounts of
customers registered in the names of nominees for such customers. Such payments
will be the responsibility of such Participants.
Transfers between Participants in DTC will be effected in the ordinary way
through DTC's same-day funds system in accordance with DTC rules and will be
settled in same-day funds. If a holder requires physical delivery of
certificates for its Exchange Notes for any reason, including to sell Exchange
Notes to persons in states which require physical delivery of the Exchange
Notes, or to pledge such securities, such holder must transfer its interest in a
Global Note, in accordance with the normal procedures of DTC and with the
procedures set forth in the Indenture.
DTC has advised the Issuer that it will take any action permitted to be
taken by a holder of Exchange Notes only at the direction of one or more
Participants to whose account the DTC interests in a Global Note are credited
and only in respect of such portion of the aggregate principal amount of
Exchange Notes as to which such Participant or Participants has or have given
such direction. However, if there is an Event of Default under the Indenture,
DTC will exchange Global Notes for certificated securities, which it will
distribute to its Participants.
DTC has advised the Issuer as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and facilitate the clearance and settlement of
securities transactions between Participants through electronic book-entry
changes in accounts of its Participants, thereby eliminating the need for
physical movement of certificates.
122
<PAGE> 121
Participants include securities brokers and dealers, banks, trust companies and
clearing corporations and certain other organizations. Indirect access to the
DTC system is available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("Indirect Participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Note among Participants of DTC, it is under
no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Issuer nor the Trustee will have any
responsibility for the performance by DTC or its Participants or Indirect
Participants of their respective obligations under the rules and procedures
governing their operations.
Certificated Securities. If DTC is at any time unwilling or unable to
continue as a depositary for any Global Note and a successor depositary is not
appointed by the Issuer within 90 days, certificated securities will be issued
in exchange for such Global Note.
123
<PAGE> 122
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Private Notes must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of Exchange Notes received in exchange for Private
Notes, where such Private Notes were acquired by such broker-dealer as a result
of market-making or other trading activities. The Issuer has agreed to make this
Prospectus, as it may be amended or supplemented from time to time, available to
any such broker-dealer that requests copies of this Prospectus in the Letter of
Transmittal for use in connection with any such resale for a period of up to 90
days after the Expiration Date. In addition, until , 1997, all
dealers effecting transactions in the Exchange Notes may be required to deliver
a prospectus.
The Issuer will not receive any proceeds from any sale of Exchange Notes by
broker-dealers or any other persons. Exchange Notes received by broker-dealers
for their own account pursuant to the Exchange Offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes, or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or at negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such
Exchange Notes. Any broker-dealer that resells Exchange Notes that were received
by it for its own account pursuant to the Exchange Offer and any broker-dealer
that participates in a distribution of such Exchange Notes may be deemed to be
an "underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange Notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will deliver
and by delivering a prospectus a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date, the Issuer will promptly
send additional copies of this Prospectus or any amendment or supplement to this
Prospectus to any broker-dealer that requests such documents in the Letter of
Transmittal. The Issuer and the Guarantors have agreed to pay all expenses
incident to the Issuer's and the Guarantors' performance of, or compliance with,
the Registration Rights Agreement and will indemnify the holders of Private
Notes (including any broker-dealers), and certain parties related to such
holders, against certain liabilities, including liabilities under the Securities
Act.
See "The Exchange Offer" for additional information concerning the Exchange
Offer and interpretations of the staff of the Commission with respect to
prospectus delivery obligations of broker-dealers.
LEGAL MATTERS
The validity of the Exchange Notes and the Guarantees offered hereby will
be passed upon for the Issuer and the Guarantors by Kaye, Scholer, Fierman, Hays
& Handler, LLP.
EXPERTS
The consolidated financial statements of SCIS and its subsidiaries as of
December 31, 1996 and 1995 and for each of the three fiscal years in the period
ended December 31, 1996 included in this Prospectus have been included herein in
reliance on the report of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.
The consolidated financial statements of Caterair and its subsidiaries as
of December 31, 1996 and 1995 and for each of the two fiscal years in the period
ended December 31, 1996 included in this Prospectus have been included herein in
reliance on the report of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.
The consolidated financial statements of Caterair and its subsidiaries for
the year ended December 31, 1994 included in this Prospectus have been included
herein in reliance on the report of Arthur Andersen LLP, independent public
accountants, given on the authority of that firm as experts in accounting and
auditing.
124
<PAGE> 123
ADDITIONAL INFORMATION
The Issuer and the Guarantors have filed with the Commission a Registration
Statement on Form S-4 (which together with any amendments thereto is referred to
as the "Registration Statement") under the Securities Act with respect to the
Exchange Notes and Guarantees offered hereby. As permitted by the rules and
regulations of the Commission, this Prospectus, which is part of the
Registration Statement, omits certain information, exhibits and undertakings
contained in the Registration Statement. For further information with respect to
the Issuer, the Guarantors and the Exchange Notes and Guarantees offered hereby,
reference is made to the Registration Statement, including the exhibits thereto
and the financial statements, notes and schedules filed as a part thereof.
Statements made in this Prospectus as to the contents of any contract, agreement
or other document referred to herein are not necessarily complete. With respect
to each such contract, agreement or other document filed as an exhibit to the
Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference.
The Issuer will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents incorporated by reference herein (not including
the exhibits to such documents, unless such exhibits are specifically
incorporated by reference in such documents). Requests for such copies should be
directed to the Issuer at 524 E. Lamar Blvd., Arlington, Texas 76011, telephone
number (817) 792-2281, attention: Thomas Lee.
The Registration Statement (and the exhibits and schedules thereto) may be
inspected and copied at the public reference section of the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
regional offices of the Commission located at 7 World Trade Center, Suite 1300,
New York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Registration Statement (and the exhibits and
schedules thereto) can also be reviewed through the Commission's Electronic Data
Gathering, Analysis and Retrieval System, which is publicly available through
the Commission's Web Site (http://www.sec.gov).
The Indenture provides that the Issuer will deliver to the Trustee under
the Indenture within 15 days after the filing of the same with the Commission,
copies of the quarterly and annual reports and of the information, documents and
other reports, if any, which the Issuer is required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act. The Indenture further
provides that, notwithstanding that the Issuer may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Issuer
will provide the Trustee under the Indenture, holders of Notes and QIBs which
request such information from the Issuer and indicate a bona fide interest in
purchasing Notes with consolidated financial statements of the Issuer and a
related "Management's Discussion and Analysis of Financial Condition and Results
of Operations" comparable to those which would have been required to appear in
quarterly or annual reports of the Issuer and, to holders of Private Notes, any
other information set forth in Rule 144A(d)(4) or any successor provision under
the Securities Act. In addition, the Issuer will provide the Trustee under the
Indenture and holders of Notes with unaudited combined financial data of the
Issuer and the Guarantors, substantially in the form provided under the caption
"Summary -- Summary Unaudited Pro Forma Financial Data" (excluding the
information under the caption "Operating Statistics") in this Prospectus, for
each fiscal year of the Issuer and for the first three fiscal quarters of each
fiscal year of the Issuer. The Issuer will also comply with the other provisions
of TIA sec. 314(a).
125
<PAGE> 124
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
SC INTERNATIONAL SERVICES, INC. PAGE
----
<S> <C>
Report of Independent Accountants (Coopers & Lybrand L.L.P.)......................... F-2
Consolidated Balance Sheets as of December 31, 1995 and 1996 and September 30, 1997
(unaudited)........................................................................ F-3
Consolidated Statements of Operations for each of the three years in the period ended
December 31, 1996 and the nine months ended September 30, 1996 and 1997
(unaudited)........................................................................ F-4
Consolidated Statements of Shareholder's Equity for each of the three years in the
period ended December 31, 1996 and the nine months ended September 30, 1997
(unaudited)........................................................................ F-5
Consolidated Statements of Cash Flows for each of the three years in the period ended
December 31, 1996 and the nine months ended September 30, 1996 and 1997
(unaudited)........................................................................ F-6
Notes to Consolidated Financial Statements........................................... F-7
CATERAIR INTERNATIONAL CORPORATION
Report of Independent Accountants (Coopers & Lybrand L.L.P.)......................... F-43
Report of Independent Public Accountants (Arthur Andersen LLP)....................... F-44
Consolidated Balance Sheets as of December 31, 1995 and 1996 and September 30, 1997
(unaudited)........................................................................ F-45
Consolidated Statements of Operations for each of the three years in the period ended
December 31, 1996 and the nine months ended September 30, 1996 and 1997
(unaudited)........................................................................ F-46
Consolidated Statements of Shareholder's Deficit for each of the three years in the
period ended December 31, 1996 and the nine months ended September 30, 1997
(unaudited)........................................................................ F-47
Consolidated Statements of Cash Flows for each of the three years in the period ended
December 31, 1996 and the nine months ended September 30, 1996 and 1997
(unaudited)........................................................................ F-48
Notes to Consolidated Financial Statements........................................... F-49
</TABLE>
F-1
<PAGE> 125
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
SC International Services, Inc.:
We have audited the accompanying consolidated balance sheets of SC
International Services, Inc. and Subsidiaries as of December 31, 1996 and 1995
and the related consolidated statements of operations, shareholder's equity and
cash flows for each of the three years in the period then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of SC
International Services, Inc. and Subsidiaries as of December 31, 1996 and 1995
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended December 31, 1996 in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Dallas, Texas
February 28, 1997
F-2
<PAGE> 126
SC INTERNATIONAL SERVICES, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- SEPTEMBER 30,
1995 1996 1997
-------- -------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents.............................. $ 54,829 $ 55,658 $ 38,327
Accounts and notes receivable (net of allowance for
doubtful accounts of $12,708 in 1995, $14,314 in
1996 and $12,949 at September 30, 1997)............. 136,519 148,409 178,604
Advances to affiliate.................................. 1,043 -- --
Tax refunds receivable from parent..................... 8,331 1,893 --
Inventories............................................ 16,985 18,150 19,049
Deferred income taxes.................................. 4,341 7,105 7,051
Prepaid expenses....................................... 14,526 17,104 18,727
-------- -------- --------
Total current assets........................... 236,574 248,319 261,758
Property and equipment, net.............................. 175,847 190,606 189,255
Deferred income taxes.................................... 42,600 45,806 61,226
Goodwill and intangible assets, net...................... 256,110 245,224 253,878
Loan to affiliate........................................ 38,544 41,634 44,075
Other assets............................................. 79,118 81,867 78,674
-------- -------- --------
Total assets................................... $828,793 $853,456 $ 888,866
======== ======== ========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable....................................... $ 79,806 $ 81,253 $ 72,971
Accrued expenses....................................... 138,720 174,723 178,664
Payable to parent...................................... -- -- 6,363
Payable to affiliate................................... -- 4,505 18,327
Current portion of long-term debt...................... 14,416 15,682 7,737
Current portion of obligations under capital leases.... 650 634 400
-------- -------- --------
Total current liabilities...................... 233,592 276,797 284,462
Obligations under capital leases......................... 30,150 29,757 29,301
Long-term debt........................................... 346,843 334,156 392,278
Other long-term liabilities.............................. 154,160 156,397 144,638
-------- -------- --------
Total liabilities.............................. 764,745 797,107 850,679
-------- -------- --------
Minority interest........................................ 9,478 9,618 9,046
-------- -------- --------
Commitments and contingencies............................ -- -- --
Shareholder's equity:
Common stock, $.01 par value; 3,000 shares authorized,
100 shares issued and outstanding at December 31,
1995, 1996, and September 30, 1997.................. -- -- --
Additional paid-in capital............................. 59,579 59,579 59,579
Cumulative translation adjustment...................... (1,764) (3,797) (3,505)
Minimum pension liability adjustment................... (5,565) (330) (330)
Retained earnings (deficit)............................ 2,320 (8,721) (26,603)
-------- -------- --------
Total shareholder's equity..................... 54,570 46,731 29,141
-------- -------- --------
Total liabilities and shareholder's equity..... $828,793 $853,456 $ 888,866
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE> 127
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
-------------------------------- -----------------------
1994 1995 1996 1996 1997
-------- -------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues................................ $468,608 $739,102 $1,529,816 $1,142,102 $1,198,190
-------- -------- ---------- ---------- ----------
Costs and expenses:
Cost of operations.................... 388,276 634,375 1,352,359 1,014,782 1,046,467
Depreciation and amortization......... 15,503 21,338 37,928 27,504 31,245
Selling, general and administrative... 17,125 28,076 48,854 35,761 37,594
Integration expenses.................. -- 28,644 30,361 21,897 13,774
Other................................. 4,345 29,882 23,721 17,251 12,105
-------- -------- ---------- ---------- ----------
Total costs and expenses...... 425,249 742,315 1,493,223 1,117,195 1,141,185
-------- -------- ---------- ---------- ----------
Operating income (loss)................. 43,359 (3,213) 36,593 24,907 57,005
-------- -------- ---------- ---------- ----------
Other income (expense):
Interest income....................... 204 2,458 7,896 5,303 4,789
Interest expense...................... (5,748) (19,715) (50,431) (38,870) (39,589)
Other................................. (1,225) (2,099) (4,679) (4,785) (8,107)
-------- -------- ---------- ---------- ----------
Total other expense........... (6,769) (19,356) (47,214) (38,352) (42,907)
-------- -------- ---------- ---------- ----------
Earnings (loss) before income taxes..... 36,590 (22,569) (10,621) (13,445) 14,098
Provision (benefit) for income taxes.... 13,385 (6,525) 420 4,800 11,235
Extraordinary loss from early
extinguishment of debt, net of tax of
$13,830............................... -- -- -- -- (20,745)
-------- -------- ---------- ---------- ----------
Net Income (loss)....................... $ 23,205 $(16,044) $ (11,041) $ (8,645) $ (17,882)
======== ======== ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE> 128
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MINIMUM
COMMON STOCK ADDITIONAL CUMULATIVE PENSION RETAINED
---------------- PAID-IN TRANSLATION LIABILITY EARNINGS
SHARES AMOUNT CAPITAL ADJUSTMENT ADJUSTMENT (DEFICIT) TOTAL
------ ------ ---------- ---------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1993............ 100 $ 10 $ 20,621 $ -- $ -- $ 5,624 $ 26,255
Net income............................ -- -- -- -- -- 23,205 23,205
------ ------ ---------- ---------- ---------- --------- --------
Balance, December 31, 1994............ 100 10 20,621 -- -- 28,829 49,460
Reorganization (Note 1)............... -- (10) 11 -- -- -- 1
Cash dividend to parent............... -- -- -- -- -- (10,465) (10,465)
Noncash capital contribution from
parent.............................. -- -- 38,947 -- -- -- 38,947
Net loss.............................. -- -- -- -- -- (16,044) (16,044)
Cumulative translation adjustment..... -- -- -- (1,764) -- -- (1,764)
Minimum pension liability
adjustment.......................... -- -- -- -- (5,565) -- (5,565)
------ ------ ---------- ---------- ---------- --------- --------
Balance, December 31, 1995............ 100 -- 59,579 (1,764) (5,565) 2,320 54,570
Cumulative translation adjustment..... -- -- -- (2,033) -- -- (2,033)
Minimum pension liability
adjustment.......................... -- -- -- -- 5,235 -- 5,235
Net loss.............................. -- -- -- -- -- (11,041) (11,041)
------ ------ ---------- ---------- ---------- --------- --------
Balance, December 31, 1996............ 100 -- 59,579 (3,797) (330) (8,721) 46,731
Cumulative translation adjustment
(unaudited)......................... -- -- -- 292 -- -- 292
Net loss (unaudited).................. -- -- -- -- -- (17,882) (17,882)
------ ------ ---------- ---------- ---------- --------- --------
Balance, September 30, 1997
(unaudited)......................... 100 $ -- $ 59,579 $ (3,505) $ (330) $(26,603) $ 29,141
====== ======= ========= ========== ========== ======== ========
</TABLE>
F-5
<PAGE> 129
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
------------------------------ -------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)........................... $ 23,205 $(16,044) $(11,041) $ (8,645) $(17,882)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation and amortization............ 15,503 21,338 37,928 27,504 31,245
Deferred income taxes.................... (889) (8,610) (5,970) (8,000) (15,366)
Extraordinary loss from early
extinguishment of debt................. -- -- -- -- 10,825
Noncash integration and other expenses... -- 41,064 -- -- --
Bad debt expense......................... -- 931 1,765 327 374
Postretirement benefits in excess of cash
paid................................... 2,000 1,400 2,000 1,500 1,501
Interest payable in-kind from
affiliate.............................. -- -- (3,090) (2,267) (2,442)
Changes in assets and liabilities:
Decrease (increase) in working capital
items (Note 19)..................... (20,825) 23,744 21,661 31,181 (39,149)
Decrease (increase) in other assets.... (5,482) 8,550 (9,683) 8,787 22,199
Increase (decrease) in other noncurrent
liabilities......................... 7,647 (13,265) 5,612 (6,055) (13,829)
-------- -------- -------- -------- --------
Net cash provided by operating
activities........................ 21,159 59,108 39,182 44,332 (22,524)
-------- -------- -------- -------- --------
Cash flows from investing activities:
Acquisition of businesses................... (10,582) (211,151) -- -- (35,900)
Purchase of property and equipment.......... (11,775) (9,575) (36,900) (20,699) (18,962)
Advances from (repayments to) affiliate..... -- (38,831) 5,548 5,833 13,823
Other....................................... (1,000) 412 -- --
-------- -------- -------- -------- --------
Net cash used in investing
activities........................ (23,357) (259,145) (31,352) (14,866) (41,039)
-------- -------- -------- -------- --------
Cash flows from financing activities:
Proceeds from issuance of long-term debt.... -- 225,000 -- -- 90,000
Proceeds from issuance of Notes............. -- 125,000 -- -- 300,000
Deferred financing costs.................... -- (17,337) -- -- (13,228)
Payment of long-term debt and obligations
under capital leases..................... (16,495) (38,190) (409) (160) (690)
Borrowing (repayments) under credit
agreement and foreign bank overdrafts.... 17,500 (15,998) (13,030) (8,896) (213,106)
Payment of Notes............................ -- -- -- -- (125,000)
Purchase of employee stock loans from an
affiliate................................ -- (6,661) -- -- --
Dividend payment to parent.................. -- (10,465) -- -- --
Net change in (payable to) and receivable
from parent.............................. 8,228 (18,938) 6,438 (2,299) 8,256
-------- -------- -------- -------- --------
Net cash provided by (used in)
financing activities.............. 9,233 242,411 (7,001) (11,355) 46,232
-------- -------- -------- -------- --------
Increase in cash and cash equivalents......... 7,035 42,374 829 18,811 (17,331)
Cash and cash equivalents, beginning of
period...................................... 5,420 12,455 54,829 54,829 55,658
-------- -------- -------- -------- --------
Cash and cash equivalents, end of period...... $ 12,455 $ 54,829 $ 55,658 $ 73,640 $ 38,327
======== ======== ======== ======== ========
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Interest................................. $ 12,584 $ 16,093 $ 45,053 $ 29,156 $ 38,107
Income taxes............................. 5,747 5,124 3,300 1,303 6,652
Supplemental disclosure of noncash financing
and investing activities:
Noncash capital contribution from parent.... -- 38,947 -- -- --
Business combination liabilities assumed.... -- 44,048 4,464 4,464 --
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE> 130
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business and Basis of Consolidation and Presentation
SC International Services, Inc. ("SCIS" or the "Company") is a wholly-owned
subsidiary of Onex Food Services, Inc. ("OFSI" or the "Parent") and is engaged
primarily in providing airline catering services. SCIS owns 100% of two
operating subsidiaries, Sky Chefs, Inc. ("Sky Chefs") and Caterair
International, Inc. (II) ("CII"). SCIS and CII were formed to effect the
September 29, 1995 business combination of Sky Chefs and Caterair International
Corporation ("Caterair"). In conjunction with this transaction, OFSI contributed
all of the common shares of Sky Chefs to SCIS. Prior to the business
combination, Sky Chefs was primarily engaged in providing airline catering
services to airlines with flights originating in the United States. The business
combination between Sky Chefs and Caterair substantially expanded the Company's
operations, which are now conducted worldwide principally under the tradenames
of LSG Lufthansa Service/SKY Chefs and Caterair.
The accompanying consolidated financial statements include the accounts of
the Company and all wholly-owned and majority-owned subsidiaries. For all
periods presented prior to the incorporation of SCIS and the contribution of all
the common stock of Sky Chefs to SCIS, the consolidated financial statements
only reflect the consolidated financial position, results of operations and cash
flows of Sky Chefs. The equity method of accounting is used when the Company has
20% to 50% interest in other companies. Under the equity method, original
investments are recorded at cost and adjusted for the Company's share of
undistributed earnings or losses of these companies. All significant
intercompany transactions have been eliminated.
Management Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amount of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Interim Financial Information
The consolidated balance sheet as of September 30, 1997, the consolidated
statement of shareholder's equity for the nine months then ended, and the
consolidated statements of operations and cash flows for the nine months ended
September 30, 1996 and 1997, have been prepared by the Company without audit. In
the opinion of management, all adjustments (which included only normal,
recurring adjustments) necessary to present fairly the financial position at
September 30, 1997, and the results of operations and cash flows for all periods
presented have been made. The results of operations for the interim periods are
not necessarily indicative of the operating results for the full year.
Revenue Recognition
Revenues are recognized at the time products are delivered to customers or
services are performed.
Cash and Cash Equivalents
For purposes of the statements of cash flows, all highly liquid debt
instruments purchased with an original maturity of three months or less are
considered to be cash equivalents. Cash flows from futures and swap transactions
are classified in the same category as the items being hedged.
Interest Rate Swap Agreements
The differential to be paid or received on interest rate swap agreements is
accrued as interest rates change and is recognized over the life of the
agreement.
F-7
<PAGE> 131
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
Inventories
Inventories are valued at the lower of cost (first-in, first-out basis) or
market and consist primarily of raw materials.
Property and Equipment
The provision for depreciation and amortization of property and equipment
is computed using the straight-line method. The estimated useful lives are as
follows:
<TABLE>
<S> <C>
Buildings............................... 20 years
Leasehold improvements.................. Term of the lease or estimated
useful life, whichever is less
Furniture and equipment................. 5 to 10 years
Vehicles................................ 5 to 10 years
</TABLE>
Gains and losses from disposals of property and equipment are reflected in
other income (expense) in the period of disposal.
Property and Equipment Under Capital Leases
Buildings under capital leases are amortized over the lives of the leases
which vary from 11 to 31 years. Equipment under capital leases is amortized over
the lives of the leases or the estimated useful lives of the equipment,
whichever is less.
Goodwill and Intangible Assets
Intangible assets are recorded at cost. Amortization is determined by the
straight-lined method. Goodwill represents the excess of cost over fair value of
net assets acquired. The estimated useful lives of these intangibles are as
follows:
<TABLE>
<S> <C>
Goodwill................................ 25 to 28 years
Trademark and tradenames................ 25 years
Beneficial lease and license rights..... Term of the lease or license or
estimated useful life whichever
is less, ranging from 6 to 32
years
Noncompete agreement.................... Term of the agreement, 6 years
</TABLE>
The Company periodically evaluates whether events and circumstances have
occurred that indicate the remaining estimated useful life of intangibles may
warrant revision or that the remaining balance of intangibles may not be
recoverable. An impairment of intangibles is recognized when estimated
undiscounted future cash flows generated by acquired businesses are determined
to not be sufficient to recover intangibles. The amount of impairment, if any,
is measured based on projected discounted cash flows using a discount rate
reflecting the Company's average cost of funds.
On March 31, 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
The Company adopted this standard effective January 1, 1996, which did not have
a material impact on the Company's financial position or results of operations.
F-8
<PAGE> 132
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
Deferred Financing Costs
Costs incurred related to the issuance of debt are deferred and amortized
over the life of the related debt using the effective interest rate method.
Amortization of deferred financing costs amounted to $525 and $2,916 for the
years ended December 31, 1995 and 1996, respectively. There were no deferred
financing costs or amortization thereof in 1994.
Income Taxes
The accounts of the Company are included in the consolidated federal income
tax return of OFSI. Current and deferred income taxes are allocated to the
Company as if it were a separate taxpayer.
Deferred income tax assets and liabilities are recognized for the expected
future tax consequences of temporary differences between the income tax and
financial reporting carrying amounts of assets and liabilities.
Management does not believe that it has significant tax liability related
to undistributed earnings, of approximately $33,230 of foreign subsidiaries at
December 31, 1996 as it believes the U.S. income tax effect on any repatriated
amounts would be minimal, and management considers the remainder to be
permanently invested.
Foreign Currency Translation
Assets and liabilities of most foreign operations are translated into U.S.
dollars using current exchange rates and the effect of translation reduces or
increases equity directly. For operations in countries with highly inflationary
economies (principally Venezuela in 1996 and principally Argentina, Brazil, and
Venezuela in 1995 and 1994), nonmonetary items are translated using historical
rates, while monetary items are translated at current rates, and the effects of
translation are included in operations. The U.S. dollar effects of exchange rate
changes included in other income and net assets determined in highly
inflationary currencies were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
Net foreign exchange..................................... $ -- $ 748 $1,525
====== ====== =====
Net assets denominated in highly inflationary
currencies............................................. $ (500) $2,890 $ 315
====== ====== =====
</TABLE>
Preopening Costs
Preopening costs, which consist primarily of payroll expenses, are expensed
as incurred.
Reclassification of Prior Period Amounts
Certain prior period amounts have been reclassified to conform to the
current year presentation.
Recent Accounting Standards
During June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130 "Reporting Comprehensive Income" and
Statement of Financial Accounting Standards No. 131 "Disclosures About Segments
of an Enterprise and Related Information." Preliminary analysis of these new
standards by the Company indicates that the standards will not have a material
impact on the Company. The standards are effective for financial statements for
fiscal years beginning after December 15, 1997.
2. BUSINESS COMBINATIONS
On September 29, 1995, the Company, OFSI, Caterair and its parent, Caterair
Holdings Corporation ("Holdings"), consummated transactions with the
shareholders and creditor of Holdings (the "Transac-
F-9
<PAGE> 133
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
tions") whereby OFSI and an affiliate of OFSI exchanged common stock and
warrants of OFSI for certain stock and debt held by Holdings' shareholders and
creditor, as a result of which OFSI and its affiliate acquired more than 50% of
the total outstanding voting shares of Holdings and more than 25% of the total
outstanding nonvoting shares of Holdings. In addition, the Company and its
subsidiaries acquired, licensed, leased and subleased substantially all of the
worldwide business and assets of Caterair. However, after the consummation of
the Transactions Caterair retained certain operations relating to customer
contracts for which consents to assignment were not obtained. Such consents with
respect to these operations were obtained during the second quarter of 1996 and
such operations were leased, subleased and licensed to SCIS and its
subsidiaries.
The aggregate purchase price for substantially all of the foreign
operations of Caterair, Caterair's tradename and working capital and the
assumption of certain Caterair liabilities was approximately $247,247 (not
including $15,054 of fees relating to the Transactions) which consisted of
$208,300 in cash and approximately $38,947 in common stock and warrants of OFSI.
In connection with the Transactions, OFSI contributed capital to SCIS in an
amount equal to the consideration paid to Holdings' shareholders and creditor.
The purchase price was allocated based on the estimated fair values of the
assets acquired at the date of acquisition. The Transactions resulted in
goodwill of approximately $131,680 which is being amortized over 25 years.
The Company accounted for this acquisition described in the preceding
paragraph using the purchase method of accounting. The results of operations and
cash flows are included in the consolidated statements of operations and cash
flows from the date of acquisition.
Prior to the Transactions, the Company and Caterair had idle kitchens at
airports which were expected to be utilized in operations in the future. The
Company expensed costs associated with these facilities as incurred. Subsequent
to the Transactions, the Company reviewed its inventory of idle kitchens and
reevaluated its plans to operate these kitchens in the future. The Company
determined that certain of these idle facilities will not be utilized in
operations in the future. Therefore, the Company accrued costs representing the
net present value of future minimum rentals less expected sublease income of
$32,832 at the date of the acquisition. The accrued costs relating to former
Caterair facilities of $13,342 (net of taxes of $8,352) are reflected as an
increase in goodwill. The accrued costs relating to former Sky Chefs' facilities
of $11,138 were charged to income and are included in integration expenses. In
addition, the carrying value of $6,091 at December 31, 1995, for Sky Chefs'
property and equipment (principally leasehold improvements) was charged against
income and included in integration expenses. In the opinion of management, the
remaining carrying values of idle facilities are not in excess of net realizable
value. As of December 31, 1996, accrued costs of $6,000 were included in accrued
expenses and $23,470 were included in other long-term liabilities. At December
31, 1995 accrued costs of $6,000 were included in accrued expenses and $25,672
were included in other long-term liabilities.
The Company is currently in the process of consolidating kitchen operations
at airports where excess kitchen capacity exists. This consolidation process has
resulted in the closing of certain kitchen facilities and a reduction in the
number of personnel. Additional liabilities for kitchen closings and severance
resulting from additional consolidations will be recognized as expense in the
period incurred.
A pre-tax charge of $18,000 was recorded in other costs and expenses during
1995 for a fee payable to a major customer in connection with obtaining its
consent to the Transactions and its revocation of a notice of nonperformance of
contract previously issued by the customer to Caterair.
Shown below are unaudited pro forma results of operations for the years
ended December 31, 1995 and 1994, respectively, as though the Transactions
occurred at the beginning of each period presented. The pro forma information
set forth below does not purport to be indicative of the results which would
actually have
F-10
<PAGE> 134
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
been attained had the Transactions been consummated as of the dates set forth
below or indicative of results which may be achieved in the future.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1994 1995
----------- -----------
(UNAUDITED)
<S> <C> <C>
Revenues.................................................... $ 1,529,185 $ 1,520,987
========= =========
Net loss.................................................... $ (5,720) $ (7,782)
========= =========
</TABLE>
In August and November 1995, Sky Chefs acquired three domestic kitchen
operations from an affiliate of LSG Lufthansa Service USA Corp., a minority
shareholder, for a cash purchase price of $5,146 and recorded goodwill of $3,151
which is being amortized over 25 years.
After the Transactions, the Company evaluated its investment in ServCater,
a Brazilian in-flight food service company. The Company determined the
investment acquired in October 1994 was partially impaired since the projected
undiscounted cash flows would be insufficient to recover goodwill and other
advances. Accordingly, the Company recognized a charge of $3,215 in 1995 which
is included in integration expenses.
3. PREPAID EXPENSES
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- SEPTEMBER 30,
1995 1996 1997
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Prepaid employee healthcare......................... $ 7,141 $ 7,141 $ 7,141
Other............................................... 7,385 9,963 11,586
------- ------- -------
$14,526 $17,104 $18,727
======= ======= =======
</TABLE>
4. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- SEPTEMBER 30,
1995 1996 1997
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Property and equipment, at cost:
Land............................................ $ 9,110 $ 9,339 $ 8,805
Buildings and leasehold improvements............ 137,962 143,245 146,642
Machinery and equipment......................... 92,250 99,887 112,576
Construction in progress........................ 8,234 26,327 23,669
-------- -------- --------
247,556 278,798 291,692
Less accumulated depreciation and
amortization................................. 78,916 98,747 111,906
-------- -------- --------
168,640 180,051 179,786
-------- -------- --------
Property and equipment under capital leases:
Buildings and improvements...................... 8,228 8,228 8,228
Machinery and equipment......................... 14,946 20,212 19,790
-------- -------- --------
23,174 28,440 28,018
Less accumulated amortization................... 15,967 17,885 18,549
-------- -------- --------
7,207 10,555 9,469
-------- -------- --------
$175,847 $190,606 $ 189,255
======== ======== ========
</TABLE>
F-11
<PAGE> 135
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
5. GOODWILL AND INTANGIBLE ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- SEPTEMBER 30,
1995 1996 1997
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Goodwill.......................................... $156,574 $158,067 $ 168,188
Trademarks and tradenames......................... 75,000 75,000 75,000
Noncompete agreements............................. 18,781 18,781 28,781
Beneficial lease and license rights............... 29,624 31,444 31,670
-------- -------- --------
279,979 283,292 303,639
Less accumulated amortization................... 23,869 38,068 49,761
-------- -------- --------
$256,110 $245,224 $ 253,878
======== ======== ========
</TABLE>
6. OTHER ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- SEPTEMBER 30,
1995 1996 1997
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Prepaid employee healthcare............................ $ 33,333 $ 29,645 $21,174
Deferred financing costs, net of accumulated
amortization of $525, $3,441, and $106 at December
31, 1995, 1996, and September 30, 1997,
respectively......................................... 16,812 13,993 13,122
Investments in joint ventures and unconsolidated
affiliates........................................... 11,513 12,800 20,502
Other.................................................. 17,460 25,429 23,876
------- ------- -------
$ 79,118 $ 81,867 $78,674
======= ======= =======
</TABLE>
7. ACCOUNTS PAYABLE
Accounts payable includes $11,461, $17,659, and $11,116 at December 31,
1995 and 1996, and September 30, 1997, respectively, representing checks
outstanding in excess of bank deposits. Accounts payable at December 31, 1995
and 1996, and September 30, 1997 includes $4,525, $2,916, and $4,633
respectively, of short-term foreign bank loans used primarily for overdraft and
working capital purposes.
8. ACCRUED EXPENSES
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- SEPTEMBER 30,
1995 1996 1997
--------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Payroll........................................... $ 59,037 $ 72,409 $ 72,564
Insurance......................................... 10,932 4,218 4,060
Employee benefits................................. 9,349 13,148 13,569
Provisions relating to idle facilities and other
acquisition related costs....................... 16,790 20,022 22,099
Other............................................. 42,612 64,926 66,372
-------- -------- --------
$ 138,720 $ 174,723 $ 178,664
======== ======== ========
</TABLE>
In connection with the Transactions, the Company had accrued $95,393 as of
December 31, 1995, for provisions relating to idle facilities and other
acquisition related costs included in accrued expenses and other long-term
liabilities. The Company made payments relating to the provisions for idle
facilities of $5,528 and
F-12
<PAGE> 136
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
$2,891 for the year ended December 31, 1996 and the nine months ended September
30, 1997, respectively. Additionally, the Company made payments relating to the
provisions for other acquisition costs, principally deferred customer consent
fees and non-compete payments, of $3,580 and $5,709 for the year ended December
31, 1996 and the nine months ended September 30, 1997, respectively. In 1996,
the Company completed an analysis of excess kitchen capacity, which resulted in
a pre-tax charge of $2,611 for costs representing the net present value of
future minimum rentals less expected sublease income for kitchens at airports
where excess kitchen capacity existed.
9. LONG-TERM DEBT
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- SEPTEMBER 30,
1995 1996 1997
--------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Credit Agreement:
A-1 Term Loan, bearing interest at 2.50% above the
Eurodollar borrowing rate or 1.50% above the
lender's prime rate, due in quarterly
installments of $750 beginning in December 1997
through September 2000......................... $ 8,989 $ 8,989 $ --
A-2 Term Loan, bearing interest at 2.50% above the
Eurodollar borrowing rate or 1.50% above the
lender's prime rate, due in various quarterly
amounts beginning in March 1996 through
September 2000................................. 49,941 41,201 --
B Term Loan, bearing interest at 3.00% above the
Eurodollar borrowing rate or 2.00% above the
lender's prime rate, due in various quarterly
amounts beginning in March 1996 through
September 2002................................. 135,839 134,091 --
C Term Loan, bearing interest at 3.25% above the
Eurodollar borrowing rate or 2.25% above the
lender's prime rate, due in various quarterly
amounts beginning in March 1996 through
September 2003................................. 29,964 29,465 --
Term Loan bearing interest at 1.50% above the
Eurodollar borrowing rate or 0.50% above the
lender's prime rate, due in quarterly installments
of $225 of principal beginning in December 1997
through December 2006, with a final maturity
payment of $81,675 in March 2007.................. -- -- 90,000
13% Senior Subordinated Notes due 2005 with interest
payable semi-annually beginning April 1996........ 125,000 125,000 --
9.25% Senior Subordinated Notes due 2007 with
interest payable semi-annually beginning March 1,
1998.............................................. -- -- 300,000
Australian $8,175 credit facility, bearing interest
at 9.85% through October 1998 and lender's prime
rate plus 1.87% thereafter, with scheduled
repayment commencing in 1998 through 2001......... 5,017 4,855 2,997
French Term Loans, bearing interest at three month
LIBOR plus 0.85% to 1.32%, principal and interest
payable quarterly through October 1998............ 4,266 2,718 2,055
Other foreign debt.................................. 2,243 3,519 4,963
--------- --------- -----------
Total debt................................ 361,259 349,838 400,015
Less current portion of long-term debt.... 14,416 15,682 7,737
--------- --------- -----------
Long-term debt............................ $ 346,843 $ 334,156 $ 392,278
======== ======== =========
</TABLE>
F-13
<PAGE> 137
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
In connection with the Transactions, SCIS, Caterair and Holdings entered
into a $500,000 Senior Secured Credit Agreement with a consortium of lenders
(the "Credit Agreement"). The Credit Agreement provided SCIS with up to $315,000
of financing consisting of $225,000 of term loans and up to $90,000 of revolving
loans (including up to $50,000 available for letters of credit). SCIS had
$224,773, and $213,746 of term loan borrowings outstanding at December 31, 1995
and 1996, respectively. No revolving loan borrowings were outstanding at
December 31, 1995 and 1996. The Credit Agreement also provided Caterair with
$185,000 of term loans. Caterair had $185,000 and $167,500 borrowings
outstanding under the Credit Agreement at December 31, 1995 and 1996,
respectively. A portion of the initial borrowings of SCIS and Caterair under the
Credit Agreement was used to repay certain indebtedness of Caterair.
In connection with the Transactions, SCIS issued $125,000 of 13% Senior
Subordinated Notes due October 1, 2005 (the "Notes"). The Notes were guaranteed
on a joint and several senior subordinated basis by Sky Chefs, CII and Caterair.
On August 28, 1997, SCIS consummated an offering of $300,000 of its 9.25%
Senior Subordinated Notes (the "New Notes") in a transaction exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Offering"). The price to investors of the New Notes was $299,600 in the
aggregate. The New Notes are guaranteed on a joint and several senior
subordinated basis by Sky Chefs, CII, certain other wholly-owned domestic
subsidiaries of SCIS and Caterair. The New Notes (and the related guarantees)
are subordinate to payment of all senior debt (as described in the Indenture
relating thereto) of SCIS and the guarantors of the New Notes. The New Notes may
be redeemed at the option of SCIS commencing on September 1, 2002 at various
premiums above face value. Up to $105,000 of the New Notes may also be redeemed
with proceeds obtained through certain public equity offerings of capital stock
of OFSI or SCIS. The Indenture for the New Notes contains covenants which, among
other things, limit SCIS', the guarantors' and Caterair's ability to pay
dividends, make stock repurchases, incur additional indebtedness, engage in or
use the proceeds of asset sales, create liens or engage in certain other
transactions.
The net proceeds to SCIS from the Offering, after deduction of discounts
and offering expenses, were approximately $289,900. SCIS used $209,400 of the
net proceeds to repay and retire all of its outstanding term loan indebtedness
under the Credit Agreement.
On August 25, 1997, SCIS commenced a tender offer for all of the Notes. In
connection therewith, SCIS offered to purchase all of the Notes at a price equal
to 117% of the principal amount thereof plus accrued and unpaid interest to the
date of purchase and solicited consents to certain amendments (the "Existing
Indenture Amendments") to the Indenture relating to the Notes from the holders
thereof (collectively, the "Offer to Purchase"). Holders of the Notes who
consented to the Existing Indenture Amendments received a payment equal to 2% of
the principal amount of the Notes from which a consent was delivered.
The Offer to Purchase expired on September 24, 1997. All of the Notes were
tendered by the holders thereof and accepted for payment by SCIS in connection
with the Offer to Purchase. SCIS paid $148,750 (excluding $7,850 of accrued
interest) in the aggregate in consideration of the repurchase of the Notes and
the related consents. SCIS used approximately $80,500 of the net proceeds from
the Offering and approximately $68,250 of borrowings under the Term Loan
Agreement (as defined herein) to fund such payments.
On August 28, 1997, SCIS, certain other parties and certain lenders entered
into a senior secured revolving credit agreement (the "Revolving Credit
Agreement"), and Caterair, SCIS, certain other parties and certain lenders
entered into a senior secured credit agreement (the "Term Loan Agreement," and
together with the Revolving Credit Agreement, the "Senior Bank Financing").
F-14
<PAGE> 138
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
Concurrently with the Offering, Caterair repaid and retired all of its
outstanding indebtedness under the Credit Agreement (approximately $155,900)
with borrowings under the Term Loan Agreement.
Pursuant to the Senior Bank Financing, Bankers Trust Company, Morgan
Guaranty Trust Company of New York and certain other lenders provided (i) SCIS
with loans under the Revolving Credit Agreement in an amount up to $90,000
(including a sub-limit of $50,000 for letters of credit) on a revolving credit
basis for working capital and general corporate purposes of SCIS, Caterair and
their respective subsidiaries (such Revolving Credit Agreement expires on August
28, 2002), (ii) Caterair with a nine and one-half year term loan under the Term
Loan Agreement in an aggregate principal amount of $160,000 for purposes of
refinancing Caterair's indebtedness under the Credit Agreement and funding
payment of related transaction costs and (iii) SCIS with a nine and one-half
year term loan under the Term Loan Agreement in an aggregate principal amount of
$90,000 for purposes of financing, in part, SCIS' Offer to Purchase, funding
payment of related transaction costs and general corporate purposes.
All of the indebtedness under the Revolving Credit Agreement and the Term
Loan Agreement is senior secured indebtedness. The Revolving Credit Agreement
does not require scheduled amortization or scheduled commitment reductions. The
Term Loan Agreement requires scheduled amortization payments. Each of the
Revolving Credit Agreement and the Term Loan Agreement, under certain
circumstances, require SCIS or Caterair, as the case may be, to make mandatory
prepayments and commitment reductions. In addition, each of SCIS and Caterair
may make optional prepayments and commitment reductions pursuant to the terms of
the Revolving Credit Agreement or the Term Loan Agreement, as the case may be.
SCIS' obligations under the Senior Bank Financing are jointly and severally
guaranteed by OFSI (on a limited basis), an affiliate of OFSI (on a limited
basis), Caterair, Sky Chefs, CII and certain other domestic subsidiaries of SCIS
(including the guarantors of the New Notes). Caterair's obligations under the
Senior Bank Financing are jointly and severally guaranteed by OFSI (on a limited
basis), an affiliate of OFSI (on a limited basis), SCIS, Sky Chefs, CII and
certain other domestic subsidiaries of SCIS (including the guarantors of the New
Notes). In addition, obligations under the Senior Bank Financing are secured by
(i) first priority security interests in virtually all tangible and intangible
assets of SCIS, Caterair, and their respective wholly-owned domestic
subsidiaries (including the guarantors of the New Notes) and (ii) pledges of all
capital stock of SCIS and Caterair and all capital stock and notes owned by
SCIS, Caterair and their respective domestic subsidiaries (limited in the case
of capital stock of foreign subsidiaries to 65% of such capital stock).
SCIS' indebtedness under the Term Loan Agreement bears interest at 1.50%
above the Eurodollar borrowing rate ("Eurodollar Base Borrowing Rate") or 0.5%
above the lender's base rate. SCIS' indebtedness under the Revolving Credit
Agreement bear interest at 1.0% above the Eurodollar Base Borrowing Rate or the
lender's base rate. The actual rate charged on each credit instrument is
dependent on the selection of either the 30, 60, 90 or 180 day Eurodollar
borrowing rate or the base rate. Interest is payable quarterly for all loans and
also at the end of each interest period for Eurodollar borrowings. The interest
rate in effect at September 30, 1997 for SCIS' indebtedness under the Senior
Bank Financing was 7.25%.
Effective September 12, 1997, SCIS entered into an interest rate swap
agreement to reduce interest rate exposure on long-term debt. The agreement
covers a notional amount of $90,000 at September 30, 1997, and has a stated
maturity of September 15, 2002.
The documents governing the Senior Bank Financing contain a number of
covenants that, among other things, restrict the ability of SCIS, Caterair and
their respective subsidiaries to dispose of assets, incur additional
indebtedness, incur guarantee obligations, repay indebtedness or amend debt
instruments, pay dividends, create liens on assets, make investments, make
acquisitions, engage in mergers or consolidations,
F-15
<PAGE> 139
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
make capital expenditures, or engage in certain transactions with subsidiaries
or affiliates or otherwise engage in certain corporate activities. In addition,
the documents governing the Senior Bank Financing require compliance with
financial tests based on combined results of SCIS and Caterair. SCIS and
Caterair were in compliance with these financial covenant requirements at
September 30, 1997.
At September 30, 1997, approximately $24,728 of bank letters of credit were
issued and outstanding under the Revolving Credit Agreement (approximately
$24,653 issued on behalf of SCIS and approximately $75 for the benefit of
Caterair) primarily to collateralize insurance carriers providing workers'
compensation coverage as well as for surety bonds, leases and requirements of
Caterair for environmental remediation of certain assets previously sold.
The Revolving Credit Agreement requires the payment of .375% on the unused
portion of the revolving credit facility as well as various fees for the
issuance and maintenance of letters of credit.
As of September 30, 1997 the combined aggregate amount of maturities for
all long-term borrowings of the Company for each of the next five years and
thereafter is as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------------------------------------------------------------
<S> <C>
1997............................................................ $ 580
1998............................................................ 7,505
1999............................................................ 1,998
2000............................................................ 1,722
2001............................................................ 2,035
Thereafter...................................................... 386,175
========
$400,015
========
</TABLE>
10. OTHER LONG-TERM LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- SEPTEMBER 30,
1995 1996 1997
-------- -------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Accrued postretirement benefit liability............. $ 31,251 $ 33,361 $ 34,861
Accrued rent......................................... 15,769 19,066 19,974
Accrued pension obligation........................... 7,287 -- 2,261
Accrued insurance.................................... 9,111 18,253 16,254
Provisions relating to idle facilities and other
acquisition related costs.......................... 78,603 68,874 58,197
Other................................................ 12,139 16,843 13,091
-------- -------- --------
$154,160 $156,397 $ 144,638
======== ======== ========
</TABLE>
F-16
<PAGE> 140
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
11. INCOME TAXES
The components of earnings (loss) before income taxes are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1994 1995 1996
------- -------- --------
<S> <C> <C> <C>
Domestic............................................ $37,090 $(19,763) $(27,699)
Foreign............................................. (500) (2,806) 17,078
------- --------- ---------
$36,590 $(22,569) $(10,621)
======= ========= =========
</TABLE>
Income tax provision (benefit) reflected in the consolidated statements of
operations consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Federal:
Current expense (benefit)........................... $12,162 $(1,870) $ 2,571
Deferred benefit.................................... (242) (5,190) (9,230)
------- ------- -------
Total federal............................... 11,920 (7,060) (6,659)
------- ------- -------
Foreign:
Current expense..................................... -- 4,199 6,696
Deferred expense (benefit).......................... -- (2,614) 989
------- ------- -------
Total foreign............................... -- 1,585 7,685
------- ------- -------
State and local:
Current expense (benefit)........................... 2,112 (245) 374
Deferred benefit.................................... (647) (805) (980)
------- ------- -------
Total state and local....................... 1,465 (1,050) (606)
------- ------- -------
Total provision (benefit) for income
taxes..................................... $13,385 $(6,525) $ 420
======= ======= =======
</TABLE>
The effective income tax rate varies from the blended federal, state and
local statutory rate as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1994 1995 1996
---- ----- -----
<S> <C> <C> <C>
Blended statutory rate....................................... 38.3% (38.5)% (38.5)%
Amortization of nondeductible goodwill....................... 0.5 2.7 20.0
Tax credits.................................................. 0.1 0.3 --
Effect of foreign taxes...................................... -- 7.0 4.0
Corporate-owned life insurance investments................... (1.8) (2.1) (3.7)
Foreign losses not benefited................................. -- 4.8 21.7
Other items.................................................. (0.5) (3.1) 0.4
---- ----- -----
Effective income tax rate.......................... 36.6% (28.9)% 3.9%
==== ===== =====
</TABLE>
F-17
<PAGE> 141
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
The components of deferred tax assets and deferred tax liabilities are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1996
-------- --------
<S> <C> <C>
Net current deferred tax asset (liability):
Bad debt expense.............................................. $ 1,223 $ 2,436
Restructuring charge.......................................... (322) (329)
Vacation and other employee benefits.......................... 3,174 3,082
Other......................................................... 266 1,916
-------- --------
$ 4,341 $ 7,105
======== ========
Net noncurrent deferred tax asset (liability):
Depreciation and amortization................................. $ 613 $ 7,303
Capital leases................................................ 3,658 3,962
Workers' compensation benefits................................ 8,288 10,112
Prepaid healthcare benefits................................... (13,032) (13,497)
Postretirement benefits....................................... 13,144 13,344
Pension....................................................... 2,784 (1,744)
Purchase deferred tax assets.................................. 26,045 21,200
Other......................................................... (231) 662
Credit and net operating carryforwards........................ 5,126 8,685
-------- --------
46,395 50,027
Less valuation allowance........................................ 3,795 4,221
-------- --------
$ 42,600 $ 45,806
======== ========
</TABLE>
The Company has recorded a total net deferred tax asset of $52,911 as of
December 31, 1996. Realization is dependent on generating sufficient taxable
income. Although realization is not assured, management believes it is more
likely than not the net deferred tax asset will be realized. The amount of the
deferred asset considered realizable, however, could be reduced in the near term
if estimates of future taxable income are reduced.
The Company had income tax refunds of $10,156 and $1,893 included in
advances to parent at December 31, 1995 and 1996, respectively.
At December 31, 1996, the Company had foreign tax credit carryforwards in
the amount of $2,455, which expire in 2011. The Company had U.S. operating loss
carryforwards of $2,828 which expire in 2001 and foreign operating losses of
$17,119 which expire as follows:
<TABLE>
<CAPTION>
YEAR OF
EXPIRATION
----------------------------------------------------------
<S> <C>
1997.................................................... $ 3,092
1998.................................................... 3,143
1999.................................................... 3,482
2000.................................................... 3,752
2001.................................................... 2,924
Indefinite.............................................. 726
---------
$17,119
========
</TABLE>
F-18
<PAGE> 142
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
12. LEASES
The Company leases various types of property, including airline catering
kitchens and equipment, vehicles and office facilities. Rent expense for all
operating leases was as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
Minimum rent............................................ $16,177 $31,131 $58,688
Contingent rent......................................... 16,956 26,934 38,872
Less sublease rent...................................... (1,201) (1,489) (542)
------ ------ ------
Total rent expense............................ $31,932 $56,576 $97,018
====== ====== ======
</TABLE>
Contingent rent represents percentage rent based on gross revenues in
excess of minimum levels.
The future minimum lease payments required under capital leases (together
with the present value of minimum lease payments) and future minimum lease
payments required under operating leases that have an initial or remaining lease
term in excess of one year as of December 31, 1996 are as follows:
<TABLE>
<CAPTION>
YEAR ENDING CAPITAL OPERATING
DECEMBER 31, LEASES LEASES
- ------------ ------- ---------
<S> <C> <C>
1997............................................................ $ 2,936 $ 50,104
1998............................................................ 2,629 47,863
1999............................................................ 2,566 46,083
2000............................................................ 2,521 44,378
2001............................................................ 2,813 48,508
Thereafter...................................................... 46,954 128,729
------- ---------
Total minimum lease payments.......................... 60,419 $ 365,665
========
Less imputed interest........................................... 30,028
-------
Present value of minimum lease payments......................... 30,391
Less current portion............................................ 634
-------
Long-term portion of minimum lease payments..................... $29,757
=======
</TABLE>
Other than the Caterair leases described below, most leases have initial
terms of from 10 to 20 years and contain one or more renewal options.
Leases for idle kitchens are included in the preceding table of operating
leases. Future minimum lease payments associated with these facilities of
$29,470 at December 31, 1996 do not represent future operating expenses as they
have been accrued as part of the Transactions (see Note 2).
In accordance with Statement of Financial Accounting Standards No. 13,
"Accounting for Leases," certain leases for kitchen facilities at airports owned
by government unit or authority are being accounted for as operating leases
because special provisions in the lease agreements make the economic life of
such facilities essentially indeterminate.
In connection with the Transactions, pursuant to several leases (the
"Domestic Leases"), Sky Chefs and CII leased and subleased from Caterair
substantially all of its domestic tangible assets for a six-year term. In the
event that Caterair's lease of such assets was for less than six years, the
applicable Domestic Lease is for such shorter period. Sky Chefs and CII have the
option to purchase the assets of Caterair covered by the
F-19
<PAGE> 143
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
Domestic Leases for an amount determined under formulas in the Domestic Leases
that were intended to result in an exercise price equal to the estimated fair
market value of such assets at the time of exercise of such option. The option
is exercisable until the date which is 30 days after termination of the
applicable Domestic Lease. The Company is not certain whether such options will
be exercised. Total amounts payable to Caterair at December 31, 1995 and 1996,
which are included in the above schedule of future minimum operating lease
payments, are approximately $171,185, and $135,117 respectively, of which
approximately $57,498 and $47,500, respectively, relates to lease payments for
leasehold improvements and equipment.
13. RELATED PARTY TRANSACTIONS
In connection with the Transactions, SCIS and its subsidiaries licensed
Caterair's rights under certain customer contracts for a six-year period (the
"License Agreements"). However, after the consummation of such Transactions,
Caterair retained certain operations relating to customer contracts for which
consents to assignment were not obtained. Such consents with respect to these
operations were obtained during the second quarter of 1996 and such operations
were leased, subleased and licensed to SCIS and its subsidiaries. Sky Chefs and
CII each have the option to purchase the customer contract rights covered by the
License Agreements for an amount determined under formulas in the License
Agreements that were intended to result in an exercise price equal to the
estimated fair market value of such rights at the time of the exercise of such
option. The option is exercisable at any time until the date which is 90 days
after the termination of the applicable License Agreement. The Company is not
certain whether such options will be exercised. Caterair agreed, subject to
certain exceptions, not to compete with Sky Chefs in the airline catering
business for a six-year term and Sky Chefs is obligated to pay Caterair $4,000
per year. Lease, license and noncompete related expense for these arrangements
with Caterair for the periods ended December 31, 1995 and 1996 included in cost
of operations amounted to $18,953 and $77,816, respectively.
The Company loaned Caterair approximately $37,788 in connection with the
Transactions. The loan matures in 2001, bears interest at 8% per annum (payable
in-kind) and is collateralized by a subordinated lien on the assets of Caterair
representing collateral under the Credit Agreement and the Senior Bank
Financing. The cumulative amounts due under this loan were $38,544 and $41,634
at December 31, 1995 and 1996, respectively. Interest income related to this
loan of $756 and $3,090 is included in interest income for the years ended
December 31, 1995 and 1996, respectively. In 1995, the Company also paid $7,147
of fees related to the Transactions on behalf of Caterair, which were included
in advances to affiliates at December 31, 1995. Caterair repaid these fees to
the Company in 1996.
The Company was unable to obtain certain consents to the Transactions with
respect to certain of Caterair's kitchens at which one airline is the major
customer. Such consents with respect to these operations were obtained during
the second quarter of 1996 and such operations were leased, subleased and
licensed to SCIS and its subsidiaries. Prior to acquiring this consent, the
Company and Caterair entered into a management agreement for the operations at
these kitchens whereby Caterair operated them with Caterair employees with the
Company providing management and administration support services in exchange for
a management fee equivalent to 4% of the kitchen's net sales. Management fees
earned under this arrangement amounted to $604 and $1,057 for the periods ended
December 31, 1995 and 1996, respectively, and are included in revenues.
In 1993, LSG Lufthansa Service GmbH ("LSG"), a subsidiary of Lufthansa
German Airlines, acquired a minority interest in OFSI from existing shareholders
through the purchase of OFSI Class A common stock by LSG's U.S. subsidiary. The
parties also entered into other agreements including joint marketing and
international development agreements. The Company had accounts receivable from
Lufthansa German
F-20
<PAGE> 144
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
Airlines of $1,541 and $2,597 at December 31, 1995 and 1996, respectively. Sales
to Lufthansa German Airlines in 1995 and 1996 were $12,881 and $22,289,
respectively.
In connection with the Combination, LSG was granted the option to acquire a
50% interest in the catering business acquired by SCIS from Caterair in Europe
for a price to be negotiated on a basis consistent with the valuation of the
entire Caterair business implicit in the Combination. This option has expired.
However, LSG and the Company are engaged in discussions with a view to reaching
agreement for the sale by the Company to LSG of 50% of the Company's European
catering business for a price estimated to be $50,000. There can be no assurance
that such sale will occur or if it does occur as to the timing, price or other
terms thereof.
All costs incurred on the Company's behalf by OFSI and by Onex Corporation,
the indirect parent of OFSI, are reflected in the Company's income statements
through management fees paid to OFSI and to Onex Corporation or through direct
reimbursement. The results of operations of the Company would not differ
materially had the Company operated on a stand alone basis. The Company paid
management fees to OFSI in 1994, 1995 and 1996 of $671, $694, and $1,500,
respectively. During 1995 the Company repaid a $10,607 loan from OFSI with
interest at LIBOR plus 1%, and also paid to Onex Corporation an advisory service
fee relating to the Transactions of $4,000.
14. GEOGRAPHIC AND CUSTOMER INFORMATION
Information concerning operations by geographic area is presented below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1994 1995 1996
-------- -------- ----------
<S> <C> <C> <C>
Net sales:
United States..................................... $463,059 $572,566 $ 952,009
Europe............................................ -- 65,729 243,895
Other............................................. 5,549 100,807 333,912
-------- -------- ----------
$468,608 $739,102 $1,529,816
======== ======== =========
Operating income (loss):
United States..................................... $ 43,778 $ (4,803) $ 11,699
Europe............................................ -- 1,208 (5,282)
Other............................................. (419) 382 30,176
-------- -------- ----------
$ 43,359 $ (3,213) $ 36,593
======== ======== =========
Identifiable assets:
United States..................................... $224,098 $648,174 $ 674,076
Europe............................................ -- 74,754 67,692
Other............................................. 18,918 105,865 106,187
-------- -------- ----------
$243,016 $828,793 $ 847,955
======== ======== =========
</TABLE>
F-21
<PAGE> 145
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
American Airlines is the only customer that accounted for 10% or more of
the Company's total revenue in any of the last three years. Sales to, and
accounts receivable from, American Airlines for the last three years ended
December 31 were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Net sales to American Airlines:
United States...................................... $ 347,948 $ 380,825 $ 412,147
Europe............................................. -- 8,288 31,200
Other.............................................. -- 4,934 26,663
--------- --------- ---------
$ 347,948 $ 394,047 $ 470,010
======== ======== ========
Accounts Receivable from American Airlines......... $ 18,000 $ 34,787 $ 18,142
======== ======== ========
</TABLE>
Although the Company's exposure to credit risk associated with nonpayment
by American Airlines is affected by conditions or occurrences within the airline
industry, trade receivables from American Airlines are considered fully
collectible as of December 31, 1996.
15. EMPLOYEE BENEFITS
In connection with the Transactions, Sky Chefs and CII, respectively, hired
approximately 6,000 and 3,000 domestic employees of Caterair on October 1, 1995.
Prior to the Transactions, Sky Chefs employed approximately 6,000 full-time
domestic employees. The employee participants' share of plan assets in the
Caterair Retirement Savings and Investment Plan as of September 29, 1995, was
transferred to the Sky Chefs and CII plans.
Retirement Benefit Plans
Sky Chefs sponsors two noncontributory pension plans, one for union and one
for non-union employees having at least one year of service and who are eligible
to participate. Effective June 30, 1995, for the union employee plan and
September 30, 1995, for the non-union employee plan, Sky Chefs amended the plans
to exclude from participation in these plans any new employees hired by Sky
Chefs subsequent to the dates of amendment. The plans provide defined benefits
based upon wages or a fixed amount multiplied by years of service. The plans
provide for disability and death benefits after meeting specified age and
service requirements.
Sky Chefs has elected to contribute to these plans an amount which is
within the range of the Employee Retirement Income Security Act ("ERISA")
minimum and maximum contributions deductible for federal income tax purposes.
The components of pension expense related to these qualified pension plans
are reflected below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1994 1995 1996
-------- -------- -------
<S> <C> <C> <C>
Service cost.......................................... $ 3,589 $ 3,392 $ 4,853
Interest cost......................................... 5,835 6,175 7,628
Actual return on plan assets.......................... 1,807 (20,066) (9,466)
Net amortization and deferral......................... (10,871) 11,147 165
-------- -------- -------
Net pension expense......................... $ 360 $ 648 $ 3,180
======== ======== =======
</TABLE>
F-22
<PAGE> 146
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
The following table sets forth the funding status of the plans and amounts
recognized in the consolidated financial statements:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1996
--------- ---------
<S> <C> <C>
Actuarial present value of benefit obligation:
Vested benefit obligation.................................. $ 89,679 $ 93,397
========= =========
Accumulated benefit obligation............................... $ 93,605 $ 96,951
========= =========
Projected benefit obligation................................. $(107,315) $(107,024)
Plan assets at fair value.................................... 88,839 101,151
--------- ---------
Plan assets less projected benefit obligation................ (18,476) (5,873)
Actuarial gains and losses and effects of assumption
changes.................................................... 24,801 13,973
Unrecognized net transition asset established January 1,
1987, to be recognized over 11 years....................... (2,594) (1,263)
Unrecognized prior service cost.............................. (45) 477
Additional minimum liability................................. (8,453) --
--------- ---------
Prepaid pension cost (liability)................... $ (4,767) $ 7,314
========= =========
</TABLE>
The discount rates and rates of increase in future compensation levels used
in determining the actuarial present value of the projected benefit obligation
were and 7.25% and 4.25%, respectively, at December 31, 1995 and 7.75% and 4.5%,
respectively, at December 31, 1996. The expected long-term rate of return on
assets was 10.6% for the years ended December 31, 1995 and 1996, respectively.
Plan assets at December 31, 1995 and 1996 consisted primarily of cash and
marketable securities.
In addition, Sky Chefs sponsors a Supplemental Executive Retirement Plan
("SERP") for certain key executive officers. This plan has not been funded by
Sky Chefs. Amounts charged to expense for this plan are $424, $418, and $431,
for 1994, 1995 and 1996, respectively. The projected unfunded liability is
approximately $2,845 and $3,032 at December 31, 1995 and 1996, respectively.
In accordance with Statement of Financial Accounting Standards No. 87, Sky
Chefs has recorded an additional minimum pension liability for underfunded plans
of $7,287 and $707 at December 31, 1995 and 1996, respectively, representing the
excess of unfunded accumulated benefit obligations over previously recorded
pension cost liabilities. A corresponding amount is recognized as an intangible
asset except to the extent that these additional liabilities exceed related
unrecognized prior service cost and net transition obligation, in which case the
increase in liabilities is charged directly to shareholders' equity. For 1995
and 1996, respectively, $5,565 and $330 of the excess minimum pension liability
resulted in a charge to equity, net of income taxes of $3,484 and $255.
Prepaid Employee Healthcare
The Company maintains two Voluntary Employee Benefit Association ("VEBA")
trusts, one for union and one for non-union domestic employees. Amounts held in
the trust, consisting primarily of money market funds, were $40,474 and $36,786
at December 31, 1995 and 1996, respectively, and are included in prepaid
expenses and other assets.
Postretirement Healthcare and Life Insurance Benefits
In addition to pension benefits, Sky Chefs provides certain healthcare and
life insurance benefits for retired domestic employees. Effective, June 30,
1995, for union employees and September 30, 1995, for non-
F-23
<PAGE> 147
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
union employees, Sky Chefs amended the plans to exclude from participation new
union employees hired by Sky Chefs subsequent to the date of amendment and
reduced substantially the postretirement healthcare and life insurance benefits
for non-union employees hired by Sky Chefs subsequent to the date of amendment.
Qualified domestic employees become eligible for benefits upon attainment of age
55 and completion of 10 years service. Such healthcare and life insurance
benefits are provided through VEBA trusts and by insurance companies, with
insurance premiums based on the benefits paid. The cash payments for providing
benefits were $1,539, $1,634, and $1,885, for the years ended December 31, 1994,
1995 and 1996, respectively.
Net postretirement benefit cost included in cost of operations for the
years ended December 31, 1994, 1995 and 1996 consists of the following
components:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
Service cost............................................. $1,015 $ 838 $ 861
Interest cost............................................ 2,524 2,196 2,174
Amortization of prior service cost....................... -- -- (59)
------ ------ ------
Net pension expense............................ $3,539 $3,034 $2,976
====== ====== ======
</TABLE>
The following sets forth the postretirement benefit plan's funded status
reconciled with amounts reported in the consolidated balance sheets as of
December 31, 1995 and 1996:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1996
------- -------
<S> <C> <C>
Accumulated postretirement benefit obligation ("APBO")
Retirees....................................................... $21,279 $23,313
Fully eligible active plan participants........................ 4,511 4,417
Other active plan participants................................. 5,078 5,043
------- -------
Total APBO....................................................... 30,868 32,773
Plan assets at fair value........................................ -- --
------- -------
Accumulated postretirement benefit obligation in excess of plan
assets......................................................... 30,868 32,773
Unrecognized net actuarial gains................................. 1,883 2,088
------- -------
Accrued postretirement benefit liability......................... 32,751 34,861
Less amount classified as current (included in accrued
expenses)...................................................... 1,500 1,500
------- -------
Noncurrent liability (included in other long-term liabilities)... $31,251 $33,361
======= =======
</TABLE>
An 8% and 7% annual rate of increase in the per capita costs of covered
healthcare benefits was assumed for 1995 and 1996, respectively, gradually
decreasing to 5% by the year 1999. Increasing the assumed healthcare cost trend
rates by one percentage point in each year would increase the accumulated
postretirement benefit obligation by $1,303 and $1,657 as of December 31, 1995
and 1996, respectively, and increase the aggregate of the service cost and
interest cost components of net periodic postretirement benefit cost for 1994,
1995 and 1996 by $151, $183 and, $208, respectively. A discount rate of 7.25%
and 7.75% was used to determine the APBO at December 31, 1995 and 1996,
respectively.
Retirement Savings Plans
Sky Chefs has established a retirement savings plan for its domestic
employees which allows participants to make contributions through salary
reduction pursuant to Section 401(k) of the Internal Revenue Code. In
F-24
<PAGE> 148
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
1995, Sky Chefs amended its retirement savings plan to provide a minimum 1% of
eligible employee compensation contribution to the plan for those participants
not eligible for participation in Sky Chefs' defined benefit plans. In addition,
Sky Chefs may elect to match certain portions of employee contributions. The
employer matching contribution was $655 and $1,210 for 1994 and 1995,
respectively.
CII established a retirement savings plan for its domestic employees hired
from Caterair on September 29, 1995, which allows participants to make
contributions from 1% to 10% of their compensation or select a fixed dollar
amount to be deducted during each pay period. CII makes a matching contribution
on the first 6% of each employee's pre-tax or after tax contributions, the
amount of which will be determined before the start of each year. The employer
matching contributions for the periods ended December 31, 1995 and 1996 were
$576 and $472, respectively.
Employee Stock Options
Options to purchase 62.74 and 46.24 of Class A shares of OFSI capital stock
were held by management employees of the Company at December 31, 1995 and 1996,
respectively. The option price for the Class A shares is equal to the book value
(adjusted for changes in generally accepted accounting principles subsequent to
May 29, 1986) at the end of the fiscal quarter immediately preceding the
exercise date. These options only become exercisable upon the occurrence of
certain future events, as defined in the employee stock purchase agreement.
Periodically, management employees have been given the opportunity to purchase
OFSI shares in exchange for the cancellation of their outstanding OFSI options.
Stock-Based Compensation Plan
SCIS sponsors a book value stock purchase plan for selected management
employees (the "Book Value Plan") and applies Accounting Principles Board
Opinion No. 25 ("APB 25") and related interpretations in accounting for this
Plan. In 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123 "Accounting for Stock-Based Compensation"
("SFAS 123") which, if fully adopted, would change the methods the Company
applies in recognizing the cost of this Plan. Adoption of the cost recognition
provisions of SFAS 123 is optional and the Company has decided not to elect
these provisions. However, pro forma disclosures as if the Company adopted the
cost recognition provisions of SFAS 123 in 1995 are required by SFAS 123 and are
discussed below.
SCIS adopted the Book Value Plan in 1986. Under the Book Value Plan, SCIS
is authorized to issue Class A shares of common stock to its full-time
management employees, nearly all of whom are eligible to participate. The
purchase price of the shares is equal to the book value (adjusted for changes in
accounting principles employed by the Company subsequent to May 29, 1986) at the
end of the fiscal quarter immediately preceding the purchase date. The number of
shares outstanding under the Plan at December 31, 1996, are described in Note 18
to these financial statements. Shares are purchased at 100% of the book value of
the shares on the date of the purchase. Accordingly, the accounting charge for
these shares purchased determined under APB 25 and SFAS 123 is zero.
The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts. SFAS 123 does not apply to awards prior to 1995.
Deferred Compensation Plan
The Company provides its key employees with the opportunity to participate
in an unfunded deferred compensation program. There were 15 and 19 participants
in the program at December 31, 1995 and 1996, respectively. Under the program,
participants may defer up to 75% of their annual base salary and up to 100%
F-25
<PAGE> 149
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
of their annual bonuses otherwise payable in cash. The amounts deferred are
contributed by the Company together with additional corporate funds into a
trust. The amounts deferred by participants are used to purchase investments at
the direction of the Plan Administration Committee. The amounts contributed to
the trust by OFSI are utilized to purchase life insurance policies on qualifying
participants and to fund administrative expenses. Upon the death of an insured
participant, the proceeds of such a policy are payable to OFSI. Account
balances, which are equal to compensation deferred and related earnings, are
payable to participants or their beneficiaries upon the earlier of termination
of employment, retirement, death, permanent disability or a lump sum on a
specific date selected in the future. The Company has guaranteed the
participants a fixed rate of return of 8% through December 31, 1999 at which
time the rate will be reset but will never be less than 5%. Any differences
between the fixed rate and the rate of return earned by the trust will affect
the amount of corporate funds necessary to administer the plan.
The program is not qualified under Section 401 of the Internal Revenue
Code. Amounts contributed to the plan through December 31, 1995 and 1996
amounted to $1,650 and $2,103, respectively.
16. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following estimated fair value amounts have been determined by the
Company using available market information and appropriate valuation
methodologies. However, considerable judgment is required in interpreting market
data to develop the estimates of fair value. Accordingly, the estimates
presented herein are not necessarily indicative of the amounts that the Company
could realize in a current market exchange.
The carrying amounts of cash and cash equivalents, accounts and notes
receivable, accounts payable and accrued expenses and other liabilities are
reasonable estimates of their fair values. Letters of credit are included in the
estimated fair value of accrued expenses and other liabilities. The estimated
fair values and carrying amounts of other financial instruments at December 31,
1995 and 1996, are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------
1995 1996
--------------------- ---------------------
ESTIMATED CARRYING ESTIMATED CARRYING
FAIR VALUE AMOUNT FAIR VALUE AMOUNT
---------- -------- ---------- --------
<S> <C> <C> <C> <C>
Assets:
Senior subordinated note due from
affiliate(a)............................. $ 39,073 $ 38,544 $ 41,634 $ 41,634
Interest rate swap agreement(c)............. -- -- 2,119 --
Liabilities:
Term loans(b)............................... 224,773 224,733 213,746 213,746
13% senior subordinated notes(b)............ 131,562 125,000 140,938 125,000
Other long-term debt(b)..................... 11,526 11,526 11,092 11,092
Interest rate swap agreement(c)............. 2,778 -- -- --
</TABLE>
The following methods and assumptions were used to estimate the fair value
of each class of financial instrument.
(a) SENIOR SUBORDINATED NOTE DUE FROM AFFILIATE
The Company's Senior Subordinated Note due from Caterair in 2001 bears a
fixed rate of interest of 8% (payable in-kind) and was executed September 29,
1995 in connection with the Transactions. This note is with a related party and
as such there is no market activity. Accordingly, the carrying values
approximate estimated fair value.
F-26
<PAGE> 150
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
(b) LONG-TERM DEBT
The Company's long-term debt securities can be segregated into three
categories: (i) term loans and the revolving credit facility: (ii) 13% senior
subordinated notes, and (iii) other long-term debt. There is no active market
for the Company's other long-term debt and, consequently, no quoted prices are
available.
(i) Term Loans and the Revolving Credit Facility
The fair value of the term loans and revolving credit facility
approximates the carrying value since interest rates are variable.
(ii) 13% Senior Subordinated Notes
The fair value of the Notes is based upon quoted market prices for
the Company's and other financial instruments of similar rating and
risk.
(iii) Other Long-Term Debt
The Company's other long-term debt is comprised principally of
foreign subsidiary bank borrowings with interest and repayment terms
that are not significantly different from current market rates.
Accordingly, the carrying values approximate estimated fair value.
(c) INTEREST RATE SWAP AGREEMENTS
At December 31, 1995 and 1996, the Company had interest rate swap
instruments (used for hedging purposes) which were not included in the Company's
consolidated balance sheet. The estimated fair value of this swap agreement was
negative (representing a liability) to the Company at December 31, 1995 and
positive (representing an asset) at December 31, 1996, as a result of
fluctuations in projected futures interest rate swap transaction values
subsequent to the trade date of December 27, 1995.
These disclosures relate to financial instruments only. The fair value
assumptions were based upon estimates of market conditions and perceived risks
of the financial instruments at December 31, 1995 and 1996.
17. DISCLOSURES OF SIGNIFICANT RISKS AND UNCERTAINTIES
The Company's financial instruments expose the Company to market and credit
risks and may at times be concentrated with certain counterparties or groups of
counterparties. The credit worthiness of counterparties is subject to continuing
review and full performance is anticipated unless otherwise specifically
disclosed.
Concentration of Cash Equivalents
Cash and cash equivalents of $20,581 and $19,898 at December 31, 1995 and
1996, respectively, were in foreign locations; a portion of which is restricted
from repatriation under various foreign tax laws and regulations.
The Company follows the policy of investing all idle domestic cash balances
in a money market fund with one money market fund manager. The invested balances
amounted to $16,740 and $20,499 at December 31, 1995 and 1996, respectively.
Dependence on Key Customers
As described in Note 1 and Note 2, the Company is engaged in providing
catering services to airlines in the U.S. and internationally (see Note 14 for
geographic and customer concentration information). The Company provides these
services to its airline customers on an open account unsecured basis. Prior to
the
F-27
<PAGE> 151
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
Transactions described in Note 2, approximately 76% of the Company's revenue was
derived from business with American Airlines under a long-term catering
agreement that expires at the end of 2003. In 1996, business with American
Airlines accounted for approximately 31% of the Company's business with no other
customer providing more than 10% of total annual revenues. The business
combination with Caterair substantially expanded the Company's base of
operations and reduced substantially its concentration of customer risk.
Dependence on Airline Industry Trends
The Company's revenues are largely dependent upon the number of passengers
who travel on airlines, the number of airline flights serviced by the Company
and the level of meal service provided to passengers. As a result, a decline in
the number of airline flights or in passenger traffic, or a reduction or
downgrading of airline meal services, as has been the case in recent years in
North America, could have a severe financial impact on the Company.
In the past several years, a number of United States airlines have merged
with other airlines, sought protection under federal bankruptcy laws or ceased
operating altogether. To the extent the Company has a significant business
relationship with an airline that reduces or ceases operations or seeks
protection under federal bankruptcy laws, the Company's revenues may be
materially adversely affected and the Company's realization of its investments
in kitchen facilities, accounts receivable and other assets related to such
customers may be negatively impacted.
Repatriation and Currency Risks
A significant portion of the Company's operations are outside the United
States. International operations are subject to a number of special risks. These
special risks include currency exchange rate fluctuations, trade barriers, and
political and economic risks in less developed countries such as hyperinflation,
governmental expropriation and exchange controls, and other governmental
restrictions that may limit the ability to repatriate earnings of foreign
subsidiaries.
Caterair Operations Restructuring
In 1993 and 1994, the business formerly operated by Caterair lost over
$42,000 (excluding one-time charges for asset write-downs, provisions for
kitchen closures and other nonrecurring charges). The Company is currently in
the process of consolidating kitchen operations at airports where excess kitchen
capacity exists. This consolidation process has resulted in the closing of
certain kitchen facilities and a reduction in the number of personnel. In
addition to $8,200 which was charged to income and included in integration
expenses in 1995, the Company incurred approximately $30,361 of costs in 1996
associated with integration, restructuring and improving its combined
operations. Additional liabilities for kitchen closings and severance resulting
from additional consolidations will be recognized as expense in the period
incurred.
18. COMMITMENTS AND CONTINGENCIES
On June 23, 1995, the Company settled, for a payment of $3,700, a claim
asserted by American Airlines, Inc. (American), for rent payable by the Company
under facility subleases with American and occupancy costs reimbursed by
American under its catering agreements with the Company. The settlement resulted
in a pre-tax charge to 1995 income of $100.
In connection with the sale of OFSI Class A common shares to employees,
OFSI has a commitment to repurchase such shares (based on adjusted book value
per share, as defined) in connection with an employee's termination from the
Company or its subsidiaries. As of December 31, 1996, 18,925.81 Class A and
719.38 Class B shares of OFSI's outstanding capital shares were held by
employees of the Company and its subsidiaries. In order to provide a reasonable
long-term incentive plan for management, the Company may
F-28
<PAGE> 152
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
repurchase portions of stock from existing management stockholders and
redistribute the stock to key management in proportion to their leadership
position in the Company.
In the normal course of business, the Company is from time to time named a
defendant in litigation and is currently a defendant in several actions.
However, in the opinion of management, the outcome of such litigation will not
result in a material adverse effect on the consolidated financial position or
results of operations of the Company.
The Company is continually upgrading its equipment and facilities in order
to provide the most efficient service to its customers. As such, management
estimates that approximately $32,000 of capital expenditures will be incurred in
1997.
19. CHANGES IN WORKING CAPITAL ITEMS
<TABLE>
<CAPTION>
NINE
MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------- ----------------------
1994 1995 1996 1996 1997
-------- ------- -------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
(Increase) decrease in accounts
and notes receivable............ $ (1,015) $ 5,606 $(13,655) $(21,163) $ (30,569)
(Increase) decrease in
inventories..................... 20 1,234 (1,165) (1,177) (899)
Increase in prepaid expenses...... (1,134) (1,819) (2,578) (2,614) (1,623)
Increase (decrease) in accounts
payable and accrued expenses.... (18,696) 18,723 39,059 56,135 (6,058)
-------- ------- -------- -------- -----------
Decrease in working capital
items........................ $(20,825) $23,744 $ 21,661 $ 31,181 $ (39,149)
======== ======= ======== ======== =========
</TABLE>
20. GUARANTOR CONSOLIDATING FINANCIAL STATEMENTS
The separate financial statements of Sky Chefs, CII and certain other
indirectly wholly-owned domestic subsidiaries of SCIS which are guarantors of
the New Notes (the "Subsidiary Guarantors") are not included herein because the
Subsidiary Guarantors are wholly-owned consolidated subsidiaries of the Company
and are jointly, severally and unconditionally liable for the obligations
represented by the New Notes on a senior subordinated basis. The Company
believes that the condensed consolidating financial information for the Company,
the combined Subsidiary Guarantors and the subsidiaries of SCIS which are not
guarantors of the New Notes (the "Non-Guarantor Subsidiaries") provide
Noteholders with information that is more meaningful to them in understanding
the financial position of the Subsidiary Guarantors than separate financial
statements of the Subsidiary Guarantors. Therefore, the separate financial
statements of the Subsidiary Guarantors are not deemed material to investors.
Investments in subsidiaries are accounted for by the parent on the equity
method for purposes of the presentation set forth below. Earnings of
subsidiaries are therefore reflected in the parent's investment accounts and
earnings. The principal elimination entries set forth below eliminate
investments in subsidiaries and intercompany balances and transactions.
Set forth below is consolidating financial information for (i) the combined
Subsidiary Guarantors, (ii) the combined Non-Guarantor Subsidiaries, (iii) the
Company (on a parent only basis), (iv) an elimination column for adjustments to
arrive at the information for the Company and its subsidiaries on a consolidated
basis and (v) the Company and its subsidiaries on a consolidated basis as of
September 30, 1997 and December 31, 1996 and 1995, for the nine months ended
September 30, 1997 and 1996 and for each of the three years in the period ended
December 31, 1996.
F-29
<PAGE> 153
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
20. GUARANTOR CONSOLIDATING FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
--------------------------------------------------------------------------------
COMBINED COMBINED SC INTERNATIONAL TOTAL
GUARANTOR NON-GUARANTOR SERVICES, INC. ELIMINATION SCIS
SUBSIDIARIES SUBSIDIARIES (PARENT ONLY) ENTRIES CONSOLIDATED
------------ ------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......... $ 2,061 $ 14,709 $ 21,557 $ -- $ 38,327
Accounts and notes receivable,
net.............................. 94,088 70,295 15,567 (1,346) 178,604
Advance to affiliate............... -- -- 219,743 (219,743) --
Tax refund receivable from
parent........................... -- -- -- -- --
Inventories........................ 9,432 9,617 -- -- 19,049
Deferred income taxes.............. 6,361 -- 998 (308) 7,051
Prepaid expenses................... 10,664 8,061 2 -- 18,727
------------ ------------- ---------------- ----------- ------------
Total current assets........ 122,606 102,682 257,867 (221,397) 261,758
Property and equipment, net.......... 106,620 82,498 137 -- 189,255
Deferred income taxes................ 39,099 -- 23,172 (1,045) 61,226
Goodwill and intangible assets,
net................................ 276,027 1,733 8,333 (32,215) 253,878
Investment in affiliates............. 196,647 15,569 87,674 (279,388) 20,502
Loan to affiliate.................... -- -- 44,075 -- 44,075
Other assets......................... 32,578 1,162 20,415 3,997 58,172
------------ ------------- ---------------- ----------- ------------
Total assets................ $773,577 $ 203,664 $441,673 $(530,048) $888,866
=========== ============= =============== ========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable................... $ 39,481 $ 25,615 $ 1,267 $ 6,608 $ 72,971
Accrued expenses................... 127,839 50,825 -- -- 178,664
Payable to parent.................. 6,363 -- -- 6,363
Payable to affiliate............... 190,983 50,659 13,037 (236,352) 18,327
Current portion of long-term
debt............................. -- 17,778 900 (10,941) 7,737
Current portion of obligations
under capital losses............. 151 249 -- -- 400
------------ ------------- ---------------- ----------- ------------
Total current liabilities... 358,454 151,489 15,204 (240,685) 284,462
Obligations under capital leases..... 26,994 2,307 -- -- 29,301
Long-term debt....................... 18,578 3,178 389,100 (18,578) 392,278
Deferred income taxes................ -- 1,353 -- (1,353) --
Other long-term liabilities.......... 143,638 1,937 8,228 (9,165) 144,638
------------ ------------- ---------------- ----------- ------------
Total liabilities........... 547,664 160,264 412,532 (269,781) 850,879
------------ ------------- ---------------- ----------- ------------
Minority interest.................... 9,371 (325) -- -- 9,046
------------ ------------- ---------------- ----------- ------------
Commitments and contingencies........ -- -- -- -- --
Shareholder's equity:
Common stock....................... 10 -- -- (10) --
Additional paid-in capital......... 181,788 12,398 59,570 (234,029) 59,579
Cumulative translation
adjustment....................... (1,355) (2,150) (3,505) 3,505 (3,505)
Minimum pension liabilities
adjustment....................... (330) -- (330) 330 (330)
Retained earnings (deficit)........ 36,429 33,477 26,603 (55,045) (26,603)
------------ ------------- ---------------- ----------- ------------
Total shareholder's
equity:................... 216,542 43,725 29,141 (288,048) 29,141
------------ ------------- ---------------- ----------- ------------
Total liabilities and
shareholder's
equity............... $773,577 $ 203,664 $441,673 $(530,048) $888,866
=========== ============= =============== ========== ===========
</TABLE>
F-30
<PAGE> 154
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
20. GUARANTOR CONSOLIDATING FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING BALANCE SHEETS -- (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1996
--------------------------------------------------------------------------------
COMBINED COMBINED SC INTERNATIONAL TOTAL
GUARANTOR NON-GUARANTOR SERVICES, INC. ELIMINATION SCIS
SUBSIDIARIES SUBSIDIARIES (PARENT ONLY) ENTRIES CONSOLIDATED
------------ ------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......... $ 1,399 $ 21,517 $ 32,742 $ -- $ 55,658
Accounts and notes receivable,
net............................. 87,807 57,837 4,525 (1,760) 148,409
Advance to affiliate.............. -- -- 237,527 (237,527) --
Tax refund receivable from
parent.......................... 1,893 -- -- -- 1,893
Inventories....................... 10,204 7,008 938 -- 18,150
Deferred income taxes............. 6,167 938 -- -- 7,105
Prepaid expenses.................. 10,698 6,406 -- -- 17,104
-------- -------- -------- --------- --------
Total current assets....... 118,168 93,706 275,732 (239,287) 248,319
Property and equipment, net......... 103,839 86,673 94 -- 190,606
Deferred income taxes............... 39,816 -- 9,343 (3,353) 45,806
Goodwill and intangible assets,
net............................... 282,379 498 -- (37,653) 245,224
Investment in affiliates............ 197,376 1,144 45,558 (231,278) 12,800
Loan to affiliate................... -- -- 41,634 -- 41,634
Other assets........................ 43,125 2,906 19,440 3,596 69,067
-------- -------- -------- --------- --------
Total assets............... $784,703 $ 184,927 $391,801 $(507,975) $853,456
======== ======== ======== ========= ========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable.................. $ 46,607 $ 27,403 $ 1,048 $ 6,195 $ 81,253
Accrued expenses.................. 121,504 53,219 -- -- 174,723
Payable to affiliate.............. 208,761 24,371 -- (228,627) 4,505
Current portion of long-term
debt............................ -- 15,836 10,787 (10,941) 15,682
Current portion of obligations
under capital leases............ 387 247 -- -- 634
-------- -------- -------- --------- --------
Total current
liabilities.............. 377,259 121,076 11,835 (233,373) 276,797
Obligations under capital leases.... 26,950 2,807 -- -- 29,757
Long-term debt...................... 18,697 6,197 327,959 (18,697) 334,156
Deferred income taxes............... -- 3,353 -- (3,353) --
Other long-term liabilities......... 157,104 8,631 5,276 (14,614) 156,397
-------- -------- -------- --------- --------
Total liabilities.......... 580,010 142,064 345,070 (270,037) 797,107
-------- -------- -------- --------- --------
Minority interest................... 9,618 (365) -- -- 9,618
-------- -------- -------- --------- --------
Commitments and contingencies....... -- -- -- -- --
Shareholder's equity:
Common stock...................... 10 -- -- (10) --
Additional paid-in capital........ 175,023 11,187 59,579 (186,210) 59,579
Cumulative translation
adjustment...................... (807) (2,990) (3,797) 3,797 (3,797)
Minimum pension liability
adjustment...................... (330) -- (330) 330 (330)
Retained earnings (deficit)....... 21,179 34,666 (8,721) (55,845) (8,721)
-------- -------- -------- --------- --------
Total shareholder's
equity................... 195,075 42,863 46,731 (237,938) 46,731
-------- -------- -------- --------- --------
Total liabilities and
shareholder's equity..... $784,703 $ 184,927 $391,801 $(507,975) $853,456
======== ======== ======== ========= ========
</TABLE>
F-31
<PAGE> 155
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
20. GUARANTOR CONSOLIDATING FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING BALANCE SHEETS -- (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1995
----------------------------------------------------------------------------
COMBINED COMBINED SC INTERNATIONAL TOTAL
GUARANTOR NON-GUARANTOR SERVICES, INC. ELIMINATION SCIS
SUBSIDIARIES SUBSIDIARIES (PARENT ONLY) ENTRIES CONSOLIDATED
------------ ------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....... $ 24,820 $ 17,135 $ 12,874 $ -- $ 54,829
Accounts and notes receivable,
net.......................... 90,769 51,827 3,465 (9,542) 136,519
Advances to affiliates.......... 1,043 -- 291,179 (291,179) 1,043
Tax refund receivable from
parent....................... 8,331 -- -- -- 8,331
Inventories..................... 10,477 6,508 -- -- 16,985
Deferred income taxes........... 7,830 -- 18 (3,507) 4,341
Prepaid expenses................ 10,436 3,566 -- 524 14,526
-------- -------- -------- ---------- --------
Total current assets.... 153,706 79,036 307,536 (303,704) 236,574
Property and equipment, net....... 86,648 89,199 -- -- 175,847
Deferred income taxes............. 30,336 3,825 8,439 -- 42,600
Goodwill and intangible assets,
net............................. 304,311 -- -- (48,201) 256,110
Investment in affiliates.......... 199,815 -- 42,276 (230,578) 11,513
Loan to affiliate................. -- -- 38,544 -- 38,544
Other assets...................... 39,179 2,875 16,645 8,906 67,605
-------- -------- -------- ---------- --------
Total assets............ $813,995 $ 174,935 $ 413,440 $ (573,577) $828,793
======== ======== ======== ========== ========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable................ $ 60,993 $ 30,549 $ 317 $ (12,053) $ 79,806
Accrued expenses................ 85,725 47,439 5,556 -- 138,720
Payable to affiliates........... 254,552 12,160 -- (266,712) --
Deferred income taxes........... -- 3,507 -- (3,507) --
Current portion of long-term
debt......................... -- 16,824 8,533 (10,941) 14,416
Current portion of obligations
under capital leases......... 425 225 -- -- 650
-------- -------- -------- ---------- --------
Total current
liabilities........... 401,695 110,704 14,406 (293,213) 233,592
Obligations under capital
leases.......................... 27,370 2,780 -- -- 30,150
Long-term debt.................... 18,884 5,643 341,200 (18,884) 346,843
Other long-term liabilities....... 161,599 11,006 3,264 (21,709) 154,160
-------- -------- -------- ---------- --------
Total liabilities....... 609,548 130,133 358,870 (333,806) 764,745
-------- -------- -------- ---------- --------
Minority interest................. 9,307 171 -- -- 9,478
-------- -------- -------- ---------- --------
Commitments and contingencies
Shareholder's equity:
Common stock.................... 10 -- -- (10) --
Additional paid-in capital...... 175,015 14,662 59,579 (189,677) 59,579
Cumulative translation
adjustment................... 112 (3,590) (1,764) 3,478 (1,764)
Minimum pension liability
adjustment................... (5,565) -- (5,565) 5,565 (5,565)
Retained earnings............... 25,568 33,559 2,320 (59,127) 2,320
-------- -------- -------- ---------- --------
Total shareholder's
equity................ 195,140 44,631 54,570 (239,771) 54,570
-------- -------- -------- ---------- --------
Total liabilities and
shareholder's
equity................ $813,995 $ 174,935 $ 413,440 $ (573,577) $828,793
======== ======== ======== ========== ========
</TABLE>
F-32
<PAGE> 156
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
20. GUARANTOR CONSOLIDATING FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1997
----------------------------------------------------------------------------
COMBINED COMBINED SC INTERNATIONAL TOTAL
GUARANTOR NON-GUARANTOR SERVICES, INC. ELIMINATION SCIS
SUBSIDIARIES SUBSIDIARIES (PARENT ONLY) ENTRIES CONSOLIDATED
------------ ------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues.......................... $802,795 $ 423,802 $ -- $ (28,407) $ 1,198,190
-------- -------- -------- -------- --------
Costs and expenses:
Cost of operations.............. 661,972 384,326 169 -- 1,046,467
Depreciation and amortization... 22,399 8,835 11 -- 31,245
Selling, general and
administrative............... 21,271 12,485 3,838 -- 37,594
Integration expenses............ 10,436 3,338 -- -- 13,774
Other........................... 36,398 4,114 -- (28,407) 12,105
-------- -------- -------- -------- --------
Total costs and
expenses.............. 752,476 413,098 4,018 (28,407) 1,141,185
-------- -------- -------- -------- --------
Operating income (loss)........... 50,319 10,704 (4,018) -- 57,005
-------- -------- -------- -------- --------
Other income (expense):
Interest income................. 436 6,399 3,877 (5,923) 4,789
Interest expense................ (16,814) (8,492) (20,206) 5,923 (39,589)
Equity in earnings (loss)....... 2,242 (1,891) 13,114 (14,061) (596)
Other........................... (5,235) (2,276) (6,260) -- (7,511)
-------- -------- -------- -------- --------
Total other expense..... (19,371) (6,260) (3,215) (14,061) (42,907)
-------- -------- -------- -------- --------
Income (loss) before income
taxes........................... 30,948 4,444 (7,233) (14,061) 14,098
Provision (benefit) for income
taxes........................... 15,698 5,633 (10,096) -- 11,235
Extraordinary loss, net of
taxes........................... -- -- (20,745) -- (20,745)
-------- -------- -------- -------- --------
Net Income (loss)................. $ 15,250 $ (1,189) $(17,882) $ (14,061) $ (17,883)
======== ======== ======== ======== ========
</TABLE>
F-33
<PAGE> 157
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
20. GUARANTOR CONSOLIDATING FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING STATEMENTS OF OPERATIONS -- (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1996
----------------------------------------------------------------------------
COMBINED COMBINED SC INTERNATIONAL TOTAL
GUARANTOR NON-GUARANTOR SERVICES, INC. ELIMINATION SCIS
SUBSIDIARIES SUBSIDIARIES (PARENT ONLY) ENTRIES CONSOLIDATED
------------ ------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues.......................... $722,252 $ 419,850 $ -- $ -- $ 1,142,102
-------- -------- -------- -------- --------
Costs and expenses:
Cost of operations.............. 635,032 379,551 199 -- 1,014,782
Depreciation and amortization... 16,829 10,675 -- -- 27,504
Selling, general and
administrative............... 28,815 4,078 2,868 -- 35,761
Integration expenses............ 18,605 3,092 -- -- 21,897
Other........................... 7,651 9,383 207 -- 17,251
-------- -------- -------- -------- --------
Total costs and
expenses.............. 707,142 406,779 3,274 -- 1,117,195
-------- -------- -------- -------- --------
Operating income (loss)........... 15,110 13,071 (3,274) -- 24,907
-------- -------- -------- -------- --------
Other income (expense):
Interest income................. 2,053 8,184 2,667 (7,601) 5,303
Interest expense................ (21,851) (10,895) (14,295) 7,601 (38,870)
Equity in earnings (loss)....... -- (147) (794) 794 (147)
Other........................... (4,167) (471) -- -- (4,638)
-------- -------- -------- -------- --------
Total other expense..... (23,395) (3,329) (12,422) 794 (38,352)
-------- -------- -------- -------- --------
Income (loss) before income
taxes........................... (8,285) 9,742 (15,696) 794 (13,445)
Provision (benefit) for income
taxes........................... (1,081) 3,332 (7,051) -- (4,800)
-------- -------- -------- -------- --------
Net Income (loss)................. $ (7,204) $ 6,410 $ (8,645) $ 794 $ (8,645)
======== ======== ======== ======== ========
</TABLE>
F-34
<PAGE> 158
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
20. GUARANTOR CONSOLIDATING FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING STATEMENTS OF OPERATIONS -- (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
---------------------------------------------------------------------------------
COMBINED COMBINED SC INTERNATIONAL
GUARANTOR NON-GUARANTOR SERVICES, INC. ELIMINATION TOTAL SCIS
SUBSIDIARIES SUBSIDIARIES (PARENT ONLY) ENTRIES CONSOLIDATED
------------ -------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues.................... $ 1,007,155 $ 563,678 $ -- $ (41,017) $ 1,529,816
-------- -------- --------- -------- ----------
Costs and expenses:
Cost of operations........ 851,877 500,283 199 -- 1,352,359
Depreciation and
amortization........... 23,638 14,289 1 -- 37,928
Selling, general and
administrative......... 32,984 11,209 4,661 -- 48,854
Integration expenses...... 25,095 5,266 -- -- 30,361
Other..................... 53,893 10,638 207 (41,017) 23,721
-------- -------- --------- -------- ----------
Total costs and
expenses........ 987,487 541,685 5,068 (41,017) 1,493,223
-------- -------- --------- -------- ----------
Operating income (loss)..... 19,668 21,993 (5,068) -- 36,593
-------- -------- --------- -------- ----------
Other income (expense):
Interest income........... 2,249 11,257 4,173 (9,783) 7,896
Interest expense.......... (24,681) (14,371) (21,162) 9,783 (50,431)
Equity in earnings
(loss)................. 1,313 (8,453) 3,282 3,282 (576)
Other..................... (139) (3,964) -- -- (4,103)
-------- -------- --------- -------- ----------
Total other
expense......... (21,258) (15,531) (13,707) 3,282 (47,214)
-------- -------- --------- -------- ----------
Income (loss) before income
taxes..................... (1,590) 6,462 (18,775) 3,282 (10,621)
Provision (benefit) for
income taxes.............. 2,799 5,355 (7,734) -- 420
-------- -------- --------- -------- ----------
Net income (loss)........... $ (4,389) $ 1,107 $(11,041) $ 3,282 $ (11,041)
======== ======== ========= ======== ==========
</TABLE>
F-35
<PAGE> 159
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
20. GUARANTOR CONSOLIDATING FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING STATEMENTS OF OPERATIONS -- (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
----------------------------------------------------------------------------
COMBINED COMBINED SC INTERNATIONAL TOTAL
GUARANTOR NON-GUARANTOR SERVICES, INC. ELIMINATION SCIS
SUBSIDIARIES SUBSIDIARIES (PARENT ONLY) ENTRIES CONSOLIDATED
------------ ------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues.......................... $596,253 $ 161,522 $ -- $ (18,673) $739,102
------------ ------------- ---------------- ----------- ------------
Costs and expenses:
Cost of operations.............. 487,881 146,494 -- -- 634,375
Depreciation and amortization... 17,682 3,656 -- -- 21,338
Selling, general and
administrative............... 18,612 9,233 231 -- 28,076
Integration expenses............ 28,644 -- -- -- 28,644
Other........................... 48,342 213 -- (18,673) 29,882
------------ ------------- ---------------- ----------- ------------
Total costs and
expenses.............. 601,161 159,596 231 (18,673) 742,315
------------ ------------- ---------------- ----------- ------------
Operating income (loss)........... (4,908) 1,926 (231) -- (3,213)
------------ ------------- ---------------- ----------- ------------
Other income (expense):
Interest income................. 6,243 325 6,213 (10,323) 2,458
Interest expense................ (14,075) (5,916) (10,047) 10,323 (19,715)
Equity in earnings (loss)....... 4,515 (921) (13,551) 9,180 (777)
Other........................... (6,402) 5,080 -- -- (1,322)
------------ ------------- ---------------- ----------- ------------
Total other income
(expense)............. (9,719) (1,432) (17,385) 9,180 (19,356)
------------ ------------- ---------------- ----------- ------------
Income (loss) before income
taxes........................... (14,627) 494 (17,616) 9,180 (22,569)
Provision (benefit) for income
taxes........................... (5,739) 786 (1,572) -- (6,525)
------------ ------------- ---------------- ----------- ------------
Net income (loss)................. $ (8,888) $ (292) $(16,044) $ 9,180 $(16,044)
========= =========== ============ ======== =========
</TABLE>
F-36
<PAGE> 160
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
20. GUARANTOR CONSOLIDATING FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING STATEMENTS OF OPERATIONS -- (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
----------------------------------------------------------------------------
COMBINED COMBINED SC INTERNATIONAL TOTAL
GUARANTOR NON-GUARANTOR SERVICES, INC. ELIMINATION SCIS
SUBSIDIARIES SUBSIDIARIES (PARENT ONLY) ENTRIES CONSOLIDATED
------------ ------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues.......................... $463,059 $ 24,228 $ -- $ (18,679) $468,608
------------ ------------- ---------------- ----------- ------------
Costs and expenses:
Cost of operations.............. 382,637 5,639 -- -- 388,276
Depreciation and amortization... 15,312 191 -- -- 15,503
Selling, general and
administrative............... 17,103 22 -- -- 17,125
Other........................... 22,871 153 -- (18,679) 4,345
------------ ------------- ---------------- ----------- ------------
Total costs and
expenses.............. 437,923 6,005 -- (18,679) 425,249
------------ ------------- ---------------- ----------- ------------
Operating income (loss)........... 25,136 18,223 -- -- 43,359
------------ ------------- ---------------- ----------- ------------
Other income (expense):
Interest income................. 177 829 -- (802) 204
Interest expense................ (6,367) (183) -- 802 (5,748)
Equity in earnings (loss)....... 11,999 -- -- (11,999) --
Other........................... (1,147) (78) -- -- (1,225)
------------ ------------- ---------------- ----------- ------------
Total other income
(expense)............. 4,662 568 -- (11,999) (6,769)
------------ ------------- ---------------- ----------- ------------
Income (loss) before income
taxes........................... 29,798 18,791 -- (11,999) 36,590
Provision for income taxes........ 6,593 6,792 -- -- 13,385
------------ ------------- ---------------- ----------- ------------
Net income (loss)................. $ 23,205 $ 11,999 $ -- $ (11,999) $ 23,205
========= =========== ============ ======== =========
</TABLE>
F-37
<PAGE> 161
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
20. GUARANTOR CONSOLIDATING FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1997
----------------------------------------------------------------------------
COMBINED COMBINED SC INTERNATIONAL TOTAL
GUARANTOR NON-GUARANTOR SERVICES, INC. ELIMINATION SCIS
SUBSIDIARIES SUBSIDIARIES (PARENT ONLY) ENTRIES CONSOLIDATED
------------ ------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities: $ 22,300 $ (746) $ (44,078) $ -- $ (22,524)
-------- -------- --------- -------- ---------
Cash flows from investing
activities:
Acquisition of businesses....... -- -- (35,900) -- (35,900)
Purchase of property and
equipment.................... (12,207) (6,701) (54) -- (18,962)
Advances from (to) affiliates... (15,885) (1,113) 30,821 -- 13,823
Other........................... -- -- -- -- --
-------- -------- --------- -------- ---------
Net cash used in
investing
activities............ (28,092) (7,814) (5,133) -- (41,039)
-------- -------- --------- -------- ---------
Cash flows from financing
activities:
Proceeds from issuance of
long-term debt............... -- -- 90,000 -- 90,000
Proceeds from issuance of
Notes........................ -- -- 300,000 -- 300,000
Deferred financing costs........ -- -- (13,228) -- (13,228)
Payment of Notes................ -- -- (125,000) -- (125,000)
Payment of long-term debt and
obligations under capital
leases....................... (311) (379) -- -- (690)
Borrowing (repayments) under
credit agreement............. -- 640 (213,746) -- (213,106)
Purchase of employee stock loans
from an affiliate............ -- -- -- -- --
Dividend payment to parent...... -- -- -- -- --
Net change in (payable to) and
receivable from parent....... 6,765 1,491 -- -- 8,256
-------- -------- --------- -------- ---------
Net cash provided by
(used in) financing
activities............ 6,454 1,752 38,206 -- 46,232
-------- -------- --------- -------- ---------
Increase in cash and cash
equivalents..................... 662 (6,808) (11,185) -- (17,331)
Cash and cash equivalents,
beginning of period............. 1,399 21,517 32,742 -- 55,658
-------- -------- --------- -------- ---------
Cash and cash equivalents, end of
period.......................... $ 2,061 $ 14,709 $ 21,557 $ -- $ 38,327
======== ======== ========= ======== =========
</TABLE>
F-38
<PAGE> 162
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
20. GUARANTOR CONSOLIDATING FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1996
----------------------------------------------------------------------------
COMBINED COMBINED SC INTERNATIONAL
GUARANTOR NON-GUARANTOR SERVICES, INC. ELIMINATION TOTAL SCIS
SUBSIDIARIES SUBSIDIARIES (PARENT ONLY) ENTRIES CONSOLIDATED
------------ ------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities...................... $ 48,813 $ 7,050 $(11,531) $-- $ 44,332
-------- ------- -------- --- --------
Cash flows from investing
activities:
Acquisition of businesses....... -- -- -- -- --
Purchase of property and
equipment.................... (15,705) (4,933) (61) -- (20,699)
Advances from (to) affiliates... (59,581) 7,528 57,886 -- 5,833
Other........................... -- -- -- -- --
-------- ------- -------- --- --------
Net cash used in
investing
activities............ (75,286) 2,595 57,825 -- (14,866)
-------- ------- -------- --- --------
Cash flows from financing
activities:
Proceeds from issuance of
long-term debt............... -- -- -- -- --
Proceeds from issuance of
Notes........................ -- -- -- -- --
Deferred financing costs........ -- -- -- -- --
Payment of long-term debt and
obligations under capital
leases....................... (291) 8,920 (8,789) -- (160)
Borrowing (repayments) under
credit agreement............. -- (8,896) -- -- (8,896)
Purchase of employee stock loans
from an affiliate............ -- -- -- -- --
Dividend payment to parent...... 3,941 (3,941) -- -- --
Net change in (payable to) and
receivable from parent....... -- (2,299) -- -- (2,299)
-------- ------- -------- --- --------
Net cash provided by
(used in) financing
activities............ 3,650 (6,216) (8,789) -- (11,355)
-------- ------- -------- --- --------
Increase in cash and cash
equivalents..................... (22,823) 3,429 37,505 -- 18,111
Cash and cash equivalents,
beginning of period............. 24,820 17,135 12,874 -- 54,829
-------- ------- -------- --- --------
Cash and cash equivalents, end of
period.......................... $ 1,997 $20,564 $ 50,379 $-- $ 72,940
======== ======= ======== === ========
</TABLE>
F-39
<PAGE> 163
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
20. GUARANTOR CONSOLIDATING FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING STATEMENTS OF CASH FLOWS -- (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
----------------------------------------------------------------------------
COMBINED COMBINED SC INTERNATIONAL TOTAL
GUARANTOR NON-GUARANTOR SERVICES, INC. ELIMINATION SCIS
SUBSIDIARIES SUBSIDIARIES (PARENT ONLY) ENTRIES CONSOLIDATED
------------ ------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities...................... $ 43,063 $ 3,255 $ 30,949 $ (38,085) $ 39,182
-------- -------- -------- -------- --------
Cash flows from investing
activities:
Acquisition of business......... -- -- -- -- --
Purchase of property and
equipment.................... (31,477) (5,329) (94) -- (36,900)
Advances from (to) affiliates... (38,310) 5,773 -- 38,085 5,548
Other........................... -- -- -- -- --
-------- -------- -------- -------- --------
Net cash used in investing
activities................. (69,787) 444 (94) 38,085 (31,352)
-------- -------- -------- -------- --------
Cash flows from financing
activities:
Payment of long-term debt and
obligations under capital
leases....................... (645) 236 -- -- (409)
Borrowing (repayments) under
credit agreement............. -- (2,043) (10,987) -- (13,030)
Dividend payment to parent...... 3,948 (3,948) -- -- --
Net change in (payable to) and
receivable from parent....... -- 6,438 -- -- 6,438
-------- -------- -------- -------- --------
Net cash provided by (used
in) financing activities... 3,303 683 (10,987) -- (7,001)
-------- -------- -------- -------- --------
Increase in cash and cash
equivalents..................... (23,421) 4,382 19,868 -- 829
Cash and cash equivalents,
beginning of period............. 24,820 17,135 12,874 -- 54,829
-------- -------- -------- -------- --------
Cash and cash equivalents, end of
period.......................... $ 1,399 $ 21,517 $ 32,742 $ -- $ 55,658
======== ======== ======== ======== ========
</TABLE>
F-40
<PAGE> 164
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
20. GUARANTOR CONSOLIDATING FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING STATEMENTS OF CASH FLOWS -- (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
--------------------------------------------------------------------------------
COMBINED COMBINED SC INTERNATIONAL TOTAL
GUARANTOR NON-GUARANTOR SERVICES, INC. ELIMINATION SCIS
SUBSIDIARIES SUBSIDIARIES (PARENT ONLY) ENTRIES CONSOLIDATED
------------ ------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Cash provided by (used in) operations:... $ 45,351 $ 21,623 $ 2,635 $ (10,501) $ 59,108
-------- -------- --------- -------- ---------
Cash flows from investing activities:
Acquisition of businesses.............. (41,219) (173,811) 3,879 -- (211,151)
Purchase of property and equipment..... (7,180) (2,395) -- -- (9,575)
Advances from (to) affiliates.......... 51,242 206,524 (307,098) 10,501 (38,831)
Other.................................. 412 -- -- -- 412
-------- -------- --------- -------- ---------
Net cash provided by (used in)
investing activities............... 3,255 30,318 (303,219) 10,501 (259,145)
-------- -------- --------- -------- ---------
Cash flows from financing activities:
Proceeds from issuance of long-term
debt and notes....................... -- -- 350,000 -- 350,000
Deferred financing costs............... -- -- (17,337) -- (17,337)
Payment of debt and capital lease
obligations.......................... (292) (37,631) (267) -- (38,190)
Repayment under credit agreement....... (17,500) 1,502 -- -- (15,998)
Purchase of employee stock loans from
affiliate............................ (6,661) -- -- -- (6,661)
Net change in payable to and receivable
from parent.......................... -- -- (18,938) -- (18,938)
Dividend payment to parent............. (10,465) -- -- -- (10,465)
-------- -------- --------- -------- ---------
Net cash provided by (used in)
financing activities:.............. (34,918) (36,129) 313,458 -- 242,411
-------- -------- --------- -------- ---------
Increase in cash and cash equivalents.... 13,688 15,812 12,874 -- 42,374
Cash and cash equivalents, beginning of
period................................. 11,132 1,323 -- -- 12,455
-------- -------- --------- -------- ---------
Cash and cash equivalents, end of
period................................. $ 24,820 $ 17,135 $ 12,874 $ -- $ 54,829
======== ======== ========= ======== =========
</TABLE>
F-41
<PAGE> 165
SC INTERNATIONAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA;
INFORMATION SUBSEQUENT TO FEBRUARY 28, 1997 IS UNAUDITED)
20. GUARANTOR CONSOLIDATING FINANCIAL STATEMENTS -- (CONTINUED)
CONSOLIDATING STATEMENTS OF CASH FLOWS -- (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
--------------------------------------------------------------------------------
COMBINED COMBINED SC INTERNATIONAL TOTAL
GUARANTOR NON-GUARANTOR SERVICES, INC. ELIMINATION SCIS
SUBSIDIARIES SUBSIDIARIES (PARENT ONLY) ENTRIES CONSOLIDATED
------------ ------------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Cash provided by (used in) operations:... $ 20,382 $ 24,606 $ -- $ (23,829) $ 21,159
------- ------- ------- -------- ----------
Cash flows from investing activities:
Acquisition of business................ -- (10,582) -- -- (10,582)
Purchase of property and equipment..... (11,456) (319) -- -- (11,775)
Advance from (to) affiliates........... (11,836) (11,993) -- 23,829 --
Other.................................. (1,000) -- -- -- (1,000)
------- ------- ------- -------- ----------
Net cash provided by (used in)
investing activities............... (24,292) (22,894) -- 23,829 (23,357)
------- ------- ------- -------- ----------
Cash flows from financing activities:
Borrowing under credit agreement....... 17,500 -- -- -- 17,500
Payment of debt and capital
obligations.......................... (16,106) (389) -- -- (16,495)
Net increase in payable to parent...... 8,228 -- -- -- 8,228
------- ------- ------- -------- ----------
Net cash provided by (used in)
financing activities............... 9,622 (389) -- -- 9,233
------- ------- ------- -------- ----------
Increase in cash and cash equivalents.... 5,712 1,323 -- -- 7,035
Cash and cash equivalents, beginning of
period................................. 5,420 -- -- -- 5,420
------- ------- ------- -------- ----------
Cash and cash equivalents, end of
period................................. $ 11,132 $ 1,323 $ -- $ -- $ 12,455
======= ======= ======= ======== ==========
</TABLE>
F-42
<PAGE> 166
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Caterair International Corporation:
We have audited the accompanying consolidated balance sheets of Caterair
International Corporation and Subsidiaries as of December 31, 1996 and 1995 and
the related consolidated statements of operations, shareholder's deficit and
cash flows for each of the two years in the period ended December 31, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Caterair
International Corporation and Subsidiaries as of December 31, 1996 and 1995 and
the consolidated results of their operations and their cash flows for each of
the two years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Dallas, Texas
March 5, 1997
F-43
<PAGE> 167
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Caterair International Corporation:
We have audited the accompanying consolidated statements of operations,
shareholder's deficit and cash flows of Caterair International Corporation (a
Delaware corporation) and Subsidiaries for the year ended December 31, 1994.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of Caterair
International Corporation and Subsidiaries for the year ended December 31, 1994,
in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Washington, D.C.
September 28, 1995
F-44
<PAGE> 168
CATERAIR INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- SEPTEMBER 30,
1995 1996 1997
--------- --------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents.............................. $ 631 $ 6,847 $ 135
Accounts receivable (net of allowance for doubtful
accounts of $355 in 1995, $994 in 1996, and $999 at
September 30, 1997)................................. 13,854 11,143 10,771
Current portion of amount due from affiliate under non-
compete agreement................................... 3,193 3,130 3,037
Advances to affiliate, net............................. -- 4,505 18,327
Deferred income taxes.................................. 8,200 920 921
Prepaid expenses and other............................. 2,950 1,312 1,178
-------- -------- ---------
Total current assets........................... 28,828 27,857 34,369
Property and equipment, net.............................. 88,623 79,395 71,129
Deferred income taxes.................................... 39,663 38,458 37,439
Deferred financing cost, net............................. 5,892 4,875 2,636
Due from affiliate under non-competition agreement....... 15,588 12,458 10,473
Net assets of discontinued operations.................... -- 1,399 1,211
Other assets............................................. 15,683 9,506 6,960
-------- -------- ---------
Total assets................................... $ 194,277 $ 173,948 $ 164,217
======== ======== =========
LIABILITIES AND SHAREHOLDER'S DEFICIT
Current liabilities:
Accrued interest....................................... $ 668 $ 1,159 $ 1,458
Payable to affiliate................................... 1,043 -- --
Other payables and accrued liabilities................. 30,248 23,682 17,099
Current portion of deferred revenue under
non-competition agreement........................... 3,193 3,130 3,037
Current portion of long-term debt...................... 17,507 17,206 1,601
Current portion of obligations under capital leases.... 95 105 110
-------- -------- ---------
Total current liabilities...................... 52,754 45,282 23,305
Obligations under capital leases......................... 1,893 1,788 1,678
Long-term debt........................................... 167,503 150,298 158,400
Note payable to affiliate................................ 38,544 41,634 44,075
Deferred revenue under non-competition agreement with
affiliate.............................................. 14,805 11,738 9,483
Net liabilities of discontinued operations............... 1,540 -- --
Other long-term liabilities.............................. 28,990 25,198 23,465
-------- -------- ---------
Total liabilities.............................. 306,029 275,938 260,406
Commitments and contingencies............................ -- -- --
Shareholder's deficit:
Common stock, $.01 par value; 10,000 shares authorized
and issued.......................................... -- -- --
Additional paid-in capital............................. 173,596 173,596 173,596
Advance to parent...................................... (38,947) (38,947) (38,947)
Cumulative translation adjustment...................... -- 23 23
Accumulated deficit.................................... (246,401) (236,662) (230,861)
-------- -------- ---------
Total shareholder's deficit.................... (111,752) (101,990) (96,189)
-------- -------- ---------
Total liabilities and shareholder's deficit.... $ 194,277 $ 173,948 $ 164,217
======== ======== =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-45
<PAGE> 169
CATERAIR INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------- ----------------------
1994 1995 1996 1996 1997
-------- -------- ------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues from affiliates:
License income.......................... $ -- $ 8,001 $34,349 $25,599 $24,903
Rental income........................... -- 10,169 40,479 30,929 29,164
Income under non-competition
agreement............................ -- 783 3,130 2,348 2,348
--------- ------- ------ ------ -------
Total revenues.................. -- 18,953 77,958 58,876 56,415
--------- ------- ------ ------ -------
Operating expenses:
Cost of operations...................... -- 7,649 30,416 24,082 22,207
Selling, general and administrative..... -- 125 1,393 1,806 593
Depreciation and amortization........... -- 3,400 11,806 9,023 8,218
--------- ------- ------ ------ -------
Total operating expenses........ -- 11,174 43,615 34,911 31,018
--------- ------- ------ ------ -------
Operating income.......................... -- 7,779 34,343 23,965 25,397
Interest income........................... -- (264) (208) (155) (372)
Interest expense.......................... -- 4,979 18,450 14,308 13,443
Other (income) expense.................... -- -- -- -- (611)
--------- ------- ------ ------ -------
Income from continuing operations before
income taxes............................ -- 3,064 16,101 9,812 12,937
Income tax provision (benefit)............ -- (50,380) 8,044 3,527 3,622
--------- ------- ------ ------ -------
Income from continuing operations....... -- 53,444 8,057 6,285 9,315
--------- ------- ------ ------ -------
Discontinued operations, net of taxes:
Income (loss) from discontinued
operations........................... (23,847) (25,430) 904 1,593 (470)
Gain on disposition of discontinued
operations........................... -- 52,674 778 1,244 --
--------- ------- ------ ------ -------
Income (loss) from discontinued
operations......................... (23,847) 27,244 1,682 2,837 (470)
--------- ------- ------ ------ -------
Income (loss) before extraordinary item... (23,847) 80,688 9,739 9,122 8,845
Extraordinary loss from early
extinguishment of debt, net of tax of
$1,175 in 1997.......................... -- (4,319) -- -- (3,044)
--------- ------- ------ ------ -------
Net income (loss)............... $(23,847) $ 76,369 $ 9,739 $ 9,122 $ 5,801
========= ======= ====== ====== =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-46
<PAGE> 170
CATERAIR INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S DEFICIT
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL ADVANCE CUMULATIVE
---------------- PAID-IN TO TRANSLATION ACCUMULATED
SHARES AMOUNT CAPITAL PARENT ADJUSTMENT DEFICIT TOTAL
------ ------ ---------- -------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1993... 10,000 $ -- $173,596 $ -- $ -- $(298,853) $(125,257)
Net loss..................... -- -- -- -- -- (23,847) (23,847)
------ ------ ---------- -------- --- ----------- ---------
Balance, December 31, 1994... 10,000 -- 173,596 -- -- (322,700) (149,104)
Net income................... -- -- -- -- -- 76,369 76,369
Dividend..................... -- -- -- -- -- (70) (70)
Advance to parent............ -- -- -- (38,947) -- -- (38,947)
------ ------ ---------- -------- --- ----------- ---------
Balance, December 31, 1995... 10,000 -- 173,596 (38,947) -- (246,401) (111,752)
Cumulative translation
adjustment................. -- -- -- -- 23 -- 23
Net income................... -- -- -- -- -- 9,739 9,739
------ ------ ---------- -------- --- ----------- ---------
Balance, December 31, 1996... 10,000 -- 173,596 (38,947) 23 (236,662) (101,990)
Net income (unaudited)....... -- -- -- -- -- 5,801 5,801
------ ------ ---------- -------- --- ----------- ---------
Balance, September 30, 1997
(unaudited)................ 10,000 $ -- $173,596 $(38,947) $ 23 $(230,861) $ (96,189)
====== ======= ========= ========= ========== =========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-47
<PAGE> 171
CATERAIR INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE
MONTHS ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------------- ----------------------
1994 1995 1996 1996 1997
-------- --------- -------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)........................................ $(23,847) $ 76,369 $ 9,739 $ 9,122 $ 5,801
Adjustments to reconcile net income from continuing
operations to net cash provided by operating
activities:
Depreciation and amortization.......................... -- 3,400 11,806 9,023 8,218
Deferred income taxes.................................. -- (50,480) 8,485 3,513 1,018
Interest on note payable to affiliate settled in
kind................................................. -- 756 3,090 2,267 2,442
Noncash interest expense............................... -- 254 1,017 678 678
Extraordinary loss from early extinguishment of debt... -- 4,319 -- -- 4,219
Gain on sale of fixed assets........................... -- -- -- -- (492)
Gain on disposition of discontinued operations......... -- (52,674) (778) (1,244) --
Change in working capital items (Note 13)................ -- (9,852) (744) 5,240 (3,793)
Change in other assets and liabilities................... -- -- -- 4,737 (1,569)
Proceeds from insurance carrier from loss on capital
assets................................................. -- -- 1,200 -- --
Net effect of discontinued operations.................... 53,250 (39,683) (2,150) (1,770) 188
-------- --------- -------- -------- ---------
Net cash provided by (used in) operating
activities....................................... 29,403 (67,591) 31,665 31,566 16,710
-------- --------- -------- -------- ---------
Cash flows from investing activities:
Capital expenditures..................................... -- (6,128) (2,300) (2,300) --
Proceeds from sale of discontinued operations............ -- 208,300 -- -- --
Proceeds from sale of fixed assets....................... -- -- -- -- 645
(Advances to) repayments from affiliates................. -- -- (5,548) (5,833) (13,823)
Net effect of discontinued operations.................... (34,611) (5,417) -- -- --
-------- --------- -------- -------- ---------
Net cash provided by (used in) investing
activities....................................... (34,611) 196,755 (7,848) (8,133) (13,178)
-------- --------- -------- -------- ---------
Cash flows from financing activities:
Net borrowings (repayments) on the revolving credit
facility............................................... 7,500 (62,500) -- -- --
Borrowings of long-term debt............................. 13,774 185,000 -- -- 160,000
Repayments of long-term debt............................. (5,667) (301,854) (17,601) (13,300) (167,608)
Deferred financing costs................................. -- -- -- -- (2,636)
Proceeds from note payable to affiliate.................. -- 37,788 -- -- --
Net effect of discontinued operations.................... (6,537) -- -- -- --
Other.................................................... (516) -- -- (8,120) --
-------- --------- -------- -------- ---------
Net cash provided by (used in) financing
activities....................................... 8,554 (141,566) (17,601) (21,420) (10,244)
-------- --------- -------- -------- ---------
Increase (decrease) in cash and cash equivalents........... 3,346 (12,402) 6,216 2,013 (6,712)
Cash and cash equivalents, beginning of period............. 9,687 13,033 631 631 6,847
-------- --------- -------- -------- ---------
Cash and cash equivalents, end of period................... $ 13,033 $ 631 $ 6,847 $ 2,644 $ 135
======== ========= ======== ======== =========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest............................................... $ 24,255 $ 67,610 $ 15,268 $11,944 $ 10,749
Income taxes........................................... 5,411 6,945 -- -- --
Supplemental disclosure of noncash financing and investing
activities:
Liabilities assumed by purchaser upon disposition of
discontinued operations................................ $ -- $ 44,048 $ 4,464 $ 4,464 $ --
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-48
<PAGE> 172
CATERAIR INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS; INFORMATION SUBSEQUENT TO MARCH 5, 1997 IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Business and Basis of Consolidation
Caterair International Corporation ("Caterair" or the "Company") is a
wholly-owned subsidiary of Caterair Holdings Corporation ("Holdings"). On
September 29, 1995, the Company, Holdings, SC International Services, Inc. and
its subsidiaries ("SCIS") and its parent, Onex Food Services, Inc. ("OFSI")
consummated transactions with the shareholders and creditor of Holdings (the
"Transactions") whereby OFSI and an affiliate of OFSI exchanged common stock and
warrants of OFSI, valued in the aggregate amount of $38,947, for certain stock
and debt held by Holdings' shareholders and creditor, as a result of which OFSI
and its parent acquired more than 50% of the total outstanding voting shares of
Holdings and approximately 25% of the total outstanding nonvoting shares of
Holdings. In addition, as part of the Transactions, SCIS acquired, licensed,
leased and subleased most of the worldwide business and assets of the Company
(other than with respect to certain operations which have been temporarily
retained as described in Note 2). The proceeds from the Transactions were
approximately $247,247 which consisted of $208,300 in cash and approximately
$38,947 in common stock and warrants of OFSI (See Note 2). The Company
recognized a $52,674 gain, net of transaction fees, on the disposition of
discontinued operations. There was no tax effect on this gain.
Prior to the Transactions, the Company was principally engaged in providing
international and domestic airline catering services. Subsequent to the
Transactions (other than with respect to certain operations which have been
temporarily retained as described in Note 2), the Company is principally engaged
in the business of leasing, subleasing and licensing domestic property to SCIS
and its subsidiaries. The accompanying consolidated financial statements include
the accounts of the Company and all remaining wholly-owned and majority owned
subsidiaries. All significant intercompany transactions have been eliminated.
Management Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amount of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Interim Financial Information
The consolidated balance sheet as of September 30, 1997, the consolidated
statement of shareholder's deficit for the nine months then ended, and the
consolidated statements of operations and cash flows for the nine months ended
September 30, 1996 and 1997, have been prepared by the Company without audit. In
the opinion of management, all adjustments (which included only normal,
recurring adjustments) necessary to present fairly the financial position at
September 30, 1997, and the results of operations and cash flows for all periods
presented have been made. The results of operations for the interim periods are
not necessarily indicative of the operating results for the full year.
Revenue Recognition
License income is recognized as services are provided under the various
license agreements. Rental income is recognized on a straight-line basis over
the lease period.
F-49
<PAGE> 173
CATERAIR INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS; INFORMATION SUBSEQUENT TO MARCH 5, 1997 IS UNAUDITED)
Cash and Cash Equivalents
For purposes of the statements of cash flows, all highly liquid debt
instruments purchased with an original maturity of three months or less are
considered to be cash equivalents. Cash flows from swap transactions are
classified in the same category as the items being hedged.
The Company maintains its cash in bank deposit accounts which, at times,
may exceed federally insured limits. The Company has not experienced any losses
in such accounts.
Interest Rate Swap Agreements
The differential to be paid or received on interest rate swap agreements is
accrued as interest rates change and is recognized over the life of the
agreement.
Property and Equipment
The provision for depreciation and amortization of property and equipment
is computed using the straight-line method. The estimated useful lives are as
follows:
<TABLE>
<S> <C>
Buildings................................. 25 years
Leasehold improvements.................... Term of the lease or estimated useful
life, whichever is less
Furniture and equipment................... 4 to 10 years
Vehicles.................................. 4 to 10 years
</TABLE>
Gains and losses from disposals of property and equipment are reflected in
the results of operations in the period of disposal.
Property and equipment under capital leases are amortized over the lives of
the leases or the estimated useful lives of the assets, whichever is less.
Intangible Assets
Intangible assets consisting primarily of rights, licenses and
non-competition agreements are recorded at cost. These assets are being
amortized over their estimated useful lives using the straight-line method.
On March 31, 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
The Company adopted this standard effective January 1, 1996, which did not have
a material impact on the Company's financial position.
Non-Competition Agreements
Revenues under a non-competition agreement are recognized ratably over the
terms of the agreement.
Deferred Financing Costs
Costs incurred related to the issuance of debt are deferred and amortized
over the life of the related debt using the effective interest rate method.
Deferred financing costs related to debt outstanding prior to the Transactions
(described in Note 2) were written off as a component of the extraordinary loss
from early extinguishment of debt. Deferred financing costs related to the
Transactions (described in Note 2) amounted to $6,147. The Company amortized
$255 and $1,017 of these costs in 1995 and 1996, respectively, which are
reflected in interest expense.
F-50
<PAGE> 174
CATERAIR INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS; INFORMATION SUBSEQUENT TO MARCH 5, 1997 IS UNAUDITED)
Income Taxes
The accounts of the Company are included in the consolidated federal income
tax return of Holdings. Current and deferred income taxes are allocated to the
Company as if it were a separate taxpayer.
Deferred income tax assets and liabilities are recognized for the expected
future tax consequences of temporary differences between the income tax and
financial reporting carrying amounts of assets and liabilities.
Reclassification of Prior Period Amounts
Certain prior period amounts have been reclassified to conform to the
current year presentation.
Recent Accounting Standards
During June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130 "Reporting Comprehensive Income" and
Statement of Financial Accounting Standards No. 131 "Disclosures About Segments
of an Enterprise and Related Information." Preliminary analysis of these new
standards by the Company indicates that the standards will not have a material
impact on the Company. The standards are effective for financial statements for
fiscal years beginning after December 15, 1997.
2. DISCONTINUED OPERATIONS:
As described in Note 1, the Company consummated the Transactions on
September 29, 1995 whereby it discontinued most of its airline catering services
business and primarily engaged in the business of leasing, subleasing and
licensing domestic property to affiliates, Sky Chefs, Inc. ("Sky Chefs") and
Caterair International, Inc. (II) ("CII"), both wholly-owned subsidiaries of
SCIS. Accordingly, all operations prior to September 30, 1995 have been
reflected as discontinued.
The Company was unable to obtain certain consents to the Transactions with
respect to certain of the Company's kitchens at which one airline is the major
customer. Such consents with respect to these operations were obtained during
the second quarter of 1996 and such operations were leased, subleased and
licensed to SCIS and its subsidiaries. Prior to acquiring this consent, the
Company and SCIS entered into a management agreement for the operations at these
kitchens whereby the Company continued to operate them with its employees and
SCIS provided management and administration support services in exchange for a
management fee equivalent to 4% of the kitchen's net sales. Management fees paid
under this arrangement amounted to $604 and $1,057 for the period ended December
31, 1995 and 1996, respectively.
In connection with the Transactions, SCIS and its subsidiaries licensed
Caterair's rights under certain customer contracts for a six-year period (the
"License Agreements"). However, after the consummation of such Transactions, the
Company retained certain operations relating to customer contracts for which
consents to assignment were not obtained. Such consents with respect to these
operations were obtained during the second quarter of 1996 and such operations
were leased, subleased and licensed to SCIS and its subsidiaries. Sky Chefs and
CII each have the option to purchase the customer contract rights covered by the
License Agreements for an amount calculated to equal the estimated fair market
value of such rights at the time of the exercise of such option. The option is
exercisable at any time until the date which is 90 days after the termination of
the applicable License Agreement. The Company is not certain whether such
options will be exercised. Caterair agreed, subject to certain exceptions, not
to compete with Sky Chefs in the airline catering business for a six-year term
and Sky Chefs is obligated to pay Caterair $4.0 million per year. At December
31, 1995 and 1996 the non-competition agreement was valued at $18,781 and
$15,588, respectively, representing the present value of payments discounted at
8.25%.
F-51
<PAGE> 175
CATERAIR INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS; INFORMATION SUBSEQUENT TO MARCH 5, 1997 IS UNAUDITED)
Concurrent with the Transactions, the Company borrowed $185,000 from a
consortium of lenders and $37,788 from SCIS (see Note 5). The borrowings, as
well as the cash proceeds ($208,300, net) from the Transactions, were utilized
to repay indebtedness outstanding under the Company's prior credit agreement,
senior notes and debentures in the aggregate amount of approximately $364,000
plus accrued interest, and to pay certain expenses relating to the Transactions.
The Company recorded an extraordinary loss of $4,319 consisting of the
difference between amounts paid to lenders for full extinguishment of debt and
carrying amounts of debt including deferred financing costs and accrued
interest. There was no tax effect on this extraordinary loss.
Identifiable revenues and expenses from discontinued operations have been
reclassified on the accompanying consolidated statements of operations from
their historical classification to separately identify them as discontinued
operations. Summary operating results for discontinued operations follows:
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED SEPTEMBER 30,
--------------------------------- --------------------
1994 1995 1996 1996 1997
---------- -------- ------- ------- ------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues........................... $1,023,143 $773,243 $31,169 $29,982 $2,872
Cost of operations................. 916,422 698,689 27,854 27,635 3,058
Selling, general and administrative
expenses......................... 42,803 27,698 1,057 -- --
Depreciation and amortization...... 30,890 21,821 -- -- --
---------- -------- ------- ------- ------
Operating income................... 33,028 25,035 2,258 2,347 (186)
Interest expense................... 50,962 45,626 18 (13) 11
Other.............................. 890 (674) 920 (1,003) 494
---------- -------- ------- ------- ------
Income (loss) before income
taxes............................ (18,824) (19,917) 1,320 1,331 (691)
Provision for income taxes......... 5,023 5,513 416 (262) (221)
---------- -------- ------- ------- ------
Income (loss) from discontinued
operations....................... $ (23,847) $(25,430) $ 904 $ 1,593 $ (470)
========= ======== ======= ======= ======
</TABLE>
The identifiable assets and liabilities of discontinued operations have
been reclassified on the accompanying consolidated balance sheet at December 31,
1995 and 1996 from their historical classification to separately identify them
as net assets or liabilities of discontinued operations. The remaining
identifiable assets and liabilities of discontinued operations at December 31,
1995 relate to certain kitchens which were unable to be leased, subleased or
licensed to Sky Chefs at the time of consummation of the Transactions. The
Company leased, subleased or licensed these operations to Sky Chefs during the
second quarter of 1996. The following represents assets and liabilities relating
to discontinued operations:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- SEPTEMBER 30,
1995 1996 1997
------- ------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Current assets..................................... $ 4,476 $ 3,019 $ 2,405
Property and equipment, net........................ -- (7) (116)
Other current liabilities.......................... (5,148) (1,509) (1,075)
Noncurrent......................................... (868) (104) (3)
-------- -------- --------
Net assets (liabilities) of discontinued
operations............................. $(1,540) $ 1,399 1,211
======== ======== ========
</TABLE>
F-52
<PAGE> 176
CATERAIR INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS; INFORMATION SUBSEQUENT TO MARCH 5, 1997 IS UNAUDITED)
Information concerning operations by geographic area is presented below:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1994 1995 1996
---------- -------- --------
<S> <C> <C> <C>
Net sales:
United States..................................... $ 533,016 $384,677 $ 26,859
International..................................... 490,127 388,566 4,310
---------- -------- --------
$1,023,143 $773,243 $ 31,169
========= ======== ========
Operating income (loss):
United States..................................... $ 21,651 $ 18,413 $ 2,562
International..................................... 11,377 6,622 (304)
---------- -------- --------
$ 33,028 $ 25,035 $ 2,258
========= ======== ========
Identifiable assets:
United States..................................... $ 197,102 $ 2,180 $ 1,654
International..................................... 301,726 2,296 1,358
---------- -------- --------
$ 498,828 $ 4,476 $ 3,012
========= ======== ========
</TABLE>
3. PROPERTY AND EQUIPMENT:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- SEPTEMBER 30,
1995 1996 1997
-------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
Land................................................. $ 305 $ 305 $ 10
Buildings and leasehold improvements................. 115,430 117,687 120,170
Machinery and equipment.............................. 59,233 60,330 59,115
Construction in progress............................. 3,663 2,532 40
-------- -------- --------
178,631 180,854 179,335
Less accumulated depreciation and
amortization............................. 90,008 101,459 108,206
-------- -------- --------
$ 88,623 $ 79,395 $ 71,129
======== ======== ========
</TABLE>
As of September 30, 1997, substantially all property and equipment has been
leased or subleased to Sky Chefs and CII.
4. OTHER ASSETS:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------ SEPTEMBER 30,
1995 1996 1997
-------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Casualty insurance loss deposits....................... $ 12,410 $ 8,051 $ 5,848
Lease deposits......................................... 1,644 144 144
Intangible assets acquired............................. 1,584 1,137 825
Other.................................................. 45 174 143
-------- ------- -----------
$ 15,683 $ 9,506 $ 6,960
======= ====== =========
</TABLE>
F-53
<PAGE> 177
CATERAIR INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS; INFORMATION SUBSEQUENT TO MARCH 5, 1997 IS UNAUDITED)
5. LONG-TERM DEBT AND NOTE PAYABLE TO AFFILIATE:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER
------------------- 30,
1995 1996 1997
-------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
Credit Agreement:
A Term Loan, bearing interest at 2.50% above the
Eurodollar borrowing rate, or 1.50% above the
lender's prime rate, due in quarterly installments
of $4,000 beginning in March 1996 through
September 2000.................................... $ 76,000 $ 60,000 $ --
B Term Loan, bearing interest at 3.00% above the
Eurodollar borrowing rate, or 2.00% above the
lender's prime rate, due in various quarterly
amounts beginning in March 1996 through September
2001.............................................. 109,000 107,500 --
Term Loan bearing interest at 1.50% above the
Eurodollar borrowing rate, or 0.50% above the
lender's prime rate, due in quarterly installments of
$400 of principal beginning in December 1997 through
December 2006, with a final maturity payment of
$145,200 in March 2007............................... -- -- 160,000
Other long-term debt................................... 10 4 1
-------- -------- --------
Total debt................................... 185,010 167,504 160,001
Less current portion of long-term debt............... 17,507 17,206 1,601
-------- -------- --------
Long-term debt....................................... $167,503 $150,298 $158,400
======== ======== ========
Senior Subordinated Note due SCIS in 2001............ $ 38,544 $ 41,634 $ 44,075
======== ======== ========
</TABLE>
In connection with the Transactions, the Company, OFSI, SCIS and Holdings
entered into a $500,000 Senior Secured Credit Agreement with a consortium of
lenders (the "Credit Agreement"). The Credit Agreement provided the Company with
$185,000 of term loans and provides SCIS with $315,000 of financing consisting
of $225,000 of term loans and up to $90,000 of revolving loans (including up to
$50,000 available for letters of credit). Caterair had $185,000 and $167,000 of
term loan borrowings outstanding at December 31, 1995 and 1996, respectively.
SCIS' borrowings outstanding under the Credit Agreement as of December 31, 1995
and 1996 were $224,733 and $213,746, respectively. SCIS paid $6,147 of fees
related to the Transactions on behalf of the Company. These fees were recorded
as deferred financing costs in the Company's financial statements. Caterair
repaid these fees to SCIS in 1996.
In connection with the Transactions, SCIS issued $125,000 of 13% Senior
Subordinated Notes due October 1, 2005 (the "Notes"). The Notes were guaranteed
on a joint and several senior subordinated basis by Sky Chefs, CII and the
Company.
On August 28, 1997, SCIS consummated an offering of $300,000 of its 9.25%
Senior Subordinated Notes (the "New Notes") in a transaction exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Offering"). The price to investors of the New Notes was $299,600 in the
aggregate. The New Notes are guaranteed on a joint and several senior
subordinated basis by Sky Chefs, CII, certain other wholly-owned domestic
subsidiaries of SCIS and the Company. The New Notes (and the related guarantees)
are subordinate to payment of all senior debt (as described in the Indenture
relating thereto) of SCIS and the guarantors of the New Notes (including the
Company). The New Notes may be redeemed at the option of SCIS commencing on
September 1, 2002 at various premiums above face value. Up to $105,000 of the
New Notes may also be redeemed with proceeds obtained through certain public
equity offerings of capital stock of OFSI or SCIS. The Indenture for the New
Notes contains covenants which, among other things, limit SCIS',
F-54
<PAGE> 178
CATERAIR INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS; INFORMATION SUBSEQUENT TO MARCH 5, 1997 IS UNAUDITED)
the guarantors' and the Company's ability to pay dividends, make stock
repurchases, incur additional indebtedness, engage in or use the proceeds of
asset sales, create liens or engage in certain other transactions.
The net proceeds to SCIS from the Offering, after deduction of discounts
and offering expenses, were approximately $289,900. SCIS used $209,400 of the
net proceeds to repay and retire all of its outstanding term loan indebtedness
under the Credit Agreement.
On August 25, 1997, SCIS commenced a tender offer for all of the Notes. In
connection therewith, SCIS offered to purchase all of the Notes at a price equal
to 117% of the principal amount thereof plus accrued and unpaid interest to the
date of purchase and solicited consents to certain amendments (the "Existing
Indenture Amendments") to the Indenture relating to the Notes from the holders
thereof (collectively, the "Offer to Purchase"). Holders of the Notes who
consented to the Existing Indenture Amendments received a payment equal to 2% of
the principal amount of the Notes from which a consent was delivered.
The Offer to Purchase expired on September 24, 1997. All of the Notes were
tendered by the holders thereof and accepted for payment by SCIS in connection
with the Offer to Purchase. SCIS paid $148,750 (excluding $7,850 of accrued
interest) in the aggregate in consideration of the repurchase of the Notes and
the related consents. SCIS used approximately $80,500 of the net proceeds from
the Offering and approximately $68,250 of borrowings under the Term Loan
Agreement (as defined herein) to fund such payments.
On August 28, 1997, SCIS, certain other parties and certain lenders entered
into a senior secured revolving credit agreement (the "Revolving Credit
Agreement"), and the Company, SCIS, certain other parties and certain lenders
entered into a senior secured credit agreement (the "Term Loan Agreement," and
together with the Revolving Credit Agreement, the "Senior Bank Financing").
Concurrently with the Offering, the Company repaid and retired all of its
outstanding indebtedness under the Credit Agreement (approximately $155,900)
with borrowings under the Term Loan Agreement.
Pursuant to the Senior Bank Financing, Bankers Trust Company, Morgan
Guaranty Trust Company of New York and certain other lenders provided (i) SCIS
with loans under the Revolving Credit Agreement in an amount up to $90,000
(including a sub-limit of $50,000 for letters of credit) on a revolving credit
basis for working capital and general corporate purposes of SCIS, the Company
and their respective subsidiaries (such Revolving Credit Agreement expires on
August 28, 2002), (ii) the Company with a nine and one-half year term loan under
the Term Loan Agreement in an aggregate principal amount of $160,000 for
purposes of refinancing the Company's indebtedness under the Credit Agreement
and funding payment of related transaction costs and (iii) SCIS with a nine and
one-half year term loan under the Term Loan Agreement in an aggregate principal
amount of $90,000 for purposes of financing, in part, SCIS' Offer to Purchase,
funding payment of related transaction costs and general corporate purposes.
All of the indebtedness under the Revolving Credit Agreement and the Term
Loan Agreement is senior secured indebtedness. The Revolving Credit Agreement
does not require scheduled amortization or scheduled commitment reductions. The
Term Loan Agreement requires scheduled amortization payments. Each of the
Revolving Credit Agreement and the Term Loan Agreement, under certain
circumstances, require SCIS or the Company, as the case may be, to make
mandatory prepayments and commitment reductions. In addition, each of SCIS and
the Company may make optional prepayments and commitment reductions pursuant to
the terms of the Revolving Credit Agreement or the Term Loan Agreement, as the
case may be.
SCIS' obligations under the Senior Bank Financing are jointly and severally
guaranteed by OFSI (on a limited basis), an affiliate of OFSI (on a limited
basis), the Company, Sky Chefs, CII and certain other domestic subsidiaries of
SCIS (including the guarantors of the New Notes). The Company's obligations
under the Senior Bank Financing are jointly and severally guaranteed by OFSI (on
a limited basis), an
F-55
<PAGE> 179
CATERAIR INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS; INFORMATION SUBSEQUENT TO MARCH 5, 1997 IS UNAUDITED)
affiliate of OFSI (on a limited basis), SCIS, Sky Chefs, CII and certain other
domestic subsidiaries of SCIS (including the guarantors of the New Notes). In
addition, obligations under the Senior Bank Financing are secured by (i) first
priority security interests in virtually all tangible and intangible assets of
SCIS, the Company, and their respective wholly-owned domestic subsidiaries
(including the guarantors of the New Notes) and (ii) pledges of all capital
stock of SCIS and the Company and all capital stock and notes owned by SCIS, the
Company and their respective domestic subsidiaries (limited in the case of
capital stock of foreign subsidiaries to 65% of such capital stock).
The Company's obligations under the Term Loan Agreement bear interest at
1.50% above the Eurodollar borrowing rate ("Eurodollar Base Borrowing Rate") or
0.5% above the lender's base rate. The actual rate charged on each credit
instrument is dependent on the Company's selection of either the 30, 60, 90 or
180 day Eurodollar borrowing rate or the base rate. Interest is payable
quarterly for all loans and also at the end of each interest period for
Eurodollar borrowings. The interest rate in effect at September 30, 1997 on the
Company's indebtedness under the Term Loan Agreement was 7.25%.
Effective September 12, 1997, the Company entered into an interest rate
swap agreement to reduce interest rate exposure on long-term debt. The agreement
covers a notional amount of $160,000 at September 30, 1997 and has a stated
maturity of September 15, 2002.
The documents governing the Senior Bank Financing contain a number of
covenants that, among other things, restrict the ability of the Company, SCIS
and their respective subsidiaries to dispose of assets, incur additional
indebtedness, incur guarantee obligations, repay indebtedness or amend debt
instruments, pay dividends, create liens on assets, make investments, make
acquisitions, engage in mergers or consolidations, make capital expenditures or
engage in certain transactions with subsidiaries or affiliates or otherwise
engage in certain corporate activities. In addition, the documents governing the
Senior Bank Financing require compliance with financial tests based on combined
results of the Company and SCIS. The Company and SCIS were in compliance with
these financial covenant requirements at September 30, 1997.
At September 30, 1997, approximately $24,653 of bank letters of credit were
issued under the Revolving Credit Agreement to SCIS (on behalf of the Company)
and approximately $75 issued directly to the Company, to primarily collateralize
the Company's insurance carriers providing workers' compensation coverage as
well as for surety bonds, leases and requirements of the Company for
environmental remediation of certain assets previously sold.
SCIS loaned Caterair approximately $37,788 in connection with the
Transactions. The loan matures in 2001, bears interest at 8% per annum (payable
in-kind) and is collateralized by a second lien on the assets of Caterair
representing collateral under the Credit Agreement. The cumulative amounts due
under this loan were $38,544 and $41,634 at December 31, 1995 and 1996,
respectively. Interest expense related to this loan of $756 and $3,090 is
included in interest expense for the years ended December 31, 1995 and 1996,
respectively.
F-56
<PAGE> 180
CATERAIR INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS; INFORMATION SUBSEQUENT TO MARCH 5, 1997 IS UNAUDITED)
As of September 30, 1997, the combined aggregate amounts of maturities for
all long-term borrowings, excluding the Subordinated Secured Note due to SCIS,
for each of the next five years and thereafter are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------------------------------------------------------------
<S> <C>
1997........................................................... $ 401
1998........................................................... 1,600
1999........................................................... 1,600
2000........................................................... 1,600
2001........................................................... 1,600
Thereafter..................................................... 153,200
---------
$ 160,001
========
</TABLE>
6. OTHER LONG-TERM LIABILITIES:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------- SEPTEMBER 30,
1995 1996 1997
-------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Casualty insurance losses............................. $ 10,125 $ 10,159 $ 8,497
Deferred gain on TriNet sale and leaseback............ 12,375 11,824 11,457
Other................................................. 6,490 3,215 3,511
------- ------- -------
$ 28,990 $ 25,198 $ 23,465
======= ======= =======
</TABLE>
In 1993, the Company sold 12 of its off-airport fee-owned properties to
TriNet Corporate Capital ("TriNet") and simultaneously entered into a lease with
TriNet on those properties with a primary term of 25 years and with four renewal
options of five years each. These leases are classified as operating leases and
are included in the properties subleased to Sky Chefs and CII. The gain on the
sale of approximately $13,800 was deferred and is being amortized over the life
of the operating leases as a reduction of operating lease rental expense.
7. LEASES:
The Company leases various types of property, including airline catering
kitchens and equipment, vehicles and office facilities, most of which have been
subleased to Sky Chefs and CII in connection with the Transactions.
Rent expense for all operating leases from continuing operations for the
period September 30, 1995 through December 31, 1995 and for the periods ended
December 31, 1996 was comprised of the following:
<TABLE>
<CAPTION>
1995 1996
------ -------
<S> <C> <C>
Minimum rent....................................................... $3,298 $30,922
Contingent rent.................................................... 4,489 --
Less deferred gain on sale and leaseback........................... (138) (506)
------ -------
Total rent expense....................................... $7,649 $30,416
====== =======
</TABLE>
Contingent rent represents percentage rent based on gross revenue in excess
of minimum levels.
F-57
<PAGE> 181
CATERAIR INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS; INFORMATION SUBSEQUENT TO MARCH 5, 1997 IS UNAUDITED)
The future minimum lease payments required under capital leases (together
with the present value of the minimum lease payments) and future minimum lease
payments required under operating leases that have an initial or remaining lease
term in excess of one year as of December 31, 1996, are as follows:
<TABLE>
<CAPTION>
YEAR ENDING CAPITAL OPERATING
DECEMBER 31, LEASES LEASES
----------------------------------------------------------------- ------- ---------
<S> <C> <C>
1997.......................................................... $ 240 $ 19,600
1998.......................................................... 237 19,272
1999.......................................................... 240 18,577
2000.......................................................... 236 18,624
2001.......................................................... 238 17,656
Thereafter.................................................... 1,695 164,834
------- ---------
Total minimum lease payments........................ 2,886 $ 258,563
========
Less imputed interest......................................... 993
-------
Present value of minimum lease payments....................... 1,893
Less current portion.......................................... 105
-------
Long-term portion of minimum lease payments................... $ 1,788
======
</TABLE>
Most leases have initial terms of from 10 to 20 years and contain one or
more renewal options.
In accordance with Statement of Financial Accounting Standards No. 13,
"Accounting for Leases," certain leases for kitchen facilities at airports owned
by governmental units of authorities are being accounted for as operating leases
because special provisions in the lease agreements make the economic life of
such facilities essentially indeterminate.
In connection with the Transactions, pursuant to several leases (the
"Domestic Leases"), Sky Chefs and CII leased and subleased from Caterair
substantially all of its domestic tangible assets for a six-year term. In the
event that Caterair's lease of such assets was for less than six years, the
applicable Domestic Lease is for such shorter period. Sky Chefs and CII have the
option to purchase the assets of Caterair covered by the Domestic Leases for an
amount determined under formulas in the Domestic Leases that were intended to
result in an exercise price equal to the estimated fair market value of such
assets at the time of exercise of such option. The option is exercisable until
the date which is 30 days after termination of the applicable Domestic Lease.
The Company is not certain whether such options will be exercised. Total amounts
receivable by the Company are approximately $126,583 of which approximately
$47,500 relates to lease payments for leasehold improvements and equipment.
The minimum rental income amounts, excluding contingent rents based on
sales, under the above noted operating leases from Sky Chefs and CII as of
December 31, 1996, are as follows:
<TABLE>
<CAPTION>
PERIOD ENDED OPERATING
DECEMBER 31, LEASES
------------------------------------------------------------------ ---------
<S> <C>
1997............................................................ $ 27,076
1998............................................................ 26,438
1999............................................................ 25,202
2000............................................................ 24,450
2001............................................................ 23,417
Thereafter...................................................... --
---------
Total minimum rental income............................. $ 126,583
========
</TABLE>
F-58
<PAGE> 182
CATERAIR INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS; INFORMATION SUBSEQUENT TO MARCH 5, 1997 IS UNAUDITED)
8. INCOME TAXES:
Taxes on income are based on income from continuing operations before
income taxes. The components of the income tax provision (benefit) for the
periods ended December 31, 1995 and 1996, respectively, are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1996
-------- ------
<S> <C> <C>
Current:
Federal........................................................ $ -- $ 325
State and local................................................ 100 --
-------- ------
100 325
-------- ------
Deferred:
Federal........................................................ (44,170) 6,754
State and local................................................ (6,310) 965
-------- ------
(50,480) 7,719
-------- ------
Total income tax provision (benefit)................... $(50,380) $8,044
======== ======
</TABLE>
Components of deferred tax assets and liabilities of continuing operations
recognized in the consolidated financial statements as of December 31, 1995 and
1996, were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1996
------- --------
<S> <C> <C>
Benefit of federal and state net operating loss carryforwards..... $42,038 $ 31,343
Property and equipment............................................ 979 3,977
Intangible assets acquired........................................ 7,422 4,039
Payroll accruals.................................................. 4,528 154
Casualty insurance................................................ 6,259 6,918
Benefit of federal targeted jobs tax credit carryforwards......... 653 978
Reserves.......................................................... -- 1,803
Other items....................................................... (4,079) 1,415
------- --------
57,800 50,627
Valuation allowance............................................... (9,723) (10,936)
------- --------
Total deferred tax assets, net of valuation allowance... 48,077 39,691
Deferred tax liabilities.......................................... (214) (313)
------- --------
Net deferred tax asset.................................. $47,863 $ 39,378
======= ========
</TABLE>
At December 31, 1994, the Company had a valuation allowance of $68,349 to
fully reserve for its gross deferred tax assets because of the uncertainties
surrounding the losses on operations to be sustained for income tax reporting
purposes. Subsequent to the Transactions, the Company evaluated the potential
for realization of a portion or all of the deferred tax assets. The Company
determined, based upon the weight of evidence, it is more likely than not that a
portion of the deferred tax assets would be realized. The valuation allowance
for deferred tax assets increased by $1,213 in 1996 due to the changes in the
Company's gross deferred tax assets and liabilities. The valuation allowance for
deferred tax assets decreased by $58,626 in 1995 due to the changes in the
Company's gross deferred tax assets and liabilities and the realization of a
portion of the Company's net deferred tax assets.
F-59
<PAGE> 183
CATERAIR INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS; INFORMATION SUBSEQUENT TO MARCH 5, 1997 IS UNAUDITED)
The Company has the following NOL and tax credit carryforwards available to
offset future U.S. Federal taxable income and income tax:
<TABLE>
<CAPTION>
YEAR AMOUNT OF YEAR OF
GENERATED NOL CREDITS EXPIRATION
- --------- --------- ------- ----------
<S> <C> <C> <C>
1990............................................ $14,831 $ 11 2005
1991............................................ 15,490 243 2006
1992............................................ 4,148 161 2007
1993............................................ -- 146 2008
1994............................................ 35,267 92 2009
1995............................................ 9,526 -- 2010
1996............................................ -- 325 2011
--------- -------
Total................................. $79,262 $ 978
======== =====
</TABLE>
The Company had a payable to its parent for income taxes of $165 included
in other payables and accrued liabilities at December 31, 1995 and 1996.
A reconciliation of the U.S. Federal income tax statutory rate and the
provision for income taxes on income from continuing operations for the periods
ended December 31, 1995 and 1996, is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1996
-------- -------
<S> <C> <C>
Tax at statutory rate............................................ $ 1,226 $ 6,440
State taxes...................................................... 100 --
Permanent differences............................................ -- 391
Utilization of NOL............................................... (1,226) --
Change in valuation allowance.................................... (50,480) 1,213
-------- -------
Provision (benefit) for income taxes............................. $(50,380) $ 8,044
======== ======
</TABLE>
9. EMPLOYEE SEVERANCE:
In September 1994, the Company implemented the Caterair International
Corporation Key Employee Retention Plan (the "Plan"). The Plan was designed to
ensure the Company of the continued employment and attention to duty of certain
key employees while the Company pursued a financial restructuring or the sale of
the Company. As a result of the Transactions, $2,843 in bonuses were paid in
1995. Except for employees in airport kitchens temporarily retained by the
Company (see Note 2), all employees of the Company were terminated on September
29, 1995 in connection with the Transactions. The employees temporarily retained
by Caterair were terminated in the second quarter of 1996. Most of the employees
terminated by Caterair were subsequently hired by SCIS. Additional severance
benefits accrued relative to the Plan may be paid in future periods upon the
termination of key employees.
In July 1995, the Company adopted the Caterair International Transition
Severance Plan (the "Severance Plan"). Benefits were paid to eligible employees
who continued working for the Company or SCIS, until at least September 30,
1995, and to employees whose employment with the Company or SCIS was
involuntarily terminated between October 1, 1995 and September 30, 1996. Total
severance charges under this plan of $1,800 were included in discontinued
operations in 1995.
The Company's retirement savings and investment plan was a voluntary
defined contribution plan that was fully funded at September 29, 1995 through an
insurance company. In accordance with the terms of the Transactions, the plan
was transferred along with substantially all of the Company participants to
subsidiaries of SCIS and the Company has no further obligations with respect to
this plan.
F-60
<PAGE> 184
CATERAIR INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS; INFORMATION SUBSEQUENT TO MARCH 5, 1997 IS UNAUDITED)
10. COMMITMENTS AND CONTINGENCIES:
Taxes
The Company is involved in a number of claims from taxing authorities,
including sales tax assessments, value added tax assessments and other related
claims. The Company believes the ultimate resolution of those claims will not
have a material adverse effect on the operating results, financial position or
cash flows of the Company.
Litigation
The Company is involved in routine litigation, including a number of
worker's compensation and related claims, that arise in the ordinary course of
its business. The Company does not believe that any of this litigation is
material to its financial position, results of operations or cash flows.
On June 3, 1991, the Teamsters Union (the "Union") went on strike at the
Company's three Los Angeles kitchens, and the Company hired replacement workers.
On August 26, 1992, a National Labor Relations Board ("NLRB") Administrative Law
Judge ("ALJ") ruled against the Company on unfair labor practice charges,
including refusal to bargain with the Union on the grounds that it no longer
represented a majority of the employees. On December 15, 1992, the NLRB in
Washington, D.C., adopted, without substantive modification or comment, the
ALJ's Recommended Decision and Order. In 1994, the ruling was reviewed by the
U.S. Court of Appeals, which supported the ALJ's Recommended Decision and Order.
The U.S. Supreme Court refused to hear the case in November 1994. The NLRB's
compliance officer is in the process of determining the back pay due the
affected employees. While the Company reinstated striking employees to the
extent reasonably possible, the Company estimates that the liability for back
pay and related losses is approximately $6,400. In accordance with the Statement
of Financial Accounting Standards No. 5 "Accounting for Contingencies" the
Company accrued this liability. The amount payable to settle this liability in
full was subsequently determined to be approximately $4,500 and payment was made
in early 1997. The remaining $1,900 was credited to discontinued operations in
1996.
Environmental Costs
At December 31, 1996 and 1995 Caterair had a $800 provision for the
estimated environmental remediation costs of all known contaminated properties
and the estimated costs for removal of all underground fuel tanks. Caterair is
unable to determine the cost, if any, of remediation actions that might be
necessary if there has been contamination resulting from other underground fuel
tanks.
Casualty Insurance Losses
Casualty insurance losses were charged to operating expenses of
discontinued operations as incurred. The losses are being paid out over several
years. The Company reflects the discounted value of the estimated unpaid losses
as a liability. At December 31, 1996 and 1995, the discount rate used was 7% and
the unpaid balance amounted to $15,056 and $14,829, respectively.
11. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS:
The following disclosure related to the estimated fair-value of financial
instruments has been determined by the Company using available market
information and appropriate valuation methodologies. However, considerable
judgment is required in interpreting market data to develop the estimates of
fair value. Accordingly, the estimates presented herein are not necessarily
indicative of the amounts the Company could realize in a current market
exchange.
The carrying amounts of cash and cash equivalents, accounts receivable,
other payables and accrued liabilities are reasonable estimates of their fair
values. Letters of credit are included in the estimated fair value
F-61
<PAGE> 185
CATERAIR INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS; INFORMATION SUBSEQUENT TO MARCH 5, 1997 IS UNAUDITED)
of accrued expenses and other liabilities. The estimated fair values and
carrying amount of other financial instruments at December 31, 1995 and 1996 are
as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------
1995 1996
---------------------- ----------------------
ESTIMATED CARRYING ESTIMATED CARRYING
FAIR VALUE AMOUNT FAIR VALUE AMOUNT
---------- -------- ---------- --------
<S> <C> <C> <C> <C>
Assets:
Interest rate swap agreement(a)........... $ -- $ -- $ 1,661 $ --
Liabilities:
Term loans(b)............................. 185,000 185,000 167,500 167,500
Senior subordinated note due to
affiliate(c)........................... 39,073 38,544 41,634 41,634
Interest rate swap agreement(a)........... 1,253 -- -- --
</TABLE>
The following methods and assumptions were used to estimate the fair value
of each class of financial instrument.
(a) INTEREST RATE SWAP AGREEMENT
At December 31, 1996 and 1995 the Company had interest rate swap
instruments (used for hedging purposes) which were not included in the Company's
consolidated balance sheet. The estimated fair value of this swap agreement was
positive (representing an asset) to the Company at December 31, 1996 and
negative (representing a liability) to the Company at December 31, 1995, as a
result of fluctuations projected futures interest rate swap transaction values
subsequent to the trade date of December 27, 1995.
(b) TERM LOANS
The fair value of the term loans and revolving credit facility approximates
the carrying value since interest rates are variable.
(c) SENIOR SUBORDINATED NOTE DUE TO AFFILIATE
The Company's senior subordinated note due to SCIS in 2001 bears a fixed
rate of interest of 8% (payable in-kind) and was executed September 29, 1995 in
connection with the Transactions. This note is with a related party and as such
there is no market activity. Accordingly, the carrying values approximate
estimated fair value.
These disclosures relate to financial instruments only. The fair value
assumptions were based upon estimates of market conditions and perceived risks
of the financial instruments at December 31, 1996.
12. DISCLOSURE OF SIGNIFICANT RISKS AND UNCERTAINTIES:
The Company's financial instruments expose the Company to market and credit
risks and may at times be concentrated with certain counterparties or groups of
counterparties. The credit worthiness of counterparties is subject to continuing
review and full performance is anticipated unless otherwise specifically
disclosed.
Dependence on Key Customers
As described in Note 2, the Company's revenues subsequent to September 29,
1995, are principally derived from rents, royalties and income under a
non-competition agreement from SCIS and as such the Company is dependent upon
SCIS's financial performance. In addition, the Company has guaranteed certain
indebtedness of SCIS as more fully described in Note 5.
F-62
<PAGE> 186
CATERAIR INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS; INFORMATION SUBSEQUENT TO MARCH 5, 1997 IS UNAUDITED)
13. CHANGES IN WORKING CAPITAL ITEMS:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30,
----------------------------- -------------------
1994 1995 1996 1996 1997
-------- -------- ------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
(Increase) decrease in accounts
receivable........................... $ -- $ (4,352) $ 2,711 $ 2,771 $ 2,357
Decrease in prepaid expenses and
other................................ -- 4,891 2,009 958 134
Increase (Decrease) in other payables
and accrued liabilities.............. -- (10,391) (5,464) 1,511 (6,284)
-------- -------- ------- -------- --------
Change in working capital items... $ -- $ (9,852) $ (744) $ 5,240 $ (3,793)
======== ======== ======= ======= =======
</TABLE>
F-63
<PAGE> 187
================================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE EXCHANGE OFFER, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE ISSUER OR ANY OF THE GUARANTORS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN
THOSE TO WHICH IT RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR THE
SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR THE EXCHANGE PROPOSED TO BE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE ISSUER OR ANY OF THE GUARANTORS SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---
<S> <C>
Special Note Regarding Forward-Looking
Statements........................... (iii)
Summary................................ 1
Risk Factors........................... 19
Use of Proceeds........................ 25
The Refinancing........................ 25
Capitalization......................... 26
Selected Historical Financial Data..... 27
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 32
The Exchange Offer..................... 43
The Airline Catering Industry.......... 53
Business............................... 55
Management............................. 64
Executive Compensation................. 67
Security Ownership..................... 74
Certain Transactions................... 77
Certain Federal Income Tax
Considerations....................... 83
Description of Certain Indebtedness.... 85
Description of Notes................... 86
Book-Entry; Delivery and Form.......... 114
Plan of Distribution................... 116
Legal Matters.......................... 116
Experts................................ 116
Additional Information................. 117
Index to Financial Statements.......... F-1
</TABLE>
UNTIL , (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE EXCHANGE NOTES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
SELLING EXCHANGE NOTES RECEIVED IN EXCHANGE FOR PRIVATE NOTES HELD FOR THEIR OWN
ACCOUNT. SEE "PLAN OF DISTRIBUTION."
================================================================================
================================================================================
[LSG/SKY CHEFS LOGO]
[CATERAIR INTERNATIONAL LOGO]
[SCIS LOGO]
SC INTERNATIONAL SERVICES, INC.
OFFER TO EXCHANGE
9 1/4% SENIOR SUBORDINATED NOTES
DUE 2007, SERIES B
FOR ALL OUTSTANDING
9 1/4% SENIOR SUBORDINATED NOTES
DUE 2007, SERIES A
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PROSPECTUS
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, 1997
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL") provides that
a Delaware corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or complete action,
suit or proceeding whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 145 further provides that a Delaware corporation similarly may indemnify
any such person serving in any such capacity who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor,
against expenses actually and reasonably incurred in connection with the defense
or settlement of such action or suit if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Delaware Court
of Chancery or such other court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 102(b)(7) of the DGCL permits a corporation to include in its
certificate of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL (relating to
unlawful payment of dividends and unlawful stock purchase and redemption) or
(iv) for any transaction from which the director derived an improper personal
benefit.
SCIS' and each of the Guarantors' Certificate of Incorporation provides
that its directors shall not be liable to the Issuer or its stockholders for
monetary damages for breach of fiduciary duty as a director except to the extent
that exculpation from liabilities is not permitted under the DGCL as in effect
at the time such liability is determined. Each such Certificate of Incorporation
further provides that the Issuer or such Guarantor, as applicable, shall
indemnify its directors and officers to the fullest extent permitted by the
DGCL.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling any of the
registrants pursuant to the foregoing provisions, the registrants have been
informed that in the opinion of the Commission, such indemnification is against
public policy as expressed in the Securities Act, and is therefore
unenforceable.
Pursuant to the Indenture, the holders of the Private Notes, respectively,
have agreed to waive and release all liability of the directors, officers and
controlling persons of each registrant which may arise in connection with any
obligations of the registrants in connection with the Private Notes or the
Indenture.
Pursuant to section 7 of the Registration Rights Agreement, dated August
28, 1997, among the Issuer, the Guarantors and the Initial Purchasers, the
holders of the Private Notes and the related guarantees have agreed to indemnify
the directors, officers and controlling persons of the registrants against
certain liabilities,
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costs, and expenses that may be incurred in connection with the registration of
such securities, to the extent that such liabilities, costs and expenses arise
from an omission or untrue statement contained in information provided to the
registrants by the holders of such securities.
The Purchase Agreement, dated August 22, 1997, between the Issuer, the
Guarantors and the Initial Purchasers contains provisions by which the Initial
Purchasers agreed to indemnify the Issuer, the Guarantors and their affiliates
(including their officers, directors, employees, agents and controlling persons)
against certain liabilities.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS
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2.1 Master Agreement, dated as of April 26, 1995, among Onex Food Services, Inc.,
Caterair Holdings Corporation and Caterair International Corporation.
Incorporated by reference to Exhibit 2.1 of SC International Services, Inc.'s
Registration Statement on Form S-1, Registration No. 33-94572.
2.1.1 Amendment No. 1 to Master Agreement, dated as of September 29, 1995, among
Onex Food Services, Inc., Caterair Holdings Corporation and Caterair
International Corporation. Incorporated by reference to Exhibit 2.2 of SC
International Services, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1995.
2.2 Sublease Agreement, dated as of September 29, 1995, between Sky Chefs, Inc.
and Caterair International Corporation, together with Schedule of additional
Subleases between such parties. Incorporated by reference to Exhibit 10.26 of
SC International Services, Inc.'s Annual Report on Form 10-K for the year
ended December 31, 1995.
2.3 Sublease Agreement, dated as of September 29, 1995, between Caterair
International, Inc. (II) and Caterair International Corporation, together
with Schedule of additional Subleases between such parties. Incorporated by
reference to Exhibit 10.27 of SC International Services, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 1995.
2.4 License Agreement, dated as of September 29, 1995, between Sky Chefs, Inc.
and Caterair International Corporation. Incorporated by reference to Exhibit
10.24 of SC International Services, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1995.
2.5 License Agreement, dated as of September 29, 1995, between Caterair
International, Inc. (II) and Caterair International Corporation. Incorporated
by reference to Exhibit 10.25 of SC International Services, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1995.
3.1 Certificate of Incorporation of SC International Services, Inc. Incorporated
by reference to Exhibit 3.1 of SC International Services, Inc.'s Registration
Statement on Form S-1, Registration No. 33-94572.
3.2 Amended and Restated Bylaws of SC International Services, Inc.*
3.3 Amended and Restated Certificate of Incorporation of Sky Chefs, Inc.
Incorporated by reference to Exhibit 3.3 of Amendment No. 3 to SC
International Services, Inc.'s Registration Statement on Form S-1,
Registration No. 33-94572.
3.4 Bylaws of Sky Chefs, Inc. Incorporated by reference to Exhibit 3.4 of
Amendment No. 3 to SC International Services, Inc.'s Registration Statement
on Form S-1, Registration No. 33-94572.
3.5 Certificate of Incorporation of Caterair International, Inc. (II).
Incorporated by reference to Exhibit 3.5 of SC International Services, Inc.'s
Registration Statement on Form S-1, Registration No. 33-94572.
3.6 Bylaws of Caterair International, Inc. (II). Incorporated by reference to
Exhibit 3.6 of SC International Services, Inc.'s Registration Statement on
Form S-1, Registration No. 33-94572.
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3.7 Certificate of Incorporation of Caterair International Corporation.
Incorporated by reference to Exhibit 3.1 of Caterair International
Corporation's Registration Statement on Form S-1, Registration No. 33-30918.
3.8 Bylaws of Caterair International Corporation. Incorporated by reference to
Exhibit 3.2 of Caterair International Corporation's Registration Statement on
Form S-1, Registration No. 33-30918.
3.9 Certificate of Incorporation of Arlington Services, Inc.*
3.10 Bylaws of Arlington Services, Inc.*
3.11 Certificate of Incorporation of Arlington Services Holding Corporation.*
3.12 Bylaws of Arlington Services Holding Corporation.*
3.13 Certificate of Incorporation of JFK Caterers, Inc.*
3.14 Bylaws of JFK Caterers, Inc.*
3.15 Certificate of Incorporation of Caterair Consulting Services Corporation.*
3.16 Bylaws of Caterair Consulting Services Corporation.*
3.17 Certificate of Incorporation of Western Aire Chef, Inc.*
3.18 Bylaws of Western Aire Chef, Inc.*
3.19 Certificate of Incorporation of Bethesda Services, Inc.*
3.20 Bylaws of Bethesda Services, Inc.*
3.21 Certificate of Incorporation of Caterair New Zealand Limited.*
3.22 Bylaws of Caterair New Zealand Limited.*
3.23 Certificate of Incorporation of Onex Ohio Finance Corp.*
3.24 Bylaws of Onex Ohio Finance Corp.*
3.25 Certificate of Incorporation of Onex Ohio Finance Corp. II.*
3.26 Bylaws of Onex Ohio Finance Corp. II.*
3.27 Certificate of Incorporation of Onex Ohio Equity Corp.*
3.28 Bylaws of Onex Ohio Equity Corp.*
3.29 Certificate of Incorporation of Onex Ohio Equity Corp. II.*
3.30 Bylaws of Onex Ohio Equity Corp. II.*
3.31 Certificate of Incorporation of Onex Ohio Credit Corp.*
3.32 Bylaws of Onex Ohio Credit Corp.*
3.33 Certificate of Incorporation of Onex Ohio Credit Corp. II.*
3.34 Bylaws of Onex Ohio Credit Corp. II.*
3.35 Certificate of Incorporation of Onex Ohio Acceptance Corporation.*
3.36 Bylaws of Onex Ohio Acceptance Corporation.*
3.37 Certificate of Incorporation of Onex Ohio Capital Corp.*
3.38 Bylaws of Onex Ohio Capital Corp.*
3.39 Certificate of Incorporation of Onex Ohio Capital Corp. II.*
3.40 Bylaws of Onex Ohio Capital Corp. II.*
3.41 Certificate of Incorporation of Onex Ohio Fiscal Corp.*
3.42 Bylaws of Onex Ohio Fiscal Corp.*
3.43 Certificate of Incorporation of Onex Ohio Fiscal Corp. II.*
3.44 Bylaws of Onex Ohio Fiscal Corp. II.*
3.45 Certificate of Incorporation of Onex Ohio Funds Corp.*
3.46 Bylaws of Onex Ohio Funds Corp.*
3.47 Certificate of Incorporation of Onex Ohio Funds Corp. II.*
3.48 Bylaws of Onex Ohio Funds Corp. II.*
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3.49 Certificate of Incorporation of Caterair International Transition
Corporation.*
3.50 Bylaws of Caterair International Transition Corporation.*
3.51 Certificate of Incorporation of Sky Chefs International Corp.*
3.52 Bylaws of Sky Chefs International Corp.*
3.53 Certificate of Incorporation of Caterair Airport Properties, Inc.*
3.54 Bylaws of Caterair Airport Properties, Inc.*
3.55 Certificate of Incorporation of Caterair St. Thomas Holdings Corporation.*
3.56 Bylaws of Caterair St. Thomas Holdings Corporation.*
3.57 Certificate of Incorporation of Sky Chefs Argentine Inc.*
3.58 Bylaws of Sky Chefs Argentine Inc.*
4.1 Indenture, dated August 28, 1997, among SC International Services, Inc., as
Issuer, The Bank of New York, as Trustee, and the Guarantors named therein.*
4.2 Form of Exchange Note (included in Exhibit 4.1)*
4.3 Form of Guarantee (included in Exhibit 4.1)*
5. Opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP.*
8.1 Opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP.*
8.2 Opinion of Price Waterhouse LLP.*
10.1 Purchase Agreement, dated as of August 22, 1997, among SC International
Services, Inc., the Guarantors named therein, and BT Securities Corporation,
J.P. Morgan Securities Inc., Credit Suisse First Boston Corporation, Goldman,
Sachs & Co., Smith Barney, Inc. and Bankers Trust International PLC, as
Initial Purchasers.*
10.2 Registration Rights Agreement, dated as of August 28, 1997, among SC
International Services, Inc., the Guarantors named therein, and BT Securities
Corporation, J.P. Morgan Securities Inc., Credit Suisse First Boston
Corporation, Goldman, Sachs & Co., Smith Barney, Inc., and Bankers Trust
International PLC.*
10.3 Dealer Manager Agreement, dated August 25, 1997, among SC International
Services, Inc., Sky Chefs, Inc., Caterair International, Inc. (II), Caterair
International Corporation and BT Securities Corporation.*
10.4 Depositary Agreement, dated as of August 25, 1997, between SC International
Services, Inc. and The Bank of New York, as Depositary.*
10.5 Form of Exchange Agent Agreement between SC International Services, Inc. and
The Bank of New York, as Exchange Agent.
10.6 Noncompetition Agreement, dated as of December 15, 1989, among Marriott
Corporation, Host International, Inc., Caterair Holdings Corporation and
Caterair International Corporation. Incorporated by reference to Exhibit
10.25 of Caterair International Corporation's Registration Statement on Form
S-1, Registration No. 33-31309.
10.7 Consulting Agreement, dated as of September 29, 1995, between Frederic V.
Malek and SC International Services, Inc. Incorporated by reference to
Exhibit 10.1 of SC International Services, Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1995.
10.8 Agreement, dated as of October 5, 1993, among Onex Corporation, Deutsche
Lufthansa Aktiengesellschaft and LSG Lufthansa Service GmbH. Incorporated by
reference to Exhibit 10.2 of SC International Services, Inc.'s Registration
Statement on Form S-1, Registration No. 33-94572.
10.9 Cooperation Agreement, dated as of October 5, 1993, between LSG Lufthansa
Service GmbH and Sky Chefs, Inc. Incorporated by reference to Exhibit 10.3 of
SC International Services, Inc.'s Registration Statement on Form S-1,
Registration No. 33-94572.
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10.10 Consent Agreement, dated as of April 20, 1995, among Onex Corporation, Onex
Food Services, Inc., OnCap Holdings U.S., Inc., Sky Chefs, Inc. and LSG
Lufthansa Service GmbH. Incorporated by reference to Exhibit 10.3.1 of
Amendment No. 2 to SC International Services, Inc.'s Registration Statement
on Form S-1, Registration No. 33-94572.
10.11 Consent Agreement, dated as of April 20, 1995, among OnCap Holdings U.S.,
Inc., OMI Quebec Inc., Onex Food Services, Inc. and LSG Lufthansa Service
GmbH. Incorporated by reference to Exhibit 10.4.1 of Amendment No. 2 to SC
International Services, Inc.'s Registration Statement on Form S-1,
Registration No. 33-94572.
10.12 Consent Agreement, dated as of April 20, 1995, among Onex Corporation, Onex
Food Services, Inc., OnCap Holdings U.S., Inc., Sky Chefs, Inc. and LSG
Lufthansa Service GmbH. Incorporated by reference to Exhibit 10.4.2 of
Amendment No. 2 to SC International Services, Inc.'s Registration Statement
on Form S-1, Registration No. 33-94572.
10.13 Exchange Agreement and Amendment to Stockholders' Agreement, dated as of
December 28, 1996, among Onex Food Services, Inc., LSG Lufthansa Service GmbH
and LSG Lufthansa Service USA Corporation.*
10.14 Stockholders' Agreement, dated as of December 6, 1993, among Onex
Corporation, Onex Food Services, Inc., OnCap Holdings U.S., Inc., OMI Quebec
Inc., LSG Lufthansa Service GmbH and LSG Lufthansa Service USA Corporation.
Incorporated by reference to Exhibit 10.4 of SC International Services,
Inc.'s Registration Statement on Form S-1, Registration No. 33-94572.
10.15 Arbitration Agreement, dated as of October 5, 1993, among Onex Corporation,
Onex Food Services, Inc., OnCap Holdings U.S., Inc., OMI Quebec Inc., Sky
Chefs, Inc., Deutsche Lufthansa Aktiengesellschaft and LSG Lufthansa Service
GmbH. Incorporated by reference to Exhibit 10.5 of SC International Services,
Inc.'s Registration Statement on Form S-1, Registration No. 33-94572.
10.16 Master National Agreement, dated August 22, 1969, between Sky Chefs, Inc. and
Hotel Employees and Restaurant Employees International Union. Incorporated by
reference to Exhibit 10.8 of Amendment No. 1 to SC International Services,
Inc.'s Registration Statement on Form S-1, Registration No. 33-94572.
10.17 Sky Chefs, Inc. Supplemental Executive Retirement Plan. Incorporated by
reference to Exhibit 10.13 of SC International Services, Inc.'s Registration
Statement on Form S-1, Registration No. 33-94572.
10.18 Sky Chefs, Inc. Performance Reward Plan. Incorporated by reference to Exhibit
10.13 of Amendment No. 1 to SC International Services, Inc.'s Registration
Statement on Form S-1, Registration No. 33-94572.
10.19 Employment Agreement, dated as of January 1, 1997, between James J. O'Neill
and Onex Food Services, Inc.*
10.20 Employment Agreement, dated as of January 1, 1997, between Michael Z. Kay and
Sky Chefs, Inc.*
10.21 Employment Agreement, dated as of January 1, 1997, between Patrick W. Tolbert
and Sky Chefs, Inc.*
10.22 Employment Agreement, dated as of January 1, 1997, between Randall C. Boyd
and Sky Chefs, Inc.*
10.23 Caterair Key Employee Retention Plan. Incorporated by reference to Exhibit
10.11 of SC International Services, Inc.'s Registration Statement on Form
S-1, Registration No. 33-94572.
10.23.1 Amendment No. 1 to Caterair Key Employee Retention Plan. Incorporated by
reference to Exhibit 10.11.1 of SC International Services, Inc.'s
Registration Statement on Form S-1, Registration No. 33-94572.
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10.24 Caterair International Corporation Transition Severance Plan. Incorporated by
reference to Exhibit 10.26 of Amendment No. 2 to SC International Services,
Inc.'s Registration Statement on Form S-1, Registration No. 33-94572.
10.25 Phantom Stock Plan for Management Employees of Onex Food Services, Inc. and
its Subsidiaries. Incorporated by reference to Exhibit 10.6 of Caterair
International Corporation's Annual Report on Form 10-K for the year ended
December 31, 1995.
10.26 Management Advisory Agreement, dated as of September 29, 1995, between OMI
Partnership Holdings Ltd. and SC International Services Inc.*
10.27 Lease Agreement, dated as of May 15, 1993, between TriNet Essential
Facilities X, Inc. and Caterair International Corporation, together with
Schedule of additional Lease Agreements between such parties.*
10.27.1 First Amendment to Lease Agreement, dated as of September 22, 1995, between
TriNet Essential Facilities X, Inc. and Caterair International Corporation.*
10.27.2 Second Amendment to Lease Agreement, dated as of December 1, 1995, between
TriNet Essential Facilities X, Inc. and Caterair International Corporation.*
10.27.3 Third Amendment to Lease Agreement, dated as of June 1, 1996, between TriNet
Essential Facilities X, Inc. and Caterair International Corporation.*
10.27.4 Fourth Amendment to Lease Agreement, dated as of December 23, 1996, between
TriNet Essential Facilities X, Inc. and Caterair International Corporation.*
10.27.5 Fifth Amendment to Lease Agreement, dated as of June 23, 1997, between TriNet
Essential Facilities X, Inc. and Caterair International Corporation.*
10.27.6 Sixth Amendment to Lease Agreement, dated as of August 22, 1997, between
TriNet Essential Facilities X, Inc. and Caterair International Corporation.*
10.27.7 Limited Waiver dated as of August 22, 1997, by TriNet Essential Facilities X,
Inc. in favor of Caterair International Corporation.*
10.28 Lease Agreement, dated as of May 15, 1993, between TriNet Essential
Facilities VIII R, Inc. and Caterair International Corporation, together with
Schedule of additional Lease Agreements between such parties.*
10.28.1 First Amendment to Lease Agreement, dated as of September 22, 1995, between
TriNet Essential Facilities VIII R, Inc. and Caterair International
Corporation.*
10.28.2 Second Amendment to Lease Agreement, dated as of December 1, 1995, between
TriNet Essential Facilities VIII R, Inc. and Caterair International
Corporation.*
10.28.3 Third Amendment to Lease Agreement, dated as of June 1, 1996, between TriNet
Essential Facilities VIII R, Inc. and Caterair International Corporation.*
10.28.4 Fourth Amendment to Lease Agreement, dated as of December 23, 1996, between
TriNet Essential Facilities VIII R, Inc. and Caterair International
Corporation.*
10.28.5 Fifth Amendment to Lease Agreement, dated as of June 23, 1997, between TriNet
Essential Facilities VIII R, Inc. and Caterair International Corporation.*
10.28.6 Sixth Amendment to Lease Agreement, dated as of August 22, 1997, between
TriNet Essential Facilities VIII R, Inc. and Caterair International
Corporation.*
10.28.7 Limited Waiver, dated as of August 22, 1997, by TriNet Essential Facilities
VIII R, Inc. in favor of Caterair International Corporation.*
10.29 Guaranty, dated as of September 22, 1995, by SC International Services, Inc.,
Sky Chefs, Inc., Onex Food Services, Inc. and Caterair International, Inc.
(II) for the benefit of TriNet Essential Facilities VIII R, Inc.*
10.30 Guaranty, dated as of September 22, 1995, by SC International Services, Inc.,
Sky Chefs, Inc., Onex Food Services, Inc. and Caterair International, Inc.
(II) for the benefit of TriNet Essential Facilities X, Inc.*
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10.31 Tax Sharing Agreement, dated as of December 15, 1989, among Caterair Holdings
Corporation, Caterair International Corporation and Marriott Corporation.
Incorporated by reference to Exhibit 10.25 of SC International Services,
Inc.'s Registration Statement on Form S-1, Registration No. 33-94572.
10.32 Noncompetition Agreement, dated as of September 29, 1995, between Caterair
International Corporation and Sky Chefs, Inc. Incorporated by reference to
Exhibit 10.16 of Caterair International Corporation's Annual Report on Form
10-K for the year ended December 31, 1995.
10.33 Promissory Note, dated September 29, 1995, by Caterair International
Corporation payable to the order of SC International Services, Inc.
Incorporated by reference to Exhibit 10.18 of Caterair International
Corporation's Annual Report on Form 10-K for the year ended December 31,
1995.
10.34 Credit Agreement, dated as of September 29, 1995, and amended and restated as
of August 28, 1997, among SC International Services, Inc., as borrower, Onex
Food Services, Inc., Caterair Holdings Corporation, Caterair International
Corporation, the guarantors named therein, the lenders party thereto from
time to time, Bankers Trust Company and J.P. Morgan Securities, Inc., as
co-arrangers, Bankers Trust Company, as syndication agent, The Bank of New
York, as co-agent, and Morgan Guaranty Trust Company of New York, as
administrative agent.
10.35 Term Loan Agreement, dated as of August 28, 1997, among Caterair
International Corporation and SC International Services, Inc., as borrowers,
the guarantors named therein, the lenders party thereto from time to time,
Bankers Trust Company and J.P. Morgan Securities Inc., as co-arrangers,
Bankers Trust Company, as syndication agent, and Morgan Guaranty Trust
Company of New York, as administrative agent.
10.36 Tax Sharing Agreement, dated as of September 29, 1995, among Onex Food
Services, Inc., Sky Chefs, Inc. and Caterair International, Inc. (II).
Incorporated by reference to Exhibit 10.22 of SC International Services,
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1995.
10.37 Shareholders' Agreement, dated as of May 29, 1986, as amended, among Onex
Food Services, Inc., an affiliate of Onex Corporation and certain employees
of Sky Chefs, Inc.
10.38 Acquisition Agreement, dated as of November 30, 1995, between LSG Lufthansa
Service USA Corporation and Sky Chefs, Inc.*
10.39 Acquisition Agreement, dated as of August 14, 1995, between LSG Lufthansa
Service USA Corporation and Sky Chefs, Inc.*
10.40 Acquisition Agreement, dated July 18, 1997, between Caterair International,
Inc. (II) and Sky Chefs, Inc.*
10.40.1 Acquisition Agreement, dated as of August 29, 1997, between Caterair
International, Inc. (II) and Sky Chefs, Inc.
10.41 Noncompetition Agreement, dated as of December 15, 1989, among Marriott
Corporation, Host International, Inc., Caterair Holdings Corporation and
Caterair International Corporation. Incorporated by reference to Caterair
International Corporation's Registration Statement on Form S-1, Registration
No. 33-31309.
10.42 Securityholder's Agreement, dated as of September 29, 1995, among Onex Food
Services, Inc., Onex U.S. LLC and OnCap Holdings U.S., Inc. Incorporated by
reference to Exhibit 10.20 of SC International Services, Inc.'s Annual Report
on Form 10-K for the year ended December 31, 1995.
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10.43 Warrant Agreement, dated as of September 29, 1995, between Onex Food
Services, Inc., and the holders of warrants issued thereunder. Incorporated
by reference to Exhibit 10.21 of SC International Services, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1995.
12.1 SC International Services, Inc. and Subsidiaries Computation of Ratio of
Earnings to Fixed Charges.
12.2 Caterair International Corporation and Subsidiaries Computation of Ratio of
Earnings to Fixed Charges.
12.3 SC International Services, Inc. and Subsidiaries and Caterair International
Corporation and Subsidiaries Computation of Combined Pro Forma Ratio of
Earnings to Fixed Charges.
21.1 Subsidiaries of the Registrants.*
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Kaye, Scholer, Fierman, Hays & Handler, LLP. Incorporated by
reference to Exhibit 5.*
23.3 Consent of Price Waterhouse, LLP. Incorporated by reference to Exhibit 8.2.*
23.4 Consent of Arthur Andersen LLP.
24.1 Power of Attorney for SC International Services, Inc. (included with
signature pages of SC International Services, Inc. set forth in the
Registration Statement filed on October 9, 1997 at page II-11).
24.2 Power of Attorney for Sky Chefs, Inc. (included with signature pages of Sky
Chefs, Inc. set forth in the Registration Statement filed on October 9, 1997
at page II-13).
24.3 Power of Attorney for Caterair International, Inc. (II) (included with
signature pages of Caterair International, Inc. (II) set forth in the
Registration Statement filed on October 9, 1997 at page II-14).
24.4 Power of Attorney of Caterair International Corporation (included with
signature pages of Caterair International Corporation set forth in the
Registration Statement filed on October 9, 1997 at page II-15).
24.5 Power of Attorney for Arlington Services, Inc. (included with signature pages
of Arlington Services, Inc. set forth in the Registration Statement filed on
October 9, 1997 at page II-16).
24.6 Power of Attorney for Arlington Services Holding Corporation (included with
signature pages of Arlington Services Holding Corporation set forth in the
Registration Statement filed on October 9, 1997 at page II-17).
24.7 Power of Attorney for JFK Caterers, Inc. (included with signature pages of
JFK Caterers, Inc. set forth in the Registration Statement filed on October
9, 1997 at page II-20).
24.8 Power of Attorney for Caterair Consulting Services Corporation (included with
signature pages of Caterair Consulting Services Corporation set forth in the
Registration Statement filed on October 9, 1997 at page II-21).
24.9 Power of Attorney for Western Aire Chef, Inc. (included with signature pages
of Western Aire Chef, Inc. set forth in the Registration Statement filed on
October 9, 1997 at page II-22).
24.10 Power of Attorney for Bethesda Services, Inc. (included with signature pages
of Bethesda Services, Inc. set forth in the Registration Statement filed on
October 9, 1997 at page II-18).
24.11 Power of Attorney for Caterair New Zealand Limited (included with signature
pages of Caterair New Zealand Limited set forth in the Registration Statement
filed on October 9, 1997 at page II-19).
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24.12 Power of Attorney for Onex Ohio Finance Corp. (included with signature pages
of Onex Ohio Finance Corp. set forth in the Registration Statement filed on
October 9, 1997 at page II-28).
24.13 Power of Attorney for Onex Ohio Finance Corp. II (included with signature
pages of Onex Ohio Finance Corp. II set forth in the Registration Statement
filed on October 9, 1997 at page II-29).
24.14 Power of Attorney for Onex Ohio Equity Corp. (included with signature pages
of Onex Ohio Equity Corp. set forth in the Registration Statement filed on
October 9, 1997 at page II-30).
24.15 Power of Attorney for Onex Ohio Equity Corp. II (included with signature
pages of Onex Ohio Equity Corp. II set forth in the Registration Statement
filed on October 9, 1997 at page II-31).
24.16 Power of Attorney for Onex Ohio Credit Corp. (included with signature pages
of Onex Ohio Credit Corp. set forth in the Registration Statement filed on
October 9, 1997 at page II-32).
24.17 Power of Attorney for Onex Ohio Credit Corp. II (included with signature
pages of Onex Ohio Credit Corp. II set forth in the Registration Statement
filed on October 9, 1997 at page II-33).
24.18 Power of Attorney for Onex Ohio Acceptance Corporation (included with
signature pages of Onex Ohio Acceptance Corporation set forth in the
Registration Statement filed on October 9, 1997 at page II-34).
24.19 Power of Attorney for Onex Ohio Capital Corp. (included with signature pages
of Onex Ohio Capital Corp. set forth in the Registration Statement filed on
October 9, 1997 at page II-35).
24.20 Power of Attorney for Onex Ohio Capital Corp. II (included with signature
pages of Onex Ohio Capital Corp. II set forth in the Registration Statement
filed on October 9, 1997 at page II-36).
24.21 Power of Attorney for Onex Ohio Fiscal Corp. (included with signature pages
of Onex Ohio Fiscal Corp. set forth in the Registration Statement filed on
October 9, 1997 at page II-37).
24.22 Power of Attorney for Onex Ohio Fiscal Corp. II (included with signature
pages of Onex Ohio Fiscal Corp. II set forth in the Registration Statement
filed on October 9, 1997 at page II-38).
24.23 Power of Attorney for Onex Ohio Funds Corp. (included with signature pages of
Onex Ohio Funds Corp. set forth in the Registration Statement filed on
October 9, 1997 at page II-39).
24.24 Power of Attorney for Onex Ohio Funds Corp. II (included with signature pages
of Onex Ohio Funds Corp. II set forth in the Registration Statement filed on
October 9, 1997 at page II-40).
24.25 Power of Attorney for Caterair International Transition Corporation (included
with signature pages of Caterair International Transition Corporation set
forth in the Registration Statement filed on October 9, 1997 at page II-24).
24.26 Power of Attorney for Sky Chefs International Corp. (included with signature
pages of Sky Chefs International Corp. set forth in the Registration
Statement filed on October 9, 1997 at page II-27).
24.27 Power of Attorney for Caterair Airport Properties, Inc. (included with
signature pages of Caterair Airport Properties, Inc. set forth in the
Registration Statement filed on October 9, 1997 at page II-26).
24.28 Power of Attorney for Caterair St. Thomas Holdings Corporation (included with
signature pages of Caterair St. Thomas Holdings Corporation set forth in the
Registration Statement filed on October 9, 1997 at page II-23).
</TABLE>
II-9
<PAGE> 197
<TABLE>
<C> <S>
24.29 Power of Attorney for Sky Chefs Argentine, Inc. (included with signature
pages of Sky Chefs Argentine, Inc. set forth in the Registration Statement
filed on October 9, 1997 at page II-25).
25.1 Statement of Eligibility on Form T-1 of Trustee under the Indenture.*
27.1 Financial Data Schedules for SC International Services, Inc. and consolidated
subsidiaries for the fiscal year ended December 31, 1996, the nine-months
ended September 30, 1997, and the nine-months ended September 30, 1996.
27.2 Financial Data Schedules for Caterair International Corporation and
consolidated subsidiaries for the fiscal year ended December 31, 1996, the
nine-months ended September 30, 1997 and the nine-months ended September 30,
1996.
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
</TABLE>
- ---------------
* Filed with the Registration Statement on October 9, 1997.
(b) FINANCIAL STATEMENT SCHEDULES
All schedules for which provision is made in Regulation S-X of the
Securities and Exchange Commission are not required under the related
instructions or are inapplicable or the required information is included in the
financial statements or notes thereto and, therefore, have been omitted.
ITEM 22. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the foregoing provisions, or otherwise, the
registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrants of expenses incurred or paid by a director, officer or
controlling person of the registrants in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrants will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(b) The undersigned registrants hereby undertake:
(1) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when
it became effective.
(2) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering rate may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
II-10
<PAGE> 198
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(3) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(4) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(c) (1) The undersigned registrants hereby undertake as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The registrants undertake that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(d) The undersigned registrants hereby undertake to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Trust Indenture Act.
The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
II-11
<PAGE> 199
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
SC INTERNATIONAL SERVICES, INC.
By: *
------------------------------------
Name: Patrick W. Tolbert
Title: Executive Vice President and
Chief
Financial and Administrative
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- ------------------
<C> <S> <C>
* Director, Chief Executive November 24, 1997
- ------------------------------------------ Officer and Vice Chairman
James J. O'Neill of the Board (principal
executive officer)
* Director, Executive Vice November 24, 1997
- ------------------------------------------ President and Chief
Patrick W. Tolbert Financial and
Administrative Officer
(principal financial
officer)
* Director and Chairman of the November 24, 1997
- ------------------------------------------ Board
Daniel J. Altobello
* Director November 24, 1997
- ------------------------------------------
Gerald W. Schwartz
* Director November 24, 1997
- ------------------------------------------
Ewout Heersink
Director
- ------------------------------------------
Helmut Woelki
Director
- ------------------------------------------
Gunther Rothig
Director
- ------------------------------------------
Helmut Bleckmann
* Director November 24, 1997
- ------------------------------------------
Michael Z. Kay
* Director November 24, 1997
- ------------------------------------------
William S. Woodside
/s/ THOMAS J. LEE Director -- Financial November 24, 1997
- ------------------------------------------ Accounting (principal
Thomas J. Lee accounting officer)
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-12
<PAGE> 200
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
SKY CHEFS, INC.
By: *
------------------------------------
Name: Patrick W. Tolbert
Title: Executive Vice President and
Chief
Financial and Administrative
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- ------------------
<C> <S> <C>
* Director, President and November 24, 1997
- ------------------------------------------ Chief Executive Officer
Michael Z. Kay (principal executive
officer)
* Director, Executive Vice November 24, 1997
- ------------------------------------------ President and Chief
Patrick W. Tolbert Financial and
Administrative Officer
(principal financial
officer)
* Director November 24, 1997
- ------------------------------------------
Gerald W. Schwartz
* Director November 24, 1997
- ------------------------------------------
Ewout Heersink
Director
- ------------------------------------------
Helmut Woelki
Director
- ------------------------------------------
Gunther Rothig
Director
- ------------------------------------------
Helmut Bleckmann
* Director November 24, 1997
- ------------------------------------------
William S. Woodside
/s/ THOMAS J. LEE Director -- Financial November 24, 1997
- ------------------------------------------ Accounting (principal
Thomas J. Lee accounting officer)
*By: /s/ THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-13
<PAGE> 201
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
CATERAIR INTERNATIONAL, INC. (II)
By: *
------------------------------------
Name: James J. O'Neill
Title: Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- ------------------
<C> <S> <C>
* Director and Chairman of the November 24, 1997
- ------------------------------------------ Board (principal
James J. O'Neill executive, financial and
accounting officer)
* Director November 24, 1997
- ------------------------------------------
Eric J. Rosen
* Director November 24, 1997
- ------------------------------------------
J. Thomas Markley
Director
- ------------------------------------------
Aaron Gellman
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-14
<PAGE> 202
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
CATERAIR INTERNATIONAL CORPORATION
By: *
------------------------------------
Name: Daniel J. Altobello
Title: President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------ ------------------
<C> <S> <C>
* President and Chief Executive November 24, 1997
- ------------------------------------------ Officer (principal
Daniel J. Altobello executive, financial and
accounting officer)
* Director November 24, 1997
- ------------------------------------------
Anthony R. Melman
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-15
<PAGE> 203
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
ARLINGTON SERVICES, INC.
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- ------------------
<C> <S> <C>
/s/ THOMAS J. LEE Director and President November 24, 1997
- ------------------------------------------ (principal executive,
Thomas J. Lee financial and accounting
officer)
* Director, Vice President November 24, 1997
- ------------------------------------------ and Treasurer
Norman J. Shuman
* Director and Secretary November 24, 1997
- ------------------------------------------
Donald F. West
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-16
<PAGE> 204
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
ARLINGTON SERVICES HOLDING
CORPORATION
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- ------------------
<C> <S> <C>
/s/ THOMAS J. LEE Director and President November 24, 1997
- ------------------------------------------ (principal executive,
Thomas J. Lee financial and accounting
officer)
* Director, Vice President and November 24, 1997
- ------------------------------------------ Treasurer
Norman J. Shuman
* Director and Secretary November 24, 1997
- ------------------------------------------
Donald F. West
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-17
<PAGE> 205
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
BETHESDA SERVICES, INC.
By: *
------------------------------------
Name: Donald F. West
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- ------------------
<C> <S> <C>
* Director, President and November 24, 1997
- ------------------------------------------ Secretary (principal
Donald F. West executive, financial and
accounting officer)
* Director, Vice President and November 24, 1997
- ------------------------------------------ Treasurer
Norman J. Shuman
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-18
<PAGE> 206
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
CATERAIR NEW ZEALAND LIMITED
By: *
------------------------------------
Name: Donald F. West
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------ ------------------
<C> <S> <C>
* Director, President and November 24, 1997
- ------------------------------------------ Secretary (principal
Donald F. West executive, financial and
accounting officer)
* Director, Vice President and November 24, 1997
- ------------------------------------------ Treasurer
Norman J. Shuman
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-19
<PAGE> 207
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
JFK CATERERS, INC.
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- ------------------
<C> <S> <C>
/s/ THOMAS J. LEE Director and President November 24, 1997
- ------------------------------------------ (principal executive,
Thomas J. Lee financial and accounting
officer)
</TABLE>
II-20
<PAGE> 208
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
CATERAIR CONSULTING SERVICES
CORPORATION
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- ------------------
<C> <S> <C>
/s/ THOMAS J. LEE Director and President November 24, 1997
- ------------------------------------------ (principal executive,
Thomas J. Lee financial and accounting
officer)
</TABLE>
II-21
<PAGE> 209
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
WESTERN AIRE CHEF, INC.
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- -------------------
<C> <S> <C>
/s/ THOMAS J. LEE President November 24, 1997
- ------------------------------------------ (principal executive,
Thomas J. Lee financial and accounting
officer)
* Director November 24, 1997
- ------------------------------------------
Daniel J. Altobello
* Director November 24, 1997
- ------------------------------------------
Patrick W. Tolbert
* Director November 24, 1997
- ------------------------------------------
Donald F. West
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-22
<PAGE> 210
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
CATERAIR ST. THOMAS HOLDINGS
CORPORATION
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------ -------------------
<C> <S> <C>
/s/ THOMAS J. LEE Director and President November 24, 1997
- ------------------------------------------ (principal executive,
Thomas J. Lee financial and accounting
officer)
</TABLE>
II-23
<PAGE> 211
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
CATERAIR INTERNATIONAL TRANSITION
CORPORATION
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- -------------------
<C> <S> <C>
/s/ THOMAS J. LEE Director and President November 24, 1997
- ------------------------------------------ (principal executive,
Thomas J. Lee financial and accounting
officer)
</TABLE>
II-24
<PAGE> 212
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
SKY CHEFS ARGENTINE, INC.
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- -------------------
<C> <S> <C>
/s/ THOMAS J. LEE President November 24, 1997
- ------------------------------------------ (principal executive,
Thomas J. Lee financial and accounting
officer)
* Director November 24, 1997
- ------------------------------------------
Patrick W. Tolbert
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-25
<PAGE> 213
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
CATERAIR AIRPORT PROPERTIES, INC.
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ THOMAS J. LEE President November 24, 1997
- --------------------------------------------- (principal executive,
Thomas J. Lee financial and accounting
officer)
* Director November 24, 1997
- ---------------------------------------------
Daniel J. Altobello
* Director and Vice President November 24, 1997
- ---------------------------------------------
Patrick W. Tolbert
* Director and Secretary November 24, 1997
- ---------------------------------------------
Donald F. West
*By: THOMAS J. LEE
- ---------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-26
<PAGE> 214
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
SKY CHEFS INTERNATIONAL CORP.
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- ------------------
<C> <S> <C>
/s/ THOMAS J. LEE President November 24, 1997
- ------------------------------------------ (principal executive,
Thomas J. Lee financial and accounting
officer)
* Director, Vice President, November 24, 1997
- ------------------------------------------ Treasurer and Secretary
Michael Z. Kay
* Director and Vice President November 24, 1997
- ------------------------------------------
Patrick W. Tolbert
* Director and Vice President November 24, 1997
- ------------------------------------------
James J. O'Neill
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-27
<PAGE> 215
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
ONEX OHIO FINANCE CORP.
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- ------------------
<C> <S> <C>
/s/ THOMAS J. LEE President November 24, 1997
- ------------------------------------------ (principal executive,
Thomas J. Lee financial and accounting
officer)
* Director November 24, 1997
- ------------------------------------------
Anthony Melman
* Director, Vice President, November 24, 1997
- ------------------------------------------ Treasurer and Secretary
James J. O'Neill
* Director and Vice President November 24, 1997
- ------------------------------------------
Donald F. West
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-28
<PAGE> 216
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
ONEX OHIO FINANCE CORP. II
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- ------------------
<C> <S> <C>
/s/ THOMAS J. LEE President (principal November 24, 1997
- ------------------------------------------ executive, financial and
Thomas J. Lee accounting officer)
* Director November 24, 1997
- ------------------------------------------
Anthony Melman
* Director, Vice President, November 24, 1997
- ------------------------------------------ Treasurer and Secretary
James J. O'Neill
* Director and Vice President November 24, 1997
- ------------------------------------------
Donald F. West
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-29
<PAGE> 217
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
ONEX OHIO EQUITY CORP.
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- ------------------
<C> <S> <C>
/s/ THOMAS J. LEE President (principal November 24, 1997
- ------------------------------------------ executive, financial and
Thomas J. Lee accounting officer)
* Director November 24, 1997
- ------------------------------------------
Anthony Melman
* Director, Vice President, November 24, 1997
- ------------------------------------------ Treasurer and Secretary
James J. O'Neill
* Director and Vice President November 24, 1997
- ------------------------------------------
Donald F. West
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-30
<PAGE> 218
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
ONEX OHIO EQUITY CORP. II
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- ------------------
<C> <S> <C>
/s/ THOMAS J. LEE President November 24, 1997
- ------------------------------------------ (principal executive,
Thomas J. Lee financial and accounting
officer)
* Director November 24, 1997
- ------------------------------------------
Ewout Heersink
* Director, Vice President, November 24, 1997
- ------------------------------------------ Treasurer and Secretary
James J. O'Neill
* Director and Vice President November 24, 1997
- ------------------------------------------
Donald F. West
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-31
<PAGE> 219
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
ONEX OHIO CREDIT CORP.
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------ ------------------
<C> <S> <C>
/s/ THOMAS J. LEE President November 24, 1997
- ------------------------------------------ (principal executive,
Thomas J. Lee financial and accounting
officer)
* Director November 24, 1997
- ------------------------------------------
Anthony Melman
* Director, Vice President, November 24, 1997
- ------------------------------------------ Treasurer and Secretary
James J. O'Neill
* Director and Vice President November 24, 1997
- ------------------------------------------
Donald F. West
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-32
<PAGE> 220
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
ONEX OHIO CREDIT CORP. II
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- ------------------
<C> <S> <C>
/s/ THOMAS J. LEE President November 24, 1997
- ------------------------------------------ (principal executive,
Thomas J. Lee financial and accounting
officer)
* Director November 24, 1997
- ------------------------------------------
Ewout Heersink
* Director, Vice President, November 24, 1997
- ------------------------------------------ Treasurer and Secretary
James J. O'Neill
* Director and Vice President November 24, 1997
- ------------------------------------------
Donald F. West
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-33
<PAGE> 221
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
ONEX OHIO ACCEPTANCE CORPORATION
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- ------------------
<C> <S> <C>
/s/ THOMAS J. LEE President November 24, 1997
- ------------------------------------------ (principal executive,
Thomas J. Lee financial and accounting
officer)
* Director November 24, 1997
- ------------------------------------------
Anthony Melman
* Director, Vice President, November 24, 1997
- ------------------------------------------ Treasurer and Secretary
James J. O'Neill
* Director and Vice President November 24, 1997
- ------------------------------------------
Donald F. West
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-34
<PAGE> 222
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
ONEX OHIO CAPITAL CORP.
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- ------------------
<C> <S> <C>
/s/ THOMAS J. LEE President (principal November 24, 1997
- ------------------------------------------ executive, financial and
Thomas J. Lee accounting officer)
* Director November 24, 1997
- ------------------------------------------
Anthony Melman
* Director, Vice President, November 24, 1997
- ------------------------------------------ Treasurer and Secretary
James J. O'Neill
* Director and Vice President November 24, 1997
- ------------------------------------------
Donald F. West
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-35
<PAGE> 223
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
ONEX OHIO CAPITAL CORP. II
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- ------------------
<C> <S> <C>
/s/ THOMAS J. LEE President November 24, 1997
- ------------------------------------------ (principal executive,
Thomas J. Lee financial and accounting
officer)
* Director November 24, 1997
- ------------------------------------------
Ewout Heersink
* Director, Vice President, November 24, 1997
- ------------------------------------------ Treasurer and Secretary
James J. O'Neill
* Director and Vice President November 24, 1997
- ------------------------------------------
Donald F. West
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-36
<PAGE> 224
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
ONEX OHIO FISCAL CORP.
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- ------------------
<C> <S> <C>
/s/ THOMAS J. LEE President November 24, 1997
- ------------------------------------------ (principal executive,
Thomas J. Lee financial and accounting
officer)
* Director November 24, 1997
- ------------------------------------------
Anthony Melman
* Director, Vice President, November 24, 1997
- ------------------------------------------ Treasurer and Secretary
James J. O'Neill
* Director and Vice President November 24, 1997
- ------------------------------------------
Donald F. West
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-37
<PAGE> 225
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
ONEX OHIO FISCAL CORP. II
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- -------------------
<C> <S> <C>
/s/ THOMAS J. LEE President November 24, 1997
- ------------------------------------------ (principal executive,
Thomas J. Lee financial and accounting
officer)
* Director November 24, 1997
- ------------------------------------------
Ewout Heersink
* Director, Vice President, November 24, 1997
- ------------------------------------------ Treasurer and Secretary
James J. O'Neill
* Director and Vice President November 24, 1997
- ------------------------------------------
Donald F. West
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-38
<PAGE> 226
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
ONEX OHIO FUNDS CORP.
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- -------------------
<C> <S> <C>
/s/ THOMAS J. LEE President November 24, 1997
- ------------------------------------------ (principal executive,
Thomas J. Lee financial and accounting
officer)
* Director November 24, 1997
- ------------------------------------------
Anthony Melman
* Director, Vice President, November 24, 1997
- ------------------------------------------ Treasurer and Secretary
James J. O'Neill
* Director and Vice President November 24, 1997
- ------------------------------------------
Donald F. West
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-39
<PAGE> 227
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Arlington, State
of Texas, on the 24th day of November, 1997.
ONEX OHIO FUNDS CORP. II
By: /s/ THOMAS J. LEE
------------------------------------
Name: Thomas J. Lee
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------- -------------------
<C> <S> <C>
/s/ THOMAS J. LEE President November 24, 1997
- ------------------------------------------ (principal executive,
Thomas J. Lee financial and accounting
officer)
* Director November 24, 1997
- ------------------------------------------
Ewout Heersink
* Director, Vice President, November 24, 1997
- ------------------------------------------ Treasurer and Secretary
James J. O'Neill
* Director and Vice President November 24, 1997
- ------------------------------------------
Donald F. West
*By: THOMAS J. LEE
- ------------------------------------------
Thomas J. Lee
Attorney-in-Fact
</TABLE>
II-40
<PAGE> 228
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
--------- ----------------------------------------------------------------- ------------
<C> <S> <C>
2.1 Master Agreement, dated as of April 26, 1995, among Onex Food
Services, Inc., Caterair Holdings Corporation and Caterair
International Corporation. Incorporated by reference to Exhibit
2.1 of SC International Services, Inc.'s Registration Statement
on Form S-1, Registration No. 33-94572. .........................
2.1.1 Amendment No. 1 to Master Agreement, dated as of September 29,
1995, among Onex Food Services, Inc., Caterair Holdings
Corporation and Caterair International Corporation. Incorporated
by reference to Exhibit 2.2 of SC International Services, Inc.'s
Annual Report on Form 10-K for the year ended December 31,
1995. ...........................................................
2.2 Sublease Agreement, dated as of September 29, 1995, between Sky
Chefs, Inc. and Caterair International Corporation, together with
Schedule of additional Subleases between such parties.
Incorporated by reference to Exhibit 10.26 of SC International
Services, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1995. ..............................................
2.3 Sublease Agreement, dated as of September 29, 1995, between
Caterair International, Inc. (II) and Caterair International
Corporation, together with Schedule of additional Subleases
between such parties. Incorporated by reference to Exhibit 10.27
of SC International Services, Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1995. ...........................
2.4 License Agreement, dated as of September 29, 1995, between Sky
Chefs, Inc. and Caterair International Corporation. Incorporated
by reference to Exhibit 10.24 of SC International Services,
Inc.'s Annual Report on Form 10-K for the year ended December 31,
1995. ...........................................................
2.5 License Agreement, dated as of September 29, 1995, between
Caterair International, Inc. (II) and Caterair International
Corporation. Incorporated by reference to Exhibit 10.25 of SC
International Services, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1995. ...................................
3.1 Certificate of Incorporation of SC International Services, Inc.
Incorporated by reference to Exhibit 3.1 of SC International
Services, Inc.'s Registration Statement on Form S-1, Registration
No. 33-94572. ...................................................
3.2 Amended and Restated Bylaws of SC International Services,
Inc.* ...........................................................
3.3 Amended and Restated Certificate of Incorporation of Sky Chefs,
Inc. Incorporated by reference to Exhibit 3.3 of Amendment No. 3
to SC International Services, Inc.'s Registration Statement on
Form S-1, Registration No. 33-94572. ............................
3.4 Bylaws of Sky Chefs, Inc. Incorporated by reference to Exhibit
3.4 of Amendment No. 3 to SC International Services, Inc.'s
Registration Statement on Form S-1, Registration No.
33-94572. .......................................................
3.5 Certificate of Incorporation of Caterair International, Inc.
(II). Incorporated by reference to Exhibit 3.5 of SC
International Services, Inc.'s Registration Statement on Form
S-1, Registration No. 33-94572. .................................
3.6 Bylaws of Caterair International, Inc. (II). Incorporated by
reference to Exhibit 3.6 of SC International Services, Inc.'s
Registration Statement on Form S-1, Registration No.
33-94572. .......................................................
3.7 Certificate of Incorporation of Caterair International
Corporation, Incorporated by reference to Exhibit 3.1 of Caterair
International Corporation's Registration Statement on Form S-1,
Registration No. 33-30918. ......................................
</TABLE>
<PAGE> 229
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
--------- ----------------------------------------------------------------- ------------
<C> <S> <C>
3.8 Bylaws of Caterair International Corporation. Incorporated by
reference to Exhibit 3.2 of Caterair International Corporation's
Registration Statement on Form S-1, Registration No.
33-30918. .......................................................
3.9 Certificate of Incorporation of Arlington Services, Inc.* .......
3.10 Bylaws of Arlington Services, Inc.* .............................
3.11 Certificate of Incorporation of Arlington Services Holding
Corporation.* ...................................................
3.12 Bylaws of Arlington Services Holding Corporation.* ..............
3.13 Certificate of Incorporation of JFK Caterers, Inc.* .............
3.14 Bylaws of JFK Caterers, Inc.* ...................................
3.15 Certificate of Incorporation of Caterair Consulting Services
Corporation.* ...................................................
3.16 Bylaws of Caterair Consulting Services Corporation.* ............
3.17 Certificate of Incorporation of Western Aire Chef, Inc.* ........
3.18 Bylaws of Western Aire Chef, Inc.* ..............................
3.19 Certificate of Incorporation of Bethesda Services, Inc.* ........
3.20 Bylaws of Bethesda Services, Inc.* ..............................
3.21 Certificate of Incorporation of Caterair New Zealand
Limited.* .......................................................
3.22 Bylaws of Caterair New Zealand Limited.* ........................
3.23 Certificate of Incorporation of Onex Ohio Finance Corp.* ........
3.24 Bylaws of Onex Ohio Finance Corp.* ..............................
3.25 Certificate of Incorporation of Onex Ohio Finance Corp. II.* ....
3.26 Bylaws of Onex Ohio Finance Corp. II.* ..........................
3.27 Certificate of Incorporation of Onex Ohio Equity Corp.* .........
3.28 Bylaws of Onex Ohio Equity Corp.* ...............................
3.29 Certificate of Incorporation of Onex Ohio Equity Corp. II.* .....
3.30 Bylaws of Onex Ohio Equity Corp. II.* ...........................
3.31 Certificate of Incorporation of Onex Ohio Credit Corp.* .........
3.32 Bylaws of Onex Ohio Credit Corp.* ...............................
3.33 Certificate of Incorporation of Onex Ohio Credit Corp. II.* .....
3.34 Bylaws of Onex Ohio Credit Corp. II.* ...........................
3.35 Certificate of Incorporation of Onex Ohio Acceptance
Corporation.* ...................................................
3.36 Bylaws of Onex Ohio Acceptance Corporation.* ....................
3.37 Certificate of Incorporation of Onex Ohio Capital Corp.* ........
3.38 Bylaws of Onex Ohio Capital Corp.* ..............................
3.39 Certificate of Incorporation of Onex Ohio Capital Corp. II.* ....
3.40 Bylaws of Onex Ohio Capital Corp. II.* ..........................
3.41 Certificate of Incorporation of Onex Ohio Fiscal Corp.* .........
3.42 Bylaws of Onex Ohio Fiscal Corp.* ...............................
3.43 Certificate of Incorporation of Onex Ohio Fiscal Corp. II.* .....
3.44 Bylaws of Onex Ohio Fiscal Corp. II.* ...........................
3.45 Certificate of Incorporation of Onex Ohio Funds Corp.* ..........
3.46 Bylaws of Onex Ohio Funds Corp.* ................................
3.47 Certificate of Incorporation of Onex Ohio Funds Corp. II.* ......
3.48 Bylaws of Onex Ohio Funds Corp. II.* ............................
</TABLE>
<PAGE> 230
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
--------- ----------------------------------------------------------------- ------------
<C> <S> <C>
3.49 Certificate of Incorporation of Caterair International Transition
Corporation.* ...................................................
3.50 Bylaws of Caterair International Transition Corporation.* .......
3.51 Certificate of Incorporation of Sky Chefs International
Corp.* ..........................................................
3.52 Bylaws of Sky Chefs International Corp.* ........................
3.53 Certificate of Incorporation of Caterair Airport Properties,
Inc.* ...........................................................
3.54 Bylaws of Caterair Airport Properties, Inc.* ....................
3.55 Certificate of Incorporation of Caterair St. Thomas Holdings
Corporation.* ...................................................
3.56 Bylaws of Caterair St. Thomas Holdings Corporation.* ............
3.57 Certificate of Incorporation of Sky Chefs Argentine Inc.* .......
3.58 Bylaws of Sky Chefs Argentine Inc.* .............................
4. Indenture, dated August 28, 1997, among SC International
Services, Inc., as Issuer, The Bank of New York, as Trustee and
the Guarantors named therein.* ..................................
5. Opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP.* ........
8.1 Opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP.* ........
8.2 Opinion of Price Waterhouse LLP.* ...............................
10.1 Purchase Agreement, dated as of August 22, 1997, among SC
International Services, Inc., the Guarantors named therein, and
BT Securities Corporation, J.P. Morgan Securities Inc., Credit
Suisse First Boston Corporation, Goldman, Sachs & Co., Smith
Barney, Inc. and Bankers Trust International PLC, as Initial
Purchasers.* ....................................................
10.2 Registration Rights Agreement, dated as of August 28, 1997, among
SC International Services, Inc., the Guarantors named therein,
and BT Securities Corporation, J.P. Morgan Securities Inc.,
Credit Suisse First Boston Corporation, Goldman, Sachs & Co.,
Smith Barney, Inc., and Bankers Trust International PLC, as
Initial Purchasers.* ............................................
10.3 Dealer Manager Agreement, dated August 25, 1997, among SC
International Services, Inc., Sky Chefs, Inc., Caterair
International, Inc. (II), Caterair International Corporation and
BT Securities Corporation.* .....................................
10.4 Depositary Agreement, dated as of August 25, 1997, between SC
International Services, Inc. and The Bank of New York, as
Depositary.* ....................................................
10.5 Form of Exchange Agent Agreement between SC International
Services, Inc. and The Bank of New York, as Exchange Agent. .....
10.6 Marriott Noncompetition Agreement, dated as of December 15, 1989,
among Marriott Corporation, Host International, Inc., Caterair
Holdings Corporation and Caterair International Corporation.
Incorporated by reference to Exhibit 10.25 of Caterair
International Corporation's Registration Statement on Form S-1,
Registration No. 33-31309. ......................................
10.7 Consulting Agreement, dated as of September 29, 1995, between
Frederic V. Malek and SC International Services, Inc.
Incorporated by reference to Exhibit 10.1 of SC International
Services, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1995. ..............................................
</TABLE>
<PAGE> 231
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
--------- ----------------------------------------------------------------- ------------
<C> <S> <C>
10.8 Agreement, dated as of October 5, 1993, among Onex Corporation,
Deutsche Lufthansa Aktiengesellschaft and LSG Lufthansa Service
GmbH. Incorporated by reference to Exhibit 10.2 of SC
International Services, Inc.'s Registration Statement on Form
S-1, Registration No. 33-94572. .................................
10.9 Cooperation Agreement, dated as of October 5, 1993, between LSG
Lufthansa Service GmbH and Sky Chefs, Inc. Incorporated by
reference to Exhibit 10.3 of SC International Services, Inc.'s
Registration Statement on Form S-1, Registration No.
33-94572. .......................................................
10.10 Consent Agreement, dated as of April 20, 1995, among Onex
Corporation, Onex Food Services, Inc., OnCap Holdings U.S., Inc.,
Sky Chefs, Inc. and LSG Lufthansa Service GmbH. Incorporated by
reference to Exhibit 10.3.1 of Amendment No. 2 to SC
International Services, Inc.'s Registration Statement on Form
S-1, Registration No. 33-94572. .................................
10.11 Consent Agreement, dated as of April 20, 1995, among OnCap
Holdings U.S., Inc., OMI Quebec Inc., Onex Food Services, Inc.
and LSG Lufthansa Service GmbH. Incorporated by reference to
Exhibit 10.4.1 of Amendment No. 2 to SC International Services,
Inc.'s Registration Statement on Form S-1, Registration No.
33-94572. .......................................................
10.12 Consent Agreement, dated as of April 20, 1995, among Onex
Corporation, Onex Food Services, Inc., OnCap Holdings U.S., Inc.,
Sky Chefs, Inc. and LSG Lufthansa Service GmbH. Incorporated by
reference to Exhibit 10.4.2 of Amendment No. 2 to SC
International Services, Inc.'s Registration Statement on Form
S-1, Registration No. 33-94572. .................................
10.13 Exchange Agreement and Amendment to Stockholders' Agreement,
dated as of December 28, 1996, among Onex Food Services, Inc.,
LSG Lufthansa Service GmbH and LSG Lufthansa Service USA
Corporation.* ...................................................
10.14 Stockholders' Agreement, dated as of December 6, 1993, among Onex
Corporation, Onex Food Services, Inc., OnCap Holdings U.S., Inc.,
OMI Quebec Inc., LSG Lufthansa Service GmbH and LSG Lufthansa
Service USA Corporation. Incorporated by reference to Exhibit
10.4 of SC International Services, Inc.'s Registration Statement
on Form S-1, Registration No. 33-94572. .........................
10.15 Arbitration Agreement dated as of October 5, 1993, among Onex
Corporation, Onex Food Services, Inc., OnCap Holdings U.S., Inc.,
OMI Quebec Inc., Sky Chefs, Inc., Deutsche Lufthansa
Aktiengesellschaft and LSG Lufthansa Service GmbH. Incorporated
by reference to Exhibit 10.5 of SC International Services, Inc.'s
Registration Statement on Form S-1, Registration No.
33-94572. .......................................................
10.16 Master National Agreement, dated August 22, 1969, between Sky
Chefs, Inc. and Hotel Employees and Restaurant Employees
International Union. Incorporated by reference to Exhibit 10.8 of
Amendment No. 1 to SC International Services, Inc.'s Registration
Statement on Form S-1, Registration No. 33-94572. ...............
10.17 Sky Chefs, Inc. Supplemental Executive Retirement Plan.
Incorporated by reference to Exhibit 10.13 of SC International
Services, Inc.'s Registration Statement on Form S-1, Registration
No. 33-94572. ...................................................
10.18 Sky Chefs, Inc. Performance Reward Plan. Incorporated by
reference to Exhibit 10.13 of Amendment No. 1 to SC International
Services, Inc.'s Registration Statement on Form S-1, Registration
No. 33-94572. ...................................................
</TABLE>
<PAGE> 232
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
--------- ----------------------------------------------------------------- ------------
<C> <S> <C>
10.19 Employment Agreement, dated as of January 1, 1997, between James
J. O'Neill and Onex Food Services, Inc.* ........................
10.20 Employment Agreement, dated as of January 1, 1997, between
Michael Z. Kay and Sky Chefs, Inc.* .............................
10.21 Employment Agreement, dated as of January 1, 1997, between
Patrick W. Tolbert and Sky Chefs, Inc.* .........................
10.22 Employment Agreement, dated as of January 1, 1997, between
Randall C. Boyd and Sky Chefs, Inc.* ............................
10.23 Caterair Key Employee Retention Plan. Incorporated by reference
to Exhibit 10.11 of SC International Services, Inc.'s
Registration Statement on Form S-1, Registration No.
33-94572. .......................................................
10.23.1 Amendment No. 1 to Caterair Key Employee Retention Plan.
Incorporated by reference to Exhibit 10.11.1 of SC International
Services, Inc.'s Registration Statement on Form S-1, Registration
No. 33-94572. ...................................................
10.24 Caterair International Corporation Transition Severance Plan.
Incorporated by reference to Exhibit 10.26 of Amendment No. 2 to
SC International Services, Inc.'s Registration Statement on Form
S-1, Registration No. 33-94572. .................................
10.25 Phantom Stock Plan for Management Employees of Onex Food
Services, Inc. and its Subsidiaries. Incorporated by reference to
Exhibit 10.6 of Caterair International Corporation's Annual
Report on Form 10-K for the year ended December 31, 1995. .......
10.26 Management Advisory Agreement, dated as of September 29, 1995,
between OMI Partnership Holdings Ltd, and SC International
Services Inc.* ..................................................
10.27 Lease Agreement, dated as of May 15, 1993, between TriNet
Essential Facilities X, Inc. and Caterair International
Corporation, together with Schedule of substantially similar
Lease Agreements between such parties.* .........................
10.27.1 First Amendment to Lease Agreement, dated as of September 22,
1995, between TriNet Essential Facilities X, Inc. and Caterair
International Corporation.* .....................................
10.27.2 Second Amendment to Lease Agreement, dated as of December 1,
1995, between TriNet Essential Facilities X, Inc. and Caterair
International Corporation.* .....................................
10.27.3 Third Amendment to Lease Agreement, dated as of June 1, 1996,
between TriNet Essential Facilities X, Inc. and Caterair
International Corporation.* .....................................
10.27.4 Fourth Amendment to Lease Agreement, dated as of December 23,
1996, between TriNet Essential Facilities X, Inc. and Caterair
International Corporation.* .....................................
10.27.5 Fifth Amendment to Lease Agreement, dated as of June 23, 1997,
between TriNet Essential Facilities X, Inc. and Caterair
International Corporation.* .....................................
10.27.6 Sixth Amendment to Lease Agreement, dated as of August 22, 1997,
between TriNet Essential Facilities X, Inc. and Caterair
International Corporation.* .....................................
10.27.7 Limited Waiver dated as of August 22, 1997, by TriNet Essential
Facilities X, Inc., in favor of Caterair International
Corporation.* ...................................................
</TABLE>
<PAGE> 233
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
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<C> <S> <C>
10.28 Lease Agreement, dated as of May 15, 1993, between TriNet
Essential Facilities VIII R, Inc. and Caterair International
Corporation, together with Schedule of substantially similar
Lease Agreements between such parties.* .........................
10.28.1 First Amendment to Lease Agreement, dated as of September 22,
1995, between TriNet Essential Facilities VIII R, Inc. and
Caterair International Corporation.* ............................
10.28.2 Second Amendment to Lease Agreement, dated as of December 1,
1995, between TriNet Essential Facilities VIII R, Inc. and
Caterair International Corporation.* ............................
10.28.3 Third Amendment to Lease Agreement, dated as of June 1, 1996,
between TriNet Essential Facilities VIII R, Inc. and Caterair
International Corporation.* .....................................
10.28.4 Fourth Amendment to Lease Agreement, dated as of December 23,
1996, between TriNet Essential Facilities VIII R, Inc. and
Caterair International Corporation.* ............................
10.28.5 Fifth Amendment to Lease Agreement, dated as of June 23, 1997,
between TriNet Essential Facilities VIII R, Inc. and Caterair
International Corporation.* .....................................
10.28.6 Sixth Amendment to Lease Agreement, dated as of August 22, 1997,
between TriNet Essential Facilities VIII R, Inc. and Caterair
International Corporation.* .....................................
10.28.7 Limited Waiver, dated as of August 22, 1997, by TriNet Essential
Facilities VIII R, Inc., in favor of Caterair International
Corporation.* ...................................................
10.29 Guaranty, dated as of September 22, 1995, by SC International
Services, Inc., Sky Chefs, Inc., Onex Food Services, Inc. and
Caterair International, Inc. (II) for the benefit of TriNet
Essential Facilities VIII R, Inc.* ..............................
10.30 Guaranty, dated as of September 22, 1995, by SC International
Services, Inc., Sky Chefs, Inc., Onex Food Services, Inc. and
Caterair International, Inc. (II) for the benefit of TriNet
Essential Facilities X, Inc.* ...................................
10.31 Tax Sharing Agreement, dated as of December 15, 1989, among
Caterair Holdings Corporation, Caterair International Corporation
and Marriott Corporation. Incorporated by reference to Exhibit
10.25 of SC International Services, Inc.'s Registration Statement
on Form S-1, Registration No. 33-94572. .........................
10.32 Noncompetition Agreement, dated as of September 29, 1995, between
Caterair International Corporation and Sky Chefs, Inc.
Incorporated by reference to Exhibit 10.16 of Caterair
International Corporation's Annual Report on Form 10-K for the
year ended December 31, 1995. ...................................
10.33 Promissory Note, dated September 29, 1995, by Caterair
International Corporation payable to the order of SC
International Services, Inc. Incorporated by reference to Exhibit
10.18 of Caterair International Corporation's Annual Report on
Form 10-K for the year ended December 31, 1995. .................
</TABLE>
<PAGE> 234
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
--------- ----------------------------------------------------------------- ------------
<C> <S> <C>
10.34 Credit Agreement, dated as of September 29, 1995, and amended and
restated as of August 28, 1997, among SC International Services,
Inc., as borrower, Onex Food Services, Inc., Caterair Holdings
Corporation, Caterair International Corporation, the guarantors
named therein, the lenders party thereto from time to time,
Bankers Trust Company and J.P. Morgan Securities, Inc., as
co-arrangers, Bankers Trust Company, as syndication agent, the
Bank of New York, as co-agent, and Morgan Guaranty Trust Company
of New York, as administrative agent. ...........................
10.35 Term Loan Agreement, dated as of August 28, 1997, among Caterair
International Corporation and SC International Services, Inc., as
borrowers, the guarantors named therein, the lenders party
thereto from time to time, Bankers Trust Company and J.P. Morgan
Securities Inc., as co-arrangers, Bankers Trust Company, as
syndication agent, and Morgan Guaranty Trust Company of New York,
as administrative agent. ........................................
10.36 Tax Sharing Agreement, dated as of September 29, 1995, among Onex
Food Services, Inc., Sky Chefs, Inc. and Caterair International,
Inc. (II). Incorporated by reference to Exhibit 10.22 of SC
International Services, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1995. ...................................
10.37 Shareholders' Agreement, dated as of May 29, 1986, as amended,
among Onex Food Services, Inc., an affiliate of Onex Corporation
and certain employees of Sky Chefs, Inc. ........................
10.38 Acquisition Agreement, dated as of November 30, 1995, between LSG
Lufthansa Service USA Corporation and Sky Chefs, Inc.* ..........
10.39 Acquisition Agreement, dated as of August 14, 1995, between LSG
Lufthansa Service USA Corporation and Sky Chefs, Inc.* ..........
10.40 Acquisition Agreement, dated July 18, 1997, between Caterair
International, Inc. (II) and Sky Chefs, Inc.* ...................
10.40.01 Acquisition Agreement, dated as of August 29, 1997, between
Caterair International, Inc. (II) and Sky Chefs, Inc. ...........
10.41 Caterair Noncompetition Agreement, dated as of December 15, 1989,
among Marriott Corporation, Host International, Inc., Caterair
Holdings Corporation and, Caterair International Corporation.
Incorporated by International Corporation Registration Statement
on Form S-1, Registration No. 33-31309. .........................
12.1 SC International Services, Inc. and Subsidiaries Computation of
Ratio of Earnings to Fixed Charges. .............................
12.2 Caterair International Corporation and Subsidiaries Computation
of Ratio of Earnings to Fixed Charges. ..........................
12.3 SC International Services, Inc. and Subsidiaries and Caterair
International Corporation and Subsidiaries Computation of
Combined Pro Forma Ratio of Earnings to Fixed Charges. ..........
21.1 Subsidiaries of the Registrants.* ...............................
23.1 Consent of Coopers & Lybrand L.L.P. .............................
23.2 Consent of Kaye, Scholer, Fierman, Hays & Handler, LLP.
Incorporated by reference to Exhibit 5.* ........................
23.3 Consent of Price Waterhouse, LLP. Incorporated by reference to
Exhibit 8.2.* ...................................................
23.4 Consent of Arthur Andersen LLP. .................................
</TABLE>
<PAGE> 235
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
--------- ----------------------------------------------------------------- ------------
<C> <S> <C>
24.1 Power of Attorney for SC International Services, Inc. (included
with signature pages of SC International Services, Inc. at page
II-11)* .........................................................
24.2 Power of Attorney for Sky Chefs, Inc. (included with signature
pages of Sky Chefs, Inc. at page II-13)* ........................
24.3 Power of Attorney for Caterair International, Inc. (II) (included
with signature pages of Caterair International, Inc. (II) at page
II-14)* .........................................................
24.4 Power of Attorney of Caterair International Corporation (included
with signature pages of Caterair International Corporation at
page II-15)* ....................................................
24.5 Power of Attorney for Arlington Services, Inc. (included with
signature pages of Arlington Services, Inc. at page II-16).* ....
24.6 Power of Attorney for Arlington Services Holding Corporation
(included with signature pages of Arlington Services Holding
Corporation at page II-17).* ....................................
24.7 Power of Attorney for JFK Caterers, Inc. (included with signature
pages of JFK Caterers, Inc. at page II-20).* ....................
24.8 Power of Attorney for Caterair Consulting Services Corporation
(included with signature pages of Caterair Consulting Services
Corporation at page II-21).* ....................................
24.9 Power of Attorney for Western Aire Chef, Inc. (included with
signature pages of Western Aire Chef, Inc. at page II-22).* .....
24.10 Power of Attorney for Bethesda Services, Inc. (included with
signature pages of Bethesda Services, Inc. at page II-18).* .....
24.11 Power of Attorney for Caterair New Zealand Limited (included with
signature pages of Caterair New Zealand Limited at page
II-19).* ........................................................
24.12 Power of Attorney for Onex Ohio Finance Corp. (included with
signature pages of Onex Ohio Finance Corp. at page II-28).* .....
24.13 Power of Attorney for Onex Ohio Finance Corp. II (included with
signature pages of Onex Ohio Finance Corp. II at page
II-29).* ........................................................
24.14 Power of Attorney for Onex Ohio Equity Corp. (included with
signature pages of Onex Ohio Equity Corp. at page II-30).* ......
24.15 Power of Attorney for Onex Ohio Equity Corp. II (included with
signature pages of Onex Ohio Equity Corp. II at page II-31).* ...
24.16 Power of Attorney for Onex Ohio Credit Corp. (included with
signature pages of Onex Ohio Credit Corp. at page II-32).* ......
24.17 Power of Attorney for Onex Ohio Credit Corp. II (included with
signature pages of Onex Ohio Credit Corp. II at page II-33).* ...
24.18 Power of Attorney for Onex Ohio Acceptance Corporation (included
with signature pages of Onex Ohio Acceptance Corporation at page
II-34).* ........................................................
24.19 Power of Attorney for Onex Ohio Capital Corp. (included with
signature pages of Onex Ohio Capital Corp. at page II-35).* .....
24.20 Power of Attorney for Onex Ohio Capital Corp. II (included with
signature pages of Onex Ohio Capital Corp. II at page
II-36).* ........................................................
24.21 Power of Attorney for Onex Ohio Fiscal Corp. (included with
signature pages of Onex Ohio Fiscal Corp. at page II-37).* ......
24.22 Power of Attorney for Onex Ohio Fiscal Corp. II (included with
signature pages of Onex Ohio Fiscal Corp. II at page II-38).* ...
</TABLE>
<PAGE> 236
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
--------- ----------------------------------------------------------------- ------------
<C> <S> <C>
24.23 Power of Attorney for Onex Ohio Funds Corp. (included with
signature pages of Onex Ohio Funds Corp. at page II-39).* .......
24.24 Power of Attorney for Onex Ohio Funds Corp. II (included with
signature pages of Onex Ohio Funds Corp. II at page II-40).* ....
24.25 Power of Attorney for Caterair International Transition
Corporation (included with signature pages of Caterair
International Transition Corporation at page II-24).* ...........
24.26 Power of Attorney for Sky Chefs International Corp. (included
with signature pages of Sky Chefs International Corp. at page
II-27).* ........................................................
24.27 Power of Attorney for Caterair Airport Properties, Inc. (included
with signature pages of Caterair Airport Properties, Inc. at page
II-26).* ........................................................
24.28 Power of Attorney for Caterair St. Thomas Holdings Corporation
(included with signature pages of Caterair St. Thomas Holdings
Corporation at page II-23).* ....................................
24.29 Power of Attorney for Sky Chefs Argentine, Inc. (included with
signature pages of Sky Chefs Argentine, Inc. at page II-25).* ...
25.1 Statement of Eligibility on Form T-I of Trustee under the
Indenture.* .....................................................
27.1 Financial Data Schedules for SC International Services, Inc. and
consolidated subsidiaries for the fiscal year ended December 31,
1996, the six-months ended June 30, 1997 and the six-months ended
June 30, 1996. ..................................................
27.2 Financial Data Schedules for Caterair International Corporation
and consolidated subsidiaries for the fiscal year ended December
31, 1996, the six-months ended June 30, 1997 and the six-months
ended June 30, 1996. ............................................
99.1 Form of Letter of Transmittal.* .................................
99.2 Form of Notice of Guaranteed Delivery.* .........................
</TABLE>
- ---------------
* Filed with the Registration Statement on October 9, 1997.
<PAGE> 1
EXHIBIT 10.5
SC INTERNATIONAL SERVICES, INC.
524 East Lamar Blvd.
Arlington, Texas 76011
(817) 792-2123
(817) 792-2222 (Facsimile)
_____________ __, 1997
The Bank of New York
Corporate Trust Trustee Administration
101 Barclay Street
Floor 21 West
New York, New York 10286
Re: EXCHANGE AGENT AGREEMENT
Ladies and Gentlemen:
SC International Services, Inc., a Delaware corporation (the "ISSUER"),
and the Guarantors (the "GUARANTORS") identified in the Registration Statement
(as defined herein) propose to make an offer (the "EXCHANGE OFFER") to exchange
up to $300,000,000 aggregate principal amount of the Issuer's 9 1/4% Senior
Subordinated Notes due 2007, Series B (the "EXCHANGE NOTES") (and the related
guarantees of the Guarantors) for a like principal amount of the Issuer's
outstanding 9 1/4% Senior Subordinated Notes due 2007, Series A (the "PRIVATE
NOTES") (and the related guarantees of the Guarantors). The terms and conditions
of the Exchange Offer are set forth in a prospectus (the "PROSPECTUS") included
in the Issuer's and the Guarantors' registration statement on Form S-4 (File No.
333-37475), as amended (the "REGISTRATION STATEMENT"), filed with the Securities
and Exchange Commission (the "COMMISSION"), and proposed to be distributed to
all record holders of the Private Notes. The Private Notes and the Exchange
Notes are collectively referred to herein as the "NOTES." Capitalized terms used
herein and not defined shall have the respective meanings ascribed to them in
the Prospectus or the Letter of Transmittal which constitutes part of the
Prospectus.
The Issuer hereby appoints The Bank of New York to act as exchange
agent (the "EXCHANGE AGENT") in connection with the Exchange Offer. References
hereinafter to "YOU" shall refer to The Bank of New York.
The Exchange Offer is expected to be commenced by the Issuer on or
about ________ __, 1997. The Letter of Transmittal accompanying the Prospectus
is to be used by the holders of the Private Notes to accept the Exchange Offer,
and contains instructions with respect to the delivery of Private Notes
tendered.
<PAGE> 2
The Exchange Offer shall expire at 5:00 P.M., New York City time,
on_____________, 1997, or on such later date or time to which the Issuer may
extend the Exchange Offer (the "EXPIRATION DATE"). Subject to the terms and
conditions set forth in the Prospectus, the Issuer expressly reserves the right
to extend the Exchange Offer from time to time, and may extend the Exchange
Offer by giving notice (such notice if given orally, to be confirmed in writing)
to you before 9:00 A.M., New York City time, on the next New York Stock Exchange
trading day after the previously scheduled Expiration Date.
The Issuer expressly reserves the right, in its sole discretion, to
amend or terminate the Exchange Offer, and not to accept for exchange any
Private Notes not theretofore accepted for exchange. The Issuer will give notice
(such notice if given orally, to be confirmed in writing) of any amendment,
termination or nonacceptance to you as promptly as practicable.
In carrying out your duties as Exchange Agent, you are to act in
accordance with the following instructions:
1. You will perform such duties and only such duties as are specifically
set forth in the section of the Prospectus captioned "The Exchange
Offer," in the Letter of Transmittal accompanying the Prospectus, or as
specifically set forth herein; provided, however, that in no way will
your general duty to act in good faith and without gross negligence or
willful misconduct be limited by the foregoing.
2. You will establish an account with respect to the Private Notes at The
Depository Trust Company (the "BOOK-ENTRY TRANSFER FACILITY") for
purposes of the Exchange Offer within two New York Stock Exchange
trading days after the date of the Prospectus, and any financial
institution that is a participant in the Book-Entry Transfer Facility's
systems may make book-entry delivery of the Private Notes by causing
the Book-Entry Transfer Facility to transfer such Private Notes into
your account in accordance with the Book-Entry Transfer Facility's
procedures for such transfer.
3. You are to examine each of the Letters of Transmittal and certificates
for Private Notes (and confirmation of book-entry transfers of Private
Notes into your account at the Book-Entry Transfer Facility) and any
other documents delivered or mailed to you by or for holders of the
Private Notes, to ascertain whether: (i) the Letters of Transmittal,
certificates and any such other documents are duly executed and
properly completed in accordance with instructions set forth therein
and that such book-entry confirmations are in due and proper form and
contain the information required to be set forth therein, and (ii) the
Private Notes have otherwise been properly tendered. In each case where
the Letter of Transmittal or any other document has been improperly
completed or executed, or where book-entry confirmations are not in due
and proper form or omit certain information, or any of the certificates
for Private Notes are not in proper form for transfer or some other
irregularity in connection with the acceptance of the Exchange Offer
exists, you will endeavor to inform the presenters of the need for
fulfillment of all requirements and to take any other action as may be
necessary or advisable to cause such irregularity to be corrected.
2
<PAGE> 3
4. With the approval of the Chairman, the President, the Executive Vice
President, Senior Vice President or any of the Vice Presidents of the
Issuer (such approval, if given orally, to be confirmed in writing) or
any other person designated by such an officer in writing, you are
authorized to waive any irregularities in connection with any tender of
Private Notes pursuant to the Exchange Offer.
5. Tenders of Private Notes may be made only as set forth in the Letter of
Transmittal and in the section of the Prospectus captioned "The
Exchange Offer--Procedures for Tendering," and Private Notes shall be
considered properly tendered to you only when tendered in accordance
with the procedures set forth therein. Notwithstanding the provisions
of this paragraph 5, Private Notes which the Chairman, the President,
the Executive Vice President, the Senior Vice President or any of the
Vice Presidents of the Issuer or any other officer of the Issuer
designated by any such person shall approve as having been properly
tendered shall be considered to be properly tendered (such approval, if
given orally, shall be confirmed in writing).
6. You shall advise the Issuer with respect to any Private Notes received
subsequent to the Expiration Date and accept its instructions with
respect to disposition of such Private Notes.
7. You shall accept tenders:
(a) in cases where the Private Notes are registered in two or more
names only if signed by all named holders;
(b) in cases where the signing person (as indicated on the Letter
of Transmittal) is acting in a fiduciary or a representative
capacity only when proper evidence of his or her authority so
to act is submitted; and
(c) from persons other than the registered holder of Private Notes
provided that customary transfer requirements, including those
regarding any applicable transfer taxes, are fulfilled.
You shall accept partial tenders of Private Notes when so indicated and
as permitted in the Letter of Transmittal and deliver certificates for Private
Notes to the transfer agent for split-up and return any untendered Private Notes
to the holder (or such other person as may be designated in the Letter of
Transmittal) as promptly as practicable after expiration or termination of the
Exchange Offer.
8. Upon satisfaction or waiver of all of the conditions to the Exchange
Offer, the Issuer will notify you (such notice if given orally, to be
confirmed in writing) of its acceptance, promptly after the Expiration
Date, of all Private Notes properly tendered and you, on behalf of the
Issuer, will exchange such Private Notes for Exchange Notes and cause
such Private Notes to be canceled. Delivery of Exchange Notes will be
made on behalf of the Issuer by you at the rate of $1,000 principal
amount of Exchange Notes for each $1,000 principal
3
<PAGE> 4
amount of the Private Notes tendered promptly after notice (such notice
if given orally, to be confirmed in writing) of acceptance of said
Private Notes by the Issuer; provided, however, that in all cases,
Private Notes tendered pursuant to the Exchange Offer will be exchanged
only after timely receipt by you of certificates for such Private Notes
(or confirmation of book-entry transfer into your account at the
Book-Entry Transfer Facility), a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) with any required
signature guarantees and any other required documents. Unless otherwise
instructed by the Issuer, you shall issue Exchange Notes only in
denominations of $1,000 or any integral multiple thereof.
9. Tenders, pursuant to the Exchange Offer are irrevocable, except that,
subject to the terms and upon the conditions set forth in the
Prospectus and the Letter of Transmittal, Private Notes tendered
pursuant to the Exchange Offer may be withdrawn at any time on or prior
to the Expiration Date in accordance with the terms of the Exchange
Offer.
10. The Issuer shall not be required to exchange any Private Notes tendered
if any of the conditions set forth in the Exchange Offer are not met.
Notice of any decision by the Issuer not to exchange any Private Notes
tendered shall be given (and confirmed in writing) by the Issuer to
you.
11. If, pursuant to the Exchange Offer, the Issuer does not accept for
exchange all or part of the Private Notes tendered because of an
invalid tender, the occurrence of certain other events set forth in the
Prospectus or otherwise, you shall as soon as practicable after the
expiration or termination of the Exchange Offer return those
certificates for unaccepted Private Notes (or effect appropriate
book-entry transfer), together with any related required documents and
the Letters of Transmittal relating thereto that are in your
possession, to the persons who deposited them (or effected such
book-entry transfer).
12. All certificates for reissued Private Notes, unaccepted Private Notes
or for Exchange Notes (other than those effected by book-entry
transfer) shall be forwarded by first-class certified mail, return
receipt requested.
13. You are not authorized to pay or offer to pay any concessions,
commissions or other solicitation fees to any broker, dealer,
commercial bank, trust company or other nominee or to engage or use any
person to solicit tenders.
14. As Exchange Agent hereunder, you:
(a) shall have no duties or obligations other than those
specifically set forth in the Prospectus, the Letter of
Transmittal or herein, or as may be subsequently agreed to in
writing by you and the Issuer;
(b) will be regarded as making no representations and having no
responsibilities as to the validity, sufficiency, value or
genuineness of any of the certificates for the Private
4
<PAGE> 5
Notes deposited with you pursuant to the Exchange Offer, and
will not be required to and will make no representation as to
the validity, value or genuineness of the Exchange Offer;
(c) shall not be obligated to take any legal action hereunder
which might in your reasonable judgment involve any expense or
liability, unless you shall have been furnished with
reasonable indemnity;
(d) may reasonably rely on and shall be protected in acting in
reliance upon any certificate, instrument, opinion, notice,
letter, telegram or other document or security delivered to
you and reasonably believed by you to be genuine and to have
been signed by the proper party or parties;
(e) may reasonably act upon any tender, statement, request,
comment, agreement or other instrument whatsoever not only as
to its due execution and validity and effectiveness of its
provisions, but also as to the truth and accuracy of any
information contained therein, which you shall in good faith
believe to be genuine or to have been signed or represented by
a proper person or persons;
(f) may rely on and shall be protected in acting upon written or
oral instructions from any officer of the Issuer;
(g) may consult with your counsel with respect to any questions
relating to your duties and responsibilities, and the opinion
of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted
to be taken by you hereunder in good faith and in accordance
with the opinion of such counsel; and
(h) shall not advise any person tendering Private Notes pursuant
to the Exchange Offer as to whether to tender or refrain from
tendering all or any portion of Private Notes or as to the
market value, decline or appreciation in market value of any
Private Notes that may or may not occur as a result of the
Exchange Offer or as to the market value of the Exchange
Notes;
provided, however, that in no way will your general duty to act in good faith
and without gross negligence or willful misconduct be limited by the foregoing.
15. You shall take such action as may from time to time be requested by the
Issuer or its counsel (and such other action as you may reasonably deem
appropriate) to furnish copies of the Prospectus, Letter of Transmittal
and the Notice of Guaranteed Delivery (as described in the Prospectus)
or such other forms as may be approved from time to time by the Issuer
to all persons requesting such documents and to accept and comply with
telephone requests for information relating to the Exchange Offer;
provided, that such information shall relate only
5
<PAGE> 6
to the procedures for accepting (or withdrawing from) the Exchange
Offer. The Issuer will furnish you with copies of such documents at
your request.
16. You shall advise by facsimile transmission or telephone, and promptly
thereafter confirm in writing to Thomas Lee, Director-Financial
Accounting of the Issuer (telephone number (817) 792-2281, facsimile
number (817) 792-2458) and such other person or persons as the Issuer
may request, daily (and more frequently during the week immediately
preceding the Expiration Date and if otherwise requested), up to and
including the Expiration Date, as to the aggregate principal amount of
Private Notes which have been duly tendered pursuant to the Exchange
Offer and the items received by you pursuant to the Exchange Offer and
this Agreement, separately reporting and giving cumulative totals as to
items properly received and items improperly received. In addition, you
will also inform, and cooperate in making available to, the Issuer or
any such other person or persons upon oral request made from time to
time prior to the Expiration Date of such other information as it or he
or she reasonably requests. Such cooperation shall include, without
limitation, the granting by you to the Issuer and such person as the
Issuer may request of access to those persons on your staff who are
responsible for receiving tenders, in order to ensure that immediately
prior to the Expiration Date the Issuer shall have received information
in sufficient detail to enable it to decide whether to extend the
Exchange Offer. You shall prepare a final list of all persons whose
tenders were accepted, the aggregate principal amount of Private Notes
tendered, the aggregate principal amount of Private Notes accepted and
the identity of any broker-dealer if you have knowledge that such
person is a broker-dealer who will receive Exchange Notes for its own
account in exchange for Private Notes and the aggregate principal
amount of Exchange Notes delivered to each, and deliver said list to
the Issuer.
17. Letters of Transmittal, book-entry confirmations and Notices of
Guaranteed Delivery received by you shall be preserved by you for a
period of time at least equal to the period of time you preserve other
records pertaining to the transfer of securities, or two years,
whichever is longer, and thereafter shall be delivered by you to the
Issuer. You shall dispose of unused Letters of Transmittal and other
surplus materials as instructed by the Issuer.
18. You hereby expressly waive any lien, encumbrance or right of set-off
whatsoever that you may have with respect to funds deposited with you
for the payment of transfer taxes by reasons of amounts, if any,
borrowed by the Issuer, or any of its subsidiaries or affiliates
pursuant to any loan or credit agreement with you or for compensation
owed to you hereunder.
19. For services rendered as Exchange Agent hereunder, you shall be
entitled to such compensation as set forth on Schedule I attached
hereto.
20. You hereby acknowledge receipt of the Prospectus and the Letter of
Transmittal and further acknowledge that you have examined each of
them. Any inconsistency between this Agreement, on the one hand, and
the Prospectus and the Letter of Transmittal (as they may be amended
from time to time), on the other hand, shall be resolved in favor of
the latter two
6
<PAGE> 7
documents, except with respect to the duties, liabilities and
indemnification of you as Exchange Agent, which shall be controlled by
this Agreement.
21. The Issuer covenants and agrees to indemnify and hold you harmless in
your capacity as Exchange Agent hereunder against any loss, liability,
cost or expense, including reasonable attorneys' fees and expenses
arising out of or in connection with any act, omission, delay or
refusal made by you in reliance upon any signature, endorsement,
assignment, certificate, order, request, notice, instruction or other
instrument or document reasonably believed by you to be valid, genuine
and sufficient and in accepting any tender or effecting any transfer of
Private Notes reasonably believed by you in good faith to be
authorized, and in delaying or refusing in good faith to accept any
tenders or effect any transfer of Private Notes; provided, however,
that anything in this Agreement to the contrary notwithstanding, the
Issuer shall not be liable for indemnification or otherwise for any
loss, liability, cost or expense to the extent arising out of your
gross negligence or willful misconduct. In no case shall the Issuer be
liable under this indemnity with respect to any claim against you
unless the Issuer shall be notified by you, by letter or cable or by
facsimile which is confirmed by letter, of the written assertion of a
claim against you or of any other action commenced against you,
promptly after you shall have received any such written assertion or
notice of commencement of action. The Issuer shall be entitled to
participate, at its own expense, in the defense of any such claim or
other action, and, if the Issuer so elects, the Issuer may assume the
defense of any pending or threatened action against you in respect of
which indemnification may be sought hereunder, in which case the Issuer
shall not thereafter be responsible for the subsequently incurred fees
and disbursements of legal counsel for you under this paragraph, so
long as the Issuer shall retain counsel reasonably satisfactory to you
to defend such action, and unless the Issuer is also a party to such
proceeding and you have reasonably determined in good faith that joint
representation would be inappropriate. You understand and agree that
the Issuer shall not be liable under this paragraph for the fees and
expenses of more than one legal counsel for you; provided, however,
that this sentence shall not be construed to prohibit you from engaging
successor counsel to continue to represent you in connection with a
proceeding under this paragraph in the event that you have terminated
counsel initially chosen by you or such counsel has terminated its
representation of you.
22. You shall arrange to comply with all requirements under the tax laws of
the United States, including those relating to missing Tax
Identification Numbers, and shall file any appropriate reports with the
Internal Revenue Service. The Issuer understands that you are required,
in certain instances, to deduct thirty-one percent (31%) with respect
to interest paid on the Exchange Notes and proceeds from the sale,
exchange, redemption or retirement of the Exchange Notes from holders
who have not supplied their correct Taxpayer Identification Numbers or
required certification. Such funds will be turned over to the Internal
Revenue Service in accordance with applicable regulations.
23. You shall notify the Issuer of the amount of any transfer taxes payable
in respect of the exchange of Private Notes and, upon receipt of a
written approval from the Issuer, shall
7
<PAGE> 8
deliver or cause to be delivered, in a timely manner to each
governmental authority to which any transfer taxes are payable in
respect of the exchange of Private Notes, your check in the amount of
all transfer taxes so payable, and the Issuer shall reimburse you for
the amount of any and all transfer taxes payable in respect of the
exchange of Private Notes; provided, however, that you shall reimburse
the Issuer for amounts refunded to you in respect of your payment of
any such transfer taxes, at such time as such refund is received by
you.
24. This Agreement and your appointment as Exchange Agent hereunder shall
be construed and enforced in accordance with the laws of the State of
New York applicable to agreements made and to be performed entirely
within such state, and without regard to conflicts of law principles.
25. This Agreement shall be binding upon and inure solely to the benefit of
each party hereto and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
Without limitation of the foregoing, the parties hereto expressly agree
that no holder of Private Notes or Exchange Notes shall have any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
26. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, and all of which taken
together shall constitute one and the same agreement.
27. In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired
thereby.
28. This Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part, except by
a written instrument signed by a duly authorized representative of the
party to be charged.
29. Unless otherwise provided herein, all notices, requests and other
communications to any party hereunder shall be in writing (including
facsimile or similar writing) and shall be given to such party,
addressed to it, at its address or telecopy number set forth below:
8
<PAGE> 9
If to the Issuer, to:
SC International Services, Inc.
524 East Lamar Boulevard
Arlington, Texas 76011-3999
Telephone: (817) 792-2123
Telecopy: (817) 792-2222
Attention: Patrick W. Tolbert
Executive Vice President and
Chief Financial and Administrative Officer
with a copy to:
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, NY 10022
Telephone: (212) 836-8201
Telecopy: (212) 836-7152
Attention: Joel I. Greenberg, Esq.
If to the Exchange Agent, to:
The Bank of New York
101 Barclay Street
Floor 21 West
New York, NY
Telephone:
Telecopy: (212) 815-5915
Attention: Corporate Trust Trustee Administration
30. Unless terminated earlier by the parties hereto, this Agreement shall
terminate 90 days following the Expiration Date. Notwithstanding the
foregoing, paragraphs 17, 19, 21, 23 and 24 shall survive the
termination of this Agreement. Upon any termination of this Agreement,
you shall promptly deliver to the Issuer any certificates for Notes,
funds or property then held by you as Exchange Agent under this
Agreement.
9
<PAGE> 10
31. This Agreement shall be binding and effective as of the date hereof.
Please acknowledge receipt of this Agreement and confirm the arrangements herein
provided by signing and returning the enclosed copy.
SC INTERNATIONAL SERVICES, INC.
By:_________________________
Name:
Title:
Accepted as of the date first above written:
THE BANK OF NEW YORK, as Exchange Agent
By:_________________________
Name:
Title:
10
<PAGE> 11
SCHEDULE I
FEE SCHEDULE FOR EXCHANGE AGENT SERVICES
$2,500 plus $500 per extension.
11
<PAGE> 1
EXHIBIT 10.34
================================================================================
CREDIT AGREEMENT
among
ONEX FOOD SERVICES, INC.,
SC INTERNATIONAL SERVICES, INC.,
CATERAIR HOLDINGS CORPORATION,
CATERAIR INTERNATIONAL CORPORATION,
VARIOUS BANKS,
BANKERS TRUST COMPANY
and
J.P. MORGAN SECURITIES INC.,
as CO-ARRANGERS,
BANKERS TRUST COMPANY,
as SYNDICATION AGENT,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as ADMINISTRATIVE AGENT,
and
THE BANK OF NEW YORK,
as CO-AGENT
----------------------------------
Dated as of September 29, 1995
and Amended and Restated
as of August 28, 1997
----------------------------------
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
----
SECTION 1. Amount and Terms of Credit.............................. 1
1.01 The Commitments......................................... 1
1.02 Minimum Amount of Each Borrowing........................ 4
1.03 Notice of Borrowing..................................... 4
1.04 Disbursement of Funds................................... 5
1.05 Notes................................................... 6
1.06 Conversions............................................. 7
1.07 Pro Rata Borrowings..................................... 8
1.08 Interest................................................ 8
1.09 Interest Periods........................................ 9
1.10 Increased Costs, Illegality, etc........................ 10
1.11 Compensation............................................ 12
1.12 Change of Lending Office................................ 13
1.13 Replacement of Banks.................................... 13
SECTION 2. Letters of Credit....................................... 15
2.01 Letters of Credit....................................... 15
2.02 Minimum Stated Amount................................... 17
2.03 Letter of Credit Requests............................... 17
2.04 Letter of Credit Participation.......................... 17
2.05 Agreement to Repay Letter of Credit Drawings............ 19
2.06 Increased Costs......................................... 21
2.07 Indemnification......................................... 22
SECTION 3. Fees; Reductions of Commitment.......................... 22
3.01 Fees.................................................... 22
3.02 Voluntary Termination of Unutilized Commitments......... 23
3.03 Mandatory Reduction of Commitments...................... 24
SECTION 4. Prepayments; Payments; Taxes............................ 26
4.01 Voluntary Prepayments................................... 26
4.02 Mandatory Repayments.................................... 27
4.03 Method and Place of Payment............................. 29
4.04 Net Payments............................................ 29
(i)
<PAGE> 3
Page
----
SECTION 5. Conditions Precedent to the Restatement Effective Date.. 31
5.01 Execution of Agreement; Notes........................... 31
5.02 Fees, etc............................................... 31
5.03 Officer's Certificate................................... 31
5.04 Opinions of Counsel and Accountants..................... 32
5.05 Corporate Documents; Proceedings; etc................... 32
5.06 Caterair Credit Agreement; etc. ........................ 33
5.07 Issuance of 9-1/4% Senior Subordinated Notes. .......... 33
5.08 Pledge Agreements....................................... 33
5.09 Security Agreement...................................... 34
5.10 Mortgage Amendments; Title Insurance.................... 34
5.11 Subsidiaries Guaranty; Designated Onex Sub Guaranty..... 35
5.12 Adverse Change; Approvals; etc.......................... 35
5.13 Litigation.............................................. 36
5.14 Solvency Certificate; Insurance Certificates............ 36
5.15 Pro Forma Balance Sheets................................ 36
5.16 Original Credit Agreement............................... 36
5.17 Caterair Holdings Subordination Agreement; etc.......... 37
5.18 13% Senior Subordinated Note Tender Offer; 13% Senior
Subordinated Note Consents; 13% Senior Subordinated
Note Indenture Supplement........................... 37
SECTION 6. Conditions Precedent to all Credit Events............... 38
6.01 Restatement Effective Date.............................. 38
6.02 No Default; Representations and Warranties.............. 38
6.03 Notice of Borrowing; Letter of Credit Request........... 38
SECTION 7. Representations, Warranties and Agreements.............. 39
7.01 Corporate Status........................................ 39
7.02 Corporate Power and Authority........................... 40
7.03 No Violation............................................ 40
7.04 Governmental Approvals.................................. 40
7.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Financial Projections.................. 41
7.06 Litigation.............................................. 42
7.07 True and Complete Disclosure............................ 42
7.08 Use of Proceeds; Margin Regulations..................... 43
7.09 Tax Returns and Payments................................ 43
7.10 Compliance with ERISA................................... 44
(ii)
<PAGE> 4
Page
----
7.11 The Security Documents.................................. 45
7.12 Representations and Warranties in Other Documents....... 46
7.13 Properties.............................................. 46
7.14 Capitalization.......................................... 46
7.15 Subsidiaries............................................ 47
7.16 Compliance with Statutes, etc........................... 47
7.17 Investment Company Act.................................. 48
7.18 Public Utility Holding Company Act...................... 48
7.19 Environmental Matters................................... 48
7.20 Labor Relations......................................... 49
7.21 Patents, Licenses, Franchises and Formulas.............. 49
7.22 Indebtedness; Subordination Provisions.................. 50
7.23 Consummation of Transaction............................. 51
SECTION 8. Affirmative Covenants................................... 51
8.01 Information Covenants................................... 51
8.02 Books, Records and Inspections.......................... 56
8.03 Maintenance of Property; Insurance...................... 57
8.04 Corporate Franchises.................................... 58
8.05 Compliance with Statutes, etc........................... 59
8.06 Compliance with Environmental Laws...................... 59
8.07 ERISA................................................... 60
8.08 End of Fiscal Years; Fiscal Quarters.................... 61
8.09 Performance of Obligations.............................. 61
8.10 Payment of Taxes........................................ 62
8.11 Additional Security; Further Assurances................. 62
8.12 Corporate Separateness.................................. 63
8.13 Caterair Holdings Secured Note and Caterair Holdings
Unsecured Debentures................................ 64
8.14 Capital Contributions................................... 64
8.15 13% Senior Subordinated Note Tender Offer; Escrows...... 64
8.16 Termination of Existing Interest Rate Protection
Agreements.......................................... 65
SECTION 9. Negative Covenants...................................... 65
9.01 Liens................................................... 65
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc.. 68
9.03 Dividends, etc.......................................... 73
9.04 Indebtedness............................................ 75
9.05 Advances, Investments and Loans......................... 78
(iii)
<PAGE> 5
Page
----
9.06 Transactions with Affiliates............................ 82
9.07 Capital Expenditures.................................... 83
9.08 Combined Interest Coverage Ratio........................ 85
9.09 Combined Leverage Ratio................................. 86
9.10 Limitation on Payments of Certain Indebtedness;
Modifications of Certain Indebtedness;
Modifications of Certificates of Incorporation,
By-Laws and Certain Other Agreements; etc........... 86
9.11 Limitation on Certain Restrictions on Subsidiaries...... 87
9.12 Limitation on Issuance of Capital Stock................. 88
9.13 Business; etc........................................... 88
9.14 Limitation on Creation of Subsidiaries.................. 90
9.15 Senior Subordinated Notes; etc.......................... 91
SECTION 10. Events of Default...................................... 91
10.01 Payments............................................... 91
10.02 Representations, etc................................... 91
10.03 Covenants.............................................. 91
10.04 Default Under Other Indebtedness....................... 91
10.05 Bankruptcy, etc........................................ 92
10.06 ERISA.................................................. 93
10.07 Security Documents..................................... 94
10.08 Guaranties; etc........................................ 94
10.09 Judgments.............................................. 94
10.10 Change of Control...................................... 94
10.11 American Airlines Catering Agreements.................. 94
10.12 Certain Caterair Agreements............................ 95
10.13 Caterair Holdings Subordination Agreement and Escrow
Agreement........................................... 95
SECTION 11. Definitions and Accounting Terms....................... 96
11.01 Defined Terms.......................................... 96
SECTION 12. The Agents.............................................130
12.01 Appointment............................................130
12.02 Nature of Duties.......................................130
12.03 Lack of Reliance on the Agents.........................130
12.04 Certain Rights of the Agents...........................131
12.05 Reliance...............................................131
(iv)
<PAGE> 6
Page
----
12.06 Indemnification........................................131
12.07 Each Agent in its Individual Capacity..................132
12.08 Holders................................................132
12.09 Resignation by the Agents..............................132
SECTION 13. Miscellaneous..........................................133
13.01 Payment of Expenses, etc...............................133
13.02 Right of Setoff........................................135
13.03 Notices................................................135
13.04 Benefit of Agreement...................................136
13.05 No Waiver; Remedies Cumulative.........................138
13.06 Payments Pro Rata......................................138
13.07 Calculations; Computations.............................139
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION;
VENUE; WAIVER OF JURY TRIAL.........................139
13.09 Counterparts...........................................141
13.10 Effectiveness..........................................141
13.11 Headings Descriptive...................................141
13.12 Amendment or Waiver; etc...............................141
13.13 Survival...............................................143
13.14 Domicile of Loans......................................143
13.15 Confidentiality........................................143
13.16 Register...............................................145
13.17 Certain Matters Relating to OFSI.......................146
13.18 Certain Post-Closing Actions...........................147
13.19 Non-Continuing Banks...................................147
SECTION 14. OFSI Guaranty..........................................147
14.01 The Guaranty...........................................147
14.02 Bankruptcy.............................................148
14.03 Nature of Liability....................................148
14.04 Independent Obligation.................................148
14.05 Authorization..........................................148
14.06 Reliance...............................................149
14.07 Subordination..........................................150
14.08 Waiver.................................................150
14.09 No Recourse Against Class B Assets.....................152
(v)
<PAGE> 7
SCHEDULE I Commitments
SCHEDULE II Bank Addresses
SCHEDULE III Existing Letters of Credit
SCHEDULE IV Real Property
SCHEDULE V Capitalization
SCHEDULE VI Subsidiaries
SCHEDULE VII Existing Indebtedness
SCHEDULE VIII Class B Assets
SCHEDULE IX Insurance
SCHEDULE X Existing Liens
SCHEDULE XI Existing Investments
EXHIBIT A Notice of Borrowing
EXHIBIT B-1 Revolving Note
EXHIBIT B-2 Swingline Note
EXHIBIT C Letter of Credit Request
EXHIBIT D Section 4.04(b)(ii) Certificate
EXHIBIT E-1 Opinion of Kaye, Scholer, Fierman, Hays &
Handler, LLP (Corporate)
EXHIBIT E-2 Opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP
(Tax)
EXHIBIT E-3 Accountant's Letter from Price Waterhouse
EXHIBIT F Officers' Certificate
EXHIBIT G-1 Amended and Restated General Pledge Agreement
EXHIBIT G-2 Amended and Restated OFSI Pledge Agreement
EXHIBIT G-3 Amended and Restated Designated Onex Sub Pledge
Agreement
EXHIBIT H Amended and Restated Security Agreement
EXHIBIT I-1 Amended and Restated Subsidiaries Guaranty
EXHIBIT I-2 Amended and Restated Designated Onex Sub Guaranty
EXHIBIT J Solvency Certificate
EXHIBIT K Intercompany Note
EXHIBIT L Amended and Restated Caterair Holdings Subordination
Agreement
EXHIBIT M Subordination Provisions
EXHIBIT N Letter Agreement
EXHIBIT O Assignment and Assumption Agreement
(vi)
<PAGE> 8
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of September 29,
1995, and amended and restated as of August 28, 1997, among ONEX FOOD SERVICES,
INC., a Delaware corporation ("OFSI"), SC INTERNATIONAL SERVICES, INC. a
Delaware corporation (the "Borrower"), CATERAIR HOLDINGS CORPORATION, a Delaware
corporation ("Caterair Holdings"), CATERAIR INTERNATIONAL CORPORATION, a
Delaware corporation ("Caterair"), the Banks (as defined in Section 11) party
hereto from time to time, BANKERS TRUST COMPANY and J.P. MORGAN SECURITIES INC.,
as Co-Arrangers (in such capacity, collectively, the "Co-Arrangers," and each a
"Co-Arranger"), BANKERS TRUST COMPANY, as Syndication Agent (in such capacity,
the "Syndication Agent"), THE BANK OF NEW YORK, as Co-Agent (in such capacity,
the "Co-Agent"), and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Administrative Agent (in such capacity, together with any successor thereto
appointed pursuant to Section 12.09, the "Administrative Agent"). All
capitalized terms used herein and defined in Section 11 are used herein as
therein defined.
W I T N E S S E T H :
WHEREAS, OFSI, the Borrower, Caterair Holdings, Caterair, the
Original Banks, the Co-Arrangers, the Co-Agent, and the Administrative Agent are
parties to a Credit Agreement, dated as of September 29, 1995 (as amended,
modified or supplemented through, but not including, the date hereof, the
"Original Credit Agreement"); and
WHEREAS, subject to and upon the terms and conditions set forth
herein, the parties hereto wish to amend and restate the Original Credit
Agreement in its entirety in the form of this Agreement;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01 The Commitments. (a) Subject to and upon the terms and
conditions set forth herein, each Bank severally agrees, at any time and from
time to time after the Restatement Effective Date and prior to the Final
Maturity Date, to make a revolving loan or loans (each a "Revolving Loan" and,
collectively, the "Revolving Loans") to the Borrower, which Revolving Loans:
-1-
<PAGE> 9
(i) shall, at the option of the Borrower, be Base Rate Loans or
Eurodollar Loans, provided that (x) except as otherwise specifically
provided in Section 1.10(b), all Revolving Loans comprising the same
Borrowing shall at all times be of the same Type and (y) no Revolving
Loans maintained as Eurodollar Loans may be incurred prior to the earlier
of (1) the 15th day after the Restatement Effective Date and (2) the
Syndication Date;
(ii) may be repaid and reborrowed in accordance with the provisions
hereof;
(iii) shall not exceed for any Bank at any time outstanding that
aggregate principal amount which, when added to the product of (x) such
Bank's Adjusted RL Percentage and (y) the sum of (I) the aggregate amount
of all Letter of Credit Outstandings (exclusive of Unpaid Drawings which
are repaid with the proceeds of, and simultaneously with the incurrence
of, the respective incurrence of Revolving Loans) at such time and (II)
the aggregate principal amount of all Swingline Loans (exclusive of
Swingline Loans which are repaid with the proceeds of, and simultaneously
with the incurrence of, the respective incurrence of Revolving Loans) then
outstanding, equals the Adjusted Available Revolving Loan Commitment of
such Bank at such time; and
(iv) shall not exceed for all Banks at any time outstanding that
aggregate principal amount which, when added to the sum of (I) the amount
of all Letter of Credit Outstandings (exclusive of Unpaid Drawings which
are repaid with the proceeds of, and simultaneously with the incurrence
of, the respective incurrence of Revolving Loans) at such time and (II)
the aggregate principal amount of all Swingline Loans (exclusive of
Swingline Loans which are repaid with the proceeds of, and simultaneously
with the incurrence of, the respective incurrence of Revolving Loans) then
outstanding, equals the Total Available Revolving Loan Commitment at such
time.
Notwithstanding anything to the contrary contained in this Section 1.01(a) or
elsewhere in this Agreement, no Revolving Loans may be incurred on the
Restatement Effective Date.
(b) Subject to and upon the terms and conditions set forth herein,
the Swingline Bank agrees to make at any time and from time to time after the
Restatement Effective Date and prior to the Swingline Expiry Date, a revolving
loan or loans (each a "Swingline Loan" and, collectively, the "Swingline Loans")
to the Borrower, which Swingline Loans:
-2-
<PAGE> 10
(i) shall be made and maintained as Base Rate Loans;
(ii) may be repaid and reborrowed in accordance with the provisions
hereof;
(iii) shall not exceed in aggregate principal amount at any time
outstanding, when combined with the aggregate principal amount of (x) all
Revolving Loans made by Non-Defaulting Banks then outstanding and (y) the
Letter of Credit Outstandings at such time, an amount equal to the
Adjusted Total Available Revolving Loan Commitment at such time (after
giving effect to any changes thereto on such date); and
(iv) shall not exceed in aggregate principal amount at any time
outstanding the Maximum Swingline Amount.
The Swingline Bank shall not make any Swingline Loan after receiving a written
notice from the Borrower or the Required Banks stating that a Default or an
Event of Default exists and is continuing until such time as the Swingline Bank
shall have received written notice of (i) rescission of all such notices from
the party or parties originally delivering such notice, (ii) the waiver of such
Default or Event of Default by the Required Banks or (iii) the Administrative
Agent's good faith determination that such Default or Event of Default has
ceased to exist.
(c) On any Business Day, the Swingline Bank may, in its sole
discretion, give notice to the Banks that its outstanding Swingline Loans shall
be refunded with a Borrowing of Revolving Loans (provided that (x) such notice
shall be deemed to have been automatically given upon the occurrence of a
Default or an Event of Default under Section 10.05 or upon the exercise of any
of the remedies provided in the last paragraph of Section 10 and (y) to the
extent such notice is otherwise required to be given, such notice shall be
deemed to have been given on a certain day only if given before 3:00 P.M. (New
York time) on such day), in which case a Borrowing of Revolving Loans
constituting Base Rate Loans (each such Borrowing, a "Mandatory Borrowing")
shall be made on the immediately succeeding Business Day by all Banks
(notwithstanding any termination of the Revolving Loan Commitments pursuant to
the last paragraph of Section 10) pro rata based on each Bank's Adjusted RL
Percentage (determined before giving effect to any termination of the Revolving
Loan Commitments pursuant to the last paragraph of Section 10) and the proceeds
thereof shall be applied directly to the Swingline Bank to repay the Swingline
Bank for such outstanding Swingline Loans. Each Bank hereby irrevocably agrees
to make Revolving Loans upon one Business Day's notice pursuant to each
Mandatory Borrowing in the amount and in the manner specified in the preceding
sentence and on the date specified
-3-
<PAGE> 11
in writing by the Swingline Bank notwithstanding (i) the amount of the Mandatory
Borrowing may not comply with the minimum amount for Borrowings otherwise
required hereunder, (ii) whether any conditions specified in Section 6 are then
satisfied, (iii) whether a Default or an Event of Default then exists, (iv) the
date of such Mandatory Borrowing and (v) the amount of the Total Revolving Loan
Commitment or the Adjusted Total Available Revolving Loan Commitment at such
time. In the event that any Mandatory Borrowing cannot for any reason be made on
the date otherwise required above (including, without limitation, as a result of
the commencement of a proceeding under the Bankruptcy Code with respect to the
Borrower), then each Bank hereby agrees that it shall forthwith purchase (as of
the date the Mandatory Borrowing would otherwise have occurred, but adjusted for
any payments received from the Borrower on or after such date and prior to such
purchase) from the Swingline Bank such participation in the outstanding
Swingline Loans as shall be necessary to cause the Banks to share in such
Swingline Loans ratably based upon their respective Adjusted RL Percentages
(determined before giving effect to any termination of the Revolving Loan
Commitments pursuant to the last paragraph of Section 10), provided that (x) all
interest payable on the Swingline Loans shall be for the account of the
Swingline Bank until the date as of which the respective participation is
required to be purchased and, to the extent attributable to the purchased
participation, shall be payable to the participant from and after such date and
(y) at the time any purchase of participation pursuant to this sentence is
actually made, the purchasing Bank shall be required to pay the Swingline Bank
interest on the principal amount of the participation purchased for each day
from and including the day upon which the Mandatory Borrowing would otherwise
have occurred to but excluding the date of payment for such participation, at
the overnight Federal Funds Rate for the first three days and at the rate
otherwise applicable to Revolving Loans maintained as Base Rate Loans hereunder
for each day thereafter.
1.02 Minimum Amount of Each Borrowing. The aggregate principal
amount of each Borrowing of Loans shall not be less than the Minimum Borrowing
Amount applicable to such Loans. More than one Borrowing may occur on the same
date, but at no time shall there be outstanding more than six Borrowings of
Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever the Borrower desires to incur
Revolving Loans hereunder (excluding Revolving Loans incurred pursuant to a
Mandatory Borrowing), the Borrower shall give the Administrative Agent at the
Notice Office at least one Business Day's prior written notice of each Base Rate
Loan and at least three Business Days' prior written notice of each Eurodollar
Loan to be made hereunder, provided that any such notice shall be deemed to have
been given on a certain day only if given before 11:00 A.M. (New York time) on
such day. Each such
-4-
<PAGE> 12
written notice (each a "Notice of Borrowing"), except as otherwise expressly
provided in Section 1.10, shall be irrevocable and shall be given by the
Borrower in the form of Exhibit A, appropriately completed to specify the
aggregate principal amount of the Revolving Loans to be made pursuant to such
Borrowing, the date of such Borrowing (which shall be a Business Day), whether
the Revolving Loans being made pursuant to such Borrowing are to be initially
maintained as Base Rate Loans or Eurodollar Loans and, if Eurodollar Loans, the
initial Interest Period to be applicable thereto. The Administrative Agent shall
promptly give each Bank notice of such proposed Borrowing, of such Bank's
proportionate share thereof and of the other matters required by the immediately
preceding sentence to be specified in the Notice of Borrowing.
(b) (i) Whenever the Borrower desires to incur Swingline Loans
hereunder, the Borrower shall give the Swingline Bank not later than 12:00 Noon
(New York time) on the date that a Swingline Loan is to be incurred, written
notice or verbal notice promptly confirmed in writing of each Swingline Loan to
be incurred hereunder. Each such notice shall be irrevocable and specify in each
case (A) the date of Borrowing (which shall be a Business Day) and (B) the
aggregate principal amount of the Swingline Loans to be incurred pursuant to
such Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(c), with the Borrower irrevocably agreeing, by its incurrence of
any Swingline Loan, to the making of the Mandatory Borrowings as set forth in
Section 1.01(c).
(iii) Without in any way limiting the obligation of the Borrower to
confirm in writing any verbal notice of any Borrowing of Swingline Loans, the
Swingline Bank may act without liability upon the basis of verbal notice of such
Borrowing, believed by the Swingline Bank in good faith to be from the
President, a Vice President, the Chief Financial Officer, the Treasurer, any
Assistant Treasurer or Controller of the Borrower prior to receipt of a written
confirmation. In each such case, the Borrower hereby waives the right to dispute
the Swingline Bank's record of the terms of such verbal notice of such Borrowing
of Swingline Loans absent gross manifest error on the part of the Administrative
Agent.
1.04 Disbursement of Funds. Not later than 12:00 Noon (New York
time) on the date specified in each Notice of Borrowing (or (x) in the case of
Swingline Loans, not later than 3:00 P.M. (New York time) on the date specified
pursuant to Section 1.03(b)(i) or (y) in the case of Mandatory Borrowings, not
later than 12:00 Noon (New York time) on the date specified pursuant to Section
1.01(c)), each Bank will make available its pro rata portion (determined in
accordance with Section 1.07) of each such Borrowing requested to be made on
such date (or in the case of Swingline
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<PAGE> 13
Loans, the Swingline Bank will make available the full amount thereof). All such
amounts will be made available in immediately available Dollar denominated funds
at the Payment Office, and the Administrative Agent will make available to the
Borrower at the Payment Office the aggregate of the amounts so made available by
the Banks (prior to 1:00 P.M. (New York time) on such day, to the extent of
funds actually received by the Administrative Agent on or prior to 12:00 Noon
(New York time) on such day). Unless the Administrative Agent shall have been
notified by any Bank prior to the date of Borrowing that such Bank does not
intend to make available to the Administrative Agent such Bank's portion of any
Borrowing to be made on such date, the Administrative Agent may assume that such
Bank has made such amount available to the Administrative Agent on such date of
Borrowing and the Administrative Agent may, in reliance upon such assumption,
make available to the Borrower a corresponding amount. If such corresponding
amount is not in fact made available to the Administrative Agent by such Bank,
the Administrative Agent shall be entitled to recover such corresponding amount
on demand from such Bank. If such Bank does not pay such corresponding amount
forthwith upon the Administrative Agent's demand therefor, the Administrative
Agent shall promptly notify the Borrower and the Borrower agrees immediately to
pay such corresponding amount to the Administrative Agent. The Administrative
Agent shall also be entitled to recover on demand from such Bank or the
Borrower, as the case may be, interest on such corresponding amount in respect
of each day from the date such corresponding amount was made available by the
Administrative Agent to the Borrower until the date such corresponding amount is
recovered by the Administrative Agent, at a rate per annum equal to (i) if
recovered from such Bank, the overnight Federal Funds Rate and (ii) if recovered
from the Borrower, the rate of interest applicable to the respective Borrowing,
as determined pursuant to Section 1.08. Nothing in this Section 1.04 shall be
deemed to relieve any Bank from its obligation to make Loans hereunder or to
prejudice any rights which the Borrower may have against any Bank as a result of
any failure by such Bank to make Loans hereunder.
1.05 Notes. (a) The Borrower's obligation to pay the principal of,
and interest on, the Loans made by each Bank shall be evidenced (i) if Revolving
Loans, by a promissory note duly executed and delivered by the Borrower
substantially in the form of Exhibit B-1 with blanks appropriately completed in
conformity herewith (each a "Revolving Note" and, collectively, the "Revolving
Notes") and (ii) if Swingline Loans, by a promissory note duly executed and
delivered by the Borrower substantially in the form of Exhibit B-2 with blanks
appropriately completed in conformity herewith (the "Swingline Note").
(b) The Revolving Note issued to each Bank shall (i) be executed by
the Borrower, (ii) be payable to such Bank or its registered assigns and be
dated the
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<PAGE> 14
Restatement Effective Date (or if issued thereafter, the date of issuance
thereof), (iii) be in a stated principal amount equal to the Revolving Loan
Commitment of such Bank (or if issued after the termination thereof, in a stated
principal amount equal to the outstanding Revolving Loans of such Bank at such
time) and be payable in the principal amount of the outstanding Revolving Loans
evidenced thereby from time to time, (iv) mature on the Final Maturity Date, (v)
bear interest as provided in the appropriate clause of Section 1.08 in respect
of the Base Rate Loans and Eurodollar Loans, as the case may be, evidenced
thereby, (vi) be subject to voluntary prepayment as provided in Section 4.01,
and mandatory repayment as provided in Section 4.02 and (vii) be entitled to the
benefits of this Agreement and the other Credit Documents.
(c) The Swingline Note issued to the Swingline Bank shall (i) be
executed by the Borrower, (ii) be payable to such Bank or its registered assigns
and be dated the Restatement Effective Date, (iii) be in a stated principal
amount equal to the Maximum Swingline Amount and be payable in the principal
amount of the Swingline Loans evidenced thereby from time to time, (iv) mature
on the Swingline Expiry Date, (v) bear interest as provided in the appropriate
clause of Section 1.08 in respect of the Base Rate Loans evidenced thereby, (vi)
be subject to voluntary prepayment as provided in Section 4.01, and mandatory
repayment as provided in Section 4.02 and (vii) be entitled to the benefits of
this Agreement and the other Credit Documents.
(d) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Notes endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced thereby. Failure to make any such notation
or any error in any such notation or endorsement shall not affect the Borrower's
obligations in respect of such Loans.
1.06 Conversions. The Borrower shall have the option to convert, on
any Business Day occurring on or after the earlier of (1) the 15th day after the
Restatement Effective Date and (2) the Syndication Date, all or a portion equal
to at least the applicable Minimum Borrowing Amount of the outstanding principal
amount of Revolving Loans made to the Borrower pursuant to one or more
Borrowings of one or more Types of Revolving Loans into a Borrowing of another
Type of Revolving Loan, provided that (i) except as otherwise provided in
Section 1.10(b), Eurodollar Loans may be converted into Base Rate Loans only on
the last day of an Interest Period applicable to the Revolving Loans being
converted and no such partial conversion of Eurodollar Loans shall reduce the
outstanding principal amount of such Eurodollar Loans made pursuant to a single
Borrowing to less than the Minimum Borrowing Amount applicable thereto, (ii)
unless the Required Banks otherwise agree, Base Rate Loans may only be converted
into Eurodollar Loans if no Default or Event of Default
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<PAGE> 15
is in existence on the date of the conversion, (iii) no conversion pursuant to
this Section 1.06 shall result in a greater number of Borrowings of Eurodollar
Loans than is permitted under Section 1.02 and (iv) Swingline Loans may not be
converted pursuant to this Section 1.06. Each such conversion shall be effected
by the Borrower giving the Administrative Agent at the Notice Office prior to
11:00 A.M. (New York time) at least three Business Days' prior written notice
(each a "Notice of Conversion") specifying the Revolving Loans to be so
converted, the Borrowing(s) pursuant to which such Revolving Loans were made
and, if to be converted into Eurodollar Loans, the Interest Period to be
initially applicable thereto. The Administrative Agent shall give each Bank
prompt notice of any such proposed conversion affecting any of its Revolving
Loans.
1.07 Pro Rata Borrowings. All Borrowings of Revolving Loans under
this Agreement shall be incurred from the Banks pro rata on the basis of their
Revolving Loan Commitments; provided, that all Borrowings of Revolving Loans
made pursuant to a Mandatory Borrowing shall be incurred from the Banks pro rata
on the basis of their Adjusted RL Percentages. It is understood that no Bank
shall be responsible for any default by any other Bank of its obligation to make
Loans hereunder and that each Bank shall be obligated to make the Loans provided
to be made by it hereunder, regardless of the failure of any other Bank to make
its Loans hereunder.
1.08 Interest. (a) The Borrower agrees to pay interest in respect of
the unpaid principal amount of each Base Rate Loan from the date of Borrowing
thereof until the earlier of (i) the maturity (whether by acceleration or
otherwise) of such Base Rate Loan and (ii) the conversion of such Base Rate Loan
to a Eurodollar Loan pursuant to Section 1.06, at a rate per annum which shall
be equal to the sum of the Applicable Margin plus the Base Rate in effect from
time to time.
(b) The Borrower agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan from the date of Borrowing thereof
until the earlier of (i) the maturity (whether by acceleration or otherwise) of
such Eurodollar Loan and (ii) the conversion of such Eurodollar Loan to a Base
Rate Loan pursuant to Section 1.06, 1.09 or 1.10, as applicable, at a rate per
annum which shall, during each Interest Period applicable thereto, be equal to
the sum of the Applicable Margin plus the Eurodollar Rate for such Interest
Period.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable hereunder
shall, in each case, bear interest at a rate per annum equal to the greater of
(x) 2% per annum in excess of the rate otherwise applicable to Base Rate Loans
from time to time and (y) the rate which is 2% in excess of the rate then borne
by such Loans, in each case with such interest to be payable on demand.
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<PAGE> 16
(d) Accrued (and theretofore unpaid) interest shall be payable (i)
in respect of each Base Rate Loan, quarterly in arrears on each Quarterly
Payment Date, (ii) in respect of each Eurodollar Loan, on the last day of each
Interest Period applicable thereto and, in the case of an Interest Period in
excess of three months, on each date occurring at three month intervals after
the first day of such Interest Period and (iii) in respect of each Loan, on any
repayment or prepayment (on the amount repaid or prepaid), at maturity (whether
by acceleration or otherwise) and, after such maturity, on demand.
(e) Upon each Interest Determination Date, the Administrative Agent
shall determine the Eurodollar Rate for each Interest Period applicable to
Eurodollar Loans and shall promptly notify the Borrower and the Banks thereof.
Each such determination shall, absent manifest error, be final and conclusive
and binding on all parties hereto.
1.09 Interest Periods. At the time the Borrower gives any Notice of
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, any Eurodollar Loan (in the case of the initial Interest Period applicable
thereto) or on the third Business Day prior to the expiration of an Interest
Period applicable to such Eurodollar Loan (in the case of any subsequent
Interest Period), the Borrower shall have the right to elect, by giving the
Administrative Agent notice thereof, the interest period (each an "Interest
Period") applicable to such Eurodollar Loan, which Interest Period shall, at the
option of the Borrower, be a one, two, three or six-month period, provided that:
(i) all Eurodollar Loans comprising a Borrowing shall at all times
have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall
commence on the date of Borrowing of such Eurodollar Loan (including the
date of any conversion thereto from a Base Rate Loan) and each Interest
Period occurring thereafter in respect of such Eurodollar Loan shall
commence on the day on which the next preceding Interest Period applicable
thereto expires;
(iii) if any Interest Period relating to a Eurodollar Loan begins on
a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period, such Interest Period shall end
on the last Business Day of such calendar month;
(iv) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding
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<PAGE> 17
Business Day; provided, however, that if any Interest Period for a
Eurodollar Loan would otherwise expire on a day which is not a Business
Day but is a day of the month after which no further Business Day occurs
in such month, such Interest Period shall expire on the next preceding
Business Day;
(v) unless the Required Banks otherwise agree, no Interest Period
may be selected at any time when a Default or an Event of Default is then
in existence; and
(vi) no Interest Period in respect of any Borrowing of Revolving
Loans shall be selected which extends beyond the Final Maturity Date.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to such Eurodollar
Loans as provided above, the Borrower shall be deemed to have elected to convert
such Eurodollar Loans into Base Rate Loans effective as of the expiration date
of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that any
Bank shall have determined in good faith (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto but,
with respect to clause (i) below, may be made only by the Administrative Agent):
(i) on any Interest Determination Date that, by reason of any
changes arising after the date of this Agreement affecting the interbank
Eurodollar market, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in the definition
of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loan because of (x) any change since the date of this
Agreement in any applicable law or governmental (including any NAIC) rule,
regulation, order, guideline or request (whether or not having the force
of law) or in the interpretation or administration thereof and including
the introduction of any new law or governmental rule, regulation, order,
guideline or request, such as, for example, but not limited to: (A) a
change in the basis of taxation of payment to any Bank of the principal of
or interest on such Eurodollar Loan or any other amounts payable hereunder
(except for changes in the rate of tax on, or determined by reference to,
the net income or profits of such Bank pursuant to the laws of the
jurisdiction in which it is organized or in which its principal office or
applicable lending office is located or any subdivision thereof or
therein) or
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<PAGE> 18
(B) a change in official reserve requirements, but, in all events,
excluding reserves required under Regulation D to the extent included in
the computation of the Eurodollar Rate and/or (y) other circumstances
since the date of this Agreement affecting such Bank or the interbank
Eurodollar market or the position of such Bank in such market; or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has been made (x) unlawful by any law or governmental (including any
NAIC) rule, regulation or order, (y) impossible by compliance by any Bank
in good faith with any governmental (including any NAIC) request (whether
or not having force of law) or (z) impracticable as a result of a
contingency occurring after the date of this Agreement which materially
and adversely affects the interbank Eurodollar market;
then, and in any such event, such Bank (or the Administrative Agent, in the case
of clause (i) above) shall promptly give notice (by telephone confirmed in
writing) thereof to the Borrower, and except in the case of clause (i) above, to
the Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Banks). Thereafter (x) in the
case of clause (i) above, Eurodollar Loans shall no longer be available until
such time as the Administrative Agent notifies the Borrower and the Banks that
the circumstances giving rise to such notice by the Administrative Agent no
longer exist, and any Notice of Borrowing or Notice of Conversion given by the
Borrower with respect to Eurodollar Loans which have not yet been incurred
(including by way of conversion) shall be deemed rescinded by the Borrower, (y)
in the case of clause (ii) above, the Borrower agrees to pay to such Bank, upon
written demand therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Bank in its sole discretion shall determine) as shall be required to compensate
such Bank for such increased costs or reductions in amounts received or
receivable hereunder (a written notice as to the additional amounts owed to such
Bank, showing the basis for the calculation thereof, submitted to the Borrower
by such Bank in good faith shall, absent manifest error, be final and conclusive
and binding on all the parties hereto) and (z) in the case of clause (iii)
above, the Borrower shall take one of the actions specified in Section 1.10(b)
as promptly as possible and, in any event, within the time period required by
law. Each of the Administrative Agent and each Bank agrees that if it gives
notice to the Borrower of any of the events described in clause (i) or (iii)
above, it shall promptly notify the Borrower and, in the case of any such Bank,
the Administrative Agent, if such event ceases to exist. If any such event
described in clause (iii) above ceases to exist as to a Bank, the obligations of
such Bank to make Eurodollar Loans and to convert Base Rate Loans into
Eurodollar Loans on the terms and conditions contained herein shall be
reinstated.
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<PAGE> 19
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected by the circumstances described in
Section 1.10(a)(iii) shall) either (x) if the affected Eurodollar Loan is then
being made initially or pursuant to a conversion, cancel the respective
Borrowing by giving the Administrative Agent telephonic notice (confirmed in
writing) on the same date that the Borrower was notified by the affected Bank or
the Administrative Agent pursuant to Section 1.10(a)(ii) or (iii) or (y) if the
affected Eurodollar Loan is then outstanding, upon at least three Business Days'
written notice to the Administrative Agent, require the affected Bank to convert
such Eurodollar Loan into a Base Rate Loan, provided that, if more than one Bank
is affected at any time, then all affected Banks must be treated the same
pursuant to this Section 1.10(b).
(c) If at any time any Bank determines that the introduction of or
any change in any applicable law or governmental (including any NAIC) rule,
regulation, order, guideline, directive or request (whether or not having the
force of law and including, without limitation, those announced or published
prior to the Restatement Effective Date) concerning capital adequacy, or any
change in interpretation or administration thereof by any governmental authority
(including the NAIC), central bank or comparable agency, will have the effect of
increasing the amount of capital required or expected to be maintained by such
Bank or any corporation controlling such Bank based on the existence of such
Bank's Revolving Loan Commitment hereunder or its obligations hereunder, then
the Borrower agrees to pay to such Bank, upon its written demand therefor, such
additional amounts as shall be required to compensate such Bank or such other
corporation for the increased cost to such Bank or such other corporation or the
reduction in the rate of return to such Bank or such other corporation as a
result of such increase of capital. In determining such additional amounts, each
Bank will act reasonably and in good faith and will use averaging and
attribution methods which are reasonable, provided that such Bank's reasonable
good faith determination of compensation owing under this Section 1.10(c) shall,
absent manifest error, be final and conclusive and binding on all the parties
hereto. Each Bank, upon determining that any additional amounts will be payable
pursuant to this Section 1.10(c), will give prompt written notice thereof to the
Borrower, which notice shall show the basis for calculation of such additional
amounts.
1.11 Compensation. The Borrower agrees to compensate each Bank, upon
its written request (which request shall set forth the basis for requesting such
compensation), for all reasonable losses, expenses and liabilities (including,
without limitation, any loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds required by such Bank to
fund its Eurodollar Loans but excluding any loss of anticipated profit) which
such Bank may sustain: (i)
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<PAGE> 20
if for any reason (other than a default by such Bank or the Administrative
Agent) a Borrowing of, or conversion from or into, Eurodollar Loans does not
occur on a date specified therefor by the Borrower in a Notice of Borrowing or
Notice of Conversion (whether or not withdrawn by the Borrower or deemed
withdrawn pursuant to Section 1.10(a)); (ii) if any repayment by the Borrower
(including any repayment made pursuant to Section 4.01 or 4.02 or a result of an
acceleration of the Loans pursuant to Section 10) or conversion of any of its
Eurodollar Loans occurs on a date which is not the last day of an Interest
Period with respect thereto; (iii) if any prepayment by the Borrower of any of
such Bank's Eurodollar Loans is not made on any date specified in a notice of
prepayment given by the Borrower; or (iv) as a consequence of (x) any other
default by the Borrower to repay Loans when required by the terms of this
Agreement or any Note held by such Bank or (y) any election made pursuant to
Section 1.10(b).
1.12 Change of Lending Office. Each Bank agrees that on the
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c), Section 2.06 or Section 4.04 with respect to such Bank,
it will, if requested by the Borrower, use reasonable efforts (subject to
overall policy considerations of such Bank) to designate another lending office
for any Loans or Letters of Credit affected by such event, provided that such
designation is made on such terms that such Bank and its lending office suffer
no economic, legal or regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of such Section. Nothing
in this Section 1.12 shall affect or postpone any of the obligations of the
Borrower or the right of any Bank provided in Sections 1.10, 2.06 and 4.04
(although each such Bank shall nevertheless have an obligation to change its
applicable lending office subject to the terms set forth in the immediately
preceding sentence).
1.13 Replacement of Banks. If any Bank (x) becomes a Defaulting Bank
or otherwise defaults in its obligations to make Loans or fund Unpaid Drawings,
(y) refuses to consent to certain proposed changes, waivers, discharges or
terminations with respect to this Agreement which have been approved by the
Required Banks as provided in Section 13.12(b) or (z) is owed increased costs
under Section 1.10 (a)(ii) or (iii), Section 1.10(c), Section 2.06 or Section
4.04 in a material amount in excess of those being generally charged by the
other Banks, the Borrower shall have the right, in accordance with the
requirements of Section 13.04(b), if no Default or Event of Default would exist
after giving effect to such replacement, to either replace such Bank (the
"Replaced Bank") with one or more Eligible Transferees, none of whom shall
constitute a Defaulting Bank at the time of such replacement (collectively, the
"Replacement Bank") and each of whom shall be required to be reasonably
acceptable to the Administrative Agent and each Issuing Bank; provided, that:
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<PAGE> 21
(i) at the time of any replacement pursuant to this Section 1.13,
the Replaced Bank and the Replacement Bank shall enter into one or more
Assignment and Assumption Agreements pursuant to Section 13.04(b) (and
with all fees payable pursuant to said Section 13.04(b) to be paid by the
Replacement Bank) pursuant to which the Replacement Bank shall acquire all
of the Revolving Loan Commitment and outstanding Revolving Loans of and
participation in Letters of Credit by, the Replaced Bank and, in
connection therewith, shall pay to (x) the Replaced Bank in respect
thereof an amount equal to the sum of (A) an amount equal to the principal
of, and all accrued interest on, all outstanding Revolving Loans of the
Replaced Bank, (B) an amount equal to all Unpaid Drawings that have been
funded by (and not reimbursed to) such Replaced Bank, together with all
then unpaid interest with respect thereto at such time and (C) an amount
equal to all accrued, but theretofore unpaid, Fees owing to the Replaced
Bank pursuant to Section 3.01, (y) the respective Issuing Bank an amount
equal to such Replaced Bank's Adjusted RL Percentage (for this purpose,
determined as if the adjustment described in clause (y) of the immediately
succeeding sentence had been made with respect to such Replaced Bank) of
any Unpaid Drawing (which at such time remains an Unpaid Drawing) with
respect to a Letter of Credit issued by it to the extent such amount was
not theretofore funded by such Replaced Bank and (z) the Swingline Bank an
amount equal to such Replaced Bank's Adjusted RL Percentage (for this
purpose, determined as if the adjustment described in clause (y) of the
immediately succeeding sentence had been made with respect to such
Replaced Bank) of any Mandatory Borrowing to the extent such amount was
not theretofore funded by such Replaced Bank; and
(ii) all obligations of the Borrower owing to the Replaced Bank
(other than those specifically described in clause (i) above in respect of
which the assignment purchase price has been, or is concurrently being,
paid) shall be paid in full to such Replaced Bank concurrently with such
replacement.
Upon the execution of the respective Assignment and Assumption Agreements, the
payment of amounts referred to in clauses (i) and (ii) above, the recordation of
the assignment on the Register by the Administrative Agent pursuant to Section
13.16 and, if so requested by the Replacement Bank, delivery to the Replacement
Bank of the appropriate Revolving Note or Notes executed by the Borrower, (x)
the Replacement Bank shall become a Bank hereunder and the Replaced Bank shall
cease to constitute a Bank hereunder, except with respect to indemnification
provisions under this Agreement (including, without limitation, Sections 1.10,
1.11, 2.06, 4.04, 13.01 and 13.06), which shall survive as to such Replaced Bank
and (y) in the case of a replacement of a Defaulting Bank with a Non-Defaulting
Bank, the Adjusted RL Percentages
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<PAGE> 22
of the respective Banks shall be automatically adjusted at such time to give
effect to such replacement (and to give effect to the replacement of a
Defaulting Bank with one or more Non-Defaulting Banks).
SECTION 2. Letters of Credit.
2.01 Letters of Credit. (a) Subject to and upon the terms and
conditions set forth herein, the Borrower may request that an Issuing Bank
issue, at any time and from time to time on and after the Restatement Effective
Date and prior to the third Business Day (or the 30th day in the case of Trade
Letters of Credit issued in negotiable form to overseas beneficiaries) preceding
the Final Maturity Date, (x) for the account of the Borrower and for the benefit
of any holder (or any trustee, agent or other similar representative for any
such holders) of L/C Supportable Indebtedness of the Borrower, any of its
Subsidiaries or Caterair, an irrevocable standby letter of credit, in a form
customarily used by such Issuing Bank or in such other form as has been approved
by such Issuing Bank (each such standby letter of credit, a "Standby Letter of
Credit") in support of such L/C Supportable Indebtedness and (y) for the account
of the Borrower and for the benefit of sellers of goods to the Borrower, any of
its Subsidiaries or Caterair, an irrevocable sight commercial letter of credit
in a form customarily used by such Issuing Bank or in such other form as has
been approved by such Issuing Bank (each such commercial letter of credit, a
"Trade Letter of Credit", and each such Trade Letter of Credit and each Standby
Letter of Credit, a "Letter of Credit") in support of commercial transactions of
the Borrower, its Subsidiaries or Caterair. It is hereby acknowledged and agreed
that all Letters of Credit issued pursuant to the Original Credit Agreement and
which remain outstanding on the Restatement Effective Date (the "Existing
Letters of Credit"), shall, in each case, constitute a "Letter of Credit" for
all purposes of this Agreement and shall be deemed issued on the Restatement
Effective Date. Schedule III contains a description of all Existing Letters of
Credit which were issued pursuant to the Original Credit Agreement and which are
to remain outstanding on the Restatement Effective Date.
(b) Subject to and upon the terms and conditions set forth herein,
each Issuing Bank hereby agrees that it will, at any time and from time to time
on or after the Restatement Effective Date and prior to the third Business Day
(or the 30th day in the case of Trade Letters of Credit issued in negotiable
form to overseas beneficiaries) preceding the Final Maturity Date, following its
receipt of the respective Letter of Credit Request (together with such other
documents, if any, as such Issuing Bank shall identify to the Borrower as being
customarily included in connection therewith), issue for the account of the
Borrower one or more Letters of Credit, (x) in the case of Standby Letters of
Credit, in support of such L/C Supportable Indebtedness of the Borrower, any of
its Subsidiaries or Caterair as is permitted to remain outstanding
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<PAGE> 23
without giving rise to a Default or an Event of Default and (y) in the case of
Trade Letters of Credit, in support of sellers of goods as referenced in Section
2.01(a), provided that the respective Issuing Bank shall be under no obligation
to issue any Letter of Credit of the types described above if at the time of
such issuance:
(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain such Issuing
Bank from issuing such Letter of Credit or any requirement of law
applicable to such Issuing Bank or any request or directive (whether or
not having the force of law) from any governmental authority with
jurisdiction over such Issuing Bank shall prohibit, or request that such
Issuing Bank refrain from, the issuance of letters of credit generally or
such Letter of Credit in particular or shall impose upon such Issuing Bank
with respect to such Letter of Credit any restriction or reserve or
capital requirement (for which such Issuing Bank is not otherwise
compensated or entitled to be compensated under this Agreement) not in
effect on the date hereof, or any unreimbursed loss, cost or expense which
was not applicable, in effect or known to such Issuing Bank as of the date
hereof and which such Issuing Bank in good faith deems material to it (for
which such Issuing Bank is not otherwise compensated or entitled to be
compensated under this Agreement); or
(ii) such Issuing Bank shall have received written notice from the
Required Banks prior to the issuance of such Letter of Credit of the type
described in the second sentence of Section 2.03(b).
(c) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and
prior to the issuance of, the respective Letter of Credit) at such time would
exceed either (x) $50,000,000 or (y) when added to the aggregate principal
amount of all Revolving Loans made by Non-Defaulting Banks then outstanding and
all Swingline Loans then outstanding, an amount equal to the Adjusted Total
Available Revolving Loan Commitment at such time, (ii) each Standby Letter of
Credit shall by its terms terminate on or before the earlier of (x) the date
which occurs 12 months after the date of the issuance thereof (although any such
Standby Letter of Credit may be extendable for successive periods of up to 12
months, but not beyond the third Business Day preceding the Final Maturity Date,
on terms acceptable to the Issuing Bank thereof) and (y) the third Business Day
preceding the Final Maturity Date and (iv) each Trade Letter of Credit shall by
its terms terminate on or before the earlier of (x) the date which occurs 180
days after the day of issuance thereof and (y) the third Business Day (or the
30th day
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in the case of Trade Letters of Credit issued in negotiable form to overseas
beneficiaries) preceding the Final Maturity Date.
2.02 Minimum Stated Amount. The Stated Amount of each Letter of
Credit shall be not less than $50,000 or such lesser amount as is acceptable to
the respective Issuing Bank.
2.03 Letter of Credit Requests; etc. (a) Whenever the Borrower
desires that a Letter of Credit be issued for its account, the Borrower shall
give the Administrative Agent and the respective Issuing Bank at least five
Business Days' (or such shorter period as is acceptable to the respective
Issuing Bank) written notice thereof. Each notice shall be in the form of
Exhibit C (each a "Letter of Credit Request"). The Administrative Agent shall
promptly transmit copies of each Letter of Credit Request to each Bank.
(b) The making of each Letter of Credit Request shall be deemed to
be a representation and warranty by the Borrower that such Letter of Credit may
be issued in accordance with, and will not violate the requirements of, Section
2.01(c). Unless the respective Issuing Bank has received written notice from the
Required Banks before it issues a Letter of Credit that one or more of the
conditions specified in Section 6 are not then satisfied, or that the issuance
of such Letter of Credit would violate Section 2.01(c), then such Issuing Bank
may issue the requested Letter of Credit for the account of the Borrower in
accordance with such Issuing Bank's usual and customary practices. Upon its
issuance of any Letter of Credit or any amendment to a then existing Letter of
Credit which changes the Stated Amount thereof, such Issuing Bank shall promptly
notify each Bank of such issuance or amendment, as the case may be, which notice
shall be accompanied by a copy of the Letter of Credit actually issued or
amended, as the case may be. As promptly as practicable after the first day of
each calendar month, each Issuing Bank shall notify the Administrative Agent and
each Bank of the Stated Amount of all Trade Letters of Credit that were issued
by such Issuing Bank and that remain outstanding as of the first day of such
calendar month.
2.04 Letter of Credit Participation. (a) Immediately upon the
issuance by any Issuing Bank of any Letter of Credit, such Issuing Bank shall be
deemed to have sold and transferred to each Bank, other than such Issuing Bank
(each such Bank, in its capacity under this Section 2.04, a "Participant"), and
each such Participant shall be deemed irrevocably and unconditionally to have
purchased and received from such Issuing Bank, without recourse or warranty, an
undivided interest and participation, to the extent of such Participant's
Adjusted RL Percentage, in such Letter of Credit, each drawing made thereunder
and the obligations of the Borrower under this Agreement with respect thereto,
and any security therefor or guaranty pertaining thereto. Upon
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any change in the Revolving Loan Commitments or Adjusted RL Percentages of the
Banks pursuant to Section 1.13 or 13.04 or as a result of a Bank Default, it is
hereby agreed that, with respect to all outstanding Letters of Credit and Unpaid
Drawings, there shall be an automatic adjustment to the participation pursuant
to this Section 2.04 to reflect the new Adjusted RL Percentages of the assignor
and assignee Bank or of all Banks with Revolving Loan Commitments, as the case
may be.
(b) In determining whether to pay under any Letter of Credit, such
Issuing Bank shall have no obligation relative to the other Banks other than to
confirm that any documents required to be delivered under such Letter of Credit
appear to have been delivered and that they appear to substantially comply on
their face with the requirements of such Letter of Credit. Any action taken or
omitted to be taken by any Issuing Bank under or in connection with any Letter
of Credit if taken or omitted in the absence of gross negligence or willful
misconduct, shall not create for such Issuing Bank any resulting liability to
the Borrower, any other Credit Party or any Bank.
(c) In the event that any Issuing Bank makes any payment under any
Letter of Credit and the Borrower shall not have reimbursed such amount in full
to such Issuing Bank pursuant to Section 2.05(a), such Issuing Bank shall
promptly notify the Administrative Agent, which shall promptly notify each
Participant of such failure, and each Participant shall promptly and
unconditionally pay to such Issuing Bank the amount of such Participant's
Adjusted RL Percentage of such unreimbursed payment in Dollars and in same day
funds. If the Administrative Agent so notifies, prior to 11:00 A.M. (New York
time) on any Business Day, any Participant required to fund a payment under a
Letter of Credit, such Participant shall make available to such Issuing Bank in
Dollars such Participant's Adjusted RL Percentage of the amount of such payment
on such Business Day in same day funds. If and to the extent such Participant
shall not have so made its Adjusted RL Percentage of the amount of such payment
available to such Issuing Bank, such Participant agrees to pay to such Issuing
Bank, forthwith on demand such amount, together with interest thereon, for each
day from such date until the date such amount is paid to such Issuing Bank at
the overnight Federal Funds Rate. The failure of any Participant to make
available to such Issuing Bank its Adjusted RL Percentage of any payment under
any Letter of Credit shall not relieve any other Participant of its obligation
hereunder to make available to such Issuing Bank its Adjusted RL Percentage of
any Letter of Credit on the date required, as specified above, but no
Participant shall be responsible for the failure of any other Participant to
make available to such Issuing Bank such other Participant's Adjusted RL
Percentage of any such payment.
(d) Whenever any Issuing Bank receives a payment of a reim-
bursement obligation as to which it has received any payments from the
Participants
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<PAGE> 26
pursuant to clause (c) above, such Issuing Bank shall pay to each Participant
which has paid its Adjusted RL Percentage thereof, in Dollars and in same day
funds, an amount equal to such Participant's share (based upon the proportionate
aggregate amount originally funded by such Participant to the aggregate amount
funded by all Participants) of the principal amount of such reimbursement
obligation and interest thereon accruing after the purchase of the respective
participation.
(e) Upon the written request of any Participant, each Issuing Bank
shall furnish to such Participant copies of any Letter of Credit issued by it
and such other documentation as may reasonably be requested by such Participant.
(f) The obligations of the Participants to make payments to each
Issuing Bank with respect to Letters of Credit issued by it shall be irrevocable
and not subject to any qualification or exception whatsoever and shall be made
in accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or any
of the other Credit Documents;
(ii) the existence of any claim, setoff, defense or other right
which any Credit Party or any of its Subsidiaries may have at any time
against a beneficiary named in a Letter of Credit, any transferee of any
Letter of Credit (or any Person for whom any such transferee may be
acting), the Administrative Agent, any Issuing Bank, any Participant, or
any other Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated transactions
(including any underlying transaction between any Credit Party or any of
its Subsidiaries and the beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or any other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Credit Documents; or
(v) the occurrence of any Default or Event of Default.
2.05 Agreement to Repay Letter of Credit Drawings. (a) The Borrower
hereby agrees to reimburse the respective Issuing Bank, by making payment to the
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Administrative Agent in immediately available funds at the Payment Office, for
any payment or disbursement made by such Issuing Bank under any Letter of Credit
issued by it (each such amount, so paid until reimbursed, an "Unpaid Drawing"),
immediately after, and in any event on the date of, the date of such payment or
disbursement, with interest on the amount so paid or disbursed by such Issuing
Bank, to the extent not reimbursed prior to 12:00 Noon (New York time) on the
date of such payment or disbursement, from and including the date paid or
disbursed to but excluding the date such Issuing Bank was reimbursed by the
Borrower therefor at a rate per annum which shall be the Base Rate in effect
from time to time plus the Applicable Margin for Revolving Loans maintained as
Base Rate Loans, provided, however, to the extent such amounts are not
reimbursed prior to 12:00 Noon (New York time) on the third Business Day
following notice to the Borrower by the Administrative Agent or the respective
Issuing Bank of such payment or disbursement, interest shall thereafter accrue
on the amounts so paid or disbursed by such Issuing Bank (and until reimbursed
by the Borrower) at a rate per annum which shall be the Base Rate in effect from
time to time plus the Applicable Margin for Revolving Loans maintained as Base
Rate Loans plus 2%, in each such case, with interest to be payable by the
Borrower on demand, it being understood and agreed, however, that (i) the notice
referred to in the immediately preceding proviso shall not be required to be
given if a Default or an Event of Default under Section 10.05 shall have
occurred and be continuing and, in such case, interest shall accrue on and after
the third Business Day after the respective Drawing at the rate provided in the
immediately preceding proviso and (ii) the Borrower shall be entitled to incur a
Borrowing of Revolving Loans and/or Swingline Loans to repay any such Unpaid
Drawings so long as (v) there is sufficient availability under the Total
Revolving Loan Commitment as determined in accordance with Sections 1.01(a)
and/or (b), (w) no Default or Event of Default under Section 10.05 shall have
occurred and be continuing, (x) the Loans have not theretofore been accelerated
pursuant to Section 10, (y) such Borrowing occurs within five Business Days
following notice to the Borrower by the Administrative Agent or the respective
Issuing Bank of such Drawing and (z) the Final Maturity Date or the Swingline
Expiry Date, as the case may be, has not occurred. The respective Issuing Bank
shall give the Borrower prompt notice of each Drawing under any Letter of
Credit, provided that the failure to give any such notice shall in no way
affect, impair or diminish the Borrower' obligations hereunder.
(b) The obligations of the Borrower under this Section 2.05 to
reimburse the respective Issuing Bank with respect to payments under Letters of
Credit (each a "Drawing") (including, in each case, interest thereon) shall be
absolute and unconditional under any and all circumstances and irrespective of
any setoff, counterclaim or defense to payment which the Borrower or any other
Credit Party may have or have had against any Bank (including in its capacity as
issuer of the Letter of Credit or as Participant), or any nonapplication or
misapplication by the beneficiary of the
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proceeds of such Drawing, the respective Issuing Bank's only obligation to the
Borrower being to confirm that any documents required to be delivered under such
Letter of Credit appear to have been delivered and that they appear to
substantially comply on their face with the requirements of such Letter of
Credit; provided, however, that the Borrower shall not be obligated to reimburse
such Issuing Bank for any wrongful payment made by such Issuing Bank under a
Letter of Credit as a result of acts or omissions constituting willful
misconduct or gross negligence on the part of such Issuing Bank. Any action
taken or omitted to be taken by any Issuing Bank under or in connection with any
Letter of Credit if taken or omitted in the absence of gross negligence or
willful misconduct, shall not create for such Issuing Bank any resulting
liability to the Borrower.
2.06 Increased Costs. If at any time the introduction of or any
change in any applicable law, rule, regulation, order, guideline or request or
in the interpretation or administration thereof by any governmental authority
(including any NAIC) charged with the interpretation or administration thereof,
or compliance by any Issuing Bank or any Participant with any request or
directive by any such authority (whether or not having the force of law), or any
change in generally acceptable accounting principles, shall either (i) impose,
modify or make applicable any reserve, deposit, capital adequacy or similar
requirement against Letters of Credit issued by any Issuing Bank or participated
in by any Participant, or (ii) impose on any Issuing Bank or any Participant any
other conditions relating, directly or indirectly, to this Agreement or any
Letter of Credit, and the result of any of the foregoing is to increase the cost
to any Issuing Bank or any Participant of issuing, maintaining or participating
in any Letter of Credit, or reduce the amount of any sum received or receivable
by any Issuing Bank or any Participant hereunder or reduce the rate of return on
its capital with respect to Letters of Credit (except for changes in the rate of
tax on, or determined by reference to, the net income or profits of such Issuing
Bank or such Participant pursuant to the laws of the jurisdiction in which it is
organized or in which its principal office or applicable lending office is
located or any subdivision thereof or therein), then, upon demand to the
Borrower by such Issuing Bank or any Participant (a copy of which demand shall
be sent by such Issuing Bank or such Participant to the Administrative Agent),
the Borrower agrees to pay (and shall pay) to such Issuing Bank or such
Participant such additional amount or amounts as will compensate such Bank for
such increased cost or reduction in the amount receivable or reduction on the
rate of return on its capital. Any Issuing Bank or any Participant, upon
determining that any additional amounts will be payable pursuant to this Section
2.06, will give prompt written notice thereof to the Borrower, which notice
shall include a certificate submitted to the Borrower by such Issuing Bank or
such Participant (a copy of which certificate shall be sent by such Issuing Bank
or such Participant to the Administrative Agent), setting forth in reasonable
detail the basis for the calculation of such additional amount or
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amounts necessary to compensate such Issuing Bank or such Participant. The
certificate required to be delivered pursuant to this Section 2.06 shall, if
delivered in good faith and absent manifest error, be final and conclusive and
binding on the Borrower.
2.07 Indemnification. To the extent that any Issuing Bank is not
reimbursed and indemnified by the Credit Parties pursuant to Section 13.01(iii),
each Participant will reimburse and indemnify such Issuing Bank in proportion to
their respective Adjusted RL Percentages, for and against any and all
liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, costs, expenses or disbursements of whatsoever kind or nature which
may be imposed on, asserted against or incurred by such Issuing Bank in
connection with any Letter of Credit issued by it or in performing its
respective duties hereunder or under any Letter of Credit issued by it, provided
that (x) no Participant shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from such Issuing Bank's gross negligence or
willful misconduct and (y) notwithstanding the foregoing provisions of this
Section 2.07, a Participant's obligation to reimburse an Issuing Bank for
payments made under a Letter of Credit that are not reimbursed by the Borrower
shall be governed by Section 2.04.
SECTION 3. Fees; Reductions of Commitment.
3.01 Fees. (a) The Borrower agrees to pay to the Administrative
Agent for distribution to each Non-Defaulting Bank a commitment commission (the
"Commitment Commission") for the period from the Restatement Effective Date to
and including the Final Maturity Date (or such earlier date as the Total
Revolving Loan Commitment shall have been terminated), computed at a rate for
each day equal to the Applicable Commitment Commission Percentage on the daily
average Unutilized Revolving Loan Commitment of such Non-Defaulting Bank.
Accrued Commitment Commission shall be due and payable quarterly in arrears on
each Quarterly Payment Date and on the Final Maturity Date or such earlier date
upon which the Total Revolving Loan Commitment is terminated.
(b) The Borrower agrees to pay to the Administrative Agent for
distribution to each Non-Defaulting Bank (based on their respective Adjusted RL
Percentages) a fee in respect of such Non-Defaulting Bank's participation in
each Letter of Credit issued hereunder (the "Letter of Credit Fee"), for the
period from and including the date of issuance of such Letter of Credit to and
including the date of termination of such Letter of Credit, computed at a rate
per annum equal to the Applicable Margin for Revolving Loans maintained as
Eurodollar Loans, as in effect from time to time, on the daily Stated Amount of
such Letter of Credit. Accrued Letter of Credit Fees shall be due and payable
quarterly in arrears on each Quarterly Payment
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Date and upon the first day on or after the termination of the Total Revolving
Loan Commitment upon which no Letters of Credit remain outstanding.
(c) The Borrower agrees to pay to the respective Issuing Bank, for
its own account, a facing fee in respect of each Letter of Credit issued by such
Issuing Bank hereunder (the "Facing Fee"), for the period from and including the
date of issuance of such Letter of Credit to and including the date of
termination of such Letter of Credit, computed at a rate per annum equal to 1/4
of 1% on the daily Stated Amount of such Letter of Credit. Accrued Facing Fees
shall be due and payable quarterly in arrears on each Quarterly Payment Date and
upon the first day on or after the termination of the Total Revolving Loan
Commitment upon which no Letters of Credit issued by such Issuing Bank remain
outstanding.
(d) The Borrower agrees to pay to the respective Issuing Bank, for
its own account, upon each drawing under, issuance of, or amendment to, any
Letter of Credit issued by such Issuing Bank, such amount as shall at the time
of such event be the administrative charge and expenses which the respective
Issuing Bank is generally imposing in connection with such occurrence with
respect to letters of credit.
(e) The Borrower agrees to pay to each of the Agents (whether in
their capacity as an Agent or a Co-Arranger), for their own account, such other
fees as have been agreed to in writing by such Credit Parties and each of the
Agents.
3.02 Voluntary Termination of Unutilized Commitments. (a) Upon at
least two Business Days' prior written notice from the Borrower to the
Administrative Agent at the Notice Office (which notice the Administrative Agent
shall promptly transmit to each of the Banks), the Borrower shall have the
right, at any time or from time to time, without premium or penalty, to
terminate the Total Unutilized Revolving Loan Commitment, in whole or in part,
in integral multiples of $1,000,000 in the case of partial reductions to the
Total Unutilized Revolving Loan Commitment, provided that (i) each such
reduction shall apply proportionately to permanently reduce the Revolving Loan
Commitment of each Bank and (ii) the reduction to the Total Unutilized Revolving
Loan Commitment shall in no case be in an amount which would cause the Revolving
Loan Commitment of any Bank to be reduced (as required by preceding clause (i))
by an amount which exceeds the remainder of (x) the Unutilized Revolving Loan
Commitment of such Bank as in effect immediately before giving effect to such
reduction minus (y) such Bank's Adjusted RL Percentage of the aggregate
principal amount of Swingline Loans then outstanding.
(b) In addition to the terminations permitted pursuant to Section
3.02(a), in the event of certain refusals by a Bank to consent to certain
proposed changes,
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waivers, discharges or terminations with respect to this Agreement which have
been approved by the Required Banks as provided in Section 13.12(b), the
Borrower may, upon five Business Days' written notice to the Administrative
Agent at the Notice Office (which notice the Administrative Agent shall promptly
transmit to each of the Banks) terminate the entire Revolving Loan Commitment of
such Bank so long as all Revolving Loans of such Bank, together with accrued and
unpaid interest, Fees and all other amounts owing to such Bank are repaid
concurrently with the effectiveness of such termination, and at such time such
Bank shall no longer constitute a "Bank" for purposes of this Agreement, except
with respect to indemnifications under this Agreement (including, without
limitation, Sections 1.10, 1.11, 2.06, 4.04, 13.01 and 13.06), which shall
survive as to such repaid Bank.
3.03 Mandatory Reduction of Commitments. (a) The Total Revolving
Loan Commitment (and the Revolving Loan Commitment of each of the Banks) shall
terminate in their entirety on September 30, 1997 and the Original Credit
Agreement shall continue in effect unless the Restatement Effective Date has
occurred on or before such date.
(b) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date on or after the Restatement
Effective Date upon which OFSI, the Borrower, any Subsidiary of the Borrower,
Caterair Holdings or any Subsidiary of Caterair Holdings receives proceeds from
any Asset Sale, an amount equal to 100% of the Net Sale Proceeds therefrom shall
result in a mandatory reduction of the Total Revolving Loan Commitment and/or be
applied as a prepayment or repayment of principal of outstanding loans under the
Caterair Credit Agreement, provided that (x) to the extent that any portion of
the proceeds from any Asset Sale are to be applied to permanently reduce the
Total Revolving Loan Commitment then at least a proportionate share of such
proceeds shall be applied as a mandatory repayment of principal of outstanding
loans under the Caterair Credit Agreement (with such proportionate share to be
based on the relative outstanding principal amount of loans under the Caterair
Credit Agreement and the outstanding principal amount of Loans, Letters of
Credit and the Total Unutilized Revolving Loan Commitment under this Agreement),
and (y) such Net Sale Proceeds therefrom shall not constitute such a reduction
and/or be required to be so applied on such date so long as no Default or Event
of Default then exists and the Borrower delivers a certificate to the
Administrative Agent on or prior to such date stating that such Net Sale
Proceeds are intended to be used to purchase assets (including the capital stock
of any Person) used or to be used in the businesses permitted by Section 9.13
(and to the extent otherwise permitted by Sections 9.02(xiv), 9.05(xvii) and
9.07(d)) within 365 days following the date of such Asset Sale, and provided
further, that if all or any portion of such Net Sale Proceeds are not so
reinvested within such 365 day period, such remaining portion shall
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be applied on the last day of such period as provided above in this Section
3.03(b) without regard to the immediately preceding proviso.
(c) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date on or after the Restatement
Effective Date upon which OFSI, the Borrower, any Subsidiary of the Borrower,
Caterair Holdings or any Subsidiary of Caterair Holdings receives any proceeds
from any incurrence by OFSI, the Borrower, any Subsidiary of the Borrower,
Caterair Holdings or any Subsidiary of Caterair Holdings of Indebtedness for
borrowed money (other than (i) Indebtedness for borrowed money permitted to be
incurred pursuant to Section 9.04 as such Section is in effect on the
Restatement Effective Date and (ii) additional Indebtedness for borrowed money
permitted to be incurred by OFSI, the Borrower, any Subsidiary of the Borrower,
Caterair Holdings or any Subsidiary of Caterair Holdings pursuant to Section
9.04 as such Section may be amended or modified by the Required Banks from time
to time but only to the extent the Required Banks expressly waive the
applicability of this Section 3.03(c) with respect to the incurrence of such
additional Indebtedness or expressly permit the proceeds thereof to be used for
purposes other than as a mandatory commitment reduction pursuant to this Section
3.03(c)), an amount equal to 100% of the cash proceeds of the respective
incurrence of Indebtedness (net of underwriting or placement discounts and
commissions and other reasonable costs associated therewith) shall result in a
mandatory reduction of the Total Revolving Loan Commitment and/or be applied as
a prepayment or repayment of principal of outstanding loans under the Caterair
Credit Agreement.
(d) In addition to any other commitment reductions pursuant to this
Section 3.03, within 10 days following each date on or after the Restatement
Effective Date on which OFSI, the Borrower, any Subsidiary of the Borrower,
Caterair Holdings or any Subsidiary of Caterair Holdings receives any proceeds
from any Recovery Event, an amount equal to 100% of the proceeds of such
Recovery Event (net of reasonable costs incurred in connection with such
Recovery Event, including, without limitation, the estimated marginal increase
in income taxes which will be payable by OFSI, the Borrower, any Subsidiary of
the Borrower, Caterair Holdings or any Subsidiary of Caterair Holdings or the
consolidated group in which any such Person is a member) shall result in a
mandatory reduction of the Total Revolving Loan Commitment and/or be applied as
a prepayment or repayment of outstanding loans under the Caterair Credit
Agreement; provided that (x) to the extent that any portion of the proceeds from
any Recovery Event are to be applied to permanently reduce the Total Revolving
Loan Commitment then at least a proportionate share of such proceeds shall be
applied as a mandatory repayment of principal of outstanding loans under the
Caterair Credit Agreement (with such proportionate share to be based on the
relative outstanding principal amount of Loans, Letters of Credit and the Total
Unutilized
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Revolving Loan Commitment under this Agreement), and (y) so long as no Default
or Event of Default then exists and such proceeds do not exceed $25,000,000,
such proceeds shall not constitute such a reduction and/or be required to be so
applied to the extent that the Borrower has delivered a certificate to the
Administrative Agent on or prior to such date stating that such proceeds are
intended to be used to replace or restore any properties or assets in respect of
which such proceeds were paid within 365 days following the date of the receipt
of such proceeds (or, to the extent such replacement or restoration cannot
reasonably be completed within such 365 day period, within 450 days following
the date of the receipt of such proceeds) and (in either case) the respective
Person has commenced work to replace or restore such properties or assets within
180 days following the date of the receipt of such proceeds, and provided
further, that (i) if the amount of such proceeds exceeds $25,000,000, then the
entire amount of such proceeds and not just the portion in excess of $25,000,000
shall result in a mandatory reduction and/or prepayment or repayment as provided
above in this Section 3.03(d) without regard to the immediately preceding
proviso and (ii) if all or any portion of such proceeds not required to result
in a mandatory reduction and/or be applied as a prepayment or repayment pursuant
to the immediately preceding proviso are not so used within 365 days (or 450
days, as the case may be) after the date of the receipt of such proceeds (or
such work has not been commenced within such 180 day period), such remaining
portion shall result in a mandatory reduction and/or be applied as a prepayment
or repayment as provided above in this Section 3.03(d) without regard to the
immediately preceding proviso.
(e) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, the Total Revolving Loan Commitment (and the
Revolving Loan Commitment of each Bank) shall terminate in its entirety on the
earlier of (i) the date on which a Change of Control occurs and (ii) the Final
Maturity Date.
(f) Each reduction to the Total Revolving Loan Commitment pursuant
to this Section 3.03 shall be applied proportionately to reduce the Revolving
Loan Commitment of each Bank.
SECTION 4. Prepayments; Payments; Taxes.
4.01 Voluntary Prepayments. (a) The Borrower shall have the right to
prepay the Loans, without premium or penalty, in whole or in part at any time
and from time to time on the following terms and conditions:
(i) the Borrower shall give the Administrative Agent prior to 12:00
Noon (New York time) at the Notice Office (x) at least one Business Day's
prior written notice (or telephonic notice promptly confirmed in writing)
of the
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Borrower's intent to prepay Base Rate Loans (or same day notice in the
case of Swingline Loans, provided such notice is given prior to 11:00 A.M.
(New York time)) and (y) at least three Business Days' prior written
notice (or telephonic notice promptly confirmed in writing) of the
Borrower's intent to prepay Eurodollar Loans, whether Revolving Loans or
Swingline Loans shall be pre-paid, the amount of such prepayment and the
Types of Loans to be prepaid and, in the case of Eurodollar Loans, the
specific Borrowing or Borrowings pursuant to which made, which notice the
Administrative Agent shall promptly transmit to each of the Banks;
(ii) each prepayment shall be in an aggregate principal amount of at
least $1,000,000 (or $250,000 in the case of Swingline Loans), provided
that if any partial prepayment of Eurodollar Loans made pursuant to any
Borrowing shall reduce the outstanding Eurodollar Loans made pursuant to
such Borrowing to an amount less than the Minimum Borrowing Amount
applicable thereto, then such Borrowing shall be converted at the end of
the then current Interest Period into a Borrowing of Base Rate Loans and
any election of an Interest Period with respect thereto given by a
Borrower shall have no force or effect; and
(iii) each prepayment in respect of any Loans made pursuant to a
Borrowing shall be applied pro rata among such Loans, provided that at the
Borrower's election in connection with any prepayment of Revolving Loans
pursuant to this Section 4.01(a), such prepayment shall not be applied to
any Revolving Loan of a Defaulting Bank.
(b) In the event of certain refusals by a Bank as provided in
Section 13.12(b) to consent to certain proposed changes, waivers, discharges or
terminations with respect to this Agreement which have been approved by the
Required Banks, the Borrower may, upon five Business Days' prior written notice
by the Borrower to the Administrative Agent at the Notice Office (which notice
the Administrative Agent shall promptly transmit to each of the Banks) repay all
Loans of such Bank, together with accrued and unpaid interest, Fees and other
amounts owing to such Bank by the Borrower in accordance with said Section
13.12(b) so long as (A) the Revolving Loan Commitment of such Bank is terminated
concurrently with such repayment pursuant to Section 3.02(b) (at which time
Schedule I shall be deemed modified to reflect the changed Revolving Loan
Commitments), and (B) the consents required by Section 13.12(b) in connection
with the repayment pursuant to this clause (b) have been obtained.
4.02 Mandatory Repayments. (a) (i) On any day on which the sum of
the aggregate outstanding principal amount of the Revolving Loans made by Non-
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Defaulting Banks, Swingline Loans and Letter of Credit Outstandings exceeds the
Adjusted Total Available Revolving Loan Commitment as then in effect, the
Borrower shall repay on such day principal of the Swingline Loans and, after all
Swingline Loans have been repaid in full, Revolving Loans of Non-Defaulting
Banks in an amount equal to such excess. If, after giving effect to the
repayment of all outstanding Swingline Loans and all outstanding Revolving Loans
of Non-Defaulting Banks, the aggregate amount of the Letter of Credit
Outstandings exceeds the Adjusted Total Available Revolving Loan Commitment as
then in effect, the Borrower shall pay to the Administrative Agent at the
Payment Office on such date an amount of cash or Cash Equivalents equal to the
amount of such excess (up to a maximum amount equal to the Letter of Credit
Outstandings at such time), such cash or Cash Equivalents to be held as security
for all obligations of the Borrower to Non-Defaulting Banks hereunder in a cash
collateral account to be established by the Administrative Agent.
(ii) On any day on which the aggregate outstanding principal amount
of the Revolving Loans made by any Defaulting Bank exceeds the Revolving Loan
Commitment of such Defaulting Bank, the Borrower shall repay on such day
principal of Revolving Loans of such Defaulting Bank in an amount equal to such
excess.
(b) With respect to each repayment of Revolving Loans required by
this Section 4.02, the Borrower may designate the Types of Revolving Loans which
are to be repaid and, in the case of Eurodollar Loans, the specific Borrowing or
Borrowings pursuant to which made, provided that: (i) repayments of Eurodollar
Loans pursuant to this Section 4.02 may only be made on the last day of an
Interest Period applicable thereto unless all Eurodollar Loans with Interest
Periods ending on such date of required repayment and all Base Rate Loans have
been paid in full; (ii) if any repayment of Eurodollar Loans made pursuant to a
single Borrowing shall reduce the outstanding Eurodollar Loans made pursuant to
such Borrowing to an amount less than the Minimum Borrowing Amount applicable
thereto, such Borrowing shall be converted at the end of the then current
Interest Period into a Borrowing of Base Rate Loans; and (iii) except for the
differing treatments of Defaulting Banks and Non-Defaulting Banks as expressly
provided in Section 4.02(a), each repayment of Revolving Loans made pursuant to
a Borrowing shall be applied pro rata among such Revolving Loans. In the absence
of a designation by the Borrower as described in the preceding sentence, the
Administrative Agent shall, subject to the above, make such designation in its
sole discretion.
(c) Notwithstanding anything to the contrary contained in this
Agreement, (i) all then outstanding Revolving Loans shall be repaid in full on
the Final Maturity Date, (ii) all the outstanding Swingline Loans shall be
repaid in full on the
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Swingline Expiry Date and (iii) all then outstanding Loans shall be repaid in
full on the date on which a Change of Control occurs.
4.03 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement or any Note shall be made to
the Administrative Agent for the account of the Bank or Banks entitled thereto
not later than 12:00 Noon (New York time) on the date when due and shall be made
in Dollars in immediately available funds at the Payment Office. Whenever any
payment to be made hereunder or under any Note shall be stated to be due on a
day which is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and, with respect to payments of principal,
interest shall be payable at the applicable rate during such extension.
4.04 Net Payments. (a) All payments made by the Borrower hereunder
or under any Note will be made without setoff, counterclaim or other defense.
Except as provided in Section 4.04(b), all such payments will be made free and
clear of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein with respect to such payments (but
excluding, except as provided in the second succeeding sentence, any tax imposed
on or measured by the net income or profits of a Bank pursuant to the laws of
the jurisdiction in which it is organized or the jurisdiction in which the
principal office or applicable lending office of such Bank is located or any
subdivision thereof or therein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imports,
duties, fees, assessments or other charges being referred to collectively as
"Taxes"). If any Taxes are so levied or imposed, the Borrower agrees to pay the
full amount of such Taxes, and such additional amounts as may be necessary so
that every payment of all amounts due under this Agreement or under any Note,
after withholding or deduction for or on account of any Taxes, will not be less
than the amount provided for herein or in such Note. If any amounts are payable
in respect of Taxes pursuant to the preceding sentence, the Borrower agrees to
reimburse each Bank, upon the written request of such Bank, for taxes imposed on
or measured by the net income or profits of such Bank pursuant to the laws of
the jurisdiction in which the principal office or applicable lending office of
such Bank is located or under the laws of any political subdivision or taxing
authority of any such jurisdiction in which the principal office or applicable
lending office of such Bank is located and for any withholding of income or
similar taxes imposed by the United States of America as such Bank shall
determine are payable by, or withheld from, such Bank in respect of such amounts
so paid to or on behalf of such Bank pursuant to the preceding sentence and in
respect of any amounts paid to or on behalf of such Bank pursuant to this
sentence. The Borrower will furnish to the Agent
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within 45 days after the date the payment of any Taxes is due pursuant to
applicable law certified copies of tax receipts evidencing such payment by the
Borrower. The Borrower agrees to indemnify and hold harmless each Bank, and
reimburse such Bank upon its written request, for the amount of any Taxes so
levied or imposed and paid by such Bank.
(b) Each Bank that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) agrees to deliver to the Borrower
and the Administrative Agent on or prior to the Restatement Effective Date, or
in the case of a Bank that is an assignee or transferee of an interest under
this Agreement pursuant to Section 1.13 or 13.04 (unless the respective Bank was
already a Bank hereunder immediately prior to such assignment or transfer), on
the date of such assignment or transfer to such Bank, (i) two accurate and
complete original signed copies of Internal Revenue Service Form 4224 or 1001
(or successor forms) certifying to such Bank's entitlement to a complete
exemption from United States withholding tax with respect to payments to be made
under this Agreement and under any Note, or (ii) if the Bank is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code and cannot deliver either
Internal Revenue Service Form 1001 or 4224 (or successor forms) pursuant to
clause (i) above, (x) a certificate substantially in the form of Exhibit D (any
such certificate, a "Section 4.04(b)(ii) Certificate") and (y) two accurate and
complete original signed copies of Internal Revenue Service Form W-8 (or
successor form) certifying to such Bank's entitlement to a complete exemption
from United States withholding tax with respect to payments of interest to be
made under this Agreement and under any Note. In addition, each Bank agrees that
from time to time after the Restatement Effective Date, when a lapse in time or
change in circumstances renders the previous certification obsolete or
inaccurate in any material respect, it will deliver to the Borrower and the
Administrative Agent two new accurate and complete original signed copies of
Internal Revenue Service Form 4224 or 1001 (or successor form) , or Form W-8 (or
successor form) and a Section 4.04(b)(ii) Certificate, as the case may be, and
such other forms as may be required in order to confirm or establish the
entitlement of such Bank to a continued exemption from or reduction in United
States withholding tax with respect to payments under this Agreement and any
Note, or it shall immediately notify the Borrower and the Administrative Agent
of its inability to deliver any such Form or Certificate. Notwithstanding
anything to the contrary contained in Section 4.04(a), but subject to Section
13.04(b) and the immediately succeeding sentence, (x) the Borrower shall be
entitled, to the extent it is required to do so by law, to deduct or withhold
income or similar taxes imposed by the United States (or any political
subdivision or taxing authority thereof or therein) from interest, fees or other
amounts payable hereunder for the account of any Bank which is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) for
U.S. Federal income tax purposes to the extent that such Bank has not provided
to the Borrower U.S.
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Internal Revenue Service Forms that establish a complete exemption from such
deduction or withholding and (y) the Borrower shall not be obligated pursuant to
Section 4.04(a) to gross-up payments to be made to a Bank in respect of income
or similar taxes imposed by the United States if (I) such Bank has not provided
to the Borrower the Internal Revenue Service Forms required to be provided to
the Borrower pursuant to this Section 4.04(b) or (II) in the case of a payment,
other than interest, to a Bank described in clause (ii) above, to the extent
that such Forms do not establish a complete exemption from withholding of such
taxes. Notwithstanding anything to the contrary contained in the preceding
sentence or elsewhere in this Section 4.04(b) and except as set forth in Section
13.04(b), the Borrower agrees to pay additional amounts and to indemnify each
Bank in the manner set forth in Section 4.04(a) (without regard to the identity
of the jurisdiction requiring the deduction or withholding) in respect of any
amounts deducted or withheld by it as described in the immediately preceding
sentence as a result of any changes after the Restatement Effective Date in any
applicable law, treaty, governmental rule, regulation, guideline or order, or in
the interpretation thereof, relating to the deducting or withholding of income
or similar Taxes.
SECTION 5. Conditions Precedent to the Restatement Effective Date.
The occurrence of the Restatement Effective Date pursuant to Section 13.10 is
subject to the satisfaction of the following conditions:
5.01 Execution of Agreement; Notes. On or prior to the Restatement
Effective Date, (i) this Agreement shall have been executed and delivered as
provided in Section 13.10 and (ii) there shall have been delivered to the
Administrative Agent for the account of each of the Banks, the appropriate
Revolving Note executed by the Borrower and to the Swingline Bank, the Swingline
Note executed by the Borrower, in each case in the amount, maturity and as
otherwise provided herein.
5.02 Fees, etc. On the Restatement Effective Date, the Borrower
shall have paid to the Agents, the Co-Arrangers and the Banks all costs, fees
and expenses (including, without limitation, legal fees and expenses) payable to
the respective Agents, the Co-Arrangers and the Banks to the extent then due.
5.03 Officer's Certificate. On the Restatement Effective Date, the
Administrative Agent shall have received a certificate, dated the Restatement
Effective Date and signed on behalf of the Borrower by any authorized officer of
the Borrower and on behalf of Caterair by any authorized officer of Caterair,
stating that all of the conditions in Sections 5.02, 5.06, 5.07, 5.12, 5.13,
5.18 and 6.02 have been satisfied on such date.
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5.04 Opinions of Counsel and Accountants. On the Restatement
Effective Date, the Administrative Agent shall have received (i) from Kaye,
Scholer, Fierman, Hays & Handler, LLP, counsel to the Credit Parties, an opinion
addressed to each of the Agents and each of the Banks and dated the Restatement
Effective Date covering the matters set forth in Exhibit E-1 and such other
matters incident to the transactions contemplated herein as the Co-Arrangers may
reasonably request, (ii) from Kaye, Scholer, Fierman, Hays & Handler, LLP,
special tax counsel to the Borrower and Caterair, an opinion addressed to each
of the Agents and each of the Banks and dated the Restatement Effective Date
covering the matter set forth in Exhibit E-2 and such other matters incident to
the transactions contemplated herein as the Co-Arrangers may reasonably request,
which legal opinion shall be accompanied by an accountant's letter from Price
Waterhouse addressed to each of the Agents and each of the Banks and dated the
Restatement Effective Date covering the matter set forth in Exhibit E-3 and such
other matters incident to the transactions contemplated herein as the
Co-Arrangers may reasonably request and (iii) from Fraser & Beatty, counsel to
the Designated Onex Sub, an opinion addressed to each of the Agents and each of
the Banks and dated the Restatement Effective Date covering such of the matters
incident to the Credit Documents executed by the Designated Onex Sub as the
Co-Arrangers may reasonably request, which opinion shall be in form and
substance reasonably satisfactory to the Co-Arrangers.
5.05 Corporate Documents; Proceedings; etc. (a) On the Restatement
Effective Date, the Administrative Agent shall have received a certificate from
each Credit Party, each dated the Restatement Effective Date and signed by any
authorized officer of such Credit Party, and attested to by the Secretary or any
Assistant Secretary of such Credit Party, in the form of Exhibit F with
appropriate insertions, together with copies of such Credit Party's certificate
of incorporation and by-laws and the resolutions of such Credit Party referred
to in such certificate, and the foregoing shall be in form and substance
reasonably satisfactory to the Co-Arrangers.
(b) All corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated by this Agreement
and the other Documents shall be reasonably satisfactory in form and substance
to the Co-Arrangers and the Required Banks, and the Administrative Agent shall
have received all information and copies of all documents and papers, including
records of corporate proceedings, governmental approvals, good standing
certificates and bring-down telegrams or facsimiles, if any, which the
Co-Arrangers reasonably may have requested in connection therewith, such
documents and papers where appropriate to be certified by proper corporate or
governmental authorities.
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5.06 Caterair Credit Agreement; etc. On the Restatement Effective
Date, (i) Caterair shall have received $160,000,000 of gross cash proceeds from
the incurrence of loans under the Caterair Credit Agreement, (ii) the Borrower
shall have received $90,000,000 of gross cash proceeds from the incurrence of
loans under the Caterair Credit Agreement, (iii) all outstanding term loans of
Caterair under the Original Credit Agreement shall have been repaid in full with
proceeds of the loans incurred by Caterair under the Caterair Credit Agreement,
and (iv) the Caterair Credit Agreement shall be in full force and effect and no
default or event of default shall exist thereunder. On the Restatement Effective
Date, the Administrative Agent shall have received a true and complete copy of
the Caterair Credit Agreement, which shall be in form and substance reasonably
satisfactory to the Co-Arrangers and the Required Banks.
5.07 Issuance of 9-1/4% Senior Subordinated Notes. (a) On the
Restatement Effective Date, the Borrower shall have received gross cash proceeds
in an aggregate principal amount of $299,604,000 from the issuance by the
Borrower of the 9-1/4% Senior Subordinated Notes. On the Restatement Effective
Date, and concurrently with the issuance of the 9-1/4% Senior Subordinated Notes
on such date, the Borrower shall have utilized a portion of the net cash
proceeds from the issuance of the 9-1/4% Senior Subordinated Notes to finance
the repayment in full of all of its outstanding term loans under the Original
Credit Agreement.
(b) All terms of, and documentation for, the 9-1/4% Senior
Subordinated Notes and the other 9-1/4% Senior Subordinated Note Documents
(including, without limitation, amortization, maturities, interest rates,
covenants, defaults, remedies, sinking fund provisions, subordination provisions
and other terms) shall be required to be reasonably satisfactory in form and
substance to the Co-Arrangers and the Required Banks, it being understood and
agreed that in any event the 9-1/4% Senior Subordinated Notes shall be unsecured
but may be guaranteed on a junior and fully subordinated basis by Caterair and
the Subsidiary Guarantors. On the Restatement Effective Date, there shall have
been delivered to the Administrative Agent true and complete copies of all
9-1/4% Senior Subordinated Note Documents.
5.08 Pledge Agreements. On the Restatement Effective Date, (i) each
Credit Party (other than OFSI and the Designated Onex Sub) shall have duly
authorized, executed and delivered an amended and restated Pledge Agreement in
the form of Exhibit G-1, with such changes thereto, or such additional pledge
agreements (or amendments thereto) entered into in connection therewith, as
foreign counsel may suggest in connection with the Pledged Securities issued by
any Foreign Subsidiary of the Borrower designated by the Co-Arrangers (such
Pledge Agreement, together with such additional pledge agreements, as modified,
supplemented or amended from time
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to time, collectively, the "General Pledge Agreement"), (ii) OFSI shall have
duly authorized, executed and delivered an amended and restated Pledge Agreement
in the form of Exhibit G-2 (as modified, supplemented or amended from time to
time, the "OFSI Pledge Agreement") and (iii) the Designated Onex Sub shall have
duly authorized, executed and delivered an amended and restated Pledge Agreement
in the form of Exhibit G-3 (as modified, supplemented or amended from time to
time, the "Designated Onex Sub Pledge Agreement") and, in each case, each Credit
Party shall have delivered to the Collateral Agent, as Pledgee, all the Pledged
Securities, if any, referred to therein then owned by such Credit Party, (x)
endorsed in blank in the case of promissory notes constituting Pledged
Securities and (y) together with executed and undated stock powers (or the
equivalent thereof in the relevant jurisdiction) in the case of capital stock
constituting Pledged Securities.
5.09 Security Agreement. On the Restatement Effective Date, each
Credit Party (other than OFSI, Caterair Holdings and the Designated Onex Sub)
shall have duly authorized, executed and delivered an amended and restated
Security Agreement in the form of Exhibit H (as modified, supplemented or
amended from time to time, the "Security Agreement") covering all of the present
and future Security Agreement Collateral of such Credit Party, together with
evidence of the completion of all recordings and filings of, or with respect to,
the Security Agreement as may be necessary or, in the reasonable opinion of the
Collateral Agent desirable, to perfect the security interests intended to be
created by the Security Agreement.
5.10 Mortgage Amendments; Title Insurance. On the Restatement
Effective Date, the Collateral Agent shall have received:
(a) fully executed counterparts of amendments (the "Mortgage
Amendments"), in form and substance reasonably satisfactory to the
Co-Arrangers, to each of the Existing Mortgages, together with evidence
that counterparts of each of the Mortgage Amendments have been delivered
to the title insurance company insuring the lien of the Existing Mortgages
for recording in all places to the extent necessary or, in the reasonable
opinion of the Collateral Agent desirable, to effectively maintain and/or
create a valid and enforceable first priority mortgage lien on each
Existing Mortgaged Property (subject to only Permitted Liens) in favor of
the Collateral Agent for the benefit of the Secured Creditors; and
(b) endorsements to the Mortgage Policies on each Existing Mortgaged
Property issued by such title insurers reasonably satisfactory to the
Co-Arrangers assuring the Collateral Agent that the Existing Mortgages on
the Existing Mortgaged Properties are valid and enforceable first priority
mortgage
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liens on the respective Existing Mortgaged Properties, free and clear of
all defects, interests and encumbrances except Permitted Liens, and such
endorsements shall otherwise be in form and substance reasonably
satisfactory to the Co-Arrangers.
5.11 Subsidiaries Guaranty; Designated Onex Sub Guaranty. (a) On the
Restatement Effective Date, each Subsidiary Guarantor shall have duly
authorized, executed and delivered an amended and restated Guaranty in the form
of Exhibit I-1 (as modified, supplemented or amended from time to time, the
"Subsidiaries Guaranty"), and the Subsidiaries Guaranty shall be in full force
and effect.
(b) On the Restatement Effective Date, the Designated Onex Sub shall
have duly authorized, executed and delivered an amended and restated Guaranty in
the form of Exhibit I-2 (as modified, supplemented or amended from time to time,
the "Designated Onex Sub Guaranty"), and the Designated Onex Sub Guaranty shall
be in full force and effect.
5.12 Adverse Change; Approvals; etc. (a) (i) On the Restatement
Effective Date, nothing shall have occurred (and the Co-Arrangers and the Banks
shall have become aware of no facts, conditions or other information not
previously known) which the Co-Arrangers or the Required Banks shall determine
has had, or could reasonably be expected to have, a material adverse effect (x)
on the rights or remedies of the Agents or the Banks, or on the ability of any
Credit Party to perform their respective obligations to the Agents and the Banks
or (y) on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of OFSI and its Subsidiaries taken as a
whole, the Borrower and its Subsidiaries taken as a whole, Caterair, Caterair
and its Subsidiaries taken as a whole or Caterair Holdings and its Subsidiaries
taken as a whole from that set forth in the audited financial statements of such
Persons for their fiscal year ended December 31, 1996.
(b) On or prior to the Restatement Effective Date, all necessary
governmental (domestic and foreign) and third party approvals and/or consents in
connection with the consummation of the Transaction, the occurrence of any
Credit Event and any transactions contemplated by the Documents and otherwise
referred to or contemplated herein or therein shall have been (or will, within
the time frame required, be) obtained and remain in full effect, and all
applicable waiting periods shall have expired without any action being taken by
any competent authority which restrains, prevents or imposes materially adverse
conditions upon the consummation of the Transaction, the occurrence of any
Credit Event or the consummation of the transactions contemplated by this
Agreement and the other Documents or otherwise referred to herein or therein.
Additionally, there shall not exist any judgment, order, injunction
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or other restraint issued or filed or a hearing seeking injunctive relief or
other restraint pending or notified prohibiting or imposing materially adverse
conditions upon the consummation of the Transaction, the occurrence of any
Credit Event or the consummation of any other transactions contemplated by this
Agreement and the other Documents.
5.13 Litigation. On the Restatement Effective Date, no litigation by
any entity (private or governmental) shall be pending or threatened (i) with
respect to the Transaction or this Agreement or any documentation executed in
connection herewith or therewith or the transactions contemplated hereby or
thereby, (ii) with respect to any material Indebtedness of OFSI, Caterair
Holdings or any of their respective Subsidiaries or (iii) which the Co-Arrangers
or the Required Banks shall determine could reasonably be expected to have a
materially adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of OFSI and its
Subsidiaries taken as a whole, SCIS, SCIS and its Subsidiaries taken as a whole,
Caterair, Caterair and its Subsidiaries taken as a whole or Caterair Holdings
and its Subsidiaries taken as a whole.
5.14 Solvency Certificate; Insurance Certificates. On the
Restatement Effective Date, there shall have been delivered to the
Administrative Agent (i) solvency certificates from an Authorized Financial
Officer of the Borrower and Caterair, in the form of Exhibit J to this Agreement
and Exhibit F to the Caterair Credit Agreement, respectively, and each dated the
Restatement Effective Date and (ii) certificates of insurance complying with the
requirements of Section 8.03, for the business and properties of the Borrower,
Caterair and their respective Subsidiaries, and in scope, form and substance
reasonably satisfactory to the Co-Arrangers and the Required Banks, including by
naming the Collateral Agent as an additional insured and/or loss payee, and
stating that such insurance shall not be cancelled or revised without at least
30 days prior written notice by the respective insurer to the Collateral Agent.
5.15 Pro Forma Balance Sheets. On the Restatement Effective Date,
there shall have been delivered to the Administrative Agent an unaudited pro
forma consolidated balance sheet as of June 30, 1997 of each of (i) the Borrower
and its Subsidiaries and (ii) Caterair, in each case after giving effect to the
Transaction and the incurrence of all Indebtedness contemplated herein and
prepared in accordance with generally accepted accounting principles, which pro
forma consolidated balance sheets shall be in form and substance reasonably
satisfactory to the Co-Arrangers and the Required Banks.
5.16 Original Credit Agreement. On the Restatement Effective Date,
all accrued and unpaid interest and fees under the Original Credit Agreement
shall have
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been paid in full regardless of whether or not such amounts would otherwise be
due and payable at such time pursuant to the terms of the Original Credit
Agreement.
5.17 Caterair Holdings Subordination Agreement; etc. On the
Restatement Effective Date, (i) Caterair Holdings, Renex, Canex and the
Administrative Agent shall have duly authorized, executed and delivered an
amended and restated Subordination Agreement in the form of Exhibit L (as
amended, modified or supplemented from time to time, the "Caterair Holdings,
Subordination Agreement"), and (ii) OFSI, Canex, the Administrative Agent and
Renex shall have entered into a letter agreement in the form of Exhibit N.
5.18 13% Senior Subordinated Note Tender Offer; 13% Senior
Subordinated Note Consents; 13% Senior Subordinated Note Indenture Supplement.
(a) On the Restatement Effective Date, the Borrower shall have accepted for
payment at least a majority of the outstanding principal amount of the 13%
Senior Subordinated Notes issued by it and tendered pursuant to the 13% Senior
Subordinated Note Tender Offer and each of the conditions to such purchase set
forth in the 13% Senior Subordinated Note Tender Offer Documents shall have been
satisfied and not waived to the satisfaction of the Administrative Agent and the
Required Banks (it being understood and agreed that the actual payment of any
such 13% Senior Subordinated Notes so tendered shall not be required to be made
until the end of the scheduled tender offer or within one Business Day
thereafter, which is 5:00 p.m. on September 24, 1997 (the "13% Senior
Subordinated Note Tender Offer Expiration Date")). The 13% Senior Subordinated
Note Tender Offer shall be conducted in compliance with the 13% Senior
Subordinated Note Tender Offer Documents and all applicable laws (including,
without limitation, Federal and state securities laws).
(b) On the Restatement Effective Date, the Borrower shall have
received sufficient 13% Senior Subordinated Note Consents pursuant to the
Consent Solicitation to authorize the execution and delivery of the 13% Senior
Subordinated Note Indenture Supplement and the 13% Senior Subordinated Note
Indenture Supplement shall have been duly executed and delivered by the Borrower
and the 13% Senior Subordinated Note Indenture Trustee and all conditions to the
effectiveness thereof shall have been satisfied. The Consent Solicitation and
the amendments effected to the 13% Senior Subordinated Note Indenture pursuant
to the 13% Senior Subordinated Note Indenture Supplement shall be conducted in
compliance with the Consent Solicitation Documents and all applicable laws
(including, without limitation, Federal and state securities laws).
(c) On the Restatement Effective Date, there shall have been
delivered to the Administrative Agent true and correct copies of all 13% Senior
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Subordinated Note Tender Offer Documents and Consent Solicitation Documents
(including executed versions of the 13% Senior Subordinated Note Indenture
Supplement). The Administrative Agent shall have received evidence in form,
scope and substance satisfactory to the Administrative Agent and the Required
Banks that the matters set forth in this Section 5.18 have been satisfied at
such time.
SECTION 6. Conditions Precedent to all Credit Events. The obligation
of each Bank to make Loans and the obligation of each Issuing Bank to issue any
Letter of Credit is subject, at the time of each such Credit Event (except as
hereinafter indicated), to the satisfaction of the following conditions:
6.01 Restatement Effective Date. The Restatement Effective Date
shall have occurred.
6.02 No Default; Representations and Warranties. At the time of each
Credit Event and also after giving effect thereto (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
contained herein and in the other Credit Documents shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on the date of the making of such Credit Event (it
being understood and agreed that any representation or warranty which by its
terms is made as of a specified date shall be required to be true and correct in
all material respects only as of such a specified date, and it being further
understood and agreed that (x) so long as (A) there is sufficient availability
under the Total Revolving Loan Commitment as determined in accordance with
Sections 1.01(a) and/or (b), (B) no Default or Event of Default under Section
10.05 shall have occurred and be continuing and (C) the Loans shall not have
been accelerated pursuant to Section 10, the Borrower shall be entitled to
request a Borrowing of Revolving Loans and/or Swingline Loans the proceeds of
which shall be used solely to repay any Unpaid Drawings then outstanding in
accordance with Section 2.05(a) and (y) any Unpaid Drawing that remains unpaid
for five Business Days or less from the date that the Borrower receives notice
of the respective Drawing shall not prevent the Borrowing of any Revolving Loans
and/or Swingline Loans for which a Notice of Borrowing has theretofore been
given so long as no other Default or Event of Default is then in existence).
6.03 Notice of Borrowing; Letter of Credit Request. (a) Prior to the
making of each Revolving Loan (other than a Revolving Loan made pursuant to a
Mandatory Borrowing), the Administrative Agent shall have received a Notice of
Borrowing meeting the requirements of Section 1.03(a). Prior to the making of
each Swingline Loan, the Swingline Bank shall receive the notice referred to in
Section 1.03(b)(i).
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(b) Prior to the issuance of any Letter of Credit (other than
Existing Letters of Credit), the Administrative Agent and the respective Issuing
Bank shall have received a Letter of Credit Request (together with such other
documents, if any, as such Issuing Bank shall identify to the Borrower as being
customarily included in connection therewith) meeting the requirements of
Section 2.03.
The occurrence of the Restatement Effective Date and the acceptance
of the benefits or proceeds of each Credit Event shall constitute a
representation and warranty by OFSI, Caterair Holdings, Caterair and the
Borrower to each of the Agents and each of the Banks that all of the conditions
specified in Section 5 and in this Section 6 and applicable to the Restatement
Effective Date and such Credit Event exist as of that time. All of the Notes,
certificates, legal opinions and other documents and papers referred to in
Section 5 and in this Section 6, unless otherwise specified, shall be delivered
to the Administrative Agent at the Notice Office for the account of each of the
Banks and, except for the Notes, in sufficient counterparts for each of the
Banks and shall be in form and substance satisfactory to the Required Banks.
SECTION 7. Representations, Warranties and Agreements. In order to
induce the Banks to enter into this Agreement and to make the Loans, and issue
(or participate in) the Letters of Credit as provided herein, each of OFSI,
Caterair Holdings, the Borrower and Caterair makes the following
representations, warranties and agreements, in each case after giving effect to
the Transaction, all of which shall survive the execution and delivery of this
Agreement and the Notes and the making of the Loans and issuance of the Letters
of Credit, with the occurrence of the Restatement Effective Date and each Credit
Event on or after the Restatement Effective Date being deemed to constitute a
representation and warranty that the matters specified in this Section 7 are
true and correct on and as of the Restatement Effective Date and the date of
each such Credit Event (it being understood and agreed that any representation
or warranty which by its terms is made as of a specified date shall be required
to be true and correct in all material respects only as of such specified date).
7.01 Corporate Status. Each of OFSI, Caterair Holdings, the Borrower
and each Subsidiary of Caterair Holdings and the Borrower (i) is a duly
organized and validly existing corporation in good standing under the laws of
the jurisdiction of its organization, (ii) has the corporate power and authority
to own its property and assets and to transact the business in which it is
engaged and presently proposes to engage and (iii) is duly qualified and is
authorized to do business and is in good standing in each jurisdiction where the
ownership of its property or the operation or conduct of its business requires
such qualifications except for failures to be so qualified which, individually
or in the aggregate, could not reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities, condition
(finan-
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cial or otherwise) or prospects of the Borrower, the Borrower and its
Subsidiaries taken as a whole, Caterair, Caterair and its Subsidiaries taken as
a whole or OFSI and its SCIS Subsidiaries taken as a whole.
7.02 Corporate Power and Authority. Each Credit Party has the
corporate power and authority to execute, deliver and perform the terms and
provisions of each of the Documents to which it is party and has taken all
necessary corporate action to authorize the execution, delivery and performance
by it of each of such Documents. Each Credit Party has duly executed and
delivered each of the Documents to which it is party, and each of such Documents
constitutes the legal, valid and binding obligation of such Credit Party
enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting creditors'
rights and by equitable principles (regardless of whether enforcement is sought
in equity or at law).
7.03 No Violation. Neither the execution, delivery or performance by
any Credit Party of the Documents to which it is a party, nor compliance by it
with the terms and provisions thereof, (i) will contravene any provision of any
applicable law, statute, rule or regulation or any applicable order, writ,
injunction or decree of any court or governmental instrumentality, (ii) will
conflict with or result in any breach of any of the terms, covenants, conditions
or provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien (except pursuant
to the Security Documents, the Caterair Holdings CD Pledge Agreement and the
Subordinated Intercompany Security Agreement) upon any of the properties or
assets of OFSI, Caterair Holdings, the Borrower or any Subsidiary of Caterair
Holdings or the Borrower pursuant to the terms of any indenture, mortgage, deed
of trust, credit agreement or loan agreement, or any other material agreement,
contract or instrument to which OFSI, Caterair Holdings, the Borrower or any
Subsidiary of Caterair Holdings or the Borrower is a party or by which it or any
of its property or assets is bound or to which it may be subject or (iii) will
violate any provision of the certificate of incorporation or by-laws (or
equivalent organizational documents) of OFSI, Caterair Holdings, the Borrower or
any Subsidiary of Caterair Holdings or the Borrower.
7.04 Governmental Approvals. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with
(except as have been obtained or made on or prior to the Restatement Effective
Date, or to the extent not required to be obtained or made on or prior to the
Restatement Effective Date pursuant to the Transaction Documents, as will be
obtained or made on or prior to the required date therefor), or exemption by,
any governmental or public body or authority
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<PAGE> 48
or any subdivision thereof, is required to authorize, or is required for, (i)
the execution, delivery and performance of any Document, (ii) the legality,
validity, binding effect or enforceability of any such Document or (iii) the
consummation of the Transaction.
7.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Financial Projections. (a) The consolidated balance sheet of each
of the Borrower and its Subsidiaries and Caterair Holdings and its Subsidiaries
at December 31, 1996 and June 30, 1997, and the related consolidated statements
of income, retained earnings and cash flow for the fiscal year and six-month
period ended on such dates, and furnished to the Banks prior to the Restatement
Effective Date present fairly the consolidated financial position of each of the
Borrower and its Subsidiaries and Caterair Holdings and its Subsidiaries at the
date of such balance sheets and the results of operations for the periods
covered thereby. All such financial statements have been prepared in accordance
with generally accepted accounting principles and practices consistently
applied. Since December 31, 1996 (and after giving effect to the Transaction),
there has been no material adverse change in the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of the
Borrower, the Borrower and its Subsidiaries taken as a whole, Caterair, Caterair
and its Subsidiaries taken as a whole or OFSI and its SCIS Subsidiaries taken as
a whole.
(b) On and as of the Restatement Effective Date, after giving effect
to the Transaction and to all Indebtedness (including the Loans) being incurred
or assumed and Liens created by each Credit Party in connection therewith, (A)
the sum of the assets, at a fair valuation of each of OFSI and its Subsidiaries
taken as a whole and the Borrower, Caterair and their respective Subsidiaries
taken as a whole will exceed their respective debts, (B) each of OFSI and its
Subsidiaries taken as a whole and the Borrower, Caterair and their respective
Subsidiaries taken as a whole have not incurred and do not intend to incur, and
do not believe that they will incur, debts beyond their ability to pay such
debts as such debts mature and (C) each of OFSI and its Subsidiaries taken as a
whole and the Borrower, Caterair and their respective Subsidiaries taken as a
whole will have sufficient capital with which to conduct their business. For
purposes of this Section 7.05(b), "debt" means any liability on a claim, and
"claim" means (i) right to payment, whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured, or unsecured or (ii) right to
an equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured.
(c) Except as fully disclosed in the financial statements delivered
pursuant to Section 7.05(a), there were as of the Restatement Effective Date no
liabil-
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<PAGE> 49
ities or obligations with respect to OFSI, Caterair Holdings or any of their
respective Subsidiaries of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either individually or in
aggregate, could reasonably be expected to be material to OFSI, Caterair
Holdings or any of their respective Subsidiaries (other than any such
liabilities or obligations which arise in the ordinary course of business in
connection with contracts entered into by any such Person). As of the
Restatement Effective Date, none of OFSI, Caterair Holdings, Caterair nor the
Borrower knows of any basis for the assertion against it or any of its
Subsidiaries of any liability or obligation of any nature whatsoever that is not
fully disclosed in the financial statements delivered pursuant to Section
7.05(a) which, either individually or in the aggregate, could reasonably be
expected to be material to OFSI, Caterair Holdings, the Borrower, Caterair or
any of their respective Subsidiaries.
(d) On and as of the Restatement Effective Date, (i) there are no
statements or conclusions in any of the financial projections dated August 5,
1997 previously delivered to the Banks (the "Financial Projections") which are
based upon or include information known to OFSI, Caterair Holdings, the Borrower
or Caterair to be misleading in any material respect or which fail to take into
account material information regarding the matters reported therein. On the
Restatement Effective Date, each of OFSI, Caterair Holdings, the Borrower and
Caterair believes that the Financial Projections are reasonable and attainable,
it being understood that the Financial Projections include assumptions as to
future events that are not to be viewed as facts and that actual results may
differ materially from the projected results.
7.06 Litigation. There are no actions, suits or proceedings pending
or threatened (i) with respect to any Document or the transactions contemplated
hereby or thereby, (ii) with respect to any material Indebtedness of OFSI,
Caterair Holdings, the Borrower or any Subsidiary of Caterair Holdings or the
Borrower, or (iii) that could reasonably be expected to materially and adversely
affect the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower, the Borrower and its
Subsidiaries taken as a whole, Caterair, Caterair and its Subsidiaries taken as
a whole or OFSI and its SCIS Subsidiaries taken as a whole.
7.07 True and Complete Disclosure. All factual information (taken as
a whole) furnished by or on behalf of OFSI, Caterair Holdings or any of their
respective Subsidiaries in writing to any Agent or any Bank (including, without
limitation, all information contained in the Documents) for purposes of or in
connection with this Agreement, the other Documents or any transaction
contemplated herein or therein is, and all other such factual information (taken
as a whole) hereafter furnished by or on behalf of OFSI, Caterair Holdings or
any of their respective Subsidiaries in writing to any Agent or any Bank, will
be, true and accurate in all material respects on
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<PAGE> 50
the date as of which such information is dated or certified and not incomplete
by omitting to state any fact necessary to make such information (taken as a
whole) not misleading in any material respect at such time in light of the
circumstances under which such information was provided.
7.08 Use of Proceeds; Margin Regulations. (a) All proceeds of
Revolving Loans and Swingline Loans shall be used to finance the working capital
requirements and general corporate purposes of the Borrower, Caterair and their
respective Subsidiaries.
(b) No part of the proceeds of any Loan will be used to purchase or
carry any Margin Stock or to extend credit for the purpose of purchasing or
carrying any Margin Stock. Neither the making of any Loan nor the use of the
proceeds thereof nor the occurrence of any other Credit Event will violate or be
inconsistent with the provisions of Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
7.09 Tax Returns and Payments. Each of OFSI, Caterair Holdings and
each of their respective Subsidiaries has filed or caused to be filed, on a
timely basis with the appropriate taxing authority, all material federal, state
and other returns, statements, forms and reports for taxes (the "Returns")
required to be filed by or with respect to the income, properties or operations
of OFSI, Caterair Holdings and their respective Subsidiaries. The Returns
accurately reflect in all material respects all liability for taxes of OFSI,
Caterair Holdings and their respective Subsidiaries and for the periods covered
thereby. Each of OFSI, Caterair Holdings and each of their respective
Subsidiaries has paid all material taxes payable by it other than taxes which
are not delinquent, and other than those contested in good faith and for which
adequate reserves have been established in accordance with generally accepted
accounting principles. There is no material action, suit, proceeding,
investigation, audit or claim now pending or threatened by any taxing authority
regarding any taxes relating to OFSI, Caterair Holdings or any of their
respective Subsidiaries. As of the Restatement Effective Date, none of OFSI,
Caterair Holdings nor any of their respective Subsidiaries has entered into an
agreement or waiver or been requested to enter into an agreement or waiver
extending any statute of limitations relating to the payment or collection of
taxes of OFSI, Caterair Holdings or any of their respective Subsidiaries to a
period ending after the Restatement Effective Date. None of OFSI, Caterair
Holdings nor any of their respective Subsidiaries has provided, with respect to
itself or property held by it, any consent under Section 341(f) of the Code.
None of OFSI, Caterair Holdings nor any of their respective Subsidiaries has
incurred, or will incur, any material tax liability for any tax year, or portion
thereof, ending on or before the
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Restatement Effective Date, in connection with the Transaction or the other
transactions contemplated hereby and thereby.
7.10 Compliance with ERISA. (i) Each Plan is in substantial
compliance with ERISA and the Code; no Reportable Event has occurred with
respect to a Plan; no Plan is insolvent or in reorganization; no Plan that is a
single-employer plan (as defined in Section 4001 of ERISA) has an Unfunded
Current Liability; no Plan has an accumulated or waived funding deficiency or
has applied for an extension of any amortization period within the meaning of
Section 412 of the Code; all contributions required to be made with respect to a
Plan and a Foreign Pension Plan have been timely made; none of OFSI, Caterair
Holdings nor any Subsidiary or ERISA Affiliate of OFSI or Caterair Holdings has
incurred any material liability to or on account of a Plan pursuant to Section
409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
Section 401(a)(29), 4971, 4975 or 4980 of the Code or expects to incur any
material liability (including any indirect, contingent, or secondary liability)
under any of the foregoing Sections with respect to any Plan; no proceedings
have been instituted to terminate or appoint a trustee to administer any Plan;
no condition exists which presents a material risk to OFSI, Caterair Holdings or
any Subsidiary or ERISA Affiliate of OFSI or Caterair Holdings of incurring a
material liability to or on account of a Plan pursuant to the foregoing
provisions of ERISA and the Code; using actuarial assumptions and computation
methods consistent with Part 1 of subtitle E of Title IV of ERISA, the aggregate
liabilities of OFSI, Caterair Holdings and their respective Subsidiaries and
ERISA Affiliates to all Plans which are multiemployer plans (as defined in
Section 4001(a)(3) of ERISA) in the event of a complete withdrawal therefrom, as
of the close of the most recent fiscal year of each such Plan ended prior to the
date of the most recent Credit Event, would not exceed $5,000,000; no lien
imposed under the Code or ERISA on the assets of OFSI, Caterair Holdings or any
Subsidiary or ERISA Affiliate of OFSI or Caterair Holdings exists or is likely
to arise on account of any Plan; and if OFSI, Caterair Holdings and their
respective Subsidiaries were to cease contributions to or terminate any employee
benefit plan maintained by any of them after securing appropriate governmental
and union consents and approvals, the unfunded liability for benefits then due
could not reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower, the Borrower and its Subsidiaries taken
as a whole, Caterair, Caterair and its Subsidiaries taken as a whole or OFSI and
its SCIS Subsidiaries taken as a whole.
(ii) Each Foreign Pension Plan has been maintained in substantial
compliance with its terms and with the requirements of any and all applicable
laws, statutes, rules, regulations and orders and has been maintained, where
required, in good standing with applicable regulatory authorities. None of OFSI,
Caterair Holdings nor
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any of their respective Subsidiaries has incurred any obligation in connection
with the termination of or withdrawal from any Foreign Pension Plan. The present
value of the accrued benefit liabilities (whether or not vested) attributable to
employees of OFSI, the Borrower, Caterair Holdings or any of their respective
Subsidiaries under each Foreign Pension Plan, determined as of the end of OFSI's
and Caterair Holdings' most recently ended fiscal year on the basis of actuarial
assumptions, which are reasonable in the aggregate, did not exceed the current
value of the assets of such Foreign Pension Plan allocable to such benefit
liabilities by more than $4,000,000.
7.11 The Security Documents. (a) The provisions of the Security
Agreement are effective to create in favor of the Collateral Agent for the
benefit of the Secured Creditors a legal, valid and enforceable security
interest in all right, title and interest of each Credit Party party to the
Security Agreement in the Security Agreement Collateral, and the Security
Agreement, upon the filing of Form UCC-1 financing statements or the appropriate
equivalent (which filings have been made), creates a fully perfected first lien
on, and security interest in, all right, title and interest in all of the
Security Agreement Collateral to the extent that such Security Agreement
Collateral consists of the type of property in which a security interest may be
perfected by filing a financing statement under the UCC as enacted in any
relevant jurisdiction, subject to no other Liens other than Permitted Liens. The
recordation of the Assignment of Security Interest in U.S. Patents and
Trademarks in the form attached to the Security Agreement in the United States
Patent and Trademark Office together with filings on Form UCC-1 made pursuant to
the Security Agreement will be effective, under applicable law, to perfect the
security interest granted to the Collateral Agent in the trademarks and patents
covered by the amended and restated Security Agreement and the recordation of
the Assignment of Security Interest in U.S. Copyrights in the form attached to
the Security Agreement with the United States Copyright Office together with
filings on Form UCC-1 made pursuant to the Security Agreement will be effective
under federal law to perfect the security interest granted to the Collateral
Agent in the copyrights covered by the Security Agreement. Each Credit Party to
the Security Agreement has good and valid title to all Security Agreement
Collateral owned by it, free and clear of all Liens except Permitted Liens.
(b) The security interests created in favor of the Collateral Agent,
as Pledgee, for the benefit of the Secured Creditors under the Pledge Agreements
constitute first priority perfected security interests in the Pledged
Securities, subject to no security interests of any other Person. No filings or
recordings are required in order to perfect (or maintain the perfection or
priority of) the security interests created in the Pledged Securities and the
proceeds thereof under the Pledge Agreements (other than, in respect of such
proceeds, the filing of Form UCC-1 financing statements or the appropriate
equivalent (which filings have been made)).
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(c) The Mortgages create, upon recording thereof and of the Mortgage
Amendments which recordings in the case of the Mortgages, have been made, and in
the case of the Mortgage Amendments, will be made within 10 days after the
Restatement Effective Date, as security for the obligations purported to be
secured thereby, a valid and enforceable first priority perfected security
interest in and mortgage lien on all of the Mortgaged Properties in favor of the
Collateral Agent for the benefit of the Secured Creditors and subject to no
other Liens (other than Permitted Liens). Each Credit Party has good and
marketable title to all fee-owned Mortgaged Properties owned by such Credit
Party and valid leasehold title to all leasehold Mortgaged Properties leased by
such Credit Party, in each case free and clear of all leases, occupancy
interests and all Liens except Permitted Liens.
7.12 Representations and Warranties in Other Documents. (a) On the
Restatement Effective Date, all representations and warranties made by any
Credit Party in the Caterair Credit Agreement and in the 9-1/4% Senior
Subordinated Note Documents were true and correct in all material respects as at
the time as of which such representations and warranties were made (or deemed
made).
(b) On the date of each Credit Event, all representations and
warranties contained in the other Credit Documents shall be true and correct in
all material respects as if made on such date.
7.13 Properties. Each of OFSI, Caterair Holdings, the Borrower and
each Subsidiary of Caterair Holdings and the Borrower has good and valid title
to all material properties owned by it, including, without limitation, all
property reflected as owned by it in the consolidated balance sheets of the
Borrower and Caterair Holdings referred to in Section 7.05(a) (except as sold or
otherwise disposed of since the date of such balance sheets pursuant to
transactions not prohibited under the Original Credit Agreement or this
Agreement), free and clear of all Liens, other than (i) as referred to in the
balance sheets or in the notes thereto or (ii) Permitted Liens. Schedule IV sets
forth a true and complete description of all Real Property owned or leased by
OFSI, Caterair Holdings, the Borrower and each Domestic Subsidiary of Caterair
Holdings and the Borrower on the Restatement Effective Date, the type of
interest therein held by such Person and sets forth the direct owner or lessee
thereof and whether such Real Property is subject to any of the Lease
Agreements.
7.14 Capitalization. (a) On the Restatement Effective Date, the
authorized capital stock of (i) OFSI consists of (x) 210,000 shares of Class A
Common Stock, $.01 par value per share (the "OFSI Class A Common Stock"), of
which 128,525.05, shares were issued and 123,184.81 shares were outstanding as
of June 30, 1997, (y) 40,000 shares of Class AA Common Stock, $.01 par value per
share, of
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which 38,326.36 shares were issued and outstanding as of June 30, 1997 and (z)
21,000 shares of Class B Common Stock, $.01 par value per share (the "OFSI Class
B Common Stock"), of which 15,207.30 shares were issued and 12,975.20 shares
were outstanding as of June 30, 1997, (ii) Caterair Holdings consists of (x)
1,000,000 shares of Caterair Holdings Class A Nonvoting Common Stock, all of
which shares are issued and outstanding and (y) 100,000 shares of Caterair
Holdings Class B Voting Common Stock, all of which shares are issued and
outstanding, (iii) the Borrower consists of 3,000 shares of common stock, $.01
par value per share, of which 100 shares are issued and outstanding and owned of
record and beneficially by OFSI and (iv) Caterair consists of 10,000 shares of
common stock, $.01 par value per share, all of which shares are issued and
outstanding and owned of record and beneficially by Caterair Holdings. All such
outstanding shares of common stock have been duly and validly issued, are fully
paid and nonassessable and are free of preemptive rights. Except as set forth on
Schedule V, none of OFSI, Caterair Holdings, the Borrower nor Caterair has
outstanding any securities convertible into or exchangeable for its capital
stock or outstanding any rights to subscribe for or to purchase, or any options
or warrants for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, its capital stock.
7.15 Subsidiaries. Schedule VI lists each Subsidiary of OFSI and
Caterair Holdings and the direct and indirect ownership interest of OFSI and
Caterair Holdings therein, in each case as of the Restatement Effective Date.
All outstanding shares of capital stock of each Subsidiary of OFSI and Caterair
Holdings have been duly and validly issued, are fully paid and non-assessable
and have been issued free of preemptive rights. Except as set forth on Schedule
V, no Subsidiary of the Borrower or Caterair has outstanding any securities
convertible into or exchangeable for its capital stock or outstanding any right
to subscribe for or to purchase, or any options or warrants for the purchase of,
or any agreement providing for the issuance (contingent or otherwise) of or any
calls, commitments or claims of any character relating to, its capital stock or
any stock appreciation or similar rights.
7.16 Compliance with Statutes, etc. Each of OFSI, Caterair Holdings,
the Borrower and each Subsidiary of Caterair Holdings and the Borrower is in
compliance with all applicable statutes, laws, ordinances, codes, rules,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including applicable statutes,
regulations, orders and restrictions relating to environmental standards and
controls), except such instances of noncompliance as could not, individually or
in the aggregate, reasonably be expected to have a material adverse effect on
the business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower, the Borrower and its Subsidiaries taken
as a
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whole, Caterair, Caterair and its Subsidiaries taken as a whole or OFSI and its
SCIS Subsidiaries taken as a whole.
7.17 Investment Company Act. None of OFSI, Caterair Holdings, the
Borrower nor any Subsidiary of Caterair Holdings or the Borrower is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
7.18 Public Utility Holding Company Act. None of OFSI, Caterair
Holdings, the Borrower nor any Subsidiary of Caterair Holdings or the Borrower
is a "holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
7.19 Environmental Matters. (a) Each of OFSI, Caterair Holdings, the
Borrower and each Subsidiary of Caterair Holdings and the Borrower is in
compliance with all applicable Environmental Laws and the requirements of any
permits issued under such Environmental Laws. There are no pending or threatened
Environmental Claims against OFSI, Caterair Holdings, the Borrower or any
Subsidiary of Caterair Holdings or the Borrower or any Real Property owned or
operated by any such Person. There are no facts, circumstances, conditions or
occurrences on any Real Property owned or operated by OFSI, Caterair Holdings,
the Borrower or any Subsidiary of Caterair Holdings or the Borrower or on any
property adjoining or in the vicinity of any such Real Property that could
reasonably be expected (i) to form the basis of an Environmental Claim against
OFSI, Caterair Holdings, the Borrower or any Subsidiary of Caterair Holdings or
the Borrower or any such Real Property or (ii) to cause any such Real Property
to be subject to any restrictions on the ownership, occupancy, use or
transferability of such Real Property by OFSI, Caterair Holdings, the Borrower
or any Subsidiary of Caterair Holdings or the Borrower under any applicable
Environmental Law.
(b) Hazardous Materials have not at any time been generated, used,
treated or stored on, or transported to or from, any Real Property owned or
operated by OFSI, Caterair Holdings, the Borrower or any Subsidiary of Caterair
Holdings or the Borrower where such generation, use, treatment or storage has
violated any Environmental Law. Hazardous Materials have not at any time been
Released on or from any Real Property owned or operated by OFSI, Caterair
Holdings, the Borrower or any Subsidiary of Caterair Holdings or the Borrower
where such Release has violated any applicable Environmental Law. There are no
underground storage tanks located on any Real Property owned or operated by
OFSI, Caterair Holdings, the
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Borrower or any Subsidiary of Caterair Holdings or the Borrower that are not in
compliance with all Environmental Laws.
(c) Notwithstanding anything to the contrary in this Section 7.19,
the representations made in this Section 7.19 shall only be untrue if the effect
of the failures and noncompliances of the types described above, either
individually or in the aggregate, have had, or could reasonably be expected to
have, a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower,
the Borrower and its Subsidiaries taken as a whole, Caterair, Caterair and its
Subsidiaries taken as a whole or OFSI and its SCIS Subsidiaries taken as a
whole.
7.20 Labor Relations. None of OFSI, Caterair Holdings, the Borrower
nor any Subsidiary of Caterair Holdings or the Borrower is engaged in any unfair
labor practice that could reasonably be expected to have a material adverse
effect on the Borrower, the Borrower and its Subsidiaries taken as a whole,
Caterair, Caterair and its Subsidiaries taken as a whole, or OFSI and its SCIS
the Subsidiaries taken as a whole. There is (i) no unfair labor practice
complaint pending against OFSI, Caterair Holdings, the Borrower or any
Subsidiary of Caterair Holdings or the Borrower or threatened against any of
them, before the National Labor Relations Board or pursuant to the Railway Labor
Act, and no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against OFSI, Caterair Holdings,
the Borrower or any Subsidiary of Caterair Holdings or the Borrower or
threatened against any of them, (ii) no strike, labor dispute, slowdown or
stoppage pending against OFSI, Caterair Holdings, the Borrower or any Subsidiary
of Caterair Holdings or the Borrower or threatened against any of them and (iii)
no union representation proceeding pending with respect to the employees of
OFSI, Caterair Holdings, the Borrower or any Subsidiary of Caterair Holdings or
the Borrower except (with respect to any matter specified in clause (i), (ii) or
(iii) above, either individually or in the aggregate) such as could not
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower, the Borrower and its Subsidiaries taken as a whole,
Caterair, Caterair and its Subsidiaries taken as a whole or OFSI and its SCIS
Subsidiaries taken as a whole.
7.21 Patents, Licenses, Franchises and Formulas. Each of OFSI,
Caterair Holdings, the Borrower and each Subsidiary of Caterair Holdings and the
Borrower owns all patents, trademarks, permits, service marks, trade names,
copyrights, licenses, franchises and formulas, or has rights with respect to the
foregoing, and has obtained assignments of all leases and other rights of
whatever nature, reasonably necessary for the present conduct of its business,
without any known conflict
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with the rights of others which, or the failure to obtain which, as the case may
be, could reasonably be expected to result in a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower, the Borrower and its Subsidiaries taken
as a whole, Caterair, Caterair and its Subsidiaries taken as a whole or OFSI and
its SCIS Subsidiaries taken as a whole.
7.22 Indebtedness; Subordination Provisions; etc. (a) Schedule VII
sets forth a true and complete list of all Indebtedness of OFSI, Caterair
Holdings and their respective Subsidiaries as of the Restatement Effective Date
and which is to remain outstanding after giving effect thereto (excluding the
Loans, the Letters of Credit, the loans under the Caterair Credit Agreement, the
Senior Subordinated Notes, the Caterair Holdings Unsecured Debentures, the
Caterair Holdings Secured Note, the Existing Caterair Senior Notes and the
SCIS/Caterair Loan, the "Existing Indebtedness"), in each case showing the
aggregate principal amount thereof and the name of the respective borrower and
any Credit Party or any of its Subsidiaries which directly or indirectly
guaranteed such debt.
(b) The subordination provisions contained in the Senior
Subordinated Notes and in the other Senior Subordinated Note Documents are
enforceable against the Borrower, Caterair, the other Subsidiary Guarantors and
the holders of the Senior Subordinated Notes, and all Obligations and Guaranteed
Obligations (as defined herein and in the Subsidiaries Guaranty) are within the
definition of "Senior Indebtedness" or "Guarantor Senior Indebtedness", as the
case may be, included in such subordination provisions.
(c) The subordination provisions contained in the Caterair Holdings
Subordination Agreement are enforceable against Caterair Holdings and the
holders of the Caterair Holdings Unsecured Debentures.
(d) None of OFSI, Caterair Holdings, the Borrower nor any Subsidiary
of Caterair Holdings or the Borrower is liable for any Indebtedness or other
obligations (except, (i) in the case of such other obligations, those in the
nature of ERISA, tax and similar obligations in which OFSI and its SCIS
Subsidiaries are jointly and severally liable with OFSI and its Non-SCIS
Subsidiaries as a matter of law and (ii) in the case of OFSI, to the extent that
such recourse is expressly limited solely to the Class B Assets or the equity
interests of any Non-SCIS Subsidiary or any Dividends or earnings from, or any
proceeds in respect of, any thereof) of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether or not due) of any Non-SCIS
Subsidiaries.
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7.23 Consummation of Transaction. At the time of consummation
thereof, the Transaction shall have been consummated in accordance with the
terms of the respective Documents and all applicable United States and other
laws. At the time of consummation thereof, all consents, approvals of and
permits for, and filings and registrations with, and all other actions in
respect of, all governmental agencies, authorities or instrumentalities required
in order to make or consummate the Transaction have been (or will, within the
time frame required, be) obtained, given, filed or taken and are or will be in
full force and effect (or effective judicial relief with respect thereto has
been obtained). All applicable waiting periods with respect to the Transaction
shall have expired without any action being taken by any competent authority
which restrains, prevents or imposes material adverse conditions upon the
Transaction. Additionally, there does not exist any judgment, order or
injunction prohibiting or imposing material adverse conditions upon the
Transaction or the occurrence of any Credit Event or the performance by OFSI,
Caterair Holdings or any of their respective Subsidiaries of their obligations
under the respective Documents. All actions taken by OFSI, Caterair Holdings or
any of their respective Subsidiaries pursuant to or in furtherance of the
consummation of the Transaction have been taken in compliance with the
respective Documents therefor and all applicable United States and other laws.
SECTION 8. Affirmative Covenants. Each of OFSI, Caterair Holdings,
Caterair and the Borrower covenants and agrees that on and after the Restatement
Effective Date and until the Total Revolving Loan Commitment and all Letters of
Credit have terminated and the Loans, Notes and Unpaid Drawings, together with
interest, Fees and all other Obligations incurred hereunder and thereunder are
paid in full (other than indemnity and similar obligations that are not then due
and payable):
8.01 Information Covenants. OFSI, Caterair Holdings, the Borrower
and Caterair will, as applicable, furnish to the Administrative Agent (with
sufficient copies for each of the Banks) (and the Administrative Agent will
promptly thereafter furnish to each Bank):
(a) Monthly Reports. Within 30 days after the end of each fiscal
month of the Borrower and Caterair (or 60 days after the end of each
December), the consolidated balance sheet of each of the Borrower and its
Subsidiaries and Caterair and its Subsidiaries as at the end of such
fiscal month and the related consolidated statements of income and
retained earnings and statement of cash flows for such fiscal month and
for the elapsed portion of the fiscal year ended with the last day of such
fiscal month, in each case setting forth comparative figures for the
corresponding fiscal month in the prior fiscal year and, to the extent the
respective budget has previously been delivered, comparative figures
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for such fiscal month as set forth in the respective budget delivered
pursuant to Section 8.01(e), all of which shall be certified by an
Authorized Financial Officer of the Borrower or Caterair, as applicable,
subject to normal year-end audit adjustments and the absence of footnotes.
(b) Quarterly Financial Statements. Within 45 days after the close
of the first three quarterly accounting periods in each fiscal year of
OFSI, Caterair Holdings, the Borrower and Caterair, (w) in the case of
OFSI, the consolidated balance sheet of OFSI as at the end of such
quarterly accounting period and the related consolidated statements of
income and retained earnings and consolidated statement of cash flows, in
each case for such quarterly accounting period and for the elapsed portion
of the fiscal year ended with the last day of such quarterly accounting
period, (x) in the case of the Borrower, the consolidated balance sheet of
the Borrower and its Subsidiaries as at the end of such quarterly
accounting period and the related consolidated statements of income and
retained earnings and the statement of cash flows, in each case for such
quarterly accounting period and for the elapsed portion of the fiscal year
ended with the last date of such quarterly accounting period, (y) in the
case of Caterair, the consolidated balance sheet of Caterair and its
Subsidiaries as at the end of such quarterly accounting period and the
related consolidated statements of income and retained earnings and the
statement of cash flows, in each case for such quarterly accounting period
and for the elapsed portion of the fiscal year ended with the last day of
such quarterly accounting period, and (z) also in the case of the
Borrower, a statement of the combined debt of the Borrower, Caterair and
their respective Subsidiaries as at the end at such quarterly accounting
period and the combined statements of income and the combined statement of
cash flows for the Borrower, Caterair and their respective Subsidiaries,
in each case for such quarterly accounting period and for the elapsed
portion of the fiscal year ended with the last day of such quarterly
accounting period (with such combined statements to be prepared on a basis
consistent with those combined statements delivered under the Original
Credit Agreement), in each case (with respect to preceding clauses (w),
(x), (y) and (z)) setting forth comparative figures for the corresponding
periods in the prior fiscal year, all of which shall be certified by an
Authorized Financial Officer of OFSI, Caterair Holdings, the Borrower or
Caterair, as applicable, subject to normal year-end audit adjustments and
the absence of footnotes.
(c) Annual Financial Statements. Within 105 days after the close of
each fiscal year of OFSI, Caterair Holdings, the Borrower and Caterair,
(i) (v) in the case of OFSI, the consolidated balance sheet of OFSI as at
the end of such fiscal year and the related consolidated statements of
income and retained
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earnings and the consolidated statement of cash flows for such fiscal year
setting forth comparative figures for the preceding fiscal year, (w) in
the case of Caterair Holdings, the consolidated balance sheet of Caterair
Holdings as at the end of such fiscal year and the related consolidated
statements of income and retained earnings and the consolidated statement
of cash flows for such fiscal year setting comparative figures for the
preceding fiscal year, (x) in the case of the Borrower, the consolidated
balance sheet of the Borrower and its Subsidiaries as at the end of such
fiscal year and the related consolidated statements of income and retained
earnings and the statement of cash flows for such fiscal year setting
forth comparatives for the preceding fiscal year, (y) in the case of
Caterair, the consolidated balance sheet of Caterair and its Subsidiaries
as at the end of such fiscal year and the related consolidated statements
of income and retained earnings and the statement of cash flows for such
fiscal year, setting forth comparatives for the preceding fiscal year, and
(z) also in the case of the Borrower, a statement of the combined debt of
the Borrower, Caterair and their respective Subsidiaries as at the end of
such fiscal year and the combined statements of income and the combined
statement of cash flows for the Borrower, Caterair and their respective
Subsidiaries for such fiscal year setting forth comparative figures for
the preceding fiscal year (with such combined statements to be prepared on
a basis consistent with those combined statements delivered under the
Original Credit Agreement), in each case (with respect to preceding
clauses (v), (w), (x), (y) and (z)) certified (A) in the case of the
consolidated financial statements of OFSI, Caterair Holdings, the Borrower
and Caterair, by Coopers and Lybrand L.L.P. or such other independent
certified public accounting firm of recognized national standing
reasonably acceptable to the Agents, together with a report of such
accounting firm stating that in the course of its regular audit of the
consolidated financial statements of each of the Borrower and its
Subsidiaries and Caterair and its Subsidiaries, which audit was conducted
in accordance with generally accepted auditing standards, such accounting
firm obtained no knowledge of any Default or Event of Default which has
occurred and is continuing under any of Sections 9.07 through 9.09,
inclusive, or, if in the opinion of such accounting firm such a Default or
an Event of Default has occurred and is continuing, a statement as to the
nature thereof and (B) in the case of the combined statements of the
Borrower and Caterair, by an Authorized Financial Officer of the Borrower
and (ii) management's discussions and analysis of the important
operational and financial developments during such fiscal year.
(d) Management Letters. Promptly after the receipt thereof by OFSI,
Caterair Holdings, the Borrower or any Domestic Subsidiary of Caterair
Holdings or the Borrower, a copy of any "management letter" received by
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OFSI, Caterair Holdings, the Borrower or such Subsidiary from its
certified public accountants and the management's responses thereto.
(e) Budgets. No later than 120 days following the commencement of
the first day of each fiscal year of the Borrower and Caterair,
consolidated budgets for each of the Borrower and Caterair in form
satisfactory to the Agents (including budgeted statements of income and
sources and uses of cash and balance sheets) prepared by the Borrower and
Caterair respectively for each of the twelve months of such fiscal year
prepared in detail, and accompanied by the statement of an Authorized
Financial Officer of the Borrower or Caterair, as the case may be, that
the respective budget is a reasonable estimate of the period covered
thereby.
(f) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Sections 8.01(a), (b) and (c), a
certificate of an Authorized Financial Officer of OFSI, Caterair Holdings,
the Borrower or Caterair, as applicable, to the effect that, to the best
of such officer's knowledge, no Default or Event of Default has occurred
and is continuing or, if any Default or Event of Default has occurred and
is continuing, specifying the nature and extent thereof, which
certificate, if delivered with the financial statements required by
Sections 8.01(b) and (c), shall also set forth the calculations required
to establish whether OFSI and its SCIS Subsidiaries or Caterair Holdings
and its Subsidiaries, as applicable, were in compliance with the
provisions of Sections 3.03(b), 9.03(ii), (iii), (v), (vi) and (vii) (y)
and (z), 9.04(vi) and 9.07 through 9.09, inclusive, at the end of such
fiscal quarter or year, as the case may be. In addition, at the time of
the delivery of the financial statements of the Borrower provided for in
Sections 8.01(a), (b) and (c), a certificate of an Authorized Financial
Officer of the Borrower setting forth (x) the aggregate principal amount
(or the Dollar Equivalent thereof) of all Third-Party Foreign Subsidiary
Indebtedness outstanding as of the date of such financial statements and
(y) the respective Foreign Subsidiary or Foreign Subsidiaries that have
incurred such Indebtedness.
(g) Notice of Default or Litigation. Promptly, and in any event
within three Business Days after an executive officer of any Credit Party
obtains knowledge thereof, notice of (i) the occurrence of any event which
constitutes a Default or an Event of Default and (ii) any litigation or
governmental investigation or proceeding pending (x) against OFSI,
Caterair Holdings or any of their respective Subsidiaries which could
reasonably be expected to materially and adversely affect the business,
operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower, the Borrower and its
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Subsidiaries taken as a whole, Caterair, Caterair and its Subsidiaries
taken as a whole or OFSI and its SCIS Subsidiaries taken as a whole, or
(y) with respect to any Document.
(h) Other Reports and Filings. Promptly, copies of all financial
information, proxy materials and other information and reports, if any,
which OFSI, Caterair Holdings, the Borrower or any Subsidiary of Caterair
Holdings or the Borrower shall file with the Securities and Exchange
Commission or any successor thereto (the "SEC") or deliver to holders of
the Senior Subordinated Notes or any other issue of its Indebtedness
pursuant to the terms of the documentation governing any such Indebtedness
(or any trustee, agent or other representative therefor).
(i) Environmental Matters. Promptly, and in any event within ten
Business Days, after an executive officer of any Credit Party obtains
knowledge thereof, notice of one or more of the following environmental
matters, unless such environmental matters could not, individually or when
aggregated with all other such environmental matters, be reasonably
expected to materially and adversely affect the business, operations,
property, assets, liabilities, condition (financial or otherwise) or
prospects of the Borrower, the Borrower and its Subsidiaries taken as a
whole, Caterair, Caterair and its Subsidiaries taken as a whole or OFSI
and its SCIS Subsidiaries taken as a whole:
(i) any pending or threatened Environmental Claim in writing
against OFSI, Caterair Holdings, the Borrower or any Subsidiary of
Caterair Holdings or the Borrower or any Real Property owned or
operated by OFSI, Caterair Holdings, the Borrower or any Subsidiary
of Caterair Holdings or the Borrower;
(ii) any condition or occurrence on or arising from any Real
Property owned or operated by OFSI, Caterair Holdings, the Borrower
or any Subsidiary of Caterair Holdings or the Borrower that (a)
results in noncompliance by OFSI, Caterair Holdings, the Borrower or
any Subsidiary of Caterair Holdings or the Borrower with any
applicable Environmental Law or (b) could reasonably be expected to
form the basis of an Environmental Claim against OFSI, Caterair
Holdings, the Borrower or any Subsidiary of Caterair Holdings or the
Borrower or any such Real Property;
(iii) any condition or occurrence on any Real Property owned
or operated by OFSI, Caterair Holdings, the Borrower or any
Subsidiary
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of Caterair Holdings or the Borrower that could reasonably be
expected to cause such Real Property to be subject to any
restrictions on the ownership, occupancy, use or transferability by
OFSI, Caterair Holdings, the Borrower or any Subsidiary of Caterair
Holdings or the Borrower of such Real Property under any
Environmental Law; and
(iv) the taking of any removal or remedial action in response
to the actual or alleged presence of any Hazardous Material on any
Real Property owned or operated by OFSI, Caterair Holdings, the
Borrower or any Subsidiary of Caterair Holdings or the Borrower as
required by any Environmental Law or any governmental or other
administrative agency.
All such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial action
and OFSI's, Caterair Holdings', the Borrower' or such Subsidiary's
response thereto. In addition, OFSI, Caterair Holdings, the Borrower or
any Subsidiary of Caterair Holdings or the Borrower will provide the Banks
with copies of all material communications with any government or
governmental agency relating to Environmental Laws, all communications
with any Person relating to any Environmental Claim of which notice is
required to be given pursuant to this Section 8.01(i), and such detailed
reports of any such Environmental Claim as may reasonably be requested by
any Agent; provided that in any event such Persons shall deliver to each
Bank all notices received by them from any government or governmental
agency under, or pursuant to, CERCLA.
(j) Annual Meetings with Banks. The Borrower shall within 135 days
after the close of each fiscal year of the Borrower hold a meeting (at a
mutually agreeable location and time) with all of the Banks at which
meeting shall be reviewed the financial results of the previous fiscal
year and the financial condition of the Borrower and its Subsidiaries and
the annual plan and budgets presented for the current fiscal year of the
Borrower and its Subsidiaries.
(k) Other Information. From time to time, such other information or
documents (financial or otherwise) with respect to OFSI, Caterair Holdings
or any of their respective Subsidiaries as any Bank may reasonably request
in writing.
8.02 Books, Records and Inspections. Each of OFSI, Caterair Holdings
and the Borrower will, and each of Caterair Holdings and the Borrower will cause
each of their respective Subsidiaries to, keep proper books of record and
account in which
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true and correct entries in conformity with generally accepted accounting
principles and all requirements of law shall be made of all dealings and
transactions in relation to its business and activities. Each of OFSI, Caterair
Holdings and the Borrower will, and each of Caterair Holdings and the Borrower
will cause each of their respective Subsidiaries to, permit officers and
designated representatives of any Agent or any Bank to visit and inspect, during
regular business hours and under guidance of officers of OFSI, Caterair
Holdings, the Borrower or such Subsidiary, any of the properties of OFSI,
Caterair Holdings, the Borrower or such Subsidiary, and to examine the books of
account of OFSI, Caterair Holdings, the Borrower or such Subsidiary and discuss
the affairs, finances and accounts of OFSI, Caterair Holdings, the Borrower or
such Subsidiary with, and be advised as to the same by, its and their officers
and independent accountants, all at such reasonable times and intervals and to
such reasonable extent as any Agent or any Bank may reasonably request.
8.03 Maintenance of Property; Insurance. (a) Schedule IX sets forth
a true and complete listing of all insurance maintained by the Borrower,
Caterair and their respective Subsidiaries on the Restatement Effective Date.
Each of the Borrower and Caterair will, and will cause each of their respective
Subsidiaries to, (i) keep all property necessary in its business in good working
order and condition (ordinary wear and tear excepted), (ii) maintain property
insurance with financially sound and reputable insurance companies on all its
property for the lower of replacement cost or market value against such risks as
applicable per property location, (iii) maintain public liability insurance with
financially sound and reputable insurance companies in such amounts and coverage
as determined in good faith by senior management of the Borrower or Caterair to
be appropriate for the Borrower, Caterair and their respective Subsidiaries,
(iv) maintain workers' compensation insurance with financially sound and
reputable insurance companies as statutorily required by each applicable locale,
and (v) furnish to each Bank, upon written request, full information as to all
insurance carried. In addition to the requirements of the immediately preceding
sentence, the Borrower and Caterair will at all times cause insurance of the
types described in Schedule IX to be maintained (with the same scope of coverage
as that described in Schedule IX) at levels which are at least as great as the
respective amount described opposite the respective type of insurance on
Schedule IX to the extent available at commercially reasonable rates.
(b) Each of the Borrower and Caterair will, and will cause each of
its respective Domestic Subsidiaries to, at all times keep their respective
properties insured in favor of the Collateral Agent, and all policies (including
Mortgage Policies) or certificates with respect to such insurance (and any other
insurance maintained by the Borrower, Caterair or any such Domestic Subsidiary)
(i) shall be endorsed to the Collateral Agent's satisfaction for the benefit of
the Collateral Agent (including, without
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limitation, by naming the Collateral Agent as loss payee or as an additional
insured), (ii) shall state that such insurance policies shall not be cancelled
without at least 30 days' prior written notice thereof by the respective insurer
to the Collateral Agent, (iii) shall provide that the respective insurers
irrevocably waive any and all rights of subrogation with respect to the
Collateral Agent and the Secured Creditors, (iv) shall contain the standard
non-contributory mortgagee clause endorsement in favor of the Collateral Agent
with respect to hazard insurance coverage, (v) shall, except in the case of
public liability insurance and workers' compensation insurance, provide that any
losses shall be payable notwithstanding (A) any act or neglect of the Borrower,
Caterair or any such Domestic Subsidiary, (B) the occupation or use of the
properties for purposes more hazardous than those permitted by the terms of the
respective policy, (C) any foreclosure or other proceeding relating to the
insured properties or (D) any change in the title to or ownership or possession
of the insured properties and (vi) shall be deposited with the Collateral Agent.
(c) If the Borrower, Caterair or any of their respective
Subsidiaries to which this Section 8.03 applies shall fail to maintain insurance
in accordance herewith, or if the Borrower, Caterair or any such Subsidiary
shall fail to so endorse and deposit all policies or certificates with respect
thereto, the Administrative Agent and/or the Collateral Agent shall have the
right (but shall be under no obligation) to procure such insurance and the
Borrower agree to reimburse the Administrative Agent or the Collateral Agent, as
the case may be, for all costs and expenses of procuring such insurance.
8.04 Corporate Franchises. Each of OFSI, Caterair Holdings and the
Borrower will, and each of Caterair Holdings and the Borrower will cause each of
its respective Subsidiaries (other than Immaterial Subsidiaries) to, do or cause
to be done, all things necessary to preserve and keep in full force and effect
its existence and its material rights, franchises, licenses and patents;
provided, however, that nothing in this Section 8.04 shall prevent (i) the sale
or other disposal of assets by OFSI, Caterair Holdings, the Borrower or any
Subsidiary of Caterair Holdings or the Borrower to the extent not prohibited
under Section 9.02 or any other transaction permitted by Section 9.02 or (ii)
the withdrawal by OFSI, Caterair Holdings, the Borrower or any Subsidiary of
Caterair Holdings or the Borrower of its qualification as a foreign corporation
in any jurisdiction where such withdrawal could not reasonably be expected to
have a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower,
the Borrower and its Subsidiaries taken as a whole, Caterair, Caterair and its
Subsidiaries taken as a whole or OFSI and its SCIS Subsidiaries taken as a
whole.
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8.05 Compliance with Statutes, etc. Each of OFSI, Caterair Holdings
and the Borrower will comply, and each of Caterair Holdings and the Borrower
will cause each of its respective Subsidiaries to comply, with all applicable
statutes, laws, ordinances, codes, rules, regulations and orders of, and all
applicable restrictions imposed by all governmental bodies, domestic or foreign,
in respect of the conduct of its business and the ownership and operation of its
property and business, except such instances of noncompliance as could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower, the Borrower
and its Subsidiaries taken as a whole, Caterair, Caterair and its Subsidiaries
taken as a whole or OFSI and its SCIS Subsidiaries taken as a whole.
8.06 Compliance with Environmental Laws. (a) Each of OFSI, Caterair
Holdings and the Borrower will comply, and each of Caterair Holdings and the
Borrower will cause each of its respective Subsidiaries to comply, with all
Environmental Laws applicable to the ownership or use of its Real Property now
or hereafter owned or operated by OFSI, Caterair Holdings, the Borrower or any
such Subsidiary, except such instances of noncompliance as could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Borrower, the Borrower
and its Subsidiaries taken as a whole, Caterair, Caterair and its Subsidiaries
taken as a whole or OFSI and its SCIS Subsidiaries taken as a whole, and will
promptly pay or cause to be paid all costs and expenses incurred in connection
with such compliance, and will keep or cause to be kept all such Real Property
free and clear of any Liens imposed pursuant to such Environmental Laws. None of
OFSI, Caterair Holdings, the Borrower nor any Subsidiary of Caterair Holdings or
the Borrower will generate, use, treat, store, release or dispose of, or permit
the generation, use, treatment, storage, release or disposal of Hazardous
Materials on any Real Property now or hereafter owned or operated by OFSI,
Caterair Holdings, the Borrower or any such Subsidiary, or transport or permit
the transportation of Hazardous Materials to or from any such Real Property
except for Hazardous Materials used or stored at any such Real Properties in
material compliance with all applicable Environmental Laws and used in
connection with the operation, use and maintenance of any such Real Property.
(b) At the written request of the Administrative Agent or the
Required Banks, which request shall specify in reasonable detail the basis
therefor, at any time and from time to time, OFSI, Caterair Holdings and the
Borrower will provide, at their own expense an environmental site assessment
report concerning any Real Property now or hereafter owned or operated by OFSI,
Caterair Holdings, the Borrower or any Domestic Subsidiary of Caterair Holdings
or the Borrower, prepared by an
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environmental consulting firm approved by the Administrative Agent, indicating
the presence or absence of Hazardous Materials and the potential cost of any
removal or remedial action in connection with any Hazardous Materials on such
Real Property; provided that such request may be made only if (i) the
Administrative Agent or the Required Banks reasonably believe that OFSI,
Caterair Holdings, the Borrower or any Domestic Subsidiary of Caterair Holdings
or the Borrower or any such Real Property is not in compliance with Section
8.06(a) or (ii) any notice is delivered to the Administrative Agent or any Bank
pursuant to Section 8.01(i). If any such Credit Party fails to provide the same
within 120 days after such request was made, the Administrative Agent may order
the same, and each of OFSI, Caterair Holdings, the Borrower and each Domestic
Subsidiary of Caterair Holdings and the Borrower shall grant and hereby grants,
to the extent that it is legally and contractually able to do so, to the
Administrative Agent and the Banks and their agents access to such Real Property
and specifically, to the extent that it is legally and contractually able to do
so, grants the Administrative Agent and the Banks an irrevocable non-exclusive
license, subject to the rights of tenants, to undertake such an assessment, all
at the Credit Party's expense.
8.07 ERISA. As soon as possible and, in any event, within 10 days
after OFSI, Caterair Holdings, the Borrower or any Subsidiary or ERISA Affiliate
of the Borrower or Caterair Holdings knows or has reason to know of the
occurrence of any of the following, OFSI, Caterair Holdings or the Borrower, as
applicable, will deliver to each of the Banks a certificate of its Chief
Financial Officer setting forth details as to such occurrence and the action, if
any, that such Person is required or proposes to take, together with any notices
required or proposed to be given to or filed with or by such Person, the PBGC, a
Plan participant or the Plan administrator with respect thereto: that a
Reportable Event has occurred; that an accumulated funding deficiency has been
incurred or an application may be or has been made to the Secretary of the
Treasury for a waiver or modification of the minimum funding standard (including
any required installment payments) or an extension of any amortization period
under Section 412 of the Code with respect to a Plan; that a contribution
required to be made to a Plan or Foreign Pension Plan has not been timely made;
that a Plan has been or may be terminated, reorganized, partitioned or declared
insolvent under Title IV of ERISA; that a Plan has an Unfunded Current Liability
giving rise to a lien under ERISA or the Code; that proceedings may be or have
been instituted to terminate or appoint a trustee to administer a Plan; that a
proceeding has been instituted pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Plan; that OFSI, Caterair Holdings, the Borrower or
any Subsidiary or ERISA Affiliate of the Borrower or Caterair Holdings will or
may incur any material liability (including any indirect, contingent, or
secondary liability) to or on account of the termination of or withdrawal from a
Plan under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with
respect to a Plan under Section 401(a)(29), 4971, 4975
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or 4980 of the Code or Section 409 or 502(i) or 502(l) of ERISA; or that the
Borrower, Caterair Holdings or any Subsidiary or ERISA Affiliate of OFSI or
Caterair Holdings may incur any material increase in liability over that
existing on the Restatement Effective Date pursuant to any employee welfare
benefit plan (as defined in Section 3(1) of ERISA) that provides benefits to
retired employees or other former employees (other than as required by Section
601 of ERISA) or any employee pension benefit plan (as defined in Section 3(2)
of ERISA). At the request of the Administrative Agent, OFSI, Caterair Holdings
or the Borrower, as applicable, will deliver to the Administrative Agent a
complete copy of the annual report (Form 5500) of each Plan (including, to the
extent required, the related financial and actuarial statements and opinions and
other supporting statements, certifications, schedules and information) required
to be filed with the Internal Revenue Service. In addition to any certificates
or notices delivered to the Banks pursuant to the first sentence hereof, copies
of annual reports and any material notices received by OFSI, Caterair Holdings,
the Borrower or any Subsidiary or ERISA Affiliate of the Borrower or Caterair
Holdings with respect to any Plan or Foreign Pension Plan shall be delivered to
the Banks no later than 10 days after the date such report has been filed with
the Internal Revenue Service or such notice has been received by OFSI, Caterair
Holdings, the Borrower, the Subsidiary or the ERISA Affiliate, as applicable.
8.08 End of Fiscal Years; Fiscal Quarters. Each of the Borrower and
Caterair will cause (i) each of its, and each of its respective Domestic
Subsidiaries', fiscal years to end on December 31, and (ii) each of its, and
each of its respective Domestic Subsidiaries', fiscal quarters to end on the
last day of each March, June, September and December.
8.09 Performance of Obligations. Each of OFSI, Caterair Holdings and
the Borrower will, and each of Caterair Holdings and the Borrower will cause
each of its respective Subsidiaries to, perform all of its obligations under the
terms of each mortgage, indenture, security agreement, loan agreement, credit
agreement or any other material agreement, contract or instrument by which it is
bound, except such non-performances as could not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrower, the Borrower and its Subsidiaries taken
as a whole, Caterair, Caterair and its Subsidiaries taken as a whole or OFSI and
its SCIS Subsidiaries taken as a whole. In addition to the requirements of the
immediately preceding sentence, each of OFSI, Caterair Holdings and the Borrower
will, and each of Caterair Holdings and the Borrower will cause each of its
respective Subsidiaries to, perform all of its obligations under the terms of
each Lease Agreement, License Agreement and the Non-Compete Agreement.
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8.10 Payment of Taxes. Each of OFSI and Caterair Holdings will pay
and discharge or cause to be paid and discharged, and will cause each of its
respective Subsidiaries to pay and discharge, all material taxes, assessments
and governmental charges or levies imposed upon it or upon its income or
profits, or upon any material properties belonging to it, in each case on a
timely basis (giving effect to applicable extensions for filings), and all
material lawful claims which, if unpaid, might become a lien or charge upon any
properties of OFSI, Caterair Holdings or any of their respective Subsidiaries;
provided that neither OFSI, Caterair Holdings nor any of their respective
Subsidiaries shall be required to pay any such tax, assessment, charge, levy or
claim which is being contested in good faith and by proper proceedings if it has
maintained adequate reserves with respect thereto in accordance with generally
accepted accounting principles.
8.11 Additional Security; Further Assurances. (a) Each of the
Borrower and Caterair will, and will cause each of its respective Wholly-Owned
Domestic Subsidiaries to, grant to the Collateral Agent security interests and
mortgages in such Real Property of such Credit Party as are not covered by the
Existing Mortgages, as may be requested from time to time by the Administrative
Agent or the Required Banks or as may be required to be granted from time to
time pursuant to the Caterair Credit Agreement. All such security interests and
mortgages shall be granted pursuant to Mortgages reasonably satisfactory in form
and substance to the Administrative Agent and shall constitute valid and
enforceable perfected Liens superior to and prior to the rights of all third
Persons and subject to no other Liens except for Permitted Liens. Such Mortgages
or instruments related thereto shall have been duly recorded or filed in such
manner and in such places as are required by law to establish, perfect, preserve
and protect the Liens in favor of the Collateral Agent required to be granted
pursuant to such Mortgages and all taxes, fees and other charges payable in
connection therewith shall have been paid in full.
(b) Each of OFSI, Caterair Holdings and the Borrower will, and each
of Caterair Holdings and the Borrower will cause each of its respective
Wholly-Owned Domestic Subsidiaries to, at their expense, make, execute, endorse,
acknowledge, file and/or deliver to the Collateral Agent from time to time such
vouchers, invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, reports and
other assurances or instruments and take such further steps relating to the
Collateral covered by any of the Security Documents as the Collateral Agent may
reasonably require. Furthermore, each of OFSI, Caterair Holdings and the
Borrower will cause to be delivered to the Collateral Agent such opinions of
counsel, Mortgage Policies, surveys and other related documents as may be
requested by the Collateral Agent to assure itself that this Section 8.11 has
been complied with.
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(c) Each of OFSI, Caterair Holdings and the Borrower agrees that
each action required above by this Section 8.11 shall be completed as soon as
possible, but in no event later than 90 days after such action is requested to
be taken by the Administrative Agent or the Required Banks or is required to be
taken pursuant to the Caterair Credit Agreement.
(d) To the extent the Borrower, Caterair Holdings or any of their
respective Subsidiaries create, establish or acquire any Wholly-Owned Domestic
Subsidiary after the Restatement Effective Date in accordance with the other
provisions of this Agreement, each such Wholly-Owned Domestic Subsidiary shall
be required to become a party to each of the Subsidiaries Guaranty, the Security
Agreement and the General Pledge Agreement by executing a counterpart thereof or
by entering into an amendment thereto satisfactory to the Administrative Agent
and 100% of the capital stock of such new Wholly-Owned Domestic Subsidiary shall
be pledged pursuant to the General Pledge Agreement. In connection with the
foregoing, to the extent requested by the Administrative Agent or the Collateral
Agent, such Wholly-Owned Domestic Subsidiary shall be required to deliver such
relevant documentation (including opinions of counsel, UCC-1 Financing
Statements and officer's certificates) of the type described in Section 5 as the
respective Wholly-Owned Domestic Subsidiary would have had delivered if it were
a Credit Party on the Restatement Effective Date. Each of the Borrower and
Caterair Holdings agrees that each action required to be taken pursuant to this
clause (d) shall be completed contemporaneously with the creation, establishment
or acquisition of such Wholly-Owned Domestic Subsidiary. In addition to the
foregoing, all other Pledged Securities acquired after the Restatement Effective
Date by any Credit Party shall, to the extent required by the respective Pledge
Agreement, be pledged and, in the case of Certificated Pledged Securities,
delivered to the Collateral Agent for pledge pursuant to such Pledge Agreement.
8.12 Corporate Separateness. OFSI covenants and agrees that it will
take, and will cause each of its Subsidiaries to take, all such action as is
necessary to keep the operations of OFSI and its SCIS Subsidiaries separate and
apart from those of its Non-SCIS Subsidiaries including, without limitation,
ensuring that all customary formalities regarding corporate existence, including
holding regular board of directors' and shareholders' meetings and maintenance
of corporate offices and records, are followed. Neither OFSI nor any of its SCIS
Subsidiaries shall make any payment to a creditor of any Non-SCIS Subsidiary in
respect of any liability of any Non-SCIS Subsidiary except to the extent that
any such payment is made solely with the Class B Assets or the equity interests
of any Non-SCIS Subsidiary or any Dividends or earnings from, or any proceeds in
respect of, any thereof. All financial statements of OFSI and its SCIS
Subsidiaries provided to creditors shall clearly evidence the corporate
separateness of the Non-SCIS Subsidiaries from OFSI and its SCIS Subsidiaries
and
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OFSI and its SCIS Subsidiaries shall maintain their own respective payroll and
separate books of account and bank accounts from the Non-SCIS Subsidiaries. Each
of OFSI and its SCIS Subsidiaries pays, and shall continue to pay, its
respective liabilities, including all administrative expenses, from its own
separate assets, and assets of OFSI and its SCIS Subsidiaries are separately
identified and segregated from the assets of the Non-SCIS Subsidiaries. Finally,
neither OFSI nor any of its SCIS Subsidiaries shall take any action, or conduct
its affairs in a manner which is likely to result in the corporate existence of
the Non-SCIS Subsidiaries being ignored, or in the assets and liabilities of
OFSI or any of its SCIS Subsidiaries being substantively consolidated with those
of the Non-SCIS Subsidiaries in a bankruptcy, reorganization or other insolvency
proceeding.
8.13 Caterair Holdings Secured Note and Caterair Holdings Unsecured
Debentures. (a) Caterair Holdings will pay all principal and interest owing in
respect of the Caterair Holdings Secured Note solely through the interest income
earned on the Caterair Holdings Certificate of Deposit and/or the proceeds from
any sale or liquidation of the Caterair Holdings Certificate of Deposit.
(b) Caterair Holdings will pay all interest on the Caterair Holdings
Unsecured Debentures solely through the issuance of additional debentures
substantially in the form of the Caterair Holdings Unsecured Debentures rather
than in cash.
8.14 Capital Contributions. OFSI and Caterair Holdings will
immediately contribute any cash proceeds received by it as a result of any event
described in Section 3.03(b), (c), or (d) to the capital of the Borrower or
Caterair, as the case may be, and the Borrower or Caterair shall use such
proceeds as (and to the extent) provided in such Sections.
8.15 13% Senior Subordinated Note Tender Offer; Escrows. (a) On the
13% Senior Subordinated Note Tender Offer Expiration Date or within one Business
Day thereafter, the Borrower will pay for all 13% Senior Subordinated Notes that
have been tendered (and not withdrawn) pursuant to the 13% Senior Subordinated
Note Tender Offer, and all such 13% Senior Subordinated Notes shall be duly
cancelled.
(b) If on September 30, 1997 more than $25,000,000 in aggregate
principal amount of 13% Senior Subordinated Notes remain outstanding, the
Borrower shall enter into an escrow agreement reasonably satisfactory to the
Administrative Agent (the "Bank Escrow Agreement") pursuant to which the
Borrower shall deposit cash with the Collateral Agent in an amount equal to the
aggregate principal amount of the 13% Senior Subordinated Notes that remain
outstanding, which cash shall be held in the escrow account referred to in the
Bank Escrow Agreement as security for the
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Obligations hereunder and for the obligations under the Caterair Credit
Agreement, although (i) such cash shall upon request of the Borrower be released
from such escrow account from time to time to repurchase or redeem outstanding
13% Senior Subordinated Notes so long as no Default or Event of Default then
exists and (ii) such cash shall upon request of the Borrower be released from
such escrow account at such time as the aggregate principal amount of
outstanding 13% Senior Subordinated Notes is $25,000,000 or less so long as no
Default or Event of Default then exists.
(c) If on September 30, 1997, $25,000,000 or less of 13% Senior
Subordinated Notes remain outstanding, the Borrower shall have the option, in
its sole discretion, to enter into the Bank Escrow Agreement and deposit cash up
to an amount equal to the aggregate principal amount of 13% Senior Subordinated
Notes that remain outstanding, which cash shall be subject to the same security
and release arrangements as set forth in clause (b) of this Section 8.15.
8.16 Termination of Existing Interest Rate Protection Agreements.
Within 14 days following the Restatement Effective Date, the Borrower shall
unwind or terminate the existing Interest Rate Protection Agreements set forth
on Schedule VII.
SECTION 9. Negative Covenants. Each of OFSI, Caterair Holdings, the
Borrower and Caterair covenants and agrees that on and after the Restatement
Effective Date and until the Total Revolving Loan Commitment and all Letters of
Credit have terminated and the Loans, Notes and Unpaid Drawings, together with
interest, Fees and all other Obligations incurred hereunder and thereunder, are
paid in full (other than indemnity and similar obligations that are not then due
and payable):
9.01 Liens. Each of OFSI, Caterair Holdings and the Borrower will
not, and each of Caterair Holdings and the Borrower will not permit any of its
respective Subsidiaries to, create, incur, assume or suffer to exist any Lien
upon or with respect to any property or assets (real or personal, tangible or
intangible) of OFSI, Caterair Holdings, the Borrower or any Subsidiary of
Caterair Holdings or the Borrower, whether now owned or hereafter acquired, or
sell any such property or assets subject to an understanding or agreement,
contingent or otherwise, to repurchase such property or assets (including sales
of accounts receivable with recourse to OFSI, Caterair Holdings, the Borrower or
any Subsidiary of Caterair Holdings or the Borrower), or assign any right to
receive income or permit the filing of any financing statement under the UCC or
any other similar notice of Lien under any similar recording or notice statute;
provided that the provisions of this Section 9.01 shall not prevent the
creation, incurrence, assumption or existence of the following (Liens described
below are herein referred to as "Permitted Liens"):
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(i) inchoate Liens for taxes, assessments or governmental charges or
levies not yet due and payable or Liens for taxes, assessments or
governmental charges or levies being contested in good faith and by
appropriate proceedings for which adequate reserves have been established
in accordance with generally accepted accounting principles;
(ii) Liens in respect of property or assets of OFSI, Caterair
Holdings, the Borrower or any Subsidiary of Caterair Holdings or the
Borrower imposed by law, which were incurred in the ordinary course of
business and do not secure Indebtedness for borrowed money, such as
carriers', warehousemen's, materialmen's and mechanics' liens and other
similar Liens arising in the ordinary course of business, and (x) which do
not in the aggregate materially detract from the value of the property or
assets of the Borrower and its Subsidiaries taken as a whole or Caterair
and its Subsidiaries taken as a whole or materially impair the operation
of the business of the Borrower and its Subsidiaries taken as a whole or
Caterair and its Subsidiaries taken as a whole or (y) which are being
contested in good faith by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the property or assets
subject to any such Lien;
(iii) Liens in existence on the Restatement Effective Date which are
of the type described in Schedule X (including, without limitation, the
Liens created pursuant to Caterair Holdings CD Pledge Agreement and the
Subordinated Intercompany Security Agreement);
(iv) Permitted Encumbrances;
(v) Liens created pursuant to the Credit Documents;
(vi) leases or subleases granted by the Borrower, Caterair or any of
their respective Subsidiaries to other Persons in the ordinary course of
business not materially interfering with the conduct of the business of
the Borrower and its Subsidiaries taken as a whole or Caterair and its
Subsidiaries taken as a whole or materially detracting from the value of
the relative assets of the Borrower and its Subsidiaries taken as a whole
or Caterair and its Subsidiaries taken as a whole or Caterair and its
Subsidiaries taken as a whole;
(vii) Liens placed upon assets subject to Capitalized Lease
Obligations, provided that (x) the aggregate principal amount of such
Capitalized Lease Obligations outstanding at any one time, when added to
the aggregate principal amount of all purchase money Indebtedness
outstanding at such time and secured
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by Liens permitted by clause (viii) of this Section 9.01, shall not exceed
the sum of (1) that aggregate amount permitted by Section 9.04(vi) plus
(2) that aggregate amount of Capitalized Lease Obligations and purchase
money Indebtedness outstanding on the Restatement Effective Date, (y) such
Liens only serve to secure the payment of Indebtedness arising under such
Capitalized Lease Obligation and (z) the Lien encumbering the asset giving
rise to the Capitalized Lease Obligation does not encumber any other asset
of OFSI, Caterair Holdings, the Borrower or any Subsidiary of Caterair
Holdings or the Borrower;
(viii) Liens placed upon equipment or machinery used in the ordinary
course of business by the Borrower, Caterair or any of their respective
Subsidiaries at the time of acquisition thereof by the Borrower, Caterair
or any such Subsidiary or within 90 days thereafter to secure Indebtedness
incurred to pay all or a portion of the purchase price thereof, provided
that (x) the aggregate outstanding principal amount of all purchase money
Indebtedness secured by Liens permitted by this clause (viii) outstanding
at any one time, when added to the aggregate principal amount of all
Capitalized Lease Obligations outstanding at such time and incurred
pursuant to clause (vii) of this Section 9.01, does not exceed the sum of
(1) that aggregate amount permitted by Section 9.04(vi) plus (2) that
aggregate amount of purchase money Indebtedness and Capitalized Lease
Obligations outstanding on the Restatement Effective Date and (y) in all
events, the Lien encumbering the equipment or machinery so acquired does
not encumber any other asset of OFSI, Caterair Holdings, the Borrower or
any Subsidiary of Caterair Holdings or the Borrower;
(ix) Liens (other than Liens imposed by ERISA) incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security or
to secure the performance of tenders, statutory obligations, surety bonds,
bids, government contracts, performance and returns of money bonds and
other similar obligations (exclusive of obligations in respect of the
payment for borrowed money);
(x) easements, rights-of-way, restrictions, encroachments and other
similar charges or encumbrances, and minor title deficiencies, in each
case not securing Indebtedness and not materially interfering with the
conduct of the business of OFSI, Caterair Holdings, the Borrower or any
Subsidiary of Caterair Holdings or the Borrower;
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(xi) Liens arising from precautionary UCC financing statement
filings regarding operating leases, consignments and similar arrangements
entered into by OFSI, Caterair Holdings, the Borrower or any Subsidiary of
Caterair Holdings or the Borrower in the ordinary course of business;
(xii) judgment Liens not giving rise to an Event of Default under
Section 10.09;
(xiii) statutory and common law landlords' liens under leases to
which OFSI, Caterair Holdings, the Borrower or any Subsidiary of Caterair
Holdings or the Borrower is a party;
(xiv) Liens placed upon the assets of any Foreign Subsidiary to
secure the Third-Party Foreign Subsidiary Indebtedness incurred by such
Foreign Subsidiary;
(xv) Liens created by OFSI on the Class B Assets or on the equity
interests of any Non-SCIS Subsidiary so long as there is no recourse to
OFSI in respect of any Indebtedness or other obligations secured by such
Liens other than solely against the Class B Assets or the equity interests
of such Non-SCIS Subsidiary or any Dividends or earnings from, or any
proceeds in respect of, any thereof; and
(xvi) Liens that are deemed to exist in favor of each trustee under
the Senior Subordinated Notes Indentures pursuant to Section 7.07 thereof
so long as at no time shall there be any property or assets of OFSI, the
Borrower, Caterair Holdings or any of their respective Subsidiaries on
deposit with such trustees to secure any amounts owing to such trustees
pursuant to such Section.
9.02 Consolidation, Merger, Purchase or Sale of Assets, etc. Each of
OFSI, Caterair Holdings and the Borrower will not, and each of Caterair Holdings
and the Borrower will not permit any of its respective Subsidiaries to, wind up,
liquidate or dissolve its affairs or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose of (or agree to do
any of the foregoing at any future time) all or any part of its property or
assets, or enter into any sale-leaseback transactions, or purchase or otherwise
acquire (in one or a series of related transactions) any part of the property or
assets (other than purchases or other acquisitions of inventory, materials and
equipment in the ordinary course of business) of any Person, except that:
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(i) Capital Expenditures shall be permitted to the extent not in
violation of Section 9.07;
(ii) Investments may be made to the extent permitted by Section
9.05;
(iii) sales of inventory in the ordinary course of business may be
made;
(iv) each of OFSI, Caterair Holdings, the Borrower and each
Subsidiary of Caterair Holdings and the Borrower may lease (as lessee)
real or personal property so long as any such lease does not create a
Capitalized Lease Obligation (other than as permitted under Section 9.04),
provided that, in any event, Sky Chefs, CII and Caterair may enter into
the Lease Agreements;
(v) sales and other dispositions in the ordinary course of business
of equipment or materials which, in the reasonable judgment of such
Person, are obsolete, worn out or otherwise no longer useful in the
conduct of such Person's business shall be permitted;
(vi) in addition to sales and dispositions permitted pursuant to
clause (v) of this Section 9.02, sales and other dispositions in the
ordinary course of business of equipment and materials shall be permitted
so long as the Net Sale Proceeds from all such sales shall not exceed
$5,000,000 in any fiscal year of the Borrower;
(vii) sales and other dispositions of other assets shall be
permitted so long as (x) all such sales and other dispositions are at fair
market value (as determined in good faith by senior management of the
Person selling or disposing of such assets) and the proceeds thereof shall
consist of at least 75% in cash and are received at the closing of such
sale or other disposition and (y) the proceeds from all such sales and
other dispositions do not exceed $15,000,000 in any fiscal year of the
Borrower or $50,000,000 in the aggregate, it being understood that in no
event shall the capital stock of any Guarantor be sold or otherwise
disposed of pursuant to this clause (vii) (other than any sale or
disposition in full of the capital stock of a Guarantor that is an
Immaterial Subsidiary);
(viii) Sky Chefs, CII and Caterair may enter into the License
Agreements;
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(ix) Sky Chefs and CII may exercise the Purchase Option in full or
in part so long as (i) in the case of any partial exercise, the Borrower
shall have demonstrated to the satisfaction of the Agents that the sum of
(1) the present value of the lease payments under the remaining Lease
Agreements (assuming an interest rate of 9% per annum) plus (2) the
present value of the license payments under the remaining License
Agreements (assuming an interest rate of 9% per annum) plus (3) the fair
value (determined in accordance with the terms of the Lease Agreements and
the License Agreements) of the remaining Leased Assets and Licensed Assets
as at the end of the respective terms of the Lease Agreements and License
Agreements plus (4) the present value of the remaining non-compete
payments to be paid pursuant to the Non-Compete Agreement (assuming an
interest rate of 9%) are sufficient to repay in full the then remaining
outstanding loans under the Caterair Credit Agreement (after giving effect
to any repayment thereof with the proceeds of such exercise), but
excluding any such loans to the extent that same are assumed by the
Borrower in accordance with the terms of the Caterair Credit Agreement,
and (ii) in the case of a full exercise (whether through successive
partial exercises or otherwise), all then outstanding loans under the
Caterair Credit Agreement and all accrued and unpaid interest with respect
to the foregoing obligations are repaid in full except to the extent that
such outstanding loans (and accrued and unpaid interest thereon) have been
assumed by the Borrower in accordance with the terms of the Caterair
Credit Agreement;
(x) sales and other dispositions of Flight Kitchens by the Borrower,
Caterair or any of their respective Subsidiaries shall be permitted to the
extent that the Board of Directors of the Borrower has determined that
either (A) such Flight Kitchens are redundant by reason of the operations
of the Borrower, Caterair and their respective Wholly-Owned Subsidiaries,
it being understood that such redundant Flight Kitchens shall be limited
to Flight Kitchens existing on the Restatement Effective Date and with
respect to which the Borrower, Caterair and their respective Subsidiaries
have more than one Flight Kitchen serving the same airport and that such
Persons shall still be able to sufficiently cover the business at such
airport from the non-redundant Flight Kitchen or Kitchens or (B) such
Flight Kitchens have been non-operating for at least three months so long
as, in the case of a sale or other disposition of a redundant Flight
Kitchen, (x) all such sales and other dispositions are at fair market
value (as determined in good faith by the Board of Directors of the
Borrower) and the proceeds thereof shall consist of at least 75% in cash
and are received at the time of the closing of such sale or other
disposition and (y) the aggregate amount of proceeds from all such sales
and other dispositions does not exceed $20,000,000;
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(xi) OFSI may sell or otherwise dispose of the Class B Assets or the
equity interests of any Non-SCIS Subsidiary or any Dividends or earnings
from, or any proceeds in respect of, any thereof;
(xii) any Subsidiary of the Borrower or Caterair may be liquidated
so long as the assets of such Subsidiary are distributed to the Borrower,
Caterair or any of their respective Wholly-Owned Domestic Subsidiaries, as
the case may be (provided, that in the case of a liquidation of a
non-Wholly-Owned Subsidiary, the assets of such Subsidiary may be
distributed to its shareholders generally so long as the Borrower,
Caterair or its respective Subsidiary which owns the equity interest or
interests in the Subsidiary being liquidated receives at least its
proportionate share of the assets being distributed (based upon its
relative holdings of the equity interests in the Subsidiary being
liquidated and taking into account the relative preferences, if any, of
the various classes of equity interest in such Subsidiary)), provided that
in the case of a liquidation of a Foreign Subsidiary, the assets of such
Foreign Subsidiary may also be distributed to a Wholly-Owned Foreign
Subsidiary of the Borrower or Caterair;
(xiii) the Borrower and its Subsidiaries may acquire all or
substantially all of the business of, or an operating division or a
business unit of, any Person so long as the aggregate amount expended
pursuant to this clause (xiii) in any fiscal year of the Borrower,
together with the aggregate amount of Designated Investments and
Designated Guaranties made during such fiscal year, does not exceed the
Permitted Amount for such fiscal year;
(xiv) the Borrower, Caterair and their respective Wholly-Owned
Subsidiaries may acquire all or substantially all of the business of, or
an operating division or a business unit of, any Person with the Net Sale
Proceeds received from any Asset Sale to the extent that such Net Sale
Proceeds are not required to be applied as provided in Section 3.03(b) and
to the extent such Net Sale Proceeds are not otherwise used to make
Investments pursuant to Section 9.05(xvii) or Capital Expenditures
pursuant to Section 9.07(d);
(xv) at any time on or after September 1, 2000, Caterair Australia
Pty Limited may sell its equity interest in Caterair Airport Services Pty
Limited to Qantas Flight Caterair Holdings Limited pursuant to the
exercise by Qantas Flight Caterair Holdings Limited of the call options
respectively described in Clauses 19A, 19B and 19C of the Restated
Shareholders Deed made on December 18, 1996, among Caterair Airport
Services Pty Limited, Caterair Australia Pty Limited, Caterair, CII, OFSI,
Qantas Airways Limited and Qantas Flight Catering Holdings Limited, so
long as the proceeds of each such sale
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shall consist solely of cash and the purchase price shall be determined on
the basis set forth in such Restated Shareholders Deed;
(xvi) any Domestic Subsidiary of the Borrower may merge or
consolidate with and into any Wholly-Owned Domestic Subsidiary of the
Borrower so long as (i) in the case of any merger or consolidation
involving a Subsidiary Guarantor, such Subsidiary Guarantor is the
surviving corporation of such merger or consolidation, (ii) in addition to
the requirements of preceding clause (i), a Wholly-Owned Subsidiary of the
Borrower is the surviving corporation of such merger or consolidation and
(iii) the security interests, if any, granted to the Collateral Agent for
the benefit of the Secured Creditors pursuant to the Security Documents in
the assets of such Domestic Subsidiary shall remain in full force and
effect and perfected (to at least the same extent as in effect immediately
prior to such merger or consolidation);
(xvii) any Subsidiary Guarantor may transfer, lease or license
assets to any other Subsidiary Guarantor that is a Subsidiary of SCIS, and
Caterair may transfer, lease or license assets to any Subsidiary Guarantor
that is a Subsidiary of SCIS, in each case so long as the security
interests granted to the Collateral Agent for the benefit of the Secured
Creditors pursuant to the Security Document in the assets so transferred,
leased or licensed shall remain in full force and effect and perfected (to
at least the same extent as in effect immediately prior to such transfer,
lease or license);
(xviii) any Foreign Subsidiary of the Borrower may merge or
consolidate with and into any Wholly-Owned Foreign Subsidiary of the
Borrower so long as such Wholly-Owned Foreign Subsidiary is the surviving
corporation of such merger or consolidation;
(xix) any Foreign Subsidiary of the Borrower may transfer, lease or
license assets to any Wholly-Owned Domestic Subsidiary of the Borrower or
to any Wholly-Owned Foreign Subsidiary of the Borrower;
(xx) the Borrower, Caterair and their respective Subsidiaries may
lease or sublease to other Persons any redundant Flight Kitchens (as
determined in clause (x) above in this Section 9.02) or any non-operating
Flight Kitchen so long as such lease or sublease does not materially
interfere with the conduct of business of the Borrower, Caterair or any
such Subsidiary; and
(xxi) the Borrower and its Subsidiaries shall have the right to sell
up to a 51% equity interest in the Foreign Subsidiary or Foreign
Subsidiaries (or the
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foreign holding company of such Foreign Subsidiary or Foreign
Subsidiaries) that own the European Flight Kitchens of Caterair that were
purchased pursuant to the transactions contemplated by the Master
Agreement and up to 51% of the equity interest in Caterair Portugal that
is owned by the Credit Parties, in each case to the Lufthansa Companies so
long as (i) such sale is at fair market value (as determined in good faith
by the Board of Directors of the Borrower), (ii) all of the proceeds
thereof shall consist of cash, (iii) the Borrower shall be in pro forma
compliance with the financial covenants set forth in Sections 9.08 and
9.09 for the Test Period then most recently ended, with such financial
covenants to be calculated on a pro forma basis as if such sale (and the
application of the Net Sale Proceeds therefrom) had occurred on the first
day of such Test Period, and (iv) at least 15 Business Days prior to the
consummation of such sale, the Borrower shall have delivered to each of
the Banks a certificate of an Authorized Financial Officer of the Borrower
setting forth in reasonable detail the pro forma calculations required to
establish compliance with preceding clause (iii) (with such pro forma
calculations to be made on a basis reasonably satisfactory to the
Co-Arrangers and consistent with Regulation S-X under the Securities Act)
(it being understood and agreed that the Borrower and the Lufthansa
Companies may structure the sale described above in this Section 9.02(xxi)
through the creation of a new foreign holding company in which the
Borrower would own (directly and/or indirectly) at least 49% of the equity
interest and the Lufthansa Companies would own the remaining equity
interest, with the Lufthansa Companies' contribution thereto to be in the
form of cash and the Borrower's contribution thereto to be in the form of
the equity interest or interests in the Foreign Subsidiary or Foreign
Subsidiaries (or the foreign holding company of such Foreign Subsidiary or
Foreign Subsidiaries) that own such European Flight Kitchens).
To the extent the Required Banks waive the provisions of this Section 9.02 with
respect to the sale of any Collateral, or any Collateral is sold or otherwise
disposed of as permitted by this Section 9.02, such Collateral shall be sold or
otherwise disposed of free and clear of the Liens created by the Security
Documents, and the Administrative Agent and Collateral Agent shall be authorized
to take any actions as they deem appropriate in order to effect the release of
the respective Collateral from the Liens created by the respective Security
Documents.
9.03 Dividends, etc. (a) Each of OFSI, Caterair Holdings and the
Borrower will not, and each of Caterair Holdings and the Borrower will not
permit any of their respective Subsidiaries to, authorize, declare or pay any
Dividends with respect to OFSI, Caterair Holdings, the Borrower or any
Subsidiary of Caterair Holdings or the Borrower, except that:
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(i) any Subsidiary of the Borrower or Caterair (x) may pay
Dividends to the Borrower, Caterair or any Wholly-Owned Subsidiary of the
Borrower or Caterair, as the case may be, and (y) if such Subsidiary is
not a Wholly-Owned Subsidiary, may pay cash Dividends (or dividends in
kind to the extent permitted by Section 9.12(b)(ii)) to its shareholders
generally so long as the Borrower, Caterair or their respective Subsidiary
which owns the equity interest or interests in the Subsidiary paying such
Dividends receives at least its proportionate share thereof (based upon
its relative holdings of equity interests in the Subsidiary paying such
Dividends and taking into account the relative preferences, if any, of the
various classes of equity interests in such Subsidiary);
(ii) so long as there shall exist no Default or Event of Default
(both before and after giving effect to the payment thereof), the Borrower
may pay cash Dividends to OFSI to enable OFSI to pay (and OFSI may pay) a
cash Dividend to any of the Lufthansa Companies, in an aggregate amount
not to exceed $2,500,000 in any fiscal year of the Borrower, provided,
that any portion of such amount that is not paid as a Dividend in any
fiscal year may be carried forward and paid to any of the Lufthansa
Companies as a Dividend in any subsequent fiscal year of the Borrower;
(iii) so long as there shall exist no Default or Event of Default
(both before and after giving effect to the payment thereof), the Borrower
may pay cash Dividends to OFSI to enable OFSI to pay (and OFSI may pay)
cash Dividends to stockholders of OFSI other than any of the Lufthansa
Companies, so long as the amount of such Dividends paid in any fiscal year
of the Borrower shall not exceed $6,000,000, provided, that any portion of
such amount that is not paid as a Dividend in any fiscal year may be
carried forward and paid as a Dividend in any subsequent fiscal year of
the Borrower;
(iv) the Borrower may pay cash Dividends to OFSI in an amount
sufficient to enable OFSI to (x) pay franchise taxes and other fees and
expenses necessary to maintain its corporate existence, (y) pay reasonable
fees to its directors and (z) perform accounting, legal, corporate
reporting and administrative functions in the ordinary course of business,
other than those functions which are related exclusively to OFSI's
investments in Persons other than the Borrower and its Subsidiaries;
(v) so long as there shall exist no Default under Section 10.01 or
10.05 or Event of Default (both before and after giving effect to the
payment thereof), the Borrower may pay cash Dividends to OFSI in an
aggregate amount not to exceed $6,000,000 in any 12 month period the
proceeds of which are
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used by OFSI to (and OFSI may, whether or not any such Default or Event of
Default exists) repurchase outstanding shares of OFSI's common stock held
by current or former employees or directors of the Borrower or any of its
Subsidiaries (A) following the death, disability or termination of
employment of such person or (B) pursuant to one or more written plans
approved by the Board of Directors of OFSI;
(vi) the Borrower may pay cash Dividends to OFSI the proceeds of
which are used by OFSI to fund payments under a plan implemented to
compensate management of the Borrower and its Subsidiaries based on the
value of OFSI's common stock;
(vii) Caterair may pay cash Dividends to Caterair Holdings in an
amount sufficient to enable Caterair Holdings to (x) pay franchise taxes
and other fees and expenses necessary to maintain its corporate existence,
(y) pay reasonable fees to its directors and (z) perform accounting,
legal, corporate reporting and administrative functions in the ordinary
course of business, provided that the amount of Dividends paid pursuant to
preceding clauses (y) and (z) shall not exceed $200,000 in the aggregate
in any fiscal year of Caterair; and
(viii) OFSI may pay Dividends consisting of, or with the proceeds
received from the sale or other disposition of, or with the earnings or
Dividends received from, the Class B Assets or the equity interests of any
Non-SCIS Subsidiary.
(b) Except to the extent expressly permitted by this Agreement,
neither Caterair Holdings nor Caterair shall (i) make (or give any notice in
respect thereof) any voluntary or mandatory payment, purchase, acquisition or
redemption, whether by the making of any payments of the principal, interest or
otherwise, with respect to any loan, advance or other extension of credit made
to Caterair Holdings or Caterair, or in respect of any Indebtedness or other
obligation of Caterair Holdings or Caterair or (ii) pay any management fees,
consulting fees or any other fees or expenses pursuant to any management
agreement, consulting agreement or any other agreement other than to the
Borrower or any of its Wholly-Owned Subsidiaries. In addition, notwithstanding
anything to the contrary contained in this Agreement, Caterair may not at any
time pay any Dividends or make any advances to Caterair Holdings the proceeds of
which are to be used to make payments (whether for principal, interest or
otherwise) in respect of the Caterair Holdings Unsecured Debentures.
9.04 Indebtedness. Each of OFSI, Caterair Holdings and the Borrower
will not, and each of Caterair Holdings and the Borrower will not permit any of
its
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respective Subsidiaries to, contract, create, incur, assume or suffer to exist
any Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(ii) Indebtedness of the Borrower, Caterair and the Subsidiary
Guarantors pursuant to (x) the 13% Senior Subordinated Notes and the other
13% Senior Subordinated Note Documents in an aggregate principal amount
equal to $125,000,000 (less the aggregate principal amount of all
repayments of principal thereof effected after the Restatement Effective
Date (including pursuant to the 13% Senior Subordinated Note Tender
Offer)) and (y) the 9-1/4% Senior Subordinated Notes and the other 9-1/4%
Senior Subordinated Note Documents in an aggregate principal amount equal
to $300,000,000 (less the aggregate principal amount of all repayments of
principal thereof effected after the Restatement Effective Date);
(iii) Existing Indebtedness shall be permitted to the extent the
same is listed on Schedule VII;
(iv) accrued expenses incurred in the ordinary course of business;
(v) Indebtedness under Interest Rate Protection Agreements entered
into with respect to Indebtedness otherwise permitted under this Section
9.04;
(vi) in addition to any purchase money Indebtedness and Capitalized
Lease Obligations permitted under clauses (iii) and (xii) of this Section
9.04, purchase money Indebtedness of the Borrower, Caterair or any of
their respective Subsidiaries subject to Liens permitted under Section
9.01(viii) or arising under Capitalized Lease Obligations permitted under
Section 9.01(vii) so long as (x) the aggregate outstanding principal
amount of such purchase money Indebtedness and Capitalized Lease
Obligations does not at any time exceed $10,000,000 and (y) in the case of
any Capitalized Lease Obligations incurred pursuant to this clause (vi),
the incurrence thereof is permitted under Section 9.07;
(vii) intercompany Indebtedness by and among the Borrower, Caterair
and their respective Subsidiaries to the extent permitted by Sections
9.05(vii), (viii), (ix), (xvi) and (xvii);
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(viii) Indebtedness of the Borrower or any of its Subsidiaries under
Other Hedging Agreements providing protection against fluctuations in
currency prices in connection with the Borrower' or any of its
Subsidiaries' ordinary business operations so long as management of the
Borrower or such Subsidiary has determined that the entering into of such
Other Hedging Agreements are bona fide hedging activities (and are not for
speculative purposes) relating to the ordinary business operations of the
Borrower or such Subsidiary;
(ix) Indebtedness of Caterair Holdings under the Caterair Holdings
Secured Note in an aggregate principal amount of $236,200,000 (less the
aggregate principal amount of all repayments of principal thereof effected
after the Restatement Effective Date) but only so long as the Caterair
Holdings Secured Note (and all interest thereon) is fully collateralized
by the Caterair Holdings Certificate of Deposit;
(x) Indebtedness of Caterair Holdings under the Caterair Holdings
Unsecured Debentures in an aggregate principal amount equal to the sum of
(1) $43,800,000 plus (2) the aggregate principal amount of Caterair
Holdings Unsecured Debentures of the type described in, and issued as
permitted by, Section 8.14(b) of the Original Credit Agreement and 8.13(b)
of this Agreement (less the aggregate principal amount of all repayments
of principal thereof effected after the Restatement Effective Date);
(xi) Indebtedness of Foreign Subsidiaries of the Borrower under
lines of credit extended by third Persons to such Foreign Subsidiaries the
proceeds of which are used by such Foreign Subsidiaries for their working
capital and general corporate purposes, so long as immediately following
the incurrence thereof the Dollar Equivalent of the aggregate outstanding
principal amount of all such Indebtedness shall not exceed the sum of (1)
$35,000,000 at any time thereafter plus, in either case, (2) that
aggregate principal amount which, when added to the sum of (I) the
aggregate principal amount of all Revolving Loans then outstanding, (II)
the aggregate principal amount of all Swingline Loans then outstanding and
(III) the aggregate amount of all Letter of Credit Outstandings at such
time (other than Letter of Credit Outstandings in respect of Letters of
Credit issued in support of any Third-Party Foreign Subsidiary
Indebtedness), equals the Total Revolving Loan Commitment then in effect
(any Indebtedness incurred pursuant to this clause (xi), together with any
similar Indebtedness incurred by Foreign Subsidiaries of the Borrower
pursuant to clause (iii) of this Section 9.04, is referred to as the
"Third-Party Foreign Subsidiary Indebtedness");
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(xii) Indebtedness of the Borrower, Caterair or any of their
respective Subsidiaries constituting Capitalized Lease Obligations and/or
purchase money Indebtedness to the extent that such Indebtedness
refinances, replaces, renews, restates, refunds, defers, extends,
substitutes, supplements or reissues any existing or future Capitalized
Lease Obligations or purchase money Indebtedness, provided that the
aggregate amount of Capitalized Lease Obligations and purchase money
Indebtedness incurred and outstanding at any time pursuant to clause (iii)
of this Section 9.04 and this clause (xii) does not exceed the amount of
Capitalized Lease Obligations and purchase money Indebtedness outstanding
on the Restatement Effective Date as shown on Schedule VII;
(xiii) guaranties by the Borrower and its Subsidiaries of
Indebtedness and other obligations of the Borrower and its Subsidiaries to
the extent that such Indebtedness and other obligations are otherwise
permitted under this Agreement, provided that the aggregate amount of such
guaranties given (and the amount of payments made thereunder) by the
Borrower and its Wholly-Owned Domestic Subsidiaries at any time in support
of Indebtedness and other obligations of non-Wholly-Owned Subsidiaries and
Wholly-Owned Foreign Subsidiaries of the Borrower shall not exceed in any
fiscal year of the Borrower, when added to the amount of Designated
Acquisitions and Designated Investments made during such fiscal year, the
Permitted Amount for such fiscal year;
(xiv) Indebtedness of OFSI that is secured solely by the Class B
Assets and so long as there is no recourse against OFSI in respect of such
Indebtedness other than against the Class B Assets or its equity interests
in the Non-SCIS Subsidiaries and (in each case) the proceeds thereof; and
(xv) Indebtedness of the Credit Parties under the Caterair Credit
Agreement and the other Caterair Credit Documents in an aggregate
principal amount not to exceed $250,000,000 (less the aggregate principal
amount of all repayments of principal thereof effected after the
Restatement Effective Date.
9.05 Advances, Investments and Loans. Each of OFSI, Caterair Holdings and
the Borrower will not, and each of Caterair Holdings and the Borrower will not
permit any of its respective Subsidiaries to, directly or indirectly, lend money
or credit or make advances to any Person, or purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any capital
contribution to, any other Person, or purchase or own a futures contract or
otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a
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futures contract, or hold any cash or Cash Equivalents (each of the foregoing an
"Investment" and, collectively, Investments"), except that the following shall
be permitted:
(i) the Borrower, Caterair and their respective Subsidiaries may
acquire and hold cash and Cash Equivalents, and Caterair Holdings may hold
the Caterair Holdings Certificate of Deposit and the interest income
earned thereon so long as the same is subject to the pledge arrangements
under the Caterair Holdings CD Pledge Agreement;
(ii) the Borrower, Caterair and their respective Subsidiaries may
acquire and hold accounts receivables owing to any of them, if created or
acquired in the ordinary of business and payable or dischargeable in
accordance with customary terms;
(iii) in addition to the loans and advances permitted under clause
(xii) of this Section 9.05, the Borrower and its Subsidiaries may make
loans and advances in the ordinary course of business to employees of the
Borrower and its Subsidiaries so long as the aggregate principal amount
thereof at any time outstanding shall not exceed $3,000,000 (determined
without regard to any write-downs or write-offs of such loans and
advances);
(iv) the Borrower may enter into Interest Rate Protection Agreements
to the extent permitted by Section 9.04(v);
(v) the Borrower and its Subsidiaries may enter into Other Hedging
Agreements to the extent permitted by Section 9.04(viii);
(vi) OFSI, Caterair Holdings and their respective Subsidiaries may
permit to remain outstanding the Investments made on or prior to the
Restatement Effective Date to the extent the same are listed on Schedule
XI (the "Existing Investments") (provided that any additional Investments
made with respect thereto shall be permitted only if independently
justified under the other provisions of this Section 9.05);
(vii) the Borrower and its Wholly-Owned Subsidiaries may make
intercompany loans to one another, and any non-Wholly-Owned Subsidiary of
the Borrower may make intercompany loans to the Borrower or any other
Subsidiary of the Borrower, provided that (w) all such intercompany loans
made by the Borrower or any of its Wholly-Owned Domestic Subsidiaries are
evidenced by an intercompany promissory note in the form of Exhibit K
(each
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an "Intercompany Note"), (x) each such Intercompany Note is pledged by the
Borrower or such Wholly-Owned Domestic Subsidiary to the Collateral Agent
pursuant to the General Pledge Agreement, (y) the aggregate amount of all
such intercompany loans made by the Borrower or any of its Wholly-Owned
Domestic Subsidiaries to Wholly-Owned Foreign Subsidiaries in any fiscal
year of the Borrower shall not exceed, when added to the aggregate amount
of Designated Acquisitions, Designated Guaranties and other Designated
Investments made during such fiscal year, the Permitted Amount for such
fiscal year and (z) any such intercompany loans made to the Borrower or
any Wholly-Owned Domestic Subsidiary of the Borrower by a non-Wholly-Owned
Subsidiary of the Borrower shall contain the subordination provisions set
forth on Exhibit M;
(viii) prior to the date on which all outstanding loans under the
Caterair Credit Agreement (and all accrued interest thereon) have been
repaid in full (or assumed by the Borrower) and the SCIS/Caterair Loan
(and all accrued interest thereon) has been repaid in full, the Borrower
and its Wholly-Owned Domestic Subsidiaries may make loans to Caterair
provided that (x) all such loans are evidenced by an Intercompany Note,
(y) each such Intercompany Note is pledged by the Borrower or such
Wholly-Owned Domestic Subsidiary pursuant to the General Pledge Agreement
and (z) Caterair promptly uses the proceeds of such loan to make payments
in respect of obligations then due and owing and/or for working capital
purposes;
(ix) the Borrower may use the proceeds of Loans to make (either
directly or through one or more of its Wholly-Owned Domestic Subsidiaries)
cash equity contributions to IFSC so long as (x) IFSC promptly uses such
proceeds to make intercompany loans to Wholly-Owned Foreign Subsidiaries
of the Borrower and (y) the aggregate amount of all cash equity
contributions made to IFSC after the Restatement Effective Date pursuant
to this clause (ix) does not exceed $36,000,000;
(x) Investments received by (x) the Borrower, Caterair or any of
their respective Subsidiaries, as the case may be, as consideration for
sales or other disposition of assets in accordance with Sections 9.02(v),
(vii) and (x) or (y) OFSI as consideration for sales or other disposition
of assets in accordance with Section 9.02(xi);
(xi) loans and advances by the Borrower and its Subsidiaries to
their respective employees the proceeds of which are immediately used to
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purchase common stock of OFSI and which proceeds are immediately
thereafter contributed by OFSI to the Borrower as a capital contribution;
(xii) Investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar arrangement
upon the bankruptcy or insolvency of such trade creditors or customers;
(xiii) OFSI may make Investments in Non-SCIS Subsidiaries and other
third Persons with the proceeds of, or with Dividends or earnings received
from, the Class B Assets or Non-SCIS Subsidiaries;
(xiv) OFSI, Caterair Holdings and their respective Subsidiaries may
hold the capital stock of or other equity interests in their Subsidiaries;
(xv) the Borrower and its Wholly-Owned Subsidiaries may make cash
equity contributions to their respective Wholly-Owned Subsidiaries,
provided that the aggregate amount of all such cash equity contributions
made by the Borrower or any of its Wholly-Owned Domestic Subsidiaries to
Wholly-Owned Foreign Subsidiaries in any fiscal year of the Borrower shall
not exceed, when added to the aggregate amount of Designated Acquisitions,
Designated Guarantees and other Designated Investments made during such
fiscal year, the Permitted Amount for such fiscal year;
(xvi) in addition to the Investments permitted by the preceding
clauses of this Section 9.05, the Borrower and its Subsidiaries may make
Investments in any fiscal year of the Borrower in an aggregate amount not
to exceed, when added to the amount of amount of Designated Acquisitions,
Designated Guarantees and other Designated Investments made during such
fiscal year, the Permitted Amount for such fiscal year;
(xvii) in addition to the Investments permitted by the preceding
clauses of this Section 9.05, the Borrower, Caterair and their respective
Wholly-Owned Subsidiaries may acquire 100% of the capital stock of a third
Person with the Net Sale Proceeds received from any Asset Sale to the
extent that such Net Sale Proceeds are not required to be applied as
provided in Section 3.03(b) and to the extent such Net Sale Proceeds are
not otherwise used to make acquisitions pursuant to Section 9.02(xiv) or
Capital Expenditures pursuant to Section 9.07(d);
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(xviii) Caterair New Zealand may contribute the assets acquired by
it as part of the New Zealand acquisition consummated in August 1997 to a
Wholly-Owned Foreign Subsidiary of the Borrower; and
(xix) Caterair may make intercompany loans to the Borrower, provided
that all such intercompany loans are evidenced by an Intercompany Note
which is pledged by Caterair pursuant to the General Pledge Agreement.
9.06 Transactions with Affiliates. Each of OFSI, Caterair Holdings
and the Borrower will not, and each of Caterair Holdings and the Borrower will
not permit any of its respective Subsidiaries to, enter into any transaction or
series of related transactions, whether or not in the ordinary course of
business, with any Affiliate of OFSI, Caterair Holdings, the Borrower or any
Subsidiary of Caterair Holdings or the Borrower, other than in the ordinary
course of business and on terms and conditions substantially as favorable to
OFSI, Caterair Holdings, the Borrower or such Subsidiary as would reasonably be
obtained by OFSI, Caterair Holdings, the Borrower or such Subsidiary at that
time in a comparable arm's-length transaction with a Person other than an
Affiliate, except that:
(i) each such Person may pay reasonable fees and compensation to and
indemnity provided on behalf of, their respective officers, directors and
employees as determined in good faith by such Person's Board of Directors
or senior management to the extent not otherwise prohibited by the terms
of this Agreement;
(ii) transactions between or among the Borrower and/or any
Subsidiary of the Borrower, on the one hand, and any Subsidiary of the
Borrower or other Person controlled (as such term is defined in the
definition of "Affiliate") by the Borrower, on the other hand, shall be
permitted so long as (x) no portion of the remaining interest in such
Subsidiary or other Person is owned by a Person who controls (as such term
is defined in the definition of "Affiliate") the Borrower and (y) such
transactions are not otherwise prohibited by the provisions of this
Agreement;
(iii) each such Person may enter into transactions pursuant to the
OFSI/SCIS Tax Sharing Agreement and the Caterair Holdings/Caterair Tax
Sharing Agreement, and OFSI and its Non-SCIS Subsidiaries may enter into
the Non-SCIS Tax Sharing Agreements;
(iv) the Borrower or any Wholly-Owned Domestic Subsidiary of the
Borrower, on the one hand, and Caterair or any Wholly-Owned Domestic
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Subsidiary of Caterair, on the other hand, may enter into transactions
(including the transactions contemplated by the Operating Agreements and
the Sky Chefs/Caterair Management Agreement) between or among themselves
to the extent such transactions are not otherwise prohibited by the terms
of this Agreement;
(v) the Borrower and its Wholly-Owned Domestic Subsidiaries may
enter into transactions between and among themselves to the extent such
transactions are not otherwise prohibited by the terms of this Agreement;
(vi) Caterair and its Wholly-Owned Domestic Subsidiaries may enter
into transactions between and among themselves to the extent such
transactions are not otherwise prohibited by the terms of this Agreement;
(vii) each such Person may pay Dividends that it is permitted to pay
under Section 9.03;
(viii) so long as no Default under Section 10.01 or 10.05 and no Event
of Default has occurred and is continuing or would result therefrom, the
Borrower may pay management fees to Onex (or its designee) on a monthly
basis pursuant to the Borrower Management Agreement in an aggregate amount
not to exceed $2,000,000 in any fiscal year of the Borrower, provided, any
such fees that are accrued and not paid by virtue of the existence of any
Default under Section 10.01 or 10.05 or any Event of Default may be paid
on the earliest date that no such Default or Event of Default is
continuing or would result from such payment; and
(ix) transactions between or among the Borrower and its Subsidiaries
pursuant to Sections 9.02(xi), 9.02(xviii), 9.02(xix) and 9.04(xiii) shall
be permitted.
Without limiting the foregoing provisions of this Section 9.06 or any other
provision of this Agreement, in no event shall any management, consulting or
similar fees be paid by OFSI, Caterair Holdings, the Borrower or any Subsidiary
of Caterair Holdings or the Borrower to any Person that controls (as such term
is defined in the definition of "Affiliate") the Borrower or Caterair Holdings
except as otherwise permitted by clause (viii) of this Section 9.06.
9.07 Capital Expenditures. (a) Each of OFSI, Caterair Holdings and
the Borrower will not, and each of Caterair Holdings and the Borrower will not
permit any of its respective Subsidiaries to, make any Capital Expenditures,
except that (i)
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during the period from January 1, 1997 through and including December 31, 1997,
the Borrower, Caterair and their respective Subsidiaries may make Capital
Expenditures so long as the aggregate amount of all such Capital Expenditures
made during such period does not exceed $42,000,000, (ii) during the Borrower's
fiscal year ending December 31, 1998, the Borrower, Caterair and their
respective Subsidiaries may make Capital Expenditures so long as the aggregate
amount of all such Capital Expenditures made during such fiscal year does not
exceed 4.5% of the combined gross revenues of the Borrower, Caterair and their
respective Subsidiaries (but eliminating any intercompany revenues between or
among the Borrower, Caterair and their respective Subsidiaries) for the
Borrower's fiscal year ending December 31, 1997 and (iii) during each fiscal
year of the Borrower thereafter, the Borrower, Caterair and their respective
Subsidiaries may make Capital Expenditures so long as the aggregate amount of
all such Capital Expenditures made during each such fiscal year does not exceed
3.5% of the combined gross revenues of the Borrower, Caterair and their
respective Subsidiaries (but eliminating any intercompany revenues between or
among the Borrower, Caterair and their respective Subsidiaries) for the
immediately preceding fiscal year of the Borrower.
In the event that the amount of Capital Expenditures permitted to be
made by the Borrower, Caterair and their respective Subsidiaries pursuant to
this clause (a) (x) in fiscal year 1997 is greater than the amount of Capital
Expenditures actually made by the Borrower, Caterair and their respective
Subsidiaries during such fiscal year, such excess may be carried forward and
utilized to make Capital Expenditures in fiscal year 1998 and (y) in fiscal year
1998 (including any amounts carried forward from fiscal year 1997) is greater
than the amount of Capital Expenditures actually made by the Borrower, Caterair
and their respective Subsidiaries during such fiscal year, such excess may be
carried forward and utilized to make Capital Expenditures in fiscal year 1999,
provided that no amount once carried forward to fiscal year 1999 pursuant to
this clause (y) may be carried forward to a fiscal year thereafter and such
amount may only be utilized after the Borrower, Caterair and their respective
Subsidiaries have utilized in full the permitted Capital Expenditure amount for
fiscal year 1999 as set forth above in this clause (a).
(b) In addition to the Capital Expenditures permitted to be made
pursuant to clauses (a), (c) and (d) of this Section 9.07, the amount of
insurance proceeds received by the Borrower, Caterair or any of their respective
Subsidiaries from any Recovery Event may be used by the Borrower, Caterair or
any of its Subsidiaries to make Capital Expenditures to replace or restore any
properties or assets in respect of which such proceeds were paid to the extent
such proceeds are not required to be applied pursuant to Section 3.03(d).
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(c) In addition to the Capital Expenditures permitted to be made
pursuant to clauses (a), (b) and (d) of this Section 9.07, acquisitions pursuant
to Section 9.02(xiii), to the extent constituting Capital Expenditures, shall be
permitted.
(d) In addition to the Capital Expenditures permitted to be made
pursuant to clauses (a), (b) and (c) of this Section 9.07, the amount of Net
Sale Proceeds received by the Borrower, Caterair or any of their respective
Subsidiaries from any Asset Sale may be used by the Borrower, Caterair and their
respective Wholly-Owned Subsidiaries to make Capital Expenditures and
acquisitions pursuant to Section 9.02(xiv) to the extent constituting Capital
Expenditures, but only to the extent that such Net Sale Proceeds are not
otherwise required to be applied pursuant to Section 3.03(b) or are not applied
to make Investments pursuant to Section 9.05(xvii).
9.08 Combined Interest Coverage Ratio. The Borrower and Caterair
will not permit the Combined Interest Coverage Ratio for any Test Period ended
on the last day of a fiscal quarter set forth below to be less than the ratio
set forth opposite such fiscal quarter below:
<TABLE>
<CAPTION>
Fiscal Quarter Ended Ratio
-------------------- -----
<S> <C>
September 30, 1997 2.00:1.00
December 31, 1997 2.00:1.00
March 31, 1998 2.00:1.00
June 30, 1998 2.00:1.00
September 30, 1998 2.00:1.00
December 31, 1998 2.00:1.00
March 31, 1999 2.00:1.00
June 30, 1999 2.00:1.00
September 30, 1999 2.00:1.00
December 31, 1999 2.25:1.00
March 31, 2000 2.25:1.00
June 30, 2000 2.25:1.00
September 30, 2000 2.25:1.00
December 31, 2000 2.25:1.00
March 31, 2001 2.25:1.00
June 30, 2001 2.25:1.00
September 30, 2001 2.25:1.00
December 31, 2001
and the last day of each fiscal
quarter thereafter 2.50:1.00
</TABLE>
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9.09 Combined Leverage Ratio. The Borrower and Caterair will not
permit the Combined Leverage Ratio at any time during a period set forth below
to be greater than the ratio set forth opposite such period below:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
Fiscal quarter ending September 30, 1997 4.75:1.00
Fiscal quarter ending December 31, 1997 4.75:1.00
Fiscal quarter ending March 31, 1998 4.75:1.00
Fiscal quarter ending June 30, 1998 4.75:1.00
Fiscal quarter ending September 30, 1998 4.75:1.00
Fiscal quarter ending December 31, 1998 4.75:1.00
Fiscal quarter ending March 31, 1999 4.75:1.00
Fiscal quarter ending June 30, 1999 4.75:1.00
Fiscal quarter ending September 30, 1999 4.75:1.00
October 1, 1999 through and including December 30, 1999 4.75:1.00
December 31, 1999 through and including March 31, 2000 4.50:1.00
Fiscal quarter ending June 30, 2000 4.50:1.00
Fiscal quarter ending September 30, 2000 4.50:1.00
October 1, 2000 through and including December 30, 2000 4.50:1.00
December 31, 2000 through and including March 31, 2001 4.00:1.00
Fiscal quarter ending June 30, 2001 4.00:1.00
Fiscal quarter ending September 30, 2001 4.00:1.00
October 1, 2001 through and including December 30, 2001 4.00:1.00
December 31, 2001 and thereafter 3.50:1.00
</TABLE>
9.10 Limitation on Payments of Certain Indebtedness; Modifications
of Certain Indebtedness; Modifications of Certificates of Incorporation, By-Laws
and Certain Other Agreements; etc. Each of OFSI, Caterair Holdings and the
Borrower will not, and each of Caterair Holdings and the Borrower will not
permit any of its respective Subsidiaries to, (i) make (or give any notice in
respect of) any voluntary or optional payment or prepayment on or redemption or
acquisition for value of, or any prepayment or redemption as a result of any
asset sale, change of control or similar event of (including in each case,
without limitation, by way of depositing with the trustee with respect thereto
or any other Person money or securities before due for the purpose of paying
when due) the Senior Subordinated Notes, the Caterair Holdings Secured Note
(other than the payment in full thereof with the proceeds from the sale or
liquidation of the Caterair Holdings Certificate of Deposit), any Caterair
Holdings Unsecured Debentures or the SCIS/Caterair Loan (except to the extent
otherwise permitted by this Agreement in the case of the SCIS/Caterair Loan),
provided that (x) the Borrower may redeem or repurchase outstanding 13% Senior
Subordinated Notes
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pursuant to the 13% Senior Subordinated Note Tender Offer and (y) after the 13%
Senior Subordinated Note Tender Offer Expiration Date, the Borrower may
voluntarily redeem or repurchase outstanding 13% Senior Subordinated Notes so
long as no Default or Event of Default then exists, (ii) amend or modify, or
permit the amendment or modification of, any provision of the Senior
Subordinated Note Documents (other than, in the case of the 13% Senior
Subordinated Notes, as contemplated by the 13% Senior Subordinated Note
Indenture Supplement), the Caterair Holdings Secured Note, the Caterair Holdings
Unsecured Debentures, the Caterair Holdings CD Pledge Agreement, the
SCIS/Caterair Note or the Subordinated Intercompany Security Agreement or of any
other agreement related thereto (including, without limitation, any purchase
agreement, indenture, loan agreement or security agreement), (iii) amend, modify
or change its certificate of incorporation (including, without limitation, by
the filing or modification of any certificate of designation), or by-laws, or
any agreement entered into by it, with respect to its capital stock, or enter
into any new agreement with respect to its capital stock, other than amendments,
modifications or changes thereto which are not adverse in any respect to the
interests of the Banks, (iv) amend, modify or change any provision of the Lease
Agreements, the License Agreements or the Non-Compete Agreements, other than
immaterial amendments, modifications or changes thereto which are not adverse in
any respect to the interests of the Banks, or (v) amend, modify or change any
provision of any Tax Sharing Agreement (including the OFSI/SCIS Tax Sharing
Agreement, the Caterair Holdings/Caterair Tax Sharing Agreement or after the
execution and delivery thereof, any Non-SCIS Tax Sharing Agreement) or the
Borrower Management Agreement.
9.11 Limitation on Certain Restrictions on Subsidiaries. Each of
OFSI, Caterair Holdings and the Borrower will not, and each of Caterair Holdings
and the Borrower will not permit any of its respective Subsidiaries to, directly
or indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any such Person to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by OFSI, Caterair Holdings, the
Borrower or any Subsidiary of Caterair Holdings or the Borrower, as the case may
be, or pay any Indebtedness owed to OFSI, Caterair Holdings, the Borrower or any
Subsidiary of Caterair Holdings or the Borrower, as the case may be, (b) make
loans or advances to OFSI, Caterair Holdings, the Borrower or any Subsidiary of
Caterair Holdings or the Borrower or (c) transfer any of its properties or
assets to OFSI, Caterair Holdings, the Borrower or any Subsidiary of Caterair
Holdings or the Borrower, except for such encumbrances or restrictions existing
under or by reason of (i) applicable law, (ii) this Agreement and the other
Credit Documents, (iii) the Senior Subordinated Note Documents, (iv) the
Caterair Credit Agreement and the other Caterair Credit Documents, (v) customary
provisions restricting subletting or assignment of any lease governing a
leasehold inter-
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est of OFSI, Caterair Holdings, the Borrower or any Subsidiary of Caterair
Holdings or the Borrower, (vi) customary provisions restricting assignment of
any license or other contract entered into in the ordinary course of business,
(vii) restrictions on the transfer of any asset subject to a Lien permitted by
this Agreement, (viii) restrictions imposed by any agreement to sell assets to
any Person pending the closing of such sale, (ix) restrictions imposed by any
joint venture or similar agreement entered into with respect to Investments
permitted by the terms of this Agreement, (x) restrictions imposed by any
Catering Agreement, lease or permit entered into in the ordinary course of
business in connection with the operation of a Flight Kitchen on the sale of
assets of the Person subject to such Catering Agreement, lease or permit and
(xi) any agreement or instrument governing any Indebtedness of a Foreign
Subsidiary of the Borrower so long as all Foreign Subsidiaries of the Borrower
whose Indebtedness agreements contain such restrictions, in the aggregate, did
not account for more than 10% of Combined EBITDA (after giving pro forma effect
to the inclusion of any additional Foreign Subsidiary proposing to enter into
such an agreement) during the Test Period ending immediately prior to the date
of determination thereof.
9.12 Limitation on Issuance of Capital Stock. (a) Each of OFSI,
Caterair Holdings and the Borrower will not, and each of Caterair Holdings and
the Borrower will not permit any of its respective Subsidiaries to, issue (i)
any class of preferred stock other than issuances by non-Wholly-Owned Foreign
Subsidiaries of the Borrower of preferred stock so long as the percentage
interest (direct or indirect) of the Borrower in such preferred stock is equal
to or greater than the percentage interest (direct or indirect) of the Borrower
in the common stock of such Subsidiary, or (ii) any class of redeemable (except
at the sole option of OFSI, Caterair Holdings, the Borrower or such Subsidiary)
common stock.
(b) Each of OFSI and Caterair Holdings will not permit any of its
respective Subsidiaries (other than a Non-SCIS Subsidiary) to issue any capital
stock (including by way of sales of treasury stock) or any options or warrants
to purchase, or securities convertible into, capital stock, except (i) for
transfers and replacements of then outstanding shares of capital stock, (ii) for
stock splits, stock dividends and additional issuances which do not decrease the
percentage ownership of OFSI, Caterair Holdings or any of their respective
Subsidiaries in any class of the capital stock or partnership interest of such
Subsidiary and (iii) to qualify directors to the extent required by applicable
law.
9.13 Business; etc. (a) The Borrower will not, and will not permit
any of its Subsidiaries to, engage in any business other than (i) the businesses
in which the Borrower, Caterair and their respective Subsidiaries and joint
ventures are engaged on the Restatement Effective Date; (ii) the businesses of
(w) producing, distributing,
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selling or delivering, or providing management or other services with respect
to, meals or other food products, (x) providing catering services, (y) providing
goods or services to Persons engaged in providing transportation services,
including, but not limited to, Persons engaged in the airline or other passenger
transportation business, or (z) providing goods or services to or at,
transportation terminals and other facilities, including, but not limited to,
airports, train stations, bus stations or roadside service facilities
(including, but not limited to, providing goods or services to any Person who
conducts operations at any such facility); or (iii) any business which is
determined in good faith by the Borrower' Board of Directors to be similar,
ancillary, complimentary or related to, or an extension of, any business
described in clause (i) or (ii) above.
(b) So long as any Lease Agreement or License Agreement that is in
effect on the Restatement Effective Date remains in effect, Caterair will not,
and will not permit any of its Subsidiaries to, engage in any business other
than the transactions contemplated under the Lease Agreements and the License
Agreements, provided, however, (i) that Caterair may continue to operate certain
of its Flight Kitchens if Caterair has not received as of the Restatement
Effective Date the requisite consents to lease such Flight Kitchens to the
Borrower or a Subsidiary of the Borrower, (ii) Caterair also may transfer, lease
or license assets pursuant to Section 9.02(xvii), and (iii) from and after the
termination of the Lease Agreements and the License Agreements that are in
effect on the Restatement Effective Date, Caterair and its Subsidiaries will not
engage in any business other than the businesses permitted to be engaged in by
the Borrower and its Subsidiaries pursuant to Section 9.13(a), including
entering into lease and license arrangements with respect to those Flight
Kitchens then owned by Caterair and its Subsidiaries pursuant to arm's-length
arrangements.
(c) Notwithstanding anything to the contrary contained in this
Agreement, (i) OFSI will not engage in any significant business activities, will
have no significant assets other than its ownership interest in the Borrower,
Caterair Holdings, the Class B Assets and the Non-SCIS Subsidiaries and will
have no significant liabilities other than those in connection with stock plans
approved by its Board of Directors and those in connection with this Agreement,
the other Credit Documents, the Caterair Credit Documents and those in which
recourse is expressly limited solely to the Class B Assets or any equity
interests in any Non-SCIS Subsidiary or any Dividends or earnings from, or any
proceeds in respect of, any thereof and (ii) OFSI will not permit any of its
Non-SCIS Subsidiaries to engage in any business that competes with any business
in which the Borrower, Caterair or any other of their respective Subsidiaries is
actively engaged in or in which in any way involves the business of (1)
producing, distributing, selling or delivering, or providing management or other
services with respect to, meals or other food products or (2) providing catering
services. OFSI will
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not permit any Person other than itself or an OFSI Designee to hold the Caterair
Holdings Unsecured Debentures.
(d) Notwithstanding anything to the contrary contained in this
Agreement, Caterair Holdings will not engage in any significant business
activities, will have no assets other than its ownership interest in Caterair
and the Caterair Holdings Certificate of Deposit and will have no significant
liabilities other than those under the Caterair Holdings Secured Note, the
Caterair Holdings Unsecured Debentures, the Caterair Holdings CD Pledge
Agreement, this Agreement, the other Credit Documents to which it is a party and
the Caterair Credit Documents to which it is a party.
(e) Notwithstanding anything to the contrary contained in Section
9.13(a) or elsewhere in this Agreement, IFSC will not engage in any significant
business activities and will not have any significant assets or liabilities
other than in connection with its operation as an Irish financial services
center captive finance company for the Foreign Subsidiaries of the Borrower.
9.14 Limitation on Creation of Subsidiaries. (a) Each of Caterair
Holdings and the Borrower will not, and will not permit any of its Subsidiaries
to, establish, create or acquire any Subsidiaries after the Restatement
Effective Date; provided that (i) the Borrower and its Wholly-Owned Subsidiaries
shall be permitted to establish and create Wholly-Owned Subsidiaries and, to the
extent otherwise permitted by this Agreement, acquire and make Investments in
Wholly-Owned Subsidiaries and non-Wholly-Owned Subsidiaries so long as (x) in
the case of the establishment, creation or acquisition of a Wholly-Owned
Domestic Subsidiary, such Wholly-Owned Domestic Subsidiary takes all of the
actions required to be taken by it pursuant to Section 8.11 and 100% of the
capital stock of such Wholly-Owned Domestic Subsidiary is pledged pursuant to
the General Pledge Agreement and (y) in the case of the establishment, creation
or acquisition of a non-Wholly-Owned Subsidiary by a Credit Party, the capital
stock of such Subsidiary owned by such Credit Party is pledged pursuant to, and
to the extent required by, the General Pledge Agreement and (ii) Subsidiaries of
the Borrower which are not Wholly-Owned Subsidiaries shall be permitted to
establish and create Subsidiaries and, to the extent otherwise permitted by this
Agreement, make Investments in Subsidiaries.
(b) OFSI will not establish, create or acquire any Subsidiaries
after the Restatement Effective Date; provided that OFSI shall be permitted to
create Non-SCIS Subsidiaries so long as in each case (i) the Agents are
reasonably satisfied with any liabilities arising as a result thereof or
acquired in connection therewith (including, but not limited to, all pension,
tax and environmental liabilities), which could reasonably be expected to become
liabilities of OFSI, the Borrower or any Subsidiary
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of the Borrower, it being understood and agreed that in any event there may be
recourse to OFSI in respect of any such obligations or liabilities but only to
the extent that such recourse is expressly limited solely to the Class B Assets
or the equity interests of any Non-SCIS Subsidiary or any Dividends or earnings
from, or proceeds in respect of, any thereof, and (ii) at the time that any such
Non-SCIS Subsidiary is formed or acquired, OFSI and such Non-SCIS Subsidiary
shall enter into a Non-SCIS Subsidiary Tax Sharing Agreement in form and
substance satisfactory to the Agents.
9.15 Senior Subordinated Notes; etc. Neither the Borrower nor any of
its Subsidiaries shall designate any Indebtedness, other than the Obligations
and the obligations under the Caterair Credit Documents, as "Designated Senior
Debt" for purposes of the Senior Subordinated Notes and the other Senior
Subordinated Note Documents. Notwithstanding anything to the contrary contained
herein or in the SCIS/Caterair Note, upon the occurrence and during the
continuance of a Default or an Event of Default, the Borrower will not take any
enforcement action whatsoever in connection with any default or event of default
under, or in respect of, the SCIS/Caterair Note.
SECTION 10. Events of Default. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
10.01 Payments. The Borrower shall (i) default in the payment when
due of any principal of any Loan or any Note or (ii) default, and such default
shall continue unremedied for three or more days, in the payment when due of any
Unpaid Drawings or interest on any Loan or Note, or any Fees or any other
amounts owing hereunder or thereunder; or
10.02 Representations, etc. Any representation, warranty or
statement made (or deemed made) by any Credit Party herein or in any other
Credit Document or in any certificate delivered pursuant hereto or thereto shall
prove to be untrue in any material respect on the date as of which made or
deemed made; or
10.03 Covenants. Any Credit Party shall (i) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 8.01(g)(i), 8.08, 8.13 or 8.14 or Section 9 or (ii) default in the due
performance or observance by it of any other term, covenant or agreement
contained in this Agreement and such default shall continue unremedied for a
period of 30 days after written notice to the Borrower by the Administrative
Agent or any Bank; or
10.04 Default Under Other Indebtedness. (i) OFSI, Caterair Holdings,
the Borrower, the Designated Onex Sub or any Subsidiary of Caterair Holdings or
the
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Borrower (other than an Immaterial Subsidiary) shall (x) default in any payment
of any Indebtedness (other than the Obligations and any Indebtedness arising
under or in connection with the Caterair Holdings Secured Note but only to the
extent that there is sufficient cash collateral to satisfy in full all
obligations in respect of the Caterair Holdings Secured Note) beyond the period
of grace, if any, provided in the instrument or agreement under which such
Indebtedness was created or (y) default in the observance or performance of any
agreement or condition relating to any Indebtedness (other than the Obligations
and any Indebtedness arising under or in connection with the Caterair Holdings
Secured Note but only to the extent that there is sufficient cash collateral to
satisfy in full all obligations in respect of the Caterair Holdings Secured
Note) or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or would permit the
holder or holders of such Indebtedness (or a trustee or agent on behalf of such
holder or holders) to cause (determined without regard to whether any notice is
required), any such Indebtedness to become due prior to its stated maturity, or
(ii) any Indebtedness (other than the Obligations and any Indebtedness arising
under or in connection with the Caterair Holdings Secured Note but only to the
extent that there is sufficient cash collateral to satisfy in full all
obligations in respect of the Caterair Holdings Secured Note) of OFSI, Caterair
Holdings, the Borrower, the Designated Onex Sub or any Subsidiary of Caterair
Holdings or the Borrower (other than an Immaterial Subsidiary) shall be declared
to be due and payable, or required to be prepaid other than by a regularly
scheduled required prepayment, prior to the stated maturity thereof, provided
that it shall not be a Default or an Event of Default under this Section 10.04
unless the aggregate principal amount of all Indebtedness as described in
preceding clauses (i) and (ii) is at least $5,000,000; or
10.05 Bankruptcy, etc. OFSI, Caterair Holdings, the Borrower, the
Designated Onex Sub or any Subsidiary of Caterair Holdings or the Borrower
(other than an Immaterial Subsidiary) shall commence a voluntary case concerning
itself under Title 11 of the United States Code entitled "Bankruptcy," as now or
hereafter in effect, or any successor thereto (the "Bankruptcy Code"); or an
involuntary case is commenced against OFSI, Caterair Holdings, the Borrower, the
Designated Onex Sub or any Subsidiary of Caterair Holdings or the Borrower
(other than an Immaterial Subsidiary) and the petition is not controverted
within 10 days, or is not dismissed within 60 days, after commencement of the
case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or
takes charge of, all or substantially all of the property of OFSI, Caterair
Holdings, the Designated Onex Sub, the Borrower or any Subsidiary of Caterair
Holdings or the Borrower (other than an Immaterial Subsidiary), or OFSI,
Caterair Holdings, the Borrower, the Designated Onex Sub or any Subsidiary of
Caterair Holdings or the Borrower (other than an Immaterial Subsidiary)
commences
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any other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency, administration or liquidation or
similar law of any jurisdiction whether now or hereafter in effect relating to
OFSI, Caterair Holdings, the Borrower, the Designated Onex Sub or any Subsidiary
of Caterair Holdings or the Borrower (other than an Immaterial Subsidiary), or
there is commenced against OFSI, Caterair Holdings, the Designated Onex Sub, the
Borrower or any Subsidiary of Caterair Holdings or the Borrower (other than an
Immaterial Subsidiary) any such proceeding which remains undismissed for a
period of 60 days, or OFSI, Caterair Holdings, the Borrower, the Designated Onex
Sub or any Subsidiary of Caterair Holdings or the Borrower (other than an
Immaterial Subsidiary) is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or OFSI,
Caterair Holdings, the Borrower, the Designated Onex Sub or any Subsidiary of
Caterair Holdings or the Borrower (other than an Immaterial Subsidiary) suffers
any appointment of any custodian, liquidator, administrator, receiver or the
like for it or any substantial part of its property to continue undischarged or
unstayed for a period of 60 days; or OFSI, Caterair Holdings, the Borrower, the
Designated Onex Sub or any Subsidiary of Caterair Holdings or the Borrower
(other than an Immaterial Subsidiary) makes a general assignment for the benefit
of creditors; or any corporate action is taken by OFSI, Caterair Holdings, the
Borrower, the Designated Onex Sub or any Subsidiary of Caterair Holdings or the
Borrower (other than an Immaterial Subsidiary) for the purpose of effecting any
of the foregoing; or
10.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof or a waiver of such standard
or extension of any amortization period is sought or granted under Section 412
of the Code, any Plan shall have had or is likely to have a trustee appointed to
administer such Plan, any Plan is, shall have been or is likely to be terminated
or to be the subject of termination proceedings under ERISA, any Plan shall have
an Unfunded Current Liability, a contribution required to be made to a Plan or a
Foreign Pension Plan has not been timely made, OFSI, Caterair Holdings or any
Subsidiary or ERISA Affiliate of OFSI or Caterair Holdings has incurred or is
likely to incur a liability to or on account of a Plan under Section 409,
502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
Section 401(a)(29), 4971, 4975 or 4980 of the Code, or OFSI, Caterair Holdings
or any Subsidiary of OFSI or Caterair Holdings has incurred or is likely to
incur liabilities pursuant to one or more employee welfare benefit plans (as
defined in Section 3(1) of ERISA) that provide benefits to retired employees or
other former employees (other than as required by Section 601 of ERISA) or
employee pension benefit plans (as defined in Section 3(2) of ERISA) or Foreign
Pension Plans; and (b) there shall result from any such event or events the
imposition of a lien, the granting of a security interest, or a liability or a
material risk of incurring a liability; and (c) which lien, security interest or
liability, individually, and/or in the
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aggregate, in the opinion of the Required Banks, could reasonably be expected to
have a material adverse effect on the business, operations, properties, assets,
liabilities, condition (financial or otherwise) or prospects of the Borrower,
the Borrower and its Subsidiaries taken as a whole, Caterair, Caterair and its
Subsidiaries taken as a whole or OFSI and its SCIS Subsidiaries taken as a
whole; or
10.07 Security Documents. At any time after the execution and
delivery thereof, any of the Security Documents shall cease to be in full force
and effect, or shall cease to give the Collateral Agent for the benefit of the
Secured Creditors the Liens, rights, powers and privileges purported to be
created thereby (including, without limitation, a perfected security interest
in, and Lien on, all of the Collateral (other than Collateral with an aggregate
value of up to $1,000,000)), in favor of the Collateral Agent, superior to and
prior to the rights of all third Persons (except as permitted by Section 9.01),
and subject to no other Liens (except as permitted by Section 9.01), or any
Credit Party shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed pursuant to any of
the Security Documents and such default shall continue unremedied for a period
of 30 days (or such longer period of time as may be specifically applicable
thereto pursuant to the terms of any Mortgage); or
10.08 Guaranties; etc. Any Guaranty or any provision thereof shall
cease to be in full force and effect, or any Guarantor or any Person acting for
or on behalf of any Guarantor shall deny or disaffirm such Guarantor's
obligations under the relevant Guaranty, or any Guarantor shall default in its
due performance of any term, covenant or agreement on its part to be performed
or observed pursuant to the relevant Guaranty; or
10.09 Judgments. One or more judgments or decrees shall be entered
against OFSI, Caterair Holdings, the Borrower, the Designated Onex Sub or any
Subsidiary of Caterair Holdings or the Borrower (other than an Immaterial
Subsidiary) involving in the aggregate for OFSI, Caterair Holdings, the
Borrower, the Designated Onex Sub and such Subsidiaries a liability (not paid or
fully covered by a reputable and solvent insurance company) and such judgments
and decrees either shall be final and non-appealable or shall not be vacated,
discharged or stayed or bonded pending appeal for any period of 30 consecutive
days, and the aggregate amount of all such judgments exceeds $5,000,000; or
10.10 Change of Control. A Change of Control shall occur; or
10.11 American Airlines Catering Agreements. Any American Airlines
Catering Agreement or any material provision thereof shall cease to be in full
force and
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effect or the Borrower, Caterair or any Subsidiary of the Borrower or Caterair,
as the case may be, shall deny or disaffirm any of its material obligations
thereunder or the Borrower, Caterair or any Subsidiary of the Borrower or
Caterair, as the case may be, shall default in the due performance or observance
of any term, covenant or agreement on its part to be performed or observed
pursuant thereto and as a result thereof one or more American Airlines Catering
Agreements are terminated with respect to Flight Kitchens that accounted for
more than 20% of the gross revenues derived by the Borrower, Caterair and any
Subsidiary of the Borrower and Caterair on a combined basis from said agreements
during the immediately preceding fiscal year; or
10.12 Certain Caterair Agreements. Any Lease Agreement, any License
Agreement or the Non-Compete Agreement or any material provision thereof shall
cease to be in full force and effect (other than by virtue of the exercise of
the Purchase Option in accordance with Section 9.02(ix) or the expiration of any
such agreement at the end of the respective term thereof) or any party thereto
shall deny or disaffirm any of its material obligations thereunder or shall
default in the due performance or observance of any material term, covenant or
agreement on its part to be performed or observed pursuant thereto; or
10.13 Caterair Holdings Subordination Agreement and Escrow
Agreement. The Caterair Holdings Subordination Agreement, the Caterair Holdings
Escrow Agreement (after the execution and delivery thereof) or any provision of
the foregoing agreements shall cease to be a legal, valid and binding obligation
enforceable against any party thereto, or any party to the Caterair Holdings
Subordination Agreement or the Caterair Holdings Escrow Agreement (after the
execution and delivery thereof) (other than the Administrative Agent) or any
Person acting by or on behalf of any such party shall deny or disaffirm such
party's obligations under the Caterair Holdings Subordination Agreement or the
Caterair Holdings Escrow Agreement (after the execution and delivery thereof),
or any such party shall default in the due performance of any term, covenant or
agreement on its part to be performed or observed pursuant to any such
Agreement;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent, upon the written request of
the Required Banks, shall by written notice to the Borrower, take any or all of
the following actions, without prejudice to the rights of any Agent, any Bank or
the holder of any Note to enforce its claims against any Credit Party (provided
that, if an Event of Default specified in Section 10.05 shall occur with respect
to the Borrower, the result which would occur upon the giving of written notice
by the Administrative Agent to the Borrower as specified in clauses (i) and (ii)
below shall occur automatically without the giving of any such notice): (i)
declare the Total Revolving Loan Commitment termin-
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ated, whereupon the Revolving Loan Commitment of each Bank shall forthwith
terminate immediately and any accrued and unpaid Commitment Commission shall
forthwith become due and payable without any other notice of any kind; (ii)
declare the principal of and any accrued interest in respect of all Loans and
the Notes and all Obligations owing hereunder and thereunder to be, whereupon
the same shall become, forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by each
Credit Party; (iii) terminate any Letter of Credit which may be terminated in
accordance with its terms; (iv) direct the Borrower to pay (and the Borrower
agrees that upon receipt of such notice, or upon the occurrence of an Event of
Default specified in Section 10.05 with respect to the Borrower, it will pay) to
the Administrative Agent at the Payment Office such additional amount of cash,
to be held as security by the Administrative Agent, as is equal to the aggregate
Stated Amount of all Letters of Credit issued for the account of the Borrower
and then outstanding; (v) enforce, as Collateral Agent, any or all of the Liens
and security interests created pursuant to the Security Documents; and/or (vi)
apply any cash collateral as provided in Section 4.02.
SECTION 11. Definitions and Accounting Terms.
11.01 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Adjusted Available Revolving Loan Commitment" for each Bank shall
mean, at any time, such Bank's Revolving Loan Commitment at such time less such
Bank's Adjusted RL Percentage of the Blocked Commitment at such time.
"Adjusted RL Percentage" shall mean (x) at a time when no Bank
Default exists, for each Bank, such Bank's RL Percentage and (y) at a time when
a Bank Default exists (i) for each Bank that is a Defaulting Bank, zero and (ii)
for each Bank that is a Non-Defaulting Bank, the percentage determined by
dividing such Bank's Revolving Loan Commitment at such time by the Adjusted
Total Revolving Loan Commitment at such time, it being understood that all
references herein to Revolving Loan Commitments and the Adjusted Total Revolving
Loan Commitment at a time when the Total Revolving Loan Commitment or Adjusted
Total Revolving Loan Commitment, as the case may be, has been terminated shall
be references to the Revolving Loan Commitments or Adjusted Total Revolving Loan
Commitment, as the case may be, in effect immediately prior to such termination,
provided that (A) no Bank's Adjusted RL Percentage shall change upon the
occurrence of a Bank Default from that in effect immediately prior to such Bank
Default if after giving effect to such Bank Default, and any repayment of
Revolving Loans and Swingline Loans at such time
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pursuant to Section 4.02(a) or otherwise, the sum of (i) the aggregate
outstanding principal amount of Revolving Loans of all Non-Defaulting Banks,
plus (ii) the aggregate outstanding principal amount of all Swingline Loans,
plus (iii) the Letter of Credit Outstandings, exceeds the Adjusted Total
Revolving Loan Commitment; (B) the changes to the Adjusted RL Percentage that
would have become effective upon the occurrence of a Bank Default but that did
not become effective as a result of the preceding clause (A) shall become
effective on the first date after the occurrence of the relevant Bank Default on
which the sum of (i) the aggregate outstanding principal amount of the Revolving
Loans of all Non-Defaulting Banks, plus (ii) the aggregate outstanding principal
amount of all Swingline Loans, plus (iii) the Letter of Credit Outstandings is
equal to or less than the Adjusted Total Revolving Loan Commitment; and (C) if
(i) a Non-Defaulting Bank's Adjusted RL Percentage is changed pursuant to the
preceding clause (B) and (ii) any repayment of such Bank's Revolving Loans,
Swingline Loans or Unpaid Drawings that were made during the period commencing
after the date of the relevant Bank Default and ending on the date of such
change to its Adjusted RL Percentage must be returned to the Borrower as a
preferential or similar payment in any bankruptcy or similar proceeding of the
Borrower, then the change to such Non-Defaulting Bank's Adjusted RL Percentage
effected pursuant to said clause (B) shall be reduced to that positive change,
if any, as would have been made to its Adjusted RL Percentage if (x) such
repayments had not been made and (y) the maximum change to its Adjusted RL
Percentage would have resulted in the sum of the outstanding principal of
Revolving Loans made by such Bank plus such Bank's new Adjusted RL Percentage of
Swingline Loans and Letter of Credit Outstandings equalling such Bank's
Revolving Loan Commitment at such time.
"Adjusted Total Available Revolving Loan Commitment" shall mean, at
any time, the Total Available Revolving Loan Commitment at such time less the
aggregate Revolving Loan Commitments of all Defaulting Banks at such time.
"Adjusted Total Revolving Loan Commitment" shall mean at any time
the Total Revolving Loan Commitment less the aggregate Revolving Loan
Commitments of all Defaulting Banks.
"Administrative Agent" shall have the meaning provided in the first
paragraph of this Agreement.
"Affiliate" shall mean, with respect to any Person, any other Person
(i) directly or indirectly controlling, (including, but not limited to, all
directors, officers and partners of such Person), controlled by, or under direct
or indirect common control with, such Person or (ii) that directly or indirectly
owns more than 10% of any class of the voting securities or capital stock of or
equity interests in such Person. A Person
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shall be deemed to control another Person if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such other Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" shall mean each of the Administrative Agent, the Syndication
Agent and, for purposes of Sections 12, 13 and 14, each such Agent also in its
capacity as a Co-Arranger.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented, amended, restated (including any amendment and restatement
thereof), extended, renewed, refinanced or replaced from time to time.
"American Airlines" shall mean American Airlines, Inc., a Delaware
corporation.
"American Airlines Catering Agreement" shall mean each of (i) the
Catering Services Agreement, dated as of April 27, 1992, as amended, between Sky
Chefs and American Airlines, (ii) the Catering Services Agreement, dated as of
February 11, 1992, as amended, between Caterair and American Airlines and (iii)
any other Catering Services Agreement entered into by the Borrower, Caterair or
any Subsidiary of the Borrower or Caterair with American Airlines.
"Applicable Commitment Commission Percentage" shall mean (i) for the
period from the Restatement Effective Date through but not including the first
Start Date, 3/8 of 1% and (ii) from and after any Start Date to and including
the corresponding End Date, the respective percentage per annum set forth in
clause (A), (B) or (C) below if, but only if, as of the Test Date for such Start
Date the applicable condition set forth in clause (A), (B) or (C) below, as the
case may be, is met:
(A) 3/8 of 1% if, but only if, as of the Test Date for such Start
Date the Leverage Ratio for the Test Period ended on such Test Date shall
be greater than 3.50:1.00;
(B) 3/10 of 1% if, but only if, as of the Test Date for such Start
Date the Leverage Ratio for the Test Period ended on such Test Date shall
be less than or equal to 3.50:1.00 and greater than 3.00:1.00; and
(C) 1/4 of 1% if, but only if, as of the Test Date for such Start
Date the Leverage Ratio for the Test Period ended on such Test Date shall
be less than or equal to 3.00:1.00.
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Notwithstanding anything to the contrary contained above in this definition, the
Applicable Commitment Commission Percentage shall be 3/8 of 1% at all times when
(i) a Default under Section 8.01(b), 8.01(c), 10.01 or 10.05 shall exist or (ii)
any Event of Default shall exist.
"Applicable Margin" shall mean a percentage per annum equal to (x)
in the case of Revolving Loans which are maintained as (i) Base Rate Loans, 1/4
of 1% less the then applicable Interest Reduction Discount, if any, and (ii)
Eurodollar Loans, 1-1/4 of 1% less the then applicable Interest Reduction
Discount, if any, and (y) in the case of Swingline Loans, 1/4 of 1% less the
then applicable Interest Reduction Discount, if any; provided, however, that
notwithstanding anything to the contrary contained above in this definition or
in the definition of Interest Reduction Discount, in no case will the Applicable
Margin ever be less than zero.
"Asset Sale" shall mean any sale, transfer or other disposition by
OFSI, Caterair Holdings, the Borrower or any Subsidiary of the Borrower or
Caterair Holdings to any Person (including by-way-of redemption by such Person)
other than to the Borrower or any Wholly-Owned Subsidiary of the Borrower or
Caterair Holdings of any asset (including, without limitation, any capital stock
or other securities of, or equity interests in, another Person) other than sales
of assets pursuant to Sections 9.02(iii), (v), (vi), (xi), (xii) and (xx).
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement substantially in the form of Exhibit O (appropriately
completed).
"Authorized Financial Officer" of the Borrower or Caterair, as the
case may be, shall mean any of the Chief Financial Officer, Treasurer, Assistant
Treasurer, Controller or any other senior financial officer of the Borrower or
Caterair, as the case may be, reasonably acceptable to the Administrative Agent.
"Bank" shall mean each financial institution listed on Schedule I,
as well as any Person which becomes a "Bank" hereunder pursuant to Section 1.13
or 13.04(b).
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing (including
any Mandatory Borrowing) or to fund its portion of any unreimbursed payment
under Section 2.04(c) or (ii) a Bank having notified in writing the Borrower
and/or the Administrative Agent that it does not intend to comply with its
obligations under Section 1.01 or Section 2, in the case of either clause (i) or
(ii) above as a result of any takeover of such Bank by any regulatory authority
or agency.
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"Bank Escrow Agreement" shall have the meaning provided in Section
8.15.
"Bankruptcy Code" shall have the meaning provided in Section 10.05.
"Base Rate" for any day shall mean a rate per annum equal to the
higher of (i) the sum of 1/2 of 1% plus the Federal Funds Rate for such day and
(ii) the Prime Lending Rate for such day.
"Base Rate Loan" shall mean each Swingline Loan and each Revolving
Loan designated or deemed designated as such by the Borrower at the time of the
incurrence thereof or conversion thereto.
"Blocked Commitment" shall mean, at any time, an amount equal to the
aggregate principal amount (or the Dollar Equivalent thereof) of all Third-Party
Foreign Subsidiary Indebtedness outstanding at such time in excess of
$35,000,000 at any time thereafter, except, in either case, to the extent that
such excess Third-Party Foreign Subsidiary Indebtedness is supported by a Letter
of Credit.
"BNY" shall mean The Bank of New York, in its individual capacity.
"Borrower" shall mean SCIS.
"Borrower Management Agreement" shall mean the Management Agreement,
dated as of September 28, 1995, between SCIS and Onex (or an Affiliate thereof).
"Borrowing" shall mean the borrowing by the Borrower of (i)
Swingline Revolving Loans from the Swingline Bank on a given date and (ii) one
Type of Loan from all the Banks on a given date (or resulting from a conversion
or conversions on such date) having in the case of Eurodollar Loans the same
Interest Period, provided that Base Rate Loans incurred pursuant to Section
1.10(b) shall be considered part of the related Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company in its individual capacity.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day except Saturday, Sunday and any day which shall be
in New York City a legal holiday or a day on which banking institutions are
authorized or
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required by law or other government action to close and (ii) with respect to all
notices and determinations in connection with, and payments of principal and
interest on, Eurodollar Loans, any day which is a Business Day described in
clause (i) above and which is also a day for trading by and between banks in the
London interbank Eurodollar market.
"Canex" shall mean Canex, Inc., a Cayman Islands corporation.
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures by such Person which should be capitalized in accordance with
generally accepted accounting principles, including all such expenditures with
respect to fixed or capital assets (including, without limitation, expenditures
for maintenance and repairs which should be capitalized in accordance with
generally accepted accounting principles) and, without duplication, the amount
of all Capitalized Lease Obligations incurred by such Person.
"Capitalized Lease Obligations" of any Person shall mean all rental
obligations which, under generally accepted accounting principles, are or will
be required to be capitalized on the books of such Person, in each case taken at
the amount thereof accounted for as indebtedness in accordance with such
principles.
"Cash Equivalents" shall mean (i) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of the
United States of America, in each case maturing within one year from the date of
acquisition thereof; (ii) marketable direct obligations issued by any state of
the United States or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Ratings Service ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv) time
deposits, certificates of deposit or bankers' acceptances (or, with respect to
foreign banks, similar instruments) maturing within one year from the date of
acquisition thereof issued by any commercial bank (or any branch thereof)
organized under the laws of the United States of America or any state thereof or
the District of Columbia or any U.S. branch of a foreign bank having at the date
of acquisition thereof combined capital and surplus of not less than
$200,000,000; (v) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clause (i) above entered
into with any bank meeting the qualifications specified in clause (iv) above;
(vi) investments in money market funds substantially all of whose assets are
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comprised of securities of the types described in clauses (i) through (v) above,
and (vii) overnight deposits and demand deposit accounts maintained in the
ordinary course of business; provided that, any funds on deposit in a trust
established by the Borrower or any Subsidiary of the Borrower in connection with
a Voluntary Employees' Beneficiary Association (as referred to in Section
501(c)(9) of the Code) may also be invested in (A) the American Advantage Money
Market Fund (or similar funds), (B) bonds and notes of corporations having, at
the time of investment, a rating of at least A by both Moody's and S&P or if an
unrated supranational, an equivalent credit quality, (C) asset-backed securities
(including, but not limited to, mortgage obligations and automobile or credit
card receivables), (D) floating rate notes, (E) master notes and both domestic
and international private placements, (F) financial futures (including, but not
limited to, treasury bills and notes, certificates of deposit and Eurodollar
deposits), (G) repurchase obligations relating to any securities described in
clauses (B) through (F) above, (H) securities of the type described in clause
(iv) above except that instead of a combined capital and surplus requirement,
such bank, or its holding company, must have (x) a long-term debt rating of at
least A by either Moody's or S&P, (y) a commercial paper rating of at least A-1
by S&P or P-1 by Moody's, or (z) an equivalent credit quality if unrated, (I)
tax exempt and tax advantaged securities (including, but not limited to, tax
exempt commercial paper, tax exempt notes, and auction rate preferred stock),
(J) hedged non-dollar money market investments, (K) securities of the types
described in clauses (i) through (vi) and (B) through (J) above whose individual
securities may have a maximum maturity of five years.
"Caterair" shall have the meaning provided in the first paragraph of
this Agreement.
"Caterair Credit Agreement" shall mean the Term Loan Agreement,
dated as of August 28, 1997, among SCIS, Caterair, the lenders from time to time
party thereto, BTCo and J.P. Morgan Securities Inc., as Co-Arrangers, BTCo, as
Syndication Agent, and Morgan, as Administrative Agent, as amended, modified or
supplemented from time to time.
"Caterair Credit Documents" shall mean the "Credit Documents" under,
and as defined in, the Caterair Credit Agreement.
"Caterair Holdings" shall have the meaning provided in the first
paragraph of this Agreement.
"Caterair Holdings/Caterair Tax Sharing Agreement" shall mean the
Income Tax Sharing Agreement, dated December 15, 1989, among Host Marriott
Corporation, Caterair Holdings and Caterair.
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"Caterair Holdings CD Pledge Agreement" shall mean the Pledge,
Assignment and Security Agreement, dated as of December 18, 1989, as amended or
otherwise modified in accordance with the terms hereof and thereof, made by
Wilmington Trust Company, as Trustee for Deerfield Capital, for the benefit of
The Sumitomo Bank of New York Trust Company, as Collateral Agent for The
Sumitomo Bank, Limited and Citibank, N.A.
"Caterair Holdings Certificate of Deposit" shall mean a certificate
of deposit issued by The Sumitomo Bank, Limited, acting through its New York
Branch in the principal amount of $236,200,000, with a maturity date of December
15, 1999 (subject to extension) (together with any certificate of deposit or
other investment issued in extension or replacement thereof or in substitution
for such certificate of deposit).
"Caterair Holdings Class A Nonvoting Common Stock" shall mean the
Class A nonvoting common stock, $.01 par value per share, of Caterair Holdings.
"Caterair Holdings Class B Voting Common Stock" shall mean the Class
B voting common stock, $.01 par value per share, of Caterair Holdings.
"Caterair Holdings Escrow Agreement" shall mean the Escrow
Agreement in the form attached to the Caterair Holdings Subordination Agreement.
"Caterair Holdings Secured Note" shall mean the New Senior Secured
Note, dated September 29, 1995, issued by Caterair Holdings in the stated
principal amount of $236,200,000, with a stated maturity of December 15, 2004.
"Caterair Holdings Subordination Agreement" shall have the meaning
provided in Section 5.17.
"Caterair Holdings Unsecured Debentures" shall mean the Senior
Debenture, dated September 29, 1995, issued by Caterair Holdings in the stated
principal amount of $43,800,000, with a maturity date of December 15, 2001,
together with each debenture permitted to be issued pursuant to Section 8.13(b).
"Caterair New Zealand" shall mean Caterair New Zealand Limited, a
Delaware corporation.
"Caterair Portugal" shall mean Caterair Por-Catering de Portugal,
S.A., a Portuguese corporation.
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"Catering Agreements" shall mean all catering agreements or
arrangements with airline companies to which OFSI, Caterair Holdings, the
Borrower or any Subsidiary of the Borrower or Caterair Holdings is a party.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C. ss. 9601 et seq.
"Change of Control" shall mean at any time (i) the Permitted Holders
(individually or collectively) shall cease to own (directly or indirectly) in
the aggregate at least 51% on a fully diluted basis of the voting interests of
OFSI, (ii) the Permitted Holders (individually or collectively) shall cease to
own (directly or indirectly) in the aggregate at least 35% on a fully diluted
basis of the economic interests in OFSI, (iii) OFSI shall cease to own on a
fully diluted basis 100% of the economic and voting interests of the Borrower,
(iv) the Permitted Holders (individually or collectively) shall cease to own
(directly or indirectly) in the aggregate at least 51% on a fully diluted basis
of the voting interests of Caterair Holdings, (v) Caterair Holdings shall cease
to own on a fully diluted basis 100% of the economic and voting interests of
Caterair or (vi) any "change of control" or similar event shall occur under the
Senior Subordinated Notes Indentures.
"CII" shall mean Caterair International, Inc. (II), a Delaware
corporation and a Wholly-Owned Domestic Subsidiary of the Borrower.
"Class B Assets" shall mean those assets owned by OFSI listed on
Schedule VIII.
"Co-Agent" shall have the meaning provided in the first paragraph of
this Agreement.
"Co-Arranger" shall have the meaning provided in the first paragraph
of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time. Section references to the Code are to the Code, as in effect at
the date of this Agreement, and to any subsequent provisions of the Code,
amendatory thereof, supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or personal) with
respect to which any security interests have been granted (or purported to be
granted) pursuant to any Security Document, including, without limitation, all
Pledge Agreement
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Collateral, all Security Agreement Collateral, all Mortgaged Properties and all
cash and Cash Equivalents delivered as collateral pursuant to Section 4.02 or 10
or pursuant to any Security Document.
"Collateral Agent" shall mean Morgan acting as collateral agent for
the Secured Creditors pursuant to the Security Documents, and any successor
thereto appointed pursuant to the terms of the respective Security Documents.
"Combined EBIT" shall mean, for any period, the Combined Net Income
of the Borrower before consolidated interest expense of the Borrower and its
Subsidiaries and provision for taxes and without giving effect to (i) any
extraordinary gains or losses or gains or losses from sales of assets other than
from sales of inventory in the ordinary course of business, (ii) any
nonrecurring cash charges incurred by the Borrower in connection with (x) the
consummation of the transactions contemplated by the Master Agreement
(including, without limitation, (A) severance payments and other employee costs
and (B) external consulting services primarily associated with the
implementation of labor savings programs) in an aggregate amount not to exceed
$51,800,000 and (y) the integration costs related to the Flight Kitchen's
operated (or previously operated) by CII and the New Zealand acquisition
consummated in August 1997 in an aggregate amount not to exceed $16,200,000 and
(iii) any charges incurred in connection with one or more stock bonus or
management plans approved by the Board of Directors of OFSI in an aggregate
amount not to exceed $35,000,000.
"Combined EBITDA" shall mean, for any period, Combined EBIT,
adjusted by adding thereto the amount of all amortization of intangibles and
depreciation that were deducted in arriving at Combined EBIT for such period, it
being understood and agreed that for purposes of this Agreement, (i) the
Combined EBITDA for the fiscal quarter ended on December 31, 1996 shall be
$38,557,000, (ii) the Combined EBITDA for the fiscal quarter ended on March 31,
1997 shall be $28,066,000 and (iii) the Combined EBITDA for the fiscal quarter
ended on June 30, 1997 shall be $38,653,000.
"Combined Indebtedness" shall mean, at any time, the amount of all
Indebtedness of each of the Borrower and its Subsidiaries determined on a
consolidated basis and Caterair and its Subsidiaries determined on a
consolidated basis as would be required to be reflected on the liability side of
a balance sheet as prepared in accordance with generally accepted accounting
principles at such time, but including, in any event, (x) all bankers
acceptances and letters of credit (including Letters of Credit) and Loans and
(y) Contingent Obligations in respect of Indebtedness of the type described
above in this description, provided, that there shall be excluded any
outstanding Indebtedness in respect of any intercompany loan or Non-Compete
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Agreement between the Borrower and its Subsidiaries, on the one hand, and
Caterair and its Subsidiaries, on the other hand.
"Combined Interest Coverage Ratio" for any period shall mean the
ratio of (x) Combined EBITDA for such period to (y) Combined Interest Expense
for such period.
"Combined Interest Expense" shall mean, for any period, the total
consolidated interest expense of the Borrower and its Subsidiaries for such
period and Caterair and its Subsidiaries for such period (in each case
calculated without regard to any limitations on the payment thereof) plus,
without duplication, that portion of Capitalized Lease Obligations of the
Borrower and its Subsidiaries and Caterair and its Subsidiaries representing the
interest factor for such period, provided, that there shall be excluded (x) any
interest expense associated with any intercompany loan between the Borrower and
its Subsidiaries, on the one hand, and Caterair and its Subsidiaries, on the
other hand and (y) any non-cash interest expense for such period related to
deferred compensation, customer settlements, idle Flight Kitchens and finance
fees.
"Combined Leverage Ratio" shall mean, at any time, the ratio of
Combined Indebtedness at such time to Combined EBITDA for the then most recently
ended Test Period, provided, however, (i) for the period from the Restatement
Effective Date through and including September 30, 1997, there shall be excluded
from the calculation of the Combined Leverage Ratio that aggregate principal
amount of outstanding 13% Senior Subordinated Notes to the extent that (and for
so long as) the Borrower has cash and/or Cash Equivalents on hand in an amount
equal to the aggregate principal amount of 13% Senior Subordinated Notes so
excluded from this calculation and (ii) after September 30, 1997, there shall be
excluded from the calculation of the Combined Leverage Ratio that aggregate
principal amount of outstanding 13% Senior Subordinated Notes to the extent that
(and for so long as) cash and/or Cash Equivalents are on deposit with the
Collateral Agent pursuant to the Bank Escrow Agreement in an amount equal to the
aggregate principal amount of 13% Senior Subordinated Notes so excluded from
this calculation.
"Combined Net Income" of any Person shall mean, for any period, the
net income of such Person and its Subsidiaries for such period after deduction
for minority interests but before, in the case of the Borrower, the rental and
other expenses of the Borrower and its Subsidiaries associated with the Lease
Agreements, the License Agreements and the Non-Compete Agreement to the extent
that such amounts were paid to Caterair or a Wholly-Owned Subsidiary thereof
(and not otherwise passed through to an unrelated third Person) and reduced net
income of the Borrower for such period, provided that (i) the net income (or
loss) of any Subsidiary of such Person which is
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accounted for by such Person by the equity method of accounting shall be
included only to the extent of the amount of cash dividends or distributions
actually paid to such Person or a Wholly-Owned Subsidiary thereof and net of any
investments made by such Person or Wholly-Owned Subsidiary, (ii) the net income
(or loss) of any Subsidiary acquired by such Person or a Subsidiary thereof in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, (iii) the consolidated net income of the Borrower
shall not include any amounts representing interest received or accrued on
promissory notes (including the SCIS/Caterair Note) or other advances payable to
the Borrower or any of its Subsidiaries by Caterair Holdings or any of its
Subsidiaries or any amounts attributable to the Borrower or any of its
Subsidiaries by reason of their ownership interest (direct or indirect), if any,
in Caterair or any of its Subsidiaries, (iv) notwithstanding preceding clause
(iii), the consolidated net income of the Borrower for any period shall include,
to the extent not already included therein, the interest income of Caterair from
sources other than the Borrower and its Subsidiaries less the amount of selling,
general and administrative expenses of Caterair for such period, (v) the net
income of any Subsidiary of such Person shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by that Subsidiary
of its income is not at the time permitted by operation of the terms of its
charter or any agreement, instrument or law applicable to such Subsidiary, (vi)
the consolidated net income of such Person for any period shall be reduced by
the amount of Dividends paid by such Person pursuant to Sections 9.03(iv), (vi)
and (vii), as the case may be, during such period, (vii) the consolidated net
income of the Borrower shall be reduced by any cash payments related to customer
concessions (other than up to $8,000,000 paid to customers other than American
Airlines) but only to the extent that such payments have not already reduced
such consolidated net income and (viii) the consolidated net income of the
Borrower for any period shall be reduced by the amount of rental expense for
such period related to the write-off of idle Flight Kitchens to the extent not
otherwise reducing Combined Net Income for such period.
"Commitment Commission" shall have the meaning provided in Section
3.01(a).
"Consent Solicitation" shall mean the solicitation of 13% Senior
Subordinated Note Consents to amend the 13% Senior Subordinated Note Indenture
performed by or on behalf of the Borrower simultaneously with the 13% Senior
Subordinated Note Tender Offer.
"Consent Solicitation Documents" shall mean each of the documents
distributed to holders of the 13% Senior Subordinated Notes or otherwise entered
into by the Borrower or any of such holders in connection with the consummation
of the
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Consent Solicitation, including, without limitation, the 13% Senior Subordinated
Note Consent and the 13% Senior Subordinated Note Indenture Supplement.
"Contingent Obligation" shall mean, as to any Person, any
obligation, contingent or otherwise, of such Person directly or indirectly
guaranteeing (including, without limitation, as a result of such Person being a
general partner of the other Person, unless the underlying obligation of such
partnership relates to liabilities other than Indebtedness or is expressly made
non-recourse as to such general partner or recourse is limited solely to the
equity interest of such general partner in such partnership) any Indebtedness or
other obligation of any other Person and, without limiting the generality of the
foregoing, any obligation or commitment, direct or indirect, contingent or
otherwise, of such Person (i) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or other obligation (whether
arising by virtue of partnership arrangements, by agreement to keepwell, to
purchase assets, goods, securities or services, to take-or-pay or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect the obligee against loss
in respect thereof (in whole or in part), provided that the term Contingent
Obligations shall not include endorsements for collection or deposit in the
ordinary course of business.
"Credit Documents" shall mean this Agreement and, after the
execution and delivery thereof pursuant to the terms of this Agreement, each
Note, the Subsidiaries Guaranty, the Designated Onex Sub Guaranty, each Security
Document, the Caterair Holdings Subordination Agreement and the Caterair
Holdings Escrow Agreement.
"Credit Event" shall mean the making of any Loan or the issuance of
any Letter of Credit.
"Credit Party" shall mean OFSI, the Borrower, Caterair Holdings,
Caterair and each other Subsidiary Guarantor and, solely for purposes of
Sections 10.07 and 10.08, the Designated Onex Sub.
"Default" shall mean any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
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"Designated Acquisition" shall mean any acquisition made pursuant to
Section 9.02(xiii).
"Designated Guaranty" shall mean any guaranty given (and any
payments made thereunder) by the Borrower and its Wholly-Owned Domestic
Subsidiaries in support of Indebtedness and other obligations of
non-Wholly-Owned Subsidiaries and Wholly-Owned Foreign Subsidiaries of the
Borrower.
"Designated Investment" shall mean any Investment made by the
Borrower or any of its Wholly-Owned Domestic Subsidiaries in, to or for the
benefit of, any Wholly-Owned Foreign Subsidiary of the Borrower pursuant to
clause (y) of the proviso in Section 9.05(vii), pursuant to the proviso in
Section 9.05(xv) or pursuant to Section 9.05(xvi).
"Designated Onex Sub" shall mean Onex OFSI Holdings Inc., a
corporation incorporated under the laws of the Province of Ontario and a
Subsidiary of Onex.
"Designated Onex Sub Guaranty" shall have the meaning provided in
Section 5.11.
"Designated Onex Sub Pledge Agreement" shall have the meaning
provided in Section 5.08.
"Dividend" with respect to any Person shall mean that such Person
has declared or paid a dividend or returned any equity capital to its
stockholders or authorized or made any other distribution, payment or delivery
of property (other than common stock of such Person) or cash to its stockholders
as such, or redeemed, retired, purchased or otherwise acquired, directly or
indirectly, for a consideration any shares of any class of its capital stock
outstanding on or after the Restatement Effective Date (or any options or
warrants issued by such Person with respect to its capital stock), or set aside
any funds for any of the foregoing purposes, or shall have permitted any of its
Subsidiaries to purchase or otherwise acquire for a consideration any shares of
any class of the capital stock of such Person outstanding on or after the
Restatement Effective Date (or any options or warrants issued by such Person
with respect to its capital stock). Without limiting the foregoing, "Dividends"
with respect to any Person shall also include all payments made or required to
be made by such Person with respect to any stock appreciation rights, plans,
equity incentive or achievement plans or any similar plans or setting aside of
any funds for the foregoing purposes.
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"Documents" shall mean the Credit Documents, the Caterair Credit
Documents, the Senior Subordinated Note Documents, the 13% Senior Subordinated
Note Documents and the Consent Solicitation Documents.
"Dollar Equivalent" shall mean, at any time of determination
thereof, the amount of Dollars which could be purchased with the amount of
currency involved in such computation at the spot exchange rate therefor as
published in the Eastern edition of The Wall Street Journal on the date one
Business Day subsequent to the date of any determination thereof, provided that
if the Eastern edition of The Wall Street Journal is not published on such date,
reference shall be made to such rate as set forth in the most recently published
Eastern edition of The Wall Street Journal, and provided further, that if at any
time the Eastern edition of The Wall Street Journal ceases to publish such
exchange rates, the Dollar Equivalent shall be the amount of Dollars which could
be purchased with the amount of currency involved in such computation at the
spot rate therefor as quoted by the Administrative Agent at approximately 11:00
a.m. (London time) on the date two Business Days prior to the date of any
determination thereof for purchase on such date, it being understood and agreed
that for purposes of determining compliance with this Agreement (including
Sections 1.01(a), 1.01(b), 2.01(c), 4.02(a) and 9.04(xi)) the Dollar Equivalent
of any Third-Party Foreign Subsidiary Indebtedness incurred in a currency other
than Dollars shall be the Dollar Equivalent thereof as in effect on the last
Business Day of the then most recently ended fiscal month of the Borrower and
such Dollar Equivalent shall remain in effect until same is recalculated as of
the last Business Day of the immediately succeeding fiscal month.
"Dollars" and the sign "$" shall each mean freely transferable legal
tender of the United States.
"Domestic Subsidiary" shall mean each Subsidiary of the Borrower or
Caterair Holdings incorporated or organized in the United States or any state or
territory thereof.
"Drawing" shall have the meaning provided in Section 2.05(b).
"Eligible Transferee" shall mean and include a commercial bank, a
financial institution, a "qualified institutional buyer" (as defined in the
Securities Act), or a fund which is regularly engaged in making, purchasing or
investing in loans or securities.
"End Date" shall mean, for any Margin Reduction Period, the last day
of such Margin Reduction Period.
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"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, notices of noncompliance or violation, investigations or
proceedings relating in any way to any Environmental Law or any permit issued,
or any approval given, under any such Environmental Law (hereafter, "Claims"),
including, without limitation, (a) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and (b)
any and all Claims by any governmental agency seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief in connection
with alleged injury or threat of injury to health, safety or the environment due
to the presence of Hazardous Materials.
"Environmental Law" shall mean any applicable Federal, state,
foreign or local statute, law, rule, regulation, ordinance, code, guideline,
written policy and rule of common law now or hereafter in effect and in each
case as amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment,
relating to the environment, employee health and safety or Hazardous Materials,
including, without limitation, CERCLA; RCRA; the Federal Water Pollution Control
Act, 33 U.S.C. ss. 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss.
2601 et seq.; the Clean Air Act, 42 U.S.C. ss. 7401 et seq.; the Safe Drinking
Water Act, 42 U.S.C. ss. 3803 et seq.; the Oil Pollution Act of 1990, 33 U.S.C.
ss. 2701 et seq.; the Emergency Planning and the Community Right-to-Know Act of
1986, 42 U.S.C. ss. 11001 et seq., the Hazardous Material Transportation Act, 49
U.S.C. ss. 1801 et seq. and the Occupational Safety and Health Act, 29 U.S.C.
ss. 651 et seq. (to the extent it regulates occupational exposure to Hazardous
Materials); and any state and local or foreign counterparts or equivalents, in
each case as amended from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time. Section references to ERISA are to ERISA, as
in effect at the date of this Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with OFSI, Caterair Holdings or a Subsidiary of OFSI or
Caterair Holdings would be deemed to be a "single employer" (i) within the
meaning of Section 414(b),(c), (m) or (o) of the Code or (ii) as a result of
OFSI, Caterair Holdings or a Subsidiary of OFSI or Caterair Holdings being or
having been a general partner of such person.
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"Eurodollar Loan" shall mean each Revolving Loan designated as such
by the Borrower at the time of the incurrence thereof or conversion thereto.
"Eurodollar Rate" shall mean (a) the arithmetic average (rounded
upward to the nearest 1/100 of 1%) of the offered quotation to first-class banks
in the London interbank Eurodollar market by each Reference Bank for Dollar
deposits of amounts in immediately available funds comparable to the outstanding
principal amount of the Eurodollar Loan of such Reference Bank with maturities
comparable to the Interest Period applicable to such Eurodollar Loan commencing
two Business Days thereafter as of 11:00 A.M. (London time) on the date which is
two Business Days prior to the commencement of such Interest Period, divided
(and rounded upward to the nearest 1/100 of 1%) by (b) a percentage equal to
100% minus the then stated maximum rate of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental, special or other
reserves required by applicable law) applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency funding or liabilities as
defined in Regulation D (or any successor category of liabilities under
Regulation D); provided, that if one or more of the Reference Banks fail to
provide the Administrative Agent with its aforesaid rate, then the Eurodollar
Rate shall be determined based on the rate or rates provided to the
Administrative Agent by the other Reference Bank or Banks.
"Event of Default" shall have the meaning provided in Section 10.
"Existing Indebtedness" shall have the meaning provided in Section
7.22(a).
"Existing Investments" shall have the meaning provided in Section
9.05(vi).
"Existing Letters of Credit" shall have the meaning provided in
Section 2.01(a).
"Existing Mortgaged Properties" shall mean all Real Property of the
Credit Parties listed on Schedule III and designated as "Existing Mortgaged
Properties" therein.
"Existing Mortgages" shall mean all Mortgages granted by the Credit
Parties pursuant to the Original Credit Agreement and which have not been
released by the lenders thereunder prior to the Restatement Effective Date.
"Facing Fee" shall have the meaning provided in Section 3.01(c).
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"Federal Funds Rate" shall mean for any period, the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal for each day
during such period to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Administrative Agent as determined by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or referred to in
Section 3.01.
"Final Maturity Date" shall mean August 28, 2002.
"Financial Projections" shall have the meaning provided in Section
7.05(d).
"Flight Kitchens" shall mean the in-flight catering kitchens
operated by the Borrower, Caterair or any of their respective Subsidiaries.
"Foreign Pension Plan" shall mean any plan, fund (including, without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States of America by OFSI, Caterair Holdings or
any one or more of their respective Subsidiaries primarily for the benefit of
employees of OFSI, Caterair Holdings or such Subsidiaries residing outside the
United States of America, which plan, fund or other similar program provides, or
results in, retirement income, a deferral of income in contemplation of
retirement or payments to be made upon termination of employment, and which plan
is not subject to ERISA or the Code.
"Foreign Subsidiary" shall mean each Subsidiary of the Borrower or
Caterair Holdings that is incorporated under the laws of any jurisdiction other
than the United States of America or any State thereof.
"General Pledge Agreement" shall have the meaning provided in
Section 5.08.
"Guaranteed Obligations" shall mean the irrevocable and
unconditional guaranty made by OFSI under the OFSI Guaranty (i) to each Agent,
the Collateral Agent and each Bank for the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of the principal
and interest on each Note issued
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by the Borrower to such Bank, and Loans made, under this Agreement and all
reimbursement obligations in respect of Drawings on Letters of Credit, together
with all the other obligations and liabilities (including, without limitation,
indemnities, fees and interest thereon) of the Borrower to each Agent, the
Collateral Agent and each Bank now existing or hereafter incurred under, arising
out of or in connection with this Agreement or any other Credit Document and the
due performance and compliance with the terms of the Credit Documents by the
Borrower and (ii) to each Other Creditor which has entered into, or in the
future enters into, an Interest Rate Protection Agreement or Other Hedging
Agreement with the Borrower or any of its Subsidiaries, the full and prompt
payment when due (whether by acceleration or otherwise) of all obligations of
the Borrower or any of its Subsidiaries owing under, or with respect to, any
such Interest Rate Protection Agreement or Other Hedging Agreement, whether now
in existence or hereafter arising, and the due performance and compliance with
all terms, conditions and agreements contained therein.
"Guaranties" shall mean the OFSI Guaranty, the Designated Onex Sub
Guaranty and the Subsidiaries Guaranty.
"Guarantor" shall mean OFSI, the Designated Onex Sub and each
Subsidiary Guarantor (including Caterair).
"Hazardous Materials" shall mean (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; (b) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances," "hazardous waste," "hazardous
materials," "extremely hazardous substances," "restricted hazardous waste,"
"toxic substances," "toxic pollutants," "contaminants," or "pollutants," or
words of similar import, under any applicable Environmental Law; and (c) any
other chemical, material or substance, exposure to which is prohibited, limited
or regulated by any governmental authority under Environmental Laws.
"IFSC" shall mean SC International Services Ireland, an Irish
corporation and a Wholly-Owned Foreign Subsidiary of the Borrower.
"Immaterial Subsidiary" shall mean any Subsidiary of the Borrower
(other than Sky Chefs and CII) or Caterair that does not have assets with a
value in excess of $15,000,000 and has not had revenues in excess of $15,000,000
for the Test Period then most recently ended and whose obligations are
non-recourse to OFSI, Caterair Holdings, the Borrower or any other Subsidiary of
Caterair Holdings or the
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Borrower; provided that at such time as Immaterial Subsidiaries with aggregate
assets with a value in excess of $30,000,000 and aggregate revenues in excess of
$30,000,000 for any Test Period and who were subject to any Default or Event of
Default under Section 10.04, 10.05 and/or 10.09, then from and after such time,
no additional Subsidiary of the Borrower will be considered an Immaterial
Subsidiary under this Agreement even though such Subsidiary might otherwise
satisfy the conditions set forth above in this definition.
"Indebtedness" shall mean, as to any Person, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such person as lessee which are
capitalized in accordance with generally accepted accounting principles, (v) all
obligations of such Person to reimburse or repay any bank or other Person in
respect of amounts paid or available to be drawn under a letter of credit or
banker's acceptance (each such obligation to be valued at the face amount of
such instrument), (vi) all Indebtedness of others secured by a Lien on any asset
of such Person, (vii) all Contingent Obligations of such Person and (viii) all
obligations under any Interest Rate Protection Agreement or Other Hedging
Agreement or under any similar type of agreement.
"Intercompany Note" shall have the meaning provided in Section
9.05(vii).
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section 1.09.
"Interest Rate Protection Agreement" shall mean any interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedging agreement, interest rate floor agreement or other similar
agreement or arrangement.
"Interest Reduction Discount" shall mean (i) for the period from the
Restatement Effective Date through but not including the first Start Date, 1/4
of 1% and (ii) from and after any Start Date to and including the corresponding
End Date, the percentage set forth in clause (A), (B) or (C) below if, but only
if, as of the Test Date
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for such Start Date the applicable condition set forth in clause (A), (B) or (C)
below, as the case may be, is met:
(A) 1/4 of 1% if, but only if, as of the Test Date for such Start
Date, the Leverage Ratio for the Test Period ended on such Test Date is
less than or equal to 4.25:1.00 and greater than 3.50:1.00;
(B) 3/8 of 1% if, but only if, as of the Test Date for such Start
Date, the Leverage Ratio for the Test Period ended on such Test Date is
less than or equal to 3.50:1.00 and greater than 3.00:1.00; or
(C) 5/8 of 1% if, but only if, as of the Test Date for such Start
Date, the Leverage Ratio for the Test Period ended on such Test Date is
less than or equal to 3.00:1.00.
Notwithstanding anything to the contrary above in this definition, the Interest
Reduction Discount shall be zero at all times when (i) a Default under Section
8.01(b), 8.01(c), 10.01 or 10.05 shall exist or (ii) any Event of Default shall
exist.
"Investments" shall have the meaning provided in Section 9.05.
"Issuing Bank" shall mean BNY, provided that, in the event BNY is
unable to issue any Letter of Credit by reason of any circumstance described in
clause (i) of the proviso to Section 2.01(b), the term Issuing Bank shall also
include Morgan, BTCo and any other Bank which at the request of the Borrower and
with the consent of the Administrative Agent agrees, in such Bank's sole
discretion, to become an Issuing Bank for the purpose of issuing Letters of
Credit pursuant to Section 2.
"L/C Supportable Indebtedness" shall mean all obligations of the
Borrower, Caterair or their respective Subsidiaries incurred for their working
capital and general corporate purposes.
"Lease Agreements" shall mean each of the leases entered into by Sky
Chefs, CII and Caterair pursuant to the Master Agreement and substantially in
the form of Exhibit 2.2(k) to the Master Agreement with respect to the Leased
Assets.
"Leased Assets" shall mean the premises and property set forth on
Schedule 2.2(k) to the Master Agreement, including all or substantially all of
the Leasehold interests and tangible assets of Caterair related thereto.
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"Leaseholds" of any Person means all the right, title and interest
of such Person as lessee or licensee in, to and under any lease.
"Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Letter of Credit Fee" shall have the meaning provided in Section
3.01(b).
"Letter of Credit Outstandings" shall mean, at any time, the sum of
(i) the aggregate Stated Amount of all outstanding Letters of Credit and (ii)
the amount of all Unpaid Drawings.
"Letter of Credit Request" shall have the meaning provided in
Section 2.03(a).
"License Agreements" shall mean each of the license agreements
entered into by Sky Chefs, CII and Caterair pursuant to the Master Agreement and
substantially in the form of Exhibit 2.2(o) to the Master Agreement, which
license agreements relate to the Licensed Assets.
"Licensed Assets" shall mean the properties set forth on Schedule
2.2(o) to the Master Agreement.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Loan" shall mean each Revolving Loan and each Swingline Loan.
"LSG/Lufthansa" shall mean LSG/Lufthansa Service GmbH, a company
organized under the laws of the Federal Republic of Germany.
"Lufthansa" shall mean Deutsch Lufthansa AG, an Aktiengesellschaft
organized under the laws of the Federal Republic of Germany.
"Lufthansa Companies" shall mean LSG/Lufthansa and one or more of
its Subsidiaries.
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"Mandatory Borrowing" shall have the meaning provided in Section
1.01(c).
"Margin Reduction Period" shall mean each period which shall
commence on a date on which the financial statements are delivered pursuant to
Section 8.01(b) or Section 8.01(c), as the case may be, and which shall end on
the earlier of (i) the date of actual delivery of the next financial statements
pursuant to Section 8.01(b) or Section 8.01(c), as the case may be, and (ii) the
latest date on which the next financial statements are required to be delivered
pursuant to Section 8.01(b) or Section 8.01(c), as the case may be; provided
that the first Margin Reduction Period shall commence on the date of delivery of
the financial statements in respect of the fiscal quarter of the Borrower ending
on December 31, 1997.
"Margin Stock" shall have the meaning provided in Regulation U.
"Master Agreement" shall mean the Master Agreement, dated as of
April 26, 1995, as amended in accordance with the terms hereof and thereof,
among OFSI, Caterair Holdings and Caterair.
"Maximum Swingline Amount" shall mean $15,000,000.
"Minimum Borrowing Amount" shall mean (i) in the case of Revolving
Loans, $3,000,000, and (ii) in the case of Swingline Loans, $500,000.
"Moody's" shall have the meaning provided in the definition of Cash
Equivalents.
"Morgan" shall mean Morgan Guaranty Trust Company of New York, in
its individual capacity.
"Mortgage" shall mean each mortgage, deed to secure debt or deed of
trust pursuant to which any Credit Party shall have granted to the Collateral
Agent a mortgage lien on such Credit Party's Mortgaged Property.
"Mortgage Amendments" shall have the meaning provided in Section
5.10.
"Mortgage Policy" shall mean each mortgage title insurance policy in
form and substance reasonably satisfactory to the Administrative Agent insuring
the mortgage lien on each Mortgage Property.
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"Mortgaged Property" shall mean each Real Property owned or leased
by any Credit Party designated as a Mortgaged Property on Schedule IV or
pursuant to Section 8.11(a).
"NAIC" shall mean the National Association of Insurance
Commissioners.
"Net Sale Proceeds" shall mean for any sale of assets, the gross
cash proceeds (including any cash received by way of deferred payment pursuant
to a promissory note, receivable or otherwise (but only as and when received))
received from any sale of assets, net of reasonable transaction costs, the
amount of such gross cash proceeds required to be used to repay any Indebtedness
(other than Indebtedness of the Banks pursuant to this Agreement and
Indebtedness under the Caterair Credit Agreement) which is secured by the
respective assets which were sold, the amount of such gross cash proceeds that
are in good faith reserved for post-closing adjustments (it being understood and
agreed that on the day that all such post-closing adjustments have been
determined definitively, the amount (if any) by which the reserved amount in
respect of such asset sale exceeds the actual post-closing adjustments payable,
shall constitute Net Sale Proceeds on such date), and the estimated marginal
increase in income taxes which will be payable by OFSI's or Caterair Holdings'
respective consolidated group with respect to the fiscal year in which the sale
occurs as a result of such sale.
"9-1/4% Senior Subordinated Note Documents" shall mean the 9-1/4%
Senior Subordinated Notes, the 9-1/4% Senior Subordinated Note Indenture and all
other documents and agreements executed and delivered in connection therewith.
"9-1/4% Senior Subordinated Note Indenture" shall mean the
Indenture, dated as of August 15, 1997, between the Borrower and The Bank of New
York, as Trustee, as amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof.
"9-1/4% Senior Subordinated Notes" shall mean the Borrower's 9-1/4%
Senior Subordinated Notes due 2007 in aggregate principal amount of $300,000,000
issued pursuant to the 9-1/4% Senior Subordinated Note Indenture.
"Non-Compete Agreement" shall mean the Non-Compete Agreement, dated
as of September 29, 1995, between Sky Chefs and Caterair.
"Non-Defaulting Bank" shall mean and include each Bank other than a
Defaulting Bank.
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"Non-SCIS Subsidiary" shall mean each Subsidiary of OFSI other than
the Borrower and its Subsidiaries and Caterair Holdings and its Subsidiaries.
"Non-SCIS Tax Sharing Agreement" shall mean each tax sharing
agreement entered into by and among OFSI and any of its Non-SCIS Subsidiaries.
"Note" shall mean each Revolving Note and the Swingline Note.
"Notice of Borrowing" shall have the meaning provided in Section
1.03(a).
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Administrative Agent,
c/o J.P. Morgan Services Inc., located at 500 Stanton Christiana Road, Newark,
Delaware 19713 Attention: Andrew Lipsett, or such other office as the
Administrative Agent may hereafter designate in writing as such to the other
parties hereto.
"Obligations" shall mean all amounts owing to any of the Agents, the
Co-Arrangers, the Collateral Agent, any Issuing Bank or any Bank pursuant to the
terms of this Agreement or any other Credit Document.
"OFSI" shall have the meaning provided in the first paragraph of
this Agreement.
"OFSI Class A Common Stock" shall have the meaning provided in
Section 7.14(a).
"OFSI Class B Common Stock" shall have the meaning provided in
Section 7.14(a).
"OFSI Pledge Agreement" shall have the meaning provided in Section
5.08.
"OFSI Guaranty" shall mean the guaranty made by OFSI pursuant to
Section 14.
"OFSI/SCIS Tax Sharing Agreement" shall mean the Tax Sharing
Agreement, dated September 29, 1995, among OFSI, the Borrower, Sky Chefs and
CII.
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"OnCap" shall mean OnCap Holding Corp., a corporation incorporated
under the laws of Ontario.
"Onex" shall mean Onex Corporation, a corporation incorporated under
the laws of Ontario.
"Onex Capital" shall mean Onex Capital Corporation, a corporation
incorporated under the laws of Ontario.
"Operating Agreements" shall mean those Operating Agreements, each
dated as of September 29, 1995, between Sky Chefs and Caterair.
"Original Banks" shall mean the lenders party to the Original Credit
Agreement in their capacity as such.
"Original Credit Agreement" shall have the meaning provided in the
first WHEREAS clause of this Agreement.
"Other Creditor" shall have the meaning provided in the Security
Documents.
"Other Hedging Agreement" shall mean any foreign exchange contracts,
currency swap agreements, commodity agreements or other similar agreements or
arrangements designed to protect against the fluctuations in currency values.
"Participant" shall have the meaning provided in Section 2.04(a).
"Payment Office" shall mean the office of the Administrative Agent
located at 60 Wall Street, New York, New York 10260-0060, or such other office
as the Administrative Agent may hereafter designate in writing as such to the
other parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Amount" for any fiscal year of the Borrower shall mean
(i) for fiscal year 1997, $20,000,000, (ii) for fiscal year 1998, $40,000,000
and (iii) for each fiscal year thereafter, $45,000,000.
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"Permitted Encumbrance" shall mean, with respect to any Mortgaged
Property, such exceptions to title as are set forth in the Mortgage Policy
delivered with respect thereto, all of which exceptions must be reasonably
acceptable to the Agents.
"Permitted Holders" shall mean (i) Gerald W. Schwartz, (ii) Onex,
(iii) OnCap, (iv) Lufthansa and/or (v) LSG/Lufthansa.
"Permitted Liens" shall have the meaning provided in Section 9.01.
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or other
enterprise or any government or political subdivision or any agency, department
or instrumentality thereof.
"Plan" shall mean any multiemployer or single-employer plan, as
defined in Section 4001 of ERISA (other than a Foreign Pension Plan), which is
maintained or contributed to by (or to which there is an obligation to
contribute of), OFSI, Caterair Holdings or a Subsidiary or an ERISA Affiliate of
OFSI or Caterair Holdings, and each such plan for the five year period
immediately following the latest date on which OFSI, Caterair Holdings or a
Subsidiary or an ERISA Affiliate of OFSI or Caterair Holdings maintained,
contributed to or had an obligation to contribute to such plan.
"Pledge Agreement Collateral" shall mean all "Collateral" as defined
in the Pledge Agreements.
"Pledge Agreements" shall mean the OFSI Pledge Agreement, the
Designated Onex Sub Pledge Agreement and the General Pledge Agreement.
"Pledged Securities" shall mean all "Pledged Securities" as defined
in the Pledge Agreements.
"Prime Lending Rate" shall mean the rate which Morgan announces from
time to time as its prime lending rate, the Prime Lending Rate to change when
and as such prime lending rate changes. The Prime Lending Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
to any customer. Morgan may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate.
"Purchase Option" shall collectively refer to the option given to
Sky Chefs and CII pursuant to the Lease Agreements and the License Agreements to
purchase the Leased Assets and the Licensed Assets.
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"Quarterly Payment Date" shall mean the 15th day of each March,
June, September and December occurring after the Restatement Effective Date.
"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C. ss. 6901 et seq.
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Recovery Event" shall mean the receipt by OFSI, Caterair Holdings,
the Borrower or any Subsidiary of Caterair Holdings or the Borrower of any cash
insurance proceeds or condemnation award payable by reason of theft, loss,
physical destruction or damage or any other similar event with respect to any
property or assets of OFSI, Caterair Holdings, the Borrower or any Subsidiary of
Caterair Holdings or the Borrower other than proceeds received by OFSI in
respect of the Class B Assets or its equity interests in Non-SCIS Subsidiaries.
"Reference Banks" shall mean Morgan, BTCo and BNY.
"Register" shall have the meaning provided in Section 13.16.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation T" shall mean Regulation T of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
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"Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing or migration into the environment.
"Renex" shall mean Renex Corporation, a Cayman Islands corporation.
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section 1.13.
"Reportable Event" shall mean an event described in Section 4043(c)
of ERISA with respect to a Plan described in PBGC Regulation Section 2615.1(b)
other than those events as to which the 30-day notice period is waived under
subsection .13, .14, .16, .18, .19 or .20 of PBGC Regulation Section 2615.
"Required Banks" shall mean collectively (and not individually)
Non-Defaulting Banks the sum of whose Revolving Loan Commitments (or, if after
the Total Revolving Loan Commitment has been terminated, outstanding Revolving
Loans and Adjusted RL Percentage of outstanding Swingline Loans and Letter of
Credit Outstandings) represent an amount greater than fifty percent of the sum
of the Adjusted Total Revolving Loan Commitment (or, if after the Total
Revolving Loan Commitment has been terminated, the sum of the then total
outstanding Revolving Loans of Non-Defaulting Banks and the aggregate Adjusted
RL Percentages of all Non-Defaulting Banks of the total outstanding Swingline
Loans and Letter of Credit Outstandings at such time).
"Restatement Effective Date" shall have the meaning provided in
Section 13.10.
"Returns" shall have the meaning provided in Section 7.09.
"Revolving Loan" shall have the meaning provided in Section 1.01(a).
"Revolving Loan Commitment" shall mean, for each Bank, the amount
set forth opposite such Bank's name in Schedule I directly below the column
entitled "Revolving Loan Commitment," as same may be (x) reduced from time to
time pursuant to Sections 3.02, 3.03 and/or 10 or (y) adjusted from time to time
as a result of assignments to or from such Bank pursuant to Section 1.13 or
13.04(b).
"Revolving Note" shall have the meaning provided in Section 1.05(a).
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"RL Percentage" of any Bank at any time shall mean a fraction
(expressed as a percentage) the numerator of which is the Revolving Loan
Commitment of such Bank at such time and the denominator of which is the Total
Revolving Loan Commitment at such time, provided that, if the RL Percentage of
any Bank is to be determined after the Total Revolving Loan Commitment has been
terminated, then the RL Percentages of the Banks shall be determined immediately
prior (and without giving effect) to such termination.
"S&P" shall have the meaning provided in the definition of Cash
Equivalents.
"SCIS/Caterair Loan shall mean the $37,788,000 subordinated loan
previously made by the Borrower to Caterair and evidenced by the SCIS/Caterair
Note.
"SCIS/Caterair Note" shall mean the 8% Pay-in-kind Promissory Note
due 2001 issued by the Borrower to Caterair.
"SCIS Subsidiaries" shall mean the Subsidiaries of the Borrower.
"SEC" shall have the meaning provided in Section 8.01(h).
"Section 4.04(b)(ii) Certificate" shall have the meaning provided in
Section 4.04(b).
"Secured Creditors" shall have the meaning provided in the
respective Security Documents.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"Security Agreement" shall have the meaning provided in Section
5.09.
"Security Agreement Collateral" shall mean all "Collateral" as
defined in the Security Agreement.
"Security Documents" shall mean the Pledge Agreements, the Security
Agreement, each Mortgage and, after the execution and delivery thereof, the Bank
Escrow Agreement.
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"Senior Subordinated Note Documents" shall mean the 13% Senior
Subordinated Note Documents and the 9-1/4% Senior Subordinated Note Documents.
"Senior Subordinated Notes" shall mean the 13% Senior Subordinated
Notes and the 9-1/4% Senior Subordinated Notes.
"Senior Subordinated Notes Indenture" shall mean the 13% Senior
Subordinated Note Indenture and the 9-1/4% Senior Subordinated Note Indenture.
"Sky Chefs" shall mean Sky Chefs, Inc., a Delaware corporation.
"Sky Chefs/Caterair Management Agreement" shall mean the Advisory
and Administrative Services Agreement, dated as of September 29, 1995, between
Sky Chefs and Caterair or a Wholly-Owned Domestic Subsidiary thereof.
"Standby Letter of Credit" shall have the meaning provided in
Section 2.01(a).
"Start Date" shall mean, with respect to any Margin Reduction
Period, the first day of such Margin Reduction Period.
"Stated Amount" of each Letter of Credit shall, at any time, mean
the maximum amount available to be drawn thereunder (in each case determined
without regard to whether any conditions to drawing could then be met).
"Subordinated Intercompany Security Agreement" shall mean the
Subordinated Security Agreement, dated as of September 29, 1995, between
Caterair and the Borrower.
"Subsidiaries Guaranty" shall have the meaning provided in Section
5.11.
"Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a 50% equity interest at the time.
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"Subsidiary Guarantor" shall mean each Wholly-Owned Domestic
Subsidiary of the Borrower and Caterair Holdings (including Caterair).
"Swingline Bank" shall mean Morgan.
"Swingline Expiry Date" shall mean the date occurring two Business
Days prior to the Final Maturity Date.
"Swingline Loan" shall have the meaning provided in Section 1.01(b).
"Swingline Note" shall have the meaning provided in Section 1.05(a).
"Syndication Agent" shall have the meaning provided in the first
paragraph of this Agreement.
"Syndication Date" shall mean the date upon which the Co-Arrangers
determine in their sole discretion that the primary syndication (and resultant
addition of institutions as Banks pursuant to Section 13.04) has been completed.
"Taxes" shall have the meaning provided in Section 4.04(a).
"Test Period" shall mean the four consecutive fiscal quarters of the
Borrower then last ended (taken as one accounting period).
"Third-Party Foreign Subsidiary Indebtedness" shall have the meaning
provided in Section 9.04(xi).
"13% Senior Subordinated Note Consent" shall mean each written
consent permitting the Borrower to enter into the 13% Senior Subordinated Note
Indenture Supplement from a holder of one or more 13% Senior Subordinated Notes
outstanding on the record date for determining those holders entitled to consent
to such 13% Senior Subordinated Note Indenture Supplement.
"13% Senior Subordinated Note Indenture" shall mean the Indenture,
dated as of September 15, 1995, between the Borrower and The Bank of New York,
as Trustee, as amended, modified or supplemented from time to time in accordance
with the terms hereof and thereof.
"13% Senior Subordinated Note Indenture Supplement" shall mean the
Supplemental Indenture to the 13% Senior Subordinated Note Indenture entered
into by
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the Borrower and the 13% Senior Subordinated Note Indenture Trustee in
connection with the Consent Solicitation.
"13% Senior Subordinated Note Indenture Trustee" shall mean The Bank
of New York.
"13% Senior Subordinated Notes" shall mean the Borrower's 13% Senior
Subordinated Notes due 2005 in aggregate principal amount of $125,000,000 issued
pursuant to the 13% Senior Subordinated Note Indenture.
"13% Senior Subordinated Note Tender Offer" shall mean the offer by
the Borrower to purchase for cash any and all of the 13% Senior Subordinated
Notes, the foregoing to be effected pursuant to the 13% Senior Subordinated Note
Tender Offer Documents.
"13% Senior Subordinated Note Tender Offer Documents" shall mean the
offer to purchase distributed by the Borrower in connection with the 13% Senior
Subordinated Note Tender Offer, and all amendments and exhibits thereto, and all
documents related to any of the foregoing filed with the SEC or distributed to
the holders (or representatives) of the 13% Senior Subordinated Notes in
connection with the 13% Senior Subordinated Note Tender Offer.
"13% Senior Subordinated Note Tender Offer Expiration Date" shall
have the meaning provided in Section 5.18.
"Total Available Revolving Loan Commitment" shall mean, at any time,
the Total Revolving Loan Commitment at such time less the Blocked Commitment at
such time.
"Total Revolving Loan Commitment" shall mean, at any time, the sum
of the Revolving Loan Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall mean, at any
time, an amount equal to the remainder of (x) the Total Revolving Loan
Commitment then in effect less (y) the sum of the aggregate principal amount of
Revolving Loans and Swingline Loans then outstanding plus the then aggregate
amount of the Letter of Credit Outstandings.
"Trade Letter of Credit" shall have the meaning provided in Section
2.01(a).
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"Transaction" shall mean (i) the amendment and restatement of the
Original Credit Agreement in the form of this Agreement, (ii) the issuance of
the 9-1/4% Senior Subordinated Notes, (iii) the consummation of the 13% Senior
Subordinated Note Tender Offer and the Consent Solicitation and (iv) the
entering into of the Caterair Credit Agreement and the incurrence of the loans
thereunder on the Restatement Effective Date.
"Type" shall mean the type of Loan determined with regard to the
interest option applicable thereto, i.e., whether a Base Rate Loan or a
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
the Plan as of the close of its most recent plan year exceeds the fair market
value of the assets allocable thereto, each determined in accordance with
Statement of Financial Accounting Standards No. 35, based upon the actuarial
assumptions used by the Plan's actuary in the most recent annual valuation of
the Plan.
"United States" and "U.S." shall each mean the United States of
America.
"Unpaid Drawing" shall have the meaning provided for in Section
2.05(a).
"Unutilized Revolving Loan Commitment" with respect to any Bank, at
any time, shall mean such Bank's Revolving Loan Commitment at such time less the
sum of (i) the aggregate outstanding principal amount of Revolving Loans made by
such Bank and (ii) such Bank's Adjusted RL Percentage of the Letter of Credit
Outstandings.
"Wholly-Owned Domestic Subsidiary" shall mean, as to any Person, any
Wholly-Owned Subsidiary of such Person which is a Domestic Subsidiary.
"Wholly-Owned Foreign Subsidiary" shall mean, as to any Person, any
Wholly-Owned Subsidiary of such Person which is a Foreign Subsidiary.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock is at the time owned by such Person
and/or one or more Wholly-Owned Subsidiaries of such Person (other than
directors' qualifying shares) and (ii) any partnership, association, joint
venture or other entity in
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which such Person and/ or one or more Wholly-Owned Subsidiaries of such Person
has a 100% equity interest at such time (other than directors' qualifying
shares).
SECTION 12. The Agents.
12.01 Appointment. The Banks hereby designate Morgan as
Administrative Agent (for purposes of this Section 12, the term "Administrative
Agent" shall include Morgan (and/or any of its affiliates) in its capacity as
Collateral Agent pursuant to any of the Security Documents where it at any time
acts as such) to act as specified herein and in the other Credit Documents. The
Banks hereby designate BTCo as Syndication Agent to act as specified herein and
in the other Credit Documents. Each Bank hereby irrevocably authorizes, and each
holder of any Note by the acceptance of such Note shall be deemed irrevocably to
authorize, any Agent to take such action on its behalf under the provisions of
this Agreement, the other Credit Documents and any other instruments and
agreements referred to herein or therein and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to or
required of such Agent by the terms hereof and thereof and such other powers as
are reasonably incidental thereto. Each Agent may perform any of its duties
hereunder or under any of the other Credit Documents by or through its
respective officers, directors, agents, employees or affiliates.
12.02 Nature of Duties. No Agent shall have any duties or
responsibilities except those expressly set forth in this Agreement and the
other Credit Documents. Neither any Agent nor any of its affiliates nor any of
their respective officers, directors, agents or employees shall be liable for
any action taken or omitted by it or them hereunder or under any other Credit
Document or in connection herewith or therewith, (i) with the consent or at the
request of the Required Banks or (ii) in the absence of its or their gross
negligence or willful misconduct. The duties of each Agent shall be mechanical
and administrative in nature; no Agent shall have by reason of this Agreement or
any other Credit Document a fiduciary relationship in respect of any Bank or the
holder of any Note; and nothing in this Agreement or any other Credit Document,
expressed or implied, is intended to or shall be so construed as to impose upon
any Agent any obligations in respect of this Agreement or any other Credit
Document except as expressly set forth herein or therein.
12.03 Lack of Reliance on the Agents. Independently and without
reliance upon any Agent, each Bank and the holder of each Note, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of the Credit Parties and
each of their Subsidiaries in connection with the making and the continuance of
the Loans and the taking or not taking of any action in connection herewith and
(ii) its own appraisal of the credit-
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worthiness of the Credit Parties and each of their Subsidiaries and, except as
expressly provided in this Agreement, no Agent shall have any duty or
responsibility, either initially or on a continuing basis, to provide any Bank
or the holder of any Note with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or at
any time or times thereafter. No Agent nor any of its affiliates nor any of
their respective officers, directors, agents or employees shall be responsible
to any Bank or the holder of any Note or any other Person for, or be required or
have any duty to ascertain, inquire or verify the accuracy of, (i) any recitals,
statements, information, representations or warranties herein, in any other
Credit Document or in any document, certificate or other writing delivered in
connection herewith or therewith, (ii) the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, priority or
sufficiency of this Agreement or any other Credit Document, (iii) the financial
condition of the Credit Parties or any of their Subsidiaries, (iv) the
performance or observance by any Credit Party or any of its Subsidiaries of any
of the terms, provisions or conditions of this Agreement or any other Credit
Document, (v) the satisfaction of any of the conditions precedent set forth in
Section 5 or 6 or (vi) the existence or possible existence of any Default or
Event of Default.
12.04 Certain Rights of the Agents. If any Agent shall request
instructions from the Required Banks with respect to any act or action
(including failure to act) in connection with this Agreement or any other Credit
Document, such Agent shall be entitled to refrain from such act or taking such
action unless and until such Agent shall have received instructions from the
Required Banks; and such Agent shall not incur liability to any Person by reason
of so refraining. Without limiting the foregoing, no Bank or holder of any Note
shall have any right of action whatsoever against any Agent as a result of such
Agent acting or refraining from acting hereunder or under any other Credit
Document in accordance with the instructions of the Required Banks.
12.05 Reliance. Each Agent shall be entitled to rely, and shall be
fully protected (and shall have no liability to any Person) in relying, upon any
note, writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order or other document or telephone
message signed, sent or made by any Person that such Agent believed to be the
proper Person, and each Agent may consult with legal counsel (who may be counsel
for the Credit Parties), independent public accountants and other experts
selected by it and shall not be liable to any Person for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.
12.06 Indemnification. To the extent any Agent is not reimbursed and
indemnified by the Credit Parties, each Bank will reimburse and indemnify such
Agent,
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its affiliates and their respective officers, directors, agents and employees,
in proportion to their respective "percentages" as used in determining the
Required Banks (determined as if there are no Defaulting Banks), for and against
any and all liabilities, obligations, losses, damages, penalties, claims,
actions, judgments, costs, expenses or disbursements of whatsoever kind or
nature which may be imposed on, asserted against or incurred by such Agent in
performing its respective duties hereunder or under any other Credit Document,
in any way relating to or arising out of this Agreement or any other Credit
Document; provided that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Agent's gross negligence or
willful misconduct.
12.07 Each Agent in its Individual Capacity. With respect to its
obligation to make Loans or issue or participate in Letters of Credit under this
Agreement, each Agent shall have the rights and powers specified herein for a
"Bank" and may exercise the same rights and powers as though it were not
performing the duties specified herein; and the term "Banks," "Required Banks,"
"holders of Notes" or any similar terms shall, unless the context clearly
otherwise indicates, include each Agent in its individual capacity. Each Agent
may accept deposits from, lend money to, and generally engage in any kind of
banking, trust or other business with any Credit Party or any Affiliate or
Subsidiary of any Credit Party as if they were not performing the duties
specified herein, and may accept fees and other consideration from any other
Credit Party for services in connection with this Agreement and otherwise
without having to account for the same to the Banks.
12.08 Holders. The Administrative Agent may deem and treat the payee
of any Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been filed with the Administrative Agent. Any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or consent, is the holder of any Note shall be conclusive
and binding on any subsequent holder, transferee, assignee or indorsee, as the
case may be, of such Note or of any Note or Notes issued in exchange therefor.
12.09 Resignation by the Agents. (a) The Administrative Agent may
resign from the performance of all its functions and duties hereunder and/or
under the other Credit Documents at any time by giving 20 Business Days' prior
written notice to the Borrower and the Banks. Such resignation shall take effect
upon the appointment of a successor Administrative Agent pursuant to clauses (b)
and (c) below or as otherwise provided below. Each other Agent may resign from
the performance of all of its functions and duties hereunder and/or under the
other Credit Documents at any
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time by giving notice to the Borrower, the Administrative Agent and the Banks.
Such resignation shall take effect upon delivery of such notice.
(b) Upon any such notice of resignation by the Administrative Agent,
the Required Banks shall appoint a successor Administrative Agent hereunder who
shall be a commercial bank or trust company reasonably acceptable to the
Borrower.
(c) If a successor Administrative Agent shall not have been so
appointed within such 20 Business Day period, the Administrative Agent, with the
consent of the Borrower, which consent shall not be unreasonably withheld, shall
then appoint a successor Administrative Agent who shall serve as Administrative
Agent hereunder until such time, if any, as the Required Banks appoint a
successor Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed pursuant
to clause (b) or (c) above by the 25th Business Day after the date such notice
of resignation was given by the Administrative Agent, the Administrative Agent's
resignation shall become effective and the Co-Arrangers (if one or more so
agrees), or if there are no Co-Arrangers or no Co-Arranger so agrees, then the
Required Banks, shall thereafter perform all the duties of the Administrative
Agent hereunder and/or under any other Credit Document until such time, if any,
as the Required Banks appoint a successor Administrative Agent as provided
above.
SECTION 13. Miscellaneous.
13.01 Payment of Expenses, etc. The Borrower shall: (i) whether or
not the transactions contemplated herein are consummated, pay all reasonable
out-of-pocket costs and expenses of the Agents (including, without limitation,
the reasonable fees and disbursements of White & Case and local and foreign
counsel and all appraisal fees, trustee's fees, documentary and recording taxes,
title insurance and recording, filing and other expenses) in connection with the
preparation, execution and delivery of this Agreement and the other Credit
Documents and the documents and instruments referred to herein and therein and
any amendment, waiver or consent relating hereto or thereto, of the Agents in
connection with their syndication efforts with respect to this Agreement and of
each Agent, each Issuing Bank and each of the Banks in connection with the
protection or preservation of their respective rights under the Credit Documents
during the continuance of an Event of Default and the enforcement of this
Agreement and the other Credit Documents and the documents and instruments
referred to herein and therein (including in each case, without limitation, the
reasonable fees and disbursements of counsel (including allocated costs of
in-house counsel) for each Agent, for each of the Issuing Banks and for each of
the Banks); (ii) pay and hold each of the
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Agents, each of the Issuing Banks and each of the Banks harmless from and
against any and all present and future stamp, excise and other similar taxes
with respect to the foregoing matters and save each of the Agents, each of the
Issuing Banks and each of the Banks harmless from and against any and all
liabilities with respect to or resulting from any delay or omission (other than
to the extent attributable to such Agent, Issuing Bank or Bank, as the case may
be) to pay such taxes; and (iii) indemnify each Agent, each Issuing Bank and
each Bank, and each of their respective officers, directors, employees,
representatives, trustees and agents from and hold each of them harmless against
any and all liabilities, obligations (including removal or remedial actions),
losses, damages, penalties, claims, actions, judgments, suits, costs, expenses
and disbursements (including reasonable attorneys' (including allocated costs of
in-house counsel) and consultants' fees and disbursements, whether any such
attorney's and consultant's fees and disbursements are incurred in connection
with any investigation, litigation or other proceeding between any Credit Party
and any Agent, any Issuing Bank or any Bank or between any Agent, any Issuing
Bank or any Bank and any third Person or otherwise) incurred by, imposed on or
assessed against any of them as a result of, or arising out of, or in any way
related to, or by reason of, (a) any investigation, litigation or other
proceeding (whether or not any Agent, any Issuing Bank or any Bank is a party
thereto) related to the entering into and/or performance of this Agreement or
any other Credit Document or the use of any Letter of Credit or the proceeds of
any Loans or the consummation of any transactions contemplated herein
(including, without limitation, the Transaction) or in any other Credit Document
or the exercise of any of their rights or remedies provided herein or in the
other Credit Documents, or (b) the actual or alleged presence of Hazardous
Materials in the air, surface water or groundwater or on the surface or
subsurface of any Real Property owned, leased or at any time operated by any
Credit Party or any of its Subsidiaries, the Release, generation, storage,
transportation, handling or disposal of Hazardous Materials at any location,
whether or not owned or operated by any Credit Party or any of its Subsidiaries,
the non-compliance of any Real Property with foreign, federal, state and local
laws, regulations, and ordinances (including applicable permits thereunder)
applicable to any Real Property, or any Environmental Claim asserted against any
Credit Party or any of its Subsidiaries, its operations, or any Real Property
owned, leased or at any time operated by any Credit Party or any of its
Subsidiaries, including, in each case, without limitation, the reasonable fees
and disbursements of counsel and other consultants incurred in connection with
any such investigation, litigation or other proceeding (but excluding any
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified). To the extent that the undertaking to indemnify, pay or hold
harmless any Agent, any Issuing Bank or any Bank set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, the Borrower
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shall make the maximum contribution to the payment and satisfaction of each of
the indemnified liabilities which is permissible under applicable law.
13.02 Right of Setoff. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of an Event of
Default, each Bank is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to any Credit
Party or to any other Person, any such notice being hereby expressly waived, to
set off and to appropriate and apply any and all deposits (general or special)
and any other Indebtedness at any time held or owing by such Bank (including,
without limitation, by branches and agencies of such Bank wherever located) to
or for the credit or the account of any Credit Party or any of its Subsidiaries
against and on account of the Obligations and liabilities of such Credit Party
or such Subsidiary to such Bank under this Agreement or under any of the other
Credit Documents, including, without limitation, all interests in Obligations
purchased by such Bank pursuant to Section 13.06(b), and all other claims of any
nature or description arising out of or connected with this Agreement or any
other Credit Document, irrespective of whether or not such Bank shall have made
any demand hereunder and although said Obligations, liabilities or claims, or
any of them, shall be contingent or unmatured. Notwithstanding anything to the
contrary contained in this Section 13.02, no Bank shall exercise any such right
of set-off without the prior consent of the Administrative Agent or the Required
Banks so long as the Obligations shall be secured by any Real Property located
in the State of California, it being understood and agreed, however, that this
sentence is for the sole benefit of the Banks and may be amended, modified or
waived in any respect by the Required Banks without the requirement of prior
notice to or consent by any Credit Party and does not constitute a waiver of any
rights against any Credit Party or against any Collateral.
13.03 Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to OFSI, Caterair
Holdings, Caterair or the Borrower, at such Credit Party's address specified
opposite its signature below; if to any Bank, at its address specified opposite
its name on Schedule II, and if to the Administrative Agent, at the Notice
Office; or, as to any Credit Party or any Agent, at such other address as shall
be designated by such party in a written notice to the other parties hereto and,
as to each Bank, at such other address as shall be designated by such Bank in a
written notice to the Borrower and the Administrative Agent. All such notices
and communications shall, when mailed, telegraphed, telexed, telecopied, or
cabled or sent by overnight courier, be effective when deposited in the mails,
delivered to the telegraph company, cable company or overnight courier, as the
case
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may be, or sent by telex or telecopier, except that notices and communications
to the Agents shall not be effective until received by the Agents.
13.04 Benefit of Agreement. (a) This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided, however, the Borrower may not assign or
transfer any of its rights, obligations or interest hereunder or under any other
Credit Document without the prior written consent of the Banks and, provided
further, that, although any Bank may transfer, assign or grant participations in
its rights hereunder to an Eligible Transferee, such Bank shall remain a "Bank"
for all purposes hereunder (and may not transfer or assign all or any portion of
its Commitments hereunder except as provided in Section 13.04(b)) and the
transferee, assignee or participant, as the case may be, shall not constitute a
"Bank" hereunder and, provided further, that no Bank shall transfer or grant any
participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (i) extend the final scheduled
maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is
not extended beyond the Final Maturity Date) in which such participant is
participating, or reduce the rate or extend the time of payment of interest or
Fees thereon (except in connection with a waiver of applicability of any
post-default increase in interest rates) or reduce the principal amount thereof,
or increase the amount of the participant's participation over the amount
thereof then in effect (it being understood that a waiver of any Default or
Event of Default or of a mandatory reduction in the Total Revolving Loan
Commitment shall not constitute a change in the terms of such participation, and
that an increase in any Revolving Loan Commitment shall be permitted without the
consent of any participant if the participant's participation therein is not
increased as a result thereof), (ii) consent to the assignment or transfer by
the Borrower of any its rights and obligations under this Agreement or (iii)
release all or substantially all of the Collateral under all of the Security
Documents (except as expressly provided in the Credit Documents) supporting the
Obligations hereunder in which such participant is participating. In the case of
any such participation, the participant shall not have any rights under this
Agreement or any of the other Credit Documents (the participant's rights against
such Bank in respect of such participation to be those set forth in the
agreement executed by such Bank in favor of the participant relating thereto)
and all amounts payable by the Borrower hereunder shall be determined as if such
Bank had not sold such participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank together
with one or more other Banks) may (x) assign all or a portion of its Revolving
Loan Commitment and related outstanding Obligations hereunder to (i) its parent
company and/or any affiliate of such Bank which is at least 50% owned by such
Bank or its
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parent company or to one or more Banks or (ii) in the case of any Bank that is a
fund that invests in bank loans, any other fund that invests in bank loans and
is managed or advised by the same investment advisor of such Bank or by an
Affiliate of such investment advisor, or (y) assign all, or if less than all, a
portion equal to at least $5,000,000 in the aggregate for the assigning Bank or
assigning Banks, of such Revolving Loan Commitment and related outstanding
Obligations hereunder to one or more Eligible Transferees (treating any fund
that invests in bank loans and any other fund that invests in bank loans and is
managed or advised by the same investment advisor of such fund or by an
Affiliate of such investment advisor as a single Eligible Transferee), each of
which assignees shall become a party to this Agreement as a Bank by execution of
an Assignment and Assumption Agreement, provided that (i) at the time of each
assignment pursuant to this Section 13.04(b) Schedule I shall be deemed modified
to reflect the Revolving Loan Commitments of such new Bank and of the existing
Banks, (ii) upon surrender of the old Revolving Notes, new Revolving Notes will
be issued, at the Borrower's expense, to such new Bank and to the assigning
Bank, such new Revolving Notes to be in conformity with the requirements of
Section 1.05 (with appropriate modifications) to the extent needed to reflect
the revised Revolving Loan Commitments, (iii) the consent of the Administrative
Agent and each Issuing Bank shall be required in connection with any such
assignment pursuant to clause (y) above (each of which consents shall not be
unreasonably withheld or delayed) and (vi) the Administrative Agent shall
receive at the time of each such assignment, from the assigning or assignee
Bank, the payment of a non-refundable assignment fee of $3,500 and, provided
further, that such transfer or assignment will not be effective until recorded
by the Administrative Agent on the Register pursuant to Section 13.16. To the
extent of any assignment pursuant to this Section 13.04(b), the assigning Bank
shall be relieved of its obligations hereunder with respect to its assigned
Revolving Loan Commitment. At the time of each assignment pursuant to this
Section 13.04(b) to a Person which is not already a Bank hereunder and which is
not a United States person (as such term is defined in Section 7701(a)(30) of
the Code) for Federal income tax purposes, the respective assignee Bank shall
provide to the Borrower and the Administrative Agent the appropriate Internal
Revenue Service Forms (and, if applicable a Section 4.04(b)(ii) Certificate). To
the extent that an assignment of all or any portion of a Bank's Revolving Loan
Commitment and related outstanding Obligations pursuant to Section 1.13 or this
Section 13.04(b) would, at the time of such assignment, result in increased
costs under Section 1.10, 1.11, 2.06 or 4.04 from those being charged by the
respective assigning Bank prior to such assignment, then the Borrower shall not
be obligated to pay such increased costs (although the Borrower shall be
obligated to pay any other increased costs of the type described above resulting
from changes after the date of the respective assignment).
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(c) Nothing in this Agreement shall prevent or prohibit any Bank
from pledging its Loans and Notes hereunder to a Federal Reserve Bank in support
of borrowings made by such Bank from such Federal Reserve Bank and, with the
consent of the Administrative Agent, any Bank which is a fund may pledge all or
any portion of its Loans and Notes to its trustee in support of its obligations
to its trustee. No pledge pursuant to this clause (c) shall release the
transferor Bank from any of its obligations hereunder.
13.05 No Waiver; Remedies Cumulative. No failure or delay on the
part of any Agent, any Issuing Bank or any Bank or any holder of any Note in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between any Credit Party and any Agent, any
Issuing Bank or any Bank or the holder of any Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights, powers and remedies herein or in any other
Credit Document expressly provided are cumulative and not exclusive of any
rights, powers or remedies which any Agent, any Issuing Bank or any Bank or the
holder of any Note would otherwise have. No notice to or demand on any Credit
Party in any case shall entitle such Credit Party to any other or further notice
or demand in similar or other circumstances or constitute a waiver of the rights
of any Agent, any Issuing Bank or any Bank or the holder of any Note to any
other or further action in any circumstances without notice or demand.
13.06 Payments Pro Rata. (a) Except as otherwise provided in this
Agreement, the Administrative Agent agrees that promptly after its receipt of
each payment from or on behalf of the Borrower in respect of any Obligations
hereunder, it shall distribute such payment to the Banks (other than any Bank
that has consented in writing to waive its pro rata share of any such payment)
pro rata based upon their respective shares, if any, of the Obligations with
respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder or under any other Credit Document (whether by voluntary payment, by
realization upon security, by the exercise of the right of setoff or banker's
lien, by counterclaim or cross action, by the enforcement of any right under the
Credit Documents, or otherwise), which is applicable to the payment of the
principal of, or interest on, the Loans, Unpaid Drawings, Commitment Commission
or Letter of Credit Fees, of a sum which with respect to the related sum or sums
received by other Banks is in a greater proportion than the total of such
Obligation then owed and due to such Bank bears to the total of such Obligation
then owed and due to all of the Banks
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immediately prior to such receipt, then such Bank receiving such excess payment
shall purchase for cash without recourse or warranty from the other Banks an
interest in the Obligations of the Borrower to such Banks in such amount as
shall result in a proportional participation by all the Banks in such amount;
provided that, if all or any portion of such excess amount is thereafter
recovered from such Bank, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 13.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
13.07 Calculations; Computations. (a) The financial statements to be
furnished to the Banks pursuant hereto shall be made and prepared in accordance
with generally accepted accounting principles in the United States consistently
applied throughout the periods involved (except as set forth in the notes
thereto or as otherwise disclosed in writing by the Borrower to the Banks);
provided that, except as otherwise specifically provided herein, all
computations determining compliance with Sections 9.07 through 9.09, inclusive,
shall utilize accounting principles and policies in conformity with those used
to prepare the audited financial statements delivered to the Banks pursuant to
Section 7.05(a).
(b) All computations of interest, Commitment Commission and other
Fees hereunder shall be made on the basis of a year of 360 days for the actual
number of days (including the first day but excluding the last day) occurring in
the period for which such interest, Commitment Commission or other Fees are
payable.
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHERWISE
PROVIDED IN CERTAIN OF THE MORTGAGES AND PLEDGE AGREEMENTS, BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROP-
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ERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.
EACH SUCH PARTY HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS
LACK PERSONAL JURISDICTION OVER SUCH PARTY, AND AGREES NOT TO PLEAD OR CLAIM, IN
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN ANY OF THE AFORESAID COURTS, THAT SUCH COURT LACKS
PERSONAL JURISDICTION OVER SUCH PARTY. EACH SUCH PARTY FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT ITS ADDRESS SET FORTH OPPOSITE
ITS SIGNATURE BELOW OR ON SCHEDULE II, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS
AFTER SUCH MAILING. EACH SUCH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO
SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY CREDIT
DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF ANY AGENT, ANY BANK OR THE HOLDER OF ANY NOTE
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY PARTY IN ANY OTHER JURISDICTION.
(b) EACH PARTY TO THIS AGREEMENT HERETO HEREBY IRREVOCABLY WAIVES TO
THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR
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RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
13.09 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
13.10 Effectiveness. This Agreement shall become effective on the
date (the "Restatement Effective Date") on which each of (i) OFSI, Caterair
Holdings, Caterair, the Borrower, each Agent and each of the Banks shall have
signed a counterpart hereof (whether the same or different counterparts) and
shall have delivered the same to the Administrative Agent and (ii) the
conditions contained in Section 5 are met to the satisfaction of the
Co-Arrangers and the Required Banks. Unless the Co-Arrangers have received
actual notice from any Bank that the conditions contained in Section 5 have not
been met to its satisfaction, upon the satisfaction of the condition described
in clause (i) of the immediately preceding sentence and upon the Co-Arrangers
good faith determination that the conditions described in clause (ii) of the
immediately preceding sentence have been met, then the Restatement Effective
Date shall have been deemed to have occurred, regardless of any subsequent
determination that one or more of the conditions thereto had not been met
(although the occurrence of the Restatement Effective Date shall not release the
Borrower from any liability for failure to satisfy one or more of the applicable
conditions contained in Section 5). The Administrative Agent will give OFSI,
Caterair Holdings, Caterair, the Borrower and each Bank prompt written notice of
the occurrence of the Restatement Effective Date.
13.11 Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
13.12 Amendment or Waiver; etc. (a) Neither this Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the respective Credit Parties party thereto and the
Required Banks, provided that no such change, waiver, discharge or termination
shall, without the consent of each Bank (other than a Defaulting Bank) (with
Obligations being directly affected thereby in the case of following clause
(i)), (i) extend the final scheduled maturity of any Loan or any Note, or extend
the stated maturity of any Letter of Credit beyond the Final Maturity Date, or
reduce the rate or extend the time of payment of interest or Fees thereon, or
reduce the principal amount thereof (except to the extent
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repaid in cash) (it being understood that any amendment or modification to the
financial definitions in this Agreement or to Section 13.07(a) shall not
constitute a reduction in the rate of interest or Fees for the purposes of this
clause (i), notwithstanding the fact that such amendment or modification
actually results in such a reduction, provided that such amendment or
modification was not consummated for the purpose of lowering the interest rate
or Fees hereunder), (ii) release all or substantially all of the Collateral
(except as expressly provided in the Credit Documents) under all the Security
Documents, (iii) amend, modify or waive any provision of this Section 13.12,
(iv) reduce the percentage specified in the definition of Required Banks (it
being understood that, with the consent of the Required Banks, additional
extensions of credit pursuant to this Agreement may be included in the
determination of the Required Banks on substantially the same basis as the
Revolving Loan Commitments (and related extensions of credit) are included on
the Restatement Effective Date) or (v) consent to the assignment or transfer by
the Borrower of any of its rights and obligations under this Agreement; provided
further, that no such change, waiver, discharge or termination shall (t)
increase the Revolving Loan Commitment of any Bank over the amount thereof then
in effect without the consent of such Bank (it being understood that waivers or
modifications of conditions precedent, covenants, Defaults or Events of Default
or of a mandatory reduction in the Total Revolving Loan Commitment shall not
constitute an increase of the Revolving Loan Commitment of any Bank, and that an
increase in the available portion of the Revolving Loan Commitment of any Bank
shall not constitute an increase in the Revolving Loan Commitment of such Bank),
(u) without the consent of each Issuing Bank, amend, modify or waive any
provision of Section 2 or alter its rights or obligations with respect to
Letters of Credit issued by it, (v) without the consent of the Swingline Bank,
alter its rights or obligations with respect to Swingline Loans, (w) without the
consent of each Agent affected thereby, amend, modify or waive any provision of
Section 12 as same applies to such Agent or any other provision as same relates
to the rights or obligations of such Agent, or (x) without the consent of the
Collateral Agent, amend, modify or waive any provision relating to the rights or
obligations of the Collateral Agent.
(b) If, in connection with any proposed change, waiver, discharge or
termination with respect to any of the provisions of this Agreement as
contemplated by clauses (i) through (v), inclusive, of the first proviso to
Section 13.12(a), the consent of the Required Banks is obtained but the consent
of one or more of such other Banks whose consent is required is not obtained,
then the Borrower shall have the right, so long as all non-consenting Banks
whose individual consent is required are treated as described in either clause
(A) or (B) below, to either (A) replace each such non-consenting Bank or Banks
with one or more Replacement Banks pursuant to Section 1.13 so long as at the
time of such replacement, each such Replacement Bank consents to the proposed
change, waiver, discharge or termination or (B) terminate such non-
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consenting Bank's Revolving Loan Commitment and repay in full its outstanding
Revolving Loans, in accordance with Sections 3.02(b) and/or 4.01(b), provided
that, unless the Commitment terminated and Revolving Loans repaid pursuant to
preceding clause (B) are immediately replaced in full at such time through the
addition of new Banks or the increase of the Revolving Loan Commitments and/or
outstanding Revolving Loans of existing Banks (who in each case must
specifically consent thereto), then in the case of any action pursuant to
preceding clause (B) the Required Banks (determined before giving effect to the
proposed action) shall specifically consent thereto, provided further, that in
any event the Borrower shall not have the right to replace a Bank, terminate its
Revolving Loan Commitment or repay its Revolving Loans solely as a result of the
exercise of such Bank's rights (and the withholding of any required consent by
such Bank) pursuant to the second proviso to Section 13.12(a).
13.13 Survival. All indemnities set forth herein including, without
limitation, in Sections 1.10, 1.11, 2.06, 2.07, 4.04, 13.01 and 13.06, shall
survive the execution, delivery and termination of this Agreement, the Notes and
any Letters of Credit, and the making and repayment of the Loans (it being
understood and agreed that all such indemnities shall also survive as to any
Bank that has assigned all of its obligations hereunder pursuant to Section
13.04(b) with respect to the period of time in which such Bank was a "Bank"
hereunder).
13.14 Domicile of Loans. Each Bank may transfer and carry its Loans
at, to or for the account of any office, Subsidiary or Affiliate of such Bank.
Notwithstanding anything to the contrary contained herein, to the extent that a
transfer of Loans pursuant to this Section 13.14 would, at the time of such
transfer, result in increased costs under Section 1.10, 1.11, 2.06 or 4.04 from
those being charged by the respective Bank prior to such transfer, then the
Borrower shall not be obligated to pay such increased costs (although the
Borrower shall be obligated to pay any other increased costs of the type
described above resulting from changes after the date of the respective
transfer).
13.15 Confidentiality. (a) Each Agent and each Bank agrees that any
information concerning the Credit Parties or any of their Subsidiaries or
Affiliates furnished to the Agents or the Banks by or on behalf of the Credit
Parties or their respective representatives (at any time on, before or after the
date of this Agreement) (including, but not limited to, copies of, or
information concerning, Sky Chefs' and Caterair's respective catering agreements
with American Airlines, together with analyses, compilations, studies or other
documents prepared by each Agent's and each Bank's agents, representatives
(including attorneys, accountants, financial advisors or to any other Person who
evaluates, approves, structures or administers the Loans on behalf of a Bank and
who is subject to this confidentiality provision) or employees
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(collectively, "Representatives") that in each case contain or otherwise reflect
such information is collectively referred to as the "Information") shall be kept
confidential and shall not, without the prior written consent of the Borrower,
be disclosed (other than to Representatives of the Agents and the Banks) in any
manner whatsoever, in whole or in part, or used other than in connection with
the Credit Documents, in evaluating the Transaction and in evaluating and
monitoring the creditworthiness of the Credit Parties, provided that disclosure
may be made of any Information (i) as has become generally available to the
public through no fault or action by such Agent, Bank or Representative in
violation of this Section 13.15, (ii) as may be required in any report,
statement or testimony submitted to any municipal, state or Federal regulatory
body having or claiming to have jurisdiction over such disclosing Agent or Bank,
or to the Federal Reserve Board, the Federal Deposit Insurance Corporation, the
NAIC or similar organizations (whether in the United States or elsewhere) or
their successors, (iii) as may be required by any law, order, regulation or
ruling applicable to such disclosing Agent or Bank, and (iv) to the Collateral
Agent who shall agree to be bound hereunder; and provided further that the
Information may be disclosed to any Bank or an Eligible Transferee that is a
participant of such Bank so long as any such participant shall have entered into
confidentiality agreements (containing provisions substantially the same as
those contained herein) with the Credit Parties as well as to any Person that
qualifies as an Eligible Transferee and is a prospective assignee or participant
in connection with such transaction provided that such prospective assignee or
participant also executes an agreement containing provisions substantially the
same as those contained herein. Each Agent and each Bank shall be responsible
for any breach of this Section 13.15 by its respective Representatives
(including former Representatives).
(b) Notwithstanding anything contained herein to the contrary, the
obligation to keep confidential the Information as set forth herein shall
automatically terminate two years after satisfaction in full of the obligations
of the Credit Parties hereunder (except in the case of the respective American
Airlines Catering Agreements, and Information with respect thereto, for which
the confidentiality obligation shall in any event continue until June 30, 2007
or such later date as may be agreed to from time to time by the Borrower and the
Required Banks, it being understood and agreed that to the extent such date is
not so extended and the Borrower is no longer permitted to share confidential
information with the Banks as it relates to the American Airlines Catering
Agreements by reason of the contractual terms of such Catering Agreements or
other written arrangements with America Airlines, the Borrower shall not be
required to share such confidential information with the Banks pursuant to this
Agreement).
(c) In the event that an Agent, a Bank or a Representative or anyone
to whom information was transmitted pursuant to this Section 13.15 is requested
or
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becomes legally compelled (by oral questions, interrogatories, requests for
information or documents, summons, subpoena, civil investigative demand or
similar process) to disclose any of the Information, such Person shall provide
the Borrower (to the extent such Person is legally permitted to do so) with
prompt notice so that the Borrower or any other Credit Party may seek a
protective order or other appropriate remedy or waive compliance with the
provisions of this Section 13.15. In the event that such protective order or
other remedy is not obtained on or prior to the date on which such Information
is required to be disclosed, or that the Credit Parties waive compliance with
the provisions of this Section 13.15, such Agent or Bank shall furnish that
portion of the Information that as advised by counsel is legally required or
advisable.
(d) This Section 13.15 shall be inoperative as to such portions of
the Information that become available to the Agents, the Banks or their
Representatives from a source, other than the Credit Parties or their respective
representatives, that such Agent, Bank or Representative does not have actual
knowledge (without any obligation of inquiry) is prohibited from disclosing such
portions by a contractual, legal or fiduciary obligation to the Credit Parties.
(e) Each of the Credit Parties hereby acknowledges and agrees that
each Agent and each Bank may share with any of its respective affiliates the
Information (including, without limitation, any nonpublic customer information
regarding creditworthiness of the Credit Parties and their Subsidiaries),
provided such affiliates shall be subject to the provisions herein to the same
extent as if it were an Agent or a Bank hereunder, it being understood that for
purposes of this Section 13.15 the term "affiliate" shall mean direct or
indirect holding company(ies), if any, as well as direct or indirect
subsidiary(ies), if any.
(f) Each Agent and each Bank agrees that in the event of any actual
or threatened breach of this Section 13.15 the Credit Parties shall be entitled,
without the requirement of posting a bond or other security, to equitable
relief, including temporary, preliminary and permanent injunctive relief and
specific performance. Such remedy shall not be the exclusive remedy for any
breach of this Section 13.15 but shall be in addition to all other remedies
available at law or equity to the Credit Parties.
13.16 Register. The Borrower hereby designates the Administrative
Agent to serve as the Borrower's agent, solely for purposes of this Section
13.16, to maintain a register (the "Register") on which it will record the
Revolving Loan Commitments from time to time of each of the Banks, the Loans
made by each of the Banks and each repayment in respect of the principal amount
of the Loans of each Bank. Failure to make any such recordation, or any error in
such recordation shall not affect the Borrower's obligations in respect of such
Loans. With respect to any Bank, the
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transfer of the Revolving Loan Commitment of such Bank and the rights to the
principal of, and interest on, any Loan made pursuant to such Revolving Loan
Commitment shall not be effective until such transfer is recorded on the
Register maintained by the Administrative Agent with respect to ownership of
such Revolving Loan Commitment and Loans and prior to such recordation all
amounts owing to the transferor with respect to such Revolving Loan Commitment
and Revolving Loans shall remain owing to the transferor. The registration of
assignment or transfer of all or part of any Revolving Loan Commitment and
Revolving Loans shall be recorded by the Administrative Agent on the Register
only upon the acceptance by the Administrative Agent of a properly executed and
delivered Assignment and Assumption Agreement pursuant to Section 13.04(b).
Coincident with the delivery of such an Assignment and Assumption Agreement to
the Administrative Agent for acceptance and registration of assignment or
transfer of all or part of a Revolving Loan, or as soon thereafter as
practicable, the assigning or transferor Bank shall surrender the Note
evidencing such Revolving Loan, and thereupon one or more new Revolving Notes in
the same aggregate principal amount shall be issued to the assigning or
transferor Bank and/or the new Bank. Each Borrower agrees to indemnify the
Administrative Agent from and against any and all losses, claims, damages and
liabilities of whatsoever nature which may be imposed on, asserted against or
incurred by the Administrative Agent in performing its duties under this Section
13.16.
13.17 Certain Matters Relating to OFSI. Notwithstanding anything to
the contrary contained in this Agreement or in any other Credit Document, the
Banks hereby agree that OFSI shall have the right, so long as no Default or
Event of Default then exists and a similar request is made under the Caterair
Credit Agreement, to establish a direct Wholly-Owned Domestic Subsidiary of OFSI
("Parent") the sole purpose of which is to own 100% of the issued and
outstanding shares of capital stock of the Borrower. In connection with such
request, OFSI shall have the right to transfer all of the outstanding shares of
capital stock of the Borrower to Parent so long as at the time of such transfer,
(i) no Default or Event of Default then exists, (ii) Parent shall enter into a
guaranty in form and substance satisfactory to the Administrative Agent pursuant
to which Parent shall unconditionally guaranty all of the Obligations, (iii)
Parent shall enter into a pledge agreement in form and substance satisfactory to
the Administrative Agent pursuant to which Parent shall pledge all of the issued
and outstanding shares of capital stock of the Borrower to secure the guaranty
referred to in preceding clause (ii), (iv) OFSI shall pledge all of the issued
and outstanding shares of the capital stock of Parent pursuant to the OFSI
Pledge Agreement, (v) OFSI, the Borrower, Caterair, the other Credit Parties and
the Banks shall enter into technical amendments and modifications to this
Agreement and the other Credit Documents which have been agreed to by the
Co-Arrangers to give effect to the foregoing and to release OFSI from its
obligations under Sections 8 and 9 of this Agreement, except for its
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<PAGE> 154
obligations under Sections 8.01(b), 8.01(c), 8.01(g), 8.04 (as it relates to the
preservation of OFSI's existence), and 9.01 (as it relates to the creation of
any Liens on the capital stock of Parent), and the Required Banks agree that
they will not unreasonably withhold their consent to any such proposed
amendments and modifications, and (v) corresponding amendments and modifications
are made to the Caterair Credit Documents.
13.18 Certain Post-Closing Actions. Notwithstanding anything to the
contrary contained in Section 5.08, the Borrower and the Banks hereby
acknowledge and agree that any amendments or modifications to any of the
localized foreign Pledge Agreements that may be required in connection with the
transactions contemplated hereby shall not be required to be delivered by the
respective Credit Parties on the Restatement Effective Date but shall instead be
required to be delivered within 90 days following the Restatement Effective
Date.
13.19 Non-Continuing Banks. The parties hereto acknowledge that each
Original Bank that is not a party hereto on the Restatement Effective Date (and
after giving effect thereto) shall no longer constitute a "Bank" under this
Agreement and the other Credit Documents, provided that all indemnities of the
Credit Parties under the Original Credit Agreement and the other Credit
Documents (as in effect prior to the Restatement Effective Date) which survive
the termination of the Original Credit Agreement by their terms shall continue
to survive in accordance with their terms after the Restatement Effective Date.
SECTION 14. OFSI Guaranty.
14.01 The Guaranty. In order to induce the Agents and the Banks to
enter into this Agreement and to extend credit hereunder, to induce the Other
Creditors to enter into the Interest Rate Protection Agreements or Other Hedging
Agreements and in recognition of the direct benefits to be received by OFSI from
the proceeds of the Loans, the issuance of the Letters of Credit and the
entering into of the Interest Rate Protection Agreements or Other Hedging
Agreements, OFSI hereby agrees with the Secured Creditors as follows: OFSI
hereby unconditionally and irrevocably guarantees, as primary obligor and not
merely as surety the full and prompt payment when due, whether upon maturity,
acceleration or otherwise, of any and all of the Guaranteed Obligations of the
Borrower to the Secured Creditors. If any or all of the Guaranteed Obligations
of the Borrower to the Secured Creditors becomes due and payable hereunder, OFSI
unconditionally promises to pay such indebtedness to the Secured Creditors, or
order, on demand, together with any and all expenses which may be incurred by
the Secured Creditors in collecting any of the Guaranteed Obligations.
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<PAGE> 155
14.02 Bankruptcy. Additionally, OFSI unconditionally and irrevocably
guarantees the payment of any and all of the Guaranteed Obligations of the
Borrower to the Secured Creditors whether or not due or payable by the Borrower
upon the occurrence of any of the events specified in Section 10.05, and
unconditionally, jointly and severally, promises to pay such indebtedness to the
Secured Creditors, or order, on demand, in lawful money of the United States.
14.03 Nature of Liability. The liability of OFSI hereunder is
exclusive and independent of any security for or other guaranty of the
Guaranteed Obligations of the Borrower whether executed by OFSI, any other
guarantor or by any other party, and the liability of OFSI hereunder is not
affected or impaired by (a) any direction as to application of payment by the
Borrower or by any other party, or (b) any other continuing or other guaranty,
undertaking or maximum liability of a guarantor or of any other party as to the
Guaranteed Obligations of the Borrower, or (c) any payment on or in reduction of
any such other guaranty or undertaking, or (d) any dissolution, termination or
increase, decrease or change in personnel by the Borrower, or (e) any payment
made to the Secured Creditors on the Guaranteed Obligations which any such
Secured Creditor repays to the Borrower pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief
proceeding, and OFSI waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding.
14.04 Independent Obligation. The obligations of OFSI hereunder are
independent of the obligations of any other guarantor, any other party or the
Borrower, and a separate action or actions may be brought and prosecuted against
OFSI whether or not action is brought against any other guarantor, any other
party or the Borrower and whether or not any other guarantor, any other party or
the Borrower be joined in any such action or actions. OFSI waives, to the full
extent permitted by law, the benefit of any statute of limitations affecting its
liability hereunder or the enforcement thereof. Any payment by the Borrower or
other circumstance which operates to toll any statute of limitations as to the
Borrower shall operate to toll the statute of limitations as to OFSI.
14.05 Authorization. OFSI authorizes the Secured Creditors without
notice or demand (except as shall be required by applicable law and cannot be
waived), and without affecting or impairing its liability hereunder, from time
to time to:
(a) change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew, increase, accelerate or alter,
any of the Guaranteed Obligations (including any increase or decrease in
the rate of interest thereon), any security therefor, or any liability
incurred directly or indirectly in
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<PAGE> 156
respect thereof, and the Guaranty herein made shall apply to the
Guaranteed Obligations as so changed, extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any of
those hereunder) incurred directly or indirectly in respect thereof or
hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the
Borrower, any other Credit Party or others or otherwise act or refrain
from acting;
(d) release or substitute any one or more endorsers, guarantors, the
Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Borrower to its creditors other than
the Secured Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Secured Creditors
regardless of what liability or liabilities of the Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement or any of the instruments or agreements
referred to herein, or otherwise amend, modify or supplement this
Agreement or any of such other instruments or agreements; and/or
(h) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of
OFSI from its liabilities under this Guaranty.
14.06 Reliance. It is not necessary for the Secured Creditors to
inquire into the capacity or powers of the Borrower or the officers, directors,
partners or agents acting or purporting to act on their behalf, and any
Guaranteed Obligations made or created in reliance upon the professed exercise
of such powers shall be guaranteed hereunder.
-149-
<PAGE> 157
14.07 Subordination. Any of the indebtedness of the Borrower now or
hereafter owing to OFSI is hereby subordinated to the Guaranteed Obligations of
the Borrower owing to the Secured Creditors; and if the Administrative Agent so
requests at a time when an Event of Default exists, all such indebtedness of the
Borrower to OFSI shall be collected, enforced and received by such OFSI for the
benefit of the Secured Creditors and be paid over to the Administrative Agent on
behalf of the Secured Creditors on account of the Guaranteed Obligations of the
Borrower to the Secured Creditors, but without affecting or impairing in any
manner the liability of OFSI under the other provisions of this Guaranty. Prior
to the transfer by OFSI of any note or negotiable instrument evidencing any of
the indebtedness of the Borrower to OFSI, OFSI shall mark such note or
negotiable instrument with a legend that the same is subject to this
subordination. Without limiting the generality of the foregoing, OFSI agrees
with the Secured Creditors that it will not exercise any right of subrogation
which it may otherwise have as a result of this Guaranty (whether contractual,
under Section 509 of the Bankruptcy Code, or otherwise) until all Guaranteed
Obligations have been paid in full in cash.
14.08 Waiver. (a) OFSI waives any right (except as shall be required
by applicable law and cannot be waived) to require the Secured Creditors to (i)
proceed against the Borrower, any other guarantor or any other party, (ii)
proceed against or exhaust any security held from the Borrower, any other
guarantor or any other party or (iii) pursue any other remedy in the Secured
Creditors' power whatsoever. OFSI waives any defense based on or arising out of
any defense of the Borrower, any other guarantor or any other party, other than
payment in full of the Guaranteed Obligations, based on or arising out of the
disability of the Borrower, any other guarantor or any other party, or the
unenforceability of the Guaranteed Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of the Borrower other
than payment in full of the Guaranteed Obligations. The Secured Creditors may,
at their election, foreclose on any security held by any Agent, the Collateral
Agent or the other Secured Creditors by one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially reasonable,
or exercise any other right or remedy the Secured Creditors may have against the
Borrower or any other party, or any security, without affecting or impairing in
any way the liability of OFSI hereunder except to the extent the Guaranteed
Obligations have been paid. OFSI waives any defense arising out of any such
election by the Secured Creditors, even though such election operates to impair
or extinguish any right of reimbursement or subrogation or other right or remedy
of OFSI against the Borrower or any other party or any security.
(b) OFSI waives all presentments, demands for performance, protests
and notices, including, without limitation, notices of nonperformance, notices
of protest, notices of dishonor, notices of acceptance of this Guaranty, and
notices of the
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<PAGE> 158
existence, creation or incurring of new or additional Guaranteed Obligations.
OFSI assumes all responsibility for being and keeping itself informed of the
Borrower's financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations and the
nature, scope and extent of the risks which OFSI assumes and incurs hereunder,
and agrees that neither any Agent nor any Bank shall have any duty to advise
OFSI of information known to them regarding such circumstances or risks.
(c) OFSI hereby acknowledges and affirms that it understands that to
the extent the Guaranteed Obligations are secured by Real Property located in
California, OFSI shall be liable for the full amount of the liability hereunder
notwithstanding the foreclosure on such Real Property by trustee sale or any
other reason impairing OFSI's or any Secured Creditor's right to proceed against
the Borrower or any other guarantor of the Guaranteed Obligations. In accordance
with Section 2856 of the California Civil Code, OFSI hereby waives:
(i) all rights of subrogation, reimbursement, indemnification,
and contribution and any other rights and defenses that are or may become
available to OFSI by reason of Sections 2787 to 2855, inclusive, 2899 and
3433 of the California Civil Code;
(ii) all rights and defenses that OFSI may have because the
Guaranteed Obligations are secured by Real Property located in California.
This means, among other things: (A) the Secured Creditors may collect from
OFSI without first foreclosing on any real or personal property collateral
pledged by the Borrower; and (B) if the Secured Creditors foreclose on any
Real Property collateral pledged by the Borrower, (1) the amount of the
Guaranteed Obligations may be reduced only by the price for which that
collateral is sold at the foreclosure sale, even if the collateral is
worth more than the sale price, and (2) the Secured Creditors may collect
from OFSI even if the Secured Creditors, by foreclosing on the Real
Property collateral, have destroyed any right OFSI may have to collect
from the Borrower. This is an unconditional and irrevocable waiver of any
rights and defenses OFSI may have because the Guaranteed Obligations are
secured by Real Property. These rights and defenses include, but are not
limited to, any rights or defenses based upon Section 580a, 580b, 580d or
726 of the California Code of Civil Procedure; and
(iii) all rights and defenses arising out of an election of
remedies by the Secured Creditors, even though that election of remedies,
such as a nonjudicial foreclosure with respect to security for the
Guaranteed Obligations, has destroyed OFSI's rights of subrogation and
reimbursement against the
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<PAGE> 159
Borrower by the operation of Section 580d of the Code of Civil Procedure
or otherwise.
OFSI warrants and agrees that each of the waivers set forth above is made with
full knowledge of its significance and consequences and that if any of such
waivers are determined to be contrary to any applicable law or public policy,
such waivers shall be effective only to the maximum extent permitted by law.
14.09 No Recourse Against Class B Assets. Notwithstanding anything
to the contrary contained in this Guaranty, the Secured Creditors acknowledge
and agree that they shall have no recourse against OFSI under this Guaranty in
respect of the Class B Assets (but, in the case of any Class B Assets that
constitute cash, only to the extent that such cash has been segregated from the
other assets (including other cash)) of OFSI.
* * *
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<PAGE> 160
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
c/o Sky Chefs, Inc. ONEX FOOD SERVICES, INC.
524 East Lamar Boulevard
Arlington, Texas 76011-3999
Telephone No.: (817) 792-2146 By: /s/ Terry W. Roueche
Telecopier No.: (817) 792-2222 ------------------------------------
Attention: Patrick W. Tolbert, Name: Terry W. Roueche
Executive Vice President Title: Ass't Secretary
524 East Lamar Boulevard SC INTERNATIONAL SERVICES, INC.
Arlington, Texas 76011-3999
Telephone No.: (817) 792-2146
Telecopier No.: (817) 792-2222 By: /s/ Thomas J. Lee
Attention: President ------------------------------------
Name: Thomas J. Lee
Title: Authorized Signatory
6550 Rock Spring Drive CATERAIR HOLDINGS CORPORATION
Bethesda, Maryland 20817
Telephone No.: (301) 897-7860
Telecopier No.: (301) 897-7797 By: /s/ Terry W. Roueche
Attention: President ------------------------------------
Name: Terry W. Roueche
Title: Ass't Secretary
with a copy to:
c/o Sky Chefs, Inc.
524 East Lamar Boulevard
Arlington, Texas 76011-3999
Telephone No.: (817) 792-2146
Telecopier No.: (817) 792-2222
Attention: Patrick W. Tolbert,
Executive Vice President
<PAGE> 161
6550 Rock Spring Drive CATERAIR INTERNATIONAL
Bethesda, Maryland 20817 CORPORATION
Telephone No.: (301) 897-7860
Telecopier No.: (301) 897-7797
Attention: President By: /s/ James Rafftesaeth
------------------------------------
Name: James Rafftesaeth
Title: Authorized Signatory
with a copy to:
c/o Sky Chefs, Inc.
524 East Lamar Boulevard
Arlington, Texas 76011-3999
Telephone No.: (817) 792-2146
Telecopier No.: (817) 792-2222
Attention: Patrick W. Tolbert,
Executive Vice President
<PAGE> 162
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, Individually and as
Administrative Agent
By: /s/ Laura E. Loffredo
------------------------------------
Name: Laura E. Loffredo
Title: Vice President
<PAGE> 163
J.P. MORGAN SECURITIES INC.,
as a Co-Arranger
By: /s/ Martin R. Pryor
------------------------------------
Name: Martin R. Pryor
Title: Vice President
<PAGE> 164
BANKERS TRUST COMPANY,
Individually and as Syndication
Agent and a Co-Arranger
By: /s/ Timothy Morris
------------------------------------
Name: Timothy Morris
Title: Vice President
<PAGE> 165
SCHEDULE I
COMMITMENTS
Revolving Loan
Bank Commitment
---- --------------
Morgan Guaranty Trust Company of New York $32,500,000
Bankers Trust Company $32,500,000
The Bank of New York $25,000,000
-----------
$90,000,000
<PAGE> 166
SCHEDULE II
BANK ADDRESSES
Morgan Guaranty Trust
Company of New York
60 Wall Street
New York, New York 10260-0060
Telephone No.: (212) 648-6793
Telecopier No.: (212) 648-5336
Attention: Laura Loffredo
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Telephone No.: (212) 250-9545
Telecopier No.: (212) 250-7218
Attention: Jim Reilly
The Bank of New York
One Wall Street
New York, New York 10005
Telephone No.: (212) 635-6724
Telecopier No.: (212) 635-6434
Attention: Steven M. Ross
<PAGE> 167
SCHEDULE III
EXISTING LETTERS OF CREDIT
As required by Section 2.01(a) of the SCIS Credit Agreement, this
schedule details all Existing Letters of Credit which were issued by The Bank of
New York for the account of SCIS pursuant to the Original Credit Agreement and
which are to remain outstanding on the Restatement Effective Date:
<TABLE>
<CAPTION>
L/C # Beneficiary Issue Date Expiry Face Amount
- ----- ----------- ---------- ------ -----------
<C> <S> <C> <C> <C>
33244 Continental Casualty Co. 9/28/95 9/29/97 $ 2,475,000.00
33277 Banco Credibanco SA 10/10/95 9/10/97 $ 1,500,000.00
33457 TriNet Essential VIII N 11/10/95 5/17/98 $ 343,112.85
33458 TriNet Essential VIII R 11/10/95 5/17/98 $ 355,017.09
33465 Travelers Indemnity Company 12/11/95 2/5/98 $ 431,801.00
33588 St Paul Fire & Marine 12/11/95 2/28/98 $ 6,651,344.00
33589 Travelers Insurance 12/11/95 2/4/98 $ 100,000.00
33590 St Paul Fire & Marine 12/11/95 9/24/97 $ 5,000,000.00
33591 San Diego Unified Port 12/11/95 3/24/98 $ 241,000.00
33592 Barclays Bank GTS 12/11/95 12/31/97 $ 1,812,024.46
33593 Port Authority NY & NJ 12/11/95 12/31/97 $ 500,000.00
33594 Port Authority NY & NJ 12/11/95 12/31/97 $ 1,000,000.00
33597 Port Authority NY & NJ 12/11/95 1/31/98 $ 18,000.00
33598 Port Authority NY & NJ 12/11/95 1/31/98 $ 282,000.00
33690 Barclays Bank Plc 12/29/95 12/27/97 $ 490,000.00
33692 CIBC Bank & Trust Company 1/26/96 1/26/98 $ 441,000.00
33918 Port Authority NY & NJ 2/22/96 4/25/98 $ 1,500,000.00
34336 CIBC Bank & Trust Company 5/23/96 5/24/98 $ 1,372,000.00
34339 TriNet Corporate Realty Trust 5/23/96 11/28/97 $ 100,000.00
36378 Direccion de Aeronautica Civil 8/8/97 6/13/98 $ 75,000.00
36417 American Airlines 7/15/97 1/15/98 $ 184,102.00
==============
Total $24,871,401.40
</TABLE>
<PAGE> 168
SCHEDULE IV
REAL PROPERTY
This schedule details the owned or leased properties of the
following entities:
COMPANY LOCATION OF PROPERTY
------- --------------------
ONEX FOOD SERVICES, INC. NONE
SC INTERNATIONAL SERVICES, INC. NONE
CATERAIR INTERNATIONAL CORPORATION SEE LIST BELOW FOR ENTRIES
ENTITLED "CATERAIR"
SKY CHEFS, INC. SEE LISTS BELOW FOR ENTRIES
ENTITLED "SKY CHEFS"
CATERAIR INTERNATIONAL, INC. (II) NONE
SKY CHEFS INTERNATIONAL CORP. NONE
ARLINGTON SERVICES, INC. Office space leased from PNC
Bank at 300 Delaware Avenue
Wilmington, DE 19801
ARLINGTON SERVICES HOLDING CORPORATION Office space leased from PNC
Bank at 300 Delaware Avenue
Wilmington, DE 19801
CATERAIR CONSULTING SERVICES CORPORATION NONE
JFK CATERERS, INC. NONE
CATERAIR ST. THOMAS HOLDINGS CORPORATION NONE
WESTERN AIRE CHEF, INC. NONE
CATERAIR AIRPORT PROPERTIES, INC. NONE
SKY CHEFS ARGENTINE, INC. NONE IN THE U.S.
ADDRESS IN ARGENTINA:
TENIENTE GENERAL MORILLAS
S N Y
AUTOPISTA AV. GVAL.
RICCHIERI
AEROPUERTO EZEIZA P. 1804
PROVINCIA DE BUENOS AIRES,
ARGENTINA
CATERAIR INTERNATIONAL TRANSITION CORPORATION NONE
<PAGE> 169
COMPANY LOCATION OF PROPERTY
------- --------------------
BETHESDA SERVICES, INC. Office space leased from PNC
Bank at
300 Delaware Avenue
Wilmington, DE 19801
CATERAIR NEW ZEALAND LIMITED Office space leased from PNC
Bank at
300 Delaware Avenue
Wilmington, DE 19801
ONEX OHIO ACCEPTANCE CORPORATION NONE
ONEX OHIO CREDIT CORP. NONE
ONEX OHIO EQUITY CORP. NONE
ONEX OHIO FINANCE CORP. NONE
ONEX OHIO FINANCE CORP. II NONE
ONEX OHIO CAPITAL CORP. NONE
ONEX OHIO FISCAL CORP. NONE
ONEX OHIO FUNDS CORP. NONE
ONEX OHIO CREDIT CORP. II NONE
ONEX OHIO FUNDS CORP. II NONE
ONEX OHIO FISCAL CORP. II NONE
ONEX OHIO EQUITY CORP. II NONE
ONEX OHIO CAPITAL CORP. II NONE
2
<PAGE> 170
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Owned/
Shop # Address City State Country Zip Airport Leased
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Sky Chefs 3830 W. International Airport Road (Closed-warehouse) Anchorage AK US 99502 ANC L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 4370 W. International Airport Road Anchorage AK US 99502 ANC L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 1449 S. 23rd Street Phoenix AZ US 85034 PHX O
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 1235 S. 23rd (Closed - Warehouse) Phoenix AZ US 85034 PHX L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 1451 S. 23rd Street Phoenix AZ US 85034 PHX O
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 2771 E. Airport Drive Tuscon AZ US 85706 TUS L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 810 Malcolm Rd. Burlingame CA US 94010 SFO O
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 370 Adrian Rd. Millbrae CA US 94010 SFO L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 1634 Rollins Road (1/2 of building leased to tenant) Burlingame CA US 94010 SFO L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 50 Adrian Court Burlingame CA US 94010 SFO L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 868 Cowan Road Burlingame CA US 94010 SFO L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 10741 Sherman Way, Unit 8 (Remote Facility - SNA 381) Sun Valley CA US 91352 BUR L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 2990-B Airway Ave. Costa Mesa CA US 92626 SNA L
- ------------------------------------------------------------------------------------------------------------------------------------
380 3250 East 29th Street Long Beach CA US 90806 LGB L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 7000 World Way West Los Angeles CA US 90045 LAX L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 6901 W. Imperial Highway Los Angeles CA US 90045 LAX L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Building M-111, Neil Armstrong Way Oakland CA US 94603 OAK L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 1902 East Avion Street Ontario CA US 91761 ONT L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 1251 Montalvo Way, Ste. B Palm Springs CA US 92262 PSP L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 6671 Lindbergh Drive Sacramento CA US 95837 SMF L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 2415 Winship Lane San Diego CA US 92101 SAN L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 1355 Airport Blvd. San Jose CA US 95112 SJC L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 26210 E. 100th Ave. Denver CO US 80249 DEN L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 3 Shoephoester Road Windsor Locks CT US O6096 BDL L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Washington National Airport, South Area Washington DC US 20001 DCA L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 12420 Fuel Farm Rd. Fort Meyers FL US 33913 FTM L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 210 S.W. 41st Court (Closed - Warehouse) Ft. Lauderdale FL US 33145 FLL L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 3260 S.W. 11th Street (Closed - Warehouse) Ft. Lauderdale FL US 33145 FLL L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 220 S.W. 34 Street Ft. Lauderdale FL US 33315 FLL L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 3500 N.W. 24th Street Miami FL US 33142 MIA O
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 3755 N.W. 21st Miami FL US 33142 MIA L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 4104 N.W. 25 Street Miami FL US 33142 MIA L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 3630 N.W. 25th Street Miami FL US 33142 MIA O
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Bldg. No. 3088, Miami Int'l Airport (sub Let to United) Miami FL US 33142 MIA L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 2800 Collingswood Dr. (Leased to A & C Bakery) (Southland) Orlando FL US 32827 MCO O
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 8680 Bear Rd. Orlando FL US 32827 MCO L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 5401 West Spruce St. Tampa FL US 33607 TPA L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Bldg. S1169, Duncan Ave. West Palm Beach FL US 33406 PBI L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 1102 S. Central Ave. East Point GA US 30344 ATL L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 110 Pohekulana Place Honolulu HI US 96819 HNL L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 3129 Lualena (Closed - Warehouse) Honolulu HI US 96819 HNL L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 2635 Wai Wai Loop (Closed - Warehouse - Leased) Honolulu HI US 96819 HNL L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 3239 Koapaka Street(Closed - warehouse) (leased to
4 tenants) Honolulu HI US 96819 HNL L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs O'Hare International Airport Chicago IL US 60666 ORD L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 200 Crofton Road Kenner LA US 70062 MSY L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 30 Wellington Road Boston MA US O2128 BOS L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 357 Griffin Way Warehouse, Chelsea Boston Ma US O2150 BOS L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs #1 Wood Island Park, Logan Int Airport (Closed -
Warehouse) Boston MA US O2150 BOS L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 5 Wood Island Park Boston MA US O2128 BOS L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 776 Elkridge Landing Road Baltimore MD US 21240 BWI L
- ------------------------------------------------------------------------------------------------------------------------------------
60 Bldg.113, Elk Road (Warehouse) Baltimore MD US 21240 BWI L
- ------------------------------------------------------------------------------------------------------------------------------------
Caterair 6550 Rock Spring Drive Bethesda MD US 20854 L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Bldg. No. 534, Detroit Metro Airport Detroit MI US 48242 DTW L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Bldg. No. 505, Detroit Metro Airport Detroit MI US 48242 DTW L
- ------------------------------------------------------------------------------------------------------------------------------------
397 221 West 79th Street (storage) Bloomington MN US 55420 MSP L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 3100 East 73rd Street Minneapolis MN US 55450 MSP L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 566 Brasilia Avenue Kansas City MO US 64153 MCI L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Terminal C RDU Airport Raleigh NC US 80307 RDU L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 2700-W Terminal Blvd Raleigh NC US 80307 RDU L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 5303 Lockheed Court Omaha NE US 68110 OMA L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 2101 George Road, SE Alburquerque NM US 87110 ALB L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Building 95, Brewster Rd South Newark NJ US 7114 EWR L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 625 Kitty Hawk Way Las Vegas NV US 89119 LAS L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 1085 Bible Way Reno NV US 89502 RNO O
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Hanger #5, LaGuardia Airport Flushing NY US 11371 LGA
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 24-20 49th Street (Vacant - Warehouse) Astoria NY US 11103 LGA O
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 45-10 19th Avenue Astoria NY US 11105 LGA O
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Building 122, JFK International Airport Jamaica NY US 11430 JFK L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Building 143, JFK International Airport (LSG Kitchen) Jamaica NY US 11430 JFK L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs AA Terminal Concessions, JFK International Airport Jamaica NY US 11430 JFK L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 15606 Rockaway Blvd. (Warehouse for Surplus Equipment) Jamaica NY US 11430 JFK L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 182-20 50th Road - (Warehouse) Jamaica NY US 11430 JFK L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Building 139, West Hangar R Jamaica NY US 11430 JFK L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 147-35 Farmers Blvd Jamaica NY US 11434 JFK L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 1200 Brooks Ave. Rochester NY US 14624 ROC L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 18 Govenor Drive, Stewart Int'l Airport Newburgh NY US 12550 SWF L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 300 Gateway Rd North Syracuse NY USA 13212 SYR L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs South Jackson Road Cleveland OH US 44135 CLE L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 4400 SW 36th Street Oklahoma City OK US 73119 OKC L
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 171
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Owned/
Shop # Address City State Country Zip Airport Leased
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Sky Chefs Cargo Building/Cargo Road Tulsa OK US 74115 TUL L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 7201 N E Alderwood Portland OR US 97218 PDX L
- ------------------------------------------------------------------------------------------------------------------------------------
628 9009 N.E. Airport Way Portland OR US 90045 PDX L
- ------------------------------------------------------------------------------------------------------------------------------------
300 Cherrington Corp. Ctr. (office space only) Coraopolis PA US 15108 CST L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 8401 Escort Street Philadelphia PA US 19153 PHL O
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 2720 Midland Park Road Charleston SC US 29418 CHS O
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 524 E Lamar Blvd. Arlington TX US 76011 L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 3851 Airport Blvd, Suites 108-109 Austin TX US 78722 AUS L
- ------------------------------------------------------------------------------------------------------------------------------------
317 9101 Wall Street, Bldg. C, Ste 420 Austin TX US 78754 AUS L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 2120 W 33rd Dallas/ Ft Worth TX US 75261 DFW L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 1535 W 20th St (Closed - Warehouse) Dallas/ Ft Worth TX US 75261 DFW L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 3000 South 22nd Street Dallas/ Ft Worth TX US 75261 DFW L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 2200 West 33rd St. (Closed - Warehouse) Dallas/ Ft Worth TX US 75261 DFW L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 6501 Convair Rd. El Paso TX US 79925 ELP L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 18950 Colonel Fischer Drive Houston TX US 77205 HOU L
- ------------------------------------------------------------------------------------------------------------------------------------
CST 4825 W. Royal Lane (office) Irving TX US
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 815 Hanger Lane Nashville TN US 37217 BNA L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 550 North Cargo Rd. Salt Lake City UT US 34122 SLC L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs East Service Rd., Dulles International Airport Chantilly VA US 22021 IAD L
- ------------------------------------------------------------------------------------------------------------------------------------
624 P.O. Box 86 Kingshill (idle) St. Croix VI US 851 STX L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 18850 28th Ave. South Seattle WA US 98188 SEA O
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 2358 South 154 St. Seattle WA US 98199 SEA L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 5220 S 3rd Street Milwaukee WI US 53207 MKE L
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 172
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Owned/
Shop # Address City State Country Zip Airport Leased
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Marriott Argentina Airline Catering, Teniente General
Morillas S/N Y Autopista Av. Gval. Ricchieri,
Aeropuerto Ezeiza P. 1804 Buenos Aires Bue Argentina BUE
- ------------------------------------------------------------------------------------------------------------------------------------
Caterair Caterair Airport Services, GPO Box 1036 (Quantas
Drive), Eagle Farm Brisbane QLD Australia 4009 BNE
- ------------------------------------------------------------------------------------------------------------------------------------
Caterair Caterair Airport Services, GPO Box 576 Cairnes QLD Australia 4870 CNS
- ------------------------------------------------------------------------------------------------------------------------------------
Caterair Caterair Airport Services, Hanger 1, Vickers Avenue,
Sydney Int'l Airport Sydney NSW Australia 2020 SYD
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Services de Bordo e Hotelaria, S.A., Aeroporto
Internatacional do Galeao, Caixa postal 32858, CEP 2193 Rio De Janeiro Brazil RIO
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Brasil, S.A., Orlando, Bergamo No. 100, Guarulhos Sao Paulo Brazil GRU
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Chile, S.A., Casilla 14469, Aeropuerto
Internacional, Arturo Merino Benitez Santiago Chile SCL
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Aeromar Ltd., Sherometeyvo Airport No. 1, K-340 Moscow CIS
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair France, 14-16, Rue de la Pomme Bleue, B.P.
20316, 95713 Roissy-Aeroport Charles de Gaulle Paris France CDG
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair In-Flite Services de Mexico, S.A. de C.V.,
KM. 19 Caretera, Boulevard De Las Naciones KM195 Acapulco Mexico 39490 ACA O
- ------------------------------------------------------------------------------------------------------------------------------------
Marraca Caterair In-Flite Services de Mexico, S.A. de C.V.,
KM. 19 Caretera, Boulevard De Las Naciones KM195 Acapulco Mexico 39490 ACA O
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Calidad en Alimentos S.A. de C.V., Aeropuerto
Internacional Midguel Hidalgo, Zona de Hangares,
Puerto No. 3 Guadalajara Mexico 45659 GDL L
- ------------------------------------------------------------------------------------------------------------------------------------
339.04 Comisariato Mazatlan, Aeropuerto Internacional Miguel
Midalgo Guadalajara Mexico 45659 GDL
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Comisariato Mazatlan, S.A. de C.V., Aeropuerto
Internacional Rafael Buelna Mazatlan Mexico 82080 MZT L
- ------------------------------------------------------------------------------------------------------------------------------------
338.01 Caterair In-Flite Services de Mexico, Aviacion Militar
30, Colonia Federal Mexico City Mexico 15700 O
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Casa ponce de Leon, S.A. de C.V., Posicion No. 67,
Aeropuerto Internacional Mexico City Mexico 15620 L
- ------------------------------------------------------------------------------------------------------------------------------------
339.01 Cocina del Aire, S.A. de C.V., Aeropuerto Internacional
Interior Mexico City Mexico 15620 L
- ------------------------------------------------------------------------------------------------------------------------------------
338.91 Hidalgo #132, Col. Penon De Los Banos C.P. 15520 Mexico City Mexico 15520
- ------------------------------------------------------------------------------------------------------------------------------------
341 Hidalgo #132, Col. Penon De Los Banos C.P. 15520 Mexico City Mexico 15520
- ------------------------------------------------------------------------------------------------------------------------------------
va Galicia Hidalgo #132, Col. Penon De Los Banos C.P. 15520 Mexico City Mexico 15520 O
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Comisariato Monterrey, S.A. de C.V., Aeropuerto
Internacional Gral. Mariano Escobedo, Apodaco,
N.L. 66600 Monterrey Mexico 66600 MTY L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Comisariato Mazatlan, S.A. de C.V., Aeropuerto Civil
Gustavo Diaz Ordaz, Apartade Postal 16-A Puerto Vallarta Mexico 48300 PVR L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Comisariato de Baja California S.A. de C.V., Calle
Uno Norte No.114 Tijuana Mexico 22500 TIJ O
- ------------------------------------------------------------------------------------------------------------------------------------
Auckland New Zealand L
- ------------------------------------------------------------------------------------------------------------------------------------
Wellington New Zealand L
- ------------------------------------------------------------------------------------------------------------------------------------
Christchurch New Zealand L
- ------------------------------------------------------------------------------------------------------------------------------------
Rarotonga New Zealand L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Internacional de Panama, P.O. Box 7026, Zona 5 Tocumen Panama PTY L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Portugal, Assistencia A Bordo, Rua de Guine,
Nr. 9, Prior Velho, 2685 Sacavem Lisbon Portugal LIS
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Barcelona, Aeropuerto de Barcelona, Post Office
Box 10.510, Prat de Liobregat Barcelona Spain BCN
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Barcelona, Aeropuerto Vilova D'Onar, Costa Brava Gerona Spain 17185 GRO
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Madrid, c/o Tresparderne, No. 25, Barrio
Aeropureto Barajas Madrid Spain 28042 MAD
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Madrid, Frente Aeropuerto de Malaga Malaga Spain 29004 AGP
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Barcelona, Apartodo 390, Aeropuerto de Mahon Mahon Spain MAH
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Barcelona, Aeropuerto Son San Juan Palma de Mallorca Spain PMI
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair U.K., Manor Royal Trading Estates, Faraday,
Road, Crawley, Sussex Gatwick U.K. 10-2PX LGW
- ------------------------------------------------------------------------------------------------------------------------------------
323 Gatwick Bond Gatwick U.K. LGW
- ------------------------------------------------------------------------------------------------------------------------------------
324.01 Administrative Office Horley U.K. Admin.
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair/GCC In-Flite Services, Faggs Road, Feltham,
Middlesex London U.K. 130NQ LHR
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair U.K., Pinfold Lane Ringway, Altrincham Cheshire Manchester U.K. 158XA MAN
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Internacional Venezuela, Aparado postal N. 165,
Distrito Federal Caracas Venezuela CCS
- ------------------------------------------------------------------------------------------------------------------------------------
304.01 Maricabo Venezuela
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 173
SCHEDULE V
CAPITALIZATION
All outstanding (i) securities convertible into or exchangeable for
capital stock and (ii) subscription rights, options, warrants, contingent
issuance agreements, calls, stock appreciation rights, commitments or claims of
any character relating to the capital stock of OFSI, Caterair Holdings, SCIS,
Caterair, and any Subsidiary are as described in the Final Offering Memorandum
dated August 22, 1997 for the issuance by SCIS of $300,000,000 in 9.25% Senior
Subordinated Notes due 2007.
<PAGE> 174
SCHEDULE VI
SUBSIDIARIES
As required by Section 7.15 of the Credit Agreement, this schedule details
each subsidiary of which OFSI or Caterair Holdings owns or holds, directly or
indirectly, more than 50% of the ordinary voting power or more than a 50% equity
interest as of the Restatement Effective Date.
Subsidiaries of Onex Food Services, Inc. ("OFSI"):
<TABLE>
<CAPTION>
Class of % of Direct
Name Stock Ownership Owner
---- ----- --------- -----
<S> <C> <C> <C>
SC International Services, Inc. ("SCIS") Common 100% OFSI
Caterair International, Inc. (II) Common 100% SCIS
Sky Chefs, Inc. Common 100% SCIS
Sky Chefs International Corp. Common 100% Sky Chefs, Inc.
LSG-Sky Chefs do Brasil Catering--Refeicoes Quotas 100% Sky Chefs Int'l
Ltda.
ServCater Internacional Ltda. Quotas 80% Sky Chefs do
Brasil
Arlington Services, Inc. Common 100% Sky Chefs, Inc.
Arlington Services Holding Corporation Common 100% Sky Chefs, Inc.
("ASH")
Bethesda Services, Inc. Common 100% Caterair
International,
Inc. (II)
Caterair New Zealand Ltd. ("CNZ") Common 100% Bethesda
Services, Inc.
Onex Ohio Acceptance Corporation Common 100% SCIS
Onex Ohio Credit Corp. Common 100% SCIS
Onex Ohio Equity Corp. Common 100% SCIS
Onex Ohio Finance Corp. Common 100% SCIS
Onex Ohio Finance Corp. II Common 100% SCIS
Onex Ohio Capital Corp. Common 100% SCIS
</TABLE>
<PAGE> 175
<TABLE>
<CAPTION>
Class of % of Direct
Name Stock Ownership Owner
---- ----- --------- -----
<S> <C> <C> <C>
Onex Ohio Fiscal Corp. Common 100% SCIS
Onex Ohio Funds Corp. Common 100% SCIS
Onex Ohio Credit Corp. II Common 100% SCIS
Onex Ohio Funds Corp. II Common 100% SCIS
Onex Ohio Fiscal Corp. II Common 100% SCIS
Onex Ohio Equity Corp. II Common 100% SCIS
Onex Ohio Capital Corp. II Common 100% SCIS
Caterair International Transition Corporation Common 100% SCIS
SC International Services of Barbados Ltd. Common 100% SCIS
Caterair Consulting Services Corporation Common 100% ASH
JFK Caterers, Inc. Common 100% ASH
Sky Chefs Argentine, Inc. Common 100% ASH
Caterair St. Thomas Holdings Corporation Common 100% ASH
Cater Suprimento de Refeicoes, Ltd.
("CSRL") Quotas 100% ASH
Caterair Servicos de Bordo e Hotelaria S/A Ordinary 100% CSRL
Sky Chefs Canada, Limited Ordinary 100% ASH
SC International Services Ireland Ordinary 100% ASH
Shares
Caterair Airport Properties, Inc. ("CAP") Common 100% CNZ
Caterair Australia Pty. Ltd. ("Aust") Ordinary; 100% CAP
Preferred
Caterair Airport Services Pty. Ltd. ("Pty") Classes 51%JV Aust
A&B
Caterair Airport Services (Sydney) Pty. Ltd. Ordinary 51% Pty
Waruda Holdings Pty., Ltd. ("Waruda") Common 51% Pty
Cairns Wholesale Bakery Pty., Ltd. Common 51% Waruda
</TABLE>
-2-
<PAGE> 176
<TABLE>
<CAPTION>
Class of % of Direct
Name Stock Ownership Owner
---- ----- --------- -----
<S> <C> <C> <C>
Western Aire Chef, Inc. Common 100% ASH
Sky Chefs Chile, S.A. ("Chile") ---- 100% Western Aire
Caterair Servicos Industriales, Ltda. ---- 94% Chile
Comercializadora de Servicios, Ltda. 91% Chile
LSG Lufthansa Service Sky Chefs France, ---- 100% ASH
S.A.
Marriott In-Flite Services of Korea, Ltd. ---- 100% ASH
Arlington Services de Panama S.A. ("ASP") 100% ASH
Inversiones Turisticas Aeropuerto Panama, Nominal 100% ASP
S.A. ("ITAP") Common
Sky Chefs de Panama S.A. ---- 100% ITAP
Caterair Portugal - Assistencia a Bordo ---- 26% CAP (26%)
Limitada
Caterair Barcelona, S.A. Registered 100% ASH (80%)
Shares Caterair Madrid
(20%)
Caterair Madrid, S.A. Registered 100% ASH
Shares
Caterair Taiwan Inflight Services, Inc. ---- 100% Caterair New
Zealand, Ltd.
Sky Chefs-UK, Ltd. Ordinary 100% ASH
Shares
LSG Sky Chefs Venezuela C.A. ---- 100% ASH
Arlington Services Mexico, S.A. de C.V. Class A&B 100% ASH
("Mexico") Registered
Shares
Caterair de Mexico, S.A. de C.V. Series B 100% Mexico
Casa Ponce de Leon, S.A. de C.V. Fixed; 100% Mexico
Variable
</TABLE>
-3-
<PAGE> 177
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Comisariato Gotre, S.A. 2 Series 100% Mexico
Bearer
Shares
Cocina del Aire Provincia, S.A. de C.V. Registered 100% Mexico
Shares
Immobiliaria Marracas, S.A. de C.V. Nominal 100% Mexico
Shares,
2 classes
Sky Chefs de Mexico, S.A. de C.V. ---- 100% Mexico
</TABLE>
Subsidiaries of Caterair Holdings Corporation ("Holdings"):
<TABLE>
<CAPTION>
Class of % Holdings' Direct
Name Stock Ownership Owner
---- ----- --------- ------
<S> <C> <C> <C>
Caterair International Corporation ("CIC") Common 100% Holdings
Caterair Portugal - Assistencia A Bordo ---- 74% CIC
Limitada
</TABLE>
-4-
<PAGE> 178
SCHEDULE VII
EXISTING INDEBTEDNESS
OF SCIS, CIC
AND THEIR
RESPECTIVE SUBSIDIARIES
As required by Section 7.22(a) of the Credit Agreement, this schedule
details, by entity, all the obligations for borrowed money, all obligations
evidenced by bonds, debentures, notes, etc., all deferred purchase price
obligations other than trade accounts payable, all capitalized leases, all
letters of credit and banker's acceptances, all third party debt secured by a
lien, all guarantees and all interest rate protection agreements or other
hedging agreements, exclusive of the loans under the Credit Agreement and the
Term Loan Agreement, the letters of credit listed on Schedule III, the Senior
Subordinated Notes, the Caterair Holdings Unsecured Debentures, the Caterair
Holdings Secured Note, and the SCIS/Caterair Loan, as of the Restatement
Effective Date:
<TABLE>
<CAPTION>
Borrowing Principal
Entity Lender/Lessor Amount Guarantor
------ ------------- ------ ---------
<S> <C> <C> <C>
Onex Food Services, Inc. ---None---
Caterair Holdings Corporation ---None---
Sky Chefs, Inc. SC International Services, Inc. $99,326,452 None
Sky Chefs, Inc. (ORD) American Airlines $ 4,432,245 None
Sky Chefs, Inc. (DFW) American Airlines $13,500,000 None
Sky Chefs, Inc. (BNA) American Airlines $ 5,053,341 None
Sky Chefs, Inc. (RDU) American Airlines $ 3,404,690 None
Sky Chefs, Inc. (TUL) American Airlines $ 479,938 None
Sky Chefs, Inc. (TUS) Tucson Airport Authority $ 279,015 None
Caterair International, Inc. (II) SC International Services, Inc. $27,612,618 None
Bethesda Services, Inc. ---None--
Caterair New Zealand Limited SC Int'l Services Ireland $ 2,651,600 None
</TABLE>
<PAGE> 179
<TABLE>
<CAPTION>
Borrowing Principal
Entity Lender/Lessor Amount Guarantor
------ ------------- ------ ---------
<S> <C> <C> <C>
Cateringpor Sky Chefs, Inc. $ 2,669,490 None
Arlington Services, Inc. Sky Chefs, Inc. $32,439,960 None
Arlington Services Holding Arlington Services, Inc. $25,116,726 None
Corporation
LSG-Sky Chefs do Brasil Sky Chefs, Inc. $ 7,726,151 None
Catering-Refeicoes Ltda. Arlington Services Holding Corp. $ 2,000,000 None
Boavista Bank $ 1,000,000 None
Garantida Bank $ 3,731,366 None
ServCater Internacional Ltda. Sky Chefs, Inc. $ 3,731,366 None
Onex Ohio Acceptance SC International Services, Inc. $ 303,338 None
Corporation
Onex Ohio Credit Corp. SC International Services, Inc. $ 4,034,553 None
Onex Ohio Equity Corp. SC International Services, Inc. $ 213,812 None
Onex Ohio Finance Corp. SC International Services, Inc. $ 106,149 None
Onex Ohio Finance Corp. II SC International Services, Inc. $ 43,256 None
Onex Ohio Capital Corp. SC International Services, Inc. $ 94,613 None
Onex Ohio Fiscal Corp. SC International Services, Inc. $ 102,425 None
Onex Ohio Funds Corp. SC International Services, Inc. $ 108,656 None
Onex Ohio Credit Corp. II SC International Services, Inc. $ 47,521 None
Onex Ohio Funds Corp. II SC International Services, Inc. $ 33,876 None
Onex Ohio Fiscal Corp. II SC International Services, Inc. $ 45,938 None
Onex Ohio Equity Corp. II SC International Services, Inc. $ 46,448 None
Onex Ohio Capital Corp. II SC International Services, Inc. $ 34,474 None
</TABLE>
-2-
<PAGE> 180
<TABLE>
<CAPTION>
Borrowing Principal
Entity Lender/Lessor Amount Guarantor
------ ------------- ------ ---------
<S> <C> <C> <C>
Caterair International City of Houston $ 2,025,000 None
Corporation
Caterair International SC International Services, Inc. $40,811,040 None
Corporation
Caterair Consulting Services ---None---
Corporation
JFK Caterers, Inc. ---None--
Caterair St. Thomas Holdings ---None---
Corporation
Western Aire Chef, Inc. ---None--
Caterair Airport Properties, Inc. ---None--
Sky Chefs Argentine, Inc. SC Int'l Services Ireland $14,088,729 None
Arlington Services Holding $ 800,000 None
Caterair International Transition
Corporation ---None---
Cater Suprimento de Refeicoes, LSG Sky Chefs doBrasil $ 149,286 None
Ltda. LSG/Sky Chefs Chile $ 2,000,000 None
Cocina del Aire $ 300,000 None
SC Int'l Services Ireland $ 2,152,967 None
Servcater $ 39,766 None
LSG/Sky Chefs Chile, S.A. Banco Credito Inversiones $ 1,318,684 None
Banco Boston $ 4,878 None
Caterair Madrid, S.A. La Caixa $ 57,964 None
Caterair Barcelona, S.A. $ 945,918 None
LSG Sky Chefs France $ 10,869 None
Caterair Taiwan Dah An Comm $ 1,742,160 None
In-Flite Services, Inc. Caterair International, Inc. (II) $ 1,209,056 None
</TABLE>
-3-
<PAGE> 181
<TABLE>
<CAPTION>
Borrowing Principal
Entity Lender/Lessor Amount Guarantor
------ ------------- ------ ---------
<S> <C> <C> <C>
LSG/Sky Chefs SC Int'l Services Ireland $ 650,000 None
Venezuela C.A.
Caterair Airport Westpac $ 3,109,564 None
Services (Sydney)
LSG/Sky Chefs France, S.A. Selectbank $ 1,360,429 None
B.N.P. $ 850,268 None
Banque De Picardie $ 154,281 None
Cocina del Aire $ 350,000 None
Sky Chefs-UK, Ltd. $ 9,238 None
Caterair Australia Pty. Ltd. Caterair Airport $ 1,099,785 None
Properties, Inc.
Caterair Airport Services Caterair Airport Services $ 5,534,625 None
Pty. Ltd. Westpac $ 1,489,197 None
Westpac $ 1,325,895 None
Sky Chefs-U.K., Ltd. Midland Bank $ 2,204,591 None
Forward Trust Co. $ 32,599
SC Int'l Services Ireland $10,058,822 None
LSG/Sky Chefs Chile $ 1,500,000 None
Caterair Barcelona, S.A. SC Int'l Services Ireland $ 1,012,193 None
Caterair Portugal - Caterair Madrid $ 4,332 None
Assistancia A Bordo, Ltda. Caterair Barcelona $ 19,442 None
Sky Chefs-U.K., Ltd. $ 405,434 None
LSG-Sky Chefs do Brasil $ 2,742 None
Sky Chefs Canada, Limited $ 25,083 None
SC Int'l Services $ 1,886,525 None
Sky Chefs de Panama Riande Continental Airport $ 60,000 None
Arlington Services Panama, SC Int'l Services Ireland $ 3,000,000 None
S.A.
Sky Chefs Canada Ltd. SC Int'l Services, Inc. $13,558,780 None
</TABLE>
-4-
<PAGE> 182
<TABLE>
<CAPTION>
Borrowing Principal
Entity Lender/Lessor Amount Guarantor
------ ------------- ------ ---------
<S> <C> <C> <C>
Sky Chefs de Mexico Immobilaria Marracas $ 48,288 None
Arlington Services Mexico $ 45,080 None
Casa Ponce de Leon Sky Chefs de Mexico $ 262,344 None
Comisariatos Gotre Sky Chefs de Mexico $ 6,058 None
Arlington Services Mexico Casa Ponce de Leon $ 35,890 None
</TABLE>
all existing Interest Swap Obligations in connection with an Interest Rate
Protection Agreement between SCIS and Morgan Guaranty Trust Company of New York
or an affiliate of Morgan Guaranty Trust Company of New York;
and all Capitalized Lease Obligations and purchase money Indebtedness in
existence on the Restatement Effective Date. The aggregate amount of such
purchase money Indebtedness and Capitalized Lease Obligations outstanding at
June 30, 1997 approximated $31,800,000.
-5-
<PAGE> 183
SCHEDULE VIII
CLASS B ASSETS OF OFSI
This schedule details the Class B Assets of OFSI as of August 25, 1997:
(a) Cash and short term investments in the amount U.S $6,266,000;
and
(b) 3,890,700 shares of subordinate voting stock of Onex
Corporation.
<PAGE> 184
S C International Services
Risk Management Department
SCHEDULE IX
INSURANCE
<TABLE>
<CAPTION>
Line of Coverage Coverage Policy Expiry Company
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aviation Liability 200 MM with a 500,000 per 5/29/98 Various Insurers through
case deductible and a Alexander Howdan Aviation
1,000,000 agg limit deductible
- ----------------------------------------------------------------------------------------------------------------
Foreign Auto, General
Liability 3,000,000 5/29/98 American International
& Workers' Compensation Underwriters
- ----------------------------------------------------------------------------------------------------------------
All Risk Property Insurance Total Insured values of 1.3 BN 3/1/98 Allianz / IRI
Various deductibles & limits
- ----------------------------------------------------------------------------------------------------------------
Automobile liability
(off Airport) 3,000,000 Aggregate Limits 5/29/98 St. Paul Fire & Marine
250,000 Deductible
1,000,000 Aggregate Deductible
- ----------------------------------------------------------------------------------------------------------------
General Liability
(Off Airport) 3,000,000 Aggregate Limits 5/29/98 St. Paul Fire & Marine
250,000 Deductible
1,000,000 Aggregate Deductible
- ----------------------------------------------------------------------------------------------------------------
Surety Bonds 4,405,000 Various Various
- ----------------------------------------------------------------------------------------------------------------
Umbrella Liability 200 MM CDN 1O/l5/97 Various (layered policy)
Onex Placement
- ----------------------------------------------------------------------------------------------------------------
Directors and Officers Liability 100 MM CDN 11/15/97 Various (layered policy)
Onex Placement 250,000 CDN Deductible
- ----------------------------------------------------------------------------------------------------------------
Fiduciary Coverage 25 MM CDN Limit of Liability Chubb Insurance Company
Onex Placement 5,000 CDN Deductible 11/15/97 Reliance Insurance Co. of CD
- ----------------------------------------------------------------------------------------------------------------
Crime 10 MM CDN 11/15/96 Chubb Insurance Company
Onex Placement 25,000 CDN Deductible
- ----------------------------------------------------------------------------------------------------------------
Special Crime (K & R) 15 MM CDN 11/15/96 Chubb Insurance Company
Onex Placement 0 Deductible
- ----------------------------------------------------------------------------------------------------------------
WORKERS' COMPENSATION - LSG/SKY Chefs only
- ----------------------------------------------------------------------------------------------------------------
All Other States Statutory 5/29/98 St. Paul Insurance Company
250,000 "Deductible"
- ----------------------------------------------------------------------------------------------------------------
California only Statutory 5/29/98 California Workers Comp Fun
Guaranteed Cost
- ----------------------------------------------------------------------------------------------------------------
Texas only Non Subscriber 5/29/98 Lindsey Morden
ERISA Plan (Administrator)
- ----------------------------------------------------------------------------------------------------------------
Nevada Statutory 5/29/98 State Industrial
Insurance System
- ----------------------------------------------------------------------------------------------------------------
Ohio Statutory 5/29/98 Bureau of Workers' Comp.
Acordia - Administrator
- ----------------------------------------------------------------------------------------------------------------
Washington Statutory 5/29/98 Dept. of Labor & Industries
- ----------------------------------------------------------------------------------------------------------------
WORKERS' COMPENSATION - Caterair International, Inc.
- ----------------------------------------------------------------------------------------------------------------
California only Statutory 5/29/98 California Workers Comp Fun
Guaranteed Cost
- ----------------------------------------------------------------------------------------------------------------
Maryland Statutory 10/3/96 Maryland State Fund
- ----------------------------------------------------------------------------------------------------------------
All Other States Statutory 5/29/98 St. Paul Insurance Company
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
Line of Coverage Policy Number Premium
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aviation Liability AM9731471 2,690,000
- -------------------------------------------------------------------------------------------
Foreign Auto, General
Liability 80-263823 47,288
& Workers' Compensation plus local Premium
- -------------------------------------------------------------------------------------------
All Risk Property Insurance CLP1025618 721,000
Various deductibles & limits
- -------------------------------------------------------------------------------------------
Automobile liability
(off Airport) 002JA3912-1 154,512
002JA3912 (plus PD loss, Retro, etc.)
- -------------------------------------------------------------------------------------------
General Liability
(Off Airport) 502JA2028 65,000
(plus PD loss, Retro, etc.)
- -------------------------------------------------------------------------------------------
Surety-Bonds 75,000
- -------------------------------------------------------------------------------------------
Umbrella Liability Various 127,446 CDN
Onex Placement
- -------------------------------------------------------------------------------------------
Directors and Officers Liability 8108-17-42F 218,000 CDN
Onex Placement 970-47-41
- -------------------------------------------------------------------------------------------
Fiduciary Coverage 8108-14-94G 24,200 CDN
Onex Placement TBA
- -------------------------------------------------------------------------------------------
Crime 8108-17-43G 162,OOO CDN
Onex Placement
- -------------------------------------------------------------------------------------------
Special Crime (K & R) 8133-95-41C 4,400 CDN
Onex Placement
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
All Other States WVA0201983 842,000
WVA0201984 (plus PD loss, Retro, etc.)
Anticipated costs 6,844,050
- -------------------------------------------------------------------------------------------
California only 1484367 1,011,000
- -------------------------------------------------------------------------------------------
Texas only 0100-S-00000-530 55,000
(plus PD loss, Retro, etc.)
- -------------------------------------------------------------------------------------------
Nevada 219665.1 180,000
- -------------------------------------------------------------------------------------------
Ohio 0154122-1 90,000
- -------------------------------------------------------------------------------------------
Washington 897,868-006 108,000
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
California only 1484366 1,100,000
- -------------------------------------------------------------------------------------------
Maryland 10255546-1 150,000
- -------------------------------------------------------------------------------------------
All Other States WVA 0201985 1,520,400
(plus PD loss, Retro, etc.)
- -------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 185
CERTIFICATE OF INSURANCE
------------------------
CERTIFICATE NUMBER: 0214
This is to certify to Morgan Guaranty Trust Company of New York
as Collateral Agent
whose address is that SC International Services, Inc., Sky Chefs, Inc.
and Caterair International Services, Inc.
Attn: Jeff Emmons
whose address is 524 E. Lamar, Suite 150
Arlington, TX 76011
Kind of Insurance Inception Date Expiration Date Limits of Coverage
05/29/97 05/29/98
- --------------------------------------------------------------------------------
AIRPORT LIABILITY
Single Liability Coverage for Each Occurrence
Bodily Injury and Property Damage $200,000,000
(Comprehensive General Liability, Contractual, Personal
Injury and On-Premises Auto)
*REFER TO THE POLICY. AN ANNUAL AGGREGATE LIMIT APPLIES TO SOME COVERAGES.
- --------------------------------------------------------------------------------
OTHER COVERAGES/CONDITIONS/REMARKS
The Certificate Holder is included as Additional Insured, but only as respects
operations of the Named Insured.
If this insurance is canceled for any reason whatever which affects the interest
of the certificate holder insurers agree to provide thirty (30) days prior
written notice of such cancellation.
- --------------------------------------------------------------------------------
SECURITY Percentage of Subscription Policy Number
VARIOUS INSURERS THROUGH ALEXANDER
HOWDEN AVIATION 100% AM9731471
Subscribing Lloyds Underwriters for
percentages as on file with Alexander
Howden Aviation.
Subscribing Insurance Companies for
percentages as on file with Alexander
Howden Aviation.
Each of the above Insurers has authorized Alexander & Alexander of Texas Inc. to
issue this certificate on its behalf. Alexander & Alexander is not an insurer
and has no liability of any sort under the above policies nor as a result of the
issuance of this certificate.
The subscribing insurer's obligations under contracts of insurance to which they
subscribe are several and not joint and are limited solely to the extent of
their individual subscriptions. The subscribing insurers are not responsible for
the subscription of any co-subscribing insurer who for any reason does not
satisfy all or part of its obligation.
This certificate of verification of insurance is not an insurance policy and
does not amend, extend or alter the coverage afforded by the policies listed
herein. Notwithstanding any requirement, term, or condition of any contract or
other document with respect to which this certificate or verification of
insurance may be issued or may pertain, the insurance afforded by the policies
described herein is subject to all terms, exclusions and conditions of such
policies.
ALEXANDER & ALEXANDER OF TEXAS
2711 North Haskell Avenue
Dallas, TX 75204
/s/ [ILLEGIBLE] August 6, 1997
- ---------------------------- ----------------------------
Authorized Representative Date
<PAGE> 186
================================================================================
CERTIFICATE OF INSURANCE ISSUE DATE (MM/DD/YY): 6-Aug-97
================================================================================
THIS CERTIFICATE IS ISSUED AS A MATTER
PRODUCER OF INFORMATION ONLY AND CONFERS NO
RIGHTS UPON THE CERTIFICATE HOLDER.
THIS CERTIFICATE DOES NOT AMEND,
EXTEND OR ALTER THE COVERAGE AFFORDED
BY THE POLICIES BELOW.
AON Risk Services, Inc. of New York --------------------------------------
Two World Trade Center COMPANIES AFFORDING COVERAGE
New York, NY 10048-1096 --------------------------------------
COMPANY The Insurance Company of the
A State of Pennsylvania
- --------------------------------------------------------------------------------
INSURED COMPANY
S C International Services, Inc. B
24 East Lamar Blvd. --------------------------------------
Arlington, Texas 76011-3999 COMPANY
C
--------------------------------------
COMPANY
D
--------------------------------------
COMPANY
E
--------------------------------------
================================================================================
COVERAGE
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED
TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY
REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT
TO WHICH THIS CERTIFICATE MAY BE ISSUED OR OTHER DOCUMENT WITH RESPECT TO WHICH
THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN. THE INSURANCE AFFORDED BY THE
POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS
OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
CO POLICY EFFECTIVE POLICY EXPIRATION
LTD TYPE OF INSURANCE POLICY NUMBER DATE (MM/DD/YY) DATE (MM/DD/YY)
- ----------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
A GENERAL LIABILITY 80-0263823 29-May-97 29-May-98
|X| COMMERCIAL GENERAL LIABILITY
|_||_| CLAIMS MADE |X| OCCUR
|_| OWNER'S & CONT PROT
|_|____________________
- --------------------------------------
A AUTOMOBILE LIABILITY Excess
DIC 80-0263823 29-May-97 29-May-98
|_| ANY AUTO
|_| ALL OWNED AUTOS
|_| SCHEDULED AUTOS
|_| HIRED AUTOS
|_| NON-OWNED AUTOS
- --------------------------------------
GARAGE LIABILITY
|_| ANY AUTO
- ----------------------------------------------------------------------------------------------
EXCESS LIABILITY
|_| UMBRELLA FORM
|_| OTHER THAN UMBRELLA FORM
- --------------------------------------
A WORKER'S COMPENSATION 83-46763 29-May-97 29-May-98
AND EMPLOYERS' LIABILITY
THE PROPRIETOR/PARTNERS/ INCL.
EXECUTIVE OFFICERS ARE: EXCL.
- ----------------------------------------------------------------------------------------------
OTHER - Property Damage, Business
Interruption and Boiler &
Machinery Program
- ----------------------------------------------------------------------------------------------
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/SPECIAL ITEMS
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CO
LTD TYPE OF INSURANCE LIMITS
- --------------------------------------------------------------------------------
<C> <S> <C> <C>
A GENERAL LIABILITY GENERAL AGGREGATE $ 3,000,000
|X| COMMERCIAL GENERAL LIABILITY PRODUCTS/COMP/OP AGG Included
|_||_| CLAIMS MADE |X| OCCUR PERSONAL & ADV. INUURY Included
|_| OWNER'S & CONT PROT EACH OCCURRENCE $ 3,000,000
|_|____________________ FIRE DAMAGE (Any
one fire) $ 50,000
MED. EXP. (Any one
- -------------------------------------- person) $ 5,000
A AUTOMOBILE LIABILITY Excess
DIC COMBINED SINGLE LIMIT $ 3,000,000
|_| ANY AUTO BODILY INJURY
|_| ALL OWNED AUTOS (Per person)
|_| SCHEDULED AUTOS BODILY INJURY
|_| HIRED AUTOS (Per accident)
|_| NON-OWNED AUTOS PROPERTY DAMAGE
- --------------------------------------
GARAGE LIABILITY AUTO ONLY-EA. ACCIDENT
|_| ANY AUTO OTHER THAN AUTO ONLY:
EACH ACCIDENT
AGGREGATE
- --------------------------------------------------------------------------------
EXCESS LIABLITY EACH OCCURRENCE
|_| UMBRELLA FORM AGGREGATE
|_| OTHER THAN UMBRELLA FORM
- --------------------------------------
A WORKER'S COMPENSATION |X| STATUTORY LIMITS
AND EMPLOYERS' LIABILITY EACH ACCIDENT
THE PROPRIETOR/PARTNERS/ INCL. DISEASE-POLICY LIMIT
EXECUTIVE OFFICERS ARE: EXCL. DISEASE-EACH EMPLOYEE
- --------------------------------------------------------------------------------
OTHER - Property Damage, Business
Interruption and Boiler &
Machinery Program
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
CERTIFICATE HOLDER CANCELLATION
- --------------------------------------------------------------------------------
Morgan Guarantee Trust Company of New York SHOULD ANY OF THE ABOVE DESCRIBED
As additional Named Insured and Loss Payee POLICIES BE CANCELED BEFORE THE
EXPIRATION DATE THEREOF. THE
ISSUING COMPANY WILL ENDEAVOR TO
MAIL 30 DAYS WRITTEN NOTICE TO
THE CERTIFICATE HOLDER NAMED TO
THE LEFT, BUT FAILURE TO MAIL
SUCH NOTICE SHALL IMPOSE NO
OBLIGATION OR LIABILITY OF ANY
KIND UPON THE COMPANY, ITS AGENTS
OR REPRESENTATIVES.
---------------------------------
AUTHORIZED REPRESENTATIVE
/s/ [ILLEGIBLE]
---------------------------------
Page 1 of 1
<PAGE> 187
================================================================================
CERTIFICATE OF INSURANCE ISSUE DATE (MM/DD/YY)
08/07/97
================================================================================
THIS CERTIFICATE IS ISSUED AS A MATTER
PRODUCER OF INFORMATION ONLY AND CONFERS NO
RIGHTS UPON THE CERTIFICATE HOLDER.
THIS CERTIFICATE DOES NOT AMEND,
EXTEND OR ALTER THE COVERAGE AFFORDED
BY THE POLICIES BELOW.
AON Risk Services, Inc. of New York --------------------------------------
Two World Trade Center COMPANIES AFFORDING COVERAGE
New York, NY 10048 --------------------------------------
COMPANY ST. PAUL FIRE & MARINE
A INSURANCE COMPANY
- --------------------------------------------------------------------------------
INSURED COMPANY
SC INTERNATIONAL SERVICES, INC. B STATE COMPENSATION INS. FUND
& CATERAIR INTERNATIONAL, INC. --------------------------------------
& SKY CHEFS, INC. COMPANY
524 EAST LAMAR BLVD. C ALLIANZ INSURANCE COMPANY
ARLINGTON, TEXAS 76011 --------------------------------------
COMPANY
D
--------------------------------------
COMPANY
E
--------------------------------------
================================================================================
COVERAGES
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED
TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY
REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT
TO WHICH THIS CERTIFICATE MAY BE ISSUED OR OTHER DOCUMENT WITH RESPECT TO WHICH
THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN. THE INSURANCE AFFORDED BY THE
POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS
OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
CO POLICY EFFECTIVE POLICY EXPIRATION
LTD TYPE OF INSURANCE POLICY NUMBER DATE (MM/DD/YY) DATE (MM/DD/YY)
- ----------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
A GENERAL LIABILITY 502JA2087 05/29/97 05/29/98
|X| COMMERCIAL GENERAL LIABILITY
|_||_| CLAIMS MADE |X| OCCUR.
|_| OWNER'S & CONTRACTOR'S PROT.
|_| ___________________________
- ----------------------------------------------------------------------------------------------------
AUTOMOBILE LIABILITY
A |X| ANY AUTO 002 JA 4017 (TX) 05/29/97 05/29/98
A |_| ALL OWNED AUTOS 002 JA 4016 (A/O/S) 05/29/97 05/29/98
A |_| SCHEDULED AUTOS 060 MA 3625 (MA) 05/29/97 05/29/98
|_| HIRED AUTOS OFF AIRPORT
|_| NON-OWNED AUTOS
|_| GARAGE LIABILITY
|_|
- ----------------------------------------------------------------------------------------------------
EXCESS LIABILITY
|_| UMBRELLA FORM
|_| OTHER THAN UMBRELLA FORM
- ----------------------------------------------------------------------------------------------------
A WORKER'S COMPENSATION WVA0201983 DED 05/29/97 05/29/98
A AND EMPLOYERS' LIABILITY WVA0201984 WI 05/29/97 05/29/98
B 1484367 (CA) 05/29/97 05/29/98
A WVA021985 05/29/97 05/29/98
- ----------------------------------------------------------------------------------------------------
B OTHER WORKERS COMP. & 1484366 (CA) 05/29/97 05/29/98
EMP. LIAB.
C ALL RISK PROPERTY CLP 1025618 03/01/97 03/01/98
- ----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CO
LTD TYPE OF INSURANCE LIMITS
- --------------------------------------------------------------------------------
<C> <S> <C> <C>
A GENERAL LIABILITY GENERAL AGGREGATE $ 3,000,000
|X| COMMERCIAL GENERAL LIABILITY PROD.-COMP/OP AGG. $ 3,000,000
|_||_| CLAIMS MADE |X| OCCUR. PERSONAL & ADV.
INJURY $ 3,000,000
|_| OWNER'S & CONTRACTOR'S PROT. EACH OCCURRENCE $ 3,000,000
|_| FIRE DAMAGE (Any
one fire) $ 3,000,000
MED. EXP. (Any one
person) $ 10,000
- --------------------------------------------------------------------------------
AUTOMOBILE LIABILITY
DIC COMBINED SINGLE LIMIT $ 3,000,000
A |X| ANY AUTO BODILY INJURY
A |_| ALL OWNED AUTOS (Per person)
A |_| SCHEDULED AUTOS BODILY INJURY
|_| HIRED AUTOS (Per accident)
|_| NON-OWNED AUTOS PROPERTY DAMAGE
|_| GARAGE LIABILITY
|_|
- --------------------------------------------------------------------------------
EXCESS LIABLITY EACH OCCURRENCE
|_| UMBRELLA FORM AGGREGATE
|_| OTHER THAN UMBRELLA FORM
- --------------------------------------------------------------------------------
A WORKER'S COMPENSATION |X| STATUTORY LIMITS
A AND EMPLOYERS' LIABILITY EACH ACCIDENT $ 1,000,000
B DISEASE-POLICY LIMIT $ 1,000,000
A DISEASE-EACH EMPLOYEE $ 1,000,000
- --------------------------------------------------------------------------------
B OTHER WORKERS COMP. & SEE ABOVE
EMP. LIAB.
C ALL RISK PROPERTY $10,000,000 REAL & PERS.
PROP. INCL. IMPROVEMENTS
- --------------------------------------------------------------------------------
</TABLE>
DESCRIPTION OF OPERATIONS/LOCATIONS/VEHICLES/SPECIAL ITEMS
MORGAN GUARANTY TRUST COMPANY OF NEW YORK AS COLLATERAL AGENT IS INCLUDED AS
ADDITIONAL INSURED AND LOSS PAYEE EXCEPT FOR WORKERS COMPENSATION BUT ONLY WITH
RESPECTS TO THE OPERATIONS AND/OR CONTRACTUAL AGREEMENT WITH THE NAMED INSURED.
- --------------------------------------------------------------------------------
CERTIFICATE HOLDER CANCELLATION
- --------------------------------------------------------------------------------
Morgan Guaranty Trust Company of New York SHOULD ANY OF THE ABOVE DESCRIBED
POLICIES BE CANCELLED BEFORE THE
EXPIRATION DATE THEREOF, THE
ISSUING COMPANY WILL MAIL 30 DAYS
WRITTEN NOTICE TO THE CERTIFICATE
HOLDER NAMED TO THE LEFT
-----------------------------------
AUTHORIZED REPRESENTATIVE
/s/ [ILLEGIBLE]
-----------------------------------
<PAGE> 188
[LETTERHEAD OF AON REED STENHOUSE INC.]
Memorandum of Insurance
No. L197 / 96-97 AMENDED
To: Morgan Guaranty Trust Company of New York, as
Collateral Agent
Attn: Andrew Lipsett
c/o J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, Delaware 19713
Memorandum of Insurance
Re: Evidence of Insurance for SC
International Services, Inc.
Insurance as described herein has been arranged on behalf of the insured named
herein under the following policy(ies) and as more fully described by the terms,
conditions, exclusions and provisions contained in the said policy(ies) and any
endorsements attached thereto.
Insured: Onex Corporation et al including, SC International Services, Inc. et al
161 Bay Street
BCE Place, Suite 4900
Toronto, ON M5J 2T3
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
Policy Policy
Coverage: Insurer Policy No. Eff. Date Exp. Date Limit(s) of Liability
not less than
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Umbrella Liability Chubb Insurance Company 79747695 April 17/97 Oct. 15/97 $20,000,000 INCLUSIVE Bodily
Injury and Property Damage subject
to aggregate where applicable
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
1st Excess Reliance Insurance Company TXL0001221 Oct. 15/96 Oct. 15/97 $10,000 IN EXCESS of
underlying
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
2nd Excess Liberty / Reliance / Royal LQ1-B71-030057- Oct. 15/96 Oct. 15/97 Limit of not less than $20,000,000
036 / Annual Aggregate excess of
TXL0001222 / scheduled underlying policies
6088945
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
3rd Excess Chubb Insurance Company 7974753 Oct. 15/96 Oct. 15/97 Limit of not less than $10,000,000
Annual Aggregate excess of
scheduled underlying policies
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
4th Excess Cigna Insurance Company XCP373280 Oct. 15/96 Oct. 15/97 Limit of not less than $30,000,000
Annual Aggregate excess of
scheduled underlying policies
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
5th Excess Royal Insurance Company 60284559 Oct. 15/96 Oct. 15/97 Limit of not less than $5,000,000
Annual Aggregate excess of
scheduled underlying policies
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
6th Excess Zurich Canada 8815305 Oct. 15/96 Oct. 15/97 Limit of not less than $10,000,000
Annual Aggregate excess of
scheduled underlying policies
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
7th Excess Royal Insurance Company 60284560 Oct. 15/96 Oct. 15/97 Limit of not less than $10,000,000
Annual Aggregate excess of
scheduled underlying policies
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
8th Excess Scottish & York Insurance IE50077 Oct. 15/96 Oct. 15/97 Limit of not less than $10,000,000
Annual Aggregate excess of
scheduled underlying policies
---------------------------------------------------------------------------------------------------------
</TABLE>
THE POLICY CONTAINS A CLAUSE THAT MAY LIMIT THE AMOUNT PAYABLE
OR, IN THE CASE OF AUTOMOBILE INSURANCE,
<PAGE> 189
[LETTERHEAD OF AON REED STENHOUSE INC.]
Memorandum of Insurance
No. L197 / 96-97 AMENDED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9th Excess Royal Insurance Company 60284561 Oct. 15/96 Oct. 15/97 Limit of not less than $5,000,000
Annual Aggregate excess of
scheduled underlying policies
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
10th Excess Lombard Canada / 3597946 / Oct. 15/96 Oct. 15/97 Limit of not less than $20,000,000
Guardian 4301019 Annual Aggregate excess of
scheduled underlying policies
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
11th Excess Scottish & York/ IE50078 / Oct. 15/96 Oct. 15/97 Limit of not less than $20,000,000
Cigna XCP373281 Annual Aggregate excess of
scheduled underlying policies
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
12th Excess Chubb Atlantic Indemnity (97) 3310-01-67 Oct. 15/96 Oct. 15/97 Limit of not less than $30,000,000
Annual Aggregate excess of
scheduled underlying policies
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Additional Only with respect to the above and arising out of the Named
Insured: Insured's operations is the following name added to the policy
as an Additional Insured. The policy limits are not increased
by the addition of such Additional Insured and remain as
stated in this Memorandum.
Morgan Guaranty Trust Company of New York, as Collateral Agent
Cancellation/ The Insurer will endeavour to provide THIRTY (30) days written
Termination: notice of cancellation/termination or adverse material change
to the Addressee.
This memorandum constitutes a statement of the facts as of the
date of issuance and are so represented and warranted only to
Morgan Guaranty Trust Company of New York, as Collateral
Agent; other persons relying on this memorandum do so at their
own risk.
Aon Reed Stenhouse Inc.
/s/ Glenn Sheppard
----------------------------------
Glenn Sheppard, Technical Services
Direct Line: (416) 868-5890
Dated August 25, 1997, at Toronto, Ontario
THE POLICY CONTAINS A CLAUSE THAT MAY LIMIT THE AMOUNT PAYABLE
OR, IN THE CASE OF AUTOMOBILE INSURANCE,
<PAGE> 190
[LETTERHEAD OF AON REED STENHOUSE INC.]
Memorandum of Insurance
No. E8 / 96-97 AMENDED
To: Morgan Guaranty Trust Company of New York, as
Collateral Agent
Attn: Andrew Lipsett
c/o J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, Delaware 19713
Re: Evidence of Insurance for SC International Services, Inc.
Insurance as described herein has been arranged on behalf of the insured named
herein under the following policy(ies) and as more fully described by the terms,
conditions, exclusions and provisions contained in the said policy(ies) and any
endorsements attached thereto.
Insured: Onex Corporation et al including SC International Services, Inc. et al
161 Bay Street, BCE Place, Suite 4900
Toronto, ON M5J 2T3
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
Policy Policy
Coverage: Insurer Policy No. Eff. Date Exp. Date Limit(s) of Liability not less
than
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Directors' and Officers' Chubb Insurance Company 8108-17-42G Nov. 15/96 Nov. 15/97 $25,000,000 each loss and each
Liability policy period
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
1st Excess D&O Liberty International Canada LN1-B71-030057 Nov. 15/96 Nov. 15/97 $25,000,000 in excess of
046 primary D&O Policy shown above.
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
2nd Excess D&O Cigna Insurance Company DOX 007326 Nov. 15/96 Nov. 15/97 $35,000,000 in excess of First
excess and primary D&O Policy
shown above.
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
3rd Excess D&O Reliance Insurance Company TDO 0001305 Nov. 15/96 Nov. 15/97 $15,000,000 in excess of
Second excess, First excess
and primary D&O Policy shown
above.
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
Comprehensive Crime Chubb Insurance Company 8109-17-43H Nov. 15/96 Nov. 15/97 $10,000,000
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
Fiduciary Liability Chubb Insurance Company 8108-14-94G Nov. 15/96 Nov. 15/97 $15,000,000
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
1st Excess Fiduciary Reliance Insurance TDO 0001304 Nov. 15/96 Nov. 15/97 $10,000,000 in excess of
primary Fiduciary Policy shown
above
-----------------------------------------------------------------------------------------------------
</TABLE>
Cancellation/ The Insurer will endeavour to provide THIRTY (30) days
Termination: written notice of cancellation or adverse material
change to the Addressee.
THE POLICY CONTAINS A CLAUSE THAT MAY LIMIT THE AMOUNT PAYABLE
OR, IN THE CASE OF AUTOMOBILE INSURANCE.
<PAGE> 191
[LETTERHEAD OF AON REED STENHOUSE INC.]
MEMORANDUM OF INSURANCE
No. E8/96-97 AMENDED
This memorandum constitutes a statement of the facts as of the date of issuance
and are so represented and warranted only to Morgan Guaranty Trust Company of
New York, as Collateral Agent; other persons relying on this memorandum do so at
their own risk.
AON REED STENHOUSE INC.
/s/ Glenn Sheppard
-------------------------------
Glenn Sheppard, Technical Services
Direct Line: (416) 868-5890
Dated August 25, 1997, at Toronto, Ontario
THE POLICY CONTAINS A CLAUSE THAT MAY LIMIT THE AMOUNT PAYABLE
OR, IN THE CASE OF AUTOMOBILE INSURANCE.
<PAGE> 192
SCHEDULE X
EXISTING LIENS
This schedule sets forth the liens in existence on the Restatement
Effective Date to be included in the definition of Permitted Liens:
All liens placed on assets subject to Capitalized Lease
Obligations and to secure purchase money Indebtedness which are in
existence on the Restatement Effective Date. The aggregate amount of
such purchase money Indebtedness and Capitalized Lease Obligations
outstanding at June 30, 1997 approximated $31,800,000.
<PAGE> 193
SCHEDULE XI
EXISTING INVESTMENTS
Pursuant to Section 9.05(vi) of the SCIS Credit Agreement, this
schedule details (direct or indirect) loans, credit extensions, advances, stock
or security purchases/acquisitions, interests, capital contributions, futures
contracts, currency or commodity options of OFSI, Caterair Holdings and their
respective Subsidiaries on the Restatement Effective Date:
In addition to the investments in the Subsidiaries listed on Schedule
VI,
Aerococina S.A. de C.V. - 49% interest
Airport Restaurants (1992) Limited - 49% interest
Antigua Catering Services Limited - 49% interest
Anchorage Caterers, Inc. - 49% interest
Barbados Flight Kitchen Limited - 49% interest
Inflight Holdings (Cayman) Ltd. - 49% interest
Industrial Catering Services (Cayman) Ltd. - 49% interest
Godca S.A. - 49% interest
Cayman Catering Services Ltd. - 49% interest
Belixe Inflight Services (Cayman) - 49% interest
Belixe Inflight Services Limited - 49% interest
Cocina del Aire (Cayman) Ltd. - 49% interest
Cocina del Aire S.A. de C.V. - 49% interest
Ecuador Inflight Services (Cayman) Ltd. (LLC) - 49% interest
Cateraire del Ecuador - 30% interest
Grenada Inflight (Cayman) Ltd. - 49% interest
Inflight Caterers (Grenada) Ltd. - 25% interest
St. Maarten In-flight (Cayman) N.V. - 49% interest
St. Maarten In-flight Services N.V. - 49% interest
Cocina de Vuelos, S.A. de C.V. (LLC) - 49% interest
Gulf International Caterers, W.L.L. - 49% interest
St. Thomas Catering Corporation - 37% interest
Abidjan Catering Ltd. - 10% interest
Versair In-Flight Services Ltd. - 24% interest
Comisariato de Baja California, S.A. de C.V. (LLC) - 50% interest
St. Lucia Catering Services Ltd. - 49% interest
Paradise Springs Ltd. - 49% interest
Caterair Barcelona, S.A. - 20% interest
Aeromar, Ltd. - 49% interest
Caterair/GCC Inflight Services Ltd. - 50% interest
Franquicias Alcomesa S.A. de C.V. - 50% interest
<PAGE> 194
Marriott Export Services, C.A. - 80% interest (inactive)
Marriott International Trade Services, C.A. - 80% interest
(inactive)
Caterair Lebanon SAL - 20% interest
Delta Dailyfood Texas, Inc. - 33% interest
CateringPor - 49% interest
Class B Assets of OFSI are listed on Schedule VIII.
Intercompany Notes are listed on Schedule VII - Existing
Indebtedness.
The Onex Ohio entities listed on Schedule VII have made employee
loans totalling $5,215,063 as of July 31, 1997.
Employee advances from Sky Chefs, Inc. totalling approximately
$287,000 as of July 31, 1997.
Employee advances from CII totalling $29,000 as of July 31, 1997.
-2-
<PAGE> 195
EXHIBIT A
NOTICE OF BORROWING
[Date]
Morgan Guaranty Trust Company of New York,
as Administrative Agent for the Banks party
to the Credit Agreement
referred to below
c/o J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, Delaware 19713
Attention: Andrew Lipsett
Gentlemen:
The undersigned, SC International Services, Inc. (the
"Borrower"), refers to the Credit Agreement, dated as of September 29, 1995 and
amended and restated as of August 28, 1997 (as amended from time to time, the
"Credit Agreement," the terms defined therein being used herein as therein
defined), among Onex Food Services, Inc., the Borrower, Caterair Holdings
Corporation, Caterair International Corporation, various Banks from time to time
party thereto, Bankers Trust Company and J.P. Morgan Securities Inc., as
Co-Arrangers, Bankers Trust Company, as Syndication Agent, you, as
Administrative Agent for such Banks, and The Bank of New York, as Co-Agent, and
hereby gives you notice, irrevocably, pursuant to Section 1.03(a) of the Credit
Agreement, that the undersigned hereby requests a Borrowing of Revolving Loans
under the Credit Agreement, and in that connection sets forth below the
information relating to such Borrowing (the "Proposed Borrowing") as required by
Section 1.03(a) of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is
_________, 19__.(1)
(ii) The aggregate principal amount of the Proposed
Borrowing is $___________.
(iii) The Revolving Loans to be made pursuant to the
Proposed Borrowing shall be initially maintained as [Base Rate Loans]
[Eurodollar Loans].
- --------------
(1) Shall be a Business Day at least three Business Days in the case of
Eurodollar Loans and at least one Business Day in the case of Base Rate Loans,
in each case after the date hereof.
<PAGE> 196
EXHIBIT A
Page 2
(iv) The initial Interest Period for the Proposed Borrowing is
___ month(s).(2)
The Borrower hereby certifies that the following statements
are true and correct on the date hereof, and will be true and correct on the
date of the Proposed Borrowing:
(A) the representations and warranties contained in the Credit
Documents are and will be true and correct in all material respects,
both before and after giving effect to the Proposed Borrowing and to
the application of the proceeds thereof, as though made on such date
(it being understood and agreed that any representation or warranty
which by its terms is made as of a specified date shall be required to
be true and correct in all material respects only as of such specified
date); and
(B) no Default or Event of Default has occurred and is
continuing, or would result from such Proposed Borrowing or from the
application of the proceeds thereof; and
(C) the aggregate outstanding principal amount (or the Dollar
Equivalent thereof) of all Third-Party Foreign Subsidiary Indebtedness
as reported in the officer's certificate of the Borrower delivered with
the most recent set of financial statements furnished to the
Administrative Agent under Section 8.01(a) of the Credit Agreement is
$_________.
Very truly yours,
SC INTERNATIONAL SERVICES, INC.
By________________________________
Name:
Title:
- ------------
(2) To be included for a Proposed Borrowing of Eurodollar Loans.
<PAGE> 197
EXHIBIT B-1
REVOLVING NOTE
$_______________ New York, New York
______ __, ____
FOR VALUE RECEIVED, SC INTERNATIONAL SERVICES, INC., a
Delaware corporation (the "Borrower"), hereby promises to pay to _______________
or its registered assigns (the "Bank"), in lawful money of the United States of
America in immediately available funds, at the office of Morgan Guaranty Trust
Company of New York (the "Administrative Agent") located at 60 Wall Street, New
York, New York 10260-0060 on the Final Maturity Date (as defined in the
Agreement referred to below) the principal sum of _______________ DOLLARS
($______________) or, if less, the then unpaid principal amount of all Revolving
Loans (as defined in the Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid
principal amount hereof in like money at said office from the date hereof until
paid at the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Revolving Notes referred to in the
Credit Agreement, dated as of September 29, 1995 and amended and restated as of
August 28, 1997, among Onex Food Services, Inc., the Borrower, Caterair Holdings
Corporation, Caterair International Corporation, the lenders from time to time
party thereto (including the Bank), Bankers Trust Company and J.P. Morgan
Securities Inc., as Co-Arrangers, Bankers Trust Company, as Syndication Agent,
Morgan Guaranty Trust Company of New York, as Administrative Agent, and The Bank
of New York, as Co-Agent (as from time to time in effect, the "Agreement"), and
is entitled to the benefits thereof and of the other Credit Documents (as
defined in the Agreement). This Note is secured by the Security Documents (as
defined in the Agreement) and is entitled to the benefits of the Guaranties (as
defined in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Final Maturity Date,
in whole or in part.
In case an Event of Default (as defined in the Agreement)
shall occur and be continuing, the principal of and accrued interest on this
Note may be declared to be due and payable in the manner and with the effect
provided in the Agreement.
<PAGE> 198
EXHIBIT B-1
Page 2
The Borrower hereby waives presentment, demand, protest or
notice of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
SC INTERNATIONAL SERVICES, INC.
By________________________________
Title:
<PAGE> 199
EXHIBIT B-2
SWINGLINE NOTE
$________________ New York, New York
_________ __, 1997
FOR VALUE RECEIVED, SC INTERNATIONAL SERVICES, INC., a
Delaware corporation (the "Borrower"), hereby promises to pay to MORGAN GUARANTY
TRUST COMPANY OF NEW YORK or its registered assigns (the "Bank"), in lawful
money of the United States of America in immediately available funds, at the
office of Morgan Guaranty Trust Company of New York (the "Administrative Agent")
located at 60 Wall Street, New York, New York 10260-0060 on the Swingline Expiry
Date (as defined in the Agreement referred to below) the principal sum of
_______________ DOLLARS ($_____________) or, if less, the then unpaid principal
amount of all Swingline Loans (as defined in the Agreement) made by the Bank
pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid
principal amount hereof in like money at said office from the date hereof until
paid at the rates and at the times provided in Section 1.08 of the Agreement.
This Note is the Swingline Note referred to in the Credit
Agreement, dated as of September 29, 1995 and amended and restated as of August
28, 1997, among Onex Food Services, Inc., the Borrower, Caterair Holdings
Corporation, Caterair International Corporation, the lenders from time to time
party thereto (including the Bank), Bankers Trust Company and J.P. Morgan
Securities Inc., as Co-Arrangers, Bankers Trust Company, as Syndication Agent,
Morgan Guaranty Trust Company of New York, as Administrative Agent, and The Bank
of New York, as Co-Agent (as from time to time in effect, the "Agreement"), and
is entitled to the benefits thereof and of the other Credit Documents (as
defined in the Agreement). This Note is secured by the Security Documents (as
defined in the Agreement) and is entitled to the benefits of the Guaranties (as
defined in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Swingline Expiry Date,
in whole or in part.
In case an Event of Default (as defined in the Agreement)
shall occur and be continuing, the principal of and accrued interest on this
Note may be declared to be due and payable in the manner and with the effect
provided in the Agreement.
<PAGE> 200
EXHIBIT B-2
Page 2
The Borrower hereby waives presentment, demand, protest or
notice of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
SC INTERNATIONAL SERVICES, INC.
By________________________________
Title:
<PAGE> 201
EXHIBIT C
LETTER OF CREDIT REQUEST
No. _____(1) Dated _____(2)
Morgan Guaranty Trust Company of New York, as Administrative Agent under the
Credit Agreement (as amended, modified or supplemented from time to
time, the "Credit Agreement"), dated as of September 29, 1995 and
amended and restated as of August 28, 1997, among Onex Food Services,
Inc., SC International Services, Inc., Caterair Holdings Corporation,
Caterair International Corporation, the lenders from time to time party
thereto, Bankers Trust Company and J.P. Morgan Securities Inc., as
Co-Arrangers, Bankers Trust Company, as Syndication Agent, Morgan
Guaranty Trust Company of New York, as Administrative Agent, and The
Bank of New York, as Co-Agent
c/o J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, Delaware 19713
Attention: ______________________
[Name and Address of applicable Issuing Bank]
Attention: ______________________
Dear Sirs:
We hereby request that ________________________, in its
individual capacity, issue a [Standby] [Trade] Letter of Credit for the account
of the undersigned on ____________(3) (the "Date of Issuance") in the aggregate
stated amount of ________________(4).
- -----------
(1) Letter of Credit Request Number.
(2) Date of Letter of Credit Request.
(3) Date of Issuance which shall be at least five Business Days after the
date of this Letter of Credit Request (or such shorter period as is
acceptable to the respective Issuing Bank).
(4) Aggregate initial stated amount of Letter of Credit.
<PAGE> 202
EXHIBIT C
Page 2
For purposes of this Letter of Credit Request, unless
otherwise defined herein, all capitalized terms used herein which are defined in
the Credit Agreement shall have the respective meaning provided therein.
The beneficiary of the requested Letter of Credit will be
____________(5), and such Letter of Credit will be in support of ____________(6)
and will have a stated expiration date of ______________(7).
We hereby certify that:
(1) the representations and warranties contained in the Credit
Documents will be true and correct in all material respects on the Date
of Issuance, both before and after giving effect to the issuance of the
Letter of Credit requested hereby (it being understood and agreed that
any representation or warranty which by its terms is made as of a
specified date shall be required to be true and correct in all material
respects only as of such specified date); and
(2) no Default or Event of Default has occurred and is
continuing nor, after giving effect to the issuance of the Letter of
Credit requested hereby, would such a Default or an Event of Default
occur; and
(3) the aggregate outstanding principal amount (or the Dollar
Equivalent thereof) of all Third-Party Foreign Subsidiary Indebtedness
as reported in the officer's
- ------------
(5) Insert name and address of beneficiary.
(6) Insert description of L/C Supportable Indebtedness which generally
describes obligation (i.e., workers' compensation, insurance,
Third-Party Foreign Subsidiary Indebtedness, etc.) to which it relates
in the case of Standby Letters of Credit and a description of the
commercial transaction (i.e., purchase of goods, etc.) which is being
supported in the case of Trade Letters of Credit.
(7) Insert last date upon which drafts may be presented which may not be
later than (i) in the case of Standby Letters of Credit, 12 months
after the Date of Issuance or, if earlier, the third Business Day
preceding the Final Maturity Date or (ii) in the case of Trade Letters
of Credit, 180 days after the Date of Issuance or, if earlier, the
third Business Day (or in the case of Trade Letters of Credit issued in
negotiable form to overseas beneficiaries, 30 days) preceding the Final
Maturity Date.
<PAGE> 203
EXHIBIT C
Page 3
certificate of the Borrower delivered with the most recent set of
financial statements furnished to the Administrative Agent under
Section 8.01(a) of the Credit Agreement is $__________.
Copies of all documentation with respect to the supported
transaction are attached hereto.
SC INTERNATIONAL SERVICES, INC.
By__________________________________
Title:
<PAGE> 204
EXHIBIT D
SECTION 4.04(b)(ii) CERTIFICATE
Reference is hereby made to the Credit Agreement, dated as of
September 29, 1995 and amended and restated as of August 28, 1997, among Onex
Food Services, Inc., SC International Services, Inc., Caterair Holdings
Corporation, Caterair International Corporation, various Banks, Bankers Trust
Company and J.P. Morgan Securities Inc., as Co-Arrangers, Bankers Trust Company,
as Syndication Agent, Morgan Guaranty Trust Company of New York, as
Administrative Agent, and The Bank of New York, as Co-Agent (the "Credit
Agreement"). Pursuant to the provisions of Section 4.04(b)(ii) of the Credit
Agreement, the undersigned hereby certifies that it is not a "bank" as such term
is used in Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as
amended.
[NAME OF BANK]
By________________________________
Title:
<PAGE> 205
EXHIBIT F
[NAME OF CREDIT PARTY]
Officers' Certificate
I, the undersigned, an authorized officer of [NAME OF CREDIT
PARTY], a corporation organized and existing under the laws of _________________
(the "Company"), do hereby certify that:
1. This Certificate is furnished pursuant to Sections 5.03 and
5.05 of the Credit Agreement, dated as of September 29, 1995 and amended and
restated as of August 28, 1997, among Onex Food Services, Inc., SC International
Services, Inc., Caterair Holdings Corporation, Caterair International
Corporation, the lenders from time to time party thereto, Bankers Trust Company
and J.P. Morgan Securities Inc., as Co-Arrangers, Bankers Trust Company, as
Syndication Agent, Morgan Guaranty Trust Company of New York, as Administrative
Agent, and The Bank of New York, as Co-Agent (such Credit Agreement, as in
effect on the date of this Certificate, being herein called the "Credit
Agreement"). Unless otherwise defined herein, capitalized terms used in this
Certificate shall have the meanings set forth in the Credit Agreement.
2. The following named individuals are elected officers of the
Company, each holds the offices of the Company set forth opposite each one's
name and each has held such office since __________, 19__.(1) The signature
adjacent to the name and title of each such officer is such officer's correct
signature.
Name(2) Title Signature
- ------------------------- ----------------- ------------------------
- ------------------------- ----------------- ------------------------
- ------------------------- ----------------- ------------------------
- ------------
(1) Insert a date prior to the time of any corporate action relating to the
Credit Agreement or any other Credit Document.
(2) Include name, office and signature of each officer who will sign any Credit
Document, including the officer who will sign the certification at the end of
this Certificate.
<PAGE> 206
EXHIBIT F
Page 2
3. Attached hereto as Exhibit A is a certified copy of the
[Certificate of Incorporation or equivalent organizational document] of the
Company as filed in the Office of ___________________ on ___________, 19__,
together with all amendments thereto adopted through the date hereof.
4. Attached hereto as Exhibit B is a true and correct copy of
the [By-Laws or equivalent organizational document] of the Company which were
duly adopted, are in full force and effect on the date hereof, and have been in
effect since _____________, 19__.
5. Attached hereto as Exhibit C is a true and correct copy of
resolutions which were duly adopted on __________, 1997 by unanimous written
consent of the Board of Directors of the Company, and said resolutions have not
been rescinded, amended or modified. Except as attached hereto as Exhibit C, no
resolutions have been adopted by the Board of Directors of the Company which
deal with the execution, delivery or performance of any of the Documents to
which the Company is party.
[6. Attached hereto as Exhibits D and E are true and correct
copies of all 9-1/4% Senior Subordinated Note Documents and all Consent
Solicitation Documents.(3)
[7.][6.] On the date hereof, all of the conditions set forth
in Sections 5.02, 5.06, 5.07, 5.12, 5.13, 5.18 and 6.02 of the Credit Agreement
have been satisfied.](4)
[6.][8.][7.] On the date hereof, the representations and warranties made by
the Company in the Credit Documents to which the Company is a party are true and
correct in all material respects, both before and after giving effect to each
Credit Event to occur on the date hereof and the application of the proceeds
thereof (it being understood and agreed that any representation or warranty
which by its terms is made as of a specified date shall be required to be true
and correct in all material respects only as of such specified date).
[7.][9.][8.] On the date hereof, no Default or Event of Default has occurred
and is continuing or would result from the Credit Events (if any) to occur on
the date hereof or from the application of the proceeds thereof.
- ------------
(3) Insert in Certificate for SCIS only.
(4) Insert in Certificate for SCIS and Caterair only.
<PAGE> 207
EXHIBIT F
Page 3
[8.][10.][9.] There is no proceeding for the dissolution or liquidation of
the Company or threatening its existence.
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day
of __________, 1997.
______________________________
Name:
Title:
<PAGE> 208
EXHIBIT F
Page 4
[NAME OF CREDIT PARTY]
I, the undersigned, [Secretary/Assistant Secretary/other Authorized Officer] of
the Company, do hereby certify that:
1. [Name of Person making above certifications] is the duly
elected and qualified [President/Vice President] of the Company and the
signature above is his genuine signature.
2. The certifications made by [name of Person making above
certifications] in Items 2, 3, 4, 5 and [8] [10] [9] above are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand this _____ day
of _________, 1997.
____________________________
Name:
Title:
<PAGE> 209
EXHIBIT G-1
AMENDED AND RESTATED GENERAL PLEDGE AGREEMENT
AMENDED AND RESTATED PLEDGE AGREEMENT (as amended, modified or
supplemented from time to time, this "Agreement"), dated as of September 29,
1995 and amended and restated as of August 28, 1997, made by each of the
undersigned pledgors (each a "Pledgor" and, together with any other entity that
becomes a party hereto pursuant to Section 23 hereof, the "Pledgors"), in favor
of MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Collateral Agent (together with
any successor pledgee, the "Pledgee"), for the benefit of the Secured Creditors
(as defined below). Except as otherwise defined herein, capitalized terms used
herein and defined in the SCIS Credit Agreement (as defined below) or in the
Caterair Credit Agreement (as defined below), as the case may be, shall be used
herein as therein defined.
W I T N E S S E T H :
WHEREAS, Onex Food Services, Inc. ("OFSI"), SC International Services,
Inc. ("SCIS"), Caterair Holdings Corporation ("Caterair Holdings"), Caterair
International Corporation ("Caterair"), various lenders from time to time party
thereto (the "SCIS Banks"), Bankers Trust Company and J.P. Morgan Securities
Inc., as Co-Arrangers (the "SCIS Co-Arrangers"), Bankers Trust Company, as
Syndication Agent, The Bank of New York, as Co-Agent, and Morgan Guaranty Trust
Company of New York, as Administrative Agent (together with any successor
administrative agent, the "SCIS Administrative Agent"), have entered into a
Credit Agreement, dated as of September 29, 1995 and amended and restated as of
August 28, 1997, providing for the making of loans to SCIS and the issuance of,
and participation in, letters of credit for the account of SCIS as contemplated
therein (as used herein, the term "SCIS Credit Agreement" means the Credit
Agreement described above in this paragraph, as the same may be amended,
modified, extended, renewed, replaced, restated or supplemented from time to
time, and including any agreement extending the maturity of, or restructuring
all or any portion of the Indebtedness under such agreement or any successor
agreements) (the SCIS Banks, the SCIS Co-Arrangers and the SCIS Administrative
Agent are herein called the "SCIS Bank Creditors");
WHEREAS, SCIS, Caterair, various lenders from time to time party
thereto (the "Caterair Banks", and together with the SCIS Banks, the "Banks"),
Bankers Trust Company and J.P. Morgan Securities Inc., as Co-Arrangers (the
"Caterair Co-Arrangers", and together with the SCIS Co-Arrangers, the
"Co-Arrangers"), Bankers Trust Company, as Syndication Agent, and Morgan
Guaranty Trust Company of New York, as Administra-
<PAGE> 210
EXHIBIT G-1
Page 2
tive Agent (together with any successor administrative agent, the "Caterair
Administrative Agent", and together with the SCIS Administrative Agent, the
"Administrative Agents"), have entered into a Term Loan Agreement, dated as of
August 28, 1997, providing for the making of loans to SCIS and Caterair as
contemplated therein (as used herein, the term "Caterair Credit Agreement" means
the Term Loan Agreement described above in this paragraph, as the same may be
amended, modified, extended, renewed, replaced, restated or supplemented from
time to time, and including any agreement extending the maturity of, or
restructuring all or any portion of the Indebtedness under such agreement or any
successor agreements, and the Caterair Credit Agreement, together with the SCIS
Credit Agreement, are herein called the "Credit Agreements") (the Caterair
Banks, the Caterair Co-Arrangers and the Caterair Administrative Agent are
herein called the "Caterair Bank Creditors", and together with the SCIS Bank
Creditors, are herein called the "Bank Creditors");
WHEREAS, SCIS, Caterair and/or one or more of their respective
Subsidiaries may at any time and from time to time enter into one or more
Interest Rate Protection Agreements or Other Hedging Agreements with one or more
Banks or any affiliate thereof (each such Bank or affiliate, even if the
respective Bank subsequently ceases to be a Bank under the applicable Credit
Agreement for any reason, together with such Bank's or affiliate's successors
and assigns, if any, collectively, the "Other Creditors," and together with the
Bank Creditors and the Pledgee, the "Secured Creditors");
WHEREAS, pursuant to the Subsidiaries Guaranty, each Subsidiary
Guarantor (including Caterair) has jointly and severally guaranteed to the
Secured Creditors the payment when due of all Guaranteed Obligations as
described therein;
WHEREAS, the Pledgors entered into a General Pledge Agreement, dated as
of September 29, 1995 (as amended, modified or supplemented to the date hereof,
the "Original General Pledge Agreement");
WHEREAS, it is a condition precedent to the making of loans and the
issuance of letters of credit under the Credit Agreements that each Pledgor
shall have executed and delivered a counterpart to this Agreement; and
WHEREAS, each Pledgor will obtain benefits from the incurrence of loans
and the issuance of letters of credit under the Credit Agreements and the
entering into of Interest Rate Protection Agreements or Other Hedging Agreements
with the Other Creditors and, accordingly, each Pledgor desires to enter into
this Agreement in order to satisfy the conditions described in the preceding
paragraph and to amend and restate the Original General Pledge Agreement in its
entirety in the form of this Agreement;
<PAGE> 211
EXHIBIT G-1
Page 3
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to each Pledgor, the receipt and sufficiency of which are hereby
acknowledged, each Pledgor hereby makes the following representations and
warranties to the Pledgee for the benefit of the Secured Creditors and hereby
covenants and agrees with the Pledgee for the benefit of the Secured Creditors
as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by each Pledgor for
the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities and
indebtedness (including, without limitation, the principal of and interest
on the notes issued by, and loans made to, SCIS under the SCIS Credit
Agreement, all reimbursement obligations and unpaid drawings in respect of
letters of credit issued under the SCIS Credit Agreement, and all
indemnities, fees and interest thereon or owed there-under) of such Pledgor
to the SCIS Bank Creditors, whether now existing or hereafter incurred
under, arising out of, or in connection with the SCIS Credit Agreement and
the other SCIS Credit Documents (such term to mean the "Credit Documents"
as defined in the SCIS Credit Agreement) (including, without limitation, in
the case of each Subsidiary Guarantor (including Caterair), all of its
obligations, liabilities and indebtedness under the Subsidiaries Guaranty)
to which such Pledgor is a party and the due performance and compliance by
such Pledgor with all of the terms, conditions and agreements contained in
the SCIS Credit Agreement and such other SCIS Credit Documents, provided
that in the case of Caterair Holdings, the security interests created under
this Agreement in the Collateral (as defined below) owned by Caterair
Holdings shall also secure all such obligations, liabilities and
indebtedness of SCIS under the SCIS Credit Documents to which it is a party
(all such obligations, liabilities and indebtedness under this clause (i),
except to the extent consisting of obligations, liabilities or indebtedness
with respect to Interest Rate Protection Agreements or Other Hedging
Agreements, being herein collectively called the "SCIS Credit Document
Obligations");
(ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities and
indebtedness (including, without limitation, the principal of and interest
on the notes issued by, and loans made to, SCIS and Caterair under the
Caterair Credit Agreement, and all indemnities, fees and interest thereon
or owed thereunder) of such Pledgor to the Caterair Bank Creditors, whether
now existing or hereafter incurred under, arising out of, or in connection
with the Caterair Credit Agreement and the other Caterair
<PAGE> 212
EXHIBIT G-1
Page 4
Credit Documents (such term to mean the "Credit Documents" as defined in
the Caterair Credit Agreement, and the Caterair Credit Documents, together
with the SCIS Credit Documents, are referred to herein as the "Credit
Documents") (including, without limitation, in the case of SCIS, all of its
obligations, liabilities and indebtedness under the SCIS Guaranty and, in
the case of each Subsidiary Guarantor (including Caterair), all of its
obligations, liabilities and indebtedness under the Subsidiaries Guaranty)
to which such Pledgor is a party and the due performance and compliance by
such Pledgor with all of the terms, conditions and agreements contained in
the Caterair Credit Agreement and such other Caterair Credit Documents,
provided that in the case of Caterair Holdings, the security interests
created under this Agreement in the Collateral owned by Caterair Holdings
shall also secure all such obligations, liabilities and indebtedness of
SCIS and Caterair under the Caterair Credit Documents to which they are a
party (all such obligations, liabilities and indebtedness under this clause
(ii), except to the extent consisting of obligations, liabilities or
indebtedness with respect to Interest Rate Protection Agreements or Other
Hedging Agreements, being herein collectively called the "Caterair Credit
Document Obligations");
(iii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities
and indebtedness owing by such Pledgor to the Other Creditors under,
arising out of or with respect to, any Interest Rate Protection Agreement
or Other Hedging Agreement (including, without limitation, in the case of
each Pledgor, all of its obligations, liabilities and indebtedness under
the Guaranties to which it is a party in respect of such Interest Rate
Protection Agreements or Other Hedging Agreements, whether such Interest
Rate Protection Agreement or Other Hedging Agreement is now in existence or
hereafter arising, and the due performance and compliance by such Pledgor
with all of the terms, conditions and agreements contained therein,
provided that in the case of Caterair Holdings, the security interests
created under this Agreement in the Collateral owned by Caterair Holdings
shall also secure all such obligations, liabilities and indebtedness of
SCIS and Caterair under, or in respect of, such Interest Rate Protection
Agreement or Other Hedging Agreements (all such obligations, liabilities
and indebtedness described in this clause (iii) being herein collectively
called the "Other Obligations");
(iv) any and all sums advanced by the Pledgee in order to preserve the
Collateral or preserve its security interest in the Collateral;
(v) in the event of any proceeding for the collection or enforcement of
any indebtedness, obligations or liabilities of such Pledgor referred to in
clauses (i),
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(ii) and (iii) above, upon the occurrence and during the continuance of an
Event of Default (such term, as used in this Agreement, shall mean any
Event of Default under, and as defined in, either Credit Agreement, or any
payment default under any Interest Rate Protection Agreement or Other
Hedging Agreement, and shall, in any event, include without limitation, any
payment default (after the expiration of any applicable grace period) on
any of the Obligations (as hereinafter defined)) shall have occurred and be
continuing, the reasonable expenses of retaking, holding, preparing for
sale or lease, selling or otherwise disposing of or realizing on the
Collateral, or of any exercise by the Pledgee of its rights hereunder,
together with reasonable attorneys' fees and court costs; and
(vi) all amounts paid by any Secured Creditor as to which such Secured
Creditor has the right to reimbursement under Section 11 of this Agreement.
All such obligations, liabilities, indebtedness, sums and expenses set forth in
clauses (i) through (vi) of this Section 1 being herein collectively called the
"Obligations," it being acknowledged and agreed that the "Obligations" shall
include extensions of credit of the types described above, whether outstanding
on the date of this Agreement or extended from time to time after the date of
this Agreement.
2. DEFINITION OF STOCK, NOTES, SECURITIES, ETC. As used herein, (i) the
term "Stock" shall mean all of the issued and outstanding shares of capital
stock (including, but not limited to, warrants, options or other rights to
acquire shares thereof) at any time owned by any Pledgor of any corporation,
provided that the term "Stock" shall not include, except as otherwise provided
below, more than 65% of the total combined voting power of all classes of
capital stock of any Foreign Subsidiary owned by such Pledgor (other than in
respect of the capital stock of IFSC, 100% of whose shares of capital stock
shall be pledged hereunder); (ii) the term "Notes" shall mean all promissory
notes from time to time issued to, or held by, any Pledgor (including, but not
limited to, the SCIS/Caterair Note and all Intercompany Notes held by any
Pledgor, but excluding the Caterair Holdings Certificate of Deposit and all
promissory notes issued by employees or directors of any Pledgor); and (iii) the
term "Securities" shall mean all of the Stock and Notes. Each Pledgor represents
and warrants that, on the date hereof, (a) the Stock held by such Pledgor
consists of the number and type of shares of the stock of the corporations as
described in Annex A hereto, (b) such Stock constitutes that percentage of the
issued and outstanding shares of capital stock of the issuing corporation as is
set forth in Annex A hereto, (c) the Notes held by such Pledgor consist of the
promissory notes described in Annex B hereto, (d) such Pledgor is the holder of
record and sole beneficial owner of the Stock and the Notes and there exist no
options or preemption rights in respect of any of the Stock and (e) such Pledgor
owns no other Securities. Following a change in the relevant
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provisions of the Code or the regulations, published rules, published rulings,
notices or other official pronouncements issued or promulgated thereunder, if
the Pledgee requests a pledge of additional stock of any Foreign Subsidiary of a
Pledgor, all of the stock of which Foreign Subsidiary has not already been
pledged pursuant to this Agreement, then within 90 days after such request the
relevant Pledgor shall either (i) pledge such additional stock of such Foreign
Subsidiary or (ii) deliver to the Pledgee an opinion of the counsel of the
respective Pledgor, which counsel shall be reasonably acceptable to the Pledgee,
that the requested pledge of such additional stock is more likely than not to
cause the undistributed earnings of such Foreign Subsidiary to be treated as a
deemed dividend to such Foreign Subsidiary's United States parent for Federal
income tax purposes.
3. PLEDGE OF SECURITIES, ETC.
3.1. Pledge. To secure the Obligations of such Pledgor (and, in the
case of Caterair Holdings, to secure the Obligations of SCIS and Caterair), each
Pledgor hereby (i) grants to the Pledgee a security interest in all of the
Collateral owned by such Pledgor, (ii) pledges and deposits as security with the
Pledgee, the Securities owned by such Pledgor on the date hereof, and delivers
to the Pledgee certificates or instruments, if any, therefor, (x) duly endorsed
in blank by such Pledgor in the case of Notes, and (y) accompanied by undated
stock powers duly executed in blank by such Pledgor (and accompanied by any
transfer tax stamps required in connection with the pledge of such Securities)
in the case of Stock, or such other instruments of transfer as are reasonably
acceptable to the Pledgee and (iii) assigns, transfers, hypothecates mortgages,
charges and sets over to the Pledgee all of such Pledgor's right, title and
interest in and to such Securities (and in and to the certificates or
instruments evidencing such Securities), to be held by the Pledgee upon the
terms and conditions set forth in this Agreement.
3.2. Subsequently Acquired Securities. If any Pledgor shall acquire (by
purchase, stock dividend or otherwise) any additional Securities at any time or
from time to time after the date hereof, such Pledgor will promptly thereafter
pledge and deposit such Securities (or certificates or instruments representing
such Securities) as security with the Pledgee and deliver to the Pledgee
certificates therefor or instruments thereof, duly endorsed in blank in the case
of such Notes, accompanied by undated stock powers duly executed in blank by
such Pledgor (and accompanied by any transfer tax stamps required in connection
with the pledge of such Securities) in the case of such Stock, or such other
instruments of transfer as are reasonably acceptable to the Pledgee, and
accompanied by a certificate executed by a principal executive officer of such
Pledgor in the form attached as Annex C hereto describing such Securities and
certifying that the same has been duly pledged with the Pledgee hereunder.
Except as otherwise provided in the last sentence of Section 2 hereof, no
Pledgor shall be required at any time to pledge hereunder any Stock
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which is more than 65% of the total combined voting power of all classes of
capital stock of any Foreign Subsidiary owned by such Pledgor.
3.3. Uncertificated Securities. Notwithstanding anything to the
contrary contained in Sections 3.1 and 3.2 hereof, if any Securities (whether
now owned or hereafter acquired) are uncertificated securities, the relevant
Pledgor shall promptly notify the Pledgee thereof, and shall promptly take all
actions required to perfect the security interest of the Pledgee under
applicable law (including, in any event, under Sections 8-313 and 8- 321 of the
New York Uniform Commercial Code, if applicable). Each Pledgor further agrees to
take such actions as the Pledgee deems reasonably necessary or desirable to
effect the foregoing and to permit the Pledgee to exercise any of its rights and
remedies hereunder, and agrees to provide an opinion of counsel reasonably
satisfactory to the Pledgee with respect to any such pledge of uncertificated
Securities promptly upon the reasonable request of the Pledgee.
3.4. Definitions of Pledged Stock; Pledged Notes; Pledged Securities
and Collateral. All Stock at any time pledged or required to be pledged
hereunder is hereinafter called the "Pledged Stock"; all Notes at any time
pledged or required to be pledged hereunder are hereinafter called the "Pledged
Notes"; all Pledged Stock and Pledged Notes together are called the "Pledged
Securities"; and the Pledged Securities, together with all proceeds thereof,
including any securities and moneys received and at the time held by the Pledgee
hereunder, are herein called the "Collateral."
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall have
the right to appoint one or more sub-agents for the purpose of retaining
physical possession of the Pledged Securities, which may be held (in the
discretion of the Pledgee) in the name of the relevant Pledgor, endorsed or
assigned in blank or in favor of the Pledgee or any nominee or nominees of the
Pledgee or a sub-agent appointed by the Pledgee.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until there
shall have occurred and be continuing an Event of Default and the Pledgee has
exercised any of its remedies under Section 7(d) hereof (or has given notice to
such Pledgor that it intends to exercise such remedies, although no such notice
shall be required and the Pledgee shall be entitled to exercise such remedies
immediately upon the occurrence of a bankruptcy or insolvency Event of Default
of the type described in either Credit Agreement in respect of such Pledgor),
each Pledgor shall be entitled to exercise any and all voting and other
consensual rights and powers pertaining to the Pledged Securities owned by it,
and to give consents, waivers or ratifications in respect thereof, provided,
that no vote shall be cast or any consent, waiver or ratification given or any
action taken which would violate
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or be inconsistent with any of the terms of this Agreement, the Credit
Agreements, any other Credit Document or any Interest Rate Protection Agreement
or Other Hedging Agreement (collectively, the "Secured Debt Agreements"), or
which would have the effect of impairing the value of the Collateral or any part
thereof or the position or interests of the Pledgee in the Collateral. All such
rights of each Pledgor to vote and to give consents, waivers and ratifications
shall cease in case an Event of Default has occurred and is continuing, and the
Pledgee has exercised any of its remedies under Section 7(d) hereof (or has
given notice to such Pledgor that it intends to exercise such remedies, although
no such notice shall be required and the Pledgee shall be entitled to exercise
such remedies immediately upon the occurrence of a bankruptcy or insolvency
Event of Default of the type described in either Credit Agreement in respect of
such Pledgor).
6. DIVIDENDS AND OTHER DISTRIBUTIONS. (a) Unless and until there shall
have occurred and be continuing an Event of Default and the Pledgee has
exercised any of its remedies under Section 7(a) hereof (or has given notice to
such Pledgor that it intends to exercise such remedies, although no such notice
shall be required and the Pledgee shall be entitled to exercise such remedies
immediately upon the occurrence of a bankruptcy or insolvency Event of Default
of the type described in either Credit Agreement in respect of such Pledgor),
(i) all dividends and other distributions payable in respect of the Pledged
Stock shall be paid to the respective Pledgor in accordance with (and to the
extent permitted by) the Credit Agreements, and (ii) all payments in respect of
the Pledged Notes shall be paid to the respective Pledgor.
(b) Nothing contained in this Section 6 shall limit or restrict in any
way the Pledgee's right to receive proceeds of the Collateral in any form in
accordance with Section 3 of this Agreement. All dividends, distributions or
other payments in respect of the Collateral which are received by any Pledgor
contrary to the provisions of this Section 6 or Section 7 hereof shall be held
in trust for the benefit of the Pledgee, shall be segregated from other property
or funds of such Pledgor and shall be forthwith delivered to the Pledgee as
Collateral in the same form as so received (with any necessary endorsement).
7. REMEDIES UPON EVENTS OF DEFAULT. If there shall have occurred and be
continuing an Event of Default, then and in every such case, the Pledgee shall
be entitled to exercise all of the rights, powers and remedies (whether vested
in it by this Agreement, any other Secured Debt Agreement or by law) for the
protection and enforcement of its rights in respect of the Collateral, and the
Pledgee shall be entitled to exercise all the rights and remedies of a secured
party under the Uniform Commercial Code and also shall be entitled, without
limitation, to exercise the following rights, which each Pledgor hereby agrees
to be commercially reasonable:
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(a) to receive all amounts payable in respect of the Collateral
otherwise payable under Section 6 hereof to the respective Pledgor;
(b) to transfer all or any part of the Collateral into the Pledgee's
name or the name of its nominee or nominees;
(c) to accelerate any Pledged Note which may be accelerated in
accordance with its terms, and take any other lawful action to collect upon
any Pledged Note (including, without limitation, to make any demand for
payment thereon);
(d) to vote all or any part of the Pledged Stock (whether or not
transferred into the name of the Pledgee) and give all consents, waivers
and ratifications in respect of the Collateral and otherwise act with
respect thereto as though it were the outright owner thereof (each Pledgor
hereby irrevocably constituting and appointing the Pledgee the proxy and
attorney-in-fact of such Pledgor, with full power of substitution to do
so); and
(e) at any time and from time to time to sell, assign and deliver, or
grant options to purchase, all or any part of the Collateral, or any
interest therein, at any public or private sale, without demand of
performance, advertisement or notice of intention to sell or of the time or
place of sale or adjournment thereof or to redeem or otherwise (all of
which are hereby waived by each Pledgor), for cash, on credit or for other
property, for immediate or future delivery without any assumption of credit
risk, and for such price or prices and on such terms as the Pledgee in its
absolute discretion may determine; provided that at least 10 days' written
notice of the time and place of any such sale shall be given to such
Pledgor. The Pledgee shall not be obligated to make any such sale of
Collateral regardless of whether any such notice of sale has theretofore
been given. Each Pledgor hereby waives and releases to the fullest extent
permitted by law any right or equity of redemption with respect to the
Collateral, whether before or after sale hereunder, and all rights, if any,
of marshalling the Collateral and any other security for the Obligations or
otherwise. At any such sale, unless prohibited by applicable law, the
Pledgee on behalf of the Secured Creditors may bid for and purchase all or
any part of the Collateral so sold free from any such right or equity of
redemption. Neither the Pledgee nor any other Secured Creditor shall be
liable for failure to collect or realize upon any or all of the Collateral
or for any delay in so doing nor shall any of them be under any obligation
to take any action whatsoever with regard thereto.
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8. REMEDIES, ETC. Each and every right, power and remedy of the Pledgee
provided for in this Agreement or any other Secured Debt Agreement, or now or
hereafter existing at law or in equity or by statute shall be cumulative and
concurrent and shall be in addition to every other such right, power or remedy.
The exercise or beginning of the exercise by the Pledgee or any other Secured
Creditor of any one or more of the rights, powers or remedies provided for in
this Agreement or any other Secured Debt Agreement or now or hereafter existing
at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Pledgee or any other Secured Creditor of
all such other rights, powers or remedies, and no failure or delay on the part
of the Pledgee or any other Secured Creditor to exercise any such right, power
or remedy shall operate as a waiver thereof. No notice to or demand on any
Pledgor in any case shall entitle it to any other or further notice or demand in
similar or other circumstances or constitute a waiver of any of the rights of
the Pledgee or any other Secured Creditor to any other or further action in any
circumstances without notice or demand. The Secured Creditors agree that this
Agreement may be enforced only by the action of the Pledgee, in each case acting
upon the instructions of the Required Secured Creditors (as defined in the
Security Agreement) and that no other Secured Creditor shall have any right
individually to seek to enforce or to enforce this Agreement or to realize upon
the security to be granted hereby, it being understood and agreed that such
rights and remedies may be exercised by the Pledgee for the benefit of the
Secured Creditors upon the terms of this Agreement.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the Pledgee
upon any sale or other disposition of the Collateral, together with all other
moneys received by the Pledgee hereunder, shall be applied to the payment of the
Obligations in the manner provided in Section 7.4 of the Security Agreement.
(b) It is understood and agreed that the Pledgors shall remain jointly
and severally liable to the extent of any deficiency between the amount of the
proceeds of the Collateral hereunder and the aggregate amount of the
Obligations.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
11. INDEMNITY. (a) Each Pledgor jointly and severally agrees to
indemnify and hold harmless the Pledgee in such capacity and each other Secured
Creditor
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and their respective successors, assigns, employees, agents and servants
(individually an "Indemnitee," and collectively the "Indemnitees") harmless from
any and all liabilities, obligations, damages, injuries, penalties, claims,
demands, actions, suits, judgments and any and all reasonable costs, expenses or
disbursements (including reasonable attorneys' fees and expenses) (for the
purposes of this Section 11 the foregoing are collectively called "expenses") of
whatever kind and nature imposed on, asserted against or incurred by any of the
Indemnitees in any way relating to or arising out of this Agreement or the
enforcement of any of the terms of, or the preservation of any rights hereunder,
or in any way relating to or arising out of the ownership, control, acceptance,
possession, condition, sale or other disposition, or use of the Collateral,
provided that no Indemnitee shall be indemnified pursuant to this Section 11(a)
for losses, damages or liabilities to the extent caused by the gross negligence
or wilful misconduct of such Indemnitee. Each Pledgor agrees that upon written
notice by any Indemnitee of the assertion of such a liability, obligation,
damage, injury, penalty, claim, demand, action, suit or judgment, the relevant
Pledgor shall to the extent requested to do so assume full responsibility for
the defense thereof.
(b) Without limiting the application of Section 11(a) hereof, each
Pledgor agrees jointly and severally to pay or reimburse the Pledgee for any and
all fees, costs and expenses, including reasonable attorneys' fees, of whatever
kind or nature incurred in connection with the creation, preservation or
protection of the Pledgee's Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment or
discharge of any taxes or Liens upon or in respect of the Collateral, and all
other reasonable fees, costs and expenses in connection with protecting,
maintaining or preserving the Collateral and the Pledgee's interest therein,
whether through judicial proceedings or otherwise, or in defending or
prosecuting any actions, suits or proceedings arising out of or relating to the
Collateral.
(c) If and to the extent that the obligations of any Pledgor under this
Section 11 are unenforceable for any reason, such Pledgor hereby agrees to make
the maximum contribution to the payment and satisfaction of such obligations
which is permissible under applicable law.
12. FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) Each Pledgor agrees that
it will join with the Pledgee in executing and, at such Pledgor's own expense,
file and refile under the Uniform Commercial Code of any jurisdiction or other
applicable law such financing statements, continuation statements and other
documents in such offices as the Pledgee may deem reasonably necessary and
wherever required by law in order to perfect and preserve the Pledgee's security
interest in the Collateral and hereby authorizes the Pledgee to file financing
statements and amendments thereto relative to all
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or any part of the Collateral without the signature of such Pledgor where
permitted by law, and agrees to do such further acts and things and to execute
and deliver to the Pledgee such additional conveyances, assignments, agreements
and instruments as the Pledgee may reasonably require or deem necessary to carry
into effect the purposes of this Agreement or to further assure and confirm unto
the Pledgee its rights, powers and remedies hereunder.
(b) Each Pledgor hereby appoints the Pledgee such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor
and in the name of such Pledgor or otherwise, from time to time after the
occurrence and during the continuance of an Event of Default, in the Pledgee's
reasonable discretion to take any action and to execute any instrument which the
Pledgee may deem reasonably necessary or advisable to accomplish the purposes of
this Agreement.
13. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance with this
Agreement all items of the Collateral at any time received under this Agreement.
It is expressly understood and agreed by each Secured Creditor that by accepting
the benefits of this Agreement each such Secured Creditor acknowledges and
agrees that the obligations of the Pledgee as holder of the Collateral and
interests therein and with respect to the disposition thereof, and otherwise
under this Agreement, are only those expressly set forth in this Agreement. The
Pledgee shall act hereunder on the terms and conditions set forth herein and in
Article X of the Security Agreement.
14. TRANSFER BY THE PLEDGORS. No Pledgor will sell or otherwise dispose
of, grant any option with respect to, or mortgage, pledge or otherwise encumber
any of the Collateral or any interest therein (except as may be permitted in
accordance with the terms of the Credit Agreement).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS. Each
Pledgor represents, warrants and covenants that (i) it is the legal, record and
beneficial owner of, and has good and marketable title to, all Pledged
Securities pledged by it hereunder, subject to no Lien (except the Lien created
by this Agreement and Liens of the type described in Sections 9.01(i), (v) and
(xii) of the SCIS Credit Agreement); (ii) it has the corporate power and
authority to pledge all the Pledged Securities pledged by it pursuant to this
Agreement; (iii) this Agreement has been duly authorized, executed and delivered
by such Pledgor and constitutes a legal, valid and binding obligation of such
Pledgor enforceable in accordance with its terms, except to the extent that the
enforceability hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting creditors'
rights and by equitable principles (regardless of whether enforcement is sought
in equity or at law); (iv) no consent of any
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other party (including, without limitation, any stockholder or creditor of such
Pledgor or any of its Subsidiaries) and no consent, license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with, any governmental authority is required to be obtained by such
Pledgor for the execution, delivery or performance of this Agreement by such
Pledgor, the validity or enforceability of this Agreement and the perfection or
enforceability of the Pledgee's security interest in the Collateral (other than,
in respect of the proceeds of the Pledged Securities, the filing of Form UCC-1
financing statements or the appropriate equivalent (which filings have been
made)) or except for compliance with or as may be required by applicable
securities laws, the exercise by the Pledgee of any of its rights or remedies
provided herein; (v) the execution, delivery and performance of this Agreement
by such Pledgor, and compliance by it with the terms and provisions hereof, will
not violate any provision of any applicable law, statute, rule or regulation or
of any applicable order, judgment, writ, injunction or decree of any court or
governmental authority, domestic or foreign, applicable to such Pledgor, or of
the certificate of incorporation or by-laws (or equivalent organizational
documents) of such Pledgor or of any securities issued by such Pledgor or any of
its Subsidiaries, or of any mortgage, indenture, lease, deed of trust, loan
agreement, credit agreement or any other material contract, agreement or
instrument to which such Pledgor or any of its Subsidiaries is a party or which
purports to be binding upon such Pledgor or any of its Subsidiaries or upon any
of their respective assets and will not result in the creation or imposition of
(or the obligation to create or impose) any lien or encumbrance on any of the
Collateral of such Pledgor or any of its Subsidiaries except as contemplated by
this Agreement; (vi) all the shares of Stock have been duly and validly issued,
are fully paid and non-assessable and are subject to no options to purchase or
similar rights; (vii) each of the Pledged Notes issued by any Credit Party or by
any of its Subsidiaries constitutes, or when executed by the respective obligor
thereof will constitute, the legal, valid and binding obligation of such
obligor, enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting creditors'
rights and by equitable principles (regardless of whether enforcement is sought
in equity or at law); and (viii) the pledge, assignment and delivery to the
Pledgee of the Securities (other than uncertificated securities) pursuant to
this Agreement creates a valid and perfected first priority Lien in the
Securities, and the proceeds thereof, subject to no other Lien or to any
agreement purporting to grant to any third party a Lien on the property or
assets of the Pledgor which would include the Securities. Each Pledgor covenants
and agrees that it will defend the Pledgee's right, title and security interest
in and to the Securities and the proceeds thereof against the claims and demands
of all persons whomsoever; and such Pledgor covenants and agrees that it will
have like title to and right to pledge any other property at any time hereafter
pledged to the Pledgee as Collateral hereunder and will like-
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wise defend the right thereto and security interest therein of the Pledgee and
the Secured Creditors.
16. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of each
Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (i) any renewal,
extension, amendment or modification of or addition or supplement to or deletion
from any Secured Debt Agreement or any other instrument or agreement referred to
therein, or any assignment or transfer of any thereof; (ii) any waiver, consent,
extension, indulgence or other action or inaction under or in respect of any
such Secured Debt Agreement or other agreement or instrument including, without
limitation, this Agreement; (iii) any furnishing of any additional security to
the Pledgee or its assignee or any acceptance thereof or any release of any
security by the Pledgee or its assignee; (iv) any limitation on any party's
liability or obligations under any such instrument or agreement or any
invalidity or unenforceability, in whole or in part, of any such instrument or
agreement or any term thereof; or (v) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to any Pledgor or any Subsidiary of any Pledgor, or any
action taken with respect to this Agreement by any trustee or receiver, or by
any court, in any such proceeding, whether or not such Pledgor shall have notice
or knowledge of any of the foregoing (it being understood that the enforcement
hereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws generally affecting creditors' rights and by
equitable principles (regardless of whether enforcement is sought in equity or
at law)).
17. REGISTRATION, ETC. (a) If there shall have occurred and be con-
tinuing an Event of Default then, and in every such case, upon receipt by any
Pledgor from the Pledgee of a written request or requests that such Pledgor
cause any registration, qualification or compliance under any Federal, state or
other applicable securities law or laws to be effected with respect to all or
any part of the Pledged Stock, such Pledgor as soon as practicable and at its
expense will cause such registration to be effected (and be kept effective) and
will cause such qualification and compliance to be declared effected (and be
kept effective) as may be so requested and as would permit or facilitate the
sale and distribution of such Pledged Stock, including, without limitation,
registration under the Securities Act of 1933, as then in effect (or any similar
statute then in effect), appropriate qualifications under applicable blue sky,
state or other applicable securities laws and appropriate compliance with any
other government requirements, provided, that the Pledgee shall furnish to such
Pledgor such information regarding the Pledgee as such Pledgor may reasonably
request in writing and as shall be required in connection with any such
registration, qualification or compliance. Such Pledgor will cause the Pledgee
to be kept advised
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in writing as to the progress of each such registration, qualification or
compliance and as to the completion thereof, will furnish to the Pledgee such
number of prospectuses, offering circulars or other documents incident thereto
as the Pledgee from time to time may reasonably request, and will indemnify the
Pledgee, each other Secured Creditor and all others participating in the
distribution of such Pledged Stock against all claims, losses, damages and
liabilities caused by any untrue statement (or alleged untrue statement) of a
material fact contained therein (or in any related registration statement,
notification or the like) or by any omission (or alleged omission) to state
therein (or in any related registration statement, notification or the like) a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same may have been caused by an
untrue statement or omission based upon information furnished in writing to such
Pledgor by the Pledgee or such other Secured Creditor expressly for use therein.
(b) If at any time when the Pledgee shall determine to exercise its
right to sell all or any part of the Pledged Securities pursuant to Section 7
hereof, and such Pledged Securities or the part thereof to be sold shall not,
for any reason whatsoever, be effectively registered under the Securities Act of
1933, as then in effect, the Pledgee may, in its sole and absolute discretion,
sell such Pledged Securities or part thereof by private sale in such manner and
under such circumstances as the Pledgee may deem necessary or advisable in order
that such sale may legally be effected without such registration. Without
limiting the generality of the foregoing, in any such event the Pledgee, in its
sole and absolute discretion (i) may proceed to make such private sale
notwithstanding that a registration statement for the purpose of registering
such Pledged Securities or part thereof shall have been filed under such
Securities Act, (ii) may approach and negotiate with a single possible purchaser
to effect such sale, and (iii) may restrict such sale to a purchaser who will
represent and agree that such purchaser is purchasing for its own account, for
investment, and not with a view to the distribution or sale of such Pledged
Securities or part thereof. In the event of any such sale, the Pledgee shall
incur no responsibility or liability for selling all or any part of the Pledged
Securities at a price which the Pledgee, in its sole and absolute discretion, in
good faith deems reasonable under the circumstances, notwithstanding the
possibility that a substantially higher price might be realized if the sale were
deferred until after registration as aforesaid.
18. TERMINATION; RELEASE. (a) On the Termination Date (as defined in
the Security Agreement), but only after giving effect to the repayments to be
made on such date, this Agreement and the security interest created hereby shall
terminate (provided that all indemnities set forth herein including, without
limitation, in Section 11 hereof shall survive any such termination), and the
Pledgee, at the request and expense of any Pledgor, will execute and deliver to
each Pledgor such proper instrument or instruments acknowledging the
satisfaction and termination of this Agreement, and will duly assign,
<PAGE> 224
EXHIBIT G-1
Page 16
release, transfer and deliver to each Pledgor (without recourse and without any
representation or warranty) all of the Collateral as has not theretofore been
sold or otherwise applied or released pursuant to this Agreement, together with
any moneys at the time held by the Pledgee or any of its sub-agents hereunder.
(b) In the event that all or any part of the Collateral is sold,
conveyed or disposed of in connection with any form of asset disposition
permitted by the Credit Agreements or otherwise released, in whole or in part,
at the direction of the Required Secured Creditors and the proceeds of such
asset disposition are applied in accordance with, and to the extent required by,
the provisions of the Credit Agreements, the Pledgee, at the request and expense
of any Pledgor, will duly assign, release, transfer and deliver to the
appropriate Pledgor (without recourse and without any representation or
warranty) such of the Collateral (and releases therefor) as is then being (or
has been) so sold or released and has not theretofore been released pursuant to
this Agreement.
(c) At any time that a Pledgor desires that the Pledgee assign,
release, transfer and deliver Collateral as provided in Section 18(a) or (b)
hereof, it shall deliver to the Pledgee a certificate signed by a principal
executive officer of such Pledgor stating that the release of the respective
Collateral is in accordance with Section 18(a) or (b).
(d) The Pledgee shall have no liability whatsoever to any Secured
Creditor as the result of any release of Collateral by it in accordance with
this Section 18.
19. NOTICES ETC. All such notices and communications hereunder shall be
sent or delivered by mail, telegraph, telex, telecopy, cable or overnight
courier service and all such notices and communications shall, when mailed,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be
effective when delivered to the telegraph company, cable company or overnight
courier, as the case may be, or sent by telex or telecopier and when mailed
shall be effective three Business Days following deposit in the mail with proper
postage, except that notices and communications to the Pledgee shall not be
effective until received by the Pledgee. All notices and other communications
shall be in writing and addressed as follows:
<PAGE> 225
EXHIBIT G-1
Page 17
(a) if to any Pledgor, to the address and communications information
set forth opposite its signature below;
(b) if to the Pledgee, at the following address of, and the
communications information for, the Pledgee:
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260-0060
Attention: Laura Loffredo
Telephone No.: (212) 648-6793
Facsimile No.: (212) 648-5336
(c) if to any Bank Creditor, either (x) to the respective
Administrative Agent, at the address of such Administrative Agent specified
in the respective Credit Agreement or (y) at such address and
communications information as such Bank Creditor shall have specified in
the respective Credit Agreement;
(d) if to any Other Creditor at such address and communications
information as such Other Creditor shall have specified in writing to the
Pledgors and the Pledgee;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
20. WAIVER; AMENDMENT. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing and duly signed by each Pledgor directly affected thereby and
the Pledgee (with the written consent of the Required Secured Creditors);
provided, that any change, waiver, modification or variance affecting the rights
and benefits of a single Class (as defined below) of Secured Creditors (and not
all Secured Creditors in a like or similar manner) shall also require the
written consent of the Requisite Creditors (as defined below) of such affected
Class. For the purpose of this Agreement, the term "Class" shall mean each class
of Secured Creditors, i.e., whether (i) the SCIS Bank Creditors as holders of
the SCIS Credit Document Obligations, (ii) the Caterair Bank Creditors as
holders of the Caterair Credit Document Obligations or (iii) the Other Creditors
as the holders of the Other Obligations. For the purpose of this Agreement, the
term "Requisite Creditors" of any Class shall mean each of (i) with respect to
the SCIS Credit Document Obligations, the Required Banks under, and as defined
in, the SCIS Credit Agreement, (ii) with respect to the Caterair Credit Document
Obligations, the Required Banks under, and as defined in,
<PAGE> 226
EXHIBIT G-1
Page 18
the Caterair Credit Agreement and (iii) with respect to the Other Obligations,
the holders of a majority of all obligations outstanding from time to time under
the Interest Rate Protection Agreements or Other Hedging Agreements.
21. MISCELLANEOUS. This Agreement shall be binding upon the successors
and assigns of each Pledgor (although no Pledgor may assign its rights and
obligations hereunder except in accordance with the provisions of the Secured
Debt Agreements) and shall inure to the benefit of and be enforceable by each of
the parties hereto and its successors and assigns. THIS AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE
OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS EXCEPT FOR THE CHOICE OF LAW
PROVISIONS OF THE NEW YORK UNIFORM COMMERCIAL CODE. EACH OF THE PARTIES TO THIS
AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. The
headings in this Agreement are for purposes of reference only and shall not
limit or define the meaning hereof. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which shall
constitute one instrument. In the event that any provision of this Agreement
shall prove to be invalid or unenforceable, such provision shall be deemed to be
severable from the other provisions of this Agreement which shall remain binding
on all parties hereto.
22. RECOURSE. This Agreement is made with full recourse to each Pledgor
(including, without, limitation, with full recourse to all assets of such
Pledgor) and pursuant to and upon all the representations, warranties, covenants
and agreements on the part of such Pledgor contained herein, in the other
Secured Debt Agreements and otherwise in writing in connection herewith or
therewith, provided that, notwithstanding anything to the contrary contained
herein, any recourse under this Agreement against Caterair Holdings is limited
solely to the Collateral of Caterair Holdings pledged pursuant to this Agreement
and any proceeds or earnings thereon.
23. ADDITIONAL PLEDGORS. It is understood and agreed that any
Wholly-Owned Domestic Subsidiary of any Pledgor that is required to execute a
counterpart of this Agreement after the date hereof pursuant to either Credit
Agreement shall automatically become a Pledgor hereunder by executing a
counterpart hereof and delivering the same to the Pledgee.
* * *
<PAGE> 227
EXHIBIT G-1
Page 19
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written
Addresses:
- ---------
524 East Lamar Boulevard SC INTERNATIONAL SERVICES, INC.,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
6550 Rock Spring Drive CATERAIR HOLDINGS CORPORATION,
Bethesda, Maryland 20817 as a Pledgor
By: ___________________________________
Name:
Title:
6550 Rock Spring Drive CATERAIR INTERNATIONAL CORPORATION,
Bethesda, Maryland 20817 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard SKY CHEFS, INC.,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
<PAGE> 228
EXHIBIT G-1
Page 20
6550 Spring Rock Drive CATERAIR INTERNATIONAL, INC. (II),
Bethesda, Maryland 20817 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard SKY CHEFS INTERNATIONAL CORP.,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
300 Delaware Avenue, Suite 315 ARLINGTON SERVICES, INC.,
Wilmington, Delaware 19801-1622 as a Pledgor
By: ___________________________________
Name:
Title:
300 Delaware Avenue, Suite 315 ARLINGTON SERVICES HOLDING
Wilmington, Delaware 19801-1622 CORPORATION, as a Pledgor
By: ___________________________________
Name:
Title:
300 Delaware Avenue BETHESDA SERVICES, INC.,
Wilmington, Delaware 19801-1622 as a Pledgor
By: ___________________________________
Name:
Title:
<PAGE> 229
EXHIBIT G-1
Page 21
300 Delaware Avenue CATERAIR NEW ZEALAND LIMITED,
Wilmington, Delaware 19801-1622 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard CATERAIR CONSULTING SERVICES
Arlington, Texas 76011 CORPORATION,
as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard JFK CATERERS, INC.,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard CATERAIR ST. THOMAS HOLDINGS
Arlington, Texas 76011 CORPORATION, as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard WESTERN AIRE CHEF, INC.
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
<PAGE> 230
EXHIBIT G-1
Page 22
6550 Rock Spring Drive CATERAIR AIRPORT PROPERTIES, INC.,
Bethesda, Maryland 20817 as a Pledgor
By: ___________________________________
Name:
Title:
6550 Rock Spring Drive SKY CHEFS ARGENTINE, INC.,
Bethesda, Maryland 20817 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard CATERAIR INTERNATIONAL TRANSITION
Arlington, Texas 76011 CORPORATION,
as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO ACCEPTANCE CORP.,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO CREDIT CORP.,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
<PAGE> 231
EXHIBIT G-1
Page 23
524 East Lamar Boulevard ONEX OHIO EQUITY CORP.,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO FINANCE CORP.,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevar ONEX OHIO FINANCE CORP. II,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO CAPITAL CORP.,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevar ONEX OHIO FISCAL CORP.,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
<PAGE> 232
EXHIBIT G-1
Page 24
524 East Lamar Boulevard ONEX OHIO FUNDS CORP.,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO CREDIT CORP. II,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO FUNDS CORP. II,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO FISCAL CORP. II,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO EQUITY CORP. II,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
<PAGE> 233
EXHIBIT G-1
Page 25
524 East Lamar Boulevard ONEX OHIO CAPITAL CORP. II,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
in each case, with a copy to:
SC International Services, Inc.
524 East Lamar Boulevard
Arlington, Texas 76011
Attention: Patrick Tolbert
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Pledgee,
Collateral Agent
By: ___________________________________
Name:
Title:
<PAGE> 234
<TABLE>
<CAPTION>
ANNEX A
to
AMENDED AND RESTATED
GENERAL
LIST OF STOCK PLEDGE AGREEMENT
====================================================================================================================================
# OF
PERCENTAGE SHARES
ISSUER/JURISDICTION OF AUTH. ISSUED PERCENTAGE TO BE STOCK CERT. TO BE
INCORPORATION OWNER CLASS OF STOCK SHARES SHARES HELD PLEDGED NUMBER PLEDGED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sky Chefs, Inc.
(Delaware) SCIS Common - 5,000,000 100 100% 100% 3 100
$100 Par
- ------------------------------------------------------------------------------------------------------------------------------------
Caterair International, Inc.
(II) (Delaware) SCIS Common - 3,000 100 100% 100% 2 100
$.01 Par
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs International
Corp.
(Delaware) Sky Chefs, Inc. Common - 1,000 1,000 100% 100% 2 1,000
$.01 Par
- ------------------------------------------------------------------------------------------------------------------------------------
Arlington Services, Inc.
(Delaware) Sky Chefs, Inc. Common - 1,000 100 100% 100% 2 100
$.01 Par
- ------------------------------------------------------------------------------------------------------------------------------------
Arlington Services
Holding Corporation Sky Chefs, Inc. Common - 3,000 1,000 100% 100% 1 1,000
(Delaware) ("ASH") $.01 Par
- ------------------------------------------------------------------------------------------------------------------------------------
Bethesda Services, Inc.
(Delaware) Caterair Common - 3,000 1,000 100% 100% 1 1,000
International, $.01 Par
Inc. (II)
- ------------------------------------------------------------------------------------------------------------------------------------
Caterair New Zealand Limited
(Delaware) Bethesda Common - 3,000 1,000 100% 100% 1 1,000
Services, Inc. $.01 Par
- ------------------------------------------------------------------------------------------------------------------------------------
Delta Dailyfood Texas, Inc.
(Texas) Sky Chefs, Inc. Common - 1,000 100 33% 33% 3 33
No Par
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 235
<TABLE>
<CAPTION>
ANNEX A
Page 2
===================================================================================================================================
# OF
PERCENTAGE SHARES
ISSUER/JURISDICTION OF AUTH. ISSUED PERCENTAGE TO BE STOCK CERT. TO BE
INCORPORATION OWNER CLASS OF STOCK SHARES SHARES HELD PLEDGED NUMBER PLEDGED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LSG-Sky Chefs do Brasil
Catering Refeicoes Sky Chefs Quotas 166,201 166,201 100% 65% -- --
Ltda. (Brazil)1 International
Corp.
- -----------------------------------------------------------------------------------------------------------------------------------
CateringPor - Catering
de Portugal, S.A.2 Sky Chefs 1,000 PTE per 700 700 49% -- -- --
International share par million million
Corp.
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Acceptance
Corporation SCIS Common - 100 100 100% 100% 3 100
(Delaware) $.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Credit Corp.
(Delaware) SCIS Common - 1,000 100 100% 100% 3 100
$.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Equity Corp.
(Delaware) SCIS Common - 1,000 100 100% 100% 2 100
$.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Finance Corp.
(Delaware) SCIS Common - 1,000 1,000 100% 100% 2 1,000
$.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Finance Corp. II
(Delaware) SCIS Common - 1,000 100 100% 100$ 2 100
$.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Capital Corp.
(Delaware) SCIS Common - 1,000 1,000 100% 100% 2 1,000
$.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Fiscal Corp.
(Delaware) SCIS Common - 1,000 1,000 100% 100% 2 1,000
$.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Funds Corp.
(Delaware) SCIS Common - 1,000 1,000 100% 100% 2 1,000
$.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Credit Corp. II
(Delaware) SCIS Common - 1,000 100 100% 100% 2 100
$.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Funds Corp. II
(Delaware) SCIS Common - 1,000 100 100% 100% 2 100
$.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Fiscal Corp. II
(Delaware) SCIS Common - 1,000 100 100% 100% 2 100
$.01 Par
</TABLE>
- --------
1 The quotas of LSG Sky Chefs do Brasil cannot be delivered, however,
physical possession is not necessary to perfect a pledge. A contract
of pledge is valid upon registration in the company books.
2 The shares of CateringPor cannot be delivered and cannot be pledged as
there will have to be an exorbitant stamp tax paid to the Portuguese
authorities.
<PAGE> 236
<TABLE>
<CAPTION>
ANNEX A
Page 3
===================================================================================================================================
# OF
CLASS PERCENTAGE STOCK SHARES
ISSUER/JURISDICTION OF AUTH. ISSUED PERCENTAGE TO BE CERT. TO BE
OF INCORPORATION OWNER STOCK SHARES SHARES HELD PLEDGED NUMBER PLEDGED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Onex Ohio Equity Corp. II
(Delaware) SCIS Common - 1,000 100 100% 100% 2 100
$.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Capital Corp. II
(Delaware) SCIS Common - 1,000 100 100% 100% 2 100
$.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Caterair International
Corporation Caterair Common - 10,000 10,000 100% 100% 1 10,000
("Caterair") (Delaware Holdings $.01 par
Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
Caterair Consulting Services
Corporation ASH Common - 100 100 100% 100% 4 100
(Delaware - formerly KCI No Par
Caterers, Inc.)
- ------------------------------------------------------------------------------------------------------------------------------------
JFK Caterers, Inc.
(Delaware) ASH Common - 100 100 100% 100% 4 100
No Par
- ------------------------------------------------------------------------------------------------------------------------------------
Caterair Airport Properties, Caterair New Common - 100 100 100% 100% 5 100
Inc. (Delaware - formerly Zealand No Par
Marriott Airport Properties, Limited
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Caterair Taiwan Inflight
Services, Inc. Caterair New Common 1,200,000 100,000 100% Held in
(Taiwan) Zealand Trust
Limited
- ------------------------------------------------------------------------------------------------------------------------------------
Western Aire Chef, Inc.
(Delaware) ASH Common - 100 100 100% 100% 5 100
No Par
- ------------------------------------------------------------------------------------------------------------------------------------
Caterair International
Transition Common - 3,000 100 100% 100% 1 100
Corporation $.01 Par
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Canada, Limited
(Canada) ASH Common 1 1 100% 100% CS-5 1
====================================================================================================================================
</TABLE>
<PAGE> 237
<TABLE>
<CAPTION>
ANNEX A
Page 4
=================================================================================================================================
PERCENTAGE STOCK # Of SHARES
ISSUER/JURISDICTION AUTH. ISSUED PERCENTAGE TO BE CERT. TO BE
OF INCORPORATION OWNER CLASS OF STOCK SHARES SHARES HELD PLEDGED NUMBER PLEDGED
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SC International ASH pound sterling1 100,000
Services Ireland Ordinary
(Ireland) Shares
US$1 A 30,000,000 1,000 100%
Ordinary
Shares
- ---------------------------------------------------------------------------------------------------------------------------------
Sky Chefs - U.K., Ltd. ASH pound sterling1 10,000,000 3,741,582 100% 65% 65
(England) Ordinary
Shares
- ---------------------------------------------------------------------------------------------------------------------------------
LSG Sky Chefs Venezuela, ASH Class B:
C.A. 100,000
(Venezuela) Bolivars
per share
Class C: 100 100 80% 65% 52
43,000
Bolivars
per share
- ---------------------------------------------------------------------------------------------------------------------------------
Arlington Services ASH Series B 1 50,000 50,000 100% 65% 32,500
Mexico, S.A. de C.V. peso per
share par
- ---------------------------------------------------------------------------------------------------------------------------------
Nova Galicia S.A. ASH Class A 25 25 100% 65% of
de C.V. (Mexico) Class B
Common
Stock
Class B 14,473,000 14,473,000
- ---------------------------------------------------------------------------------------------------------------------------------
Cater Suprimento ASH Quotas 2,169,162 2,169,162 100% 69%
de Refeicoes, Ltda. 4,347 4,347
(Brazil)
- ---------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Chile, S.A. Western Aire Common 99% 65% 990
(Chile) Chef, Inc.
1,000 1,000
Caterair Airport Common 1%
Properties
("CAP")
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 238
<TABLE>
<CAPTION>
ANNEX A
Page 5
===================================================================================================================================
PERCENTAGE # OF SHARES
ISSUER/JURISDICTION AUTH. ISSUED PERCENTAGE TO BE STOCK CERT. TO BE
OF INCORPORATION OWNER CLASS OF STOCK SHARES SHARES HELD PLEDGED NUMBER PLEDGED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cocina de Vuelos, S.A. ASH Common - 2,700 2,700 49% 49% -- --
de C.V. (El Salvador) 10,000 Colones
per share
- -----------------------------------------------------------------------------------------------------------------------------------
Caterair Madrid, S.A. ASH Common 64,800 64,800 100% 65% 42,120
(Spain)
- -----------------------------------------------------------------------------------------------------------------------------------
Caterair Barcelona, ASH (80%) Class A 14,000 14,000 100% [52.8%]
S.A. (Spain) Caterair Madrid
(20%)
Class B 3,500 3,500
- -----------------------------------------------------------------------------------------------------------------------------------
Caterair Portugal 74% CIC - 40,600,000 40,600,000 74% -- -- --
Servicios Profissionaise 26% CAP ESC ESC 26%
Aero de Assistencia a
Bordo, Limitada (Portugal)
- -----------------------------------------------------------------------------------------------------------------------------------
LSG Lufthansa Service ASH - 160,000 160,000 100% 65% -- --
Sky Chefs
France, S.A. (France)
- -----------------------------------------------------------------------------------------------------------------------------------
Caterair Australia Pty. CAP Ordinary 5,000,000 102 100% 65% 17,18 67
Ltd. (Australia) Common &
(formerly Marriott Hotel 100%
Corporation Pty. Ltd.) Preferred
Preferred 475,900 475,900 11 475,900
- -----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Argentine, Inc. ASH Common - 100 100 100% 100% 3 100
(Delaware) No Par
- -----------------------------------------------------------------------------------------------------------------------------------
Caterair St. Thomas ASH Common - 100 100 100% 100% 2 100
Holdings Corporation No Par
(Delaware)
- -----------------------------------------------------------------------------------------------------------------------------------
Arlington Services ASH Common - 500 2 100% 1
de Panama S.A. No Par
- -----------------------------------------------------------------------------------------------------------------------------------
Inflite Holdings ASH US$1 50,000 100 49% -- -- --
(Cayman) Ltd. Ordinary
(Cayman Islands) Shares
- -----------------------------------------------------------------------------------------------------------------------------------
Versair In-Flite ASH Class A 7,001,000 7,001,000 7, yrs. 1,683,640
Services Limited 24% 24% 1994/1
(Jamaica)
Class B 7,016,000 7,016,000 8, VIPS 1,680,240
1994/2
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 239
<TABLE>
<CAPTION>
ANNEX A
Page 6
==================================================================================================================================
PERCENTAGE # OF SHARES
ISSUER/JURISDICTION AUTH. ISSUED PERCENTAGE TO BE STOCK CERT. TO BE
OF INCORPORATION OWNER CLASS OF STOCK SHARES SHARES HELD PLEDGED NUMBER PLEDGED
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Antigua Catering ASH Eastern 1,040,000 540,000 49% -- -- --
Services Limited Caribbean
(Antigua) US$1
Ordinary
Shares
- ----------------------------------------------------------------------------------------------------------------------------------
St. Lucia Catering ASH US$1 Par SLCS 300,000 49% -- -- --
Services Ltd. 300,000
(St.Lucia)
- ----------------------------------------------------------------------------------------------------------------------------------
Caterair Lebanon ASH LL 100,000 1,000 1,000 20% -- -- --
SAL Par
- ----------------------------------------------------------------------------------------------------------------------------------
Gulf International CAP Bahraini 30,000,000 10,000 49% -- -- --
Caterers, W.L.L. Dinars
(Bahrain)
- ----------------------------------------------------------------------------------------------------------------------------------
Marriott In-Flite ASH Common 110,000 50,000 100% -- Held in --
Services of Korea Trust
(Korea)
- ----------------------------------------------------------------------------------------------------------------------------------
Barbados Flight ASH Common No Limit 80,000 49% -- Held in --
Kitchen Limited Trust
(Barbados)
- ----------------------------------------------------------------------------------------------------------------------------------
Airport Restaurants ASH Common No Limit 10,000 49% -- Held in --
(1992) Limited Trust
(Barbados)
==================================================================================================================================
</TABLE>
<PAGE> 240
ANNEX B
to AMENDED
AND RESTATED
GENERAL
PLEDGE AGREEMENT
LIST OF NOTES
================================================================================
BORROWER PLEDGOR/LENDER
- --------------------------------------------------------------------------------
Sky Chefs, Inc. SC International Services, Inc.
- --------------------------------------------------------------------------------
Arlington Services, Inc. SC International Services, Inc.
- --------------------------------------------------------------------------------
Arlington Services Holding Corporation SC International Services, Inc.
- --------------------------------------------------------------------------------
Caterair International, Inc. (II) SC International Services, Inc.
- --------------------------------------------------------------------------------
Bethesda Services, Inc. SC International Services, Inc.
- --------------------------------------------------------------------------------
Caterair New Zealand Limited SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Acceptance Corporation SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Credit Corp. SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Equity Corp. SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Finance Corp. SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Capital Corp. SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Fiscal Corp. SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Funds Corp. SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Credit Corp. II SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Equity corp. II SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Finance Corp. II SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Capital Corp. II SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Fiscal Corp. II SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Funds Corp. II SC International Services, Inc.
- --------------------------------------------------------------------------------
Caterair International Corporation SC International Services, Inc.
- --------------------------------------------------------------------------------
JFK Caterers, Inc. SC International Services, Inc.
- --------------------------------------------------------------------------------
Caterair St. Thomas Holdings Corporation SC International Services, Inc.
- --------------------------------------------------------------------------------
Western Aire Chef, Inc. SC International Services, Inc.
- --------------------------------------------------------------------------------
Caterair Airport Properties, Inc. SC International Services, Inc.
- --------------------------------------------------------------------------------
Sky Chefs Argentine, Inc. SC International Services, Inc.
- --------------------------------------------------------------------------------
Caterair Consulting Services Corporation SC International Services, Inc.
- --------------------------------------------------------------------------------
SC International Services, Inc. Caterair International Corporation
- --------------------------------------------------------------------------------
<PAGE> 241
ANNEX B
Page 2
<TABLE>
<CAPTION>
==========================================================================================
BORROWER PLEDGOR/LENDER
- ------------------------------------------------------------------------------------------
<S> <C>
SC International Servics, Inc. Sky Chefs, Inc.
- ------------------------------------------------------------------------------------------
Sky Chefs International Corp. Sky Chefs, Inc.
- ------------------------------------------------------------------------------------------
Arlington Services, Inc. Sky Chefs, Inc.
- ------------------------------------------------------------------------------------------
Sky Chefs, Inc. Arlington Services, Inc.
- ------------------------------------------------------------------------------------------
Arlington Services Holding Corporation Arlington Services, Inc.
- ------------------------------------------------------------------------------------------
Bethesda Services, Inc. Caterair International, Inc. (II)
- ------------------------------------------------------------------------------------------
Caterair New Zealand Limited Bethesda Services, Inc.
- ------------------------------------------------------------------------------------------
Caterair Airport Properties, Inc. Caterair International, Inc. (II)
- ------------------------------------------------------------------------------------------
Caterair Airport Properties, Inc. Caterair New Zealand Limited
- ------------------------------------------------------------------------------------------
Arlington Services de Panama, S.A. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Sky Chefs de Panama S.A. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Inversiones Turisticas Aeropuerto Panama, S.A. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
LSG Lufthansa Service Sky Chefs France, S.A SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Sky Chefs Chile, S.A. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Caterair Servicos Industriales, Ltda. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Cater Suprimento De Refeicoes, Ltda. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
LSG-Sky Chefs do Brasil Catering --Refeicoes Ltda. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
ServCater Internacional Ltda. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
ServCater Internacional Ltda. Sky Chefs, Inc.
- ------------------------------------------------------------------------------------------
ServCater Internacional Ltda. Sky Chefs International Corp.
- ------------------------------------------------------------------------------------------
Caterair Servicos de Bordo e Hotelaria, S.A. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Sky Chefs - U.K., Ltd. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Arlington Services Mexico, S.A. de C.V. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Nova Galicia, S.A. de C.V. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Caterair de Mexico, S.A. de C.V. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Immobiliaria Marracas, S.A. de C.V. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Casa Ponce de Leon, S.A. de C.V. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Comisariato Gotre, S.A. de C.V. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 242
<TABLE>
<CAPTION>
ANNEX B
Page 3
========================================================================================
BORROWER PLEDGOR/LENDER
- ----------------------------------------------------------------------------------------
<S> <C>
Cocina del Aire Provincia, S.A. de C.V. SC International Services, Inc.
- ----------------------------------------------------------------------------------------
Sky Chefs de Mexico, S.A. de C.V. SC International Services, Inc.
- ----------------------------------------------------------------------------------------
Caterair Taiwan Inflight Services, Inc. SC International Services, Inc.
- ----------------------------------------------------------------------------------------
Caterair Madrid, S.A. SC International Services, Inc.
- ----------------------------------------------------------------------------------------
Caterair Barcelona, S.A. SC International Services, Inc.
- ----------------------------------------------------------------------------------------
Caterair Australia Pty. Ltd. SC International Services, Inc.
- ----------------------------------------------------------------------------------------
Caterair Portugal-Assistencia A Bordo Limitada SC International Services, Inc.
- ----------------------------------------------------------------------------------------
Sky Chefs Canada, Limited SC International Services, Inc.
- ----------------------------------------------------------------------------------------
LSG Sky Chefs Venezuela C.A. SC International Services, Inc.
- ----------------------------------------------------------------------------------------
Sky Chefs Ireland SC International Services, Inc.
- ----------------------------------------------------------------------------------------
SC International Services Ireland Arlington Services Holding Corporation
- ----------------------------------------------------------------------------------------
Arlington Services Panama, S.A. Arlington Services Holding Corporation
- ----------------------------------------------------------------------------------------
Caterair Taiwan Inflight Services, Inc. Bethesda Services Holding Corporation
- ----------------------------------------------------------------------------------------
Caterair Australia Pty. Ltd. Caterair Airport Properties,Inc.
========================================================================================
</TABLE>
<PAGE> 243
ANNEX C
to
AMENDED AND
RESTATED GENERAL
PLEDGE AGREEMENT
FORM OF CERTIFICATE
[Letterhead of Pledgor]
[Date]
Morgan Guaranty Trust Company
of New York, as Collateral Agent
60 Wall Street
New York, New York 10260-0060
Attention: ___________________
Ladies and Gentlemen:
Reference is hereby made to the Pledge Agreement, dated as of September 29,
1995 and amended and restated as of August 28, 1997, among the undersigned, the
other pledgors party thereto, and you, as Collateral Agent (the "Pledge
Agreement"). Pursuant to Section 3.2 of the Pledge Agreement, the undersigned
hereby pledges and delivers to you under the Pledge Agreement [stock certificate
number ____, representing ____ shares of the capital stock of ____, together
with a duly executed and undated stock power for such shares] [a promissory note
issued by __________ in favor of the undersigned, duly endorsed in blank].
Very truly yours,
[NAME OF PLEDGOR]
By_______________________
Title:
Accepted this ____ day
of ________, _____:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Collateral Agent
By________________________
Title:
<PAGE> 244
EXHIBIT G-2
AMENDED AND RESTATED OFSI PLEDGE AGREEMENT
AMENDED AND RESTATED PLEDGE AGREEMENT (as amended, modified or
supplemented from time to time, this "Agreement"), dated as of September 29,
1995 and amended and restated as of August 28, 1997, made by Onex Food Services,
Inc. (the "Pledgor"), in favor of MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Collateral Agent (together with any successor pledgee, the "Pledgee"), for the
benefit of the Secured Creditors (as defined below). Except as otherwise defined
herein, capitalized terms used herein and defined in the SCIS Credit Agreement
(as defined below) or in the Caterair Credit Agreement (as defined below), as
the case may be, shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, the Pledgor, SC International Services, Inc.
("SCIS"), Caterair Holdings Corporation ("Caterair Holdings"), Caterair
International Corporation ("Caterair"), various lenders from time to time party
thereto (the "SCIS Banks"), Bankers Trust Company and J.P. Morgan Securities
Inc., as Co-Arrangers (the "SCIS Co-Arrangers"), Bankers Trust Company, as
Syndication Agent, The Bank of New York, as Co-Agent, and Morgan Guaranty Trust
Company of New York, as Administrative Agent, (together with any successor
administrative agent, the "SCIS Administrative Agent"), have entered into a
Credit Agreement, dated as of September 29, 1995 and amended and restated as of
August 28, 1997, providing for the making of loans to SCIS and the issuance of,
and participation in, letters of credit for the account of SCIS as contemplated
therein (as used herein, the term "SCIS Credit Agreement" means the Credit
Agreement described above in this paragraph, as the same may be amended,
modified, extended, renewed, replaced, restated or supplemented from time to
time, and including any agreement extending the maturity of, or restructuring
all or any portion of the Indebtedness under such agreement or any successor
agreements) (the SCIS Banks, the SCIS Co-Arrangers and the SCIS Administrative
Agent are herein called the "SCIS Bank Creditors");
WHEREAS, SCIS, Caterair, various lenders from time to time
party thereto (the "Caterair Banks", and together with the SCIS Banks, the
"Banks"), Bankers Trust Company and J.P. Morgan Securities Inc., as Co-Arrangers
(the "Caterair Co-Arrangers", and together with the SCIS Co-Arrangers, the
"Co-Arrangers"), Bankers Trust Company, as Syndication Agent, and Morgan
Guaranty Trust Company of New York, as Administrative Agent (together with any
successor administration agent, the "Caterair Administrative Agent", and
together with the SCIS Administrative Agent, the "Administrative Agents"), have
entered into a Term Loan Agreement, dated as of August 28, 1997, providing for
the
<PAGE> 245
EXHIBIT G-2
Page 2
making of loans to SCIS and Caterair as contemplated therein (as used herein,
the term "Caterair Credit Agreement" means the Term Loan Agreement described
above in this paragraph, as the same may be amended, modified, extended,
renewed, replaced, restated or supplemented from time to time, and including any
agreement extending the maturity of, or restructuring all or any portion of the
Indebtedness under such agreement or any successor agreements, and the SCIS
Credit Agreement, together with the Caterair Credit Agreement, are herein called
the "Credit Agreements") (the Caterair Banks, the Caterair Co-Arrangers and the
Caterair Administrative Agent are herein called the "Caterair Bank Creditors",
and together with the SCIS Bank Creditors, are herein called "Bank Creditors");
WHEREAS, SCIS, Caterair and/or one or more of their respective
Subsidiaries may at any time and from time to time enter into one or more
Interest Rate Protection Agreements or Other Hedging Agreements with one or more
Banks or any affiliate thereof (each such Bank or affiliate, even if the
respective Bank subsequently ceases to be a Bank under the applicable Credit
Agreement for any reason, together with such Bank's or affiliate's successors
and assigns, if any, collectively, the "Other Creditors," and together with the
Bank Creditors and the Pledgee, the "Secured Creditors");
WHEREAS, pursuant to each OFSI Guaranty, the Pledgor has
guaranteed to the Secured Creditors the payment when due of all Guaranteed
Obligations as described therein;
WHEREAS, the Pledgor entered into the OFSI Pledge Agreement,
dated as of September 29, 1995 (as amended, modified or supplemented to the date
hereof, the "Original OFSI Pledge Agreement");
WHEREAS, it is a condition precedent to the making of loans
and the issuance of letters of credit under the Credit Agreements that the
Pledgor shall have executed and delivered a counterpart to this Agreement; and
WHEREAS, the Pledgor will obtain benefits from the incurrence
of loans and the issuance of letters of credit under the Credit Agreements and
the entering into of Interest Rate Protection Agreements or Other Hedging
Agreements with the Other Creditors and, accordingly, the Pledgor desires to
enter into this Agreement in order to satisfy the conditions described in the
preceding paragraph and to amend and restate the Original OFSI Pledge Agreement
in its entirety in the form of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to the Pledgor, the receipt and sufficiency of which are
hereby acknowledged, the Pledgor hereby makes the following representations and
warranties to the Pledgee for the
<PAGE> 246
EXHIBIT G-2
Page 3
benefit of the Secured Creditors and hereby covenants and agrees with the
Pledgee for the benefit of the Secured Creditors as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by the
Pledgor for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations,
liabilities and indebtedness of the Pledgor to the SCIS Bank Creditors,
whether now existing or hereafter incurred under, arising out of, or in
connection with the SCIS Credit Agreement and the other SCIS Credit
Documents (such term to mean the "Credit Documents" as defined in the
SCIS Credit Agreement") (including, without limitation, all of its
obligations, liabilities and indebtedness under the OFSI Guaranty (as
defined in the SCIS Credit Agreement)) to which the Pledgor is a party
and the due performance and compliance by the Pledgor with all of the
terms, conditions and agreements contained in the SCIS Credit Agreement
and such other SCIS Credit Documents (all such obligations, liabilities
and indebtedness under this clause (i), except to the extent consisting
of obligations, liabilities or indebtedness with respect to Interest
Rate Protection Agreements or Other Hedging Agreements, being herein
collectively called the "SCIS Credit Document Obligations");
(ii) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations,
liabilities and indebtedness of the Pledgor to the Caterair Bank
Creditors, whether now existing or hereafter incurred under, arising
out of, or in connection with the Caterair Credit Agreement and the
other Caterair Credit Documents (such term to mean the "Credit
Documents" as defined in the Caterair Credit Agreement", and the
Caterair Credit Documents, together with the SCIS Credit Documents, are
referred to herein as the "Credit Documents") (including, without
limitation, all of its obligations, liabilities and indebtedness under
the OFSI Guaranty (as defined in the Caterair Credit Agreement)) to
which the Pledgor is a party and the due performance and compliance by
the Pledgor with all of the terms, conditions and agreements contained
in the Caterair Credit Agreement and such other Caterair Credit
Documents (all such obligations, liabilities and indebtedness under
this clause (i), except to the extent consisting of obligations,
liabilities or indebtedness with respect to Interest Rate Protection
Agreements or Other Hedging Agreements, being herein collectively
called the "Caterair Credit Document Obligations");
(iii) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations,
liabilities and indebtedness owing by the Pledgor to the Other
Creditors under, arising out of or with respect to, any Interest Rate
Protection Agreement or Other Hedging Agreement (including,
<PAGE> 247
EXHIBIT G-2
Page 4
without limitation, all of its obligations, liabilities and
indebtedness under each OFSI Guaranty in respect of such Interest Rate
Protection Agreements or Other Hedging Agreements), whether such
Interest Rate Protection Agreement or Other Hedging Agreement is now in
existence or hereafter arising, and the due performance and compliance
by the Pledgor with all of the terms, conditions and agreements
contained therein (all such obligations, liabilities and indebtedness
described in this clause (iii) being herein collectively called the
"Other Obligations");
(iv) any and all sums advanced by the Pledgee in order to
preserve the Collateral (as hereinafter defined) or preserve its
security interest in the Collateral;
(v) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations or liabilities of the
Pledgor referred to in clauses (i), (ii) and (iii) above, upon the
occurrence and during the continuance of an Event of Default (such
term, as used in this Agreement, shall mean any Event of Default under,
and as defined in, either the Credit Agreement, or any payment default
under any Interest Rate Protection Agreement or Other Hedging
Agreement, and shall, in any event, include without limitation, any
payment default (after the expiration of any applicable grace period)
on any of the Obligations (as hereinafter defined)) shall have occurred
and be continuing, the reasonable expenses of retaking, holding,
preparing for sale or lease, selling or otherwise disposing of or
realizing on the Collateral, or of any exercise by the Pledgee of its
rights hereunder, together with reasonable attorneys' fees and court
costs; and
(vi) all amounts paid by any Secured Creditor as to which such
Secured Creditor has the right to reimbursement under Section 11 of
this Agreement.
All such obligations, liabilities, indebtedness, sums and expenses set forth in
clauses (i) through (vi) of this Section 1 being herein collectively called the
"Obligations," it being acknowledged and agreed that the "Obligations" shall
include extensions of credit of the types described above, whether outstanding
on the date of this Agreement or extended from time to time after the date of
this Agreement.
2. DEFINITION OF STOCK, NOTES, SECURITIES, ETC. As used
herein, (i) the term "Stock" shall mean all of the issued and outstanding shares
of capital stock (including, but not limited to, warrants, options or other
rights to acquire shares thereof) at any time owned by the Pledgor of SCIS or
any of its Subsidiaries or Caterair Holdings or any of its Subsidiaries,
provided that the term "Stock" shall not include, except as otherwise provided
below, more than 65% of the total combined voting power of all classes of
capital stock of any Foreign Subsidiary owned by the Pledgor or any stock held
<PAGE> 248
EXHIBIT G-2
Page 5
as part of the Class B Assets; (ii) the term "Notes" shall mean all of the
promissory notes from time to time issued to, or held by, the Pledgor
representing obligations of SCIS or any of its Subsidiaries, Caterair Holdings
or any of its Subsidiaries (including the Caterair Holdings Unsecured Debenture
to the extent held by the Pledgor) or any of the Lufthansa Companies (to the
extent the obligations of the Lufthansa Companies are evidenced by a Note); and
(iii) the term "Securities" shall mean all of the Stock and Notes. The Pledgor
represents and warrants that, on the date hereof, (a) the Stock held by the
Pledgor consists of the number and type of shares of the stock of the
corporations as described in Annex A hereto, (b) such Stock constitutes that
percentage of the issued and outstanding shares of capital stock of the issuing
corporation as is set forth in Annex A hereto, (c) the Notes held by the Pledgor
consist of the promissory notes described in Annex B hereto, (d) the Pledgor is
the holder of record and sole beneficial owner of the Stock and the Notes and
there exist no options or preemption rights in respect of any of the Stock and
(e) the Pledgor owns no other Securities. Following a change in the relevant
provisions of the Code or the regulations, published rules, published rulings,
notices or other official pronouncements issued or promulgated thereunder, if
the Pledgee requests a pledge of additional stock of any Foreign Subsidiary of
the Pledgor, all of the stock of which Foreign Subsidiary has not already been
pledged pursuant this Agreement, then within 90 days after such request the
Pledgor shall either (i) pledge such additional stock of such Foreign Subsidiary
or (ii) deliver to the relevant Pledgee an opinion of the counsel of the
Pledgor, which counsel shall be reasonably acceptable to the Pledgee, that the
requested pledge of such additional stock is more likely than not to cause the
undistributed earnings of such Foreign Subsidiary to be treated as a deemed
dividend to such Foreign Subsidiary's United States parent for Federal income
tax purposes.
3. PLEDGE OF SECURITIES, ETC.
3.1. Pledge. To secure the Obligations of the Pledgor, the
Pledgor hereby (i) grants to the Pledgee a security interest in all of the
Collateral owned by the Pledgor, (ii) pledges and deposits as security with the
Pledgee, the Securities owned by the Pledgor on the date hereof, and delivers to
the Pledgee certificates or instruments, if any, therefor, (x) duly endorsed in
blank by the Pledgor in the case of Notes, and (y) accompanied by undated stock
powers duly executed in blank by the Pledgor (and accompanied by any transfer
tax stamps required in connection with the pledge of such Securities) in the
case of Stock, or such other instruments of transfer as are reasonably
acceptable to the Pledgee and (iii) assigns, transfers, hypothecates mortgages,
charges and sets over to the Pledgee all of the Pledgor's right, title and
interest in and to such Securities (and in and to the certificates or
instruments evidencing such Securities), to be held by the Pledgee upon the
terms and conditions set forth in this Agreement.
3.2. Subsequently Acquired Securities. If the Pledgor shall
acquire (by purchase, stock dividend or otherwise) any additional Securities at
any time or from time
<PAGE> 249
EXHIBIT G-2
Page 6
to time after the date hereof, the Pledgor will promptly thereafter pledge and
deposit such Securities (or certificates or instruments representing such
Securities) as security with the Pledgee and deliver to the Pledgee certificates
therefor or instruments thereof, duly endorsed in blank in the case of such
Notes, accompanied by undated stock powers duly executed in blank by the Pledgor
(and accompanied by any transfer tax stamps required in connection with the
pledge of such Securities) in the case of such Stock, or such other instruments
of transfer as are reasonably acceptable to the Pledgee, and accompanied by a
certificate executed by a principal executive officer of the Pledgor in the form
attached as Annex C hereto describing such Securities and certifying that the
same has been duly pledged with the Pledgee hereunder. Except as otherwise
provided in the last sentence of Section 2 hereof, the Pledgor shall not be
required at any time to pledge hereunder any Stock which is more than 65% of the
total combined voting power of all classes of capital stock of any Foreign
Subsidiary owned by the Pledgor.
3.3. Uncertificated Securities. Notwithstanding anything to
the contrary contained in Sections 3.1 and 3.2 hereof, if any Securities
(whether now owned or hereafter acquired) are uncertificated securities, the
Pledgor shall promptly notify the Pledgee thereof, and shall promptly take all
actions required to perfect the security interest of the Pledgee under
applicable law (including, in any event, under Sections 8-313 and 8-321 of the
New York Uniform Commercial Code, if applicable). The Pledgor further agrees to
take such actions as the Pledgee deems reasonably necessary or desirable to
effect the foregoing and to permit the Pledgee to exercise any of its rights and
remedies hereunder, and agrees to provide an opinion of counsel reasonably
satisfactory to the Pledgee with respect to any such pledge of uncertificated
Securities promptly upon the reasonable request of the Pledgee.
3.4. Definitions of Pledged Stock; Pledged Notes; Pledged
Securities and Collateral. All Stock at any time pledged or required to be
pledged hereunder is hereinafter called the "Pledged Stock;" all Notes at any
time pledged or required to be pledged hereunder are hereinafter called the
"Pledged Notes;" all Pledged Stock and Pledged Notes together are called the
"Pledged Securities;" and the Pledged Securities, together with all proceeds
thereof, including any securities and moneys received and at the time held by
the Pledgee hereunder, are herein called the "Collateral."
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee
shall have the right to appoint one or more sub-agents for the purpose of
retaining physical possession of the Pledged Securities, which may be held (in
the discretion of the Pledgee) in the name of the Pledgor, endorsed or assigned
in blank or in favor of the Pledgee or any nominee or nominees of the Pledgee or
a sub-agent appointed by the Pledgee.
<PAGE> 250
EXHIBIT G-2
Page 7
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until
there shall have occurred and be continuing an Event of Default and the Pledgee
has exercised any of its remedies under Section 7(d) hereof (or has given notice
to the Pledgor that it intends to exercise such remedies, although no such
notice shall be required and the Pledgee shall be entitled to exercise such
remedies immediately upon the occurrence of a bankruptcy or insolvency Event of
Default of the type described in either Credit Agreement in respect of the
Pledgor), the Pledgor shall be entitled to exercise any and all voting and other
consensual rights and powers pertaining to the Pledged Securities owned by it,
and to give consents, waivers or ratifications in respect thereof; provided that
no vote shall be cast or any consent, waiver or ratification given or any action
taken which would violate or be inconsistent with any of the terms of this
Agreement, the Credit Agreements, any other Credit Document or any Interest Rate
Protection Agreement or Other Hedging Agreement (collectively, the "Secured Debt
Agreements"), or which would have the effect of impairing the value of the
Collateral or any part thereof or the position or interests of the Pledgee in
the Collateral. All such rights of the Pledgor to vote and to give consents,
waivers and ratifications shall cease in case an Event of Default has occurred
and is continuing, and the Pledgee has exercised any of its remedies under
Section 7(d) hereof (or has given notice to the Pledgor that it intends to
exercise such remedies, although no such notice shall be required and the
Pledgee shall be entitled to exercise such remedies immediately upon the
occurrence of a bankruptcy or insolvency Event of Default of the type described
in either Credit Agreement in respect of the Pledgor).
6. DIVIDENDS AND OTHER DISTRIBUTIONS. (a) Unless and until
there shall have occurred and be continuing an Event of Default and the Pledgee
has exercised any of its remedies under Section 7(a) hereof (or has given notice
to the Pledgor that it intends to exercise such remedies, although no such
notice shall be required and the Pledgee shall be entitled to exercise such
remedies immediately upon the occurrence of an Event of Default of the type
described in either Credit Agreement in respect of the Pledgor), (i) all
dividends and other distributions payable in respect of the Pledged Stock shall
be paid to the Pledgor in accordance with (and to the extent permitted by) the
Credit Agreements, and (ii) all payments in respect of the Pledged Notes shall
be paid to the Pledgor.
(b) Nothing contained in this Section 6 shall limit or
restrict in any way the Pledgee's right to receive proceeds of the Collateral in
any form in accordance with Section 3 of this Agreement. All dividends,
distributions or other payments in respect of the Collateral which are received
by the Pledgor contrary to the provisions of this Section 6 or Section 7 hereof
shall be held in trust for the benefit of the Pledgee, shall be segregated from
other property or funds of the Pledgor and shall be forthwith delivered to the
Pledgee as Collateral in the same form as so received (with any necessary
endorsement).
<PAGE> 251
EXHIBIT G-2
Page 8
7. REMEDIES UPON EVENTS OF DEFAULT. If there shall have
occurred and be continuing an Event of Default, then and in every such case, the
Pledgee shall be entitled to exercise all of the rights, powers and remedies
(whether vested in it by this Agreement, any other Secured Debt Agreement or by
law) for the protection and enforcement of its rights in respect of the
Collateral, and the Pledgee shall be entitled to exercise all the rights and
remedies of a secured party under the Uniform Commercial Code and also shall be
entitled, without limitation, to exercise the following rights, which the
Pledgor hereby agrees to be commercially reasonable:
(a) to receive all amounts payable in respect of the
Collateral otherwise payable under Section 6 hereof to the Pledgor;
(b) to transfer all or any part of the Collateral into the
Pledgee's name or the name of its nominee or nominees;
(c) to accelerate any Pledged Note which may be accelerated in
accordance with its terms, and take any other lawful action to collect
upon any Pledged Note (including, without limitation, to make any
demand for payment thereon);
(d) to vote all or any part of the Pledged Stock (whether or
not transferred into the name of the Pledgee) and give all consents,
waivers and ratifications in respect of the Collateral and otherwise
act with respect thereto as though it were the outright owner thereof
(the Pledgor hereby irrevocably constituting and appointing the Pledgee
the proxy and attorney-in-fact of the Pledgor, with full power of
substitution to do so); and
(e) at any time and from time to time to sell, assign and
deliver, or grant options to purchase, all or any part of the
Collateral, or any interest therein, at any public or private sale,
without demand of performance, advertisement or notice of intention to
sell or of the time or place of sale or adjournment thereof or to
redeem or otherwise (all of which are hereby waived by the Pledgor),
for cash, on credit or for other property, for immediate or future
delivery without any assumption of credit risk, and for such price or
prices and on such terms as the Pledgee in its absolute discretion may
determine; provided that at least 10 days' written notice of the time
and place of any such sale shall be given to the Pledgor. The Pledgee
shall not be obligated to make any such sale of Collateral regardless
of whether any such notice of sale has theretofore been given. The
Pledgor hereby waives and releases to the fullest extent permitted by
law any right or equity of redemption with respect to the Collateral,
whether before or after sale hereunder, and all rights, if any, of
marshalling the Collateral and any other security for the Obligations
or otherwise. At any such sale, unless prohibited by applicable law,
<PAGE> 252
EXHIBIT G-2
Page 9
the Pledgee on behalf of the Secured Creditors may bid for and purchase
all or any part of the Collateral so sold free from any such right or
equity of redemption. Neither the Pledgee nor any other Secured
Creditor shall be liable for failure to collect or realize upon any or
all of the Collateral or for any delay in so doing nor shall any of
them be under any obligation to take any action whatsoever with regard
thereto.
8. REMEDIES, ETC. Each and every right, power and remedy of
the Pledgee provided for in this Agreement or any other Secured Debt Agreement,
or now or hereafter existing at law or in equity or by statute shall be
cumulative and concurrent and shall be in addition to every other such right,
power or remedy. The exercise or beginning of the exercise by the Pledgee or any
other Secured Creditor of any one or more of the rights, powers or remedies
provided for in this Agreement or any other Secured Debt Agreement or now or
hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by the Pledgee or any other Secured
Creditor of all such other rights, powers or remedies, and no failure or delay
on the part of the Pledgee or any other Secured Creditor to exercise any such
right, power or remedy shall operate as a waiver thereof. No notice to or demand
on the Pledgor in any case shall entitle it to any other or further notice or
demand in similar or other circumstances or constitute a waiver of any of the
rights of the Pledgee or any other Secured Creditor to any other or further
action in any circumstances without notice or demand. The Secured Creditors
agree that this Agreement may be enforced only by the action of the Pledgee, in
each case acting upon the instructions of the Required Secured Creditors (as
defined in the Security Agreement) and that no other Secured Creditor shall have
any right individually to seek to enforce or to enforce this Agreement or to
realize upon the security to be granted hereby, it being understood and agreed
that such rights and remedies may be exercised by the Pledgee for the benefit of
the Secured Creditors upon the terms of this Agreement.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the
Pledgee upon any sale or other disposition of the Collateral, together with all
other moneys received by the Pledgee hereunder, shall be applied to the payment
of the Obligations in the manner provided in Section 7.4 of the Security
Agreement.
(b) It is understood and agreed that the Pledgor shall remain
liable to the extent of any deficiency between the amount of the proceeds of the
Collateral hereunder and the aggregate amount of the Obligations.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral
by the Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of
<PAGE> 253
EXHIBIT G-2
Page 10
the purchase money paid over to the Pledgee or such officer or be answerable in
any way for the misapplication or nonapplication thereof.
11. INDEMNITY. (a) The Pledgor agrees to indemnify and hold
harmless the Pledgee in such capacity and each other Secured Creditor and their
respective successors, assigns, employees, agents and servants (individually an
"Indemnitee," and collectively the "Indemnitees") harmless from any and all
liabilities, obligations, damages, injuries, penalties, claims, demands,
actions, suits, judgments and any and all reasonable costs, expenses or
disbursements (including reasonable attorneys' fees and expenses) (for the
purposes of this Section 11 the foregoing are collectively called "expenses") of
whatever kind and nature imposed on, asserted against or incurred by any of the
Indemnitees in any way relating to or arising out of this Agreement or the
enforcement of any of the terms of, or the preservation of any rights hereunder,
or in any way relating to or arising out of the ownership, control, acceptance,
possession, condition, sale or other disposition, or use of the Collateral,
provided that no Indemnitee shall be indemnified pursuant to this Section 11(a)
for losses, damages or liabilities to the extent caused by the gross negligence
or wilful misconduct of such Indemnitee. The Pledgor agrees that upon written
notice by any Indemnitee of the assertion of such a liability, obligation,
damage, injury, penalty, claim, demand, action, suit or judgment, the Pledgor
shall to the extent requested to do so assume full responsibility for the
defense thereof.
(b) Without limiting the application of Section 11(a) hereof,
the Pledgor agrees to pay or reimburse the Pledgee for any and all fees, costs
and expenses, including reasonable attorneys' fees, of whatever kind or nature
incurred in connection with the creation, preservation or protection of the
Pledgee's Liens on, and security interest in, the Collateral, including, without
limitation, all fees and taxes in connection with the recording or filing of
instruments and documents in public offices, payment or discharge of any taxes
or Liens upon or in respect of the Collateral, and all other reasonable fees,
costs and expenses in connection with protecting, maintaining or preserving the
Collateral and the Pledgee's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits or
proceedings arising out of or relating to the Collateral.
(c) If and to the extent that the obligations of the Pledgor
under this Section 11 are unenforceable for any reason, the Pledgor hereby
agrees to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
12. FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) The Pledgor
agrees that it will join with the Pledgee in executing and, at the Pledgor's own
expense, file and refile under the Uniform Commercial Code of any jurisdiction
or other applicable law such financing statements, continuation statements and
other documents in such offices as the Pledgee may deem reasonably necessary and
wherever required by law
<PAGE> 254
EXHIBIT G-2
Page 11
in order to perfect and preserve the Pledgee's security interest in the
Collateral and hereby authorizes the Pledgee to file financing statements and
amendments thereto relative to all or any part of the Collateral without the
signature of the Pledgor where permitted by law, and agrees to do such further
acts and things and to execute and deliver to the Pledgee such additional
conveyances, assignments, agreements and instruments as the Pledgee may
reasonably require or deem necessary to carry into effect the purposes of this
Agreement or to further assure and confirm unto the Pledgee its rights, powers
and remedies hereunder.
(b) The Pledgor hereby appoints the Pledgee the Pledgor's
attorney-in-fact, with full authority in the place and stead of the Pledgor and
in the name of the Pledgor or otherwise, from time to time after the occurrence
and during the continuance of an Event of Default, in the Pledgee's reasonable
discretion to take any action and to execute any instrument which the Pledgee
may deem reasonably necessary or advisable to accomplish the purposes of this
Agreement.
13. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance
with this Agreement all items of the Collateral at any time received under this
Agreement. It is expressly understood and agreed by each Secured Creditor that
by accepting the benefits of this Agreement each such Secured Creditor
acknowledges and agrees that the obligations of the Pledgee as holder of the
Collateral and interests therein and with respect to the disposition thereof,
and otherwise under this Agreement, are only those expressly set forth in this
Agreement. The Pledgee shall act hereunder on the terms and conditions set forth
herein and in Article X of the Security Agreement.
14. TRANSFER BY THE PLEDGOR. The Pledgor will not sell or
otherwise dispose of, grant any option with respect to, or mortgage, pledge or
otherwise encumber any of the Collateral or any interest therein (except as may
be permitted in accordance with the terms of the Credit Agreement).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGOR.
The Pledgor represents, warrants and covenants that (i) it is the legal, record
and beneficial owner of, and has good and marketable title to, all Pledged
Securities pledged by it hereunder, subject to no Lien (except the Lien created
by this Agreement and Liens of the type described in Sections 9.01(i), (v) and
(xii) of the SCIS Credit Agreement); (ii) it has the corporate power and
authority to pledge all the Pledged Securities pledged by it pursuant to this
Agreement; (iii) this Agreement has been duly authorized, executed and delivered
by the Pledgor and constitutes a legal, valid and binding obligation of the
Pledgor enforceable in accordance with its terms, except to the extent that the
enforceability hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting creditors'
rights and by equitable principles (regardless of whether enforcement is sought
in equity or at law); (iv) no consent of any other party (including, without
limitation, any stockholder or creditor of the Pledgor or any of its
<PAGE> 255
EXHIBIT G-2
Page 12
Subsidiaries) and no consent, license, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing or declaration with,
any governmental authority is required to be obtained by the Pledgor for the
execution, delivery or performance of this Agreement by the Pledgor, the
validity or enforceability of this Agreement and the perfection or
enforceability of the Pledgee's security interest in the Collateral (other than,
in respect of the proceeds of the Pledged Securities, the filing of Form UCC-1
financing statements or the appropriate equivalent (which filings, have been
made)) or except for compliance with or as may be required by applicable
securities laws, the exercise by the Pledgee of any of its rights or remedies
provided herein; (v) the execution, delivery and performance of this Agreement
by the Pledgor, and the compliance by it with the terms and provisions hereof,
will not violate any provision of any applicable law or regulation or of any
applicable order, judgment, writ, injunction or decree of any court, arbitrator
or governmental authority, domestic or foreign, applicable to the Pledgor, or of
the certificate of incorporation or by-laws (or equivalent organizational
documents) of the Pledgor or of any securities issued by the Pledgor or any of
its Subsidiaries, or of any mortgage, indenture, lease, deed of trust, loan
agreement, credit agreement or any other material contract, agreement or
instrument or undertaking to which the Pledgor or any of its Subsidiaries is a
party or which purports to be binding upon the Pledgor or any of its
Subsidiaries or upon any of their respective assets and will not result in the
creation or imposition of (or the obligation to create or impose) any lien or
encumbrance on any of the Collateral of the Pledgor or any of its Subsidiaries
except as contemplated by this Agreement; (vi) all the shares of Stock have been
duly and validly issued, are fully paid and non-assessable and are subject to no
options to purchase or similar rights; (vii) each of the Pledged Notes issued by
any Credit Party or by any of its Subsidiaries constitutes, or when executed by
the respective obligor thereof will constitute, the legal, valid and binding
obligation of such obligor, enforceable in accordance with its terms, except to
the extent that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
generally affecting creditors' rights and by equitable principles (regardless of
whether enforcement is sought in equity or at law); and (viii) the pledge,
assignment and delivery to the Pledgee of the Securities (other than
uncertificated securities) pursuant to this Agreement creates a valid and
perfected first priority Lien in the Securities, and the proceeds thereof,
subject to no other Lien or to any agreement purporting to grant to any third
party a Lien on the property or assets of the Pledgor which would include the
Securities. The Pledgor covenants and agrees that it will defend the Pledgee's
right, title and security interest in and to the Securities and the proceeds
thereof against the claims and demands of all persons whomsoever; and the
Pledgor covenants and agrees that it will have like title to and right to pledge
any other property at any time hereafter pledged to the Pledgee as Collateral
hereunder and will likewise defend the right thereto and security interest
therein of the Pledgee and the Secured Creditors.
16. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of
the Pledgor under this Agreement shall be absolute and unconditional and shall
remain in
<PAGE> 256
EXHIBIT G-2
Page 13
full force and effect without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstance or occurrence
whatsoever, including, without limitation: (i) any renewal, extension, amendment
or modification of or addition or supplement to or deletion from any Secured
Debt Agreement or any other instrument or agreement referred to therein, or any
assignment or transfer of any thereof; (ii) any waiver, consent, extension,
indulgence or other action or inaction under or in respect of any such Secured
Debt Agreement or other agreement or instrument including, without limitation,
this Agreement; (iii) any furnishing of any additional security to the Pledgee
or its assignee or any acceptance thereof or any release of any security by the
Pledgee or its assignee; (iv) any limitation on any party's liability or
obligations under any such instrument or agreement or any invalidity or
unenforceability, in whole or in part, of any such instrument or agreement or
any term thereof; or (v) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceeding
relating to the Pledgor or any Subsidiary of the Pledgor, or any action taken
with respect to this Agreement by any trustee or receiver, or by any court, in
any such proceeding, whether or not the Pledgor shall have notice or knowledge
of any of the foregoing (it being understood that the enforcement hereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar rights generally affecting creditors' rights and by equitable
principles (regardless of whether enforcement is sought in equity or at law)).
17. REGISTRATION, ETC. (a) If there shall have occurred and be
continuing an Event of Default then, and in every such case, upon receipt by the
Pledgor from the Pledgee of a written request or requests that the Pledgor cause
any registration, qualification or compliance under any Federal, state or other
applicable securities law or laws to be effected with respect to all or any part
of the Pledged Stock, the Pledgor as soon as practicable and at its expense will
cause such registration to be effected (and be kept effective) and will cause
such qualification and compliance to be declared effected (and be kept
effective) as may be so requested and as would permit or facilitate the sale and
distribution of such Pledged Stock, including, without limitation, registration
under the Securities Act of 1933, as then in effect (or any similar statute then
in effect), appropriate qualifications under applicable blue sky, state or other
applicable securities laws and appropriate compliance with any other government
requirements; provided that the Pledgee shall furnish to the Pledgor such
information regarding the Pledgee as the Pledgor may reasonably request in
writing and as shall be required in connection with any such registration,
qualification or compliance. The Pledgor will cause the Pledgee to be kept
advised in writing as to the progress of each such registration, qualification
or compliance and as to the completion thereof, will furnish to the Pledgee such
number of prospectuses, offering circulars or other documents incident thereto
as the Pledgee from time to time may reasonably request, and will indemnify the
Pledgee, each other Secured Creditor and all others participating in the
distribution of such Pledged Stock against all claims, losses, damages and
liabilities caused by any untrue statement (or alleged untrue statement) of a
material fact contained therein (or in any related registration statement,
notification or the like) or by any
<PAGE> 257
EXHIBIT G-2
Page 14
omission (or alleged omission) to state therein (or in any related registration
statement, notification or the like) a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as the same may have been caused by an untrue statement or omission
based upon information furnished in writing to the Pledgor by the Pledgee or
such other Secured Creditor expressly for use therein.
(b) If at any time when the Pledgee shall determine to
exercise its right to sell all or any part of the Pledged Securities pursuant to
Section 7 hereof, and such Pledged Securities or the part thereof to be sold
shall not, for any reason whatsoever, be effectively registered under the
Securities Act of 1933, as then in effect, the Pledgee may, in its sole and
absolute discretion, sell such Pledged Securities or part thereof by private
sale in such manner and under such circumstances as the Pledgee may deem
necessary or advisable in order that such sale may legally be effected without
such registration. Without limiting the generality of the foregoing, in any such
event the Pledgee, in its sole and absolute discretion (i) may proceed to make
such private sale notwithstanding that a registration statement for the purpose
of registering such Pledged Securities or part thereof shall have been filed
under such Securities Act, (ii) may approach and negotiate with a single
possible purchaser to effect such sale, and (iii) may restrict such sale to a
purchaser who will represent and agree that such purchaser is purchasing for its
own account, for investment, and not with a view to the distribution or sale of
such Pledged Securities or part thereof. In the event of any such sale, the
Pledgee shall incur no responsibility or liability for selling all or any part
of the Pledged Securities at a price which the Pledgee, in its sole and absolute
discretion, in good faith deems reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might be
realized if the sale were deferred until after registration as aforesaid.
18. TERMINATION; RELEASE. (a) On the Termination Date (as
defined in the Security Agreement), but only after giving effect to the
repayments to be made on such date, this Agreement and the security interest
created hereby shall terminate (provided that all indemnities set forth herein
including, without limitation, in Section 11 hereof shall survive any such
termination), and the Pledgee, at the request and expense of the Pledgor, will
execute and deliver to the Pledgor such proper instrument or instruments
acknowledging the satisfaction and termination of this Agreement, and will duly
assign, release, transfer and deliver to the Pledgor (without recourse and
without any representation or warranty) all of the Collateral as has not
theretofore been sold or otherwise applied or released pursuant to this
Agreement, together with any moneys at the time held by the Pledgee or any of
its sub-agents hereunder.
(b) In the event that all or any part of the Collateral is
sold, conveyed or disposed of in connection with any form of asset disposition
permitted by the Credit Agreements or otherwise released, in whole or in part,
at the direction of the Required Secured Creditors and the proceeds of such
asset disposition are applied in accordance with,
<PAGE> 258
EXHIBIT G-2
Page 15
and to the extent required by, the provisions of the Credit Agreements, the
Pledgee, at the request and expense of the Pledgor, will duly assign, release,
transfer and deliver to the Pledgor (without recourse and without any
representation or warranty) such of the Collateral (and releases therefor) as is
then being (or has been) so sold or released and has not theretofore been
released pursuant to this Agreement.
(c) At any time that the Pledgor desires that the Pledgee
assign, release, transfer and deliver Collateral as provided in Section 18(a) or
(b) hereof, it shall deliver to the Pledgee a certificate signed by a principal
executive officer of the Pledgor stating that the release of the respective
Collateral is in accordance with Section 18(a) or (b).
(d) The Pledgee shall have no liability whatsoever to any
Secured Creditor as the result of any release of Collateral by it in accordance
with this Section 18.
19. NOTICES ETC. All such notices and communications hereunder
shall be sent or delivered by mail, telegraph, telex, telecopy, cable or
overnight courier service and all such notices and communications shall, when
mailed, telegraphed, telexed, telecopied, or cabled or sent by overnight
courier, be effective when delivered to the telegraph company, cable company or
overnight courier, as the case may be, or sent by telex or telecopier and when
mailed shall be effective three Business Days following deposit in the mail with
proper postage, except that notices and communications to the Pledgee shall not
be effective until received by the Pledgee. All notices and other communications
shall be in writing and addressed as follows:
(a) if to the Pledgor, to the address and communications
information set forth opposite its signature below;
(b) if to the Pledgee, at the following address of, and the
communications information for, the Pledgee:
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260-0060
Attention: Laura Loffredo
Telephone No.: (212) 648-6793
Facsimile No.: (212) 648-5336
(c) if to any Bank Creditor, either (x) to the respective
Administrative Agent, at the address of such Administrative Agent
specified in the respective Credit Agreement or (y) at such address and
communications information as such Bank Creditor shall have specified
in the Credit Agreement;
<PAGE> 259
EXHIBIT G-2
Page 16
(d) if to any Other Creditor at such address and
communications information as such Other Creditor shall have specified
in writing to the Pledgor and the Pledgee;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
20. WAIVER; AMENDMENT. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing and duly signed by the Pledgor and the Pledgee
(with the written consent of the Required Secured Creditors); provided, that any
change, waiver, modification or variance affecting the rights and benefits of a
single Class (as defined below) of Secured Creditors (and not all Secured
Creditors in a like or similar manner) shall also require the written consent of
the Requisite Creditors (as defined below) of such affected Class. For the
purpose of this Agreement, the term "Class" shall mean each class of Secured
Creditors, i.e., whether (i) the SCIS Bank Creditors as holders of the SCIS
Credit Document Obligations, (ii) the Caterair Bank Creditors as holders of the
Caterair Credit Document Obligations or (iii) the Other Creditors as the holders
of the Other Obligations. For the purpose of this Agreement, the term "Requisite
Creditors" of any Class shall mean each of (i) with respect to the SCIS Credit
Document Obligations, the Required Banks under, and as defined in, the SCIS
Credit Agreement, (ii) with respect to the Caterair Credit Document Obligations,
the Required Banks under, and as defined in, the Caterair Credit Agreement and
(iii) with respect to the Other Obligations, the holders of a majority of all
obligations outstanding from time to time under the Interest Rate Protection
Agreements or Other Hedging Agreements.
21. MISCELLANEOUS. This Agreement shall be binding upon the
successors and assigns of the Pledgor (although the Pledgor may not assign its
rights and obligations hereunder except in accordance with the provisions of the
Secured Debt Agreements) and shall inure to the benefit of and be enforceable by
each of the parties hereto and its successors and assigns. THIS AGREEMENT SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS EXCEPT FOR THE CHOICE OF
LAW PROVISIONS OF THE NEW YORK UNIFORM COMMERCIAL CODE. EACH OF THE PARTIES TO
THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS DOCUMENT,
THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
The headings in this Agreement are for purposes of reference only and shall not
limit or define the meaning hereof. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which shall
constitute one instrument. In the event that any
<PAGE> 260
EXHIBIT G-2
Page 17
provision of this Agreement shall prove to be invalid or unenforceable, such
provision shall be deemed to be severable from the other provisions of this
Agreement which shall remain binding on all parties hereto.
22. RECOURSE. This Agreement is made with full recourse to the
Pledgor (including, without limitation, with full recourse to all assets of the
Pledgor) and pursuant to and upon all the representations, warranties, covenants
and agreements on the part of the Pledgor contained herein, in the other Secured
Debt Agreements and otherwise in writing in connection herewith or therewith.
Notwithstanding anything to the contrary contained in this Agreement, the
Secured Creditors acknowledge and agree that they shall have no recourse against
the Pledgor under this Agreement in respect of the Class B Assets (but, in the
case of any Class B Assets constituting cash, only to the extent that such cash
has been segregated from the other assets (including other cash) of the
Pledgor).
* * *
<PAGE> 261
EXHIBIT G-2
Page 18
IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused
this Agreement to be executed by their duly elected officers duly authorized as
of the date first above written.
Address:
c/o Sky Chefs,Inc. ONEX FOOD SERVICES, INC.,
524 East Lamar Boulevard as Pledgor
Arlington, Texas 76011
By__________________________
Title:
60 Wall Street MORGAN GUARANTY TRUST
New York, New York 10260-0060 COMPANY OF NEW YORK,
as Pledgee, Collateral Agent
By__________________________
Title:
<PAGE> 262
ANNEX A
to
AMENDED AND RESTATED
OFSI PLEDGE AGREEMENT
LIST OF STOCK
<TABLE>
<CAPTION>
===========================================================================================================
ISSUER/JURISDICTION OF PLEDGOR CLASS OF AUTHORIZED SHARES PERCENT- STOCK # OF
INCORPORATION STOCK SHARES ISSUED AGE TO BE CERT. SHARES
PLEDGED NUMBER PLEDGED
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SC International OFSI Common-$.01 3,000 100 100% 1 100
Services, Inc. (Delaware) par
- -----------------------------------------------------------------------------------------------------------
===========================================================================================================
</TABLE>
<PAGE> 263
ANNEX B
to
AMENDED AND RESTATED
OFSI PLEDGE AGREEMENT
LIST OF NOTES
<TABLE>
<CAPTION>
==========================================================================================
DEBTOR DATE ISSUED PRINCIPAL AMOUNT
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Caterair Holdings Corporation June 15, 1995 $4,245,103.00
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation March 15, 1995 $3,990,696.12
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation Dec. 15, 1994 $3,875,832.01
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation Sept. 15, 1994 $3,762,188.25
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation June 15, 1994 $3,612,182.34
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation March 15, 1994 $3,395,706.08
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation Dec. 15, 1993 $3,297,967.55
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation Sept. 15, 1993 $3,201,267.43
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation June 15, 1993 $3,073,626.55
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation March 15, 1993 $2,889,425.66
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation Dec. 15, 1992 $2,806,259.39
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation Sept. 15, 1992 $2,723,976.71
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation June 15, 1992 $2,615,366.35
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation March 15, 1992 $2,484,869.01
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation Dec. 15, 1991 $2,386,826.79
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation Sept. 15, 1991 $2,316,842.34
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation June 15, 1991 $2,224,465.24
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation March 15, 1991 $2,091,154.16
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation Dec. 15, 1990 $2,030,964.52
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation Sept. 15, 1990 $1,971,414.36
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation June 15, 1990 $1,892,810.16
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation March 15, 1990 $1,779,375.00
==========================================================================================
</TABLE>
<PAGE> 264
ANNEX C
to
OFSI
PLEDGE AGREEMENT
FORM OF CERTIFICATE
[Date]
Morgan Guaranty Trust Company
of New York, as Collateral Agent
60 Wall Street
New York, New York 10260-0060
Attention: ___________________
Ladies and Gentlemen:
Reference is hereby made to the Pledge Agreement, dated as of
September 29, 1995 and amended and restated as of August 28, 1997, between the
undersigned and you, as Collateral Agent (the "Pledge Agreement"). Pursuant to
Section 3.2 of the Pledge Agreement, the undersigned hereby pledges and delivers
to you under the Pledge Agreement [stock certificate number ____, representing
____ shares of the capital stock of ____, together with a duly executed and
undated stock power for such shares] [a promissory note issued by __________ in
favor of the undersigned, duly endorsed in blank].
Very truly yours,
[NAME OF PLEDGOR]
By_______________________
Title:
Accepted this ____ day
of ________, _____:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Collateral Agent
By________________________
Title:
<PAGE> 265
EXHIBIT G-3
AMENDED AND RESTATED DESIGNATED ONEX SUB PLEDGE AGREEMENT
AMENDED AND RESTATED PLEDGE AGREEMENT (as amended, modified or
supplemented from time to time, this "Agreement"), dated as of January 1, 1997
and amended and restated as of August 28, 1997, made by ONEX OFSI HOLDINGS INC.,
an Ontario corporation (the "Pledgor"), in favor of MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Collateral Agent (together with any successor pledgee,
the "Pledgee"), for the benefit of the Secured Creditors (as defined below).
Except as otherwise defined herein, capitalized terms used herein and defined in
the SCIS Credit Agreement (as defined below) or in the Caterair Credit Agreement
(as defined below), as the case may be, shall be used herein as therein defined.
WITNESSETH:
WHEREAS, Onex Food Services, Inc. ("OFSI"), SC International Services,
Inc. ("SCIS"), Caterair Holdings Corporation ("Caterair Holdings"), Caterair
International Corporation ("Caterair"), various lenders from time to time party
thereto (the "SCIS Banks"), Bankers Trust Company and J.P. Morgan Securities
Inc., as Co-Arrangers (the "SCIS Co-Arrangers"), Bankers Trust Company, as
Syndication Agent, The Bank of New York, as Co-Agent, and Morgan Guaranty Trust
Company of New York, as Administrative Agent, (together with any successor
administrative agent, the "SCIS Administrative Agent"), have entered into a
Credit Agreement, dated as of September 29, 1995 and amended and restated as of
August 28, 1997, providing for the making of loans to SCIS and the issuance of,
and participation in, letters of credit for the account of SCIS as contemplated
therein (as used herein, the term "SCIS Credit Agreement" means the Credit
Agreement described above in this paragraph, as the same may be amended,
modified, extended, renewed, replaced, restated or supplemented from time to
time, and including any agreement extending the maturity of, or restructuring
all or any portion of the Indebtedness under such agreement or any successor
agreements) (the SCIS Banks, the SCIS Co-Arrangers and the SCIS Administrative
Agent are herein called the "SCIS Bank Creditors");
WHEREAS, SCIS, Caterair, various lenders from time to time party
thereto (the "Caterair Banks", and together with the SCIS Banks, the "Banks"),
Bankers Trust Company and J.P. Morgan Securities Inc., as Co-Arrangers (the
"Caterair Co-Arrangers", and together with the SCIS Co-Arrangers, the
"Co-Arrangers"), Bankers Trust Company,
<PAGE> 266
EXHIBIT G-3
Page 2
as Syndication Agent, and Morgan Guaranty Trust Company of New York, as
Administrative Agent (together with any successor administrative agent, the
"Caterair Administrative Agent", and together with the SCIS Administrative
Agent, the "Administrative Agents"), have entered into a Term Loan Agreement,
dated as of August 28, 1997, providing for the making of loans to SCIS and
Caterair as contemplated therein (as used herein, the term "Caterair Credit
Agreement" means the Term Loan Agreement described above in this paragraph, as
the same may be amended, modified, extended, renewed, replaced, restated or
supplemented from time to time, and including any agreement extending the
maturity of, or restructuring all or any portion of the Indebtedness under such
agreement or any successor agreements, and the Caterair Credit Agreement,
together with the SCIS Credit Agreement, are herein called the "Credit
Agreements") (the Caterair Banks, the Caterair Co-Arrangers and the Caterair
Administrative Agent are herein called the "Caterair Bank Creditors", and
together with the SCIS Bank Creditors, are herein called the "Bank Creditors");
WHEREAS, SCIS, Caterair and/or one or more of their respective
Subsidiaries may at any time and from time to time enter into one or more
Interest Rate Protection Agreements or Other Hedging Agreements with one or more
Banks or any affiliate thereof (each such Bank or affiliate, even if the
respective Bank subsequently ceases to be a Bank under the applicable Credit
Agreement for any reason, together with such Bank's or affiliate's successors
and assigns, if any, collectively, the "Other Creditors," and together with the
Bank Creditors and the Pledgee, the "Secured Creditors");
WHEREAS, the Pledgor is an Affiliate of OFSI, SCIS and Caterair;
WHEREAS, pursuant to the Designated Onex Sub Guaranty, the Pledgor has
guaranteed to the Secured Creditors the payment when due of all Guaranteed
Obligations as described therein;
WHEREAS, the Pledgor entered into a Designated Onex Sub Pledge
Agreement, dated as of January 1, 1997 (as amended, modified or supplemented to
the date hereof, the "Original Designated Onex Sub Pledge Agreement");
WHEREAS, it is a condition precedent to the making of loans and the
issuance of letters of credit under the Credit Agreements that the Pledgor shall
have executed and delivered a counterpart to this Agreement; and
WHEREAS, the Pledgor will obtain benefits from the incurrence of loans
and the issuance of letters of credit under the Credit Agreements and the
entering into of
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Interest Rate Protection Agreements or Other Hedging Agreements with the Other
Creditors and, accordingly, the Pledgor desires to enter into this Agreement in
order to satisfy the conditions described in the preceding paragraph and to
amend and restate the Original Designated Onex Sub Pledge Agreement in its
entirety in the form of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to the Pledgor, the receipt and sufficiency of which are hereby
acknowledged, the Pledgor hereby makes the following representations and
warranties to the Pledgee for the benefit of the Secured Creditors and hereby
covenants and agrees with the Pledgee for the benefit of the Secured Creditors
as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by the Pledgor for
the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities and
indebtedness of the Pledgor to the SCIS Bank Creditors, whether now
existing or hereafter incurred under, arising out of, or in connection with
the Designated Onex Sub Guaranty and the due performance and compliance by
the Pledgor with all of the terms, conditions and agreements contained in
the Designated Onex Sub Guaranty and herein (all such obligations,
liabilities and indebtedness under this clause (i), except to the extent
consisting of obligations, liabilities or indebtedness with respect to
Interest Rate Protection Agreements or Other Hedging Agreements, being
herein collectively called the "SCIS Credit Document Obligations");
(ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities and
indebtedness of the Pledgor to the Caterair Bank Creditors, whether now
existing or hereafter incurred under, arising out of, or in connection with
the Designated Onex Sub Guaranty and the due performance and compliance by
the Pledgor with all of the terms, conditions and agreements contained in
the Designated Onex Sub Guaranty and herein (all such obligations,
liabilities and indebtedness under this clause (i), except to the extent
consisting of obligations, liabilities or indebtedness with respect to
Interest Rate Protection Agreements or Other Hedging Agreements, being
herein collectively called the "Caterair Credit Document Obligations");
(iii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities and
indebtedness
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owing by the Pledgor to the Other Creditors under, arising out of or with
respect to, the Designated Onex Sub Guaranty in respect of any Interest
Rate Protection Agreements or Other Hedging Agreements, whether such
Interest Rate Protection Agreement or Other Hedging Agreement is now in
existence or hereafter arising, and the due performance and compliance by
the Pledgor with all of the terms, conditions and agreements contained in
the Designated Onex Sub Guaranty and herein (all such obligations,
liabilities and indebtedness described in this clause (iii) being herein
collectively called the "Other Obligations");
(iv) any and all sums advanced by the Pledgee in order to preserve
the Collateral (as hereinafter defined) or preserve its security interest
in the Collateral;
(v) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations or liabilities of the Pledgor
referred to in clauses (i) and (ii) above, upon the occurrence and during
the continuance of an Event of Default (such term, as used in this
Agreement, shall mean any Event of Default under, and as defined in, either
Credit Agreement, or any payment default under any Interest Rate Protection
Agreement or Other Hedging Agreement, and shall, in any event, include
without limitation, any payment default (after the expiration of any
applicable grace period) on any of the Obligations (as hereinafter
defined)) shall have occurred and be continuing, the reasonable expenses of
retaking, holding, preparing for sale or lease, selling or otherwise
disposing of or realizing on the Collateral, or of any exercise by the
Pledgee of its rights hereunder, together with reasonable attorneys' fees
and court costs; and
(vi) all amounts paid by any Secured Creditor as to which such
Secured Creditor has the right to reimbursement under Section 11 of this
Agreement.
All such obligations, liabilities, indebtedness, sums and expenses set forth in
clauses (i) through (vi) of this Section 1 being herein collectively called the
"Obligations," it being acknowledged and agreed that the "Obligations" shall
include extensions of credit of the types described above, whether outstanding
on the date of this Agreement or extended from time to time after the date of
this Agreement.
2. DEFINITION OF SECURITIES, ETC. As used herein, the term
"Securities" shall mean all of the issued and outstanding shares of capital
stock (including, but not limited to, warrants, options or other rights to
acquire shares thereof) at any time owned by the Pledgor of Caterair Holdings.
The Pledgor represents and warrants that, on the date hereof, (a) the Securities
held by the Pledgor consists of the number and type of
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shares of the capital stock of Caterair Holdings as described in Annex A hereto,
(b) such Securities constitutes that percentage of the issued and outstanding
shares of capital stock of Caterair Holdings as is set forth in Annex A hereto
and (c) the Pledgor is the holder of record and sole beneficial owner of the
Securities and there exist no options or preemption rights in respect of any of
the Securities.
3. PLEDGE OF SECURITIES, ETC.
3.1. Pledge. To secure the Obligations of the Pledgor, the Pledgor
hereby (i) grants to the Pledgee a security interest in all of the Collateral
owned by the Pledgor, (ii) pledges and deposits as security with the Pledgee,
the Securities owned by the Pledgor on the date hereof, and delivers to the
Pledgee certificates or instruments, if any, therefor, accompanied by undated
stock powers duly executed in blank by the Pledgor (and accompanied by any
transfer tax stamps required in connection with the pledge of such Securities)
or such other instruments of transfer as are reasonably acceptable to the
Pledgee and (iii) assigns, transfers, hypothecates mortgages, charges and sets
over to the Pledgee all of the Pledgor's right, title and interest in and to
such Securities (and in and to the certificates or instruments evidencing such
Securities), to be held by the Pledgee upon the terms and conditions set forth
in this Agreement.
3.2. Subsequently Acquired Securities. If the Pledgor shall acquire (by
purchase, stock dividend or otherwise) any additional Securities at any time or
from time to time after the date hereof, the Pledgor will promptly thereafter
pledge and deposit such Securities (or certificates or instruments representing
such Securities) as security with the Pledgee and deliver to the Pledgee
certificates therefor or instruments thereof, accompanied by undated stock
powers duly executed in blank by the Pledgor (and accompanied by any transfer
tax stamps required in connection with the pledge of such Securities) or such
other instruments of transfer as are reasonably acceptable to the Pledgee, and
accompanied by a certificate executed by a principal executive officer of the
Pledgor in the form attached as Annex B hereto describing such Securities and
certifying that the same has been duly pledged with the Pledgee hereunder.
3.3. Uncertificated Securities. Notwithstanding anything to the
contrary contained in Sections 3.1 and 3.2 hereof, if any Securities (whether
now owned or hereafter acquired) are uncertificated securities, the Pledgor
shall promptly notify the Pledgee thereof, and shall promptly take all actions
required to perfect the security interest of the Pledgee under applicable law
(including, in any event, under Sections 8-313 and 8-321 of the New York Uniform
Commercial Code, if applicable). The Pledgor further agrees to take such actions
as the Pledgee deems reasonably necessary or desirable to effect the foregoing
and
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to permit the Pledgee to exercise any of its rights and remedies hereunder, and
agrees to provide an opinion of counsel reasonably satisfactory to the Pledgee
with respect to any such pledge of uncertificated Securities promptly upon the
reasonable request of the Pledgee.
3.4. Definitions of Pledged Securities and Collateral. All Securities
at any time pledged or required to be pledged hereunder is hereinafter called
the "Pledged Securities;" and the Pledged Securities, together with all proceeds
thereof, including any securities and moneys received and at the time held by
the Pledgee hereunder, are herein called the "Collateral."
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall have
the right to appoint one or more sub-agents for the purpose of retaining
physical possession of the Pledged Securities, which may be held (in the
discretion of the Pledgee) in the name of the Pledgor, endorsed or assigned in
blank or in favor of the Pledgee or any nominee or nominees of the Pledgee or a
sub-agent appointed by the Pledgee.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until there
shall have occurred and be continuing an Event of Default and the Pledgee has
exercised any of its remedies under Section 7(d) hereof (or has given notice to
the Pledgor that it intends to exercise such remedies, although no such notice
shall be required and the Pledgee shall be entitled to exercise such remedies
immediately upon the occurrence of a bankruptcy or insolvency Event of Default
of the type described in either Credit Agreement in respect of the Pledgor), the
Pledgor shall be entitled to exercise any and all voting and other consensual
rights and powers pertaining to the Pledged Securities owned by it, and to give
consents, waivers or ratifications in respect thereof; provided that no vote
shall be cast or any consent, waiver or ratification given or any action taken
which would violate or be inconsistent with any of the terms of this Agreement,
the Credit Agreements, any other Credit Document or any Interest Rate Protection
Agreement or Other Hedging Agreement (collectively, the "Secured Debt
Agreements"), or which would have the effect of impairing the value of the
Collateral or any part thereof or the position or interests of the Pledgee in
the Collateral. All such rights of the Pledgor to vote and to give consents,
waivers and ratifications shall cease in case an Event of Default has occurred
and is continuing, and the Pledgee has exercised any of its remedies under
Section 7(d) hereof (or has given notice to the Pledgor that it intends to
exercise such remedies, although no such notice shall be required and the
Pledgee shall be entitled to exercise such remedies immediately upon the
occurrence of a bankruptcy or insolvency Event of Default of the type described
in either Credit Agreement in respect of the Pledgor).
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6. DIVIDENDS AND OTHER DISTRIBUTIONS. (a) Unless and until there shall
have occurred and be continuing an Event of Default and the Pledgee has
exercised any of its remedies under Section 7(a) hereof (or has given notice to
the Pledgor that it intends to exercise such remedies, although no such notice
shall be required and the Pledgee shall be entitled to exercise such remedies
immediately upon the occurrence of a bankruptcy or insolvency Event of Default
of the type described in either Credit Agreement in respect of the Pledgor), all
dividends and other distributions (if any) payable in respect of the Pledged
Securities shall be paid to the Pledgor in accordance with (and to the extent
permitted by) the Credit Agreements.
(b) Nothing contained in this Section 6 shall limit or restrict in any
way the Pledgee's right to receive proceeds of the Collateral in any form in
accordance with Section 3 of this Agreement. All dividends, distributions or
other payments in respect of the Collateral which are received by the Pledgor
contrary to the provisions of this Section 6 or Section 7 hereof shall be held
in trust for the benefit of the Pledgee, shall be segregated from other property
or funds of the Pledgor and shall be forthwith delivered to the Pledgee as
Collateral in the same form as so received (with any necessary endorsement).
7. REMEDIES UPON EVENTS OF DEFAULT. If there shall have occurred and
be continuing an Event of Default, then and in every such case, the Pledgee
shall be entitled to exercise all of the rights, powers and remedies (whether
vested in it by this Agreement, any other Secured Debt Agreement or by law) for
the protection and enforcement of its rights in respect of the Collateral, and
the Pledgee shall be entitled to exercise all the rights and remedies of a
secured party under the Uniform Commercial Code and also shall be entitled,
without limitation, to exercise the following rights, which the Pledgor hereby
agrees to be commercially reasonable:
(a) to receive all amounts payable in respect of the Collateral
otherwise payable under Section 6 hereof to the Pledgor;
(b) to transfer all or any part of the Collateral into the Pledgee's
name or the name of its nominee or nominees;
(c) to vote all or any part of the Pledged Securities (whether or
not transferred into the name of the Pledgee) and give all consents,
waivers and ratifications in respect of the Collateral and otherwise act
with respect thereto as though it were the outright owner thereof (the
Pledgor hereby irrevocably constituting and appointing the Pledgee the
proxy and attorney-in-fact of the Pledgor, with full power of substitution
to do so); and
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(d) at any time and from time to time to sell, assign and deliver,
or grant options to purchase, all or any part of the Collateral, or any
interest therein, at any public or private sale, without demand of
performance, advertisement or notice of intention to sell or of the time or
place of sale or adjournment thereof or to redeem or otherwise (all of
which are hereby waived by the Pledgor), for cash, on credit or for other
property, for immediate or future delivery without any assumption of credit
risk, and for such price or prices and on such terms as the Pledgee in its
absolute discretion may determine; provided that at least 10 days' written
notice of the time and place of any such sale shall be given to the
Pledgor. The Pledgee shall not be obligated to make any such sale of
Collateral regardless of whether any such notice of sale has theretofore
been given. The Pledgor hereby waives and releases to the fullest extent
permitted by law any right or equity of redemption with respect to the
Collateral, whether before or after sale hereunder, and all rights, if any,
of marshalling the Collateral and any other security for the Obligations or
otherwise. At any such sale, unless prohibited by applicable law, the
Pledgee on behalf of the Secured Creditors may bid for and purchase all or
any part of the Collateral so sold free from any such right or equity of
redemption. Neither the Pledgee nor any other Secured Creditor shall be
liable for failure to collect or realize upon any or all of the Collateral
or for any delay in so doing nor shall any of them be under any obligation
to take any action whatsoever with regard thereto.
8. REMEDIES, ETC. Each and every right, power and remedy of the
Pledgee provided for in this Agreement or any other Secured Debt Agreement, or
now or hereafter existing at law or in equity or by statute shall be cumulative
and concurrent and shall be in addition to every other such right, power or
remedy. The exercise or beginning of the exercise by the Pledgee or any other
Secured Creditor of any one or more of the rights, powers or remedies provided
for in this Agreement or any other Secured Debt Agreement or now or hereafter
existing at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Pledgee or any other Secured Creditor of
all such other rights, powers or remedies, and no failure or delay on the part
of the Pledgee or any other Secured Creditor to exercise any such right, power
or remedy shall operate as a waiver thereof. No notice to or demand on the
Pledgor in any case shall entitle it to any other or further notice or demand in
similar or other circumstances or constitute a waiver of any of the rights of
the Pledgee or any other Secured Creditor to any other or further action in any
circumstances without notice or demand. The Secured Creditors agree that this
Agreement may be enforced only by the action of the Pledgee, in each case acting
upon the instructions of the Required Secured Creditors (as defined in the
Security Agreement) and that no other Secured Creditor shall have any right
individually
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to seek to enforce or to enforce this Agreement or to realize upon the security
to be granted hereby, it being understood and agreed that such rights and
remedies may be exercised by the Pledgee for the benefit of the Secured
Creditors upon the terms of this Agreement.
9. APPLICATION OF PROCEEDS. All monies collected by the Pledgee upon
any sale or other disposition of the Collateral, together with all other moneys
received by the Pledgee hereunder, shall be applied to the payment of the
Obligations in the manner provided in Section 7.4 of the Security Agreement.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
11. INDEMNITY. (a) The Pledgor agrees to indemnify and hold harmless
the Pledgee in such capacity and each other Secured Creditor and their
respective successors, assigns, employees, agents and servants (individually an
"Indemnitee," and collectively, the "Indemnitees") harmless from any and all
liabilities, obligations, damages, injuries, penalties, claims, demands,
actions, suits, judgments and any and all reasonable costs, expenses or
disbursements (including reasonable attorneys' fees and expenses) (for the
purposes of this Section 11 the foregoing are collectively called "expenses") of
whatever kind and nature imposed on, asserted against or incurred by any of the
Indemnitees in any way relating to or arising out of this Agreement or the
enforcement of any of the terms of, or the preservation of any rights hereunder,
or in any way relating to or arising out of the ownership, control, acceptance,
possession, condition, sale or other disposition, or use of the Collateral,
provided that no Indemnitee shall be indemnified pursuant to this Section 11(a)
for losses, damages or liabilities to the extent caused by the gross negligence
or wilful misconduct of such Indemnitee. The Pledgor agrees that upon written
notice by any Indemnitee of the assertion of such a liability, obligation,
damage, injury, penalty, claim, demand, action, suit or judgment, the Pledgor
shall to the extent requested to do so assume full responsibility for the
defense thereof.
(b) Without limiting the application of Section 11(a) hereof, the
Pledgor agrees to pay or reimburse the Pledgee for any and all fees, costs and
expenses, including reasonable attorneys' fees, of whatever kind or nature
incurred in connection with the creation, preservation or protection of the
Pledgee's Liens on, and security interest in, the
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Collateral, including, without limitation, all fees and taxes in connection with
the recording or filing of instruments and documents in public offices, payment
or discharge of any taxes or Liens upon or in respect of the Collateral, and all
other reasonable fees, costs and expenses in connection with protecting,
maintaining or preserving the Collateral and the Pledgee's interest therein,
whether through judicial proceedings or otherwise, or in defending or
prosecuting any actions, suits or proceedings arising out of or relating to the
Collateral.
(c) If and to the extent that the obligations of the Pledgor under
this Section 11 are unenforceable for any reason, the Pledgor hereby agrees to
make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
12. FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) The Pledgor agrees that
it will join with the Pledgee in executing and, at the Pledgor's own expense,
file and refile under the Uniform Commercial Code of any jurisdiction or other
applicable law such financing statements, continuation statements and other
documents in such offices as the Pledgee may deem reasonably necessary and
wherever required by law in order to perfect and preserve the Pledgee's security
interest in the Collateral and hereby authorizes the Pledgee to file financing
statements and amendments thereto relative to all or any part of the Collateral
without the signature of the Pledgor where permitted by law, and agrees to do
such further acts and things and to execute and deliver to the Pledgee such
additional conveyances, assignments, agreements and instruments as the Pledgee
may reasonably require or deem necessary to carry into effect the purposes of
this Agreement or to further assure and confirm unto the Pledgee its rights,
powers and remedies hereunder.
(b) The Pledgor hereby appoints the Pledgee the Pledgor's
attorney-in-fact, with full authority in the place and stead of the Pledgor and
in the name of the Pledgor or otherwise, from time to time after the occurrence
and during the continuance of an Event of Default, in the Pledgee's reasonable
discretion to take any action and to execute any instrument which the Pledgee
may deem reasonably necessary or advisable to accomplish the purposes of this
Agreement.
13. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance with this
Agreement all items of the Collateral at any time received under this Agreement.
It is expressly understood and agreed by each Secured Creditor that by accepting
the benefits of this Agreement each such Secured Creditor acknowledges and
agrees that the obligations of the Pledgee as holder of the Collateral and
interests therein and with respect to the disposition thereof, and otherwise
under this Agreement, are only those expressly set forth
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in this Agreement. The Pledgee shall act hereunder on the terms and conditions
set forth herein and in Article X of the Security Agreement.
14. TRANSFER BY THE PLEDGOR. The Pledgor will not sell or otherwise
dispose of, grant any option with respect to, or mortgage, pledge or otherwise
encumber any of the Collateral or any interest therein (except pursuant to the
terms of this Agreement).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGOR. The
Pledgor represents, warrants and covenants that (i) it is the legal, record and
beneficial owner of, and has good and marketable title to, all Pledged
Securities pledged by it hereunder, subject to no Lien (except the Lien created
by this Agreement and Liens of the type described in Sections 9.01(i), (v) and
(xii) of the SCIS Credit Agreement); (ii) it has the corporate power and
authority to pledge all the Pledged Securities pledged by it pursuant to this
Agreement; (iii) this Agreement has been duly authorized, executed and delivered
by the Pledgor and constitutes a legal, valid and binding obligation of the
Pledgor enforceable in accordance with its terms, except to the extent that the
enforceability hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting creditors'
rights and by equitable principles (regardless of whether enforcement is sought
in equity or at law); (iv) no consent of any other party (including, without
limitation, any stockholder or creditor of the Pledgor or any of its
Subsidiaries) and no consent, license, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing or declaration with,
any governmental authority is required to be obtained by the Pledgor for the
execution, delivery or performance of this Agreement by the Pledgor, the
validity or enforceability of this Agreement and the perfection or
enforceability of the Pledgee's security interest in the Collateral (other than,
in respect of the proceeds of the Pledged Securities, the filing of Form UCC-1
financing statements or the appropriate equivalent (which filings have been
made)) or except for compliance with or as may be required by applicable
securities laws, the exercise by the Pledgee of any of its rights or remedies
provided herein; (v) the execution, delivery and performance of this Agreement
by the Pledgor, and the compliance by it with the terms and provisions hereof,
will not violate any provision of any applicable law or regulation or of any
applicable order, judgment, writ, injunction or decree of any court, arbitrator
or governmental authority, domestic or foreign, applicable to the Pledgor, or of
the certificate of incorporation or by-laws (or equivalent organizational
documents) of the Pledgor or of any securities issued by the Pledgor or any of
its Subsidiaries, or of any mortgage, indenture, lease, deed of trust, loan
agreement, credit agreement or any other material contract, agreement or
instrument or undertaking to which the Pledgor or any of its Subsidiaries is a
party or which purports to be binding upon the Pledgor or any of its Subsi-
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diaries or upon any of their respective assets and will not result in the
creation or imposition of (or the obligation to create or impose) any lien or
encumbrance on any of the Collateral of the Pledgor or any of its Subsidiaries
except as contemplated by this Agreement; (vi) all the shares of Securities have
been duly and validly issued, are fully paid and non-assessable and are subject
to no options to purchase or similar rights; and (vii) the pledge, assignment
and delivery to the Pledgee of the Securities (other than uncertificated
securities) pursuant to this Agreement creates a valid and perfected first
priority Lien in the Securities, and the proceeds thereof, subject to no other
Lien or to any agreement purporting to grant to any third party a Lien on the
property or assets of the Pledgor which would include the Securities. The
Pledgor covenants and agrees that it will defend the Pledgee's right, title and
security interest in and to the Securities and the proceeds thereof against the
claims and demands of all persons whomsoever; and the Pledgor covenants and
agrees that it will have like title to and right to pledge any other property at
any time hereafter pledged to the Pledgee as Collateral hereunder and will
likewise defend the right thereto and security interest therein of the Pledgee
and the Secured Creditors.
16. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of the Pledgor
under this Agreement shall be absolute and unconditional and shall remain in
full force and effect without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstance or occurrence
whatsoever, including, without limitation: (i) any renewal, extension, amendment
or modification of or addition or supplement to or deletion from any Secured
Debt Agreement or any other instrument or agreement referred to therein, or any
assignment or transfer of any thereof; (ii) any waiver, consent, extension,
indulgence or other action or inaction under or in respect of any such Secured
Debt Agreement or other agreement or instrument including, without limitation,
this Agreement; (iii) any furnishing of any additional security to the Pledgee
or its assignee or any acceptance thereof or any release of any security by the
Pledgee or its assignee; (iv) any limitation on any party's liability or
obligations under any such instrument or agreement or any invalidity or
unenforceability, in whole or in part, of any such instrument or agreement or
any term thereof; or (v) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceeding
relating to the Pledgor or any Subsidiary of the Pledgor, or any action taken
with respect to this Agreement by any trustee or receiver, or by any court, in
any such proceeding, whether or not the Pledgor shall have notice or knowledge
of any of the foregoing (it being understood that the enforcement hereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar rights generally affecting creditors' rights and by equitable
principles (regardless of whether enforcement is sought in equity or at law)).
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17. REGISTRATION, ETC. (a) If there shall have occurred and be
continuing an Event of Default then, and in every such case, upon receipt by the
Pledgor from the Pledgee of a written request or requests that the Pledgor cause
any registration, qualification or compliance under any Federal, state or other
applicable securities law or laws to be effected with respect to all or any part
of the Pledged Securities, the Pledgor as soon as practicable and at its expense
will cause such registration to be effected (and be kept effective) and will
cause such qualification and compliance to be declared effected (and be kept
effective) as may be so requested and as would permit or facilitate the sale and
distribution of such Pledged Securities, including, without limitation,
registration under the Securities Act of 1933, as then in effect (or any similar
statute then in effect), appropriate qualifications under applicable blue sky,
state or other applicable securities laws and appropriate compliance with any
other government requirements; provided that the Pledgee shall furnish to the
Pledgor such information regarding the Pledgee as the Pledgor may reasonably
request in writing and as shall be required in connection with any such
registration, qualification or compliance. The Pledgor will cause the Pledgee to
be kept advised in writing as to the progress of each such registration,
qualification or compliance and as to the completion thereof, will furnish to
the Pledgee such number of prospectuses, offering circulars or other documents
incident thereto as the Pledgee from time to time may reasonably request, and
will indemnify the Pledgee, each other Secured Creditor and all others
participating in the distribution of such Pledged Securities against all claims,
losses, damages and liabilities caused by any untrue statement (or alleged
untrue statement) of a material fact contained therein (or in any related
registration statement, notification or the like) or by any omission (or alleged
omission) to state therein (or in any related registration statement,
notification or the like) a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same may have been caused by an untrue statement or omission based upon
information furnished in writing to the Pledgor by the Pledgee or such other
Secured Creditor expressly for use therein.
(b) If at any time when the Pledgee shall determine to exercise its
right to sell all or any part of the Pledged Securities pursuant to Section 7
hereof, and such Pledged Securities or the part thereof to be sold shall not,
for any reason whatsoever, be effectively registered under the Securities Act of
1933, as then in effect, the Pledgee may, in its sole and absolute discretion,
sell such Pledged Securities or part thereof by private sale in such manner and
under such circumstances as the Pledgee may deem necessary or advisable in order
that such sale may legally be effected without such registration. Without
limiting the generality of the foregoing, in any such event the Pledgee, in its
sole and absolute discretion (i) may proceed to make such private sale
notwithstanding that a registration statement for the purpose of registering
such Pledged Securities or part thereof shall have been filed under such
Securities Act, (ii) may approach and negotiate with a single
<PAGE> 278
EXHIBIT G-3
Page 14
possible purchaser to effect such sale, and (iii) may restrict such sale to a
purchaser who will represent and agree that such purchaser is purchasing for its
own account, for investment, and not with a view to the distribution or sale of
such Pledged Securities or part thereof. In the event of any such sale, the
Pledgee shall incur no responsibility or liability for selling all or any part
of the Pledged Securities at a price which the Pledgee, in its sole and absolute
discretion, in good faith deems reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might be
realized if the sale were deferred until after registration as aforesaid.
18. TERMINATION; RELEASE. (a) On the Termination Date (as defined in
the Security Agreement), but only after giving effect to the repayments to be
made on such date, this Agreement and the security interest created hereby shall
terminate (provided that all indemnities set forth herein including, without
limitation, in Section 11 hereof shall survive any such termination), and the
Pledgee, at the request and expense of the Pledgor, will execute and deliver to
the Pledgor such proper instrument or instruments acknowledging the satisfaction
and termination of this Agreement, and will duly assign, release, transfer and
deliver to the Pledgor (without recourse and without any representation or
warranty) all of the Collateral as has not theretofore been sold or otherwise
applied or released pursuant to this Agreement, together with any moneys at the
time held by the Pledgee or any of its sub-agents hereunder.
(b) In the event that all or any part of the Collateral is sold,
conveyed or disposed of in connection with any form of asset disposition
permitted by the Credit Agreements or otherwise released, in whole or in part,
at the direction of the Required Secured Creditors and the proceeds of such
asset disposition are applied in accordance with, and to the extent required by,
the provisions of the Credit Agreements, the Pledgee, at the request and expense
of the Pledgor, will duly assign, release, transfer and deliver to the Pledgor
(without recourse and without any representation or warranty) such of the
Collateral (and releases therefor) as is then being (or has been) so sold or
released and has not theretofore been released pursuant to this Agreement.
(c) At any time that the Pledgor desires that the Pledgee assign,
release, transfer and deliver Collateral as provided in Section 18(a) or (b)
hereof, it shall deliver to the Pledgee a certificate signed by a principal
executive officer of the Pledgor stating that the release of the respective
Collateral is in accordance with Section 18(a) or (b).
(d) The Pledgee shall have no liability whatsoever to any Secured
Creditor as the result of any release of Collateral by it in accordance with
this Section 18.
<PAGE> 279
EXHIBIT G-3
Page 15
19. NOTICES ETC. All such notices and communications hereunder shall be
sent or delivered by mail, telegraph, telex, telecopy, cable or overnight
courier service and all such notices and communications shall, when mailed,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be
effective when delivered to the telegraph company, cable company or overnight
courier, as the case may be, or sent by telex or telecopier and when mailed
shall be effective three Business Days following deposit in the mail with proper
postage, except that notices and communications to the Pledgee shall not be
effective until received by the Pledgee. All notices and other communications
shall be in writing and addressed as follows:
(a) if to the Pledgor, to the address and communications information
set forth opposite its signature below;
(b) if to the Pledgee, at the following address of, and the
communications information for, the Pledgee:
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260-0060
Attention: Laura Loffredo
Telephone No.: (212) 648-6793
Facsimile No.: (212) 648-5336
(c) if to any Bank Creditor, either (x) to the respective
Administrative Agent, at the address of such Administrative Agent specified
in the respective Credit Agreement or (y) at such address and
communications information as such Bank Creditor shall have specified in
the respective Credit Agreement;
(d) if to any Other Creditor at such address and communications
information as such Other Creditor shall have specified in writing to the
Pledgor and the Pledgee;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
20. WAIVER; AMENDMENT. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing and duly signed by the Pledgor and the Pledgee (with the
written consent of the Required Secured Creditors); provided, that any change,
waiver, modification or variance
<PAGE> 280
EXHIBIT G-3
Page 16
affecting the rights and benefits of a single Class (as defined below) of
Secured Creditors (and not all Secured Creditors in a like or similar manner)
shall also require the written consent of the Requisite Creditors (as defined
below) of such affected Class. For the purpose of this Agreement, the term
"Class" shall mean each class of Secured Creditors, i.e., whether (i) the SCIS
Bank Creditors as holders of the SCIS Credit Document Obligations, (ii) the
Caterair Bank Creditors as holders of the Caterair Credit Document Obligations
or (iii) the Other Creditors as the holders of the Other Obligations. For the
purpose of this Agreement, the term "Requisite Creditors" of any Class shall
mean each of (i) with respect to the Credit Document Obligations, the Required
Banks under, and as defined in, the SCIS Credit Agreement, (ii) with respect to
the Caterair Credit Document Obligations, the Required Banks under, and as
defined in, the Caterair Credit Agreement and (iii) with respect to the Other
Obligations, the holders of a majority of all obligations outstanding from time
to time under the Interest Rate Protection Agreements or Other Hedging
Agreements.
21. MISCELLANEOUS. This Agreement shall be binding upon the successors
and assigns of the Pledgor (although the Pledgor may not assign its rights and
obligations hereunder except in accordance with the provisions of the Secured
Debt Agreements) and shall inure to the benefit of and be enforceable by each of
the parties hereto and its successors and assigns. THIS AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE
OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS EXCEPT FOR THE CHOICE OF LAW
PROVISIONS OF THE NEW YORK UNIFORM COMMERCIAL CODE. EACH OF THE PARTIES TO THIS
AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS DOCUMENT, THE
OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. The
headings in this Agreement are for purposes of reference only and shall not
limit or define the meaning hereof. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which shall
constitute one instrument. In the event that any provision of this Agreement
shall prove to be invalid or unenforceable, such provision shall be deemed to be
severable from the other provisions of this Agreement which shall remain binding
on all parties hereto.
22. RECOURSE. Notwithstanding the foregoing or anything else contained
in this Agreement, the Secured Creditors, by their acceptance of the benefits of
this Agreement, expressly acknowledge and agree that recourse against the
Pledgor in respect
<PAGE> 281
EXHIBIT G-3
Page 17
of the Obligations shall be limited to the Collateral and the Pledgor's right,
title and interest therein.
* * *
<PAGE> 282
EXHIBIT G-3
Page 18
IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.
Address:
c/o Onex Corporation ONEX OFSI HOLDINGS INC.,
161 Bay Street as Pledgor
Toronto, Ontario M5J2S1
Canada
Attention: By________________________
Telecopier No.: Name:
Title:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Pledgee, Collateral Agent
By________________________
Name:
Title:
<PAGE> 283
ANNEX A
to
DESIGNATED ONEX SUB
PLEDGE AGREEMENT
LIST OF STOCK
<TABLE>
<CAPTION>
==================================================================================================
ISSUER/JURISDICTION OF CLASS OF AUTHORIZED SHARES PERCENT- STOCK # OF
INCORPORATION STOCK SHARES ISSUED AGE TO BE CERT. SHARES
PLEDGED NUMBER PLEDGED
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Caterair Holdings Class A 1,000,000 1,000,000 100% A-1/A 250,000
Corporation Common
(Delaware) $.01 par
==================================================================================================
</TABLE>
<PAGE> 284
ANNEX B
to
AMENDED AND RESTATED
DESIGNATED ONEX SUB
PLEDGE AGREEMENT
FORM OF CERTIFICATE
[Date]
Morgan Guaranty Trust Company
of New York, as Collateral Agent
60 Wall Street
New York, New York 10260-0060
Attention: ___________________
Ladies and Gentlemen:
Reference is hereby made to the Amended and Restated Designated Onex
Sub Pledge Agreement, dated as of January 1, 1997 and amended and restated as of
August 28, 1997 between the undersigned and you, as Collateral Agent (the
"Pledge Agreement"). Pursuant to Section 3.2 of the Pledge Agreement, the
undersigned hereby pledges and delivers to you under the Pledge Agreement stock
certificate number ____, representing ____ shares of the capital stock of
Caterair Holdings, together with a duly executed and undated stock power for
such shares.
Very truly yours,
ONEX OFSI HOLDINGS INC.,
as Pledgor
By_______________________
Title:
Accepted this ____ day
of ________, _____:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Collateral Agent
By________________________
Title:
<PAGE> 285
EXHIBIT H
[Conformed as Executed]
================================================================================
AMENDED AND RESTATED
SECURITY AGREEMENT
among
SC INTERNATIONAL SERVICES, INC.,
CATERAIR INTERNATIONAL CORPORATION,
VARIOUS SUBSIDIARIES OF
SC INTERNATIONAL SERVICES, INC.
and
CATERAIR INTERNATIONAL CORPORATION,
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Collateral Agent
================================================================================
Dated as of September 29, 1995
and Amended and Restated as of
August 28, 1997
================================================================================
<PAGE> 286
TABLE OF CONTENTS
Page
----
ARTICLE I SECURITY INTERESTS........................................ 3
1.1. Grant of Security Interests.................................... 3
1.2. Power of Attorney.............................................. 3
ARTICLE II GENERAL REPRESENTATIONS, WARRANTIES AND
COVENANTS................................................. 4
2.1. Necessary Filings.............................................. 4
2.2. No Liens....................................................... 4
2.3. Other Financing Statements..................................... 4
2.4. Chief Executive Office; Records................................ 5
2.5. Location of Inventory and Equipment............................ 5
2.6. Recourse....................................................... 6
2.7. Trade Names; Change of Name.................................... 6
ARTICLE III SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS................. 7
3.1. Maintenance of Records......................................... 7
3.2. Direction to Account Debtors; Contracting Parties; etc......... 7
3.3. Rights in the Receivables and Contracts........................ 8
3.4. Delivery of Instruments........................................ 8
3.5. Assignors Remain Liable Under Receivables...................... 8
3.6. Assignors Remain Liable Under Contracts........................ 8
3.7. Further Actions................................................ 9
ARTICLE IV SPECIAL PROVISIONS CONCERNING TRADEMARKS.................. 9
4.1. Additional Representations and Warranties...................... 9
4.2. Licenses and Assignments....................................... 10
4.3. Infringements.................................................. 10
4.4. Preservation of Marks.......................................... 10
4.5. Maintenance of Registration.................................... 10
4.6. Future Registered Marks........................................ 10
4.7. Remedies....................................................... 10
(i)
<PAGE> 287
Page
----
ARTICLE V SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS..................... 11
5.1. Additional Representations and Warranties...................... 11
5.2. Licenses and Assignments....................................... 11
5.3. Infringements.................................................. 12
5.4. Maintenance of Patents or Copyrights........................... 12
5.5. Prosecution of Patent or Copyright Application................. 12
5.6. Other Patents or Copyrights.................................... 12
5.7. Remedies....................................................... 12
ARTICLE VI PROVISIONS CONCERNING ALL COLLATERAL...................... 13
6.1. Protection of Collateral Agent's Security...................... 13
6.2. Warehouse Receipts Non-negotiable.............................. 13
6.3. Further Actions; Louisiana Matters............................. 13
6.4. Financing Statements........................................... 14
ARTICLE VII REMEDIES UPON OCCURRENCE OF EVENT OF
DEFAULT................................................... 14
7.1. Remedies; Obtaining the Collateral Upon Default................ 14
7.2. Remedies; Disposition of the Collateral........................ 16
7.3. Waiver of Claims............................................... 17
7.4. Application of Proceeds........................................ 17
7.5. Remedies Cumulative............................................ 20
7.6. Discontinuance of Proceedings.................................. 20
ARTICLE VIII INDEMNITY................................................. 21
8.1. Indemnity...................................................... 21
8.2. Indemnity Obligations Secured by Collateral; Survival.......... 22
ARTICLE IX DEFINITIONS............................................... 22
ARTICLE X THE COLLATERAL AGENT...................................... 29
10.1. Appointment................................................... 29
10.2. Nature of Duties.............................................. 30
10.3. Lack of Reliance on the Collateral Agent...................... 31
10.4. Certain Rights of the Collateral Agent........................ 31
10.5. Reliance...................................................... 32
10.6. Indemnification............................................... 32
10.7. The Collateral Agent in its Individual Capacity............... 33
10.8. Holders....................................................... 33
(ii)
<PAGE> 288
Page
----
10.9. Resignation by the Collateral Agent........................... 33
10.10. Fees of Collateral Agent..................................... 34
ARTICLE XI MISCELLANEOUS............................................. 34
11.1. Notices....................................................... 34
11.2. Waiver; Amendment............................................. 35
11.3. Obligations Absolute.......................................... 35
11.4. Successors and Assigns........................................ 36
11.5. Headings Descriptive.......................................... 36
11.6. Governing Law................................................. 36
11.7. Assignor's Duties............................................. 37
11.8. Termination; Release.......................................... 37
11.9. Counterparts.................................................. 38
11.10. Severability................................................. 38
11.11. Additional Assignors......................................... 38
ANNEX A SCHEDULE OF CHIEF EXECUTIVE OFFICES AND
OTHER RECORD LOCATIONS
ANNEX B SCHEDULE OF INVENTORY AND EQUIPMENT LOCATIONS
ANNEX C LIST OF TRADE AND FICTITIOUS NAMES
ANNEX D LIST OF MARKS
ANNEX E LIST OF PATENTS AND APPLICATIONS
ANNEX F LIST OF COPYRIGHTS AND APPLICATIONS
ANNEX G ASSIGNMENT OF SECURITY INTEREST IN
UNITED STATES TRADEMARKS AND PATENTS
SCHEDULE A
SCHEDULE B
ANNEX H ASSIGNMENT OF SECURITY INTEREST IN
UNITED STATES COPYRIGHTS
SCHEDULE A
ANNEX I LOUISIANA ADDENDUM TO SECURITY AGREEMENT
(iii)
<PAGE> 289
EXHIBIT H
[Conformed as Executed]
AMENDED AND RESTATED SECURITY AGREEMENT
AMENDED AND RESTATED SECURITY AGREEMENT, dated as of September 29,
1995 and amended and restated as of August 28, 1997, among each of the
undersigned assignors (each an "Assignor" and, together with any other entity
that becomes a party hereto pursuant to Section 11.11 hereof, the "Assignors")
and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Collateral Agent (together
with any successor collateral agent, the "Collateral Agent"), for the benefit of
the Secured Creditors (as defined below). Except as otherwise defined herein,
capitalized terms used herein and defined in the SCIS Credit Agreement (as
defined below) or in the Caterair Credit Agreement (as defined below), as the
case may be, shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, Onex Food Services, Inc. ("OFSI"), SC International
Services, Inc. ("SCIS"), Caterair Holdings Corporation ("Caterair Holdings"),
Caterair International Corporation ("Caterair"), various lenders from time to
time party thereto (the "SCIS Banks"), Bankers Trust Company and J.P. Morgan
Securities Inc., as Co-Arrangers (the "SCIS Co-Arrangers"), Bankers Trust
Company, as Syndication Agent, The Bank of New York, as Co-Agent and Morgan
Guaranty Trust Company of New York, as Administrative Agent (together with any
successor administrative agent, the "SCIS Administrative Agent"), have entered
into a Credit Agreement, dated as of September 29, 1995 and amended and restated
as of August 28, 1997, providing for the making of loans to SCIS and the
issuance of, and participation in, letters of credit for the account of SCIS as
contemplated therein (as used herein, the term "SCIS Credit Agreement" means the
Credit Agreement described above in this paragraph as the same may be amended,
modified, extended, renewed, replaced, restated or supplemented from time to
time, and including any agreement extending the maturity of, or restructuring
all or any portion of the Indebtedness under such agreement or any successor
agreement) (the SCIS Banks, the SCIS Co-Arrangers and the SCIS Administrative
Agent are herein called the "SCIS Bank Creditors");
WHEREAS, SCIS, Caterair, various lenders from time to time party
thereto (the "Caterair Banks", and together with the SCIS Banks, the "Banks"),
Bankers Trust Company and J. P. Morgan Securities Inc., as Co-Arrangers (the
"Caterair Co-Arrangers", and together with the SCIS Co-Arrangers, the
"Co-Arrangers"), Bankers Trust Company,
<PAGE> 290
EXHIBIT H
Page 2
as Syndication Agent, and Morgan Guaranty Trust Company of New York, as
Administrative Agent (together with any successor administrative agent, the
"Caterair Administrative Agent, and together with the SCIS Administrative Agent,
the "Administrative Agents"), have entered into a Term Loan Agreement, dated as
of August 28, 1997, providing for the making of loans to SCIS and Caterair as
contemplated therein (as used herein, the term "Caterair Credit Agreement" means
the Term Loan Agreement described above in this paragraph, as the same may be
amended, modified, extended, renewed, replaced, restated or supplemented from
time to time, and including any agreement extending the maturity of, or
restructuring all or any portion of the Indebtedness under such agreement or any
successor agreements, and the Caterair Credit Agreement, together with the SCIS
Credit Agreement, are herein called the "Credit Agreements") (the Caterair
Banks, the Caterair Co-Arrangers and the Caterair Administrative Agent are
herein called the "Caterair Bank Creditors", and together with the SCIS Bank
Creditors, are herein called the "Bank Creditors");
WHEREAS, SCIS, Caterair and/or one or more of their respective
subsidiaries may at any time and from time to time enter into one or more
Interest Rate Protection Agreements or Other Hedging Agreements with one or more
Banks or any affiliate thereof (each such Bank or affiliate, even if the
respective Bank subsequently ceases to be a Bank under the applicable Credit
Agreement for any reason, together with such Bank's or affiliate's successors
and assigns, if any, collectively, the "Other Creditors," and together with the
Bank Creditors and the Collateral Agent, the "Secured Creditors");
WHEREAS, pursuant to the Subsidiaries Guaranty, each Subsidiary
Guarantor (including Caterair) has jointly and severally guaranteed to the
Secured Creditors the payment when due of all Guaranteed Obligations as
described therein;
WHEREAS, the Assignors entered into a Security Agreement, dated as
of September 29, 1995 (as amended, modified or supplemented to the date hereof,
the "Original Security Agreement");
WHEREAS, it is a condition precedent to the making of loans and the
issuance of letters of credit under the Credit Agreements that each Assignor
shall have executed and delivered this Agreement; and
WHEREAS, each Assignor will obtain benefits from the incurrence of
loans and the issuance of letters of credit under the Credit Agreements and the
entering into of Interest Rate Protection Agreements or Other Hedging Agreements
with the Other Creditors and, accordingly, each Assignor desires to execute this
Agreement to satisfy the conditions
<PAGE> 291
EXHIBIT H
Page 3
described in the preceding paragraph and to amend and restate the Original
Security Agreement in its entirety in the form of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to each Assignor, the receipt and sufficiency of which are hereby
acknowledged, each Assignor hereby makes the following representations and
warranties to the Collateral Agent for the benefit of the Secured Creditors and
hereby covenants and agrees with the Collateral Agent for the benefit of the
Secured Creditors as follows:
ARTICLE I
SECURITY INTERESTS
1.1. Grant of Security Interests. (a) As security for the prompt and
complete payment and performance when due of all of the Obligations of such
Assignor, each Assignor does hereby assign and transfer unto the Collateral
Agent, and does hereby pledge and grant to the Collateral Agent for the benefit
of the Secured Creditors, a continuing security interest in, all of the right,
title and interest of such Assignor in, to and under all of the following,
whether now existing or hereafter from time to time acquired: (i) each and every
Receivable, (ii) all Contracts, together with all Contract Rights arising
thereunder, (iii) all Inventory, (iv) all Equipment, (v) all Marks, together
with the registrations and right to all renewals thereof, and the goodwill of
the business of such Assignor symbolized by the Marks, (vi) all Patents and
Copyrights, and all reissues, renewals or extensions thereof, (vii) all computer
programs of such Assignor and all intellectual property rights therein and all
other proprietary information of such Assignor, including, but not limited to,
trade secrets, (viii) all other Goods, General Intangibles, Chattel Paper,
Documents, Instruments and other assets of such Assignor, (ix) the Cash
Collateral Account and all monies, securities and Instruments deposited or
required to be deposited in such Cash Collateral Account and (x) all Proceeds
and products of any and all of the foregoing (all of the above, collectively,
the "Collateral"). Notwithstanding anything to the contrary contained in this
Agreement, the term Collateral shall not include any American Supplies as
defined in the American Airlines Catering Agreements with Sky Chefs and Caterair
(as in effect on the date hereof).
(b) The security interest of the Collateral Agent under this
Agreement extends to all Collateral of the kind which is the subject of this
Agreement which any Assignor may acquire at any time during the continuation of
this Agreement.
<PAGE> 292
EXHIBIT H
Page 4
1.2. Power of Attorney. Each Assignor hereby constitutes and
appoints the Collateral Agent its true and lawful attorney, irrevocably, with
full power after the occurrence of and during the continuance of an Event of
Default (in the name of such Assignor or otherwise) to act, require, demand,
receive, compound and give acquittance for any and all monies and claims for
monies due or to become due to such Assignor under or arising out of the
Collateral, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or take any action or institute any proceedings
which the Collateral Agent may deem to be necessary or advisable to protect the
interests of the Secured Creditors, which appointment as attorney is coupled
with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
2.1. Necessary Filings. All filings, registrations and recordings
necessary or appropriate to create, preserve and perfect the security interest
granted by such Assignor to the Collateral Agent hereby in respect of the
Collateral have been accomplished and the security interest granted to the
Collateral Agent pursuant to this Agreement in and to the Collateral creates a
perfected security interest therein prior to the rights of all other Persons
therein and subject to no other Liens (other than Permitted Liens) and is
entitled to all the rights, priorities and benefits afforded by the Uniform
Commercial Code or other relevant law as enacted in any relevant jurisdiction to
perfected security interests, in each case to the extent that the Collateral
consists of the type of property in which a security interest may be perfected
by filing a financing statement under the Uniform Commercial Code as enacted in
any relevant jurisdiction or in the United States Patent and Trademark Office or
the United States Copyright Office.
2.2. No Liens. Such Assignor is, and as to Collateral acquired by it
from time to time after the date hereof such Assignor will be, the owner of all
Collateral free from any Lien, security interest, encumbrance or other right,
title or interest of any other Person (other than Permitted Liens), and such
Assignor shall defend the Collateral to the extent of its rights therein against
all claims and demands of all Persons at any time claiming the same or any
interest therein adverse to the Collateral Agent.
<PAGE> 293
EXHIBIT H
Page 5
2.3. Other Financing Statements. As of the date hereof, there is no
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) on file or of record in any relevant jurisdiction
covering or purporting to cover any interest of any kind in the Collateral
(other than filings in respect of Permitted Liens), and so long as the
Termination Date has not occurred, such Assignor will not execute or authorize
to be filed in any public office any financing statement (or similar statement
or instrument of registration under the law of any jurisdiction) or statements
relating to the Collateral, except financing statements filed or to be filed in
respect of and covering the security interests granted hereby by such Assignor
or in respect of Permitted Liens.
2.4. Chief Executive Office; Records. The chief executive office of
such Assignor is located, as of the date hereof, at the address indicated on
Annex A hereto for such Assignor. Such Assignor will not move its chief
executive office except to such new location as such Assignor may establish in
accordance with the last sentence of this Section 2.4. The originals of all
documents evidencing all Receivables and Contract Rights and Trade Secret Rights
of such Assignor and the only original books of account and records of such
Assignor relating thereto are, and will continue to be, kept at such chief
executive office, at one or more of the other record locations set forth on
Annex A hereto or at such new locations as such Assignor may establish in
accordance with the last sentence of this Section 2.4. All Receivables and
Contract Rights of such Assignor are, and will continue to be, maintained at,
and controlled and directed (including, without limitation, for general
accounting purposes) from, the office locations described above or such new
location established in accordance with the last sentence of this Section 2.4.
No Assignor shall establish new locations for such offices until (i) such
Assignor shall have given to the Collateral Agent not less than 30 days' prior
written notice of its intention to do so, clearly describing such new location
and providing such other information in connection therewith as the Collateral
Agent may reasonably request, (ii) with respect to such new location, such
Assignor shall have taken all action, reasonably satisfactory to the Collateral
Agent, to maintain the security interest of the Collateral Agent in the
Collateral intended to be granted hereby at all times fully perfected and in
full force and effect, (iii) at the reasonable request of the Collateral Agent,
such Assignor shall have furnished an opinion of counsel reasonably acceptable
to the Collateral Agent to the effect that all financing or continuation
statements and amendments or supplements thereto have been filed in the
appropriate filing office or offices, and all other actions (including, without
limitation, the payment of all filing fees and taxes, if any, payable in
connection with such filings) have been taken in order to perfect (and maintain
the perfection and priority of) the security interest granted hereby and (iv)
the Collateral Agent shall have received evidence that all other actions
(including, without limitation, the payment of all filing fees and taxes, if
any, payable in connection
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with such filings) have been taken, in order to perfect (and maintain the
perfection and priority of) the security interest granted hereby.
2.5. Location of Inventory and Equipment. All Inventory and
Equipment held on the date hereof by each Assignor is located at one of the
locations shown on Annex B hereto for such Assignor. Each Assignor agrees that
all Inventory and Equipment now held or subsequently acquired by it shall be
kept at (or shall be in transport to) any one of the locations shown on Annex B
hereto for such Assignor, or at such new location as such Assignor may establish
in accordance with the last sentence of this Section 2.5. Any Assignor may
establish a new location for its Inventory and Equipment if (i) such Assignor
shall have given to the Collateral Agent not less than 30 days' prior written
notice of its intention so to do, clearly describing such new location and
providing such other information in connection therewith as the Collateral Agent
may request, (ii) with respect to such new location, such Assignor shall have
taken all action reasonably satisfactory to the Collateral Agent to maintain the
security interest of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect, (iii)
at the reasonable request of the Collateral Agent, such Assignor shall have
furnished an opinion of counsel reasonably acceptable to the Collateral Agent to
the effect that all financing or continuation statements and amendments or
supplements thereto have been filed in the appropriate filing office or offices,
and all other actions (including, without limitation, the payment of all filing
fees and taxes, if any, payable in connection with such filings) have been taken
in order to perfect (and maintain the perfection and priority of) the security
interest granted hereby and (iv) the Collateral Agent shall have received
evidence that all other actions (including, without limitation, the payment of
all filing fees and taxes, if any, payable in connection with such filings) have
been taken, in order to perfect (and maintain the perfection and priority of)
the security interest granted hereby.
2.6. Recourse. This Agreement is made with full recourse to each
Assignor and pursuant to and upon all the warranties, representations, covenants
and agreements on the part of such Assignor contained herein, in the other
Credit Documents, in the Interest Rate Protection Agreements or Other Hedging
Agreements and otherwise in writing in connection herewith or therewith.
2.7. Trade Names; Change of Name. No Assignor operates in any
jurisdiction under, or in the preceding 12 months has had or has operated in any
jurisdiction under, any trade names, fictitious names or other names except its
legal name and such other trade or fictitious names as are listed on Annex C
hereto for such Assignor. No Assignor shall change its legal name or assume or
operate in any jurisdiction under any trade, fictitious or other name except
those names listed on Annex C hereto for such Assignor and new
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names established in accordance with the last sentence of this Section 2.8. No
Assignor shall assume or operate in any jurisdiction under any new trade,
fictitious or other name until (i) such Assignor shall have given to the
Collateral Agent not less than 30 days' prior written notice of its intention so
to do, clearly describing such new name and the jurisdictions in which such new
name shall be used and providing such other information in connection therewith
as the Collateral Agent may reasonably request, (ii) with respect to such new
name, such Assignor shall have taken all action to maintain the security
interest of the Collateral Agent in the Collateral intended to be granted hereby
at all times fully perfected and in full force and effect, (iii) at the
reasonable request of the Collateral Agent, such Assignor shall have furnished
an opinion of counsel reasonably acceptable to the Collateral Agent to the
effect that all financing or continuation statements and amendments or
supplements thereto have been filed in the appropriate filing office or offices,
and all other actions (including, without limitation, the payment of all filing
fees and taxes, if any, payable in connection with such filings) have been taken
in order to perfect (and maintain the perfection and priority of) the security
interest granted hereby and (iv) the Collateral Agent shall have received
evidence that all other actions (including, without limitation, the payment of
all filing fees and taxes, if any, payable in connection with such filings) have
been taken, in order to perfect (and maintain the perfection and priority of)
the security interest granted hereby.
ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS
3.1. Maintenance of Records. Each Assignor will keep and maintain at
its own cost and expense true and correct records of its Receivables and
Contracts, including, but not limited to, the originals of all documentation
(including each Contract) with respect thereto, records of all payments
received, all credits granted thereon, all merchandise returned and all other
dealings therewith, and such Assignor will make the same available on such
Assignor's premises to the Collateral Agent for inspection, at such Assignor's
own cost and expense, at any and all reasonable times and intervals and to such
extent as the Collateral Agent may reasonably request. Upon the
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occurrence and during the continuance of an Event of Default, such Assignor
shall, at its own cost and expense, upon the request of the Collateral Agent,
deliver all tangible evidence of its Receivables and Contract Rights (including,
without limitation, all documents evidencing the Receivables and all Contracts)
and such books and records to the Collateral Agent or to its representatives
(copies of which evidence and books and records may be retained by such
Assignor). Upon the occurrence and during the continuance of an Event of
Default, if the Collateral Agent so directs, such Assignor shall legend, in form
and manner satisfactory to the Collateral Agent, its Receivables and the
Contracts, as well as books, records and documents (if any) of such Assignor
evidencing or pertaining to such Receivables and Contracts with an appropriate
reference to the fact that such Receivables and Contracts have been assigned to
the Collateral Agent and that the Collateral Agent has a security interest
therein.
3.2. Direction to Account Debtors; Contracting Parties; etc. Upon
the occurrence and during the continuance of an Event of Default and if the
Collateral Agent so directs any Assignor, such Assignor agrees (x) to cause all
payments on account of the Receivables and Contracts to be made directly to the
Cash Collateral Account, (y) that the Collateral Agent may, at its option,
directly notify the obligors with respect to any Receivables and/or under any
Contracts to make payments with respect thereto as provided in the preceding
clause (x) and (z) that the Collateral Agent may enforce collection of any such
Receivables and Contracts and may adjust, settle or compromise the amount of
payment thereof, in the same manner and to the same extent as such Assignor.
Without notice to or assent by any Assignor, the Collateral Agent may apply any
or all amounts then in, or thereafter deposited in, the Cash Collateral Account
in the manner provided in Section 7.4 of this Agreement. The reasonable costs
and expenses (including reasonable attorneys' fees) of collection, whether
incurred by an Assignor or the Collateral Agent, shall be borne by the relevant
Assignor.
3.3. Rights in the Receivables and Contracts. Each Assignor will do
nothing to impair the rights of the Collateral Agent in the Receivables or
Contracts.
3.4. Delivery of Instruments. If any Assignor owns or acquires any
Instruments constituting Collateral in excess of $100,000 and such Collateral is
not otherwise required to be pledged pursuant to the General Pledge Agreement,
such Assignor will within 10 days thereafter notify the Collateral Agent
thereof, and upon request by the Collateral Agent will promptly deliver such
Instrument to the Collateral Agent, appropriately endorsed in a manner
reasonably satisfactory to the Collateral Agent, to be held as Collateral
pursuant to this Agreement. Until such Collateral is delivered to the Collateral
Agent, such Assignor shall hold such property in trust for the Secured
Creditors, segregated from other property of such Assignor, as additional
collateral security for the Obligations.
3.5. Assignors Remain Liable Under Receivables. Anything herein to
the contrary notwithstanding, the Assignors shall remain liable under each of
the Receivables to observe and perform all of the conditions and obligations to
be observed and performed by them thereunder, all in accordance with the terms
of any agreement giving rise to such
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Receivables. Neither the Collateral Agent nor any other Secured Creditor shall
have any obligation or liability under any Receivable (or any agreement giving
rise thereto) by reason of or arising out of this Agreement or the receipt by
the Collateral Agent or any other Secured Creditor of any payment relating to
such Receivable pursuant hereto, nor shall the Collateral Agent or any other
Secured Creditor be obligated in any manner to perform any of the obligations of
any Assignor under or pursuant to any Receivable (or any agreement giving rise
thereto), to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by them or as to the sufficiency of any
performance by any party under any Receivable (or any agreement giving rise
thereto), to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to them or to which they may be entitled at any time or times.
3.6. Assignors Remain Liable Under Contracts. Anything herein to the
contrary notwithstanding, the Assignors shall remain liable under each of the
Contracts to observe and perform all of the conditions and obligations to be
observed and performed by them thereunder, all in accordance with and pursuant
to the terms and provisions of each Contract. Neither the Collateral Agent nor
any other Secured Creditor shall have any obligation or liability under any
Contract by reason of or arising out of this Agreement or the receipt by the
Collateral Agent or any other Secured Creditor of any payment relating to such
Contract pursuant hereto, nor shall the Collateral Agent or any other Secured
Creditor be obligated in any manner to perform any of the obligations of any
Assignor under or pursuant to any Contract, to make any payment, to make any
inquiry as to the nature or the sufficiency of any performance by any party
under any Contract, to present or file any claim, to take any action to enforce
any performance or to collect the payment of any amounts which may have been
assigned to them or to which they may be entitled at any time or times.
3.7. Further Actions. Each Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to its Receivables, Contracts, Instruments and other property or
rights covered by the security interest hereby granted, as the Collateral Agent
may require.
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ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1. Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful exclusive owner of the
United States Marks listed in Annex D hereto for such Assignor and that said
listed Marks include all United States marks and applications for registrations
of United States marks in the United States Patent and Trademark Office that
such Assignor owns or uses in connection with its business as of the date
hereof. Each Assignor represents and warrants that it owns, is licensed to use
or otherwise has the right to use and is not prohibited from using all Marks
that is uses. Each Assignor further warrants that it is aware of no third party
claim that any aspect of such Assignor's present or contemplated business
operations infringes or will infringe any trademark, service mark or trade name.
Each Assignor represents and warrants that it is the true and lawful owner of or
otherwise has the right to use all United States trademark registrations and
applications listed in Annex D hereto and that said registrations are valid,
subsisting, have not been cancelled and that such Assignor is not aware of any
third-party claim that any of said registrations is invalid or unenforceable, or
is not aware that there is any reason that any of said registrations is invalid
or unenforceable, or is not aware that there is any reason that any of said
material applications will not pass to registration. Each Assignor hereby grants
to the Collateral Agent an absolute power of attorney to sign, upon the
occurrence and during the continuance of an Event of Default, any document which
may be required by the United States Patent and Trademark Office (or the
equivalent foreign office) in order to effect an absolute assignment of all
right, title and interest in each Mark, and record the same.
4.2. Licenses and Assignments. Except as otherwise permitted by the
Credit Agreements, each Assignor hereby agrees not to divest itself of any right
under any Mark absent prior written approval of the Collateral Agent.
4.3. Infringements. Each Assignor agrees, promptly upon learning
thereof, to notify the Collateral Agent in writing of any potential infringement
claim and, upon and during the continuance of an Event of Default, to furnish
such pertinent information that may be available with respect to, any party who
such Assignor believes is infringing or diluting or otherwise violating any of
such Assignor's rights in and to any material Mark, or with respect to any party
claiming that such Assignor's use of any material Mark violates any property
right of that party. Each Assignor further agrees, unless otherwise agreed by
the Collateral Agent, to prosecute in accordance with reasonable business
practices any Person infringing any material Mark.
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4.4. Preservation of Marks. Except as otherwise permitted by the
Credit Agreements, each Assignor agrees to take such actions to preserve its
United States Marks as trademarks or service marks under the laws of the United
States.
4.5. Maintenance of Registration. Each Assignor shall, at its own
expense, diligently process all documents required to maintain those trademark
registrations deemed by such Assignor's senior management or Board of Directors
to be in the best interests of such Assignor, including but not limited to
affidavits of use and applications for renewals of registration in the United
States Patent and Trademark Office for all of its material registered Marks, and
shall pay all fees and disbursements in connection therewith.
4.6. Future Registered Marks. If any United States Mark registration
issues hereafter to any Assignor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office, within 30 days of
receipt of such certificate, such Assignor shall deliver to the Collateral Agent
a copy of such certificate, and an assignment for security in such Mark, to the
Collateral Agent and at the expense of such Assignor, confirming the assignment
for security in such Mark to the Collateral Agent hereunder, the form of such
security to be substantially the same as the form hereof.
4.7. Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may, by written notice to the relevant Assignor, take any
or all of the following actions: (i) declare the entire right, title and
interest of such Assignor in and to each of the Marks and the goodwill of the
business associated therewith, together with all trademark rights and rights of
protection to the same, vested in the Collateral Agent for the benefit of the
Secured Creditors, in which event such rights, title and interest shall
immediately vest in the Collateral Agent for the benefit of the Secured
Creditors, and the Collateral Agent shall be entitled to exercise the power of
attorney referred to in Section 4.1 hereof to execute, cause to be acknowledged
and notarized and record said absolute assignment with the applicable agency;
(ii) take and use or sell the Marks and the goodwill of such Assignor's business
symbolized by the Marks and the right to carry on the business and use the
assets of such Assignor in connection with which the Marks have been used; (iii)
direct such Assignor to refrain, in which event such Assignor shall as promptly
as practicable refrain, from using the Marks in any manner whatsoever, directly
or indirectly, and, if requested by the Collateral Agent, change such Assignor's
corporate name to eliminate therefrom any use of any Mark; and (iv) direct such
Assignor to execute such other and further documents that the Collateral Agent
may request to further confirm the foregoing and to transfer ownership of the
Marks and registrations and any pending trademark application in the United
States Patent and Trademark Office to the Collateral Agent.
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ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS
5.1. Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner of all rights in
(i) all United States trade secrets and proprietary information necessary to
operate the business of such Assignor (the "Trade Secret Rights"), (ii) the
United States Patents listed in Annex E hereto for such Assignor and that said
Patents include all United States patents and applications for United States
patents that such Assignor owns as of the date hereof and (iii) the United
States Copyrights listed in Annex F hereto for such Assignor and that said
Copyrights constitute all the United States copyrights registered with the
United States Copyright Office and applications to United States copyrights that
such Assignor now owns. Each Assignor represents and warrants that it owns or is
licensed to practice under all Patents and Copyrights that it now uses or
practices under. Each Assignor further warrants that it has no knowledge of any
third party claim that any aspect of such Assignor's present or contemplated
business operations infringes or will infringe any patent or any copyright or
such Assignor has misappropriated any trade secret or proprietary information.
Each Assignor hereby grants to the Collateral Agent an absolute power of
attorney to sign, upon the occurrence and during the continuance of any Event of
Default, any document which may be required by the United States Patent and
Trademark Office (or the equivalent foreign office) or United States Copyright
Office (or the equivalent foreign office), as the case may be, in order to
effect an absolute assignment of all right, title and interest in each Patent
and Copyright, and to record the same.
5.2. Licenses and Assignments. Except as otherwise permitted by the
Credit Agreements, each Assignor hereby agrees not to divest itself of any right
under any Patent or Copyright absent prior written approval of the Collateral
Agent.
5.3. Infringements. Each Assignor agrees, promptly upon learning
thereof, to notify the Collateral Agent in writing of any potential infringement
claim and, upon and during the continuance of an Event of Default, to furnish
all pertinent information available to such Assignor with respect to any
infringement in any material Patent or Copyright or to any claim that the
practice of any Patent or Copyright violates any property right of a third
party, or with respect to any misappropriation of any Trade Secret Right or any
claim that practice of any Trade Secret Right violates any property right of a
third party. Each Assignor further agrees, absent direction of the Collateral
Agent to the contrary, diligently
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to prosecute in accordance with reasonable business practices any Person
infringing any Patent or Copyright or any Person misappropriating any Trade
Secret Right.
5.4. Maintenance of Patents or Copyrights. At its own expense, each
Assignor shall make timely payment of all post-issuance fees required to
maintain in force rights under each material Patent or Copyright.
5.5. Prosecution of Patent or Copyright Application. At its own
expense, each Assignor shall diligently prosecute those applications for (i)
United States Patents listed in Annex E hereto and (ii) United States Copyrights
listed in Annex F hereto, in each case for such Assignor as deemed by such
Assignor's senior management or Board of Directors to be in the best interests
of such Assignor.
5.6. Other Patents or Copyrights. Within 30 days of the acquisition
or issuance of a United States Patent or United States Copyright or of filing of
an application for a United States Patent or United States Copyright, the
relevant Assignor shall deliver to the Collateral Agent a copy of said
certificate or registration of, or application for, said Patent or Copyright, as
the case may be, with an assignment for security as to such Patent or Copyright,
as the case may be, to the Collateral Agent and at the expense of such Assignor,
confirming the assignment for security, the form of such assignment for security
to be substantially the same as the form hereof.
5.7. Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may by written notice to the relevant Assignor, take any or
all of the following actions: (i) declare the entire right, title, and interest
of such Assignor in each of the Patents and Copyrights vested in the Collateral
Agent for the benefit of the Secured Creditors, in which event such right,
title, and interest shall immediately vest in the Collateral Agent for the
benefit of the Secured Creditors, in which case the Collateral Agent shall be
entitled to exercise the power of attorney referred to in Section 5.1 hereof to
execute, cause to be acknowledged and notarized and to record said absolute
assignment with the applicable agency; (ii) take and practice or sell the
Patents and Copyrights; (iii) direct such Assignor to refrain, in which event
such Assignor shall as promptly as practicable refrain, from practicing the
Patents and Copyrights directly or indirectly; and (iv) such Assignor shall
execute such other and further documents as the Collateral Agent may request
further to confirm the foregoing and to transfer ownership of the Patents and
Copyrights to the Collateral Agent for the benefit of the Secured Creditors.
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ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1. Protection of Collateral Agent's Security. Each Assignor will
do nothing to impair the rights of the Collateral Agent in the Collateral. Each
Assignor will at all times keep its Inventory and Equipment insured in favor of
the Collateral Agent, at such Assignor's own expense to the extent and in the
manner provided in the Credit Agreement. If any Assignor shall fail to insure
its Inventory and Equipment in accordance with the preceding sentence, or if
such Assignor shall fail to so endorse and deposit all policies with respect
thereto to the extent required by the Credit Agreements, the Collateral Agent
shall have the right (but shall be under no obligation) to procure such
insurance and such Assignor agrees to promptly reimburse the Collateral Agent
for all costs and expenses of procuring such insurance. The Collateral Agent
shall, at the time such proceeds of such insurance are distributed to the
Secured Creditors, apply such proceeds in accordance with Section 7.4 hereof.
Each Assignor assumes all liability and responsibility in connection with the
Collateral acquired by it and the liability of such Assignor to pay the
Obligations shall in no way be affected or diminished by reason of the fact that
such Collateral may be lost, destroyed, stolen, damaged or for any reason
whatsoever unavailable to such Assignor.
6.2. Warehouse Receipts Non-negotiable. Each Assignor agrees that if
any warehouse receipt or receipt in the nature of a warehouse receipt is issued
with respect to any of its Inventory, such Assignor shall request that such
warehouse receipt or receipt in the nature thereof shall not be "negotiable" (as
such term is used in Section 7-104 of the Uniform Commercial Code as in effect
in any relevant jurisdiction or under other relevant law).
6.3. Further Actions; Louisiana Matters. (a) Each Assignor will, at
its own expense, make, execute, endorse, acknowledge, file and/or deliver to the
Collateral Agent from time to time such lists, descriptions and designations of
its Collateral, warehouse receipts, receipts in the nature of warehouse
receipts, bills of lading, documents of title, vouchers, invoices, schedules,
confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, reports and other assurances or
instruments and take such further steps relating to the Collateral and other
property or rights covered by the security interest hereby granted, which the
Collateral Agent reasonably deems appropriate or advisable to perfect, preserve
or protect its security interest in the Collateral.
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(b) Notwithstanding anything contained in this Agreement to the
contrary, each Assignor agrees that at all times during which any portion of the
Collateral, or any proceeds thereof, are located in Louisiana or are otherwise
subject to the application of Louisiana law in any respect, the security
interest granted by each Assignor to the Collateral Agent in such portions of
such Collateral shall be subject to the provisions of Louisiana law and to the
terms of the Louisiana Addendum annexed hereto and each Assignor hereby agrees
to execute and deliver to the Collateral Agent the Louisiana Addendum
substantially in the form of Annex I hereto.
6.4. Financing Statements. Each Assignor agrees to execute and
deliver to the Collateral Agent such financing statements, in form reasonably
acceptable to the Collateral Agent, as the Collateral Agent may reasonably deem
necessary or desirable to establish and maintain a valid, enforceable, first
priority perfected security interest in the Collateral as provided herein and in
the other rights and security contemplated hereby all in accordance with the
Uniform Commercial Code as enacted in any and all relevant jurisdictions or any
other relevant law. Each Assignor will pay any applicable filing fees,
recordation taxes and related expenses relating to its Collateral. Each Assignor
hereby authorizes the Collateral Agent to file any such financing statements
without the signature of such Assignor where permitted by law.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
7.1. Remedies; Obtaining the Collateral Upon Default. Each Assignor
agrees that, if any Event of Default shall have occurred and be continuing, then
and in every such case, the Collateral Agent, in addition to any rights now or
hereafter existing under applicable law, shall have all rights as a secured
creditor under the Uniform Commercial Code in all relevant jurisdictions and may
take each of the following actions, each of which such Assignor agrees to be
commercially reasonable:
(i) personally, or by agents or attorneys, immediately take
possession of the Collateral or any part thereof, from such Assignor or
any other Person who then has possession of any part thereof with or
without notice or process of law, and for that purpose may enter upon such
Assignor's premises where any of the Collateral is located and remove the
same and use in connection with such removal any and all services,
supplies, aids and other facilities of such Assignor;
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(ii) instruct the obligor or obligors on any agreement, instrument
or other obligation (including, without limitation, the Receivables and
the Contracts) constituting the Collateral to make any payment required by
the terms of such agreement, instrument or other obligation directly to
the Collateral Agent and may exercise any and all remedies and rights of
such Assignor in respect of such Collateral;
(iii) withdraw all monies, securities and instruments in the Cash
Collateral Account for application to the Obligations in accordance with
Section 7.4 hereof;
(iv) sell, assign or otherwise liquidate any or all of the
Collateral or any part thereof in accordance with Section 7.2 hereof, or
direct the relevant Assignor to sell, assign or otherwise liquidate any or
all of the Collateral or any part thereof, and, in each case, take
possession of the proceeds of any such sale or liquidation;
(v) take possession of the Collateral or any part thereof, by
directing the relevant Assignor in writing to deliver the same to the
Collateral Agent at any place or places designated by the Collateral
Agent, in which event such Assignor shall at its own expense:
(x) forthwith cause the same to be moved to the place or
places so designated by the Collateral Agent;
(y) store and keep any Collateral so delivered to the
Collateral Agent at such place or places pending further action by
the Collateral Agent as provided in Section 7.2 hereof;
(z) while the Collateral shall be so stored and kept, provide
such guards and maintenance services as shall be necessary to
protect the same and to preserve and maintain them in good
condition;
(vi) license or sublicense, whether on an exclusive or nonexclusive
basis, any Marks, Patents and Copyrights included in the Collateral for
such term and on such conditions and in such manner as the Collateral
Agent shall in its sole judgment determine;
it being understood that each Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity hav-
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ing jurisdiction, the Collateral Agent shall be entitled to a decree requiring
specific performance by such Assignor of said obligation. The Secured Creditors
agree that this Agreement may be enforced only by the action of the Collateral
Agent, in each case acting upon the instructions of the Required Secured
Creditors and that no other Secured Creditor shall have any right individually
to seek to enforce or to enforce this Agreement or to realize upon the security
to be granted hereby, it being understood and agreed that such rights and
remedies may be exercised by the Collateral Agent or the holders of at least a
majority of the outstanding Other Obligations, as the case maybe, for the
benefit of the Secured Creditors upon the terms of this Agreement and the Credit
Agreements.
7.2. Remedies; Disposition of the Collateral. Any Collateral
repossessed by the Collateral Agent under or pursuant to Section 7.1 hereof and
any other Collateral whether or not so repossessed by the Collateral Agent, may
be sold, assigned, leased or otherwise disposed of under one or more contracts
or as an entirety, and without the necessity of gathering at the place of sale
the property to be sold, and in general in such manner, at such time or times,
at such place or places and on such terms as the Collateral Agent may, in
compliance with any mandatory requirements of applicable law, determine to be
commercially reasonable. Any of the Collateral may be sold, leased or otherwise
disposed of, in the condition in which the same existed when taken by the
Collateral Agent or after any overhaul or repair at the expense of the relevant
Assignor which the Collateral Agent shall determine to be commercially
reasonable. Any such disposition which shall be a private sale or other private
proceedings permitted by such requirements shall be made upon not less than 10
days' written notice to the relevant Assignor specifying the time at which such
disposition is to be made and the intended sale price or other consideration
therefor, and shall be subject, for the 10 days after the giving of such notice,
to the right of the relevant Assignor or any nominee of such Assignor to acquire
the Collateral involved at a price or for such other consideration at least
equal to the intended sale price or other consideration so specified. Any such
disposition which shall be a public sale permitted by such requirements shall be
made upon not less than 10 days' written notice to the relevant Assignor
specifying the time and place of such sale and, in the absence of applicable
requirements of law, shall be by public auction (which may, at the Collateral
Agent's option, be subject to reserve), after publication of notice of such
auction not less than 10 days prior thereto in two newspapers in general
circulation in the City of New York. To the extent permitted by any such
requirement of law, the Collateral Agent and the other Secured Creditors may bid
for and become the purchaser of the Collateral or any item thereof, offered for
sale in accordance with this Section without accountability to the relevant
Assignor. If, under mandatory requirements of applicable law, the Collateral
Agent shall be required to make disposition of the Collateral within a period of
time which does not permit the giving of notice to the relevant Assignor as
hereinabove specified, the Collateral
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Agent need give such Assignor only such notice of disposition as shall be
reasonably practicable in view of such mandatory requirements of applicable law.
Each Assignor agrees to do or cause to be done all such other acts and things as
may be reasonably necessary to make such sale or sales of all or any portion of
the Collateral valid and binding and in compliance with any and all applicable
laws, regulations, orders, writs, injunctions, decrees or awards of any and all
courts, arbitrators or governmental instrumentalities, domestic or foreign,
having jurisdiction over any such sale or sales, all at such Assignor's expense.
7.3. Waiver of Claims. Except as otherwise provided in this
Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL
AGENT'S TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY OR ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH ASSIGNOR
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES
OR OF ANY STATE, and each Assignor hereby further waives, to the extent
permitted by law:
(i) all damages occasioned by such taking of possession except any
damages which are the direct result of the Collateral Agent's gross
negligence or willful misconduct;
(ii) all other requirements as to the time, place and terms of sale
or other requirements with respect to the enforcement of the Collateral
Agent's rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law
in order to prevent or delay the enforcement of this Agreement or the
absolute sale of the Collateral or any portion thereof, and each Assignor,
for itself and all who may claim under it, insofar as it or they now or
hereafter lawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the relevant Assignor therein and
thereto, and shall be a perpetual bar both at law and in equity against such
Assignor and against any and all Persons claiming or at-
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tempting to claim the Collateral so sold, optioned or realized upon, or any part
thereof, from, through and under such Assignor.
7.4. Application of Proceeds. (a) All moneys collected by the
Collateral Agent (or, to the extent any Pledge Agreement or any Mortgage
requires proceeds of collateral under such Security Documents to be applied in
accordance with the provisions of this Agreement, the Pledgee or Mortgagee under
such other Security Document) upon any sale or other disposition of the
Collateral, together with all other moneys received by the Collateral Agent
hereunder, shall be applied as follows:
(i) first, to the payment of all Obligations owing the Collateral
Agent of the type provided in clauses (iv) and (v) of the definition of
Obligations;
(ii) second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding
Primary Obligations shall be paid to the Secured Creditors as provided in
Section 7.4(e) hereof, with each Secured Creditor receiving an amount
equal to its outstanding Primary Obligations or, if the proceeds are
insufficient to pay in full all such Primary Obligations, its Pro Rata
Share of the amount remaining to be distributed;
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii), an amount equal to the
outstanding Secondary Obligations shall be paid to the Secured Creditors
as provided in Section 7.4(e) hereof, with each Secured Creditor receiving
an amount equal to its outstanding Secondary Obligations or, if the
proceeds are insufficient to pay in full all such Secondary Obligations,
its Pro Rata Share of the amount remaining to be distributed; and
(iv) fourth, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) through (iii) inclusive and
following the termination of this Agreement pursuant to Section 11.8
hereof, to the relevant Assignor or, to the extent directed by such
Assignor or a court of competent jurisdiction, to whomever may be lawfully
entitled to receive such surplus.
(b) For purposes of this Agreement, (x) "Pro Rata Share" shall mean,
when calculating a Secured Creditor's portion of any distribution or amount,
that amount (expressed as a percentage) equal to a fraction the numerator of
which is the then unpaid amount of such Secured Creditor's Primary Obligations
or Secondary Obligations, as the case may be, and the denominator of which is
the then outstanding amount of all Primary
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Obligations or Secondary Obligations, as the case may be, (y) "Primary
Obligations" shall mean (i) in the case of the SCIS Credit Document Obligations
and the Caterair Credit Document Obligations, all principal of, and interest on,
all loans, all unpaid drawings in respect of letters of credit (together with
all interest accrued thereon), the aggregate stated amounts of all letters of
credit issued under the SCIS Credit Agreement, and all fees and (ii) in the case
of the Other Obligations, all amounts due under the Interest Rate Protection
Agreements or Other Hedging Agreements (other than indemnities, fees (including,
without limitation, attorneys' fees) and similar obligations and liabilities)
and (z) "Secondary Obligations" shall mean all Obligations other than Primary
Obligations.
(c) When payments to the Secured Creditors are based upon their
respective Pro Rata Shares, the amounts received by such Secured Creditors
hereunder shall be applied (for purposes of making determinations under this
Section 7.4 only) (i) first, to their Primary Obligations and (ii) second, to
their Secondary Obligations. If any payment to any Secured Creditor of its Pro
Rata Share of any distribution would result in overpayment to such Secured
Creditor, such excess amount shall instead be distributed in respect of the
unpaid Primary Obligations or Secondary Obligations, as the case may be, of the
other Secured Creditors, with each Secured Creditor whose Primary Obligations or
Secondary Obligations, as the case may be, have not been paid in full to receive
an amount equal to such excess amount multiplied by a fraction the numerator of
which is the unpaid Primary Obligations or Secondary Obligations, as the case
may be, of such Secured Creditor and the denominator of which is the unpaid
Primary Obligations or Secondary Obligations, as the case may be, of all Secured
Creditors entitled to such distribution.
(d) Each of the Secured Creditors agrees and acknowledges that if
the SCIS Bank Creditors are to receive a distribution on account of undrawn
amounts with respect to letters of credit issued under the SCIS Credit Agreement
(which shall only occur after all outstanding loans under the SCIS Credit
Agreement and unpaid drawings with respect to such letters of credit have been
paid in full), such amounts shall be paid to the SCIS Administrative Agent under
the SCIS Credit Agreement and held by it, for the equal and ratable benefit of
the SCIS Bank Creditors, as cash security for the repayment of Obligations owing
to the SCIS Bank Creditors as such. If any amounts are held as cash security
pursuant to the immediately preceding sentence, then upon the termination of all
outstanding letters of credit under the SCIS Credit Agreement, and after the
application of all such cash security to the repayment of all Obligations owing
to the SCIS Bank Creditors after giving effect to the termination of all such
letters of credit, if there remains any excess cash, such excess cash shall be
returned by the SCIS Administrative Agent to the Collateral Agent for
distribution in accordance with Section 7.4(a) hereof.
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(e) Except as set forth in Section 7.4(c) hereof, all payments
required to be made to the SCIS Bank Creditors hereunder shall be made to the
SCIS Administrative Agent under the SCIS Credit Agreement for the account of the
SCIS Bank Creditors, all payments required to be made to the Caterair Bank
Creditors hereunder shall be made to the Caterair Administrative Agent under the
Caterair Credit Agreement for the account of the Caterair Bank Creditors and all
payments required to be made to the Other Creditors hereunder shall be made
directly to the respective Other Creditor.
(f) For purposes of applying payments received in accordance with
this Section 7.4, the Collateral Agent shall be entitled to rely upon (i) the
respective Administrative Agent under the respective Credit Agreement and (ii)
the Other Creditors for a determination (which each Administrative Agent, each
Other Creditor and the Secured Creditors agree (or shall agree) to provide upon
request of the Collateral Agent) of the outstanding Obligations owed to the SCIS
Bank Creditors, the Caterair Bank Creditors or the Other Creditors, as the case
may be. Unless it has actual knowledge (including by way of written notice from
an SCIS Bank Creditor, a Caterair Bank Creditor or an Other Creditor) to the
contrary, each Administrative Agent under the applicable Credit Agreement, in
furnishing information pursuant to the preceding sentence, and the Collateral
Agent, in acting hereunder, shall be entitled to assume that (x) no Secondary
Obligations are owing to any SCIS Bank Creditor, Caterair Bank Creditor or Other
Creditor and (y) no Interest Rate Protection Agreement or Other Hedging
Agreement, or Other Obligations in respect thereof, are in existence.
(g) It is understood that the Assignors shall remain jointly and
severally liable to the extent of any deficiency between the amount of the
proceeds of the Collateral and the aggregate amount of the sums referred to in
clause (a) of this Section 7.4 with respect to the relevant Assignor.
7.5. Remedies Cumulative. Each and every right, power and remedy
hereby specifically given to the Collateral Agent shall be in addition to every
other right, power and remedy specifically given under this Agreement, the
Interest Rate Protection Agreements or Other Hedging Agreements, the other
Credit Documents or now or hereafter existing at law, in equity or by statute
and each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time or simultaneously and as
often and in such order as may be deemed expedient by the Collateral Agent. All
such rights, powers and remedies shall be cumulative and the exercise or the
beginning of the exercise of one shall not be deemed a waiver of the right to
exercise any other or others. No delay or omission of the Collateral Agent in
the exercise of any such right, power or remedy and no renewal or extension of
any of the Obligations shall impair
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any such right, power or remedy or shall be construed to be a waiver of any
Default or Event of Default or an acquiescence therein. No notice to or demand
on any Assignor in any case shall entitle it to any other or further notice or
demand in similar or other circumstances or constitute a waiver of any of the
rights of the Collateral Agent to any other or further action in any
circumstances without notice or demand. In the event that the Collateral Agent
shall bring any suit to enforce any of its rights hereunder and shall be
entitled to judgment, then in such suit the Collateral Agent may recover
expenses, including attorneys' fees, and the amounts thereof shall be included
in such judgment.
7.6. Discontinuance of Proceedings. In case the Collateral Agent
shall have instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, sale, entry or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Collateral Agent, then and in every such case the
relevant Assignor, the Collateral Agent and each holder of any of the
Obligations shall be restored to their former positions and rights hereunder
with respect to the Collateral subject to the security interest created under
this Agreement, and all rights, remedies and powers of the Collateral Agent
shall continue as if no such proceeding had been instituted.
ARTICLE VIII
INDEMNITY
8.1. Indemnity. (a) Each Assignor jointly and severally agrees to
indemnify, reimburse and hold the Collateral Agent, each other Secured Creditor
and their respective successors, permitted assigns, employees, agents and
servants (hereinafter referred to individually as "Indemnitee," and collectively
as "Indemnitees") harmless from any and all liabilities, obligations, damages,
injuries, penalties, claims, demands, actions, suits, judgments and any and all
costs, expenses or disbursements (including reasonable attorneys' fees and
expenses) (for the purposes of this Section 8.1 the foregoing are collectively
called "expenses") of whatsoever kind and nature imposed on, asserted against or
incurred by any of the Indemnitees in any way relating to or arising out of this
Agreement, or in any other way connected with the administration of the
transactions contemplated hereby or the enforcement of any of the terms hereof,
or the preservation of any rights hereunder, or in any way relating to or
arising out of the manufacture, ownership, ordering, purchase, delivery,
control, acceptance, lease, financing, possession, operation, condition, sale,
return or other disposition, or use of the Collateral (including, without
limitation, latent or other defects, whether or not discoverable), the violation
of the laws
<PAGE> 311
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of any country, state or other governmental body or unit, any tort (including,
without limitation, claims arising or imposed under the doctrine of strict
liability, or for or on account of injury to or the death of any Person
(including any Indemnitee), or property damage), or contract claim; provided
that no Indemnitee shall be indemnified pursuant to this Section 8.1(a) for
losses, damages or liabilities to the extent caused by the gross negligence or
willful misconduct of such Indemnitee. Each Assignor agrees that upon written
notice by any Indemnitee of the assertion of such a liability, obligation,
damage, injury, penalty, claim, demand, action, suit or judgment, the relevant
Assignor shall assume full responsibility for the defense thereof. Each
Indemnitee agrees to use its best efforts to promptly notify the relevant
Assignor of any such assertion of which such Indemnitee has knowledge.
(b) Without limiting the application of Section 8.1(a) hereof, each
Assignor agrees, jointly and severally, to pay, or reimburse the Collateral
Agent for any and all reasonable fees, costs and expenses of whatever kind or
nature incurred in connection with the creation, preservation or protection of
the Collateral Agent's Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment or
discharge of any taxes or Liens upon or in respect of the Collateral, premiums
for insurance with respect to the Collateral and all other reasonable fees,
costs and expenses in connection with protecting, maintaining or preserving the
Collateral and the Collateral Agent's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits or
proceedings arising out of or relating to the Collateral.
(c) If and to the extent that the obligations of any Assignor under
this Section 8.1 are unenforceable for any reason, such Assignor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
8.2. Indemnity Obligations Secured by Collateral; Survival. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in Section 8.1 hereof shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement, the termination of all Interest Rate
Protection Agreements or Other Hedging Agreements and the payment of all other
Obligations and notwithstanding the discharge thereof.
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ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified. Such
definitions shall be equally applicable to the singular and plural forms of the
terms defined.
"Administrative Agent" shall have the meaning provided in the
recitals to this Agreement.
"Agreement" shall mean this Amended and Restated Security Agreement,
as the same may be modified, supplemented or amended from time to time in
accordance with its terms.
"American Airports" shall mean the Dallas/Fort Worth, Chicago
O'Hare, Nashville and Raleigh-Durham airports.
"Assignor" shall have the meaning provided in the first paragraph of
this Agreement.
"Bank Creditors" shall have the meaning provided in the recitals to
this Agreement.
"Banks" shall have the meaning provided in the recitals to this
Agreement.
"Cash Collateral Account" shall mean a non-interest bearing cash
collateral account maintained with the Collateral Agent for the benefit of the
Secured Creditors.
"Caterair" shall have the meaning provided in the recitals to this
Agreement.
"Caterair Administrative Agent" shall have the meaning provided in
the recitals to this Agreement.
"Caterair Bank Creditors" shall have the meaning provided in the
recitals to this Agreement.
"Caterair Banks" shall have the meaning provided in the recitals to
this Agreement.
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"Caterair Co-Arrangers" shall have the meaning provided in the
recitals to this Agreement.
"Caterair Credit Agreement" shall have the meaning provided in the
recitals to this Agreement.
"Caterair Credit Document Obligations" shall have the meaning
provided in the definition of "Obligations" in this Article IX.
"Caterair Holdings" shall have the meaning provided in the recitals
to this Agreement.
"Chattel Paper" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Class" shall have the meaning provided in Section 11.2 of this
Agreement.
"Collateral" shall have the meaning provided in Section 1.1(a) of
this Agreement.
"Collateral Agent" shall have the meaning provided in the first
paragraph of this Agreement.
"Contract Rights" shall mean all rights of any Assignor (including,
without limitation, all rights to payment) under each Contract.
"Contracts" shall mean all contracts between any Assignor and one or
more additional parties (including, without limitation, each Catering Agreement,
any Interest Rate Protection Agreement or Other Hedging Agreement, each
partnership agreement and joint venture agreement to which any Assignor is a
party and the Subordinated Intercompany Security Agreement), but excluding any
contract (other than the right to the payment of money that is due or is to
become due thereunder which shall in any event be subject to the security
interests under this Agreement) to the extent that the terms thereof prohibit
the assignment of, or granting a security interest in, such contract.
"Copyrights" shall mean any copyright owned by any Assignor,
including any registrations of any Copyrights, in the United States Copyright
Office (or the equivalent foreign office), as well as any application for a
copyright registration now or hereafter
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made with the United States Copyright Office (or the equivalent foreign office)
by any Assignor.
"Credit Agreements" shall have the meaning provided in the recitals
to this Agreement.
"Credit Documents" shall have the meaning provided in the definition
of "Obligations" in this Article IX.
"Default" shall mean any event which, with notice or lapse of time,
or both, would constitute an Event of Default.
"Documents" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Equipment" shall mean any "equipment," as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all machinery, equipment, furnishings, movable
trade fixtures and vehicles now or hereafter owned by any Assignor and any and
all additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.
"Event of Default" shall mean any Event of Default under, and as
defined in, either Credit Agreement and shall in any event, without limitation,
include any payment default on any of the Obligations after the expiration of
any applicable grace period.
"General Intangibles" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Goods" shall have the meaning provided in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.
"Indemnitee" shall have the meaning provided in Section 8.1 of this
Agreement.
"Instrument" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
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"Inventory" shall mean merchandise, inventory and goods, and all
additions, substitutions and replacements thereof, wherever located, together
with all goods, supplies, incidentals, packaging materials, labels, materials
and any other items used or usable in manufacturing, processing, packaging or
shipping same; in all stages of production -- from raw materials through
work-in-process to finished goods -- and all products and proceeds of whatever
sort and wherever located and any portion thereof which may be returned,
rejected, reclaimed or repossessed by the Collateral Agent from any Assignor's
customers, and shall specifically include all "inventory" as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York, now or hereafter owned by any Assignor.
"Liens" shall mean any security interest, mortgage, pledge, lien,
claim, charge, encumbrance, title retention agreement, lessor's interest in a
financing lease or analogous instrument, in, of, or on any Assignor's property.
"Marks" shall mean all right, title and interest in and to any
trademarks, service marks and trade names now held or hereafter acquired by any
Assignor, including any registration of any trademarks and service marks, or the
equivalent thereof in any foreign country or in the United States Patent and
Trademark Office and any trade dress including logos and/or designs used by any
Assignor in the United States or any foreign country.
"Obligations" shall mean:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities
and indebtedness (including, without limitation, the principal of and
interest on the notes issued by, and loans made to, SCIS under the SCIS
Credit Agreement, all reimbursement obligations and unpaid drawings in
respect of letters of credit issued under the SCIS Credit Agreement, and
all indemnities, fees and interest thereon or owed thereunder) of each
Assignor to the SCIS Bank Creditors, whether now existing or hereafter
incurred under, arising out of, or in connection with the SCIS Credit
Agreement and the other SCIS Credit Documents (such term to mean the
"Credit Documents" as defined in the SCIS Credit Agreement) (including,
without limitation, in the case of each Subsidiary Guarantor (including
Caterair), all of its obligations, liabilities and indebtedness under the
Subsidiaries Guaranty) to which such Assignor is a party and the due
performance and compliance by such Assignor with all of the terms,
conditions and agreements contained in the SCIS Credit Agreement and such
other SCIS Credit Documents (all such obligations, liabilities and
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indebtedness under this clause (i), except to the extent consisting of
obligations, liabilities or indebtedness with respect to Interest Rate
Protection Agreements or Other Hedging Agreements, being herein
collectively called the "SCIS Credit Document Obligations");
(ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities
and indebtedness (including, without limitation, the principal of and
interest on the notes issued by, and loans made to, SCIS and Caterair
under the Caterair Credit Agreement, and all indemnities, fees and
interest thereon or owed thereunder) of each Assignor to the Caterair Bank
Creditors, whether now existing or hereafter incurred under, arising out
of, or in connection with the Caterair Credit Agreement and the other
Caterair Credit Documents (such term to mean the "Credit Documents" as
defined in the Caterair Credit Agreement, and the Caterair Credit
Documents, together with the SCIS Credit Documents, are referred to herein
as the "Credit Documents") (including, without limitation, in the case of
SCIS, all of its obligations, liabilities and indebtedness under the SCIS
Guaranty and, in the case of each Subsidiary Guarantor (including
Caterair), all of its obligations, liabilities and indebtedness under the
Subsidiaries Guaranty) to which such Assignor is a party and the due
performance and compliance by such Assignor with all of the terms,
conditions and agreements contained in the Caterair Credit Agreement and
such other Caterair Credit Documents (all such obligations, liabilities
and indebtedness under this clause (ii), except to the extent consisting
of obligations, liabilities or indebtedness with respect to Interest Rate
Protection Agreements or Other Hedging Agreements, being herein
collectively called the "Caterair Credit Document Obligations");
(iii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities
and indebtedness owing by each Assignor to the Other Creditors under,
arising out of or with respect to, any Interest Rate Protection Agreement
or Other Hedging Agreement (including, without limitation, in the case of
each Assignor, all of its obligations, liabilities and indebtedness under
the Guaranties to which it is a party in respect of such Interest Rate
Protection Agreements or Other Hedging Agreements), whether such Interest
Rate Protection Agreement or Other Hedging Agreement is now in existence
or hereafter arising, and the due performance and compliance by such
Assignor with all of the terms, conditions and agreements contained
therein (all such obligations, liabilities and indebtedness described in
this clause (iii) being herein collectively called the "Other
Obligations");
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(iv) any and all sums advanced by the Collateral Agent in order to
preserve the Collateral or preserve its security interest in the
Collateral;
(v) in the event of any proceeding for the collection or enforcement
of any indebtedness, obligations or liabilities of each Assignor referred
to in clauses (i), (ii) and (iii) above, upon the occurrence and during
the continuance of an Event of Default shall have occurred and be
continuing, the reasonable expenses of retaking, holding, preparing for
sale or lease, selling or otherwise disposing of or realizing on the
Collateral, or of any exercise by the Collateral Agent of its rights
hereunder, together with reasonable attorneys' fees and court costs; and
(vi) all amounts paid by any Secured Creditor as to which such
Secured Creditor has the right to reimbursement under Section 11 of this
Agreement.
"OFSI" shall have the meaning provided in the recitals to this
Agreement.
"Original Security Agreement" shall have the meaning provided in the
recitals to this Agreement.
"Other Creditors" shall have the meaning provided in the recitals to
this Agreement.
"Other Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
"Patents" shall mean any United States or foreign patent to which
any Assignor now or hereafter has title and any divisions or continuations
thereof, as well as any application for a United States or foreign patent now or
hereafter made by any Assignor.
"Primary Obligations" shall have the meaning provided in Section
7.4(b) of this Agreement.
"Pro Rata Share" shall have the meaning provided in Section 7.4(b)
of this Agreement.
"Proceeds" shall have the meaning provided in the Uniform Commercial
Code as in effect in the State of New York on the date hereof or under other
relevant law and, in any event, shall include, but not be limited to, (i) any
and all proceeds of any insur-
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ance, indemnity, warranty or guaranty payable to the Collateral Agent or any
Assignor from time to time with respect to any of the Collateral, (ii) any and
all payments (in any form whatsoever) made or due and payable to any Assignor
from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental authority (or any person acting under color of governmental
authority) and (iii) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
"Receivables" shall mean any "account" as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all of such Assignor's rights to payment for goods
sold or leased or services performed by such Assignor, whether now in existence
or arising from time to time hereafter, including, without limitation, rights
evidenced by an account, note, contract, security agreement, chattel paper, or
other evidence of indebtedness or security, together with (a) all security
pledged, assigned, hypothecated or granted to or held by such Assignor to secure
the foregoing, (b) all of any Assignor's right, title and interest in and to any
goods, the sale of which gave rise thereto, (c) all guarantees, endorsements and
indemnifications on, or of, any of the foregoing, (d) all powers of attorney for
the execution of any evidence of indebtedness or security or other writing in
connection therewith, (e) all books, records, ledger cards, and invoices
relating thereto, (f) all evidences of the filing of financing statements and
other statements and the registration of other instruments in connection
therewith and amendments thereto, notices to other creditors or secured parties,
and certificates from filing or other registration officers, (g) all credit
information, reports and memoranda relating thereto and (h) all other writings
related in any way to the foregoing.
"Required Secured Creditors" shall mean (i) prior to the occurrence
of an Event of Default, those Banks the sum of whose outstanding loans,
percentage participation in outstanding letters of credit and unutilized
commitments under the Credit Agreements represent an amount greater than 50% of
the sum of all outstanding loans, percentage participations in all outstanding
letters of credit and unutilized commitments under the Credit Agreements (or, to
the extent required by each Credit Agreement, each of the Banks under each of
the Credit Agreements), (ii) on and after the occurrence and during the
continuance of an Event of Default, those Banks the sum of whose outstanding
loans and percentage participation in outstanding letters of credit represent an
amount greater than 50% of the sum of all outstanding loans and percentage
participations in all outstanding letters of credit under the Credit Agreements
(or, to the extent required by each Credit Agreement, each of the Banks under
each of the Credit Agreements) or (iii) after all SCIS Credit Document
<PAGE> 319
EXHIBIT H
Page 31
Obligations and all Caterair Credit Document Obligations have been paid in full,
the holders of a majority of the outstanding principal amount of the Other
Obligations.
"Requisite Creditors" shall have the meaning provided in Section
11.2 of this Agreement.
"SCIS" shall have the meaning provided in the recitals to this
Agreement.
"SCIS Administrative Agent" shall have the meaning provided in the
recitals to this Agreement.
"SCIS Bank Creditors" shall have the meaning provided in the
recitals to this Agreement.
"SCIS Banks" shall have the meaning provided in the recitals to this
Agreement.
"SCIS Co-Arrangers" shall have the meaning provided in the recitals
to this Agreement.
"SCIS Credit Agreement" shall have the meaning provided in the
recitals to this Agreement.
"SCIS Credit Document Obligations" shall have the meaning provided
in the definition of "Obligations" in this Article IX.
"Secondary Obligations" shall have the meaning provided in Section
7.4(b) of this Agreement.
"Secured Creditors" shall have the meaning provided in the recitals
to this Agreement.
"Secured Debt Agreements" shall mean and include this Agreement, the
other Credit Documents and the Interest Rate Protection Agreements and the Other
Hedging Agreements.
"Termination Date" shall have the meaning provided in Section 11.8
of this Agreement.
<PAGE> 320
EXHIBIT H
Page 32
"Trade Secret Rights" shall have the meaning provided in Section 5.1
of this Agreement.
ARTICLE X
THE COLLATERAL AGENT
10.1. Appointment. The Secured Creditors, by their acceptance of the
benefits of this Agreement and the other Security Documents, hereby irrevocably
designate Morgan Guaranty Trust Company of New York, as Collateral Agent, to act
as specified herein and in the other Credit Documents. Each Secured Creditor
hereby irrevocably authorizes, and each holder of any Note by the acceptance of
such Note and by the acceptance of the benefits of this Agreement and the other
Credit Documents shall be deemed irrevocably to authorize, the Collateral Agent
to take such action on its behalf under the provisions of this Agreement and the
other Credit Documents and any other instruments and agreements referred to
herein or therein and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of the
Collateral Agent by the terms hereof or thereof and such other powers as are
reasonably incidental thereto. The Collateral Agent may perform any of its
duties hereunder and under the other Credit Documents by or through its
authorized agents or employees.
10.2. Nature of Duties. (a) The Collateral Agent shall have no
duties or responsibilities except those expressly set forth in this Agreement
and in the other Credit Documents. The duties of the Collateral Agent shall be
mechanical and administrative in nature; the Collateral Agent shall not have by
reason of this Agreement, any other Credit Document or any other Secured Debt
Agreement a fiduciary relationship in respect of any Secured Creditor; and
nothing in this Agreement, any other Credit Document or any other Secured Debt
Agreement, expressed or implied, is intended to or shall be so construed as to
impose upon the Collateral Agent any obligations in respect of this Agreement or
any other Credit Document except as expressly set forth herein or therein.
(b) The Collateral Agent shall not be responsible for insuring the
Collateral hereunder or any collateral under the other Security Documents or for
the payment of taxes, charges or assessments or discharging of Liens upon the
Collateral hereunder or any collateral under the Security Documents or otherwise
as to the maintenance of the Collateral hereunder or any collateral under the
Security Documents.
<PAGE> 321
EXHIBIT H
Page 33
(c) The Collateral Agent shall not be required to ascertain or
inquire as to the performance by any Assignor of any of the covenants or
agreements contained in this Agreement, any other Credit Document or any other
Secured Debt Agreement.
(d) The Collateral Agent shall be under no obligation or duty to
take any action under this Agreement or any other Credit Document if taking such
action (i) would subject the Collateral Agent to a tax in any jurisdiction where
it is not then subject to a tax or (ii) would require the Collateral Agent to
qualify to do business in any jurisdiction where it is not then so qualified,
unless the Collateral Agent receives security or indemnity satisfactory to it
against such tax (or equivalent liability), or any liability resulting from such
qualification, in each case as results from the taking of such action under this
Agreement or any other Credit Document or (iii) would subject the Collateral
Agent to in personam jurisdiction in any locations where it is not then so
subject.
(e) Notwithstanding any other provision of this Agreement or any
other Credit Document, neither the Collateral Agent nor any of its officers,
directors, employees, affiliates or agents shall, in its individual capacity, be
personally liable for any action taken or omitted to be taken by it in
accordance with this Agreement or any other Credit Document except for its own
gross negligence or willful misconduct.
10.3. Lack of Reliance on the Collateral Agent. Independently and
without reliance upon the Collateral Agent, each Secured Creditor, to the extent
it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of each
Assignor in connection with the making and the continuance of the Obligations
and the taking or not taking of any action in connection therewith, and (ii) its
own appraisal of the creditworthiness of each Assignor, and the Collateral Agent
shall have no duty or responsibility, either initially or on a continuing basis,
to provide any Secured Creditor with any credit or other information with
respect thereto, whether coming into its possession before the extension of any
Obligations or the purchase of any Notes or at any time or times thereafter. The
Collateral Agent shall not be responsible in any manner whatsoever to any
Secured Creditor for the correctness of any recitals, statements, information,
representations or warranties in any Credit Document or in any document,
certificate or other writing delivered in connection therewith or for the
execution, effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of this Agreement or the other Credit
Documents or the security interests granted hereunder or thereunder or the
financial condition of any Assignor or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement or any other Credit Document, or the financial
condition of any Assignor, or the existence or possible existence of any Default
or Event
<PAGE> 322
EXHIBIT H
Page 34
of Default. The Collateral Agent makes no representations as to the value or
condition of the Collateral hereunder or the collateral under any other Security
Document or any part thereof, or as to the title of any Assignor thereto or as
to the security afforded by this Agreement or the other Security Documents.
10.4. Certain Rights of the Collateral Agent. (a) No Secured
Creditor shall have the right to cause the Collateral Agent to take any action
with respect to the Collateral hereunder or the collateral under any other
Security Document, with only the Required Secured Creditors having the right to
direct the Collateral Agent to take any such action. If the Collateral Agent
shall request instructions from the Required Secured Creditors, with respect to
any act or action (including failure to act) in connection with this Agreement
or any other Security Document, the Collateral Agent shall be entitled to
refrain from such act or taking such action unless and until it shall have
received instructions from the Required Secured Creditors and to the extent
requested, appropriate indemnification in respect of actions to be taken, and
the Collateral Agent shall not incur liability to any Person by reason of so
refraining. Without limiting the foregoing, no Secured Creditor shall have any
right of action whatsoever against the Collateral Agent as a result of the
Collateral Agent acting or refraining from acting hereunder in accordance with
the instructions of the Required Secured Creditors.
(b) The Collateral Agent shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement or any other Credit
Document at the request or direction of any of the Secured Creditors, unless
such Secured Creditors shall have offered to the Collateral Agent reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
10.5. Reliance. The Collateral Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
the proper Person or entity, and, with respect to all legal matters pertaining
to this Agreement or any other Credit Document and its duties hereunder or
thereunder, upon advice of counsel selected by it.
10.6. Indemnification. To the extent the Collateral Agent is not
reimbursed and indemnified by any Assignor under this Agreement or any other
Credit Document, the Secured Creditors will reimburse and indemnify the
Collateral Agent, in proportion to their respective outstanding principal
amounts (including, for this purpose, any unpaid Primary Obligations in respect
of Interest Rate Protection Agreements or Other Hedging Agreements, as
outstanding principal) of Obligations, for and against any and all liabilities,
<PAGE> 323
EXHIBIT H
Page 35
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Collateral Agent in performing its
duties hereunder or under any other Credit Document, or in any way relating to
or arising out of its actions as Collateral Agent in respect of this Agreement
or under any other Credit Document (including any amounts required to be
returned by the Collateral Agent in respect of Collateral hereunder or
collateral under any other Security Document) except for those resulting solely
from the Collateral Agent's own gross negligence or willful misconduct. The
indemnities set forth in this Article X shall survive the repayment of all
Obligations, with the respective indemnification at such time to be based upon
the outstanding principal amounts (determined as described above) of Obligations
at the time of the respective occurrence upon which the claim against the
Collateral Agent is based or, if same is not reasonably determinable, based upon
the outstanding principal amounts (determined as described above) of Obligations
as in effect immediately prior to the termination of this Agreement. The
indemnities set forth in this Article X are in addition to any indemnities
provided by the Banks to the Collateral Agent pursuant to the Credit Agreements,
with the effect being that the Banks shall be responsible for indemnifying the
Collateral Agent to the extent the Collateral Agent does not receive payments
pursuant to this Section 10.6 from the Secured Creditors (although in such
event, and upon the payment in full of all such amounts owing to the Collateral
Agent, the respective Banks who paid same shall be subrogated to the rights of
the Collateral Agent to receive payment from the Secured Creditors).
10.7. The Collateral Agent in its Individual Capacity. With respect
to its obligations as a lender under either Credit Agreement and any other
Credit Documents to which the Collateral Agent is a party, and to act as agent
under one or more of such Credit Documents, the Collateral Agent shall have the
rights and powers specified therein and herein for a "Bank", or an "Agent", as
the case may be, and may exercise the same rights and powers as though it were
not performing the duties specified herein; and the terms "Banks," "Required
Banks," "Required Secured Creditors, "holders of Notes," or any similar terms
shall, unless the context clearly otherwise indicates, include the Collateral
Agent in its individual capacity. The Collateral Agent may accept deposits from,
lend money to, and generally engage in any kind of banking, trust or other
business with any Assignor or any Affiliate or Subsidiary of any Assignor as if
it were not performing the duties specified herein or in the other Credit
Documents, and may accept fees and other consideration from any Assignor for
services in connection with the Credit Agreement, the other Credit Documents and
otherwise without having to account for the same to the Secured Creditors.
<PAGE> 324
EXHIBIT H
Page 36
10.8. Holders. The Collateral Agent may deem and treat the payee of
any Note as the owner thereof for all purposes hereof unless and until written
notice of the assignment, transfer or endorsement thereof, as the case may be,
shall have been filed with the Collateral Agent. Any request, authority or
consent of any person or entity who, at the time of making such request or
giving such authority or consent, is the holder of any Note, shall be final and
conclusive and binding on any subsequent holder, transferee, assignee or
endorsee, as the case may be, of such Note or of any Note or Notes issued in
exchange therefor.
10.9. Resignation by the Collateral Agent. (a) The Collateral Agent
may resign from the performance of all of its functions and duties under this
Agreement and the other Credit Documents at any time by giving 20 Business Days'
prior written notice to each Assignor and the Secured Creditors. Such
resignation shall take effect upon the appointment of a successor Collateral
Agent pursuant to clause (b) or (c) below.
(b) If a successor Collateral Agent shall not have been appointed
within said 20 Business Day period by the Required Secured Creditors, the
Collateral Agent, with the consent of each Assignor, which consent shall not be
unreasonably withheld, shall then appoint a successor Collateral Agent who shall
serve as Collateral Agent hereunder and under the other Credit Documents until
such time, if any, as the Required Secured Creditors appoint a successor
Collateral Agent as provided above. Notwithstanding the foregoing, the initial
Collateral Agent (in its capacity as such) may, without the consent of any
Assignor or any Secured Creditor (but upon at least 10 Business Days' prior
written notice to SCIS and the Secured Creditors), assign any or all of its
rights and obligations, as Collateral Agent under this Agreement or any other
Credit Document to J.P. Morgan Delaware.
(c) If no successor Collateral Agent has been appointed pursuant to
clause (b) above by the 25th Business Day after the date of such notice of
resignation was given by the Collateral Agent, the Required Secured Creditors
shall then appoint a successor Collateral Agent who shall serve as Collateral
Agent hereunder and under the other Credit Documents until such time, if any, as
the Required Secured Creditors appoint a successor Collateral Agent as provided
above.
10.10. Fees of Collateral Agent. Each Assignor (by its execution and
delivery hereof) hereby agrees that it shall pay to Morgan Guaranty Trust
Company of New York as the initial Collateral Agent, such fees as have been
separately agreed to in writing with Morgan Guaranty Trust Company of New York
for acting as Collateral Agent hereunder and under the other Security Documents.
In the event a successor Collateral
<PAGE> 325
EXHIBIT H
Page 37
Agent is at any time appointed pursuant to the preceding Section 10.9, each
Assignor hereby agrees to pay such successor Collateral Agent such fees for
acting as such as would customarily be charged by such Collateral Agent for
acting in such capacity in similar situations.
ARTICLE XI
MISCELLANEOUS
11.1. Notices. Except as otherwise specified herein, all notices and
communications hereunder shall be sent or delivered by mail, telegraph, telex,
telecopy, cable or overnight courier service and all such notices and
communications shall, when mailed, telegraphed, telexed, telecopied, or cabled
or sent by overnight courier, be effective when delivered to the telegraph
company, cable company or overnight courier, as the case may be, or sent by
telex or telecopier and when mailed shall be effective three Business Days
following deposit in the mail with proper postage, except that notices and
communications to the Collateral Agent shall not be effective until received by
the Collateral Agent. All notices and other communications shall be in writing
and addressed as follows:
(a) if to any Assignor, to the address and communications
information set forth opposite its signature below;
(b) if to the Collateral Agent, at the following address of, and the
communications information for, the Collateral Agent:
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260-0060
Attention: Laura Loffredo
Telephone No.: (212) 648-6793
Facsimile No.: (212) 648-5336
(c) if to any Bank Creditor (other than the Collateral Agent), at
such address and communications information as such Bank Creditor shall
have specified in the applicable Credit Agreement;
<PAGE> 326
EXHIBIT H
Page 38
(d) if to any Other Creditor, at such address and communications
information as such Other Creditor shall have specified in writing to each
Assignor and the Collateral Agent;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
11.2. Waiver; Amendment. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by each Assignor directly affected thereby and the
Collateral Agent (with the consent of the Required Secured Creditors); provided,
that any change, waiver, modification or variance affecting the rights and
benefits of a single Class of Secured Creditors (and not all Secured Creditors
in a like or similar manner) shall also require the written consent of the
Requisite Creditors of such Class of Secured Creditors. For the purpose of this
Agreement, the term "Class" shall mean each class of Secured Creditors, i.e.,
whether (x) the SCIS Bank Creditors as holders of the SCIS Credit Document
Obligations, (y) the Caterair Bank Creditors as holders of the Caterair Credit
Document Obligations or (z) the Other Creditors as the holders of the Other
Obligations. For the purpose of this Agreement, the term "Requisite Creditors"
of any Class shall mean each of (x) with respect to the SCIS Credit Document
Obligations, the Required Banks under, and as defined in, the SCIS Credit
Agreement, (y) with respect to the Caterair Credit Document Obligations, the
Required Banks under, and as defined in, the Caterair Credit Agreement and (z)
with respect to the Other Obligations, the holders of at least a majority of all
obligations outstanding from time to time under the Interest Rate Protection
Agreements or Other Hedging Agreements.
11.3. Obligations Absolute. The obligations of each Assignor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Assignor (it being
understood that the enforcement hereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar rights generally
affecting creditors' rights and by equitable principles (regardless of whether
enforcement is sought in equity or at law)); (b) any exercise or non-exercise,
or any waiver of, any right, remedy, power or privilege under or in respect of
this Agreement, any other Credit Document or any Interest Rate Protection
Agreement or Other Hedging Agreement; (c) any renewal, extension, amendment or
modification of or addition or supplement to or deletion from any Credit
Document or any Interest Rate Protection Agreement or Other Hedging Agreement or
any security for any of the Obligations; (d) any waiver, consent, extension,
indulgence or other action or inaction under or in respect of any such agreement
<PAGE> 327
EXHIBIT H
Page 39
or instrument including, without limitation, this Agreement; (e) any furnishing
of any additional security to the Collateral Agent or its assignee or any
acceptance thereof or any release of any security by the Collateral Agent or its
assignee; or (f) any limitation on any party's liability or obligations under
any such instrument or agreement or any invalidity or unenforceability, in whole
or in part, of any such instrument or agreement or any term thereof; whether or
not any Assignor shall have notice or knowledge of any of the foregoing.
11.4. Successors and Assigns. This Agreement shall be binding upon
each Assignor and its successors and assigns and shall inure to the benefit of
the Collateral Agent and each other Secured Creditor and their respective
successors and assigns; provided, that no Assignor may transfer or assign any or
all of its rights or obligations hereunder except in accordance with the
provisions of the Secured Debt Agreements. All agreements, statements,
representations and warranties made by each Assignor herein or in any
certificate or other instrument delivered by such Assignor or on its behalf
under this Agreement shall be considered to have been relied upon by the Secured
Creditors and shall survive the execution and delivery of this Agreement, the
other Credit Documents and the Interest Rate Protection Agreements or Other
Hedging Agreements regardless of any investigation made by the Secured Creditors
or on their behalf.
11.5. Headings Descriptive. The headings of the several sections of
this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.
11.6. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK. EACH OF THE PARTIES TO THIS AGREEMENT
HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
11.7. Assignor's Duties. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Collateral Agent be required or obligated in any
<PAGE> 328
EXHIBIT H
Page 40
manner to perform or fulfill any of the obligations of each Assignor under or
with respect to any Collateral.
11.8. Termination; Release. (a) On the Termination Date, but only
after giving effect to the payments to be made on such date, this Agreement
shall terminate (provided that all indemnities set forth herein including,
without limitation, in Section 8.1 hereof shall survive such termination) and
the Collateral Agent, at the request and expense of the respective Assignor,
will promptly execute and deliver to such Assignor proper instruments (including
Uniform Commercial Code termination statements on form UCC-3 (or the equivalent
form thereof)) acknowledging the satisfaction and termination of this Agreement,
and will duly assign, release, transfer and deliver to such Assignor (without
recourse and without any representation or warranty) all of the Collateral as
may be in the possession of the Collateral Agent and as has not theretofore been
sold or otherwise applied or released pursuant to this Agreement. As used in
this Agreement, "Termination Date" shall mean the date upon which the total
commitments under the Credit Agreements and all Interest Rate Protection
Agreements or Other Hedging Agreements have been terminated, no note under the
Credit Agreements is outstanding (and all loans thereunder have been repaid in
full), and all letters of credit issued under the SCIS Credit Agreement have
been terminated and all Obligations then owing have been paid in full.
(b) In the event that all or any part of the Collateral is sold,
conveyed or disposed of in connection with any form of asset disposition
permitted by the Credit Agreements or otherwise released, in whole or in part,
at the direction of the Required Secured Creditors and the proceeds of such
asset disposition or from such release are applied in accordance with, and to
the extent required by, the provisions of the Credit Agreements, such Collateral
will be sold or otherwise disposed of free and clear of the Liens created by
this Agreement and the Collateral Agent, at the request and expense of the
respective Assignor, will duly assign, release, transfer and deliver to such
Assignor (without recourse and without any representation or warranty) such of
the Collateral as is then being (or has been) so sold or released and has not
theretofore been released pursuant to this Agreement, it being understood and
agreed, however, that the Required Banks under, and as defined in, the SCIS
Credit Agreement may agree to release Collateral from the Liens created by the
Security Documents with an aggregate value of up to $1,000,000 in any fiscal
year of SCIS without the consent of the Caterair Bank Creditors.
(c) Notwithstanding anything contained in this Agreement to the
contrary, the Collateral Agent agrees (i) to fully release any or all of the
Collateral constituting Catering Assets (as defined in the American Airlines
Catering Agreement with Sky Chefs)
<PAGE> 329
EXHIBIT H
Page 41
to the extent (but only to the extent) subject to the option granted in Section
9 of the American Airlines Catering Agreement upon receipt by the Collateral
Agent from American Airlines of the purchase price in cash as specified in
Section 9 of such American Airlines Catering Agreement with respect to such
Catering Assets and (ii) to deliver to American Airlines at least 10 days prior
written notice prior to any foreclosure action or other exercise of remedies in
respect of the Catering Assets referred to in preceding clause (i) and deliver
to American Airlines the letter required by clause (i)(y) of the first sentence
of Section 11(f) of such American Airlines Catering Agreement.
(d) At any time that an Assignor desires that the Collateral Agent
take any action to acknowledge or give effect to any release of Collateral
pursuant to the foregoing Section 11.8(a), (b) or (c), as the case may be, such
Assignor shall deliver to the Collateral Agent a certificate signed by a
principal executive officer of such Assignor stating that the release of the
respective Collateral is permitted pursuant to such Section 11.8(a), (b) or (c),
as the case may be.
(e) The Collateral Agent shall have no liability whatsoever to any
other Secured Creditor as a result of any release of Collateral by it in
accordance with this Section 11.8.
11.9. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
11.10. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11.11. Additional Assignors. It is understood and agreed that any
Wholly-Owned Domestic Subsidiary of SCIS or Caterair Holdings that is required
to execute a counterpart of this Agreement after the date hereof pursuant to the
Credit Agreements shall automatically become an Assignor hereunder by executing
a counterpart hereof and delivering the same to the Collateral Agent.
* * *
<PAGE> 330
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
Addresses:
524 East Lamar Boulevard SC INTERNATIONAL
Arlington, Texas 76011 SERVICES, INC., as an
Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: Authorized Signatory
Taxpayer
I.D. No.: 75-2607219
6550 Rock Spring Drive CATERAIR INTERNATIONAL
Bethesda, Maryland 20817 CORPORATION, as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: Authorized Signatory
Taxpayer
I.D. No.: 52-1640561
524 East Lamar Boulevard SKY CHEFS, INC., as an
Arlington, Texas 76011 Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: Authorized Signatory
Taxpayer
I.D. No: 13-1318367
6550 Rock Spring Drive CATERAIR INTERNATIONAL,
Bethesda, Maryland 20817 INC. (II), as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: Authorized Signatory
Taxpayer
I.D. No. 75-2607218
<PAGE> 331
524 East Lamar Boulevard SKY CHEFS INTERNATIONAL
Arlington, Texas 76011 CORP., as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 13-3800220
300 Delaware Avenue, Suite 315 ARLINGTON SERVICES, INC.,
Wilmington, Delaware 19801-1622 as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 51-0344713
300 Delaware Avenue, Suite 315 ARLINGTON SERVICES
Wilmington, Delaware 19801-1622 HOLDING CORPORATION,
as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 58-1524154
300 Delaware Avenue, Suite 315 BETHESDA SERVICES, INC.,
Wilmington, Delaware 19801-1622 as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: Authorized Signatory
Taxpayer
I.D. No: 13-2740073
<PAGE> 332
300 Delaware Avenue, Suite 315 CATERAIR NEW ZEALAND
Wilmington, Delaware 19801-1622 LIMITED,
as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: Authorized Signatory
Taxpayer
I.D. No: 13-2740073
524 East Lamar Boulevard CATERAIR CONSULTING
Arlington, Texas 76011 SERVICES CORPORATION,
as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 52-0936585
524 East Lamar Boulevard JFK CATERERS, INC.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 52-1312557
524 East Lamar Boulevard CATERAIR ST. THOMAS
Arlington, Texas 76011 HOLDINGS CORPORATION,
as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 52-1805211
<PAGE> 333
524 East Lamar Boulevard WESTERN AIRE CHEF, INC.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 52-0974724
6550 Rock Spring Drive CATERAIR AIRPORT
Bethesda, Maryland 20817 PROPERTIES, INC.,
as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 52-1047952
524 East Lamar Boulevard SKY CHEFS ARGENTINE,
Arlington, Texas 76011 INC.,
as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Treasurer
Taxpayer
I.D. No: 52-1689276
524 East Lamar Boulevard CATERAIR INTERNATIONAL
Arlington, Texas 76011 TRANSITION CORPORATION,
as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 52-1947041
524 East Lamar Boulevard ONEX OHIO ACCEPTANCE
Arlington, Texas 76011 CORP., as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
<PAGE> 334
Taxpayer
I.D. No: 75-2137075
524 East Lamar Boulevard ONEX OHIO CREDIT CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 75-2137074
524 East Lamar Boulevard ONEX OHIO EQUITY CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 75-2184952
524 East Lamar Boulevard ONEX OHIO FINANCE CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 75-2228384
524 East Lamar Boulevard ONEX OHIO FINANCE CORP.
Arlington, Texas 76011 II, as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 75-2344670
<PAGE> 335
524 East Lamar Boulevard ONEX OHIO CAPITAL CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 75-2272627
524 East Lamar Boulevard ONEX OHIO FISCAL CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 75-2273325
524 East Lamar Boulevard ONEX OHIO FUNDS CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 75-2272625
524 East Lamar Boulevard ONEX OHIO CREDIT CORP.
Arlington, Texas 76011 II, as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 31-1024320
524 East Lamar Boulevard ONEX OHIO FUNDS CORP. II,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 31-1024320
<PAGE> 336
524 East Lamar Boulevard ONEX OHIO FISCAL CORP.
Arlington, Texas 76011 II, as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 31-1024320
524 East Lamar Boulevard ONEX OHIO EQUITY CORP.
Arlington, Texas 76011 II, as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 31-1024320
524 East Lamar Boulevard ONEX OHIO CAPITAL CORP.
Arlington, Texas 76011 II, as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 31-1024320
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Collateral Agent
By: /s/ Laura Loffredo
-----------------------
Title: Vice President
Taxpayer
I.D. No: 13-5123346
<PAGE> 337
ANNEX A
to
AMENDED AND
RESTATED
SECURITY
AGREEMENT
SCHEDULE OF CHIEF EXECUTIVE OFFICES
AND OTHER RECORD LOCATIONS
SC INTERNATIONAL SERVICES, INC.
524 East Lamar Blvd.
Arlington, Texas 76011
CATERAIR INTERNATIONAL CORPORATION
6550 Rock Spring Drive
Bethesda, Maryland 20817
SKY CHEFS, INC.
524 East Lamar Boulevard
Arlington, Texas 76011
CATERAIR INTERNATIONAL, INC. (II)
6550 Rock Spring Drive
Bethesda, Maryland 20817
SKY CHEFS INTERNATIONAL CORP.
524 East Lamar Blvd.
Arlington, Texas 76011
ARLINGTON SERVICES, INC.
300 Delaware Avenue, Suite 315
Wilmington, Delaware 19801-1622
ARLINGTON SERVICES HOLDING CORPORATION
300 Delaware Avenue, Suite 315
Wilmington, Delaware 19801-1622
BETHESDA SERVICES, INC.
300 Delaware Avenue, Suite 315
Wilmington, Delaware 19801-1622
<PAGE> 338
ANNEX A
to Security
Agreement
Page 2
CATERAIR NEW ZEALAND LIMITED
300 Delaware Avenue, Suite 315
Wilmington, Delaware 19801-1622
CATERAIR CONSULTING SERVICES CORPORATION
524 East Lamar Blvd.
Arlington, Texas 76011
JFK CATERERS, INC.
524 East Lamar Blvd.
Arlington, Texas 76011
CATERAIR ST. THOMAS HOLDINGS CORPORATION
524 East Lamar Blvd.
Arlington, Texas 76011
WESTERN AIRE CHEF, INC.
524 East Lamar Blvd.
Arlington, Texas 76011
CATERAIR AIRPORT PROPERTIES, INC.
6550 Rock Spring Drive
Bethesda, Maryland 20817
SKY CHEFS ARGENTINE, INC.
524 East Lamar Blvd.
Arlington, Texas 76011
CATERAIR INTERNATIONAL TRANSITION CORPORATION
524 East Lamar Blvd.
Arlington, Texas 76011
ONEX OHIO ACCEPTANCE CORPORATION
524 East Lamar Blvd.
Arlington, Texas 76011
<PAGE> 339
ANNEX A
to Security
Agreement
Page 3
ONEX OHIO CREDIT CORP.
524 East Lamar Blvd.
Arlington, Texas 76011
ONEX OHIO EQUITY CORP.
524 East Lamar Blvd.
Arlington, Texas 76011
ONEX OHIO FINANCE CORP.
524 East Lamar Blvd.
Arlington, Texas 76011
ONEX OHIO FINANCE CORP. II
524 East Lamar Blvd.
Arlington, Texas 76011
ONEX OHIO CAPITAL CORP.
524 East Lamar Blvd.
Arlington, Texas 76011
ONEX OHIO FISCAL CORP.
524 East Lamar Blvd.
Arlington, Texas 76011
ONEX OHIO FUNDS CORP.
524 East Lamar Blvd.
Arlington, Texas 76011
ONEX OHIO CREDIT CORP. II
524 East Lamar Blvd.
Arlington, Texas 76011
ONEX OHIO FUNDS CORP. II
524 East Lamar Blvd.
Arlington, Texas 76011
<PAGE> 340
ANNEX A
to Security
Agreement
Page 4
ONEX OHIO FISCAL CORP. II
524 East Lamar Blvd.
Arlington, Texas 76011
ONEX OHIO EQUITY CORP. II
524 East Lamar Blvd.
Arlington, Texas 76011
ONEX OHIO CAPITAL CORP. II
524 East Lamar Blvd.
Arlington, Texas 76011
<PAGE> 341
ANNEX B
to
AMENDED AND
RESTATED
SECURITY
AGREEMENT
SCHEDULE OF INVENTORY AND EQUIPMENT LOCATIONS
LOCATION OF PROPERTY/
COMPANY EQUIPMENT HELD
------- ---------------------
SC INTERNATIONAL SERVICES, INC. NONE
CATERAIR INTERNATIONAL CORPORATION SEE ATTACHED LIST FOR ENTRIES
ENTITLED "CATERAIR"
SKY CHEFS, INC. SEE ATTACHED LIST FOR ENTRIES,
ENTITLED "SKY CHEFS"
CATERAIR INTERNATIONAL, INC. (II) NONE
SKY CHEFS INTERNATIONAL CORP. NONE
ARLINGTON SERVICES, INC. NONE
ARLINGTON SERVICES HOLDING CORPORATION NONE
CATERAIR CONSULTING SERVICES CORPORATION NONE
JFK CATERERS, INC. NONE
CATERAIR ST. THOMAS HOLDINGS CORPORATION NONE
WESTERN AIRE CHEF, INC. NONE
CATERAIR AIRPORT PROPERTIES, INC. NONE
SKY CHEFS ARGENTINE, INC. ADDRESS IN ARGENTINA: TENIENTE
GENERAL MORILLAS S/N Y AUTOPISTA
AV. GVAL. RICCHIERI AEROPUERTO
EZEIZA P. 1804 PROVINCIA DE BUENOS
AIRES, ARGENTINA
BETHESDA SERVICES, INC. NONE
CATERAIR NEW ZEALAND LIMITED NONE
CATERAIR INTERNATIONAL TRANSITION NONE
CORPORATION
ONEX OHIO ACCEPTANCE CORPORATION NONE
ONEX OHIO CREDIT CORP. NONE
ONEX OHIO EQUITY CORP. NONE
ONEX OHIO FINANCE CORP. NONE
ONEX OHIO FINANCE CORP. II NONE
ONEX OHIO CAPITAL CORP. NONE
ONEX OHIO FISCAL CORP. NONE
ONEX OHIO FUNDS CORP. NONE
<PAGE> 342
ANNEX B
Page 2
ONEX OHIO CREDIT CORP. II NONE
ONEX OHIO FUNDS CORP. II NONE
ONEX OHIO FISCAL CORP. II NONE
ONEX OHIO EQUITY CORP. II NONE
ONEX OHIO CAPITAL CORP. II NONE
<PAGE> 343
ANNEX B
Page 3
SKY CHEFS, INC.
<TABLE>
<CAPTION>
Location Street Address Leased or Owned Type of Facility
- -------- -------------- --------------- ----------------
<S> <C> <C> <C>
Headquarters 524 East Lamar Blvd. Leased Corporate Offices
Arlington, TX 76011-3999
Austin 1924 E. 38 1/2 St. Leased Flight Kithchen
Austin, TX 78723
Austin 3851 Airport Blvd. Leased Office and
Suite 105 Storage Space
Austin, TX 78722
Boston Logan Int'l Airport Leased Flight Kitchen
30 Wellington Rd.
East Boston, MA 02128-2055
Chicago 511 Cargo Rd. Leased Flight Kitchen
O'Hare Int'l Airport
Chicago, IL 60666-0287
Cincinnati Air Cargo Building Leased, but no Former Flight
West Service Road longer occupied by Kitchen
Greater Cincinnati Airport Sky Chefs
Boone County, KY
Cleveland Sky Chefs United Kitchen Leased Flight Kitchen
Cleveland Hopkins Int'l Airport
Jackson Road
Cleveland, OH 44135
Cleveland Cleveland Hopkins Int'l Airport Leased Formerly a Flight
South Cargo Road Kitchen, but
Cleveland, OH 44135 closed and used
as a storage
facility now
Dallas/Fort Worth 2120 W. 33rd Street Leased Flight Kitchen
Int'l DFW Airport, TX 75261-9103
Dallas/Fort Worth 3000 S. 22nd Street Leased Flight Kitchen
Domestic DFW Airport, TX 75261-0012
</TABLE>
<PAGE> 344
ANNEX B
Page 4
<TABLE>
<CAPTION>
Location Address Leased or Owned Type of Facility
- -------- ------- --------------- ----------------
<S> <C> <C> <C>
Dallas/Fort Worth 1535 West 20th St. Leased, but not Former Flight
(DFN) DFW Airport, TX 75261 operated by Sky Kitchen
Chefs
Denver (New Airport) 26210 East 100th Street Lease under Flight Kitchen
Denver, CO 80249 negotiation
Detroit Building #534 Leased Flight Kitchen
Detroit Metro Airport
Detroit, MI 48242
El Paso 6501 Convair Leased Flight Kitchen
Suite G
El Paso, TX 79925
Fort Lauderdale 3260 S.W. 11th Avenue Leased Flight Kitchen
Unit A
Ft. Lauderdale, FL 33315
Honolulu 3129 Ualena Street Leased Flight Kitchen
Honolulu, HI 96819
Honolulu 2635 WaiWai Loop Subleased by Sky Warehouse
Honolulu, HI Chefs to American
Pacific Transport
Co., Ltd.
Los Angeles 7000 World Way West Leased Flight Kitchen
Los Angeles, CA 90045
Miami 3755 N.W. 21st Street Leased Flight Kitchen
Miami, FL 33142
Miami 3601 N.W. 22nd Street Leased Flight Kitchen
Miami, FL 33142
Milwaukee 5220 South 3rd Street Owned Flight Kitchen
Milwaukee, WI 53207
Newark Newark Int'l Airport Leased Flight Kitchen
Building #95
Brewster Road South
Newark, NJ 07114
</TABLE>
<PAGE> 345
ANNEX B
Page 5
<TABLE>
<CAPTION>
Location Address Leased or Owned Type of Facility
- -------- ------- --------------- ----------------
<S> <C> <C> <C>
Newark 560-590 Bercik Street Leased Warehouse Space
Elizabeth, NJ
Nashville 815 Hangar Lane Leased Flight Kitchen
Nashville, TN 37217
Nashville 1504 Vultee Blvd. Leased Formerly Flight
Nashville, TN 37217 Kitchen, but
closed and used
for storage now
New Orleans 200 Crofton Road Leased Flight Kitchen
Kenner, LA 70062
New York Onex Investment Corp. Leased Office
712 Fifth Avenue
New York, NY 10019
New York Building #122 Leased Flight Kitchen
JFK Int'l Airport
Jamaica, NY 11430-1683
New York American Airlines Terminal Leased Restaurant
Building #57 Facilities
JFK Int'l Airport
Jamaica, NY 11430-1683
New York 156-06 - 156-08 Rockaway Blvd. Leased Former Flight
Queens, NY Kitchen no
longer operated
by Sky Chefs
New York 182-20 150th Road Leased Warehouse Space
Jamaica, NY 11413
New York American Airlines Hangar #5 Leased Flight Kitchen
LaGuardia Airport
Flushing, NY 11371
Oklahoma City 4400 SW 36th Street Owned Flight Kitchen
Oklahoma City, OK 73119
</TABLE>
<PAGE> 346
ANNEX B
Page 6
<TABLE>
<CAPTION>
Location Address Leased or Owned Type of Facility
- -------- ------- --------------- ----------------
<S> <C> <C> <C>
Omaha 5303 Lockheed Ct. Leased Flight Kitchen
Eppley Field
Omaha, NE 68110
Phoenix 1235 S. 23rd St. Leased Flight Kitchen
Phoenix, AZ 85034
Portland Portland Int'l Airport Leased Flight Kitchen
7201 N.E. Alderwood Rd.
Portland, OR 97218-1080
Raleigh-Durham 2700 W. Terminal Blvd. Leased Flight Kitchen
Raleigh, NC 27623
Raleigh-Durham Terminal C Leased Restaurant and
RDU Int'l Airport Retail Facilities
Raleigh, NC 27623
San Diego 2415 Winship Lane Leased Flight Kitchen
San Diego, CA 92101
San Francisco 810 Malcolm Road Owned Flight Kitchen
Burlingame, CA 94010-1492
San Francisco 1755 Bay Shore Highway Owned Parking car
Burlingame, CA facility (leased to
Alamo Rent-A-
Car, Inc.)
Stewart Air Force 18 Governors Drive Leased Flight Kitchen
Base, Newburgh, NY Newburgh, NY 12550
Syracuse 300 Gateway Drive Leased Flight Kitchen
N. Syracuse, NY 13212 and Storage
Space
Tucson 2771 E. Airport Dr. Leased Flight Kitchen
Tucson, AZ 85706
Tucson TowerGrille Leased Restaurant
7061 South Plumber Facility
Tucson, AZ 85706
</TABLE>
<PAGE> 347
ANNEX B
Page 7
<TABLE>
<CAPTION>
Location Address Leased or Owned Type of Facility
- -------- ------- --------------- ----------------
<S> <C> <C> <C>
Tulsa Cargo Building Leased Flight Kitchen
Cargo Road
Tulsa, OK 74115
</TABLE>
<PAGE> 348
ANNEX B
Page 8
LSG/USA CORPORATION
<TABLE>
<CAPTION>
Location Address Leased or Owned Type of Facility
- -------- ------- --------------- ----------------
<S> <C> <C> <C>
Miami(1) 4101 N.W. 25th Street Leased Flight Kitchen
Miami, FL 33142
New York JFK Int'l. Airport Leased Flight Kitchen
Building 143
Jamaica, NY 11430
San Francisco(1) 370 Adrian Road Leased Flight Kitchen
Millbrae, CA 94030
</TABLE>
- --------
(1) Managed by Sky Chefs.
<PAGE> 349
ANNEX B
Page 9
LSG/SKY CHEFS
<TABLE>
<CAPTION>
Street
Location Address Leased, Owned Type of Facility
- -------- ------- or Managed ----------------
----------
<S> <C> <C> <C>
Sacramento Metropolitan Airport Leased Flight Kitchen
6671 Lindberg Drive
Sacramento, CA 95837
Reno 1085 Bible Way Leased Flight Kitchen
Reno, NV 89502
Dallas/Ft. Worth 2200 W. 33rd Leased Flight Kitchen
P.O. Box 610072
Dallas/Ft. Worth Airport
Dallas, TX 75261
Atlanta 1102 S. Central Avenue Leased Flight Kitchen
East Point, GA 30344
Houston 4420 Wright Bros. Road Leased Flight Kitchen
P.O. Box 60464
Houston, TX 77205
West Palm Beach Building S1169 Duncan Leased Flight Kitchen
Avenue
Palm Beach Int'l Airport
West Palm Beach, FL 33406
Seattle 18850 28th Avenue, South Leased Flight Kitchen
Seattle, WA 98188
Anchorage 3830 International Airport Leased Flight Kitchen
Road
Western Air Freight Building
Anchorage, AL 99519
Kansas City P.O. Box 20546 Leased Flight Kitchen
566 Brasilia Avenue
Kansas City, MI 64195
Orlando 8680 Bear Road Leased Flight Kitchen
Orlando, FL 32827
</TABLE>
<PAGE> 350
ANNEX B
Page 10
<TABLE>
<CAPTION>
Street
Location Address Leased, Owned Type of Facility
- -------- ------- or Managed ----------------
----------
<S> <C> <C> <C>
Washington, D.C. Washington National Airport Leased Flight Kitchen
Washington, DC 20001
Albuquerque Albuquerque International Leased Flight Kitchen
Airport
P.O. Box 9106
Albuquerque, NM 87119
Tampa 5401 W. Spruce Street Leased Flight Kitchen
Tampa, FL 33607
Rochester P.O. Box 24966 Leased Flight Kitchen
1200 Brooks Avenue
Rochester, NY 14624
Hartford Bradley International Airport Leased Flight Kitchen
Windsor Locks, CT 06096
Palm Springs 1251 Montalvo Way, Ste. B Leased Flight Kitchen
Palm Springs, CA 92262
New Orleans New Orleans International Leased Flight Kitchen
Airport
200 Crofton Road
Kenner, LA 7006
Miami 3500 N.W. 24th Street Leased Flight Kitchen
Miami, FL 33142
San Diego San Diego International Leased Flight Kitchen
Airport
2311 Airlane Road
San Diego, CA 92101
Las Vegas 625 Kitty Hawk Way Leased Flight Kitchen
Las Vegas, NV 89119
Charleston 6900 Midland Park Road Leased Flight Kitchen
Charleston Heights, SC
29418
Ft. Lauderdale 220 SW 34th Street Leased Flight Kitchen
Ft. Lauderdale, FL 33315
</TABLE>
<PAGE> 351
ANNEX B
Page 11
<TABLE>
<CAPTION>
Street
Location Address Leased, Owned Type of Facility
- -------- ------- or Managed ----------------
----------
<S> <C> <C> <C>
Minneapolis 3100 East 73rd Street Leased Flight Kitchen
Minneapolis, MN 55450
Portland 9009 N.E. Airport Way Leased Flight Kitchen
Portland International Airport
Portland, OR 97220
Detroit Building 505 Leased Flight Kitchen
Detroit Metropolitan Airport
Detroit, MI 48242
Washington, DC P.O. Box 17087 Leased Flight Kitchen
Washington, DC 20041
Dulles International
Airport
East Service Road
Chantilly, VA 22021
Ft. Myers 12420 Fuel Farm Road Leased Flight Kitchen
Ft. Myers, FL 33913
Phoenix 1451 S. 23rd Street Leased Flight Kitchen
Phoenix, AR 85034
Honolulu 110 Pohakulana Place Leased Flight Kitchen
Honolulu, HI 96819
</TABLE>
<PAGE> 352
ANNEX B
Page 12
CATERAIR
<TABLE>
<CAPTION>
Street
Location Address Leased, Owned Type of Facility
- -------- ------- or Managed ----------------
----------
<S> <C> <C> <C>
Headquarters 6550 Rock Spring Drive Leased Corporate Offices
Bethesda, MD 20817
Charleston 6900 Midland Park Road Owned Flight Kitchen
Charleston Heights, SC 29418
</TABLE>
<PAGE> 353
ANNEX B
Page 13
CATERAIR INTERNATIONAL, INC. (II)
<TABLE>
<CAPTION>
Location Address Leased or Owned Type of Facility
- -------- ------- --------------- ----------------
<S> <C> <C> <C>
Austin 9101 Wallstreet Leased Flight Kitchen
Bldg. C, Ste. 420
Austin, Texas 78754
Baltimore Baltimore/Washington Int'l Leased Flight Kitchen
Airport
776 Elkridge Landing Road
Baltimore, Maryland 21240
Boston #1 Wood Island Park Leased Flight Kitchen
Logan International Airport
Boston, Massachusetts 02128
Los Angeles 6901 W. Imperial Highway Leased Flight Kitchen
Los Angeles, California 90045
New York/ JFK International Airport Leased Flight Kitchen
JFK Building 139
Jamaica, New York 11430
New York/ 147-35 Farmers Boulevard Leased Flight Kitchen
JFK Jamaica, New York 11434
New York/ 45-10 19th Avenue Leased Flight Kitchen
La Guardia Astoria, New York 11434
Oakland Oakland International Airport Leased Flight Kitchen
Neil Armstrong Way
Building M-111
P.O. Box 14088
Oakland, California 94614
Ontario 1902 East Avion Street Leased Flight Kitchen
Ontario, California 91761
Philadelphia 8401 Escort Street Leased Flight Kitchen
Philadelphia, Pennsylvania 19153
</TABLE>
<PAGE> 354
ANNEX B
Page 14
<TABLE>
<CAPTION>
Location Address Leased or Owned Type of Facility
- -------- ------- --------------- ----------------
<S> <C> <C> <C>
Salt Lake City AMF Box 22104 Leased Flight Kitchen
550 North Cargo Road
Salt Lake International Airport
Salt Lake City, Utah 84122
San Francisco 50 Adrian Court Leased Flight Kitchen
Burlingame, California 94010
San Jose 385 Commercial Street Leased Flight Kitchen
San Jose, California 95212
Santa Ana 2990-B Airway Avenue Leased Flight Kitchen
Costa Mesa, California 92626
</TABLE>
<PAGE> 355
ANNEX C
to
AMENDED AND
RESTATED
SECURITY
AGREEMENT
LIST OF TRADE AND FICTITIOUS NAMES
SC INTERNATIONAL SERVICES, INC. NONE
CATERAIR INTERNATIONAL CORPORATION Marriott In-Flight Services
Fort Lauderdale Catering Company
[Caterair International Europe (used
by Caterair France, S.A.)]
SKY CHEFS, INC. LSG/Sky Chefs
LSG Lufthansa Service/Sky Chefs
Servcater (in Brazil)
Cateringpor (in Portugal)
CATERAIR INTERNATIONAL, INC. (II) NONE
SKY CHEFS INTERNATIONAL CORP. NONE
ARLINGTON SERVICES, INC. NONE
ARLINGTON SERVICES HOLDING CORPORATION NONE
BETHESDA SERVICES, INC. NONE
CATERAIR NEW ZEALAND LIMITED NONE
CATERAIR CONSULTING SERVICES CORPORATION NONE
JFK CATERERS, INC. NONE
CATERAIR ST. THOMAS HOLDINGS CORPORATION NONE
WESTERN AIRE CHEF, INC. NONE
CATERAIR AIRPORT PROPERTIES, INC. NONE
SKY CHEFS ARGENTINE, INC. NONE
CATERAIR INTERNATIONAL TRANSITION NONE
CORPORATION
ONEX OHIO ACCEPTANCE CORPORATION NONE
ONEX OHIO CREDIT CORP. NONE
ONEX OHIO EQUITY CORP. NONE
<PAGE> 356
ANNEX C
Page 2
ONEX OHIO FINANCE CORP. NONE
ONEX OHIO FINANCE CORP. II NONE
ONEX OHIO CAPITAL CORP. NONE
ONEX OHIO FISCAL CORP. NONE
ONEX OHIO FUNDS CORP. NONE
ONEX OHIO CREDIT CORP. II NONE
ONEX OHIO FUNDS CORP. II NONE
ONEX OHIO FISCAL CORP. II NONE
ONEX OHIO EQUITY CORP. II NONE
ONEX OHIO CAPITAL CORP. II NONE
<PAGE> 357
ANNEX D
to
AMENDED AND
RESTATED
SECURITY
AGREEMENT
LIST OF MARKS
SKY CHEFS, INC.
NONE
SC INTERNATIONAL SERVICES, INC.
NONE
CATERAIR HOLDINGS CORPORATION
NONE
CATERAIR INTERNATIONAL CORPORATION
NONE
CATERAIR INTERNATIONAL, INC. (II)
NONE
SKY CHEFS INTERNATIONAL CORP.
NONE
ARLINGTON SERVICES HOLDING CORPORATION
NONE
<PAGE> 358
ANNEX D
Page 2
ARLINGTON SERVICES, INC.
Trademark Registration Number Registration Date
--------- ------------------- -----------------
SKYCHEFS 1,081,378 1/3/78
The "Spork" 1,081,379 1/3/78
SKYCHEFS 1,081,380 1/3/78
BETHESDA SERVICES, INC.
Caterair 1,639,399 3/26/91
Caterair International 1,643,177 4/30/91
stylized aircraft graphic 1,666,254 11/26/91
CATERAIR NEW ZEALAND LIMITED
NONE
CATERAIR CONSULTING SERVICES CORPORATION
NONE
JFK CATERERS, INC.
NONE
CATERAIR ST. THOMAS HOLDINGS CORPORATION
NONE
WESTERN AIRE CHEF, INC.
NONE
<PAGE> 359
ANNEX D
Page 3
CATERAIR AIRPORT PROPERTIES, INC.
NONE
SKY CHEFS ARGENTINE, INC.
NONE
CATERAIR INTERNATIONAL TRANSITION CORPORATION
NONE
ONEX OHIO ACCEPTANCE CORPORATION
NONE
ONEX OHIO CREDIT CORP.
NONE
ONEX OHIO EQUITY CORP.
NONE
ONEX OHIO FINANCE CORP.
NONE
ONEX OHIO FINANCE CORP. II
NONE
ONEX OHIO CAPITAL CORP.
NONE
ONEX OHIO FISCAL CORP.
NONE
<PAGE> 360
ANNEX D
Page 4
ONEX OHIO FUNDS CORP.
NONE
ONEX OHIO CREDIT CORP. II
NONE
ONEX OHIO FUNDS CORP. II
NONE
ONEX OHIO FISCAL CORP. II
NONE
ONEX OHIO EQUITY CORP. II
NONE
ONEX OHIO CAPITAL CORP. II
NONE
<PAGE> 361
ANNEX E
to
AMENDED AND
RESTATED
SECURITY
AGREEMENT
LIST OF PATENTS AND APPLICATIONS
SC INTERNATIONAL SERVICES, INC. NONE
SKY CHEFS, INC. NONE
CATERAIR INTERNATIONAL CORPORATION NONE
CATERAIR INTERNATIONAL, INC. (II) NONE
SKY CHEFS INTERNATIONAL CORP. NONE
ARLINGTON SERVICES, INC. NONE
ARLINGTON SERVICES HOLDING CORPORATION NONE
BETHESDA SERVICES, INC. NONE
CATERAIR NEW ZEALAND LIMITED NONE
CATERAIR CONSULTING SERVICES CORPORATION NONE
JFK CATERERS, INC. NONE
CATERAIR ST. THOMAS HOLDINGS CORPORATION NONE
WESTERN AIRE CHEF, INC. NONE
CATERAIR AIRPORT PROPERTIES, INC. NONE
SKY CHEFS ARGENTINE, INC. NONE
CATERAIR INTERNATIONAL TRANSITION NONE
CORPORATION
ONEX OHIO ACCEPTANCE CORPORATION NONE
ONEX OHIO CREDIT CORP. NONE
ONEX OHIO EQUITY CORP. NONE
<PAGE> 362
ANNEX E
Page 2
ONEX OHIO FINANCE CORP. NONE
ONEX OHIO FINANCE CORP. II NONE
ONEX OHIO CAPITAL CORP. NONE
ONEX OHIO FISCAL CORP. NONE
ONEX OHIO FUNDS CORP. NONE
ONEX OHIO CREDIT CORP. II NONE
ONEX OHIO FUNDS CORP. II NONE
ONEX OHIO FISCAL CORP. II NONE
ONEX OHIO EQUITY CORP. II NONE
ONEX OHIO CAPITAL CORP. II NONE
<PAGE> 363
ANNEX F
to
AMENDED AND
RESTATED
SECURITY
AGREEMENT
LIST OF COPYRIGHTS AND APPLICATIONS
SC INTERNATIONAL SERVICES, INC.
NONE
SKY CHEFS, INC.
Copyright Registration Number Registration Date
--------- ------------------- -----------------
Fire House 5 - Model GP 42976 6/18/64
Fire House 5 - Design GP 44210 6/11/64
CATERAIR INTERNATIONAL CORPORATION
NONE
CATERAIR INTERNATIONAL, INC. (II)
NONE
SKY CHEFS INTERNATIONAL CORP.
NONE
ARLINGTON SERVICES, INC.
NONE
ARLINGTON SERVICES HOLDING CORPORATION
NONE
<PAGE> 364
ANNEX F
Page 2
BETHESDA SERVICES, INC.
NONE
CATERAIR NEW ZEALAND LIMITED
NONE
CATERAIR CONSULTING SERVICES CORPORATION
NONE
JFK CATERERS, INC.
NONE
CATERAIR ST. THOMAS HOLDINGS CORPORATION
NONE
WESTERN AIRE CHEF, INC.
NONE
CATERAIR AIRPORT PROPERTIES, INC.
NONE
SKY CHEFS ARGENTINE, INC.
NONE
CATERAIR INTERNATIONAL TRANSITION CORPORATION
NONE
ONEX OHIO ACCEPTANCE CORPORATION
NONE
<PAGE> 365
ANNEX F
Page 3
ONEX OHIO CREDIT CORP.
NONE
ONEX OHIO EQUITY CORP.
NONE
ONEX OHIO FINANCE CORP.
NONE
ONEX OHIO FINANCE CORP. II
NONE
ONEX OHIO CAPITAL CORP.
NONE
ONEX OHIO FISCAL CORP.
NONE
ONEX OHIO FUNDS CORP.
NONE
ONEX OHIO CREDIT CORP. II
NONE
ONEX OHIO FUNDS CORP. II
NONE
ONEX OHIO FISCAL CORP. II
NONE
<PAGE> 366
ANNEX F
Page 4
ONEX OHIO EQUITY CORP. II
NONE
ONEX OHIO CAPITAL CORP. II
NONE
<PAGE> 367
ANNEX G
to
AMENDED AND
RESTATED
SECURITY
AGREEMENT
ASSIGNMENT OF SECURITY INTEREST
IN UNITED STATES TRADEMARKS AND PATENTS
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which are hereby acknowledged, [Name of Grantor], a __________ corporation (the
"Grantor") with principal offices at __________________________, hereby grants
to Morgan Guaranty Trust Company of New York as Collateral Agent, with principal
offices at 60 Wall Street, New York, New York 10260-0060 (the "Grantee"), a
security interest in (i) all of the Grantor's right, title and interest in and
to the United States trademarks, trademark registrations and trademark
applications (the "Marks") set forth on Schedule A attached hereto, (ii) all of
the Grantor's rights, title and interest in and to the United States patents
(the "Patents") set forth on Schedule B attached, in each case together with
(iii) all Proceeds (as such term is defined in the Security Agreement referred
to below) and products of the Marks and Patents, (iv) the goodwill of the
businesses with which the Marks are associated and (v) all causes of action
arising prior to or after the date hereof for infringement of any of the Marks
and Patents or unfair competition regarding the same.
THIS ASSIGNMENT is made to secure the satisfactory performance and
payment of all the Obligations of the Grantor, as such term is defined in the
Security Agreement among the Grantor, the other assignors from time to time
party thereto and the Grantee, dated as of September 29, 1995 and amended and
restated as of August 28, 1997 (as amended from time to time, the "Security
Agreement"). Upon the occurrence of the
<PAGE> 368
ANNEX G
Page 2
Termination Date (as defined in the Security Agreement), the Grantee shall, upon
such satisfaction, execute, acknowledge, and deliver to the Grantor an
instrument in writing releasing the security interest in the Marks and Patents
acquired under this Assignment.
This Assignment has been granted in conjunction with the security
interest granted to the Grantee under the Security Agreement. The rights and
remedies of the Grantee with respect to the security interest granted herein are
without prejudice to, and are in addition to those set forth in the Security
Agreement, all terms and provisions of which are incorporated herein by
reference. In the event that any provisions of this Assignment are deemed to
conflict with the Security Agreement, the provisions of the Security Agreement
shall govern.
IN WITNESS WHEREOF, the undersigned have executed this Assignment as
of the ____ day of _________, ____.
[NAME OF GRANTOR], as Grantor
By
-----------------------------
Title:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Collateral Agent, Grantee
By
-----------------------------
Title:
<PAGE> 369
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of _________, ____, before me personally came
________ _________________ who, being by me duly sworn, did state as follows:
that [s]he is _______________ of [Name of Grantor], that [s]he is authorized to
execute the foregoing Assignment on behalf of said corporation and that [s]he
did so by authority of the Board of Directors of said corporation.
-------------------------
Notary Public
<PAGE> 370
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of _________, ____, before me personally came
________ _____________________ who, being by me duly sworn, did state as
follows: that [s]he is __________________ of Morgan Guaranty Trust Company of
New York, that he is authorized to execute the foregoing Assignment on behalf of
said corporation and that he did so by authority of the Board of Directors of
said corporation.
----------------------------
Notary Public
<PAGE> 371
SCHEDULE A
MARK REG. NO. REG. DATE
- ---- -------- ---------
<PAGE> 372
SCHEDULE B
PATENT PATENT NO. ISSUE DATE
- ------ ---------- ----------
<PAGE> 373
ANNEX H
to
AMENDED AND
RESTATED
SECURITY
AGREEMENT
ASSIGNMENT OF SECURITY INTEREST
IN UNITED STATES COPYRIGHTS
WHEREAS, [Name of Assignor], a _______________ corporation (the
"Assignor"), having its chief executive office at
______________________________, _____________________, is the owner of all
right, title and interest in and to the United States copyrights and associated
United States copyright registrations and applications for registration set
forth in Schedule A attached hereto;
WHEREAS, MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Collateral
Agent, having its principal offices at 60 Wall Street, New York, New York
10260-0060 (the "Assignee"), desires to acquire a security interest in said
copyrights and copyright registrations and applications therefor; and
WHEREAS, the Assignor is willing to assign to the Assignee, and to
grant to the Assignee, a security interest in and lien upon the copyrights and
copyright registrations and applications therefor described above.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and subject to the terms and conditions of the
Security Agreement, dated as of September 29, 1995 amended and restated as of
August 28, 1997, made by the Assignor, the other assignors from time to time
party thereto and the Assignee (as amended from time to time, the "Security
Agreement"), the Assignor hereby assigns to the Assignee, and grants to the
Assignee, a security interest in the copyrights and copyright registrations and
applications therefor set forth in Schedule A attached hereto.
This Assignment has been granted in conjunction with the security
interest granted to the Assignee under the Security Agreement. The rights and
remedies of the Assignee with respect to the security interest granted herein
are without prejudice to, and are in addition to those set forth in the Security
Agreement, all terms and provisions of which are incorporated herein by
reference. In the event that any provisions of this
<PAGE> 374
ANNEX H
Page 2
Assignment are deemed to conflict with the Security Agreement, the provisions of
the Security Agreement shall govern.
Executed at New York, New York, the __ day of ____________, ____.
[NAME OF ASSIGNOR], as Assignor
By
-----------------------------
Title:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Collateral Agent, Assignee
By
-----------------------------
Title:
<PAGE> 375
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this __ day of ________, ____ before me personally came
_______________, who being duly sworn, did depose and say that [s]he is
___________________ of [Name of Assignor], that [s]he is authorized to execute
the foregoing Assignment on behalf of said corporation and that [s]he did so by
authority of the Board of Directors of said corporation.
-------------------------
Notary Public
<PAGE> 376
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this __ day of ________, ____ before me personally came
_______________, who being duly sworn, did depose and say that [s]he is
___________________ of Morgan Guaranty Trust Company of New York that [s]he is
authorized to execute the foregoing Assignment on behalf of said corporation and
that [s]he did so by authority of the Board of Directors of said corporation.
-------------------------
Notary Public
<PAGE> 377
SCHEDULE A
U.S. COPYRIGHTS
REGISTRATION PUBLICATION
NUMBERS DATE COPYRIGHT TITLE
- ------------ ----------- ---------------
<PAGE> 378
ANNEX I
to
SECURITY
AGREEMENT
[Conformed as Executed]
LOUISIANA ADDENDUM TO SECURITY AGREEMENT
THIS LOUISIANA ADDENDUM (the "Addendum") is made and entered into as of
the 28th day of August, 1997, among each of the undersigned, with each of
the undersigned having the taxpayer identification number set out in its
signature block below (each an "Assignor" and, together with any other entity
that becomes a party hereto pursuant to Section 11.11 of the Security Agreement
(as hereinafter defined), the "Assignors"), and Morgan Guaranty Trust Company of
New York, having a taxpayer identification number of 13-5123346, as the
Collateral Agent (the "Collateral Agent") for the benefit of the Secured
Creditors (as defined in the Security Agreement).
1. This Addendum supplements the Security Agreement dated as of September
29, 1995 and amended and restated as of August 28, 1997 by and among the
Assignors and the Collateral Agent for the benefit of the Secured Creditors (the
"Security Agreement"). This Addendum shall apply to each Assignor's Collateral
(as defined in the Security Agreement) and all proceeds thereof at all times
during which such Collateral or the proceeds thereof are located in Louisiana or
are otherwise subject to the application of Louisiana law in any respect (the
term "Louisiana Collateral" as used herein shall refer to all portions of the
Collateral and the proceeds thereof that are at any time located in the state of
Louisiana or are otherwise subject to Louisiana law at all times during which
such portions or proceeds thereof are located in Louisiana or are otherwise
subject to the application of Louisiana law).
2. The parties hereto recognize and agree that the security interest
granted by each Assignor to the Collateral Agent in the Louisiana Collateral
shall be subject to the provisions of Chapter 9 of the Louisiana Commercial Laws
(La. R.S. ss.ss. 10:9-101, et seq.) and all other provisions of Louisiana law.
3. Contemporaneously with the execution of this Addendum, each Assignor
has completed and signed one or more appropriate Louisiana UCC-1 financing
statements with regard to the Louisiana Collateral and the proceeds thereof.
Each Assignor authorizes the Collateral Agent, at the Assignors' expense, to
file multiple originals, or photocopies, carbon copies or facsimile copies of
such Louisiana UCC-1 financing statements with the
<PAGE> 379
ANNEX I
Page 2
appropriate filing officer or officers in the State of Louisiana, pursuant to
the provisions of Chapter 9 of the Louisiana Commercial Laws (La. R.S. ss.ss.
10:9-101, et seq.).
4. Each Assignor hereby represents and warrants to the Collateral Agent
that their respective taxpayer identification numbers are correctly set out in
that Assignor's signature block in this Addendum. Each Assignor shall give the
Collateral Agent thirty (30) days notice prior to any change in each Assignor's
taxpayer identification number. In the event of any change in any Assignor's
taxpayer identification number, that Assignor will execute and file any new
financing statements or any other documents that are necessary or desirable to
preserve and continue the Collateral Agent's security interest in the Louisiana
Collateral under the Security Agreement and this Addendum within thirty (30)
days after such change.
5. Upon the occurrence of any Event of Default (as defined in the Security
Agreement), the Collateral Agent shall have the following rights and remedies
with respect to the Louisiana Collateral, which rights and remedies are in
addition to and are not in lieu or limitation of any other rights and remedies
that may be provided in the Security Agreement, under Chapter 9 of the Louisiana
Commercial Laws (La. R.S. ss.ss. 10:9-101, et seq.), under the Uniform
Commercial Code of any state other than Louisiana, or at law or in equity
generally:
A. The Collateral Agent may cause the Louisiana Collateral, or any
part or parts thereof, to be immediately seized wherever found, and sold,
whether in term of court or in vacation, under ordinary or executory process, in
accordance with applicable Louisiana law, to the highest bidder for cash, with
or without appraisement, without the necessity of making additional demand, or
of notifying any Assignor, or placing any Assignor in default.
B. For purposes of foreclosure under Louisiana executory process
procedures, each Assignor confesses judgment and acknowledges to be indebted
unto and in favor of the Collateral Agent up to the full amount of each
Assignor's Obligations, in principal, interest, costs, expenses, attorneys' fees
and other fees and charges. To the extent permitted under applicable Louisiana
law, each Assignor additionally waives: (a) the benefit of appraisal as provided
in Articles 2332, 2336, 2723 and 2724 of the Louisiana Code of Civil Procedure
and all other laws with regard to appraisal upon judicial sale; (b) the demand
and three (3) days' delay as provided under Articles 2639 and 2721 of the
Louisiana Code of Civil Procedure; (c) the Notice of Seizure as provided under
Articles 2293 and 2721 of the Louisiana Code of Civil Procedure; (d) the three
(3) days' delay provided under Articles 2331 and 2722 of the Louisiana Code of
Civil Procedure; and (e) all other benefits provided under Articles 2331, 2722
and 2723 of the Louisiana Code of Civil Procedure and all other Articles not
specifically mentioned above.
<PAGE> 380
ANNEX I
Page 3
C. Should any of the Louisiana Collateral be seized as an incident
to an action for the recognition or enforcement of the Obligations or the
Security Agreement and this Addendum, by executory process, sequestration,
attachment, writ of fieri facias or otherwise, each Assignor agrees that the
court issuing any such order shall, if requested by the Collateral Agent,
appoint the Collateral Agent or any person or entity named by the Collateral
Agent at the time such seizure is requested, or at any time thereafter, as
keeper of the Louisiana Collateral as provided under La. R.S. ss.ss. 9:5136, et
seq. Each Assignor agrees to pay the reasonable fees of such keeper, which are
hereby fixed at $50.00 per hour per location, which compensation to the keeper
shall also be a part of the Obligation under the Security Agreement and this
Addendum.
D. Should it become necessary for the Collateral Agent to foreclose
against the Louisiana Collateral, all declarations of fact that are made under
an authentic act before a Notary Public in the presence of two witnesses, by a
person declaring such facts to lie within his or her knowledge, shall constitute
authentic evidence for purposes of executory process and also for purposes of
La. R.S. ss. 9:3509.1, La. R.S. ss. 9:3504(D)(6) and La. R.S. ss. 10:9-508, as
applicable.
6. ANYTHING TO THE CONTRARY CONTAINED IN THE SECURITY AGREEMENT
NOTWITHSTANDING, THE SECURITY INTERESTS IN THE LOUISIANA COLLATERAL GRANTED IN
THE SECURITY AGREEMENT, AND IN THIS ADDENDUM, AND THE REMEDIES OF THE SECURED
CREDITORS IN THE COURTS SITTING IN AND FOR THE STATE OF LOUISIANA WITH RESPECT
TO THE LOUISIANA COLLATERAL SHALL BE GOVERNED BY LOUISIANA LAW, WITH NEW YORK
LAW GOVERNING THE PROVISIONS OF THE SECURITY AGREEMENT, THE APPLICATION OF THE
SECURITY AGREEMENT TO THE COLLATERAL AND THE PROCEEDS THEREOF, AND ALL RIGHTS
AND OBLIGATIONS OF THE PARTIES THEREUNDER IN ALL OTHER RESPECTS. EACH OF THE
PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
7. This Addendum shall form a part of the Security Agreement for all
purposes, and, except as supplemented hereby, the terms of the Security
Agreement are ratified and shall remain in full force and effect. All
capitalized terms used herein and not otherwise defined will have the meanings
assigned to them in the Security Agreement.
<PAGE> 381
IN WITNESS WHEREOF, the parties to the Security Agreement and this
Addendum have caused this Addendum to be executed by their duly authorized
officers as of the date first above written.
524 East Lamar Boulevard SC INTERNATIONAL SERVICES, INC.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: Authorized Signatory
6550 Rock Spring Drive CATERAIR INTERNATIONAL
Bethesda, Maryland 20817 CORPORATION, as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: Authorized Signatory
524 East Lamar Boulevard SKY CHEFS, INC., as an Assignor
Arlington, Texas 76011
By: /s/ Thomas J. Lee
------------------------------
Title: Authorized Signatory
6550 Rock Spring Drive CATERAIR INTERNATIONAL,
Bethesda, Maryland 20817 INC. (II), as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: Authorized Signatory
524 East Lamar Boulevard SKY CHEFS INTERNATIONAL
Arlington, Texas 76011 CORP., as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
<PAGE> 382
300 Delaware Avenue, Suite 315 ARLINGTON SERVICES, INC.,
Wilmington, Delaware 19801-1622 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
300 Delaware Avenue, Suite 315 ARLINGTON SERVICES HOLDING
Wilmington, Delaware 19801-1622 CORPORATION, as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
300 Delaware Avenue, Suite 315 BETHESDA SERVICES, INC.,
Wilmington, Delaware 19801-1622 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: Authorized Signatory
300 Delaware Avenue, Suite 315 CATERAIR NEW ZEALAND
Wilmington, Delaware 19801-1622 LIMITED, as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: Authorized Signatory
524 East Lamar Boulevard CATERAIR CONSULTING SERVICES
Arlington, Texas 76011 CORPORATION, as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
<PAGE> 383
524 East Lamar Boulevard JFK CATERERS, INC.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard CATERAIR ST. THOMAS
Arlington, Texas 76011 HOLDINGS CORPORATION,
as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard WESTERN AIRE CHEF, INC.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
6550 Rock Spring Drive CATERAIR AIRPORT PROPERTIES,
Bethesda, Maryland 20817 INC., as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
6550 Rock Spring Drive SKY CHEFS ARGENTINE,
Bethesda, Maryland 20817 INC., as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
<PAGE> 384
524 East Lamar Boulevard CATERAIR INTERNATIONAL
Arlington, Texas 76011 TRANSITION CORPORATION,
as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: Authorized Signatory
524 East Lamar Boulevard ONEX OHIO ACCEPTANCE
Arlington, Texas 76011 CORP., as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard ONEX OHIO CREDIT CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard ONEX OHIO EQUITY CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard ONEX OHIO FINANCE CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
<PAGE> 385
524 East Lamar Boulevard ONEX OHIO FINANCE CORP. II,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard ONEX OHIO CAPITAL CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard ONEX OHIO FISCAL CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard ONEX OHIO FUNDS CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard ONEX OHIO CREDIT CORP. II,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
<PAGE> 386
524 East Lamar Boulevard ONEX OHIO FUNDS CORP. II,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard ONEX OHIO FISCAL CORP.
Arlington, Texas 76011 II, as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard ONEX OHIO EQUITY CORP.
Arlington, Texas 76011 II, as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard ONEX OHIO CAPITAL CORP.
Arlington, Texas 76011 II, as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
in each case, with a copy to:
SC International Services, Inc.
524 East Lamar Boulevard
Arlington, Texas 76011
Attention: Patrick Tolbert
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Collateral Agent
By: /s/ Laura Loffredo
------------------------------
Title: Vice President
<PAGE> 387
EXHIBIT I-1
AMENDED AND RESTATED SUBSIDIARIES GUARANTY
AMENDED AND RESTATED GUARANTY, dated as of September 29, 1995 and
amended and restated as of August 28, 1997 (as amended, modified or supplemented
from time to time, this "Guaranty"), made by each of the undersigned guarantors
(each a "Guarantor," and together with any other entity that becomes a party
hereto pursuant to Section 24 hereof, the "Guarantors"). Except as otherwise
defined herein, capitalized terms used herein and defined in the SCIS Credit
Agreement (as defined below) or in the Caterair Credit Agreement (as defined
below), as the case may be, shall be used herein as therein defined.
W I T N E S S E T H:
WHEREAS, Onex Food Services, Inc. ("OFSI"), SC International Services,
Inc. ("SCIS"), Caterair Holdings Corporation ("Caterair Holdings"), Caterair
International Corporation ("Caterair", and together with SCIS, the "Borrowers"),
various lenders from time to time party thereto (the "SCIS Banks"), Bankers
Trust Company and J.P. Morgan Securities Inc., as Co-Arrangers (the "SCIS
Co-Arrangers"), Bankers Trust Company, as Syndication Agent, The Bank of New
York, as Co-Agent, and Morgan Guaranty Trust Company of New York, as
Administrative Agent (together with any successor administrative agent, the
"SCIS Administrative Agent"), have entered into a Credit Agreement, dated as of
September 29, 1995 and amended and restated as of August 28, 1997, providing for
the making of loans to SCIS and the issuance of, and participation in, letters
of credit for the account of SCIS, as contemplated therein (as used herein, the
term "SCIS Credit Agreement" means the Credit Agreement described above in this
paragraph, as the same may be amended, modified, extended, renewed, replaced or
supplemented from time to time, and including any agreement extending the
maturity of, or restructuring all or any portion of the Indebtedness under such
agreement or any successor agreement) (the SCIS Banks, the SCIS Co-Arrangers and
the SCIS Administrative Agent are herein called the "SCIS Bank Creditors");
WHEREAS, SCIS, Caterair, various lenders from time to time party
thereto (the "Caterair Banks", and together with the SCIS Banks, the "Banks"),
Bankers Trust Company and J.P. Morgan Securities Inc., as Co-Arrangers (the
"Caterair Co-Arrangers", and together with the SCIS Co-Arrangers, the
"Co-Arrangers"), Bankers Trust Company, as Syndication Agent, and Morgan
Guaranty Trust Company of New York, as Administrative Agent (together with any
successor administrative agent, the "Caterair
<PAGE> 388
EXHIBIT I-1
Page 2
Administrative Agent", and together with the SCIS Administrative Agent, the
"Administrative Agents"), have entered into a Term Loan Agreement, dated as of
August 28, 1997, providing for the making of loans to SCIS and Caterair as
contemplated therein (as used herein, the term "Caterair Credit Agreement" means
the Term Loan Agreement described above in this paragraph, as the same may be
amended, modified, extended, renewed, replaced, restated or supplemented from
time to time, and including any agreement extending the maturity of, or
restructuring all or any portion of the Indebtedness under such agreement or any
successor agreements, and the Caterair Credit Agreement, together with the SCIS
Credit Agreement, are herein called the "Credit Agreements") (the Caterair
Banks, the Caterair Co-Arrangers and the Caterair Administrative Agent are
herein called the "Caterair Bank Creditors", and together with the SCIS Bank
Creditors, are herein called the "Bank Creditors");
WHEREAS, SCIS, Caterair or one or more of their respective Subsidiaries
may at any time and from time to time enter into one or more Interest Rate
Protection Agreements or Other Hedging Agreements with one or more Banks or any
affiliate thereof (each such Bank or affiliate, even if the respective Bank
subsequently ceases to be a Bank under the applicable Credit Agreement for any
reason, together with such Bank's or affiliate's successors and assigns, if any,
collectively, the "Other Creditors," and together with the Bank Creditors and
the Collateral Agent, the "Secured Creditors");
WHEREAS, each Guarantor (other than Caterair) is a direct or indirect
Subsidiary of SCIS or Caterair;
WHEREAS, the Guarantors (other than Caterair) entered into a Guaranty,
dated as of September 29, 1995 (as amended, modified or supplemented to the date
hereof, the "Original Subsidiaries Guaranty");
WHEREAS, it is a condition to the making of loans and the issuance of
letters of credit under the Credit Agreements that each Guarantor shall have
executed and delivered this Guaranty; and
WHEREAS, each Guarantor will obtain benefits from the incurrence of
loans and the issuance of letters of credit under the Credit Agreements and the
entering into of Interest Rate Protection Agreements or Other Hedging Agreements
and, accordingly, desires to execute this Guaranty in order to satisfy the
conditions described in the preceding paragraph and to amend and restate the
Original Subsidiaries Guaranty in its entirety in the form of this Guaranty;
<PAGE> 389
EXHIBIT I-1
Page 3
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to each Guarantor, the receipt and sufficiency of which are hereby
acknowledged, each Guarantor hereby makes the following representations and
warranties to the Secured Creditors and hereby covenants and agrees with each
Secured Creditor as follows:
1. Each Guarantor, jointly and severally, irrevocably, absolutely and
unconditionally guarantees: (i) to the SCIS Bank Creditors the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of (x) the principal of and interest on the notes issued by, and the loans made
to, SCIS under the SCIS Credit Agreement, and all reimbursement obligations and
unpaid drawings with respect to letters of credit issued under the SCIS Credit
Agreement and (y) all other obligations (including obligations which, but for
the automatic stay under Section 362(a) of the Bankruptcy Code, would become
due), liabilities and indebtedness owing by SCIS to the SCIS Bank Creditors
under the SCIS Credit Agreement or any other SCIS Credit Document (such term to
mean the "Credit Documents" as defined in the SCIS Credit Agreement) to which
SCIS is a party (including, without limitation, indemnities, fees and interest
thereon), whether now existing or hereafter incurred under, arising out of or in
connection with the SCIS Credit Agreement or any such other SCIS Credit Document
and the due performance and compliance by any Borrower with all of the terms,
conditions and agreements contained in the SCIS Credit Documents (all such
principal, interest, liabilities, indebtedness and obligations being herein
collectively called the "SCIS Credit Document Obligations"); (ii) to the
Caterair Bank Creditors the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of (x) the principal of and
interest on the notes issued by, and the loans made to, SCIS and Caterair under
the Caterair Credit Agreement and (y) all other obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due), liabilities and indebtedness owing by SCIS
and Caterair to the Caterair Bank Creditors under the Caterair Credit Agreement
or any other Caterair Credit Document (such term to mean the "Credit Documents"
as defined in the Caterair Credit Agreement, and the Caterair Credit Documents,
together with the SCIS Credit Documents, are referred to herein as the "Credit
Documents") to which Caterair or SCIS is a party (including, without limitation,
indemnities, fees and interest thereon), whether now existing or hereafter
incurred under, arising out of or in connection with the Caterair Credit
Agreement or any such other Caterair Credit Document and the due performance and
compliance by SCIS and Caterair with all of the terms, conditions and agreements
contained in the Caterair Credit Documents (all such principal, interest,
liabilities, indebtedness and obligations being herein collectively called the
"Caterair Credit Document Obligations"); and (iii) to each Other Creditor the
full and prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of all obligations (including obligations which, but
for the automatic stay under Section 362(a) of the Bankruptcy Code, would become
due), liabilities and indebtedness owing by any Borrower
<PAGE> 390
EXHIBIT I-1
Page 4
or any Subsidiary of such Borrower under any Interest Rate Protection Agreement
or Other Hedging Agreement, whether now in existence or hereafter arising, and
the due performance and compliance by any Borrower or such Subsidiary with all
of the terms, conditions and agreements contained in the Interest Rate
Protection Agreements or Other Hedging Agreements (all such obligations,
liabilities and indebtedness being herein collectively called the "Other
Obligations," and together with the Credit Document Obligations, the "Guaranteed
Obligations"). Each Guarantor understands, agrees and confirms that the Secured
Creditors may enforce this Guaranty up to the full amount of the Guaranteed
Obligations against such Guarantor without proceeding against any other
Guarantor, any Borrower, against any security for the Guaranteed Obligations, or
under any other guaranty covering all or a portion of the Guaranteed
Obligations. For purposes of this Guaranty, the term "Guarantor" as applied to
Caterair shall refer to Caterair as a guarantor of indebtedness incurred by
SCIS, as opposed to indebtedness directly incurred by it.
2. Additionally, each Guarantor, jointly and severally,
unconditionally, absolutely and irrevocably, guarantees the payment of any and
all Guaranteed Obligations whether or not due or payable by any Borrower or any
Subsidiary thereof upon the occurrence in respect of such Borrower or any such
Subsidiary of any of the events of the type specified in Section 10.05 of the
SCIS Credit Agreement, and unconditionally and irrevocably, jointly and
severally, promises to pay such Guaranteed Obligations to the Secured Creditors,
or order, on demand, in legal tender of the United States. This Guaranty shall
constitute a guaranty of payment, and not of collection.
3. The liability of each Guarantor hereunder is primary, absolute and
unconditional and is exclusive and independent of any security for or other
guaranty of the indebtedness of any Borrower or any Subsidiary thereof whether
executed by such Guarantor, any other Guarantor, any other guarantor or by any
other party, and the liability of each Guarantor hereunder shall not be affected
or impaired by any circumstance or occurrence whatsoever (other than the
indefeasible satisfaction in full in cash of the Guaranteed Obligations),
including, without limitation: (a) any direction as to application of payment by
any Borrower or any Subsidiary thereof or by any other party, (b) any other
continuing or other guaranty, undertaking or maximum liability of a guarantor or
of any other party as to the Guaranteed Obligations, (c) any payment on or in
reduction of any such other guaranty or undertaking, (d) any dissolution,
termination or increase, decrease or change in personnel by any Borrower or any
Subsidiary thereof, (e) any payment made to any Secured Creditor on the
indebtedness which any Secured Creditor repays any Borrower or any Subsidiary
thereof pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and each Guarantor waives any
right to the deferral or modification of its obligations hereunder by
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reason of any such proceeding, (f) any action or inaction by the Secured
Creditors as contemplated in Section 6 hereof or (g) any invalidity,
irregularity or unenforceability of all or any part of the Guaranteed
Obligations or of any security therefor.
4. The obligations of each Guarantor hereunder are independent of the
obligations of any other Guarantor, any other guarantor, any Borrower or any
Subsidiary thereof, and a separate action or actions may be brought and
prosecuted against each Guarantor whether or not action is brought against any
other Guarantor, any other guarantor, any Borrower or any Subsidiary thereof and
whether or not any other Guarantor, any other guarantor, any Borrower or any
Subsidiary thereof be joined in any such action or actions. Each Guarantor
waives, to the fullest extent permitted by law, the benefits of any statute of
limitations affecting its liability hereunder or the enforcement thereof. Any
payment by any Borrower or any Subsidiary thereof or other circumstance which
operates to toll any statute of limitations as to such Borrower or any such
Subsidiary shall operate to toll the statute of limitations as to each
Guarantor.
5. Each Guarantor hereby waives notice of acceptance of this Guaranty
and notice of any liability to which it may apply, and waives promptness,
diligence, presentment, demand of payment, protest, notice of dishonor or
nonpayment of any such liabilities, suit or taking of other action by any
Administrative Agent or any other Secured Creditor against, and any other notice
to, any party liable thereon (including such Guarantor, any other Guarantor, any
other guarantor, any Borrower or any Subsidiary thereof).
6. Any Secured Creditor may at any time and from time to time without
the consent of, or notice to, any Guarantor, without incurring responsibility to
such Guarantor, without impairing or releasing the obligations of such Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:
(a) change the manner, place or terms of payment of, and/or change or
extend the time of payment of, renew or alter, any of the Guaranteed
Obligations (including any increase or decrease in the rate of interest
thereon), any security therefor, or any liability incurred directly or
indirectly in respect thereof, and the guaranty herein made shall apply to
the Guaranteed Obligations as so changed, extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any
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liabilities (including any of those hereunder) incurred directly or
indirectly in respect thereof or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against any
Borrower, any other Credit Party, any Subsidiary thereof or otherwise act
or refrain from acting;
(d) release or substitute any one or more endorsers, Guarantors, other
guarantors, any Borrower, any Subsidiary thereof or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of any Borrower or any Subsidiary thereof to
creditors of such Borrower or such Subsidiary other than the Secured
Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of any Borrower or any Subsidiary thereof to the
Secured Creditors regardless of what liabilities of such Borrower or such
Subsidiary remain unpaid;
(g) consent to or waive any breach of, or any act, omission or default
under, any of the Interest Rate Protection Agreements or Other Hedging
Agreements, the Credit Documents or any of the instruments or agreements
referred to therein, or otherwise amend, modify or supplement any of the
Interest Rate Protection Agreements or Other Hedging Agreements, the Credit
Documents or any of such other instruments or agreements;
(h) act or fail to act in any manner referred to in this Guaranty which
may deprive such Guarantor of its right to subrogation against any Borrower
or any Subsidiary thereof to recover full indemnity for any payments made
pursuant to this Guaranty; and/or
(i) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of
such Guarantor from its liabilities under this Guaranty.
7. This Guaranty is a continuing one and all liabilities to which it
applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon. No failure or delay on the part of any
Secured Creditor in exercising
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any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein expressly specified
are cumulative and not exclusive of any rights or remedies which any Secured
Creditor would otherwise have. No notice to or demand on any Guarantor in any
case shall entitle such Guarantor to any other further notice or demand in
similar or other circumstances or constitute a waiver of the rights of any
Secured Creditor to any other or further action in any circumstances without
notice or demand. It is not necessary for any Secured Creditor to inquire into
the capacity or powers of any Borrower or any Subsidiary thereof or the
officers, directors, partners or agents acting or purporting to act on its
behalf, and any indebtedness made or created in reliance upon the professed
exercise of such powers shall be guaranteed hereunder.
8. Any indebtedness of any Borrower or any Subsidiary thereof now or
hereafter held by any Guarantor is hereby subordinated to the indebtedness of
such Borrower or such Subsidiary to the Secured Creditors, and such indebtedness
of such Borrower or such Subsidiary to any Guarantor, if any Administrative
Agent, after the occurrence and during the continuance of an Event of Default,
so requests, shall be collected, enforced and received by such Guarantor as
trustee for the Secured Creditors and be paid over to the Secured Creditors on
account of the indebtedness of such Borrower or such Subsidiary to the Secured
Creditors, but without affecting or impairing in any manner the liability of
such Guarantor under the other provisions of this Guaranty. Without limiting the
generality of the foregoing, each Guarantor hereby agrees with the Secured
Creditors that it will not exercise any right of subrogation which it may at any
time otherwise have as a result of this Guaranty (whether contractual, under
Section 509 of the Bankruptcy Code or otherwise) until all Guaranteed
Obligations have been irrevocably paid in full in cash.
9. (a) Each Guarantor waives any right (except as shall be required by
applicable law and cannot be waived) to require the Secured Creditors to: (i)
proceed against any Borrower, any Subsidiary thereof, any other Guarantor, any
other guarantor of the Guaranteed Obligations or any other party; (ii) proceed
against or exhaust any security held from any Borrower, any Subsidiary thereof,
any other Guarantor, any other guarantor of the Guaranteed Obligations or any
other party; or (iii) pursue any other remedy in the Secured Creditors' power
whatsoever. Each Guarantor waives any defense based on or arising out of any
defense of any Borrower, any Subsidiary thereof, any other Guarantor, any other
guarantor of the Guaranteed Obligations or any other party other than payment in
full of the Guaranteed Obligations, including, without limitation, any defense
based on or arising out of the disability of any Borrower, any Subsidiary
thereof, any other Guarantor, any other guarantor of the Guaranteed Obligations
or any other party, or the
<PAGE> 394
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unenforceability of the Guaranteed Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of any Borrower or any
Subsidiary thereof other than payment in full of the Guaranteed Obligations. The
Secured Creditors may, at their election, foreclose on any security held by the
Administrative Agent, the Collateral Agent or the other Secured Creditors by one
or more judicial or nonjudicial sales, whether or not every aspect of any such
sale is commercially reasonable, or exercise any other right or remedy the
Secured Creditors may have against any Borrower or any Subsidiary thereof or any
other party, or any security, without affecting or impairing in any way the
liability of any Guarantor hereunder except to the extent the Guaranteed
Obligations have been paid in full. Each Guarantor waives any defense arising
out of any such election by the Secured Creditors, even though such election
operates to impair or extinguish any right of reimbursement or subrogation or
other right or remedy of such Guarantor against any Borrower or any Subsidiary
thereof or any other party or any security.
(b) Each Guarantor waives all presentments, demands for performance,
protests and notices, including, without limitation, notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
indebtedness. Each Guarantor assumes all responsibility for being and keeping
itself informed of each Borrower's and each of its Subsidiary's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Guaranteed Obligations and the nature, scope and extent of the
risks which such Guarantor assumes and incurs hereunder, and agrees that the
Secured Creditors shall have no duty to advise any Guarantor of information
known to them regarding such circumstances or risks.
(c) Each Guarantor hereby acknowledges and affirms that it understands
that to the extent the Guaranteed Obligations are secured by Real Property
located in California, such Guarantor shall be liable for the full amount of the
liability hereunder notwithstanding the foreclosure on such Real Property by
trustee sale or any other reason impairing such Guarantor's or any Secured
Creditor's right to proceed against any Borrower or any other guarantor of the
Guaranteed Obligations. In accordance with Section 2856 of the California Civil
Code, each Guarantor hereby waives:
(i) all rights of subrogation, reimbursement, indemnification, and
contribution and any other rights and defenses that are or may become
available to such Guarantor by reason of Sections 2787 to 2855, inclusive,
2899 and 3433 of the California Civil Code;
(ii) all rights and defenses that such Guarantor may have because the
Guaranteed Obligations are secured by Real Property located in California.
This
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means, among other things: (A) the Secured Creditors may collect from each
Guarantor without first foreclosing on any real or personal property
collateral pledged by any Borrower; and (B) if the Secured Creditors
foreclose on any Real Property collateral pledged by any Borrower, (1) the
amount of the Guaranteed Obligations may be reduced only by the price for
which that collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price, and (2) the Secured Creditors
may collect from each Guarantor even if the Secured Creditors, by
foreclosing on the Real Property collateral, have destroyed any right such
Guarantor may have to collect from such Borrower. This is an unconditional
and irrevocable waiver of any rights and defenses each Guarantor may have
because the Guaranteed Obligations are secured by Real Property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure; and
(iii) all rights and defenses arising out of an election of remedies
by the Secured Creditors, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for the Guaranteed
Obligations, has destroyed such Guarantor's rights of subrogation and
reimbursement against any Borrower by the operation of Section 580d of the
Code of Civil Procedure or otherwise.
Each Guarantor warrants and agrees that each of the waivers set forth above is
made with full knowledge of its significance and consequences and that if any of
such waivers are determined to be contrary to any applicable law or public
policy, such waivers shall be effective only to the maximum extent permitted by
law.
10. The Secured Creditors agree that this Guaranty may be enforced only
by the action of any Administrative Agent or the Collateral Agent, in each case
acting upon the instructions of the Required Secured Creditors (as defined in
the Security Agreement) and that no other Secured Creditors shall have any right
individually to seek to enforce or to enforce this Guaranty or to realize upon
the security to be granted by the Security Documents, it being understood and
agreed that such rights and remedies may be exercised by each Administrative
Agent or the Collateral Agent for the benefit of the Secured Creditors upon the
terms of this Guaranty and the Security Documents. The Secured Creditors further
agree that this Guaranty may not be enforced against any director, officer,
employee, or stockholder of any Guarantor (except to the extent such stockholder
is also a Guarantor hereunder).
11. In order to induce the Banks to make loans and issue or participate
in letters of credit pursuant to the Credit Agreements, and in order to induce
the Other
<PAGE> 396
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Creditors to execute, deliver and perform the Interest Rate Protection
Agreements or Other Hedging Agreements, each Guarantor represents, warrants and
covenants that:
(a) Such Guarantor (i) is a duly organized and validly existing
corporation in good standing under the laws of the jurisdiction of its
organization, (ii) has the corporate power and authority to own its
property and assets and to transact the business in which it is engaged and
presently proposes to engage and (iii) is duly qualified and is authorized
to do business and is in good standing in each jurisdiction where the
conduct of its business requires such qualification except for failures to
be so qualified which, individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of each Borrower and its Subsidiaries taken as a
whole.
(b) Such Guarantor has the corporate power and authority to execute,
deliver and perform the terms and provisions of this Guaranty and each
other Document to which it is a party and has taken all necessary corporate
action to authorize the execution, delivery and performance by it of this
Guaranty and each such other Document. Such Guarantor has duly executed and
delivered this Guaranty and each other Document to which it is a party, and
this Guaranty and each such other Document constitutes the legal, valid and
binding obligation of such Guarantor enforceable in accordance with its
terms, except to the extent that the enforceability hereof or thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws generally affecting creditors' rights and by
equitable principles (regardless of whether enforcement is sought in equity
or at law).
(c) Neither the execution, delivery or performance by such Guarantor
of this Guaranty or any other Document to which it is a party, nor
compliance by it with the terms and provisions hereof and thereof, will (i)
contravene any provision of any applicable law, statute, rule or regulation
or any applicable order, writ, injunction or decree of any court or
governmental instrumentality, (ii) conflict with or result in any breach of
any of the terms, covenants, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien (except pursuant to the Security
Documents and the Subordinated Intercompany Security Agreement) upon any of
the property or assets of such Guarantor or any of its Subsidiaries
pursuant to the terms of any indenture, mortgage, deed of trust, loan
agreement, credit agreement, or any other material agreement, contract or
instrument to which such Guarantor or any of its Subsidiaries is a party or
by which it or any of its property or assets is bound or to
<PAGE> 397
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which it may be subject or (iii) violate any provision of the certificate
of incorporation or by-laws (or equivalent organizational documents) of
such Guarantor or any of its Subsidiaries.
(d) No order, consent, approval, license, authorization or validation
of, or filing, recording or registration with (except as have been obtained
or made), or exemption by, any governmental or public body or authority, or
any subdivision thereof, is required to authorize, or is required for, (i)
the execution, delivery and performance of this Guaranty by such Guarantor
or any other Document to which such Guarantor is a party or (ii) the
legality, validity, binding effect or enforceability of this Guaranty or
any other Document to which such Guarantor is a party.
(e) There are no actions, suits or proceedings pending or threatened
(i) with respect to this Guaranty or any other Document to which such
Guarantor is a party or (ii) with respect to such Guarantor that could
reasonably be expected to materially and adversely affect (a) the business,
operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of any Borrower and its Subsidiaries taken as a
whole or (b) the rights or remedies of the Secured Creditors hereunder or
under the other Credit Documents to which such Guarantor is a party or the
ability of such Guarantor to perform its respective obligations to the
Secured Creditors hereunder and under the other Credit Documents to which
it is a party.
12. Each Guarantor covenants and agrees that on and after the
Restatement Effective Date and until the Termination Date (as defined in the
Security Agreement) has occurred and all Guaranteed Obligations have been paid
in full, such Guarantor will comply, and will cause each of its Subsidiaries to
comply, with all of the applicable provisions, covenants and agreements
contained in the Credit Agreements, and will take, or will refrain from taking,
as the case may be, all actions that are necessary to be taken or not taken so
that it is not in violation of any provision, covenant or agreement contained in
the Credit Agreements, and so that no Default or Event of Default, is caused by
the actions of such Guarantor or any of its Subsidiaries.
13. The Guarantors hereby jointly and severally agree to pay all
reasonable out-of-pocket costs and expenses of the Administrative Agents and the
Collateral Agent in connection with any amendment, waiver or consent relating
hereto and of the Administrative Agents, the Collateral Agent and each other
Secured Creditor in connection with any enforcement of this Guaranty (including
in each case, without limitation, the reasonable fees and disbursements of
counsel employed by each Secured Creditor).
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14. This Guaranty shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Secured Creditors
and their successors and assigns.
15. Neither this Guaranty nor any provision hereof may be changed,
waived, discharged or terminated except with the written consent of each
Guarantor directly affected thereby and with the written consent of the Required
Secured Creditors; provided, that any change, waiver, modification or variance
affecting the rights and benefits of a single Class (as defined below) of
Secured Creditors (and not all Secured Creditors in a like or similar manner)
shall also require the written consent of the Requisite Creditors (as defined
below) of such Class of Secured Creditors (it being understood that the addition
or release of any Guarantor hereunder shall not constitute a change, waiver,
discharge or termination affecting any Guarantor other than the Guarantor so
added or released). For the purpose of this Guaranty the term "Class" shall mean
each class of Secured Creditors, i.e., whether (i) the SCIS Bank Creditors as
holders of the SCIS Credit Document Obligations, (ii) the Caterair Bank
Creditors as holders of the Caterair Credit Document Obligations or (iii) the
Other Creditors as the holders of the Other Obligations. For the purpose of this
Guaranty, the term "Requisite Creditors" of any Class shall mean (i) with
respect to the SCIS Credit Document Obligations, the Required Banks under, and
as defined in, the SCIS Credit Agreement (or to the extent required by Section
13.12 of the SCIS Credit Agreement, with the written consent of each SCIS Bank),
(ii) with respect to the Caterair Credit Document Obligations the Required Banks
under, and as defined in, the Caterair Credit Agreement (or to the extent
required by Section 11.12 of the Caterair Credit Agreement, with the written
consent of each Caterair Bank) and (iii) with respect to the Other Obligations,
the holders of at least a majority of all obligations outstanding from time to
time under the Interest Rate Protection or Other Hedging Agreements.
16. Each Guarantor acknowledges that an executed (or conformed) copy of
each of the Credit Documents and Interest Rate Protection Agreements or Other
Hedging Agreements has been made available to its principal executive officers
and such officers are familiar with the contents thereof.
17. In addition to any rights now or hereafter granted under applicable
law (including, without limitation, Section 151 of the New York Debtor and
Secured Creditor Law) and not by way of limitation of any such rights, upon the
occurrence and during the continuance of an Event of Default (such term to mean
and include any "Event of Default" as defined in either Credit Agreement or any
payment default under any Interest Rate Protection Agreement or Other Hedging
Agreement continuing after any applicable grace period), each Secured Creditor
is hereby authorized, at any time or from time to time, without notice to any
Guarantor or to any other Person, any such notice being expressly
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waived, to set off and to appropriate and apply any and all deposits (general or
special) and any other indebtedness at any time held or owing by such Secured
Creditor to or for the credit or the account of such Guarantor, against and on
account of the obligations and liabilities of such Guarantor to such Secured
Creditor under this Guaranty, irrespective of whether or not such Secured
Creditor shall have made any demand hereunder and although said obligations,
liabilities, deposits or claims, or any of them, shall be contingent or
unmatured. Notwithstanding anything to the contrary contained in this Section
17, no Secured Creditor shall exercise any such right of set-off without the
prior written consent of either Administrative Agent or the Required Secured
Creditors so long as the Guaranteed Obligations shall be secured by any real
property located in the State of California, it being understood and agreed,
however, that this sentence is for the sole benefit of the Secured Creditors and
may be amended, modified or waived in any respect by the Required Secured
Creditors without the requirement of prior notice to or consent by any Credit
Party and does not constitute a waiver of any rights against any Credit Party or
against any Collateral.
18. All notices, requests, demands or other communications pursuant
hereto shall be deemed to have been duly given or made when delivered to the
Person to which such notice, request, demand or other communication is required
or permitted to be given or made under this Guaranty, addressed to such party at
(i) in the case of any Bank Creditor, as provided in the applicable Credit
Agreement, (ii) in the case of any Guarantor, at its address set forth opposite
its signature below and (iii) in the case of any Other Creditor, at such address
as such Other Creditor shall have specified in writing to the Guarantors; or in
any case at such other address as any of the Persons listed above may hereafter
notify the others in writing.
19. If claim is ever made upon any Secured Creditor for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (ii) any settlement or compromise of any such claim effected by such payee
with any such claimant (including any Borrower), then and in such event each
Guarantor agrees that any such judgment, decree, order, settlement or compromise
shall be binding upon such Guarantor, notwithstanding any revocation hereof or
other instrument evidencing any liability of any Borrower, and such Guarantor
shall be and remain liable to the aforesaid payees hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally
been received by any such payee.
20. (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE SECURED
CREDITORS AND OF THE UNDERSIGNED HEREUNDER
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SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF
NEW YORK. Any legal action or proceeding with respect to this Guaranty or any
other Credit Document to which any Guarantor is a party may be brought in the
courts of the State of New York or of the United States of America for the
Southern District of New York, and, by execution and delivery of this Guaranty,
each Guarantor hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each Guarantor hereby further irrevocably waives any claim that any such
court lacks personal jurisdiction over such Guarantor, and agrees not to plead
or claim in any legal action or proceeding with respect to this Guaranty or any
other Credit Document to which such Guarantor is a party brought in any of the
aforesaid courts that any such court lacks personal jurisdiction over such
Guarantor. Each Guarantor further irrevocably consents to the service of process
out of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such Guarantor at its address set forth opposite its signature below, such
service to become effective 30 days after such mailing. Each Guarantor hereby
irrevocably waives any objection to such service of process and further
irrevocably waives and agrees not to plead or claim in any action or proceeding
commenced hereunder or under any other Credit Document to which such Guarantor
is a party that such service of process was in any way invalid or ineffective.
Nothing herein shall affect the right of any of the Secured Creditors to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against each Guarantor in any other jurisdiction.
(b) Each Guarantor hereby irrevocably waives (to the fullest extent
permitted by applicable law) any objection which it may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Guaranty or any other Credit Document to which
such Guarantor is a party brought in the courts referred to in clause (a) above
and hereby further irrevocably waives and agrees not to plead or claim in any
such court that such action or proceeding brought in any such court has been
brought in an inconvenient forum.
(c) EACH GUARANTOR AND EACH SECURED CREDITOR (BY ITS ACCEPTANCE OF THE
BENEFITS OF THIS GUARANTY) HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS GUARANTY, THE OTHER CREDIT DOCUMENTS TO WHICH SUCH GUARANTOR IS A PARTY OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
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21. In the event that all of the capital stock of one or more
Guarantors is sold or otherwise disposed of or liquidated in compliance with the
requirements of the Credit Agreements (or such sale or other disposition has
been approved in writing by the Required Secured Creditors) and the proceeds of
such sale, disposition or liquidation are applied in accordance with the
provisions of the Credit Agreements, to the extent applicable, such Guarantor
shall upon consummation of such sale or other disposition be released from this
Guaranty automatically and without further action and this Guaranty shall, as to
each such Guarantor or Guarantors, terminate, and have no further force or
effect (it being understood and agreed that the sale of one or more Persons that
own, directly or indirectly, all of the capital stock or partnership interests
of any Guarantor shall be deemed to be a sale of such Guarantor for the purposes
of this Section 21).
22. This Guaranty may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with the Guarantors and the Administrative
Agents.
23. All payments made by any Guarantor hereunder will be made without
setoff, counterclaim or other defense and on the same basis as payments are made
by the applicable Borrower under Sections 4.03 and 4.04 of the SCIS Credit
Agreement or Sections 3.03 and 3.04 of the Caterair Credit Agreement, as the
case may be.
24. It is understood and agreed that any Wholly-Owned Domestic
Subsidiary of SCIS or Caterair Holdings that is required to execute a
counterpart of this Guaranty after the date hereof pursuant to the Credit
Agreements shall automatically become a Guarantor hereunder by executing a
counterpart hereof and delivering the same to the Administrative Agents.
25. At any time a payment in respect of the Guaranteed Obligations is
made under this Guaranty, the right of contribution of each Guarantor against
each other Guarantor shall be determined as provided in the immediately
following sentence, with the right of contribution of each Guarantor to be
revised and restated as of each date on which a payment (a "Relevant Payment")
is made on the Guaranteed Obligations under this Guaranty. At any time that a
Relevant Payment is made by a Guarantor that results in the aggregate payments
made by such Guarantor in respect of the Guaranteed Obligations to and including
the date of the Relevant Payment exceeding such Guarantor's Contribution
Percentage (as defined below) of the aggregate payments made by all Guarantors
in respect of the Guaranteed Obligations to and including the date of the
Relevant Payment (such excess, the "Aggregate Excess Amount"), each such
Guarantor shall have a right of
<PAGE> 402
EXHIBIT I-1
Page 16
contribution against each other Guarantor who has made payments in respect of
the Guaranteed Obligations to and including the date of the Relevant Payment in
an aggregate amount less than such other Guarantor's Contribution Percentage of
the aggregate payments made to and including the date of the Relevant Payment by
all Guarantors in respect of the Guaranteed Obligations (the aggregate amount of
such deficit, the "Aggregate Deficit Amount") in an amount equal to (x) a
fraction the numerator of which is the Aggregate Excess Amount of such Guarantor
and the denominator of which is the Aggregate Excess Amount of all Guarantors
multiplied by (y) the Aggregate Deficit Amount of such other Guarantor. A
Guarantor's right of contribution pursuant to the preceding sentences shall
arise at the time of each computation, subject to adjustment to the time of any
subsequent computation; provided, that no Guarantor may take any action to
enforce such right until the Guaranteed Obligations have been paid in full and
the Termination Date (as defined in the Security Agreement) has occurred, it
being expressly recognized and agreed by all parties hereto that any Guarantor's
right of contribution arising pursuant to this Section 25 against any other
Guarantor shall be expressly junior and subordinate to such other Guarantor's
obligations and liabilities in respect of the Guaranteed Obligations and any
other obligations owing under this Guaranty. As used in this Section 25: (i)
each Guarantor's "Contribution Percentage" shall mean the percentage obtained by
dividing (x) the Adjusted Net Worth (as defined below) of such Guarantor by (y)
the aggregate Adjusted Net Worth of all Guarantors; (ii) the "Adjusted Net
Worth" of each Guarantor shall mean the greater of (x) the Net Worth (as defined
below) of such Guarantor and (y) zero; and (iii) the "Net Worth" of each
Guarantor shall mean the amount by which the fair salable value of such
Guarantor's assets on the date of any Relevant Payment exceeds its existing
debts and other liabilities (including contingent liabilities, but without
giving effect to any Guaranteed Obligations arising under this Guaranty or
under, or in respect of, the Senior Subordinated Notes or any other issue of
subordinated Indebtedness) on such date. All parties hereto recognize and agree
that, except for any right of contribution arising pursuant to this Section 25,
each Guarantor who makes any payment in respect of the Guaranteed Obligations
shall have no right of contribution or subrogation against any other Guarantor
in respect of such payment until all of the Guaranteed Obligations have been
irrevocably paid in full in cash. Each of the Guarantors recognizes and
acknowledges that the rights to contribution arising hereunder shall constitute
an asset in favor of the party entitled to such contribution. In this
connection, each Guarantor has the right to waive its contribution right against
any Guarantor to the extent that after giving effect to such waiver such
Guarantor would remain solvent, in the determination of the Required Secured
Creditors.
26. Each Guarantor hereby confirms that it is its intention that this
Guaranty not constitute a fraudulent transfer or conveyance for purposes of the
Bankruptcy Code, the Uniform Fraudulent Conveyance Act or any similar Federal or
state law. To effectuate the foregoing intention, each Guarantor and each
Secured Creditor hereby
<PAGE> 403
EXHIBIT I-1
Page 17
irrevocably agrees that the Guaranteed Obligations guaranteed by such Guarantor
shall be limited to such amount as will, after giving effect to such maximum
amount and all other (contingent or otherwise) liabilities of such Guarantor
that are relevant under such laws (excluding liabilities in respect of the
Senior Subordinated Notes and any other issue of subordinated Indebtedness), and
after giving effect to any rights to contribution pursuant to any agreement
providing for an equitable contribution among such Guarantor and the other
Guarantors, result in the Guaranteed Obligations of such Guarantor in respect of
such maximum amount not constituting a fraudulent transfer or conveyance.
* * *
<PAGE> 404
EXHIBIT I-1
Page 18
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
executed and delivered as of the date first above written.
Addresses:
524 East Lamar Boulevard SKY CHEFS, INC., as a Guarantor
Arlington, Texas 76011
By: _____________________________________
Name:
Title:
6550 Rock Spring Drive CATERAIR INTERNATIONAL
Bethesda, Maryland 20817 CORPORATION, as a Guarantor
By: _____________________________________
Name:
Title:
6550 Rock Spring Drive CATERAIR INTERNATIONAL, INC. (II),
Bethesda, Maryland 20817 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard SKY CHEFS INTERNATIONAL CORP.,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
<PAGE> 405
EXHIBIT I-1
Page 19
300 Delaware Avenue, Suite 315 ARLINGTON SERVICES, INC.,
Wilmington, Delaware 19801-1622 as a Guarantor
By: _____________________________________
Name:
Title:
300 Delaware Avenue, Suite 315 ARLINGTON SERVICES HOLDING
Wilmington, Delaware 19801-1622 CORPORATION, as a Guarantor
By: _____________________________________
Name:
Title:
300 Delaware Avenue, Suite 315 BETHESDA SERVICES, INC.,
Wilmington, Delaware 19801-1622 as a Guarantor
By: _____________________________________
Name:
Title:
300 Delaware Avenue, Suite 315 CATERAIR NEW ZEALAND
Wilmington, Delaware 19801-1622 LIMITED, as a Guarantor
By: _____________________________________
Name:
Title:
<PAGE> 406
EXHIBIT I-1
Page 20
524 East Lamar Boulevard CATERAIR CONSULTING SERVICES
Arlington, Texas 76011 CORPORATION,
as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard JFK CATERERS, INC.,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard CATERAIR ST. THOMAS HOLDINGS
Arlington, Texas 76011 CORPORATION,
as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard WESTERN AIRE CHEF, INC.,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
6550 Rock Spring Drive CATERAIR AIRPORT PROPERTIES, INC.,
Bethesda, Maryland 20817 as a Guarantor
By: _____________________________________
Name:
Title:
<PAGE> 407
EXHIBIT I-1
Page 21
524 East Lamar Boulevard SKY CHEFS ARGENTINE, INC.,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard CATERAIR INTERNATIONAL
Arlington, Texas 76011 TRANSITION CORPORATION
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO ACCEPTANCE CORP.,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO CREDIT CORP.,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO EQUITY CORP.,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
<PAGE> 408
EXHIBIT I-1
Page 22
524 East Lamar Boulevard ONEX OHIO FINANCE CORP.,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO FINANCE CORP. II,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO CAPITAL CORP.,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO FISCAL CORP.,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO FUNDS CORP.,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
<PAGE> 409
EXHIBIT I-1
Page 23
524 East Lamar Boulevard ONEX OHIO CREDIT CORP. II,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO FUNDS CORP. II,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO FISCAL CORP. II,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO EQUITY CORP. II,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
<PAGE> 410
EXHIBIT I-1
Page 24
524 East Lamar Boulevard ONEX OHIO CAPITAL CORP. II,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
in each case, with a copy to:
SC International Services, Inc.
524 East Lamar Boulevard
Arlington, Texas 76011
Attention: Patrick Tolbert
Accepted and Agreed to:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Administrative Agent and,
Collateral Agent
By: _____________________________________
Name:
Title:
<PAGE> 411
EXHIBIT I-2
AMENDED AND RESTATED DESIGNATED ONEX SUB GUARANTY
AMENDED AND RESTATED GUARANTY, dated as of January 1, 1997 and
amended and restated as of August 28, 1997 (as amended, modified or supplemented
from time to time, this "Guaranty"), made by ONEX OFSI HOLDINGS INC., an Ontario
corporation (the "Guarantor"). Except as otherwise defined herein, capitalized
terms used herein and defined in the SCIS Credit Agreement (as defined below) or
in the Caterair Credit Agreement (as defined below), as the case may be, shall
be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, Onex Food Services, Inc. ("OFSI"), SC International
Services, Inc. ("SCIS"), Caterair Holdings Corporation ("Caterair Holdings"),
Caterair International Corporation ("Caterair", and together with SCIS, the
"Borrowers"), various lenders from time to time party thereto (the "SCIS
Banks"), Bankers Trust Company and J.P. Morgan Securities Inc., as Co-Arrangers
(the "SCIS Co-Arrangers"), Bankers Trust Company, as Syndication Agent, The Bank
of New York, as Co-Agent, and Morgan Guaranty Trust Company of New York, as
Administrative Agent (together with any successor administrative agent, the
"SCIS Administrative Agent"), have entered into a Credit Agreement, dated as of
September 29, 1995 and amended and restated as of August 28, 1997, providing for
the making of loans to SCIS and the issuance of, and participation in, letters
of credit for the account of SCIS, as contemplated therein (as used herein, the
term "SCIS Credit Agreement" means the Credit Agreement described above in this
paragraph, as the same may be amended, modified, extended, renewed, replaced or
supplemented from time to time, and including any agreement extending the
maturity of, or restructuring all or any portion of the Indebtedness under such
agreement or any successor agreement) (the SCIS Banks, the SCIS Co-Arrangers and
the SCIS Administrative Agent are herein called the "SCIS Bank Creditors");
WHEREAS, SCIS, Caterair, various lenders from time to time
party thereto (the "Caterair Banks", and together with the SCIS Banks, the
"Banks"), Bankers Trust Company and J.P. Morgan Securities Inc., as Co-Arrangers
(the "Caterair Co-Arrangers", and together with the SCIS Co-Arrangers, the
"Co-Arrangers"), Bankers Trust Company,
<PAGE> 412
EXHIBIT I-2
Page 2
as Syndication Agent, and Morgan Guaranty Trust Company of New York, as
Administrative Agent (together with any successor administrative agent, the
"Caterair Administrative Agent", and together with the SCIS Administrative
Agent, the "Administrative Agents"), have entered into a Term Loan Agreement,
dated as of August 28, 1997 providing for the making of loans to SCIS and
Caterair as contemplated therein (as used herein, the term "Caterair Credit
Agreement" means the Term Loan Agreement described above in this paragraph, as
the same may be amended, modified, extended, renewed, replaced, restated or
supplemented from time to time, and including any agreement extending the
maturity of, or restructuring all or any portion of the Indebtedness under such
agreement or any successor agreements, and the Caterair Credit Agreement,
together with the SCIS Credit Agreement, are herein called the "Credit
Agreements") (the Caterair Banks, the Caterair Co-Arrangers and the Caterair
Administrative Agent are herein called the "Caterair Bank Creditors", and
together with the SCIS Bank Creditors, are herein called the "Bank Creditors");
WHEREAS, the Borrowers or one or more of their respective
Subsidiaries may at any time and from time to time enter into one or more
Interest Rate Protection Agreements or Other Hedging Agreements with one or more
Banks or any affiliate thereof (each such Bank or affiliate, even if the
respective Bank subsequently ceases to be a Bank under the Credit Agreement for
any reason, together with such Bank's or affiliate's successors and assigns, if
any, collectively, the "Other Creditors," and together with the Bank Creditors
and the Collateral Agent, the "Secured Creditors");
WHEREAS, the Guarantor entered into the Designated Onex Sub
Guaranty, dated as of January 1, 1997 (as amended, modified or supplemented to
the date hereof, the "Original Designated Onex Sub Guaranty");
WHEREAS, the Guarantor is an Affiliate of OFSI, Caterair and
SCIS;
WHEREAS, it is a condition to the making of loans and the
issuance of letters of credit under the Credit Agreements that the Guarantor
shall have executed and delivered this Guaranty; and
WHEREAS, the Guarantor will obtain benefits from the
incurrence of loans and the issuance of letters of credit under the Credit
Agreements and the entering into of Interest Rate Protection Agreements or Other
Hedging Agreements and, accordingly, desires to execute this Guaranty in order
to satisfy the conditions described in the preceding paragraph and to amend and
restate the Original Designated Onex Sub Guaranty in its entirety in the form of
this Agreement;
<PAGE> 413
EXHIBIT I-2
Page 3
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to the Guarantor, the receipt and sufficiency of which are
hereby acknowledged, the Guarantor hereby makes the following representations
and warranties to the Secured Creditors and hereby covenants and agrees with
each Secured Creditor as follows:
1. The Guarantor, irrevocably, absolutely and unconditionally
guarantees: (i) to the SCIS Bank Creditors the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of (x) the
principal of and interest on the notes issued by, and the loans made to, SCIS
under the SCIS Credit Agreement, and all reimbursement obligations and unpaid
drawings with respect to letters of credit issued under the SCIS Credit
Agreement and (y) all other obligations (including obligations which, but for
the automatic stay under Section 362(a) of the Bankruptcy Code, would become
due), liabilities and indebtedness owing by SCIS to the SCIS Bank Creditors
under the SCIS Credit Agreement or any other SCIS Credit Document (such term to
mean the "Credit Documents" as defined in the SCIS Credit Agreement) to which
SCIS is a party (including, without limitation, indemnities, fees and interest
thereon), whether now existing or hereafter incurred under, arising out of or in
connection with the SCIS Credit Agreement or any such other SCIS Credit Document
and the due performance and compliance by SCIS with all of the terms, conditions
and agreements contained in the SCIS Credit Documents (all such principal,
interest, liabilities, indebtedness and obligations being herein collectively
called the "SCIS Credit Document Obligations"); (ii) to the Caterair Bank
Creditors the full and prompt payment when due (whether at the stated maturity,
by acceleration or otherwise) of (x) the principal of and interest on the notes
issued by, and the loans made to SCIS and Caterair, under the Caterair Credit
Agreement, and (y) all other obligations (including obligations which, but for
the automatic stay under Section 362(a) of the Bankruptcy Code, would become
due), liabilities and indebtedness owing by SCIS and Caterair to the Caterair
Bank Creditors under the Caterair Credit Agreement or any other Caterair Credit
Document (such term to mean the "Credit Documents" as defined in the Caterair
Credit Agreement, and the Caterair Credit Documents, together with the SCIS
Credit Documents, are referred to herein as the "Credit Documents") to which
SCIS or Caterair is a party (including, without limitation, indemnities, fees
and interest thereon), whether now existing or hereafter incurred under, arising
out of or in connection with the Caterair Credit Agreement or any such other
Caterair Credit Document and the due performance and compliance by SCIS and
Caterair with all of the terms, conditions and agreements contained in the
Caterair Credit Documents (all such principal, interest, liabilities,
indebtedness and obligations being herein collectively called the "Caterair
Credit Document Obligations"); and (iii) to each Other Creditor the full and
prompt payment when due (whether at the stated maturity, by acceleration or
otherwise) of all obligations (including obligations which, but for the
automatic stay under Section 362(a) of the Bankruptcy Code, would become due),
liabilities
<PAGE> 414
EXHIBIT I-2
Page 4
and indebtedness owing by any Borrower or any Subsidiary of such Borrower under
any Interest Rate Protection Agreement or Other Hedging Agreement, whether now
in existence or hereafter arising, and the due performance and compliance by any
Borrower or such Subsidiary with all of the terms, conditions and agreements
contained in the Interest Rate Protection Agreements or Other Hedging Agreements
(all such obligations, liabilities and indebtedness being herein collectively
called the "Other Obligations," and together with the Credit Document
Obligations, the "Guaranteed Obligations"). The Guarantor understands, agrees
and confirms that the Secured Creditors may enforce this Guaranty up to the full
amount of the Guaranteed Obligations against the Guarantor without proceeding
against any Borrower, against any security for the Guaranteed Obligations, or
under any other guaranty covering all or a portion of the Guaranteed
Obligations. Notwithstanding the foregoing or anything else contained in this
Guaranty, the Secured Creditors, by their acceptance of the benefits of this
Guaranty, expressly acknowledge and agree that recourse against the Guarantor in
respect of the Guaranteed Obligations shall be limited to the capital stock of
Caterair Holdings, the proceeds thereof and the Guarantor's right, title and
interest therein.
2. Additionally, the Guarantor, unconditionally, absolutely
and irrevocably, guarantees the payment of any and all Guaranteed Obligations
whether or not due or payable by any Borrower or any Subsidiary thereof upon the
occurrence in respect of such Borrower or any such Subsidiary of any of the
events of the type specified in Section 10.05 of the SCIS Credit Agreement, and
unconditionally and irrevocably, promises to pay such Guaranteed Obligations to
the Secured Creditors, or order, on demand, in legal tender of the United
States, but otherwise subject to the limitations on recourse set forth in the
final sentence of Section 1 of this Agreement. This Guaranty shall constitute a
guaranty of payment, and not of collection.
3. The liability of the Guarantor hereunder is primary,
absolute and unconditional and is exclusive and independent of any security for
or other guaranty of the indebtedness of any Borrower or any Subsidiary thereof
whether executed by the Guarantor, any other guarantor or by any other party,
and the liability of the Guarantor hereunder shall not be affected or impaired
by any circumstance or occurrence whatsoever (other than the indefeasible
satisfaction in full in cash of the Guaranteed Obligations), including, without
limitation: (a) any direction as to application of payment by any Borrower or
any Subsidiary thereof or by any other party, (b) any other continuing or other
guaranty, undertaking or maximum liability of a guarantor or of any other party
as to the Guaranteed Obligations, (c) any payment on or in reduction of any such
other guaranty or undertaking, (d) any dissolution, termination or increase,
decrease or change in personnel by any Borrower or any Subsidiary thereof, (e)
any payment made to any Secured Creditor on the indebtedness which any Secured
Creditor repays any Borrower or any Subsidiary thereof
<PAGE> 415
EXHIBIT I-2
Page 5
pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and the Guarantor waives any right
to the deferral or modification of its obligations hereunder by reason of any
such proceeding, (f) any action or inaction by the Secured Creditors as
contemplated in Section 6 hereof or (g) any invalidity, irregularity or
unenforceability of all or any part of the Guaranteed Obligations or of any
security therefor.
4. The obligations of the Guarantor hereunder are independent
of the obligations of any other guarantor, any Borrower or any Subsidiary
thereof, and a separate action or actions may be brought and prosecuted against
the Guarantor whether or not action is brought against any other guarantor, any
Borrower or any Subsidiary thereof and whether or not any other guarantor, any
Borrower or any Subsidiary thereof be joined in any such action or actions. The
Guarantor waives, to the fullest extent permitted by law, the benefits of any
statute of limitations affecting its liability hereunder or the enforcement
thereof. Any payment by any Borrower or any Subsidiary thereof or other
circumstance which operates to toll any statute of limitations as to such
Borrower or any such Subsidiary shall operate to toll the statute of limitations
as to the Guarantor.
5. The Guarantor hereby waives notice of acceptance of this
Guaranty and notice of any liability to which it may apply, and waives
promptness, diligence, presentment, demand of payment, protest, notice of
dishonor or nonpayment of any such liabilities, suit or taking of other action
by any Administrative Agent or any other Secured Creditor against, and any other
notice to, any party liable thereon (including the Guarantor, any other
guarantor, any Borrower or any Subsidiary thereof).
6. Any Secured Creditor may at any time and from time to time
without the consent of, or notice to, the Guarantor, without incurring
responsibility to the Guarantor, without impairing or releasing the obligations
of the Guarantor hereunder, upon or without any terms or conditions and in whole
or in part:
(a) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew or alter, any of the
Guaranteed Obligations (including any increase or decrease in the rate
of interest thereon), any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the guaranty herein made
shall apply to the Guaranteed Obligations as so changed, extended,
renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any
<PAGE> 416
EXHIBIT I-2
Page 6
manner and in any order any property by whomsoever at any time pledged
or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and/or
any offset thereagainst;
(c) exercise or refrain from exercising any rights against any
Borrower, any other Credit Party, any Subsidiary thereof or otherwise
act or refrain from acting;
(d) release or substitute any one or more endorsers, other
guarantors, any Borrower, any Subsidiary thereof or other obligors;
(e) settle or compromise any of the Guaranteed Obligations,
any security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect thereof or
hereof, and may subordinate the payment of all or any part thereof to
the payment of any liability (whether due or not) of any Borrower or
any Subsidiary thereof to creditors of such Borrower or such Subsidiary
other than the Secured Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of any Borrower or any Subsidiary thereof
to the Secured Creditors regardless of what liabilities of such
Borrower or such Subsidiary remain unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, any of the Interest Rate Protection Agreements or Other
Hedging Agreements, the Credit Documents or any of the instruments or
agreements referred to therein, or otherwise amend, modify or
supplement any of the Interest Rate Protection Agreements or Other
Hedging Agreements, the Credit Documents or any of such other
instruments or agreements;
(h) act or fail to act in any manner referred to in this
Guaranty which may deprive the Guarantor of its right to subrogation
against any Borrower or any Subsidiary thereof to recover full
indemnity for any payments made pursuant to this Guaranty; and/or
(i) take any other action which would, under otherwise
applicable principles of common law, give rise to a legal or equitable
discharge of the Guarantor from its liabilities under this Guaranty.
<PAGE> 417
EXHIBIT I-2
Page 7
7. This Guaranty is a continuing one and all liabilities to
which it applies or may apply under the terms hereof shall be conclusively
presumed to have been created in reliance hereon. No failure or delay on the
part of any Secured Creditor in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein expressly specified are cumulative and not
exclusive of any rights or remedies which any Secured Creditor would otherwise
have. No notice to or demand on the Guarantor in any case shall entitle the
Guarantor to any other further notice or demand in similar or other
circumstances or constitute a waiver of the rights of any Secured Creditor to
any other or further action in any circumstances without notice or demand. It is
not necessary for any Secured Creditor to inquire into the capacity or powers of
any Borrower or any Subsidiary thereof or the officers, directors, partners or
agents acting or purporting to act on its behalf, and any indebtedness made or
created in reliance upon the professed exercise of such powers shall be
guaranteed hereunder.
8. Any indebtedness of any Borrower or any Subsidiary thereof
now or hereafter held by the Guarantor is hereby subordinated to the
indebtedness of such Borrower or such Subsidiary to the Secured Creditors, and
such indebtedness of such Borrower or such Subsidiary to the Guarantor, if any
Administrative Agent, after the occurrence and during the continuance of an
Event of Default, so requests, shall be collected, enforced and received by the
Guarantor as trustee for the Secured Creditors and be paid over to the Secured
Creditors on account of the indebtedness of such Borrower or such Subsidiary to
the Secured Creditors, but without affecting or impairing in any manner the
liability of the Guarantor under the other provisions of this Guaranty. Without
limiting the generality of the foregoing, the Guarantor hereby agrees with the
Secured Creditors that it will not exercise any right of subrogation which it
may at any time otherwise have as a result of this Guaranty (whether
contractual, under Section 509 of the Bankruptcy Code or otherwise) until all
Guaranteed Obligations have been irrevocably paid in full in cash.
9. (a) The Guarantor waives any right (except as shall be
required by applicable law and cannot be waived) to require the Secured
Creditors to: (i) proceed against any Borrower, any Subsidiary thereof, any
other guarantor of the Guaranteed Obligations or any other party; (ii) proceed
against or exhaust any security held from any Borrower, any Subsidiary thereof,
any other guarantor of the Guaranteed Obligations or any other party; or (iii)
pursue any other remedy in the Secured Creditors' power whatsoever. The
Guarantor waives any defense based on or arising out of any defense of any
Borrower, any Subsidiary thereof, any other guarantor of the Guaranteed
Obligations or any other party other than payment in full of the Guaranteed
Obligations, including, without
<PAGE> 418
EXHIBIT I-2
Page 8
limitation, any defense based on or arising out of the disability of any
Borrower, any Subsidiary thereof, any other Guarantor, any other guarantor of
the Guaranteed Obligations or any other party, or the unenforceability of the
Guaranteed Obligations or any part thereof from any cause, or the cessation from
any cause of the liability of any Borrower or any Subsidiary thereof other than
payment in full of the Guaranteed Obligations. The Secured Creditors may, at
their election, foreclose on any security held by the Administrative Agent, the
Collateral Agent or the other Secured Creditors by one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is commercially
reasonable, or exercise any other right or remedy the Secured Creditors may have
against any Borrower or any Subsidiary thereof or any other party, or any
security, without affecting or impairing in any way the liability of the
Guarantor hereunder except to the extent the Guaranteed Obligations have been
paid in full. The Guarantor waives any defense arising out of any such election
by the Secured Creditors, even though such election operates to impair or
extinguish any right of reimbursement or subrogation or other right or remedy of
the Guarantor against any Borrower or any Subsidiary thereof or any other party
or any security.
(b) The Guarantor waives all presentments, demands for
performance, protests and notices, including, without limitation, notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Guaranty, and notices of the existence, creation or incurring of new or
additional indebtedness. The Guarantor assumes all responsibility for being and
keeping itself informed of any Borrower's and each of its Subsidiary's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Guaranteed Obligations and the nature, scope and extent of the
risks which the Guarantor assumes and incurs hereunder, and agrees that the
Secured Creditors shall have no duty to advise the Guarantor of information
known to them regarding such circumstances or risks.
(c) The Guarantor hereby acknowledges and affirms that it
understands that to the extent the Guaranteed Obligations are secured by Real
Property located in California, the Guarantor shall be liable for the full
amount of the liability hereunder notwithstanding the foreclosure on such Real
Property by trustee sale or any other reason impairing the Guarantor's or any
Secured Creditor's right to proceed against any Borrower or any other guarantor
of the Guaranteed Obligations. In accordance with Section 2856 of the California
Civil Code, the Guarantor hereby waives:
(i) all rights of subrogation, reimbursement, indemnification,
and contribution and any other rights and defenses that are or may
become available
<PAGE> 419
EXHIBIT I-2
Page 9
to the Guarantor by reason of Sections 2787 to 2855, inclusive, 2899
and 3433 of the California Civil Code:
(ii) all rights and defenses that the Guarantor may have
because the Guaranteed Obligations are secured by Real Property located
in California. This means, among other things: (A) the Secured
Creditors may collect from the Guarantor without first foreclosing on
any real or personal property collateral pledged by any Borrower; and
(B) if the Secured Creditors foreclose on any Real Property collateral
pledged by any Borrower, (1) the amount of the Guaranteed Obligations
may be reduced only by the price for which that collateral is sold at
the foreclosure sale, even if the collateral is worth more than the
sale price, and (2) the Secured Creditors may collect from the
Guarantor even if the Secured Creditors, by foreclosing on the Real
Property collateral, have destroyed any right the Guarantor may have to
collect from the Borrower. This is an unconditional and irrevocable
waiver of any rights and defenses the Guarantor may have because the
Guaranteed Obligations are secured by Real Property. These rights and
defenses include, but are not limited to, any rights or defenses based
upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure and
(iii) all rights and defenses arising out of an election of
remedies by the Secured Creditors, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security
for the Guaranteed Obligations, has destroyed the Guarantor's rights of
subrogation and reimbursement against any Borrower by the operation of
Section 580d of the Code of Civil Procedure or otherwise.
The Guarantor warrants and agrees that each of the waivers set forth above is
made with full knowledge of its significance and consequences and that if any of
such waivers are determined to be contrary to any applicable law or public
policy, such waivers shall be effective only to the maximum extent permitted by
law.
10. The Secured Creditors agree that this Guaranty may be
enforced only by the action of either Administrative Agent or the Collateral
Agent, in each case acting upon the instructions of the Required Secured
Creditors (as defined in the Security Agreement) and that no other Secured
Creditors shall have any right individually to seek to enforce or to enforce
this Guaranty or to realize upon the security to be granted by the Security
Documents, it being understood and agreed that such rights and remedies may be
exercised by each Administrative Agent or the Collateral Agent for the benefit
of the Secured Creditors upon the terms of this Guaranty and the Security
Documents. The
<PAGE> 420
EXHIBIT I-2
Page 10
Secured Creditors further agree that this Guaranty may not be enforced against
any director, officer, employee, or stockholder of the Guarantor.
11. The Guarantor represents, warrants and covenants that:
(a) The Guarantor (i) is a duly organized and validly existing
corporation in good standing under the laws of the jurisdiction of its
organization, (ii) has the corporate power and authority to own its
property and assets and to transact the business in which it is engaged
and presently proposes to engage and (iii) is duly qualified and is
authorized to do business and is in good standing in each jurisdiction
where the conduct of its business requires such qualification except
for failures to be so qualified which, individually or in the
aggregate, could not reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Guarantor.
(b) The Guarantor has the corporate power and authority to
execute, deliver and perform the terms and provisions of this Guaranty
and the Designated Onex Sub Pledge Agreement and has taken all
necessary corporate action to authorize the execution, delivery and
performance by it of this Guaranty and the Designated Onex Sub Pledge
Agreement. The Guarantor has duly executed and delivered this Guaranty
and the Designated Onex Sub Pledge Agreement, and this Guaranty and the
Designated Onex Sub Pledge Agreement constitute legal, valid and
binding obligations of the Guarantor enforceable in accordance with
their terms, except to the extent that the enforceability hereof or
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting
creditors' rights and by equitable principles (regardless of whether
enforcement is sought in equity or at law).
(c) Neither the execution, delivery or performance by the
Guarantor of this Guaranty or the Designated Onex Sub Pledge Agreement,
nor compliance by it with the terms and provisions hereof and thereof,
will (i) contravene any provision of any applicable law, statute, rule
or regulation or any applicable order, writ, injunction or decree of
any court or governmental instrumentality, (ii) conflict with or result
in any breach of any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien (except
pursuant to the Designated Onex Sub Pledge Agreement) upon the capital
stock of Caterair Holdings or the proceeds thereof pursuant to the
terms of any indenture, mortgage, deed of trust, loan
<PAGE> 421
EXHIBIT I-2
Page 11
agreement, credit agreement, or any other material agreement, contract
or instrument to which the Guarantor or any of its Subsidiaries is a
party or by which it or any of its property or assets is bound or to
which it may be subject or (iii) violate any provision of the
certificate of incorporation or by-laws (or equivalent organizational
documents) of the Guarantor.
(d) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with (except as
have been obtained or made), or exemption by, any governmental or
public body or authority, or any subdivision thereof, is required to
authorize, or is required for, (i) the execution, delivery and
performance of this Guaranty by the Guarantor or the Designated Onex
Sub Pledge Agreement or (ii) the legality, validity, binding effect or
enforceability of this Guaranty or the Designated Onex Sub Pledge
Agreement.
(e) There are no actions, suits or proceedings pending or
threatened (i) with respect to this Guaranty or the Designated Onex Sub
Pledge Agreement or (ii) with respect to the Guarantor that could
reasonably be expected to materially and adversely affect (a) the
business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Guarantor or (b) the
rights or remedies of the Secured Creditors hereunder or under the
Designated Onex Sub Pledge Agreement or the ability of the Guarantor to
perform its respective obligations to the Secured Creditors hereunder
and under the Designated Onex Sub Pledge Agreement.
12. The Guarantor hereby agrees to pay all reasonable
out-of-pocket costs and expenses of the Administrative Agents and the Collateral
Agent in connection with any amendment, waiver or consent relating hereto and of
the Administrative Agents, the Collateral Agent and each other Secured Creditor
in connection with any enforcement of this Guaranty (including in each case,
without limitation, the reasonable fees and disbursements of counsel employed by
each Secured Creditor).
13. This Guaranty shall be binding upon the Guarantor and its
successors and assigns and shall inure to the benefit of the Secured Creditors
and their successors and assigns.
14. Neither this Guaranty nor any provision hereof may be
changed, waived, discharged or terminated except with the written consent of the
Guarantor and the Required Secured Creditors; provided, that any change, waiver,
modification or variance affecting the rights and benefits of a single Class (as
defined below) of Secured Creditors
<PAGE> 422
EXHIBIT I-2
Page 12
(and not all Secured Creditors in a like or similar manner) shall also require
the written consent of the Requisite Creditors (as defined below) of such Class
of Secured Creditors. For the purpose of this Guaranty the term "Class" shall
mean each class of Secured Creditors, i.e., whether (i) the SCIS Bank Creditors
as holders of the SCIS Credit Document Obligations, (ii) the Caterair Bank
Creditors as holders of the Caterair Credit Document Obligations or (iii) the
Other Creditors as the holders of the Other Obligations. For the purpose of this
Guaranty, the term "Requisite Creditors" of any Class shall mean (i) with
respect to the SCIS Credit Document Obligations, the Required Banks under, and
as defined in, the SCIS Credit Agreement (or to the extent required by Section
13.12 of the SCIS Credit Agreement, with the written consent of each Bank), (ii)
with respect to the Caterair Credit Document Obligations the Required Banks
under, and as defined in, the Caterair Credit Agreement (or to the extent
required by Section 11.12 of the Caterair Credit Agreement, with the written
consent of each Caterair Bank) and (iii) with respect to the Other Obligations,
the holders of at least a majority of all obligations outstanding from time to
time under the Interest Rate Protection or Other Hedging Agreements.
15. The Guarantor acknowledges that an executed (or conformed)
copy of each of the Credit Documents and Interest Rate Protection Agreements or
Other Hedging Agreements has been made available to its principal executive
officers and such officers are familiar with the contents thereof.
16. In addition to any rights now or hereafter granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Secured Creditor Law) and not by way of limitation of any such
rights, upon the occurrence and during the continuance of an Event of Default
(such term to mean and include any "Event of Default" as defined in either
Credit Agreement or any payment default under any Interest Rate Protection
Agreement or Other Hedging Agreement continuing after any applicable grace
period), each Secured Creditor is hereby authorized, at any time or from time to
time, without notice to the Guarantor or to any other Person, any such notice
being expressly waived, to set off and to appropriate and apply any and all
deposits (general or special) and any other indebtedness at any time held or
owing by such Secured Creditor to or for the credit or the account of the
Guarantor, against and on account of the obligations and liabilities of the
Guarantor to such Secured Creditor under this Guaranty, irrespective of whether
or not such Secured Creditor shall have made any demand hereunder and although
said obligations, liabilities, deposits or claims, or any of them, shall be
contingent or unmatured. Notwithstanding anything to the contrary contained in
this Section 16, no Secured Creditor shall exercise any such right of set-off
without the prior written consent of either Administrative Agent or the Required
Secured Creditors so long as the Guaranteed Obligations shall be secured by any
real property located in the State of California, it being
<PAGE> 423
EXHIBIT I-2
Page 13
understood and agreed, however, that this sentence is for the sole benefit of
the Secured Creditors and may be amended, modified or waived in any respect by
the Required Secured Creditors without the requirement of prior notice to or
consent by any Credit Party and does not constitute a waiver of any rights
against any Credit Party or against any Collateral.
17. All notices, requests, demands or other communications
pursuant hereto shall be deemed to have been duly given or made when delivered
to the Person to which such notice, request, demand or other communication is
required or permitted to be given or made under this Guaranty, addressed to such
party at (i) in the case of any Bank Creditor, as provided in the applicable
Credit Agreement, (ii) in the case of the Guarantor, at its address set forth
opposite its signature below and (iii) in the case of any Other Creditor, at
such address as such Other Creditor shall have specified in writing to the
Guarantor; or in any case at such other address as any of the Persons listed
above may hereafter notify the others in writing.
18. If claim is ever made upon any Secured Creditor for
repayment or recovery of any amount or amounts received in payment or on account
of any of the Guaranteed Obligations and any of the aforesaid payees repays all
or part of said amount by reason of (i) any judgment, decree or order of any
court or administrative body having jurisdiction over such payee or any of its
property or (ii) any settlement or compromise of any such claim effected by such
payee with any such claimant (including any Borrower), then and in such event
the Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon the Guarantor, notwithstanding any revocation
hereof or other instrument evidencing any liability of such Borrower, and the
Guarantor shall be and remain liable to the aforesaid payees hereunder for the
amount so repaid or recovered to the same extent as if such amount had never
originally been received by any such payee.
19. (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE
SECURED CREDITORS AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Any legal action
or proceeding with respect to this Guaranty or the Designated Onex Sub Pledge
Agreement may be brought in the courts of the State of New York or of the United
States of America for the Southern District of New York, and, by execution and
delivery of this Guaranty, the Guarantor hereby irrevocably accepts for itself
and in respect of its property, generally and unconditionally, the jurisdiction
of the aforesaid courts. The Guarantor hereby further irrevocably waives any
claim that any such court lacks personal jurisdiction over the Guarantor, and
agrees not to plead or claim in any legal action or proceeding with respect
<PAGE> 424
EXHIBIT I-2
Page 14
to this Guaranty or the Designated Onex Sub Pledge Agreement brought in any of
the aforesaid courts that any such court lacks personal jurisdiction over the
Guarantor. The Guarantor further irrevocably consents to the service of process
out of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
the Guarantor at its address set forth opposite its signature below, such
service to become effective 30 days after such mailing. The Guarantor hereby
irrevocably waives any objection to such service of process and further
irrevocably waives and agrees not to plead or claim in any action or proceeding
commenced hereunder or under the Designated Onex Sub Pledge Agreement that such
service of process was in any way invalid or ineffective. Nothing herein shall
affect the right of any of the Secured Creditors to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against the Guarantor in any other jurisdiction.
(b) The Guarantor hereby irrevocably waives (to the fullest
extent permitted by applicable law) any objection which it may now or hereafter
have to the laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Guaranty or the Designated Onex Sub
Pledge Agreement brought in the courts referred to in clause (a) above and
hereby further irrevocably waives and agrees not to plead or claim in any such
court that such action or proceeding brought in any such court has been brought
in an inconvenient forum.
(c) THE GUARANTOR AND EACH SECURED CREDITOR (BY ITS ACCEPTANCE
OF THE BENEFITS OF THIS GUARANTY) HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS GUARANTY, THE DESIGNATED ONEX SUB PLEDGE AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
20. This Guaranty may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Guarantor and the
Administrative Agent.
21. All payments made by the Guarantor hereunder will be made
without setoff, counterclaim or other defense and on the same basis as payments
are made by the applicable Borrower under Sections 4.03 and 4.04 of the SCIS
Credit Agreement or Sections 3.03 and 3.04 of the Caterair Credit Agreement, as
the case may be.
<PAGE> 425
EXHIBIT I-2
Page 15
* * *
<PAGE> 426
EXHIBIT I-2
Page 16
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to
be executed and delivered as of the date first above written.
Addresses:
c/o Onex Corporation ONEX OFSI HOLDINGS INC.,
161 Bay Street as Guarantor
Toronto, Ontario M5J2S1
Canada By: ____________________________
Attention: Name:
Telecopier No.: Title:
Accepted and Agreed to:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Administrative Agent and
Collateral Agent
By: ____________________________
Name:
Title:
<PAGE> 427
EXHIBIT J
OFFICER'S SOLVENCY CERTIFICATE
I, the undersigned, the _______________ of SC International
Services, Inc., a corporation organized and existing under the laws of the State
of Delaware (the "Company"), do hereby certify on behalf of the Company that:
1. This Certificate is furnished pursuant to Section 5.14 of
the Credit Agreement, dated as of September 29, 1995 and amended and restated as
of August 28, 1997 (as in effect on the date hereof, the "Credit Agreement,")
among Onex Food Services, Inc. ("OFSI"), Caterair Holdings Corporation, the
Company, Caterair International Corporation ("Caterair"), various Banks from
time to time party thereto, Bankers Trust Company and J.P. Morgan Securities
Inc., as Co-Arrangers, Bankers Trust Company, as Syndication Agent, Morgan
Guaranty Trust Company of New York, as Administrative Agent, and The Bank of New
York, as Co-Agent. Unless otherwise defined herein, capitalized terms used in
this Certificate shall have the meanings set forth in the Credit Agreement.
2. For purposes of this Certificate, the terms below shall
have the following definitions:
(a) "Fair Value"
The amount at which the assets, in their entirety, of the
Company, Caterair and their respective Subsidiaries (taken as
a whole) and OFSI and its Subsidiaries (on a consolidated
basis), in each case would change hands between a willing
buyer and a willing seller, within a commercially reasonable
period of time, each having reasonable knowledge of the
relevant facts, with neither being under any compulsion to
act.
(b) "Present Fair Salable Value"
The amount that could be obtained by an independent willing
seller from an independent willing buyer if the assets of the
Company, Caterair and their respective Subsidiaries (taken as
a whole) and OFSI and its Subsidiaries (on a consolidated
basis) are sold in an arm's-length transaction with reasonable
<PAGE> 428
Exhibit J
Page 2
promptness under present conditions for the sale of comparable
business enterprises.
(c) "New Financing"
The indebtedness incurred or to be incurred by the Credit
Parties under the Credit Documents (assuming the full
utilization by the Company of the Revolving Loan Commitments
under the Credit Agreement) and all other financing
contemplated by the Credit Documents (including the Caterair
Credit Agreement and the 9 1/4% Senior Subordinated Notes)
(and any guaranties of the foregoing), in each case after
giving effect to the Transaction and the incurrence of all
financings contemplated therewith.
(d) "Stated Liabilities"
The recorded liabilities (including Contingent Liabilities
that would be recorded in accordance with generally accepted
accounting principles ("GAAP") consistently applied) of the
Company, Caterair and their respective Subsidiaries (taken as
a whole) and OFSI and its Subsidiaries (on a consolidated
basis) in each case at December 31, 1996, together with (i)
the net change in long-term debt (including current
maturities) between December 31, 1996 and the date hereof and
(ii) without duplication, the amount of all New Financing.
(e) "Contingent Liabilities"
The maximum estimated amount of liability reasonably likely to
result from pending litigation, asserted claims and
assessments, guaranties, uninsured risks and other contingent
liabilities of the Company, Caterair and their respective
Subsidiaries (taken as a whole) and OFSI and its Subsidiaries
(on a consolidated basis) (exclusive of such Contingent
Liabilities to the extent reflected in Stated Liabilities).
(f) "Will be able to pay its Stated Liabilities, including
Contingent Liabilities, as they mature."
For the period from the date hereof through the stated
maturity of all New Financing, each of the Company, Caterair
and their respective Subsidiaries (taken as a whole) and OFSI
and its Subsidiaries (on a consolidated basis) will have
sufficient assets and cash flow to pay its Stated Liabilities
and Contingent Liabilities as those liabilities mature or
otherwise become due.
<PAGE> 429
Exhibit J
Page 3
(g) "Does not have Unreasonably Small Capital"
For the period from the date hereof through the stated
maturity of all New Financing, each of the Company, Caterair
and their respective Subsidiaries (taken as a whole) and OFSI
and its Subsidiaries (on a consolidated basis) in each case
after consummation of the Transaction and all Indebtedness
being incurred or assumed and Liens created in connection
therewith, is a going concern and has sufficient capital to
ensure that it will continue to be a going concern for such
period and to remain a going concern despite moderately
negative deviations from the Projections discussed below.
3. For purposes of this Certificate, I, or officers of the
Company and OFSI under my direction and supervision, have performed the
following procedures as of and for the periods set forth below.
(a) I have reviewed the consolidated statements of financial
condition of each of the Company, Caterair and their
respective Subsidiaries and OFSI and its Subsidiaries each at
December 31, 1996 and June 31, 1997, and the related
consolidated statements of income and cash flow and changes in
shareholders' equity of each of the Company, Caterair and
their respective Subsidiaries, OFSI and its Subsidiaries each
for the fiscal year and six-month period ended on such date,
as the case may be.
(b) I have reviewed the unaudited pro forma consolidated financial
statements of each of the Company, Caterair and their
respective Subsidiaries and OFSI and its Subsidiaries each for
the period ending June 30, 1997 prepared in accordance with
GAAP after giving effect to the Transaction and the incurrence
of the New Financing, and verified the mathematical accuracy
of the application of the pro forma adjustments to the amounts
in the audited consolidated financial statements.
(c) I have made inquiries of certain other officials of the
Company and OFSI who have responsibility for financial and
accounting matters regarding:
1. whether the unaudited pro forma consolidated
financial statements referred to in paragraph (b)
above are in conformity with GAAP and applied on a
basis substantially consistent with that of the
unaudited financial statements as at June 30, 1997;
and
2. whether, at December 31, 1996, there were any
decreases as compared with June 30, 1997, in the
consolidated net assets or the excess of consolidated
current assets over consolidated current
<PAGE> 430
Exhibit J
Page 4
liabilities of each of the Company, Caterair and
their respective Subsidiaries (taken as a whole) and
OFSI and its Subsidiaries (on a consolidated basis).
(d) I have read:
1. the Credit Documents, the Caterair Credit Documents,
the Senior Subordinated Note Documents and the
respective Schedules and Exhibits thereto.
(e) With respect to Contingent Liabilities, I:
1. inquired of certain officials of the Company,
Caterair and OFSI who have responsibility for legal,
financial and accounting matters as to the existence
and estimated liability with respect to all
Contingent Liabilities known to them;
2. confirmed with senior officers of the Company,
Caterair and OFSI that, to the best of such officers'
knowledge, (i) all appropriate items were included in
Stated Liabilities or Contingent Liabilities made
known to me in the course of my inquiry and that (ii)
the amounts relating thereto were the maximum
estimated amount of liability reasonably likely to
result therefrom as of the date hereof;
3. I hereby certify that, to the best of my knowledge,
all material Contingent Liabilities that may arise
from any pending litigation, asserted claims and
assessments, guarantees, uninsured risks and other
Contingent Liabilities of the Company, Caterair and
their respective Subsidiaries and OFSI and its
Subsidiaries (exclusive of such Contingent
Liabilities to the extent reflected in Stated
Liabilities) have been considered in making the
certification set forth in paragraph 4 below, and
with respect to each such Contingent Liability the
estimable maximum estimated amount of liability with
respect thereto was used in making such
certification.
(f) I have had the Projections, which have been previously
delivered to the Banks, prepared under my direction and have
re-examined the Projections on the date hereof and considered
the effect thereon of any changes since the date of the
preparation thereof on the results projected therein.
(g) I have made inquiries of certain officers of the Company,
Caterair and OFSI which have responsibility for financial
reporting and accounting matters
<PAGE> 431
Exhibit J
Page 5
regarding whether they were aware of any events or conditions
that, as of the date hereof, would cause either the Company,
Caterair and their respective Subsidiaries (taken as a whole)
or OFSI and its Subsidiaries (on a consolidated basis), in
each case after giving effect to the consummation of the
Transaction and the related financing transactions (including
the incurrence of the New Financing), to (i) have assets with
a Fair Value or Present Fair Salable Value that are less than
the sum of Stated Liabilities and Contingent Liabilities; (ii)
have Unreasonably Small Capital; or (iii) not be able to pay
its Stated Liabilities and Contingent Liabilities as they
mature or otherwise become due.
4. Based on and subject to the foregoing, I hereby certify on
behalf of the Company that, after giving effect to the Transaction and the
related financing transactions (including the New Financing), it is my informed
opinion that as of the date hereof (i) the Fair Value and Present Fair Salable
Value of the assets of each of the Company, Caterair and their respective
Subsidiaries (taken as a whole) and OFSI and its Subsidiaries (on a consolidated
basis) in each case exceed its Stated Liabilities and Contingent Liabilities;
(ii) each of the Company, Caterair and their respective Subsidiaries (taken as a
whole) and OFSI and its Subsidiaries (on a consolidated basis) will not have
Unreasonably Small Capital; and (iii) each of the Company, Caterair and their
respective Subsidiaries (taken as a whole) and OFSI and its Subsidiaries (on a
consolidated basis) will be able to pay its Stated Liabilities and Contingent
Liabilities as they mature or otherwise become due.
<PAGE> 432
Exhibit J
Page 6
IN WITNESS WHEREOF, the Company has caused its duly authorized
_______________ to execute and deliver this Certificate this 28th day of August,
1997.
SC INTERNATIONAL SERVICES, INC.
By______________________________
Name:
Title:
<PAGE> 433
EXHIBIT K
INTERCOMPANY NOTE
New York, New York
___________, _____
FOR VALUE RECEIVED, __________________________, a ___________
corporation (the "Payor"), hereby promises to pay on demand to the order of
______________________, or its registered assigns (the "Payee"), in lawful money
of the United States of America in immediately available funds, at such location
in the United States of America as the Payee shall from time to time designate,
the unpaid principal amount of all loans and advances made by the Payee to the
Payor (collectively, the "Loans").
The Payor promises also to pay interest on the Loans in like
money at said office from the date hereof until paid at such rate per annum as
shall be agreed upon from time to time by the Payor and Payee.
Upon the commencement of any bankruptcy, reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar proceeding of any jurisdiction relating to the Payor, the
Loans shall become immediately due and payable without presentment, demand,
protest or notice of any kind in connection with this Note.
This Note is one of the Intercompany Notes referred to in the
Credit Agreement, dated as of September 29, 1995 and amended and restated as of
August 28, 1997, among Onex Food Services, Inc., SC International Services,
Inc., Caterair Holdings Corporation, Caterair International Corporation, the
lenders from time to time party thereto, Bankers Trust Company and J.P. Morgan
Securities Inc., as Co-Arrangers, Bankers Trust Company, as Syndication Agent,
Morgan Guaranty Trust Company of New York, as Administrative Agent, and The Bank
of New York, as Co-Agent (as amended, modified or supplemented from time to
time, the "Credit Agreement") and is subject to the terms thereof, and shall be
pledged by the Payee pursuant to the General Pledge Agreement (as defined in the
Credit Agreement). The Payor hereby acknowledges and agrees that the Collateral
Agent pursuant to (and as defined in) the General Pledge Agreement, as in effect
from time to time, may exercise all rights provided therein with respect to this
Note.
<PAGE> 434
EXHIBIT K
Page 2
The Payee is hereby authorized to record all Loans made by it
to the Payor (all of which shall be evidenced by this Note), and all repayments
or prepayments thereof, in its books and records, such books and records
constituting prima facie evidence of the accuracy of the information contained
therein.
All payments under this Note shall be made without offset,
counterclaim or deduction of any kind.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAW OF THE STATE OF NEW YORK.
[NAME OF PAYOR]
By________________________________
Title:
Pay to the order of
____________________________
[NAME OF PAYEE]
By__________________________
Title:
<PAGE> 435
EXHIBIT L
AMENDED AND RESTATED
SUBORDINATION AGREEMENT
This Amended and Restated Subordination Agreement (the
"Subordination Agreement"), dated as of August 28, 1997, entered into by and
among Caterair Holdings Corporation, a Delaware corporation ("Holdings"), Renex
Corporation, a corporation organized under the laws of the Cayman Islands
("Debentureholder"), Caynex, Inc., a corporation organized under the laws of the
Cayman Islands ("Optionholder"), and Morgan Guaranty Trust Company of New York,
as Administrative Agent (together with any successor administrative agent, the
"Administrative Agent"), on behalf of the various lenders under (i) the Credit
Agreement, dated as of September 29, 1995 and amended and restated as of August
28, 1997, by and among Holdings, Caterair International Corporation
("Caterair"), Onex Food Services, Inc., SC International Services, Inc.
("SCIS"), the lenders from time to time party thereto, Bankers Trust Company and
J.P. Morgan Securities Inc., as Co-Arrangers, Bankers Trust Company, as
Syndication Agent, Morgan Guaranty Trust Company of New York, as Administrative
Agent, and The Bank of New York, as Co-Agent (the "Revolver"), and (ii) the Term
Loan Agreement, dated as of August 28, 1997, by and among SCIS, Caterair, the
lenders from time to time party thereto, Bankers Trust Company and J.P. Morgan
Securities Inc., as Co-Arrangers, Bankers Trust Company, as Syndication Agent,
and Morgan Guaranty Trust Company of New York as Administrative Agent (the "Term
Loan") (each of the Revolver and the Term Loan as amended, modified,
supplemented, extended, restated, refinanced, replaced or refunded from time to
time, collectively, the "Credit Agreements"), amends and restates that certain
Subordination Agreement dated as of December 19, 1995 by and among the parties
hereto.
WHEREAS, Holdings is the maker of that certain $43,800,000
principal amount Senior Debenture due 2001, dated September 29, 1995 (together
with all Interest Debentures (as defined therein) issued or to be issued
thereunder or issued prior to September 29, 1995 pursuant to the $280,000,000
principal amount Senior Debenture due 2001, dated December 15, 1989, made by
Holdings, the "Holdings Unsecured Debenture");
WHEREAS, Debentureholder is the holder of the Holdings Unsecured
Debenture;
WHEREAS, Optionholder is the holder of an option granted to it by
Debentureholder to purchase the Holdings Unsecured Debenture from
Debentureholder;
NOW THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
Section 1.01. Subordination of Liabilities. Holdings, for itself,
its successors and assigns, covenants and agrees, and each subsequent holder of
the Holdings Unsecured Debenture, including, without limitation, Debentureholder
and Optionholder, by their acceptance thereof likewise covenants and agrees,
that the payment of the principal of, interest on, and all other amounts owing
in respect of, the Holdings Unsecured Debenture (the "Subordinated
Indebtedness") is hereby expressly subordinated, to the extent and in the manner
hereinafter set
<PAGE> 436
forth, to the prior satisfaction and discharge in full in cash or termination of
the Obligations (as defined below) under the Credit Agreements. The provisions
of this Subordination Agreement shall constitute a continuing offer to all
persons who, in reliance upon such provisions, become holders of, or continue to
hold, the Obligations under the Credit Documents (as defined in each of the
Credit Agreements) and such provisions are made for the benefit of the holders
of the Obligations under the Credit Documents, and, they and/or each of them may
proceed to enforce such provisions. This provision shall in no manner limit the
right or obligation of Holdings to issue, in accordance with the terms of the
Holdings Unsecured Debenture, to the Holder of the Holdings Unsecured Debenture,
Interest Debentures. As used herein, the term "Obligation" shall mean any
principal, interest (including interest accruing after the commencement of any
bankruptcy, insolvency, receivership or similar proceeding, at the rate provided
for in the documentation in respect thereto, whether or not such interest is an
allowed claim against the debtor in any such proceeding), premium, penalties,
fees, expenses, indemnities and other liabilities and obligations payable under
a Credit Agreement or any other Credit Document.
Section 1.02. Holdings Not to Make Payments with Respect to
Subordinated Indebtedness in Certain Circumstances. (a) All Obligations owing in
respect of the Credit Documents shall first be paid in full in cash, before any
payment, whether in cash, property, securities or otherwise, is made on account
of the Subordinated Indebtedness.
(b) Holdings may not, directly or indirectly, make any payment to
the holder of any Subordinated Indebtedness (other than by issuance of Interest
Debentures) and may not acquire any Subordinated Indebtedness for cash or
property until all Obligations owing in respect of the Credit Documents shall
have been satisfied and discharged in full in cash or terminated.
Notwithstanding the preceding sentence until the satisfaction and discharge in
full in cash or termination of all Obligations owing in respect of the Credit
Documents, the Debentureholder, Optionholder (or any subsequent holder of the
Holdings Unsecured Debenture), Holdings and the Administrative Agent hereby
agree that Holdings shall pay all amounts due and payable (other than Interest
Debentures), at maturity or any time thereafter, in respect of the Holdings
Unsecured Debenture to an escrow agent (the "Escrow Agent") to be held by such
Escrow Agent under the terms and conditions contained in the form of Escrow
Agreement attached hereto as Exhibit A. The Escrow Agent shall be selected by
Holdings and shall be reasonably satisfactory to the Administrative Agent. Each
holder of the Holdings Unsecured Debenture hereby agrees that, so long as any
Obligations owing in respect of the Credit Documents remain outstanding, it will
not sue for, or otherwise take any action to enforce Holdings' obligations to
pay, amounts owing in respect of the Holdings Unsecured Debenture without the
prior written consent of the Required Banks (as such term is defined in each of
the Credit Agreements). However, the prohibition contained in the preceding
sentence shall in no way be construed to limit the right of any holder of the
Holdings Unsecured Debenture to sue for, or otherwise take action to enforce
Holdings' obligation (pursuant to the terms of this Section 1.02(b)) to pay
amounts of cash otherwise available to Holdings to the Escrow Agent in respect
of the Holdings Unsecured Debenture and for Holdings to issue Interest
Debentures, it being understood and agreed that (i) cash otherwise available to
Holdings shall not include (w) cash or other funds held by any subsidiary or
affiliate of Holdings, (x) cash that is necessary for Holdings to pay franchise
2
<PAGE> 437
taxes and other fees and expenses to maintain its corporate existence, (y) cash
necessary to pay fees to its directors and (z) cash necessary to perform its
accounting, legal, corporate reporting and other administrative functions and
(ii) until all Obligations under the Credit Documents have been paid in full in
cash, in no event shall any holder of the Holdings Unsecured Debenture take any
enforcement action whatsoever with respect to any outstanding shares of capital
stock of Caterair International Corporation or any other subsidiary of Holdings.
(c) In the event that notwithstanding the provisions of the
preceding subsections (a) and (b) of this Section 1.02, Holdings shall make any
payment to any holder of Subordinated Indebtedness on account of the
Subordinated Indebtedness at a time when such payment is not permitted by said
subsection (a) or (b), such payment shall be paid forthwith to the
Administrative Agent in satisfaction of any Obligations owing in respect of the
Credit Documents.
(d) To the extent any payment of indebtedness under the Credit
Documents (whether by or on behalf of Holdings, as proceeds of security or
enforcement of any right of setoff or otherwise) is declared to be fraudulent or
preferential, set aside or required to be paid to any receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar person under any
bankruptcy, insolvency, receivership, fraudulent conveyance or similar law,
then, if such payment is recovered by, or paid over to, such receiver, trustee
in bankruptcy, liquidating trustee, agent or other similar person, the
indebtedness under the Credit Documents or part thereof originally intended to
be satisfied shall be deemed to be reinstated and outstanding as if such payment
had not occurred.
Section 1.03. Subordination to Prior Payment of all Senior
Indebtedness on Dissolution, Liquidation or Reorganization of Holdings. Until
the satisfaction and discharge in full in cash or termination of all Obligations
owing in respect of the Credit Documents, upon any distribution of assets of
Holdings upon dissolution, winding up, liquidation or reorganization of Holdings
(whether in bankruptcy, insolvency or receivership proceedings or upon an
assignment for the benefit of creditors or otherwise):
(a) the holders of the Obligations under the Credit Documents shall
first be entitled to receive payment in full in cash in respect of such
Obligations (including, without limitation, post-petition interest at the
rate provided in the documentation with respect to such Obligations,
whether or not such post-petition interest is an allowed claim against
the debtor in any bankruptcy or similar proceeding) before the holder of
the Holdings Unsecured Debenture is entitled to receive any payment on
account of the Subordinated Indebtedness;
(b) any payment or distributions of assets of Holdings of any kind
or character, whether in cash, property or securities to which the holder
of the Holdings Unsecured Debenture would be entitled except for the
provisions of this Subordination Agreement, shall be paid by the
liquidating trustee or agent or other person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating
trustee
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<PAGE> 438
or other trustee or agent, directly to the holders of the Obligations
under the Credit Documents or their representative or representatives, to
the extent necessary to make payment in full in cash in respect of the
Obligations owing in respect of the Credit Documents, after giving effect
to any concurrent payment or distribution to the holders of such
Obligations; and
(c) in the event that, notwithstanding the foregoing provisions of
this Section 1.03, any payment or distribution of assets of Holdings of
any kind or character, whether in cash, property or securities, shall be
received by the holder of the Holdings Unsecured Debenture on account of
Subordinated Indebtedness before the Obligations owing in respect of the
Credit Documents are paid in full in cash, such payment or distribution
shall be paid forthwith to the Administrative Agent in satisfaction of
any Obligations owing under the Credit Documents.
Without in any way modifying the provisions of this Subordination
Agreement or affecting the subordination effected hereby, Holdings shall give
prompt written notice to the holder of the Holdings Unsecured Debenture of any
dissolution, winding up, liquidation or reorganization of Holdings (whether in
bankruptcy, insolvency or receivership proceedings or upon assignment for the
benefit of creditors or otherwise).
Section 1.04. Subrogation. Upon the satisfaction and discharge in
full in cash or termination of all Obligations owing in respect of the Credit
Documents, the holder of the Holdings Unsecured Debenture shall be subrogated to
the rights of the holders of the indebtedness under the Credit Agreements to
receive payments or distributions of assets of Holdings applicable to the Credit
Agreements until all amounts owing on the Holdings Unsecured Debenture shall be
paid in full, and for the purpose of such subrogation no payments or
distributions to the holders of the indebtedness under the Credit Agreements by
or on behalf of Holdings or by or on behalf of the holder of the Holdings
Unsecured Debenture by virtue of this Subordination Agreement which otherwise
would have been made to the holder of the Holdings Unsecured Debenture shall, as
between Holdings, its creditors other than the holders of the indebtedness under
the Credit Agreements, and the holder of the Holdings Unsecured Debenture, be
deemed to be payment by Holdings to or on account of the Credit Agreements, it
being understood that the provisions of this Subordination Agreement are and are
intended solely for the purpose of defining the relative rights of the holder of
the Holdings Unsecured Debenture, on the one hand, and the holders of the
indebtedness under the Credit Agreements, on the other hand.
Section 1.05. Obligation of Holdings Unconditional. Nothing
contained in this Subordination Agreement is intended to or shall impair, as
between Holdings and the holder of the Holdings Unsecured Debenture, the
obligation of Holdings, which is absolute and unconditional, to pay to the
holder of the Holdings Unsecured Debenture the principal of and interest on the
Holdings Unsecured Debenture as and when the same shall become due and payable
in accordance with their terms, or is intended to or shall affect the relative
rights of the holder of the Holdings Unsecured Debenture and creditors of
Holdings other than the holders of
4
<PAGE> 439
the indebtedness under the Credit Agreements (it being understood that the
provisions of this Subordination Agreement are and are intended solely for the
purpose of defining the relative rights of the holder of the Holdings Unsecured
Debenture, on the one hand, and the holders of the indebtedness under the Credit
Agreements on the other hand), nor shall anything herein or therein prevent the
holder of the Holdings Unsecured Debenture from exercising all remedies
otherwise permitted by applicable law and this Subordination Agreement upon an
event of default under the Holdings Unsecured Debenture, subject to the rights,
if any, under this Subordination Agreement of the holders of the indebtedness
under the Credit Agreements in respect of cash, property, or securities of
Holdings received upon the exercise of any such remedy or as otherwise provided
herein with respect to exercising any such remedy. Upon any distribution of
assets of Holdings referred to in this Subordination Agreement, the holder of
the Holdings Unsecured Debenture shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are pending, or a
certificate of the liquidating trustee or agent or other person making any
distribution to the holder of the Holdings Unsecured Debenture, for the purpose
of ascertaining the persons entitled to participate in such distribution, the
holders of the indebtedness under the Credit Agreements and other indebtedness
of Holdings, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this
Subordination Agreement.
Section 1.06. Subordination Rights Not Impaired by Acts or
Omissions of Holdings or Holders of Senior Indebtedness. No right of any present
or future holders of the indebtedness under the Credit Agreements to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of Holdings or by any act or
failure to act in good faith by any such holder, or by any noncompliance by
Holdings with the terms and provisions of the Holdings Unsecured Debenture,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with. The holders of the indebtedness under the Credit
Agreements may, without in any way affecting the obligations of the holder of
the Holdings Unsecured Debenture with respect hereto, at any time or from time
to time and in their absolute discretion, change the manner, place or terms of
payment of, change or extend the time of payment of, or renew or alter, the
Credit Agreements or any other Credit Document or amend, modify or supplement
any agreement or instrument governing or evidencing the Credit Agreements, any
other Credit Documents, or any other document referred to therein, or exercise
or refrain from exercising any other of their rights under the Credit Agreements
or any other Credit Document, including, without limitation, the waiver of
default thereunder and the release of any collateral securing the Credit
Agreements or any other Credit Document, all without notice to or assent from
the holder of the Holdings Unsecured Debenture.
Section 2. Governing Law. This Agreement and (unless otherwise
provided), all amendments hereof and waivers and consents hereunder shall be
governed by the internal law of the State of New York without regard to the
conflicts of laws or principles thereof.
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<PAGE> 440
Section 3. Submission to Jurisdiction.
(a) Any legal action or proceeding with respect to this
Agreement or any of the transactions contemplated hereby may be brought against
any of the parties in the courts of the State of New York or the United States
of America for the Southern District of New York; each of the parties hereby
consents to generally and unconditionally, the jurisdiction of the aforesaid
courts (and the appropriate appellate courts) in any such legal action or
proceedings.
(b) Each of the parties hereto hereby irrevocably waives, in
connection with any such action or proceeding, any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which it may now or hereafter have to bringing of any such
action or proceeding in such jurisdiction.
(c) Each of the parties hereto hereby irrevocably consents to
the service of process of any of the aforementioned courts in any such action or
proceeding anywhere in the world.
(d) Nothing herein shall affect the right of any party hereto
to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against any other party hereto in any other
jurisdiction.
Section 4. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be considered an original, but all
of which together shall constitute the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this
Subordination Agreement as of the date first written above.
CATERAIR HOLDINGS CORPORATION
By: /s/ Terry Roueche
--------------------------------
Name: Terry Roueche
Title: Assistant Secretary
6
<PAGE> 441
ACCEPTED AND AGREED TO
this 28th day of August, 1997
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent under the Revolver
on behalf of the other lenders named therein
By: /s/ Laura E. Loffredo
-----------------------------------------
Name: Laura E. Loffredo
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent under the Term
Loan on behalf of the other lenders named therein
By: /s/ Laura E. Loffredo
-----------------------------------------
Name: Laura E. Loffredo
Title: Vice President
RENEX CORPORATION
By: /s/ Donald F. West
-----------------------------------------
Name: Donald F. West
Title: Authorized Signer
CAYNEX, INC.
By: /s/ Donald F. West
-----------------------------------------
Name: Donald F. West
Title: President
7
<PAGE> 442
EXHIBIT A
to the
Amended and Restated Subordination Agreement
Form of Escrow Agreement
[Escrow Agent]
[Address]
Attention:
Re: Amended and Restated Escrow Agreement
Gentlemen:
This Amended and Restated Escrow Agreement (the "Escrow Agreement")
is hereby accepted as of August __, 1997, by Caterair Holdings Corporation, a
Delaware corporation ("Holdings"), the maker of that certain $43,800,000
principal amount Senior Debenture due 2001, dated September 29, 1995 (together
with all Interest Debentures (as defined therein) issued and to be issued
thereunder or issued prior to September 29, 1995 pursuant to the $280,000,000
principal amount Senior Debenture due 2001, dated December 15, 1989, made by
Holdings, the "Holdings Unsecured Debenture"), Renex Corporation, a corporation
organized under the laws of the Cayman Islands, the holder of the Holdings
Unsecured Debenture ("Debentureholder"), Caynex, Inc., a corporation organized
under the laws of the Cayman Islands, the holder of an option (the "Option") to
purchase the Holdings Unsecured Debenture from Debentureholder ("Optionholder"),
and Morgan Guaranty Trust Company of New York, as Administrative Agent (together
with any successor administrative agents, the "Administrative Agent"), on behalf
of the various lenders under (i) the Credit Agreement, dated as of September 29,
1995 and amended and restated as of August __, 1997, by and among Holdings,
Caterair International Corporation ("Caterair"), Onex Food Services, Inc., SC
International Services, Inc. ("SCIS"), the lenders from time to time party
thereto, Bankers Trust Company, and J.P. Morgan Securities Inc. as Co-Arrangers,
Bankers Trust Company as Syndication Agent, Morgan Guaranty Trust Company of New
York as Administrative Agent, and The Bank of New York as Co-Agent (the
"Revolver"), and (ii) the Term Loan Agreement, dated as of August __, 1997, by
and among SCIS, Caterair, the lenders from time to time party thereto, Bankers
Trust Company and J.P. Morgan Securities Inc., as Co-Arrangers, Bankers Trust
Company, as Syndication Agent, and Morgan Guaranty Trust Company of New York as
Administrative Agent (the "Term Loan") (each of the Revolver and the Term Loan
as amended, modified, supplemented, extended, restated, refinanced, replaced or
refunded from time to time, collectively, the "Credit Agreements").
The parties hereto, intending to be legally bound, hereby agree as
follows:
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<PAGE> 443
1. Deposit and Investments. Holdings will, from time to time,
deposit with _________________, as escrow agent (the "Escrow Agent"), any and
all amounts to be paid to the holder of the Holdings Unsecured Debenture in
respect of all amounts due and payable (excluding any Interest Debentures) under
the Holdings Unsecured Debenture, at maturity or any other time (collectively,
the "Deposit"). The Deposit shall be held in a separate account maintained by
the Escrow Agent (the "Escrow") pursuant to this Escrow Agreement. The Escrow
Agent shall invest the Deposit in Permitted Investments in accordance with the
joint written instructions of Holdings, Debentureholder and Optionholder until
disbursement of amounts deposited therein. "Permitted Investments" means any of
the investments identified on Schedule A hereto.
2. Deposit. The Escrow Agent shall hold and disburse the Deposit
pursuant to the terms of this Escrow Agreement.
3. Retention of Earnings, Etc. All interest, earnings, and gains
received by the Escrow Agent from the investment of the Deposit shall be
reinvested and held as part of the Deposit. In connection with the investment of
the Deposit, Debentureholder or Optionholder, as the case may be, shall provide
the Escrow Agent with their respective taxpayer identification numbers.
4. Disbursement.
(a) The Escrow Agent is authorized and directed to deliver and
disburse the Deposit, together with any interest, earnings or gains on the
Deposit in accordance with the terms set forth below upon receipt of written
notice from the Administrative Agent:
(i) if a written notice from the Administrative Agent states
that the obligations under either of the Credit Agreements have been terminated
or satisfied in full, the Escrow Agent shall disburse the Deposit to
Debentureholder;
(ii) if a written notice from the Administrative Agent states
that an Event of Default has occurred under (and as defined in) either Credit
Agreement, the Escrow Agent shall disburse the Deposit to the Administrative
Agent on behalf of the other lenders under the Credit Agreements; or
(iii) if a written notice from the Administrative Agent
states that a Deposit is in violation of the Amended and Restated Subordination
Agreement, dated as of August __, 1997, among Holdings, Debentureholder,
Optionholder and the Administrative Agent, the Escrow Agent shall disburse the
Deposit to the Administrative Agent on behalf of the other lenders under the
Credit Agreements.
(b) In the event the Escrow Agent shall be instructed to disburse
the Deposit to the Administrative Agent in accordance with Section 4(a)(ii), and
the amount of the Deposit, together with all other amounts received by the
lenders under the Credit Agreements
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<PAGE> 444
shall exceed the amounts owing under the Credit Agreements, the Escrow Agent
shall pay such excess to the holder of the Holdings Unsecured Debenture or as a
court may otherwise direct.
5. Rights, Duties, and Liabilities of Escrow Agent.
(a) The Escrow Agent shall have no duty to know or determine the
performance or non-performance of any provision of any agreement between the
parties to this Escrow Agreement, which shall not bind the Escrow Agent in any
manner. The Escrow Agent assumes no responsibility for the validity or
sufficiency of any document or paper or payment deposited or called for under
this Escrow Agreement except as may be expressly and specifically set forth in
this Escrow Agreement, and the duties and responsibilities of the Escrow Agent
under this Escrow Agreement are limited to those expressly and specifically
stated in this Escrow Agreement.
(b) The Escrow Agent shall not be personally liable for any act it
may do or omit to do under this Escrow Agreement as such agent while acting in
good faith and in the exercise of its own best judgment, and any act done or
omitted by it pursuant to the written advice of its counsel shall be conclusive
evidence of such good faith. The Escrow Agent shall have the right at any time
to consult with its counsel upon any question arising under this Escrow
Agreement and shall incur no liability for any delay reasonably required to
obtain the advice of counsel.
(c) Other than those notices or demands expressly provided in this
Escrow Agreement, the Escrow Agent is expressly authorized to disregard any and
all notices or demands given by any party hereto, or by any other person, firm,
or corporation, excepting only orders or process of court, and the Escrow Agent
is expressly authorized to comply with and obey any and all final process,
orders, judgments, or decrees of any court, and to the extent the Escrow Agent
obeys or complies with any thereof of any court, it shall not be liable to any
party to this Escrow Agreement or to any other person, firm, or corporation by
reason of such compliance.
(d) In consideration of the acceptance of this Escrow by the Escrow
Agent (as evidenced by its signature below), Holdings, Debentureholder and
Optionholder agree, for themselves and their successors and assigns, to pay the
Escrow Agent its charges, fees, and expenses as contemplated by this Escrow
Agreement. The escrow fees or charges shall be as written below the Escrow
Agent's signature.
(e) The Escrow Agent shall be under no duty or obligation to
ascertain the identity, authority, or right of any party hereto (or their
agents) to execute or deliver or purport to execute or deliver this Escrow
Agreement or any documents or papers or payments deposited or called for or
given under this Escrow Agreement.
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<PAGE> 445
(f) The Escrow Agent shall not be liable for the outlawing of any
rights under any statute of limitations or by reason of laches in respect of
this Escrow Agreement or any documents or papers deposited with the Escrow
Agent.
(g) In the event of any dispute among the parties to this Escrow
Agreement, including a dispute as to the validity or meaning of any provision of
this Escrow Agreement, or any other fact or matter relating to this Escrow
Agreement or to the transactions between Holdings, Debentureholder or
Optionholder and the Administrative Agent, as the case may be, the Escrow Agent
is instructed that it shall be under no obligation to act, except in accordance
with this Escrow Agreement or under process or order of court or, if there by no
such process or order, until it has filed or caused to be filed an appropriate
action interpleading Holdings, Debentureholder or Optionholder and delivering
the Deposit (or the portion of the Deposit in dispute) to such court, and the
Escrow Agent shall sustain no liability for its failure to act pending such
process of court or order or interpleader of action.
6. Modification of Escrow Agreement. The provisions of this Escrow
Agreement may be supplemented, altered, amended, modified, or revoked by writing
only, signed by Holdings, Debentureholder, Optionholder and the Administrative
Agent and approved in writing by the Escrow Agent.
7. Assignment of Escrow Agreement. No assignment, transfer,
conveyance, or hypothecation of any right, title, or interest in and to the
subject matter of this Escrow Agreement shall be binding upon any party,
including the Escrow Agent, unless all fees have been paid and then only upon
the assent of all parties hereto in writing.
8. Binding. The undertakings and agreements contained in this
Escrow Agreement shall bind and inure to the benefit of the parties to this
Escrow Agreement and their respective heirs, personal representatives,
successors, and assigns.
9. Sale or Assignment of Holdings Unsecured Debenture. It shall be
a condition of the sale, assignment, hypothecation or other transfer by
Debentureholder or Optionholder, as the case may be, of the Holdings Unsecured
Debenture to any third party not a party to this Escrow Agreement (each a
"Nonparty Debentureholder"), that such Nonparty Debentureholder become a party
to, and agree to be bound by, the terms and conditions contained herein.
10. Notices. Any notice or other communication required or
permitted to be given under this Agreement shall be in writing and shall be
considered given when delivered or when sent by telecopier (with receipt
confirmed) provided that in each case a copy is mailed by registered mail to the
appropriate parties at the addresses set forth below (or at such other address
as a party may specify by notice to the other):
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<PAGE> 446
If to Debentureholder, to:
Renex Corporation
c/o Caledonian Bank and Trust, Limited
P.O. Box 1043
George Town, Grand Cayman
Cayman Islands
British West Indies
Telecopier No.: ________________
Attention: _____________________
If to Optionholder, to:
Caynex, Inc.
c/o Coopers & Lybrand
Butterfield House
Grand Cayman
Cayman Islands
British West Indies
Attention: William Walmsley
with copies to:
c/o Onex Corporation
161 Bay Street
Toronto, Ontario M5J 2S1
Canada
Telecopier No.: (416) 362-5765
Attention: Mr. Ewout Heersink
Chief Financial Officer
and
Na-Churs Plant Food Co.
421 Leader Street
Marion, Ohio 43302
Telecopier No. (614) 383-2615
Attention: Donald F. West
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<PAGE> 447
and
Onex Food Services, Inc.
c/o Sky Chefs, Inc.
524 E. Lamar Blvd.
Arlington, Texas 76011-3999
Telecopier No.: (817) 792-2222
Attention: Patrick Tolbert
Executive Vice President and Chief
Administrative and Financial Officer
and
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, New York 10022
Telecopier No.: (212) 836-7149
Attention: Joel I. Greenberg, Esq.
If to the Administrative Agent, to:
c/o J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, Delaware 19713
Telecopier No.: (212) 648-5336
Attention: Andrew Lipsett
If to Holdings, to:
[6550 Rock Spring Drive
Bethesda, Maryland 20817
Telecopier No.: (301) 897-7978]
Attention: _____________________
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with a copy to:
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, New York 10022
Telecopier No.: (212) 836-7149
Attention: Joel I. Greenberg, Esq.
If to the Escrow Agent, to:
[Address of Escrow Agent]
Telecopier No.: __________________
Attention: _______________________
14
<PAGE> 449
11. Counterparts. This Escrow Agreement may be executed in one or
more counterparts, each of which will be deemed an original. Whenever pursuant
to this Escrow Agreement any of the parties hereto are to deliver a jointly
signed writing to Escrow Agent or jointly advise Escrow Agent in writing, such
writing may in each and all cases be signed jointly or in counterparts and such
counterparts shall be deemed to be one instrument.
CATERAIR HOLDINGS CORPORATION
By:
--------------------------------------
Name:
Title:
RENEX CORPORATION
By:
--------------------------------------
Name:
Title:
CAYNEX, INC.
By:
--------------------------------------
Name:
Title:
15
<PAGE> 450
ACCEPTED this __ day of ___________________
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent under the
Revolver on behalf of the other lenders
named therein
By:
----------------------------------------
Name:
Title:
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent under the
Term Loan on behalf of the other lenders
named therein
By:
----------------------------------------
Name:
Title:
[ESCROW AGENT]
By:
----------------------------------------
Name:
Title:
Fee:
16
<PAGE> 451
Schedule A
Permitted Investments
Investments permitted shall include: (a) obligations issued or
guaranteed by the United States of America; (b) obligations issued or guaranteed
by any person controlled or supervised by and acting as an instrumentality of
the United States of America pursuant to authority granted by the Congress of
the United States of Americas; (c) obligations rated at the time of purchase not
less than "A" or the equivalent by Moody's Investors Service, Inc. or Standard &
Poor's Ratings Group, issued or guaranteed by any state of the United States of
America, or the District of Columbia; (d) commercial or finance company paper
which is rated at the time of purchase in the single highest classification,
"A-l+" by Standard & Poor's Ratings Group and "P-1" by Moody's Investors
Service, Inc. and which matures not more than 270 days after the date of
purchase; (e) United States dollar denominated deposit accounts, federal funds
and banker's acceptances with domestic commercial banks which have a rating on
their short term certificates of deposit on the date of purchase of "A-l" or
"A-l+" by Standard & Poor's Rating Group and "P-1" by Moody's Investors Service,
Inc. and maturing no more than 360 days after the date of purchase; (f)
repurchase agreements fully secured by any obligation set forth in clauses (a)
and (b) above; (g) shares in regulated investment companies substantially all of
the assets of which are invested in investments described in clauses (a) through
(f) above and (h) investment agreements with a bank or insurance company, which
has an unsecured, uninsured and unguaranteed obligation (or claims-paying
ability) rated "A-3" or better by Moody's Investors Service, Inc., or is the
lead bank of a parent bank holding company, or an affiliate of any such bank or
insurance company with an uninsured, unsecured and unguaranteed obligation
meeting such rating requirements and either (A) such affiliate meets the
applicable rating requirements or (B) such bank or insurance company guarantees
the obligations of such affiliate under such investment agreement, provided: (i)
interest is paid at least semi-annually at a fixed rate during the entire term
of the agreement, consistent with Bond payment dates; (ii) moneys invested
thereunder may be withdrawn without any penalty, redemption premium, or charge
upon not more than one day's notice (provided such notice may be amended or
canceled at any time prior to the withdrawal date); (iii) the agreement is not
subordinated to any other obligations of such insurance company or bank; (iv)
the same guaranteed interest rate will be paid on any future deposits made to
restore the reserve to its required amount; and (v) the borrower receives an
opinion of counsel that such agreement is an enforceable obligation of such
insurance company or bank.
17
<PAGE> 452
EXHIBIT M
ANNEX A
Subordination Provisions to be attached
to each note evidencing an intercompany
loan made by a non-Wholly Owned Subsidiary
of SCIS to SCIS, any Wholly-Owned
Domestic Subsidiary thereof or IFSC
Section 1.01. Subordination of Liabilities. __________________
(the "Company"), for itself, its successors and assigns, covenants and agrees,
and each holder of the Note to which this Annex A is attached (the "Note") by
its acceptance thereof likewise covenants and agrees, that the payment of the
principal of, interest on, and all other amounts owing in respect of, the Note
(the "Subordinated Indebtedness") is hereby expressly subordinated, to the
extent and in the manner hereinafter set forth, to the prior payment in full in
cash of all Senior Indebtedness (as defined in Section 1.07 of this Annex A).
The provisions of this Annex A shall constitute a continuing offer to all
persons who, in reliance upon such provisions, become holders of, or continue to
hold, Senior Indebtedness, and such provisions are made for the benefit of the
holders of Senior Indebtedness, and such holders are hereby made obligees
hereunder the same as if their names were written herein as such, and they
and/or each of them may proceed to enforce such provisions.
Section 1.02. Company not to Make Payments with Respect to
Subordinated Indebtedness in Certain Circumstances. (a) Upon the maturity of any
Senior Indebtedness (including interest thereon or fees or any other amounts
owing in respect thereof), whether at stated maturity, by acceleration or
otherwise, all Obligations (as defined in Section 1.07 of this Annex A) owing in
respect thereof, in each case to the extent due and owing, shall first be paid
in full in cash, before any payment, whether in cash, property, securities or
otherwise, is made on account of the Subordinated Indebtedness.
(b) The Company may not, directly or indirectly, make any
payment of any Subordinated Indebtedness and may not acquire any Subordinated
Indebtedness for cash or property until all Senior Indebtedness has been paid in
full in cash if any default or event of default under the SCIS Credit Agreement
(as defined in Section 1.07 of this Annex A), the Caterair Credit Agreement (as
defined in Section 1.07 of this Annex A) or any other issue of Senior
Indebtedness is then in existence or would result therefrom. Each holder of the
Note hereby agrees that, so long as any such default or event of default in
respect of any issue of Senior Indebtedness exists or any restrictions set forth
in any issue of Senior Indebtedness reduces the amount permitted to be paid in
respect of the Note, such holder
<PAGE> 453
EXHIBIT M
ANNEX A
Page 2
will not sue for, or otherwise take any action to enforce the Company's
obligations to pay, amounts owing in respect of the Note.
(c) In the event that notwithstanding the provisions of the
preceding subsections (a) and (b) of this Section 1.02, the Company shall make
any payment on account of the Subordinated Indebtedness at a time when payment
is not permitted by said subsection (a) or (b), such payment shall be held by
the holder of the Note, in trust for the benefit of, and shall be paid forthwith
over and delivered to, the holders of Senior Indebtedness or their
representative or the trustee under the indenture or other agreement pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, for application pro rata to the
payment of all Senior Indebtedness remaining unpaid to the extent necessary to
pay all Senior Indebtedness in full in accordance with the terms of such Senior
Indebtedness, after giving effect to any concurrent payment or distribution to
or for the holders of Senior Indebtedness. Without in any way modifying the
provisions of this Annex A or affecting the subordination effected hereby if the
hereafter referenced notice is not given, the Company shall give the holder of
the Note prompt written notice of any event which would prevent payments under
Section 1.02(a) or (b).
Section 1.03. Subordination to Prior Payment of all Senior
Indebtedness on Dissolution, Liquidation or Reorganization of Company. Upon any
distribution of assets of the Company upon dissolution, winding up, liquidation
or reorganization of the Company (whether in bankruptcy, insolvency or
receivership proceedings or upon an assignment for the benefit of creditors or
otherwise):
(a) the holders of all Senior Indebtedness shall first be
entitled to receive payment in full in cash of all Senior Indebtedness
(including, without limitation, post-petition interest at the rate
provided in the documentation with respect to the Senior Indebtedness,
whether or not such post-petition interest is an allowed claim against
the debtor in any bankruptcy or similar proceeding) before the holder
of the Note is entitled to receive any payment on account of the
Subordinated Indebtedness;
(b) any payment or distributions of assets of the Company of
any kind or character, whether in cash, property or securities to which
the holder of the Note would be entitled except for the provisions of
this Annex A, shall be paid by the liquidating trustee or agent or
other person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or other trustee or
<PAGE> 454
EXHIBIT M
ANNEX A
Page 3
agent, directly to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under
any indenture under which any instruments evidencing any such Senior
Indebtedness may have been issued, to the extent necessary to make
payment in full in cash of all Senior Indebtedness remaining unpaid,
after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing
provisions of this Section 1.03, any payment or distribution of assets
of the Company of any kind or character, whether in cash, property or
securities, shall be received by the holder of the Note on account of
Subordinated Indebtedness before all Senior Indebtedness is paid in
full in cash, such payment or distribution shall be received and held
in trust for and shall be paid over to the holders of the Senior
Indebtedness remaining unpaid or unprovided for or their representative
or representatives, or to the trustee or trustees under any indenture
under which any instruments evidencing any of such Senior Indebtedness
may have been issued, for application to the payment of such Senior
Indebtedness until all such Senior Indebtedness shall have been paid in
full in cash, after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness.
Without in any way modifying the provisions of this Annex A or
affecting the subordination effected hereby if the hereafter referenced notice
is not given, the Company shall give prompt written notice to the holder of the
Note of any dissolution, winding up, liquidation or reorganization of the
Company (whether in bankruptcy, insolvency or receivership proceedings or upon
assignment for the benefit of creditors or otherwise).
Section 1.04. Subrogation. Subject to the prior payment in
full in cash of all Senior Indebtedness, the holder of the Note 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 all amounts owing on the Note shall be paid in full, and for
the purpose of such subrogation no payments or distributions to the holders of
the Senior Indebtedness by or on behalf of the Company or by or on behalf of the
holder of the Note by virtue of this Annex A which otherwise would have been
made to the holder of the Note shall, as between the Company, its creditors
other than the holders of Senior Indebtedness, and the holder of the Note, be
deemed to be payment by the Company to or on account of the Senior Indebtedness,
it being understood that the provisions of this Annex A are and are intended
solely for the purpose of defining the
<PAGE> 455
EXHIBIT M
ANNEX A
Page 4
relative rights of the holder of the Note, on the one hand, and the holders of
the Senior Indebtedness, on the other hand.
Section 1.05. Obligation of the Company Unconditional. Nothing
contained in this Annex A or in the Note is intended to or shall impair, as
between the Company and the holder of the Note, the obligation of the Company,
which is absolute and unconditional, to pay to the holder of the Note the
principal of and interest on the Note as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the
relative rights of the holder of the Note and creditors of the Company other
than the holders of the Senior Indebtedness, nor shall anything herein or
therein (except to the extent set forth in this Annex A) prevent the holder of
the Note from exercising all remedies otherwise permitted by applicable law and
this Annex A upon an event of default under the Note, subject to the rights, if
any, under this Annex A of the holders of Senior Indebtedness in respect of
cash, property, or securities of the Company received upon the exercise of any
such remedy. Upon any distribution of assets of the Company referred to in this
Annex A, the holder of the Note shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are pending, or a
certificate of the liquidating trustee or agent or other person making any
distribution to the holder of the Note, for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Annex A.
Section 1.06. Subordination Rights not Impaired by Acts or
Omissions of Company or Holders of Senior Indebtedness. No right of any present
or future holders of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act in
good faith by any such holder, or by any noncompliance by the Company with the
terms and provisions of the Note, regardless of any knowledge thereof which any
such holder may have or be otherwise charged with. The holders of the Senior
Indebtedness may, without in any way affecting the obligations of the holder of
the Note with respect hereto, at any time or from time to time and in their
absolute discretion, change the manner, place or terms of payment of, change or
extend the time of payment of, or renew or alter, any Senior Indebtedness or
amend, modify or supplement any agreement or instrument governing or evidencing
such Senior Indebtedness or any other document referred to therein, or exercise
or refrain from exercising any other of their rights under the Senior
Indebtedness including, without limitation, the waiver of default
<PAGE> 456
EXHIBIT M
ANNEX A
Page 5
thereunder and the release of any collateral securing such Senior Indebtedness,
all without notice to or assent from the holder of the Note.
Section 1.07. Senior Indebtedness. The term "Senior
Indebtedness" shall mean all Obligations (as defined below) (i) of the Company
under, or in respect of, the Credit Agreement (as amended, modified,
supplemented, extended, restated, refinanced, replaced or refunded from time to
time, the "SCIS Credit Agreement"), dated as of September 29, 1995 and amended
and restated as of August 28, 1997, by and among Onex Food Services, Inc., SC
International Services, Inc. ("SCIS"), Caterair Holdings Corporation, Caterair
International Corporation ("Caterair"), the lenders from time to time party
thereto, Bankers Trust Company and J.P. Morgan Securities Inc., as Co-Arrangers,
Bankers Trust Company, as Syndication Agent, Morgan Guaranty Trust Company of
New York, as Administrative Agent, and The Bank of New York, as Co-Agent, and
any renewal, extension, restatement, refinancing or refunding thereof, (ii) of
the Company under the other Credit Documents (as defined in the SCIS Credit
Agreement) to which it is a party (including, under the Subsidiaries Guaranty
(as defined in the SCIS Credit Agreement)), (iii) of the Company under, or in
respect of, any Interest Rate Protection Agreements (as defined in the SCIS
Credit Agreement) or Other Hedging Agreements (as defined in the SCIS Credit
Agreement), (iv) of the Company, under, or in respect of, the Term Loan
Agreement (as amended, modified, supplemented, extended, restated, refinanced,
replaced or refunded from time to time, the "Caterair Credit Agreement"), dated
as of August 28, 1997, by and among SCIS, Caterair, the lenders from time to
time party thereto, Bankers Trust Company and J.P. Morgan Securities Inc., as
Co-Arrangers, Bankers Trust Company, as Syndication Agent, and Morgan Guaranty
Trust Company of New York, as Administrative Agent and (v) of the Company under
the other Credit Documents (as defined in the Caterair Credit Agreement) to
which it is a party (including under the Subsidiaries Guaranty (as defined in
the Caterair Credit Agreement)). As used herein, the term "Obligation" shall
mean any principal, interest, premium, penalties, fees, expenses, indemnities
and other liabilities and obligations payable under the documentation governing
any Senior Indebtedness (including interest accruing after the commencement of
any bankruptcy, insolvency, receivership or similar proceeding, whether or not
such interest is an allowed claim against the debtor in any such proceeding).
<PAGE> 457
EXHIBIT N
LETTER AGREEMENT
ONEX FOOD SERVICES, INC.
524 East Lamar Boulevard
Arlington, Texas 76011
CAYNEX, INC.
Butterfield House
P.O. Box 2019
Grand Cayman
Cayman Islands
British West Indies
August 28, 1997
Morgan Guaranty Trust Company
of New York
c/o J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, Delaware 19713
Re: Pledge by Renex Corporation ("Reflex") of the $43,800,000
principal amount Senior Debenture due 2001, dated
September 29, 1995, made by Caterair Holdings Corporation
("Holdings") (together with all Interest Debentures (as
defined therein) issued or to be issued thereunder or
issued prior to September 29, 1995 pursuant to the
$280,000,000 principal amount Senior Debenture due 2001,
dated December 25, 1989, made by Holdings, the "Holdings
Unsecured Debenture") to Onex Food Services, Inc. ("OFSI")
and Caynex, Inc. ("Caynex").
Ladies and Gentlemen:
Please be advised that, (i) pursuant to a Pledge Agreement, dated
December 19, 1995 (the "Pledge Agreement"), Renex has pledged to OFSI and
granted to OFSI a security interest in the Collateral (as defined in the Pledge
Agreement and including, without limitation, the Holdings Unsecured Debenture),
and (ii) pursuant to an Option Agreement, dated December 19, 1995 (the "Option
Agreement"), Renex has granted to Caynex a subordinated security interest in the
Holdings Unsecured Debenture. The Holdings Unsecured Debenture has been
<PAGE> 458
pledged by OFSI to you and is on deposit with you in connection with (i) that
certain Credit Agreement, dated as of September 29, 1995 and amended and
restated as of August 28, 1997, among Holdings, Caterair International
Corporation ("Caterair"), OFSI, SC International Services, Inc. ("SCIS"), the
lenders from time to time party thereto, Bankers Trust Company and J.P. Morgan
Securities Inc. as Co-Arrangers, Bankers Trust Company as Syndication Agent,
Morgan Guaranty Trust Company of New York as Administrative Agent, and The Bank
of New York as Co-Agent (the "Revolver") and (ii) that certain Term Loan
Agreement, dated as of August 28, 1997, among SCIS, Caterair, the lenders from
time to time party thereto, Bankers Trust Company and J.P. Morgan Securities
Inc. as Co-Arrangers, Bankers Trust Company as Syndication Agent, and Morgan
Guaranty Trust Company of New York as Administrative Agent (the "Term Loan")
(each of the Revolver and the Term Loan as amended, modified, supplemented,
extended, restated, refinanced, replaced or refunded from time to time,
collectively, the "Credit Agreements").
By your execution of this letter agreement in the space indicated
below, you hereby (i) agree to hold the Collateral, as bailee for OFSI and
Caynex, subject to your prior security interest, and (ii) agree that, upon
payment in full of all amounts and termination of all commitments to make
financial accommodations under the Credit Agreements, you will deliver the
Collateral to OFSI at do Sky Chefs, Inc., 524 East Lamar Boulevard, Arlington,
Texas 76011 (Attention: Patrick W. Tolbert, Executive Vice President and Chief
Financial and Administrative Officer), or to OFSI's designee if so notified in a
writing by OFSI.
OFSI and Caynex each acknowledge that you are acting merely as
bailee for purposes of perfecting their respective security interests and that
you have undertaken no duty to either of them (and shall have no liability
whatsoever to either of them in respect thereof) and are not otherwise acting as
agent for either of them with respect to the Collateral.
Very truly yours,
ONEX FOOD SERVICES, INC.
By: /s/ Terry Roueche
-----------------------------
Name: Terry Roueche
Title: Assistant Secretary
2
<PAGE> 459
CAYNEX, INC.
By: /s/ Donald F. West
---------------------------------
Name: Donald F. West
Title: President
Agreed to:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent under
the Revolver on behalf of the other
lenders named therein
By: /s/ Laura Loffredo
---------------------------------
Name: LAURA E. LOFFREDO
Title: VICE PRESIDENT
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent under
the Term Loan on behalf of the other
lenders named therein
By: /s/ [ILLEGIBLE]
---------------------------------
Name: [ILLEGIBLE]
Title: [ILLEGIBLE]
RENEX CORPORATION
By: /s/ Donald F. West
---------------------------------
Name: Donald F. West
Title: Authorized Signer
3
<PAGE> 460
EXHIBIT O
ASSIGNMENT AND ASSUMPTION AGREEMENT
Date __________, 19__
Reference is made to the Credit Agreement described in Item 2
of Annex I hereto (as such Credit Agreement may hereafter be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement").
Unless defined in Annex I hereto, terms defined in the Credit Agreement are used
herein as therein defined. ___________ (the "Assignor") and __________ (the
"Assignee") hereby agree as follows:
1. The Assignor hereby sells and assigns to the Assignee
without recourse and without representation or warranty (other than as expressly
provided herein), and the Assignee hereby purchases and assumes from the
Assignor, that interest in and to all of the Assignor's rights and obligations
under the Credit Agreement as of the date hereof which represents the percentage
interest specified in Item 4 of Annex I hereto (the "Assigned Share") of all of
the Assignor's outstanding rights and obligations under the Credit Agreement
with respect to the Assigned Share of the Total Revolving Loan Commitment and of
any outstanding Revolving Loans, Swingline Loans and Letters of Credit.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the other Credit Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or the other Credit Documents or any other instrument or document
furnished pursuant thereto; and (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or any other Credit Party or the performance or observance by the
Borrower or any other Credit Party of any of its obligations under the Credit
Agreement or the other Credit Documents to which they are a party or any other
instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of
the Credit Agreement and the other Credit Documents, together with copies of the
financial statements referred to therein and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption Agreement; (ii) agrees
that it will, independently and without reliance upon the Administrative Agent,
any Co-Arranger, the Assignor or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement;
(iii) confirms that it is an Eligible Transferee as required under Section
13.04(b) of the Credit Agreement; (iv) appoints and authorizes each Agent and
the Collateral Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement and the other Credit Documents as are
delegated to such Agent and the Collateral Agent by the
<PAGE> 461
EXHIBIT O
Page 2
terms thereof, together with such powers as are reasonably incidental thereto;
[and] (v) agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement and other Credit
Documents are required to be performed by it as a Bank[; and (vi) to the extent
legally entitled to do so, attaches the forms described in Section 13.04(b) of
the Credit Agreement].(1)
4. Following the execution of this Assignment and Assumption
Agreement by the Assignor and the Assignee, an executed original hereof
(together with all attachments) will be delivered to the Administrative Agent.
This Assignment and Assumption shall be effective, unless otherwise specified in
Item 5 of Annex I hereto (the "Settlement Date"), upon the receipt of the
consent of the Administrative Agent and each Issuing Bank to the extent required
by Section 13.04(b) of the Credit Agreement, receipt by the Administrative Agent
of the assignment fee referred to in such Section 13.04(b) and the recordation
of the assignment as provided in Section 13.16 of the Credit Agreement.
5. Upon the delivery of a fully executed original hereof to
the Administrative Agent, as of the Settlement Date, (i) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment and
Assumption Agreement, have the rights and obligations of a Bank thereunder and
under the other Credit Documents and (ii) the Assignor shall, to the extent
provided in this Assignment and Assumption Agreement, relinquish its rights and
be released from its obligations under the Credit Agreement and the other Credit
Documents.
6. It is agreed that the Assignee shall be entitled to (x) all
interest on the Assigned Share of the Revolving Loans at the rates specified in
Item 6 of Annex I; (y) all Commitment Commission on the Assigned Share of the
Total Revolving Loan Commitment (if not theretofore terminated) at the rate
specified in Item 7 of Annex I hereto; and (z) all Letter of Credit Fees on the
Assignee's participation in all Letters of Credit at the rate specified in Item
8 of Annex I hereto, which, in each case, accrue on and after the Settlement
Date, such interest, Commitment Commission and Letter of Credit Fees to be paid
by the Administrative Agent directly to the Assignee. It is further agreed that
all payments of principal made on the Assigned Share of the Revolving Loans
which occur on and after the Settlement Date will be paid directly by the
Administrative Agent to the Assignee. Upon the Settlement Date, the Assignee
shall pay to the Assignor an amount specified by the Assignor in writing which
represents the Assigned Share of the principal amount of the Revolving Loans and
made by the Assignor pursuant to the Credit Agreement which are outstanding on
the Settlement Date. The Assignor and the Assignee shall make all appropriate
adjustments in payments under the Credit Agreement for periods prior to the
Settlement Date directly between themselves.
- --------
(1) Include if the Assignee is organized under the laws of a jurisdiction
outside of the United States.
<PAGE> 462
EXHIBIT O
Page 3
7. THIS ASSIGNMENT AND ASSUMPTION AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
8. This Assignment and Assumption Agreement may be executed in
any number of counterparts each of which so executed and delivered shall be an
original, but all of which together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Assignment and Assumption
Agreement, as of the date first above written, such execution also being made on
Annex I hereto.
Accepted this _____ day [NAME OF ASSIGNOR]
of _______, ____ as Assignor
By_____________________________
Title:
[NAME OF ASSIGNEE]
as Assignee
By_____________________________
Title:
<PAGE> 463
EXHIBIT O
Page 4
Consented to as of ____________ __, _____.
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent
By_________________________________________
Title:
_____________________
as an Issuing Bank
By_________________________________________
Title:
NAME OF EACH OTHER ISSUING BANK
By________________________
Title:
<PAGE> 464
ANNEX FOR ASSIGNMENT AND ASSUMPTION AGREEMENT
ANNEX I
1. Borrower: SC International Services, Inc.
2. Name and Date of Credit Agreement:
Credit Agreement, dated as of September 29, 1995 and amended and
restated as of August 28, 1997, among Onex Food Services, Inc., SC
International Services, Inc., Caterair Holdings Corporation, Caterair
International Corporation, the Banks from time to time party thereto,
Bankers Trust Company and J.P. Morgan Securities Inc., as Co-Arrangers,
Bankers Trust Company, as Syndication Agent, Morgan Guaranty Trust
Company of New York, as Administrative Agent, and The Bank of New York,
as Co-Agent, as amended to the date hereof.
3. Date of Assignment Agreement:
4. Amounts (as of date of item #3 above):
<TABLE>
<CAPTION>
Revolving
Loan Commitment
---------------
<S> <C>
a. Aggregate Amount
for all Banks $__________
b. Assigned Share $__________
c. Amount of Share $__________
</TABLE>
5. Settlement Date:
6. Rate of Interest As set forth in Section 1.08 of the
Credit Agreement (unless otherwise
agreed to by the Assignor and the
Assignee)(2)
- ------------
(2) The Borrower and the Administrative Agent shall direct the entire amount of
the interest to the Assignee at the rate set forth in Section 1.08 of the Credit
Agreement with the Assignor and Assignee effecting the agreed upon sharing of
the interest through payments by the Assignee to the Assignor.
<PAGE> 465
Annex I
Page 2
7. Commitment Commission: As set forth in Section 3.01(a) of
the Credit Agreement (unless
otherwise agreed to by the Assignor
and the Assignee)
8. Letter of Credit Fees As set forth in Section 3.01(b) of
the Credit Agreement (unless
otherwise agreed to by the Assignor
and the Assignee)
9. Notice:
ASSIGNOR:
_______________
_______________
_______________
Attention:
Telephone:
Telecopier:
Reference:
ASSIGNEE:
_______________
_______________
_______________
Attention:
Telephone:
Telecopier:
Reference:
<PAGE> 466
Annex I
Page 3
Payment Instructions:
ASSIGNOR:
_______________
_______________
_______________
Attention:
Reference:
ASSIGNEE:
_______________
_______________
_______________
Attention:
Reference:
Accepted and Agreed:
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By_______________________ By______________________
_______________________ ______________________
(Print Name and Title) (Print Name and Title)
<PAGE> 1
EXHIBIT 10.35
================================================================================
TERM LOAN AGREEMENT
among
SC INTERNATIONAL SERVICES, INC.,
CATERAIR INTERNATIONAL CORPORATION,
VARIOUS BANKS,
BANKERS TRUST COMPANY
and
J.P. MORGAN SECURITIES INC.,
as CO-ARRANGERS,
BANKERS TRUST COMPANY,
as SYNDICATION AGENT,
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as ADMINISTRATIVE AGENT
----------------------------------
Dated as of August 28, 1997
----------------------------------
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<PAGE> 2
TABLE OF CONTENTS
Page
----
SECTION 1. Amount and Terms of Credit.............................. 1
1.01 The Commitments; etc.................................... 1
1.02 Notice of Borrowing..................................... 2
1.03 Disbursement of Funds................................... 2
1.04 Notes................................................... 3
1.05 Pro Rata Borrowings..................................... 4
1.06 Interest................................................ 4
1.07 Interest Periods........................................ 5
1.08 Increased Costs, Illegality, etc........................ 7
1.09 Compensation............................................ 10
1.10 Change of Lending Office................................ 10
1.11 Replacement of Banks.................................... 10
SECTION 2. Fees; Reductions of Commitment.......................... 11
2.01 Fees.................................................... 11
2.02 Mandatory Reduction of Commitments...................... 11
SECTION 3. Prepayments; Payments; Taxes............................ 12
3.01 Voluntary Prepayments................................... 12
3.02 Mandatory Repayments.................................... 12
3.03 Method and Place of Payment............................. 18
3.04 Net Payments............................................ 18
SECTION 4. Conditions Precedent.................................... 20
4.01 Execution of Agreement; Notes........................... 20
4.02 Fees, etc............................................... 20
4.03 Officer's Certificate................................... 20
4.04 Opinion of Counsel...................................... 20
4.05 Corporate Documents; Proceedings; etc................... 21
4.06 SCIS Credit Agreement; etc.............................. 22
4.07 Issuance of 9 1/4% Senior Subordinated Notes............ 22
4.08 Pledge Agreements....................................... 22
4.09 Security Agreement...................................... 23
4.10 Mortgage Amendments; Title Insurance.................... 23
4.11 Guaranties.............................................. 24
(i)
<PAGE> 3
Page
----
4.12 Adverse Change; Approvals; etc.......................... 24
4.13 Litigation.............................................. 25
4.14 Solvency Certificate; Insurance Certificates............ 25
4.15 Pro Forma Balance Sheets................................ 25
4.16 Caterair Holdings Subordination Agreement, etc.......... 25
4.17 No Default; Representations and Warranties.............. 26
4.18 Notice of Borrowing..................................... 26
4.19 13% Senior Subordinated Note Tender Offer; 13% Senior
Subordinated Note Consent; 13% Senior Subordinated
Note Indenture Supplement.............................. 26
SECTION 5. Representations, Warranties and Agreements.............. 27
5.01 Corporate Status........................................ 27
5.02 Corporate Power and Authority........................... 28
5.03 No Violation............................................ 28
5.04 Governmental Approvals.................................. 28
5.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Financial Projections..................... 29
5.06 Litigation.............................................. 30
5.07 True and Complete Disclosure............................ 30
5.08 Use of Proceeds; Margin Regulations..................... 30
5.09 Tax Returns and Payments................................ 31
5.10 Compliance with ERISA................................... 31
5.11 The Security Documents.................................. 32
5.12 Representations and Warranties in Other Documents....... 33
5.13 Properties.............................................. 34
5.14 Capitalization.......................................... 34
5.15 Subsidiaries............................................ 34
5.16 Compliance with Statutes, etc........................... 35
5.17 Investment Company Act.................................. 35
5.18 Public Utility Holding Company Act...................... 35
5.19 Environmental Matters................................... 35
5.20 Labor Relations......................................... 36
5.21 Patents, Licenses, Franchises and Formulas.............. 36
5.22 Indebtedness; Subordination Provisions; etc............. 37
5.23 Consummation of Transaction............................. 37
SECTION 6. Affirmative Covenants................................... 38
6.01 Information Covenants................................... 38
(ii)
<PAGE> 4
Page
----
6.02 Books, Records and Inspections.......................... 42
6.03 Maintenance of Property; Insurance...................... 42
6.04 Corporate Franchises.................................... 43
6.05 Compliance with Statutes, etc........................... 44
6.06 Compliance with Environmental Laws...................... 44
6.07 Performance of Obligations.............................. 45
6.08 Payment of Taxes........................................ 45
6.09 Additional Security; Further Assurances................. 46
6.10 13% Senior Subordinated Note Tender Offer; Escrows...... 47
SECTION 7. Negative Covenants...................................... 48
7.01 Limitation on Restricted Payments....................... 48
7.02 Limitation on Transactions with Affiliates.............. 51
7.03 Limitation on Incurrence of Additional Indebtedness..... 53
7.04 Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries.................................. 53
7.05 Limitation on Asset Sales; etc.......................... 55
7.06 Limitation on Preferred Stock of Subsidiaries........... 57
7.07 Limitation on Liens..................................... 58
7.08 Conduct of Business of SCIS and Its Restricted
Subsidiaries ........................................... 58
7.09 Conduct of Business of Caterair......................... 58
7.10 Guarantor Capital Stock................................. 59
7.11 Merger, etc............................................. 59
7.12 Senior Subordinated Notes, etc.......................... 59
SECTION 8. Events of Default....................................... 60
8.01 Payments................................................ 60
8.02 Representations, etc.................................... 60
8.03 Covenants............................................... 60
8.04 Default Under the SCIS Credit Agreement................. 60
8.05 Default Under Other Indebtedness........................ 61
8.06 Bankruptcy, etc......................................... 61
8.07 Security Documents...................................... 62
8.08 Guaranties; etc......................................... 62
8.09 Judgments............................................... 62
8.10 Change of Control....................................... 63
SECTION 9. Definitions and Accounting Terms........................ 63
9.01 Defined Terms........................................... 63
(iii)
<PAGE> 5
Page
----
SECTION 10. The Agents............................................. 99
10.01 Appointment............................................ 99
10.02 Nature of Duties....................................... 99
10.03 Lack of Reliance on the Agents......................... 99
10.04 Certain Rights of the Agents...........................100
10.05 Reliance...............................................100
10.06 Indemnification........................................100
10.07 Each Agent in its Individual Capacity..................101
10.08 Holders................................................101
10.09 Resignation by the Agents..............................101
SECTION 11. Miscellaneous..........................................102
11.01 Payment of Expenses, etc...............................102
11.02 Right of Setoff........................................103
11.03 Notices................................................104
11.04 Benefit of Agreement...................................104
11.05 No Waiver; Remedies Cumulative.........................106
11.06 Payments Pro Rata......................................107
11.07 Calculations; Computations.............................107
11.08 GOVERNING LAW; SUBMISSION TO JURISDICTION;
VENUE; WAIVER OF JURY TRIAL............................108
11.09 Counterparts...........................................109
11.10 Effectiveness..........................................109
11.11 Headings Descriptive...................................109
11.12 Amendment or Waiver; etc...............................110
11.13 Survival...............................................111
11.14 Domicile of Loans......................................111
11.15 Confidentiality........................................111
11.16 Register...............................................113
11.17 Assumption by SCIS.....................................113
11.18 Certain Matters Relating to OFSI.......................114
11.19 Certain Post-Closing Actions...........................114
SECTION 12. SCIS Guaranty..........................................115
12.01 The Guaranty...........................................115
12.02 Bankruptcy.............................................115
12.03 Nature of Liability....................................115
12.04 Independent Obligation.................................115
12.05 Authorization..........................................116
(iv)
<PAGE> 6
Page
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12.06 Reliance...............................................117
12.07 Subordination..........................................117
12.08 Waiver.................................................117
12.09 Maximum Amount.........................................119
SCHEDULE I Commitments
SCHEDULE II Bank Addresses
SCHEDULE III Real Property
SCHEDULE IV Subsidiaries
SCHEDULE V Existing Indebtedness
SCHEDULE VI Existing Liens
EXHIBIT A Notice of Borrowing
EXHIBIT B-1 SCIS Note
EXHIBIT B-2 Caterair Note
EXHIBIT C Section 3.04(b)(ii) Certificate
EXHIBIT D-1 Opinion of Kaye, Scholer, Fierman,
Hays & Handler, LLP (Corporate)
EXHIBIT D-2 Opinion of Kaye, Scholer, Fierman,
Hays & Handler, LLP (Tax)
EXHIBIT D-3 Accountant's Letter from Price Waterhouse
EXHIBIT E Officers' Certificate
EXHIBIT F Solvency Certificate
EXHIBIT G-1 Amended and Restated General Pledge Agreement
EXHIBIT G-2 Amended and Restated OFSI Pledge Agreement
EXHIBIT G-3 Amended and Restated Designated Onex
Sub Pledge Agreement
EXHIBIT H Amended and Restated Security Agreement
EXHIBIT I-1 Amended and Restated Subsidiaries Guaranty
EXHIBIT I-2 Amended and Restated Designated Onex Sub Guaranty
EXHIBIT J OFSI Guaranty
EXHIBIT K Assignment and Assumption Agreement
EXHIBIT L Amended and Restated Caterair Holdings
Subordination Agreement
EXHIBIT M Subordination Provisions
EXHIBIT N Letter Agreement
(v)
<PAGE> 7
TERM LOAN AGREEMENT, dated as of August 28, 1997, among SC
INTERNATIONAL SERVICES, INC. a Delaware corporation ("SCIS"), CATERAIR
INTERNATIONAL CORPORATION, a Delaware corporation ("Caterair", and together with
SCIS, each a "Borrower" and, collectively, the "Borrowers"), the Banks (as
defined in Section 9) party hereto from time to time, BANKERS TRUST COMPANY and
J.P. MORGAN SECURITIES INC., as Co-Arrangers (in such capacity, collectively,
the Co-Arrangers"), BANKERS TRUST COMPANY, as Syndication Agent (in such
capacity, the "Syndication Agent"), and MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as Administrative Agent (in such capacity, together with any successor
thereto appointed pursuant to Section 10.09, the "Administrative Agent"). All
capitalized terms used herein and defined in Section 9 are used herein as
therein defined.
W I T N E S S E T H :
WHEREAS, (i) Caterair wishes to obtain its term loan facility
hereunder to refinance its outstanding term loans under the Original
SCIS/Caterair Credit Agreement and (ii) SCIS wishes to obtain its term loan
facility hereunder to finance, in part, the 13% Senior Subordinated Note Tender
Offer; and
WHEREAS, subject to and upon the terms and conditions set forth
herein, the Banks are willing to make available to the Borrowers the respective
credit facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01 The Commitments; etc. (a) Subject to and upon the terms and
conditions set forth herein, each Bank with a SCIS Commitment severally agrees
to make, on the Closing Date, a term loan (each a "SCIS Loan" and, collectively,
the "SCIS Loans") to SCIS, which SCIS Loans shall (i) be maintained as and/or
converted into one or more Borrowings of Eurodollar Loans (subject to
conversion, in whole or in part, into Base Rate Loans pursuant to Section 1.08
or as provided in last sentence of Section 1.07) and (ii) be made by each such
Bank in that initial aggregate principal amount as is equal to the SCIS
Commitment of such Bank on the Closing Date (before giving effect to the
termination thereof on such date pursuant to Section 2.02(b)). Once
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<PAGE> 8
repaid, SCIS Loans incurred hereunder may not be reborrowed. Notwithstanding
anything to the contrary contained in this Agreement, the Loans to be incurred
on the Closing Date shall be incurred as Base Rate Loans and shall be converted
into Eurodollar Loans with a three month Interest Period on August 29, 1997.
(b) Subject to and upon the terms and conditions set forth herein,
each Bank with a Caterair Commitment severally agrees to make, on the Closing
Date, a term loan (each a "Caterair Loan" and, collectively, the "Caterair
Loans") to Caterair, which Loans shall (i) be maintained as and/or converted
into one or more Borrowings of Eurodollar Loans (subject to conversion, in whole
or in part, into Base Rate Loans pursuant to Section 1.08 or as provided in last
sentence of Section 1.07) and (ii) be made by each such Bank in that initial
aggregate principal amount as is equal to the Caterair Commitment of such Bank
on the Closing Date (before giving effect to the termination thereof on such
date pursuant to Section 2.02(b)). Once repaid, Caterair Loans incurred
hereunder may not be reborrowed.
(c) The aggregate principal amount of each Borrowing of Eurodollar
Loans shall not be less than the Minimum Borrowing Amount applicable thereto.
More than one Borrowing may occur on the same date, but at no time shall there
be outstanding more than five Borrowings of Eurodollar Loans.
1.02 Notice of Borrowing. When a Borrower desires to incur its Loans
hereunder, such Borrower shall give the Administrative Agent at the Notice
Office at least three Business Days' prior written notice thereof, provided that
such notice shall be deemed to have been given on a certain day only if given
before 11:00 A.M. (New York time) on such day. Such written notice (the "Notice
of Borrowing"), except as otherwise expressly provided in Section 1.08, shall be
irrevocable and shall be given by the respective Borrower in the form of Exhibit
A, appropriately completed to specify the aggregate principal amount of the
Loans to be made to such Borrower pursuant to such Borrowing, the date of such
Borrowing (which shall be a Business Day) and the initial Interest Period to be
applicable to such Borrowing. The Administrative Agent shall promptly give each
Bank which is required to make Loans of the Tranche specified in the respective
Notice of Borrowings notice of such proposed Borrowing, of such Bank's
proportionate share thereof and of the other matters required by the immediately
preceding sentence to be specified in the respective Notice of Borrowing.
1.03 Disbursement of Funds. Not later than 12:00 Noon (New York
time) on the Closing Date, each Bank with a Commitment of the respective Tranche
will make available its pro rata portion (determined in accordance with Section
1.05) of the respective Loans required to be made by it on such date. All such
amounts will be made available in immediately available Dollar denominated funds
at the Payment
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<PAGE> 9
Office and the Administrative Agent will make available to the respective
Borrowers at the Payment Office the aggregate of the amounts so made available
by the Banks (prior to 1:00 P.M. (New York time) on such day, to the extent of
funds actually received by the Administrative Agent on or prior to 12:00 Noon
(New York time) on such day). Unless the Administrative Agent shall have been
notified by any Bank prior to the Closing Date that such Bank does not intend to
make available to the Administrative Agent such Bank's portion of the Loans
required to be made by it on such date, the Administrative Agent may assume that
such Bank has made such amount available to the Administrative Agent on the
Closing Date and the Administrative Agent may, in reliance upon such assumption,
make available to the respective Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Administrative Agent
by such Bank, the Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Bank. If such Bank does not pay such
corresponding amount forthwith upon the Administrative Agent's demand therefor,
the Administrative Agent shall promptly notify the respective Borrower and such
Borrower agrees immediately to pay such corresponding amount to the
Administrative Agent. The Administrative Agent shall also be entitled to recover
on demand from such Bank or the respective Borrower, as the case may be,
interest on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to such
Borrower until the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to (i) if recovered from such
Bank, the overnight Federal Funds Rate and (ii) if recovered from such Borrower,
the rate of interest applicable to the Loans, as determined pursuant to Section
1.06. Nothing in this Section 1.03 shall be deemed to relieve any Bank from its
obligation to make its Loans hereunder or to prejudice any rights which any
Borrower may have against any Bank as a result of any failure by such Bank to
make Loans hereunder.
1.04 Notes. (a) Each Borrower's obligation to pay the principal of,
and interest on, the Loans made by each Bank to such Borrower shall be evidenced
(i) if SCIS Loans, by a promissory note duly executed and delivered by SCIS
substantially in the form of Exhibit B-1 with blanks appropriately completed in
conformity herewith (each a "SCIS Note" and, collectively, the "SCIS Notes") and
(ii) if Caterair Loans, by a promissory note duly executed and delivered by
Caterair substantially in the form of Exhibit B-2 with blanks appropriately
completed in conformity herewith (each a "Caterair Note" and, collectively, the
"Caterair Term Notes").
(b) The SCIS Note issued to each Bank with a SCIS Commitment or
outstanding SCIS Loans shall (i) be executed by SCIS, (ii) be payable to such
Bank or its registered assigns and be dated the Closing Date (or if issued
thereafter, the date of issuance thereof), (iii) be in a stated principal amount
equal to the aggregate principal
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<PAGE> 10
amount of the SCIS Loans made by such Bank and be payable in the principal
amount of the outstanding SCIS Loans evidenced thereby from time to time, (iv)
mature on the Final Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.06 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary prepayment as provided in Section 3.01, and mandatory repayment as
provided in Section 3.02, and (vii) be entitled to the benefits of this
Agreement and the other Credit Documents.
(c) The Caterair Note issued to each Bank with a Caterair Commitment
or outstanding Caterair Loans shall (i) be executed by Caterair, (ii) be payable
to such Bank or its registered assigns and be dated the Closing Date (or if
issued thereafter, the date of issuance thereof), (iii) be in a stated principal
amount equal to the aggregate principal amount of the Caterair Loans made by
such Bank and be payable in the principal amount of the outstanding Caterair
Loans evidenced thereby from time to time, (iv) mature on the Final Maturity
Date, (v) bear interest as provided in the appropriate clause of Section 1.06 in
respect of the Base Rate Loans and Eurodollar Loans, as the case may be,
evidenced thereby, (vi) be subject to voluntary prepayment as provided in
Section 3.01, and mandatory repayment as provided in Section 3.02, and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.
(d) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Notes endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced thereby. Failure to make any such notation
or any error in any such notation or endorsement shall not affect any Borrower's
obligations in respect of such Loans.
1.05 Pro Rata Borrowings. All Borrowings of SCIS Loans and Caterair
Loans under this Agreement shall be incurred from the Banks pro rata on the
basis of their SCIS Commitments and Caterair Commitments, as the case may be. It
is understood that no Bank shall be responsible for any default by any other
Bank of its obligation to make Loans hereunder and that each Bank shall be
obligated to make the Loans provided to be made by it hereunder, regardless of
the failure of any other Bank to make its Loans hereunder.
1.06 Interest. (a) Each Borrower agrees to pay interest in respect
of the unpaid principal amount of each Base Rate Loan made to such Borrower from
the date of Borrowing thereof until the earlier of (i) the maturity (whether by
acceleration or otherwise) of such Base Rate Loan and (ii) the conversion of
such Base Rate Loan to a Eurodollar Loan pursuant to Section 1.08 or 1.12, as
applicable, at a rate per
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<PAGE> 11
annum which shall be equal to the sum of the Applicable Margin plus the Base
Rate in effect from time to time.
(b) Each Borrower agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan made to such Borrower from the date of
Borrowing thereof until the earlier of (i) the maturity (whether by acceleration
or otherwise) of such Eurodollar Loan and (ii) the conversion of such Eurodollar
Loan to a Base Rate Loan pursuant to Section 1.08, at a rate per annum which
shall, during each Interest Period applicable thereto, be equal to the sum of
the Applicable Margin plus the Eurodollar Rate for such Interest Period.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable hereunder
shall, in each case, bear interest at a rate per annum equal to the greater of
(x) 2% per annum in excess of the rate otherwise applicable to Base Rate Loans
from time to time and (y) the rate which is 2% in excess of the rate then borne
by such Loans, in each case with such interest to be payable on demand.
(d) Accrued (and theretofore unpaid) interest shall be payable (i)
in respect of each Base Rate Loan, quarterly in arrears on each Quarterly
Payment Date, (ii) in respect of each Eurodollar Loan, on the last day of each
Interest Period applicable thereto and, in the case of an Interest Period in
excess of three months, on each date occurring at three month intervals after
the first day of such Interest Period, and (iii) in respect of each Loan, on any
repayment or prepayment (on the amount repaid or prepaid), at maturity (whether
by acceleration or otherwise) and, after such maturity, on demand.
(e) Upon each Interest Determination Date, the Administrative Agent
shall determine the Eurodollar Rate for each Interest Period applicable to
Eurodollar Loans and shall promptly notify the respective Borrower and the Banks
thereof. Each such determination shall, absent manifest error, be final and
conclusive and binding on all parties hereto.
1.07 Interest Periods. On or prior to 11:00 A.M. (New York time) on
the third Business Day prior to the Closing Date (in the case of the initial
Interest Period or Periods applicable to the Eurodollar Loans) or on or prior to
11:00 A.M. (New York time) on the third Business Day prior to the expiration of
an Interest Period applicable such Eurodollar Loans (in the case of any
subsequent Interest Period), each Borrower shall have the right to elect, by
giving the Administrative Agent notice thereof, the interest period (each an
"Interest Period") applicable to such Eurodollar
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<PAGE> 12
Loan, which Interest Period shall, at the option of such Borrower, be a one,
two, three or six-month period, provided that:
(i) all Eurodollar Loans comprising a Borrowing shall at all times
have the same Interest Period;
(ii) the initial Interest Period for all Eurodollar Loans shall
commence on the Closing Date and each Interest Period occurring thereafter
in respect of such Eurodollar Loans shall commence (x) on the day on which
the next preceding Interest Period applicable thereto expires or (y) only
in the circumstances provided in Section 1.08(d)(y) (where all Eurodollar
Loans have theretofore been converted into Base Rate Loans), on the
Business Day specified in Section 1.08(d)(y);
(iii) if any Interest Period relating to a Eurodollar Loan begins on
a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period, such Interest Period shall end
on the last Business Day of such calendar month;
(iv) if any Interest Period relating to a Eurodollar Loan would
otherwise expire on a day which is not a Business Day, such Interest
Period shall expire on the next succeeding Business Day; provided,
however, that if any Interest Period for a Eurodollar Loan would otherwise
expire on a day which is not a Business Day but is a day of the month
after which no further Business Day occurs in such month, such Interest
Period shall expire on the next preceding Business Day;
(v) no Interest Period in respect of any Borrowing of any Tranche of
Eurodollar Loans shall be selected which extends beyond any date upon
which a mandatory repayment of such Tranche of Loans will be required to
be made under Section 3.02(a) if the aggregate principal amount of such
Tranche of Loans which have Interest Periods which will expire after such
date will be in excess of the aggregate principal amount of such Tranche
of Loans then outstanding less the aggregate amount of such required
prepayment; and
(vi) no Interest Period in respect of any Borrowing of Eurodollar
Loans shall be selected which extends beyond the Final Maturity Date.
If (x) by 11:00 A.M. (New York time) on the third Business Day prior
to the expiration of any Interest Period applicable to a Borrowing of Eurodollar
Loans the respective Borrower has failed to give the Administrative Agent notice
of such
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<PAGE> 13
Borrower's election for a new Interest Period to be applicable to such
Eurodollar Loans, such Borrower shall be deemed to have elected a one-month
Interest Period to be applicable to such Eurodollar Loan effective as of the
expiration date of such current Interest Period or (y) upon the expiration of
any Interest Period, such Borrower is not permitted to elect a new Interest
Period to be applicable to such Eurodollar Loans by virtue of the application of
clause (vi) above, such Borrower shall be deemed to have elected to convert such
Eurodollar Loans into Base Rate Loans effective as of the expiration date of
such current Interest Period.
1.08 Increased Costs, Illegality, etc. (a) In the event that any
Bank shall have determined in good faith (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto but,
with respect to clause (i) below, may be made only by the Administrative Agent):
(i) on any Interest Determination Date that, by reason of any
changes arising after the date of this Agreement affecting the interbank
Eurodollar market, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in the definition
of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loan because of (x) any change since the date of this
Agreement in any applicable law or governmental (including any NAIC) rule,
regulation, order, guideline or request (whether or not having the force
of law) or in the interpretation or administration thereof and including
the introduction of any new law or governmental rule, regulation, order,
guideline or request, such as, for example, but not limited to: (A) a
change in the basis of taxation of payment to any Bank of the principal of
or interest on such Eurodollar Loan or any other amounts payable hereunder
(except for changes in the rate of tax on, or determined by reference to,
the net income or profits of such Bank pursuant to the laws of the
jurisdiction in which it is organized or in which its principal office or
applicable lending office is located or any subdivision thereof or
therein) or (B) a change in official reserve requirements, but, in all
events, excluding reserves required under Regulation D to the extent
included in the computation of the Eurodollar Rate and/or (y) other
circumstances since the date of this Agreement affecting such Bank or the
interbank Eurodollar market or the position of such Bank in such market;
or
(iii) at any time, that the making or continuance of any Eurodollar
Loan has been made (x) unlawful by any law or governmental (including any
NAIC) rule, regulation or order, (y) impossible by compliance by any Bank
in good faith
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<PAGE> 14
with any governmental (including any NAIC) request (whether or not having
force of law) or (z) impracticable as a result of a contingency occurring
after the date of this Agreement which materially and adversely affects
the interbank Eurodollar market;
then, and in any such event, such Bank (or the Administrative Agent, in the case
of clause (i) above) shall promptly give notice (by telephone confirmed in
writing) thereof to the respective Borrowers that have incurred such Eurodollar
Loans and, except in the case of clause (i) above, to the Administrative Agent
of such determination (which notice the Administrative Agent shall promptly
transmit to each of the other Banks). Thereafter (x) in the case of clause (i)
above, on the last day of the then current Interest Period or Interest Periods,
all Eurodollar Loans shall be automatically converted to Base Rate Loans, until
such time as the Administrative Agent notifies the respective Borrower and the
Banks that the circumstances giving rise to such notice by the Administrative
Agent no longer exist, in which event Section 1.08(d) shall apply, (y) in the
case of clause (ii) above, such Borrower agrees to pay to such Bank, upon
written demand therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Bank in its sole discretion shall determine) as shall be required to compensate
such Bank for such increased costs or reductions in amounts received or
receivable hereunder (a written notice as to the additional amounts owed to such
Bank, showing the basis for the calculation thereof, submitted to such Borrower
by such Bank in good faith shall, absent manifest error, be final and conclusive
and binding on all the parties hereto) and (z) in the case of clause (iii)
above, the respective Borrower shall take one of the actions specified in
Section 1.08(b) as promptly as possible and, in any event, within the time
period required by law. Each of the Administrative Agents and each Bank agrees
that if it gives notice to any Borrower of any of the events described in clause
(i) or (iii) above, it shall promptly notify such Borrower and, in the case of
any such Bank, the Administrative Agent, if such event ceases to exist. If any
such event described in clause (iii) above ceases to exist as to a Bank, the
obligations of such Bank to convert Base Rate Loans into Eurodollar Loans on the
terms and conditions contained herein shall be reinstated.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.08(a)(ii) or (iii), the respective Borrower
may (and in the case of a Eurodollar Loan affected by the circumstances
described in Section 1.08(a)(iii) shall), upon at least three Business Days'
written notice to the Administrative Agent, require the affected Bank to convert
such Eurodollar Loan into a Base Rate Loan until such time as the circumstances
described in Section 1.08(a)(ii) or (iii) shall no longer be applicable in which
event clause (d) below shall apply, pro-
-8-
<PAGE> 15
vided, that, if more than one Bank is affected at any time, then all affected
Banks must be treated the same pursuant to this Section 1.08(b).
(c) If at any time any Bank determines that the introduction of or
any change in any applicable law or governmental (including any NAIC) rule,
regulation, order, guideline, directive or request (whether or not having the
force of law and including, without limitation, those announced or published
prior to the Closing Date) concerning capital adequacy, or any change in
interpretation or administration thereof by any governmental authority
(including the NAIC), central bank or comparable agency, will have the effect of
increasing the amount of capital required or expected to be maintained by such
Bank or any corporation controlling such Bank based on the existence of such
Bank's Commitments hereunder or its obligations hereunder, then the Borrowers
jointly and severally agree to pay to such Bank, upon its written demand
therefor, such additional amounts as shall be required to compensate such Bank
or such other corporation for the increased cost to such Bank or such other
corporation or the reduction in the rate of return to such Bank or such other
corporation as a result of such increase of capital. In determining such
additional amounts, each Bank will act reasonably and in good faith and will use
averaging and attribution methods which are reasonable, provided, that such
Bank's reasonable good faith determination of compensation owing under this
Section 1.08(c) shall, absent manifest error, be final and conclusive and
binding on all the parties hereto. Each Bank, upon determining that any
additional amounts will be payable pursuant to this Section 1.08(c), will give
prompt written notice thereof to the Borrowers, which notice shall show the
basis for calculation of such additional amounts.
(d) In the event that any Base Rate Loan is outstanding at any time
and the relevant circumstances described in Section 1.08(a)(i), (ii) and/or
(iii), as the case may be, cease to be applicable, the respective Bank or Banks
or the Administrative Agent (as applicable) shall give prompt notice thereof to
the respective Borrower and the Administrative Agent (as applicable) and (x) if
a Borrowing of Eurodollar Loans is outstanding at such time (from one or more
Banks which were not affected by such circumstances or as a result of the
application of following clause (y)), then on the last day of the Interest
Period then applicable thereto the Base Rate Loans of the respective affected
Bank or Banks to which the circumstances described above have ceased to be
applicable shall be converted back into (and thereafter shall form a part of)
the respective Borrowing of Eurodollar Loans (until such time, if any, as
Section 1.08(a) and (b) shall thereafter become applicable) and (y) if no
Eurodollar Loans remain outstanding at such time, then on the third Business Day
thereafter the Base Rate Loans of the respective Bank or Banks to which the
circumstances described above shall cease to be applicable shall be converted
into a Borrowing of Eurodollar Loans (with an Interest Period of three months
beginning on said third Business Day).
-9-
<PAGE> 16
1.09 Compensation. Each Borrower agrees to compensate each Bank,
upon its written request (which request shall set forth the basis for requesting
such compensation), for all reasonable losses, expenses and liabilities
(including, without limitation, any loss, expense or liability incurred by
reason of the liquidation or reemployment of deposits or other funds required by
such Bank to fund its Eurodollar Loans but excluding any loss of anticipated
profit) which such Bank may sustain: (i) if any repayment by such Borrower
(including any repayment made pursuant to Section 3.01 or 3.02 or a result of an
acceleration of the Loans pursuant to Section 8) occurs on a date which is not
the last day of an Interest Period with respect thereto; (ii) if any prepayment
is not made on any date specified in a notice of prepayment given by such
Borrower; or (iii) as a consequence of (x) any other default by such Borrower to
repay its Loans when required by the terms of this Agreement or any Note held by
such Bank or (y) any election made pursuant to Section 1.08(b).
1.10 Change of Lending Office. Each Bank agrees that on the
occurrence of any event giving rise to the operation of Section 1.08(a)(ii) or
(iii), Section 1.08(c) or Section 3.04 with respect to such Bank, such Bank
will, if requested by the respective Borrower, use reasonable efforts (subject
to overall policy considerations of such Bank) to designate another lending
office for any Loans affected by such event, provided, that such designation is
made on such terms that such Bank and its lending office suffer no economic,
legal or regulatory disadvantage, with the object of avoiding the consequence of
the event giving rise to the operation of such Section. Nothing in this Section
1.10 shall affect or postpone any of the obligations of any Borrower or the
right of any Bank provided in Sections 1.08 and 3.04 (although each such Bank
shall nevertheless have an obligation to change its applicable lending office
subject to the terms set forth in the immediately preceding sentence).
1.11 Replacement of Banks. If any Bank (x) refuses to consent to
certain proposed changes, waivers, discharges or terminations with respect to
this Agreement which have been approved by the Required Banks as provided in
Section 11.12(b) or (y) is owed increased costs under Section 1.08 (a)(ii) or
(iii), Section 1.08(c) or Section 3.04 in a material amount in excess of those
being generally charged by the other Banks, the Borrowers shall have the right,
in accordance with the requirements of Section 11.04(b), if no Default or Event
of Default then exists (or in the case of preceding clause (x), no Default or
Event of Default would exist after giving effect to such replacement), to
replace such Bank (the "Replaced Bank") with one or more Eligible Transferees
(collectively, the "Replacement Bank") each of whom shall be required to be
reasonably acceptable to the Administrative Agent, provided, that:
(i) at the time of any replacement pursuant to this Section 1.11,
the Replaced Bank and the Replacement Bank shall enter into one or more
Assign-
-10-
<PAGE> 17
ment and Assumption Agreements pursuant to Section 11.04(b) (and with all
fees payable pursuant to said Section 11.04(b) to be paid by the
Replacement Bank) pursuant to which the Replacement Bank shall acquire all
of the outstanding Loans of the Replaced Bank and, in connection
therewith, shall pay to the Replaced Bank in respect thereof an amount
equal to the principal of, and all accrued interest on, all outstanding
Loans of the Replaced Bank; and
(ii) all obligations of the Borrowers owing to the Replaced Bank
(other than those specifically described in clause (i) above in respect of
which the assignment purchase price has been, or is concurrently being,
paid) shall be paid in full to such Replaced Bank concurrently with such
replacement.
Upon the execution of the respective Assignment and Assumption Agreements, the
payment of amounts referred to in clauses (i) and (ii) above, the recordation of
the assignment on the Register by the Administrative Agent pursuant to Section
11.16 and, if so requested by the Replacement Bank, delivery to the Replacement
Bank of the appropriate Note or Notes executed by the Borrowers, the Replacement
Bank shall become a Bank hereunder and the Replaced Bank shall cease to
constitute a Bank hereunder, except with respect to indemnification provisions
under this Agreement (including, without limitation, Sections 1.08, 1.09, 3.04,
11.01 and 11.06), which shall survive as to such Replaced Bank.
SECTION 2. Fees; Reductions of Commitment.
2.01 Fees. The Borrowers jointly and severally agree to pay to the
Administrative Agent and the Co-Arrangers, for their own account, such other
fees as have been agreed to in writing by such Credit Parties and the
Administrative Agent and the Co-Arrangers.
2.02 Mandatory Reduction of Commitments. (a) The Total Commitments
(and the Commitment of each of the Banks) shall terminate in their entirety on
September 30, 1997 unless the Closing Date has occurred on or before such date.
(b) In addition to any other mandatory commitment reduction pursuant
to this Section 2.02, the Total Commitments (and the Commitment of each Bank)
shall terminate in their entirety on the Closing Date (after giving effect to
the making of the Loans on such date).
-11-
<PAGE> 18
SECTION 3. Prepayments; Payments; Taxes.
3.01 Voluntary Prepayments. Each Borrower shall have the right to
prepay the Loans owing by such Borrower, without premium or penalty, in whole or
in part at any time and from time to time on the following terms and conditions:
(i) such Borrower shall give the Administrative Agent prior to 12:00
Noon (New York time) at the Notice Office at least three Business Days'
prior written notice (or telephonic notice promptly confirmed in writing)
of such Borrower's intent to prepay Loans, the amount of such prepayment
and the Types of Loans to be prepaid and, in the case of Eurodollar Loans,
the specific Borrowing or Borrowings pursuant to which made, which notice
the Administrative Agent shall promptly transmit to each of the Banks with
outstanding Loans of the respective Tranche;
(ii) each such prepayment shall be in an aggregate principal amount
of at least $1,000,000, provided that no partial prepayment of Eurodollar
Loans made pursuant to any Borrowing shall reduce the outstanding
Eurodollar Loans made pursuant to such Borrowing to an amount less than
the Minimum Borrowing Amount applicable thereto;
(iii) each such prepayment in respect of any Loans of a respective
Tranche shall be applied pro rata among the Loans of the various Banks of
such Tranche (based on the relative outstanding principal amounts
thereof); and
(iv) each such prepayment of Loans of a respective Tranche shall be
applied to reduce the then remaining Scheduled Repayments of such Tranche
in inverse order of maturity.
3.02 Mandatory Repayments (a) In addition to any other mandatory
repayments pursuant to this Section 3.02, Caterair shall be required to repay
that principal amount of Caterair Loans, to the extent then outstanding, as is
set forth below opposite such date (each such repayment, as the same may be
reduced as provided in Sections 3.01 and 3.02(h), a "Caterair Scheduled
Repayment"):
<TABLE>
<CAPTION>
Caterair
Scheduled
Repayment Date Amount
-------------- ------------
<S> <C>
December 15, 1997 $ 400,000
</TABLE>
-12-
<PAGE> 19
<TABLE>
<CAPTION>
<S> <C>
March 15, 1998 $ 400,000
June 15, 1998 $ 400,000
September 15, 1998 $ 400,000
December 15, 1998 $ 400,000
March 15, 1999 $ 400,000
June 15, 1999 $ 400,000
September 15, 1999 $ 400,000
December 15, 1999 $ 400,000
March 15, 2000 $ 400,000
June 15, 2000 $ 400,000
September 15, 2000 $ 400,000
December 15, 2000 $ 400,000
March 15, 2001 $ 400,000
June 15, 2001 $ 400,000
September 15, 2001 $ 400,000
December 15, 2001 $ 400,000
March 15, 2002 $ 400,000
June 15, 2002 $ 400,000
September 15, 2002 $ 400,000
December 15, 2002 $ 400,000
March 15, 2003 $ 400,000
June 15, 2003 $ 400,000
September 15, 2003 $ 400,000
December 15, 2003 $ 400,000
March 15, 2004 $ 400,000
June 15, 2004 $ 400,000
September 15, 2004 $ 400,000
December 15, 2004 $ 400,000
March 15, 2005 $ 400,000
June 15, 2005 $ 400,000
September 15, 2005 $ 400,000
December 15, 2005 $ 400,000
</TABLE>
-13-
<PAGE> 20
<TABLE>
<CAPTION>
<S> <C>
March 15, 2006 $ 400,000
June 15, 2006 $ 400,000
September 15, 2006 $ 400,000
December 15, 2006 $ 400,000
Final Maturity Date $145,200,000
</TABLE>
(b) In addition to any other mandatory repayments pursuant to this
Section 3.02, SCIS shall be required to repay that principal amount of SCIS
Loans, to the extent then outstanding, as is set forth below opposite such date
(each such repayment, as the same may be reduced as provided in Sections 3.01
and 3.02(h), a "SCIS Scheduled Repayment"):
<TABLE>
<CAPTION>
SCIS
Scheduled
Repayment Date Amount
-------------- ------------
<S> <C>
December 15, 1997 $ 225,000
March 15, 1998 $ 225,000
June 15, 1998 $ 225,000
September 15, 1998 $ 225,000
December 15, 1998 $ 225,000
March 15, 1999 $ 225,000
June 15, 1999 $ 225,000
September 15, 1999 $ 225,000
December 15, 1999 $ 225,000
March 15, 2000 $ 225,000
June 15, 2000 $ 225,000
September 15, 2000 $ 225,000
December 15, 2000 $ 225,000
March 15, 2001 $ 225,000
June 15, 2001 $ 225,000
September 15, 2001 $ 225,000
December 15, 2001 $ 225,000
March 15, 2002 $ 225,000
June 15, 2002 $ 225,000
</TABLE>
-14-
<PAGE> 21
<TABLE>
<CAPTION>
<S> <C>
September 15, 2002 $ 225,000
December 15, 2002 $ 225,000
March 15, 2003 $ 225,000
June 15, 2003 $ 225,000
September 15, 2003 $ 225,000
December 15, 2003 $ 225,000
March 15, 2004 $ 225,000
June 15, 2004 $ 225,000
September 15, 2004 $ 225,000
December 15, 2004 $ 225,000
March 15, 2005 $ 225,000
June 15, 2005 $ 225,000
September 15, 2005 $ 225,000
December 15, 2005 $ 225,000
March 15, 2006 $ 225,000
June 15, 2006 $ 225,000
September 15, 2006 $ 225,000
December 15, 2006 $ 225,000
Final Maturity Date $ 81,675,000
</TABLE>
(c) In addition to any other mandatory repayments pursuant to this
Section 3.02, each Borrower shall repay principal of outstanding Loans with the
Net Sale Proceeds from any Asset Sale or Caterair Asset Sale as (and to the
extent) required by Section 7.05.
(d) In addition to any other mandatory repayments pursuant to this
Section 3.02, within 10 days following each date on which any Borrower or any
Restricted Subsidiary of any Borrower receives any proceeds from any Recovery
Event, an amount equal to 100% of the proceeds of such Recovery Event (net of
reasonable costs incurred in connection with such Recovery Event, including,
without limitation, the estimated marginal increase in income taxes which will
be payable by such Borrower or any Restricted Subsidiary of such Borrower or the
consolidated group in which any such Person is a member) shall be applied as
mandatory repayment of principal of outstanding Loans, provided that (1) so long
as no Default or Event of Default then exists, if the proceeds from any Recovery
Event are less than $1,000,000, then no prepayment shall be required pursuant to
this Section 3.02(c), (2) to the extent
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<PAGE> 22
that any portion of the proceeds from any Recovery Event are to be applied to
permanently repay principal of loans outstanding under the SCIS Credit Agreement
(and, in the case of any repayment pursuant to this clause (2) of outstandings
pursuant to any revolving loan or similar commitment, so long as such revolving
loan or similar commitment is permanently reduced by the amount of such
repayment), then at least a proportionate share of such proceeds shall be
applied as a mandatory repayment of principal of outstanding Loans (with such
proportionate share to be based on the relative outstanding principal amount of
loans, letters of credit and unutilized commitments under the SCIS Credit
Agreement and the outstanding principal amount of Loans under this Agreement),
(3) so long as no Default or Event of Default then exists, if the proceeds from
any Recovery Event are equal to or greater than $1,000,000 but less than or
equal to $25,000,000, such proceeds shall not be required to be so applied on
such date to the extent that the respective Borrower has delivered a certificate
to the Administrative Agent on or prior to such date stating that such proceeds
are intended to be used to replace or restore any properties or assets in
respect of which such proceeds were paid within 365 days following the date of
the receipt of such proceeds (or, to the extent such replacement or restriction
cannot reasonably be completed within such 365 day period, within 450 days
following the date of the receipt of such proceeds), (4) if the amount of
proceeds from any Recovery Event exceeds $25,000,000, then the entire amount and
not just the portion in excess of $25,000,000 shall either (i) be applied to
permanently repay principal of loans outstanding under the SCIS Credit Agreement
(and, in the case of any such repayment pursuant to this clause (4) of
outstandings pursuant to any revolving loan or similar commitment, so long as
such revolving loan or similar commitment is permanently reduced by the amount
of such repayment) and to the extent that any portion of such proceeds are to be
so applied, then at least a proportionate share of such proceeds shall be
applied as a mandatory repayment of principal of outstanding Loans (with such
proportionate share to be based on the relative outstanding principal amount of
loans, letters of credit and unutilized commitments under the SCIS Credit
Agreement and the outstanding principal amount of Loans under this Agreement) or
(ii) to the extent not so applied pursuant to preceding clause (i), be applied
as a mandatory repayment of Loans as provided above in this Section 3.02(c), and
(5) if all or any portion of such proceeds not required to be applied to the
repayment of Loans pursuant to the proviso of this Section 3.02(c) (other than
clause (1) of such proviso) are not used for the purposes described in clause
(3) above within 365 days after the day of the receipt of such proceeds (or 450
days, as the case may be), such remaining portion shall be (A) applied to
permanently repay (x) principal of loans outstanding under the SCIS Credit
Agreement (and, in the case of any repayment pursuant to this clause (5)(A) of
outstandings pursuant to any revolving loan or similar commitment, so long as
revolving loan or similar commitment is permanently reduced by the amount of
such repayment) and to the extent that any portion of such proceeds are to be so
applied, then at least a proportionate share of such
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<PAGE> 23
proceeds shall be applied as a mandatory repayment of principal of outstanding
Loans (with such proportionate share to be based on the relative outstanding
principal amount of loans, letters of credit and unutilized commitments under
the SCIS Credit Agreement and the outstanding principal amount of Loans under
this Agreement), or (B) if not so applied pursuant to preceding clause (A),
applied on the last day of such period as a mandatory repayment of principal of
the Loans as provided in this Section 3.02(c).
(e) In addition to any other mandatory repayments pursuant to this
Section 3.02, all then outstanding Loans shall be repaid in full on any date on
which a Change of Control occurs.
(f) In addition to any other mandatory repayments pursuant to this
Section 3.02, on the date on which the Purchase Option has been exercised in
full (including as a result of successive partial exercises) Caterair shall
repay in full all then outstanding Caterair Loans on such date (other than those
Caterair Loans that have been assumed by SCIS on or prior to such date) unless
SCIS shall have assumed all of the Caterair Loans in accordance with the
requirements of Section 11.17.
(g) In addition to any other mandatory repayments pursuant to this
Section 3.02, all then outstanding Loans shall be repaid in full on the Final
Maturity Date.
(h) The receipt of each amount that is required by Section 3.02(c)
or 3.02(d) to be applied to repay outstanding Loans shall, (A) to the extent
that the proceeds from any such events described in any such Section are
received by SCIS or any Subsidiary of SCIS, (1) first, be applied to repay the
outstanding principal amount of SCIS Loans and (2) second, to the extent in
excess of the amount required to be applied pursuant to the preceding clause
(1), be applied to repay the outstanding principal amount of Caterair Loans and
(B) to the extent that the proceeds from any such event described in any such
Section are received by Caterair or any of its Subsidiaries, (1) first, be
applied to repay outstanding Caterair Loans and (2) second, to the extent in
excess of the amount required to be applied pursuant to the preceding clause
(1), be applied to repay outstanding SCIS Loans. All repayments of principal
made by the Borrowers pursuant to this Section 3.02 shall be applied pro rata to
the outstanding Loans of the various Banks of the respective Tranche (based upon
the relative outstanding principal amounts thereof). The amount of each
principal repayment of Loans of the respective Tranche pursuant to Section
3.02(b) or 3.02(c) shall be applied to reduce the then remaining Scheduled
Repayments of such Tranche in inverse order of maturity.
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<PAGE> 24
3.03 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement or any Note shall be made to
the Administrative Agent for the account of the Bank or Banks entitled thereto
not later than 12:00 Noon (New York time) on the date when due and shall be made
in Dollars in immediately available funds at the Payment Office. Whenever any
payment to be made hereunder or under any Note shall be stated to be due on a
day which is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and, with respect to payments of principal,
interest shall be payable at the applicable rate during such extension.
3.04 Net Payments. (a) All payments made by each Borrower hereunder
or under any Note will be made without setoff, counterclaim or other defense.
Except as provided in Section 3.04(b), all such payments will be made free and
clear of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein with respect to such payments (but
excluding, except as provided in the second succeeding sentence, any tax imposed
on or measured by the net income or profits of a Bank pursuant to the laws of
the jurisdiction in which it is organized or the jurisdiction in which the
principal office or applicable lending office of such Bank is located or any
subdivision thereof or therein) and all interest, penalties or similar
liabilities with respect thereto (all such non-excluded taxes, levies, imports,
duties, fees, assessments or other charges being referred to collectively as
"Taxes"). If any Taxes are so levied or imposed, the respective Borrower agrees
to pay the full amount of such Taxes, and such additional amounts as may be
necessary so that every payment of all amounts due under this Agreement or under
any Note, after withholding or deduction for or on account of any Taxes, will
not be less than the amount provided for herein or in such Note. If any amounts
are payable in respect of Taxes pursuant to the preceding sentence, the
respective Borrower agrees to reimburse each Bank, upon the written request of
such Bank, for taxes imposed on or measured by the net income or profits of such
Bank pursuant to the laws of the jurisdiction in which the principal office or
applicable lending office of such Bank is located or under the laws of any
political subdivision or taxing authority of any such jurisdiction in which the
principal office or applicable lending office of such Bank is located and for
any withholding of income or similar taxes imposed by the United States of
America as such Bank shall determine are payable by, or withheld from, such Bank
in respect of such amounts so paid to or on behalf of such Bank pursuant to the
preceding sentence and in respect of any amounts paid to or on behalf of such
Bank pursuant to this sentence. Each Borrower will furnish to the Administrative
Agent within 45 days after the date the payment of any Taxes is due pursuant to
applicable law certified copies of tax receipts evidencing such payment by such
Borrower. Each Borrower agrees to indemnify and
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<PAGE> 25
hold harmless each Bank, and reimburse such Bank upon its written request, for
the amount of any Taxes so levied or imposed and paid by such Bank.
(b) Each Bank that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) agrees to deliver to the Borrowers
and the Administrative Agent on or prior to the Closing Date, or in the case of
a Bank that is an assignee or transferee of an interest under this Agreement
pursuant to Section 1.11 or 11.04 (unless the respective Bank was already a Bank
hereunder immediately prior to such assignment or transfer), on the date of such
assignment or transfer to such Bank, (i) two accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001 (or successor forms)
certifying to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments to be made under this Agreement and
under any Note, or (ii) if the Bank is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue
Service Form 1001 or 4224 (or successor forms) pursuant to clause (i) above, (x)
a certificate substantially in the form of Exhibit C (any such certificate, a
"Section 3.04(b)(ii) Certificate") and (y) two accurate and complete original
signed copies of Internal Revenue Service Form W-8 (or successor form)
certifying to such Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments of interest to be made under this
Agreement and under any Note. In addition, each Bank agrees that from time to
time after the Closing Date, when a lapse in time or change in circumstances
renders the previous certification obsolete or inaccurate in any material
respect, it will deliver to the Borrowers and the Administrative Agent two new
accurate and complete original signed copies of Internal Revenue Service Form
4224 or 1001 (or successor forms), or Form W-8 (or successor form) and a Section
3.04(b)(ii) Certificate, as the case may be, and such other forms as may be
required in order to confirm or establish the entitlement of such Bank to a
continued exemption from or reduction in United States withholding tax with
respect to payments under this Agreement and any Note, or it shall immediately
notify the Borrower and the Administrative Agent of its inability to deliver any
such Form or Certificate. Notwithstanding anything to the contrary contained in
Section 3.04(a), but subject to Section 11.04(b) and the immediately succeeding
sentence, (x) each Borrower shall be entitled, to the extent it is required to
do so by law, to deduct or withhold income or similar taxes imposed by the
United States (or any political subdivision or taxing authority thereof or
therein) from interest, fees or other amounts payable hereunder for the account
of any Bank which is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes to the
extent that such Bank has not provided to such Borrower U.S. Internal Revenue
Service Forms that establish a complete exemption from such deduction or
withholding and (y) each Borrower shall not be obligated pursuant to Section
3.04(a) to gross-up payments to be made to a Bank in respect of income or
similar taxes imposed by the United States if
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<PAGE> 26
(I) such Bank has not provided to each Borrower the Internal Revenue Service
Forms required to be provided to such Borrower pursuant to this Section 3.04(b)
or (II) in the case of a payment, other than interest, to a Bank described in
clause (ii) above, to the extent that such Forms do not establish a complete
exemption from withholding of such taxes. Notwithstanding anything to the
contrary contained in the preceding sentence or elsewhere in this Section
3.04(b) and except as set forth in Section 11.04(b), each Borrower agrees to pay
additional amounts and to indemnify each Bank in the manner set forth in Section
3.04(a) (without regard to the identity of the jurisdiction requiring the
deduction or withholding) in respect of any amounts deducted or withheld by it
as described in the immediately preceding sentence as a result of any changes
after the Closing Date in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation thereof, relating to
the deducting or withholding of income or similar Taxes.
SECTION 4. Conditions Precedent. The obligation of each Bank to make
Loans on the Closing Date is subject to the satisfaction of the following
conditions:
4.01 Execution of Agreement; Notes. On or prior to the Closing Date,
(i) the Effective Date shall have occurred and (ii) there shall have been
delivered to the Administrative Agent for the account of each of the Banks, the
appropriate SCIS Note and/or Caterair Note executed by the respective Borrower,
in each case in the amount, maturity and as otherwise provided herein.
4.02 Fees, etc. On the Closing Date, SCIS and Caterair shall have
paid to the Agents, the Co-Arrangers and the Banks all costs, fees and expenses
(including, without limitation, legal fees and expenses) payable to the
respective Agents, the Co-Arrangers and the Banks to the extent then due.
4.03 Officer's Certificate. On the Closing Date, the Administrative
Agent shall have received a certificate, dated the Closing Date and signed on
behalf of SCIS by any authorized officer of SCIS and on behalf of Caterair by
any authorized officer of Caterair, stating that all of the conditions in
Sections 4.02, 4.07, 4.12, 4.13, 4.17 and 4.19 have been satisfied on such date.
4.04 Opinion of Counsel. On the Closing Date, the Administrative
Agent shall have received (i) from Kaye, Scholer, Fierman, Hays & Handler, LLP,
counsel to the Credit Parties, an opinion addressed to each of the Agents and
each of the Banks and dated the Closing Date covering the matters set forth in
Exhibit D-1 and such other matters incident to the transactions contemplated
herein as the Co-Arrangers
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<PAGE> 27
may reasonably request, (ii) from Kaye, Scholer, Fierman, Hays & Handler, LLP,
special tax counsel to SCIS and Caterair, an opinion addressed to each of the
Agents and each of the Banks and dated the Closing Date covering the matter set
forth in Exhibit D-2 and such other matters incident to the transaction
contemplated herein as the Co-Arrangers may reasonably request, which legal
opinion shall be accompanied by an accountant's letter from Price Waterhouse
addressed to each of the Agents and each of the Banks and dated the Closing Date
covering the matter set forth in Exhibit D-3 and such other matters incident to
the transactions contemplated herein as the Co-Arrangers may reasonably request
and (iii) from Fraser & Beatty, counsel to the Designated Onex Sub, an opinion
addressed to each of the Agents and each of the Banks and dated the Closing Date
covering such of the matters incident to the Credit Documents executed by the
Designated Onex Sub as the Co-Arrangers may reasonably request, which opinion
shall be in form and substance reasonably satisfactory to the Co-Arrangers.
4.05 Corporate Documents; Proceedings; etc. (a) On the Closing Date,
the Administrative Agent shall have received a certificate from each Credit
Party, each dated the Closing Date and signed by any authorized officer of such
Credit Party, and attested to by the Secretary or any Assistant Secretary of
such Credit Party, in the form of Exhibit E with appropriate insertions,
together with copies of such Credit Party's certificate of incorporation and
by-laws and the resolutions of such Credit Party referred to in such
certificate, and the foregoing shall be in form and substance reasonably
satisfactory to the Co-Arrangers.
(b) All corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated by this Agreement
and the other Documents shall be reasonably satisfactory in form and substance
to the Co-Arrangers and the Required Banks, and the Administrative Agent shall
have received all information and copies of all documents and papers, including
records of corporate proceedings, governmental approvals, good standing
certificates and bring-down telegrams or facsimiles, if any, which the
Co-Arrangers reasonably may have requested in connection therewith, such
documents and papers where appropriate to be certified by proper corporate or
governmental authorities.
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4.06 SCIS Credit Agreement; etc. On the Closing Date, (i) the
Original SCIS/Caterair Credit Agreement shall have been amended and restated in
the form of the SCIS Credit Agreement, (ii) all outstanding term loans of
Caterair under the Original SCIS/Caterair Credit Agreement shall have been
repaid in full with proceeds of the Caterair Loans, and (iii) the SCIS Credit
Agreement shall be in full force and effect and no default or event of default
shall exist thereunder. On the Closing Date, the Administrative Agent shall have
received a true and complete copy of the SCIS Credit Agreement, which shall be
in form and substance reasonably satisfactory to the Co-Arrangers and the
Required Banks.
4.07 Issuance of 9 1/4% Senior Subordinated Notes. (a) On the
Closing Date, SCIS shall have received gross cash proceeds in an aggregate
principal amount of $299,604,000 from the issuance by SCIS of the 9 1/4% Senior
Subordinated Notes. On the Closing Date, and concurrently with the issuance of
the 9 1/4% Senior Subordinated Notes on such date, SCIS shall have utilized a
portion of the net cash proceeds from the issuance of the 9 1/4% Senior
Subordinated Notes to finance the repayment in full of all of its outstanding
term loans under the Original SCIS/Caterair Credit Agreement.
(b) All terms of, and documentation for, the 9 1/4% Senior
Subordinated Notes and the other 9 1/4% Senior Subordinated Note Documents
(including, without limitation, amortization, maturities, interest rates,
covenants, defaults, remedies, sinking fund provisions, subordination provisions
and other terms) shall be required to be reasonably satisfactory in form and
substance to the Co-Arrangers and the Required Banks, it being understood and
agreed that in any event the 9 1/4% Senior Subordinated Notes shall be unsecured
but may be guaranteed on a junior and fully subordinated basis by the Borrower
and the Subsidiary Guarantors. On the Closing Date, there shall have been
delivered to the Administrative Agent true and complete copies of all 9 1/4%
Senior Subordinated Note Documents.
4.08 Pledge Agreements. On the Closing Date, (i) each Credit Party
(other than OFSI and the Designated Onex Sub) shall have duly authorized,
executed and delivered and amended and restated Pledge Agreement in the form of
Exhibit G-1, with such changes thereto, or such additional pledge agreements (or
amendments thereto) entered into in connection therewith, as foreign counsel may
suggest in connection with the Pledged Securities issued by any Foreign
Subsidiary of SCIS designated by the Administrative Agent (such amended and
restated Pledge Agreement, together with such additional pledge agreements, as
modified, supplemented or amended from time to time, collectively, the "General
Pledge Agreement"), (ii) OFSI shall have duly authorized, executed and delivered
an amended and restated Pledge Agreement in the form of Exhibit G-2 (such
amended and restated Pledge Agreement as modified,
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supplemented, amended from time to time, the "OFSI Pledge Agreement") and (iii)
the Designated Onex Sub shall have duly authorized, executed and delivered an
amended and restated Pledge Agreement in the form of Exhibit G-3 (as modified,
supplemented or amended from time to time, the "Designated Onex Sub Pledge
Agreement") and, in each case, each Credit Party shall have delivered to the
Collateral Agent, as Pledgee, all the Pledged Securities, if any, referred to
therein then owned by such Credit Party, (x) endorsed in blank in the case of
promissory notes constituting Pledged Securities and (y) together with executed
and undated stock powers (or the equivalent thereof in the relevant
jurisdiction) in the case of capital stock constituting Pledged Securities.
4.09 Security Agreement. On the Closing Date, each Credit Party
(other than OFSI, Caterair Holdings and the Designated Onex Sub) shall have duly
authorized, executed and delivered an amended and restated Security Agreement in
the form of Exhibit H (as modified, supplemented or amended from time to time,
the "Security Agreement") covering all of the present and future Security
Agreement Collateral of such Credit Party, together with evidence of the
completion of all recordings and filings of, or with respect to, the Security
Agreement as may be necessary or, in the reasonable opinion of the Collateral
Agent desirable, to perfect the security interests intended to be created by the
Security Agreement.
4.10 Mortgage Amendments; Title Insurance. On the Closing Date, the
Collateral Agent shall have received:
(a) fully executed counterparts of amendments (the "Mortgage
Amendments"), in form and substance reasonably satisfactory to the
Co-Arrangers, to each of the Existing Mortgages, together with evidence
that counterparts of each of the Mortgage Amendments have been delivered
to the title insurance company insuring the lien of the Existing Mortgages
for recording in all places to the extent necessary or, in the reasonable
opinion of the Collateral Agent desirable, to effectively maintain and/or
create a valid and enforceable first priority mortgage lien on each
Existing Mortgaged Property (subject to only Permitted Liens) in favor of
the Collateral Agent for the benefit of the Secured Creditors; and
(b) endorsements to the Mortgage Policies on each Existing Mortgaged
Property issued by such title insurers reasonably satisfactory to the
Co-Arrangers assuring the Collateral Agent that the Existing Mortgages on
the Existing Mortgaged Properties are valid and enforceable first priority
mortgage liens on the respective Existing Mortgaged Properties, free and
clear of all defects, interests and encumbrances except Permitted Liens,
and such
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endorsements shall otherwise be in form and substance reasonably
satisfactory to the Co-Arrangers.
4.11 Guaranties. (a) On the Closing Date, each Subsidiary Guarantor
shall have duly authorized, executed and delivered a Guaranty in the form of
Exhibit I-1 (as modified, supplemented or amended from time to time, the
"Subsidiaries Guaranty"), and the Subsidiaries Guaranty shall be in full force
and effect.
(b) On the Closing Date, the Designated Onex Sub shall have duly
authorized, executed and delivered an amended and restated Guaranty in the form
of Exhibit I-2 (as modified, supplemented or amended from time to time, the
"Designated Onex Sub Guaranty"), and the Designated Onex Guaranty shall be in
full force and effect.
(c) On the Closing Date, OFSI shall have duly authorized,executed
and delivered a Guaranty in the form of Exhibit J (as modified, supplemented or
amended from time to time, the "OFSI Guaranty"), and the OFSI Guaranty shall be
in full force and effect.
4.12 Adverse Change; Approvals; etc. (a) On or prior to the Closing
Date, nothing shall have occurred (and neither the Co-Arrangers nor the Banks
shall have become aware of any facts, conditions or other information not
previously known) which the Co-Arrangers or the Required Banks shall determine
has had, or could reasonably be expected to have, a material adverse effect (x)
on the rights or remedies of the Agents or the Banks, or on the ability of any
Credit Party to perform their respective obligations to the Agents and the Banks
or (y) on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of any Borrower, OFSI and its Subsidiaries
taken as a whole, any Borrower and its Subsidiaries taken as a whole or Caterair
Holdings and its Subsidiaries taken as a whole from that set forth in the
audited financial statements of such Persons for their fiscal year ended
December 31, 1996.
(b) On or prior to the Closing Date, all necessary governmental
(domestic and foreign) and third party approvals and/or consents in connection
with the consummation of the Transaction and the transactions contemplated by
the Documents and otherwise referred to or contemplated herein or therein shall
have been (or will, within the time frame required, be) obtained and remain in
full effect, and all applicable waiting periods shall have expired without any
action being taken by any competent authority which restrains, prevents or
imposes materially adverse conditions upon the consummation of the Transaction
or the consummation of the transactions contemplated by this Agreement and the
other Documents or otherwise referred to herein or therein.
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Additionally, there shall not exist any judgment, order, injunction or other
restraint issued or filed or a hearing seeking injunctive relief or other
restraint pending or notified prohibiting or imposing materially adverse
conditions upon the consummation of the Transaction or the consummation of any
other transactions contemplated by this Agreement and the other Documents.
4.13 Litigation. On the Closing Date, no litigation by any entity
(private or governmental) shall be pending or threatened (i) with respect to the
Transaction or this Agreement or any documentation executed in connection
herewith or therewith or the transactions contemplated hereby or thereby, (ii)
with respect to any material Indebtedness of OFSI, Caterair Holdings or any of
their respective Subsidiaries or (iii) which the Co-Arrangers or the Required
Banks shall determine could reasonably be expected to have a materially adverse
effect on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of any Borrower, OFSI and its Subsidiaries
taken as a whole, any Borrower and its Subsidiaries taken as a whole or Caterair
Holdings and its Subsidiaries taken as a whole.
4.14 Solvency Certificate; Insurance Certificates. On the Closing
Date, there shall have been delivered to the Administrative Agent (i) solvency
certificates from an Authorized Financial Officer of Caterair and SCIS, in the
form of Exhibit F to this Agreement and Exhibit J to the Caterair Credit
Agreement, respectively, and each dated the Closing Date and (ii) certificates
of insurance complying with the requirements of Section 6.03 for the business
and properties of the Borrowers and their respective Subsidiaries, and in scope,
form and substance reasonably satisfactory to the Co-Arrangers and the Required
Banks, including by naming the Collateral Agent as an additional insured and/or
loss payee, and stating that such insurance shall not be cancelled or revised
without at least 30 days prior written notice by the respective insurer to the
Collateral Agent.
4.15 Pro Forma Balance Sheets. On the Closing Date, there shall have
been delivered to the Administrative Agent an unaudited pro forma consolidated
balance sheet as of June 30, 1997 of each of (i) SCIS and its Subsidiaries and
(ii) Caterair, in each case after giving effect to the Transaction and the
incurrence of all Indebtedness contemplated herein and prepared in accordance
with generally accepted accounting principles, which pro forma consolidated
balance sheets shall be in form and substance reasonably satisfactory to the
Co-Arrangers and the Required Banks.
4.16 Caterair Holdings Subordination Agreement, etc. On the Closing
Date, (i) Caterair Holdings, Renex, Canex and the Administrative Agent shall
have duly authorized, executed and delivered an amended and restated
Subordination Agreement in the form of Exhibit L (as amended, modified or
supplemented from time to time, the
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"Caterair Holdings, Subordination Agreement"), and (ii) OFSI, Canex, the
Administrative Agent and Renex shall have entered into a letter agreement in the
form of Exhibit N.
4.17 No Default; Representations and Warranties. On the Closing Date
and after giving effect to the Loans made on such date (i) there shall exist no
Default or Event of Default and (ii) all representations and warranties
contained herein and in the other Credit Documents shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on the Closing Date (it being understood and agreed
that any representation or warranty which by its terms is made as of a specified
date shall be required to be true and correct in all material respects only as
of such a specified date).
4.18 Notice of Borrowing. Prior to the making of the Loans, the
Administrative Agent shall have received Notice of Borrowings meeting the
requirements of Section 1.02.
4.19 13% Senior Subordinated Note Tender Offer; 13% Senior
Subordinated Note Consent; 13% Senior Subordinated Note Indenture Supplement.
(a) On the Closing Date, SCIS shall have accepted for payment at least a
majority of the outstanding principal amount of 13% Senior Subordinated Notes
issued by it and tendered pursuant to the 13% Senior Subordinated Note Tender
Offer and each of the conditions to such purchase set forth in the 13% Senior
Subordinated Note Tender Offer Documents shall have been satisfied and not
waived to the satisfaction of the Administrative Agent and the Required Banks
(it being understood that the actual payment of any such 13% Senior Subordinated
Notes so tendered and accepted shall not be required to be made until the end of
the scheduled tender offer period or within one Business Day thereafter, which
is 5:00 p.m. on September 24, 1997 (the "13% Senior Subordinated Note Tender
Offer Expiration Date")). The 13% Senior Subordinated Note Tender Offer shall be
conducted in compliance with the 13% Senior Subordinated Note Tender Offer
Documents and all applicable laws (including, without limitation, Federal and
state securities laws).
(b) On the Closing Date, SCIS shall have received sufficient 13%
Senior Subordinated Note Consents pursuant to the Consent Solicitation to
authorize the execution and delivery of the 13% Senior Subordinated Note
Indenture Supplement and the 13% Senior Subordinated Note Indenture Supplement
shall have been duly executed and delivered by SCIS and the 13% Senior
Subordinated Note Indenture Trustee and all conditions to the effectiveness
thereof shall have been satisfied. The Consent Solicitation and the amendments
effected to the 13% Senior Subordinated Note Indenture pursuant to the 13%
Senior Subordinated Note Indenture Supplement shall
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be conducted in compliance with the Consent Solicitation Documents and all
applicable laws (including, without limitation, Federal and state securities
laws).
(c) On the Closing Date, there shall have been delivered to the
Administrative Agent true and correct copies of all 13% Senior Subordinated Note
Tender Offer Documents and Consent Solicitation Documents (including executed
versions of the 13% Senior Subordinated Note Indenture Supplement). The
Administrative Agent shall have received evidence in form, scope and substance
satisfactory to the Administrative Agent and the Required Banks that the matters
set forth in this Section 4.19 have been satisfied at such time.
The occurrence of the Closing Date and the incurrence of the Loans
on such date shall constitute a representation and warranty by SCIS and Caterair
to each of the Agents and each of the Banks that all of the conditions specified
in this Section 4 exist as of that time. All of the Notes, certificates, legal
opinions and other documents and papers referred to in this Section 4, unless
otherwise specified, shall be delivered to the Administrative Agent for the
account of each of the Banks and, except for the Notes, in sufficient
counterparts for each of the Banks and shall be in form and substance
satisfactory to the Required Banks.
SECTION 5. Representations, Warranties and Agreements. In order to
induce the Banks to enter into this Agreement and to make the Loans as provided
herein, each of the Borrowers makes the following representations, warranties
and agreements, in each case after giving effect to the Transaction, all of
which shall survive the execution and delivery of this Agreement and the Notes
and the making of the Loans on and as of the Closing Date (it being understood
and agreed that (i) any representation or warranty which by its terms is made as
of a specified date shall be required to be true and correct in all material
respects only as of such specified date and (ii) no representation or warranty
is made herein as to OFSI or Caterair Holdings).
5.01 Corporate Status. Each of SCIS, Caterair and each Subsidiary of
SCIS and Caterair (i) is a duly organized and validly existing corporation in
good standing under the laws of the jurisdiction of its organization, (ii) has
the corporate power and authority to own its property and assets and to transact
the business in which it is engaged and presently proposes to engage and (iii)
is duly qualified and is authorized to do business and is in good standing in
each jurisdiction where the ownership of its property or the operation or
conduct of its business requires such qualifications except for failures to be
so qualified which, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of Caterair,
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Caterair and its Subsidiaries taken as a whole, SCIS or SCIS and its
Subsidiaries taken as a whole.
5.02 Corporate Power and Authority. Each Credit Party has the
corporate power and authority to execute, deliver and perform the terms and
provisions of each of the Documents to which it is party and has taken all
necessary corporate action to authorize the execution, delivery and performance
by it of each of such Documents. Each Credit Party has duly executed and
delivered each of the Documents to which it is party, and each of such Documents
constitutes the legal, valid and binding obligation of such Credit Party
enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting creditors'
rights and by equitable principles (regardless of whether enforcement is sought
in equity or at law).
5.03 No Violation. Neither the execution, delivery or performance by
any Credit Party of the Documents to which it is a party, nor compliance by it
with the terms and provisions thereof, (i) will contravene any provision of any
applicable law, statute, rule or regulation or any applicable order, writ,
injunction or decree of any court or governmental instrumentality, (ii) will
conflict with or result in any breach of any of the terms, covenants, conditions
or provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien (except pursuant
to the Security Documents and the Subordinated Intercompany Security Agreement)
upon any of the properties or assets of any Borrower or any Subsidiary of any
Borrower pursuant to the terms of any indenture, mortgage, deed of trust, credit
agreement or loan agreement, or any other material agreement, contract or
instrument to which any Borrower or any Subsidiary of any Borrower is a party or
by which it or any of its property or assets is bound or to which it may be
subject or (iii) will violate any provision of the certificate of incorporation
or by-laws (or equivalent organizational documents) of any Borrower or any
Subsidiary of any Borrower.
5.04 Governmental Approvals. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with
(except as have been obtained or made on or prior to the Closing Date, or to the
extent not required to be obtained or made on or prior to the Closing Date
pursuant to the Transaction Documents, as will be obtained or made on or prior
to the required date therefor), or exemption by, any governmental or public body
or authority or any subdivision thereof, is required to authorize, or is
required for, (i) the execution, delivery and performance of any Document, (ii)
the legality, validity, binding effect or enforceability of any such Document or
(iii) the consummation of the Transaction.
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5.05 Financial Statements; Financial Condition; Undisclosed
Liabilities; Financial Projections. (a) The consolidated balance sheet of each
of SCIS and its Subsidiaries and Caterair and its Subsidiaries at December 31,
1996 and June 30, 1997, and the related consolidated statements of income,
retained earnings and cash flow for the fiscal year and six-month period ended
on such dates, and furnished to the Banks prior to the Closing Date present
fairly the consolidated financial position of each of SCIS and its Subsidiaries
and Caterair and its Subsidiaries at the date of such balance sheets and the
results of operations for the periods covered thereby. All such financial
statements have been prepared in accordance with generally accepted accounting
principles and practices consistently applied. Since December 31, 1996 (and
after giving effect to the Transaction), there has been no material adverse
change in the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of any Borrower or any Borrower and its
Subsidiaries taken as a whole.
(b) On and as of the Closing Date, after giving effect to the
Transaction and to all Indebtedness (including the Loans) being incurred or
assumed and Liens created by each Credit Party in connection therewith, (A) the
sum of the assets, at a fair valuation of SCIS, Caterair and their respective
Subsidiaries taken as a whole will exceed their respective debts, (B) SCIS,
Caterair and their respective Subsidiaries taken as a whole have not incurred
and do not intend to incur, and do not believe that they will incur, debts
beyond their ability to pay such debts as such debts mature and (C) SCIS,
Caterair and their respective Subsidiaries taken as a whole will have sufficient
capital with which to conduct their business. For purposes of this Section
5.05(b), "debt" means any liability on a claim, and "claim" means (i) right to
payment, whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured, or unsecured or (ii) right to an equitable remedy for
breach of performance if such breach gives rise to a payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured or unsecured.
(c) Except as fully disclosed in the financial statements delivered
pursuant to Section 5.05(a), there were as of the Closing Date no liabilities or
obligations with respect to the Borrowers or any of their respective
Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether or not due) which, either individually or in aggregate,
could reasonably be expected to be material to such Borrower or any of their
respective Subsidiaries (other than any such liabilities or obligations which
arise in the ordinary course of business in connection with contracts entered
into by any such Person). As of the Closing Date, no Borrower knows of any basis
for the assertion against it or any of its Subsidiaries of any liability or
obligation of any nature whatsoever that is not fully disclosed in the financial
statements delivered pursuant to Section 5.05(a) which, either individually or
in the
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aggregate, could reasonably be expected to be material to the Borrowers or any
of their respective Subsidiaries.
(d) On and as of the Closing Date, (i) there are no statements or
conclusions in any of the financial projections dated August 5, 1997 previously
delivered to the Banks (the "Financial Projections") which are based upon or
include information known to any Borrower to be misleading in any material
respect or which fail to take into account material information regarding the
matters reported therein. On the Closing Date, each Borrower believes that the
Financial Projections are reasonable and attainable, it being understood that
the Financial Projections include assumptions as to future events that are not
to be viewed as facts and that actual results may differ materially from the
projected results.
5.06 Litigation. There are no actions, suits or proceedings pending
or threatened (i) with respect to any Document or the transactions contemplated
hereby or thereby, (ii) with respect to any material Indebtedness of any
Borrower or any Subsidiary of any Borrower, or (iii) that could reasonably be
expected to materially and adversely affect the business, operations, property,
assets, liabilities, condition (financial or otherwise) or prospects of any
Borrower or any Borrower and its Subsidiaries taken as a whole.
5.07 True and Complete Disclosure. All factual information (taken as
a whole) furnished by or on behalf of any Borrower or any of its respective
Subsidiaries in writing to any Agent or any Bank (including, without limitation,
all information contained in the Documents) for purposes of or in connection
with this Agreement, the other Documents or any transaction contemplated herein
or therein is, and all other such factual information (taken as a whole)
hereafter furnished by or on behalf of any Borrower or any of its respective
Subsidiaries in writing to any Agent or any Bank, will be, true and accurate in
all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any fact necessary to make
such information (taken as a whole) not misleading in any material respect at
such time in light of the circumstances under which such information was
provided.
5.08 Use of Proceeds; Margin Regulations. (a) All proceeds of the
Caterair Loans shall be used by Caterair (i) to refinance its outstanding term
loans under the Original SCIS/Caterair Credit Agreement and (ii) to pay costs
and expenses related to the Transaction. All proceeds of the SCIS Loans shall be
used by SCIS (i) to finance, in part, the 13% Senior Subordinated Note Tender
Offer and (ii) to pay cost and expenses related to the Transaction.
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(b) No part of the proceeds of any Loan will be used to purchase or
carry any Margin Stock or to extend credit for the purpose of purchasing or
carrying any Margin Stock. Neither the making of any Loan nor the use of the
proceeds thereof will violate or be inconsistent with the provisions of
Regulation G, T, U or X of the Board of Governors of the Federal Reserve System.
5.09 Tax Returns and Payments. Each of SCIS, Caterair and each of
their respective Subsidiaries has filed or caused to be filed, on a timely basis
with the appropriate taxing authority, all material federal, state and other
returns, statements, forms and reports for taxes (the "Returns") required to be
filed by or with respect to the income, properties or operations of SCIS,
Caterair and their respective Subsidiaries. The Returns accurately reflect in
all material respects all liability for taxes of SCIS, Caterair and their
respective Subsidiaries and for the periods covered thereby. Each of SCIS,
Caterair and each of their respective Subsidiaries has paid all material taxes
payable by it other than taxes which are not delinquent, and other than those
contested in good faith and for which adequate reserves have been established in
accordance with generally accepted accounting principles. There is no material
action, suit, proceeding, investigation, audit or claim now pending or
threatened by any taxing authority regarding any taxes relating to SCIS,
Caterair or any of their respective Subsidiaries. As of the Closing Date, none
of SCIS, Caterair nor any of their respective Subsidiaries has entered into an
agreement or waiver or been requested to enter into an agreement or waiver
extending any statute of limitations relating to the payment or collection of
taxes of SCIS, Caterair or any of their respective Subsidiaries to a period
ending after the Closing Date. None of SCIS, Caterair nor any of their
respective Subsidiaries has provided, with respect to itself or property held by
it, any consent under Section 341(f) of the Code. None of SCIS, Caterair nor any
of their respective Subsidiaries has incurred, or will incur, any material tax
liability for any tax year, or portion thereof, ending on or before the Closing
Date, in connection with the Transaction or the other transactions contemplated
hereby and thereby.
5.10 Compliance with ERISA. (i) Each Plan is in substantial
compliance with ERISA and the Code; no Reportable Event has occurred with
respect to a Plan; no Plan is insolvent or in reorganization; no Plan that is a
single-employer plan (as defined in Section 4001 of ERISA) has an Unfunded
Current Liability; no Plan has an accumulated or waived funding deficiency or
has applied for an extension of any amortization period within the meaning of
Section 412 of the Code; all contributions required to be made with respect to a
Plan and a Foreign Pension Plan have been timely made; none of SCIS or Caterair
nor any Subsidiary or ERISA Affiliate of SCIS or Caterair has incurred any
material liability to or on account of a Plan pursuant to Section 409, 502(i),
502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section
401(a)(29), 4971, 4975 or 4980 of the Code or expects to incur any
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material liability (including any indirect, contingent, or secondary liability)
under any of the foregoing Sections with respect to any Plan; no proceedings
have been instituted to terminate or appoint a trustee to administer any Plan;
no condition exists which presents a material risk to SCIS, Caterair or any
Subsidiary or ERISA Affiliate of SCIS, Caterair of incurring a material
liability to or on account of a Plan pursuant to the foregoing provisions of
ERISA and the Code; using actuarial assumptions and computation methods
consistent with Part 1 of subtitle E of Title IV of ERISA, the aggregate
liabilities of SCIS, Caterair and their respective Subsidiaries and ERISA
Affiliates to all Plans which are multiemployer plans (as defined in Section
4001(a)(3) of ERISA) in the event of a complete withdrawal therefrom, as of the
close of the most recent fiscal year of each such Plan, would not exceed
$5,000,000; no lien imposed under the Code or ERISA on the assets of SCIS,
Caterair or any Subsidiary or ERISA Affiliate of SCIS or Caterair exists or is
likely to arise on account of any Plan; and if SCIS, Caterair and their
respective Subsidiaries were to cease contributions to or terminate any employee
benefit plan maintained by any of them after securing appropriate governmental
and union consents and approvals, the unfunded liability for benefits then due
could not reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of SCIS, Caterair, SCIS and its Subsidiaries taken as a
whole or Caterair and its Subsidiaries taken as a whole.
(ii) Each Foreign Pension Plan has been maintained in substantial
compliance with its terms and with the requirements of any and all applicable
laws, statutes, rules, regulations and orders and has been maintained, where
required, in good standing with applicable regulatory authorities. None of SCIS,
Caterair nor any of their respective Subsidiaries has incurred any obligation in
connection with the termination of or withdrawal from any Foreign Pension Plan.
The present value of the accrued benefit liabilities (whether or not vested)
attributable to employees of SCIS, Caterair or any of their respective
Subsidiaries under each Foreign Pension Plan, determined as of the end of SCIS'
and Caterair's most recently ended fiscal year on the basis of actuarial
assumptions, which are reasonable in the aggregate, did not exceed the current
value of the assets of such Foreign Pension Plan allocable to such benefit
liabilities by more than $4,000,000.
5.11 The Security Documents. (a) The provisions of the Security
Agreement are effective to create in favor of the Collateral Agent for the
benefit of the Secured Creditors a legal, valid and enforceable security
interest in all right, title and interest of each Credit Party party to the
Security Agreement in the Security Agreement Collateral, and the Security
Agreement, upon the filing of Form UCC-1 financing statements or the appropriate
equivalent (which filings have been made), creates a fully perfected first lien
on, and security interest in, all right, title and interest in all of the
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Security Agreement Collateral to the extent that such Security Agreement
Collateral consists of the type of property in which a security interest may be
perfected by filing a financing statement under the UCC as enacted in any
relevant jurisdiction, subject to no other Liens other than Permitted Liens. The
recordation of the Assignment of Security Interest in U.S. Patents and
Trademarks in the form attached to the Security Agreement in the United States
Patent and Trademark Office together with filings on Form UCC-1 made pursuant to
the Security Agreement will be effective, under applicable law, to perfect the
security interest granted to the Collateral Agent in the trademarks and patents
covered by the Security Agreement and the recordation of the Assignment of
Security Interest in U.S. Copyrights in the form attached to the Security
Agreement with the United States Copyright Office together with filings on Form
UCC- 1 made pursuant to the Security Agreement will be effective under federal
law to perfect the security interest granted to the Collateral Agent in the
copyrights covered by the Security Agreement. Each Credit Party party to the
Security Agreement has good and valid title to all Security Agreement Collateral
owned by it, free and clear of all Liens except Permitted Liens.
(b) The security interests created in favor of the Collateral Agent,
as Pledgee, for the benefit of the Secured Creditors under the Pledge Agreements
constitute first priority perfected security interests in the Pledged
Securities, subject to no security interests of any other Person. No filings or
recordings are required in order to perfect (or maintain the perfection or
priority of) the security interests created in the Pledged Securities and the
proceeds thereof under the Pledge Agreements (other than, in respect of such
proceeds, the filing of Form UCC-1 financing statements or the appropriate
equivalent (which filings have been made)).
(c) The Mortgages create, upon recording thereof and of the Mortgage
Amendments in the case of the Existing Mortgages (which recordings, in the case
of the Mortgages, have been made, and in the case of the Mortgage Amendments,
will be made within 10 days after the Closing Date), as security for the
obligations purported to be secured thereby, a valid and enforceable first
priority perfected security interest in and mortgage lien on all of the
Mortgaged Properties in favor of the Collateral Agent for the benefit of the
Secured Creditors and subject to no other Liens (other than Permitted Liens).
Each Credit Party has good and marketable title to all fee-owned Mortgaged
Properties owned by such Credit Party and valid leasehold title to all
lease-hold Mortgaged Properties leased by such Credit Party, in each case free
and clear of all leases, occupancy interests and all Liens except Permitted
Liens.
5.12 Representations and Warranties in Other Documents. (a) On the
Closing Date, all representations and warranties made by any Credit Party in the
SCIS Credit Agreement and in the 9 1/4% Senior Subordinated Note Documents were
true and
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correct in all material respects as at the time as of which such representations
and warranties were made (or deemed made).
(b) On the Closing Date, all representations and warranties
contained in the other Credit Documents shall be true and correct in all
material respects.
5.13 Properties. Each of SCIS, Caterair and each Subsidiary of SCIS
and Caterair has good and valid title to all material properties owned by it,
including, without limitation, all property reflected as owned by it in the
consolidated balance sheets of SCIS and Caterair referred to in Section 5.05(a)
(except as sold or otherwise disposed of since the date of such balance sheets
pursuant to transactions not prohibited under the Original SCIS/Caterair Credit
Agreement), free and clear of all Liens, other than (i) as referred to in the
balance sheets or in the notes thereto or (ii) Permitted Liens. Schedule III
sets forth a true and complete description of all Real Property owned or leased
by SCIS, Caterair and each Domestic Subsidiary of SCIS and Caterair on the
Closing Date, the type of interest therein held by such Person and sets forth
the direct owner or lessee thereof and whether such Real Property is subject to
any of the Lease Agreements.
5.14 Capitalization. On the Closing Date, the authorized capital
stock of (i) SCIS consists of 3,000 shares of common stock, $.01 par value per
share, of which 100 shares are issued and outstanding and owned of record and
beneficially by OFSI and (ii) Caterair consists of 10,000 shares of common
stock, $.01 par value per share, all of which shares are issued and outstanding
and owned of record and beneficially by Caterair Holdings. All such outstanding
shares of common stock have been duly and validly issued, are fully paid and
nonassessable and are free of preemptive rights. Neither SCIS nor Caterair has
outstanding any securities convertible into or exchangeable for its capital
stock or outstanding any rights to subscribe for or to purchase, or any options
or warrants for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, its capital stock.
5.15 Subsidiaries. Schedule IV lists, as of the Closing Date, each
Subsidiary of SCIS and Caterair and the direct and indirect ownership interest
of SCIS and Caterair therein. All outstanding shares of capital stock of each
Subsidiary of SCIS and Caterair have been duly and validly issued, are fully
paid and non-assessable and have been issued free of preemptive rights. No
Subsidiary of SCIS or Caterair has outstanding any securities convertible into
or exchangeable for its capital stock or outstanding any right to subscribe for
or to purchase, or any options or warrants for the purchase of, or any agreement
providing for the issuance (contingent or otherwise) of
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or any calls, commitments or claims of any character relating to, its capital
stock or any stock appreciation or similar rights.
5.16 Compliance with Statutes, etc. Each of SCIS, Caterair and each
Subsidiary of SCIS and Caterair is in compliance with all applicable statutes,
laws, ordinances, codes, rules, regulations and orders of, and all applicable
restrictions imposed by, all governmental bodies, domestic or foreign, in
respect of the conduct of its business and the ownership of its property
(including applicable statutes, regulations, orders and restrictions relating to
environmental standards and controls) to the extent required as of the Closing
Date, except such instances of noncompliance as could not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of SCIS, Caterair, SCIS and its Subsidiaries taken as a
whole or Caterair and its Subsidiaries taken as a whole.
5.17 Investment Company Act. None of SCIS, Caterair nor any
Subsidiary of SCIS or Caterair is an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
5.18 Public Utility Holding Company Act. None of SCIS, Caterair nor
any Subsidiary of SCIS or Caterair is a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
5.19 Environmental Matters. (a) Each of SCIS, Caterair and each
Subsidiary of SCIS and Caterair is in compliance with all applicable
Environmental Laws and the requirements of any permits issued under such
Environmental Laws. There are no pending or threatened Environmental Claims
against SCIS, Caterair or any Subsidiary of SCIS or Caterair or any Real
Property owned or operated by any such Person. There are no facts,
circumstances, conditions or occurrences on any Real Property owned or operated
by SCIS, Caterair or any Subsidiary of SCIS or Caterair or on any property
adjoining or in the vicinity of any such Real Property that could reasonably be
expected (i) to form the basis of an Environmental Claim against SCIS, Caterair
or any Subsidiary of SCIS or Caterair or any such Real Property or (ii) to cause
any such Real Property to be subject to any restrictions on the ownership,
occupancy, use or transferability of such Real Property by SCIS, Caterair or any
Subsidiary of SCIS or Caterair under any applicable Environmental Law.
(b) Hazardous Materials have not at any time been generated, used,
treated or stored on, or transported to or from, any Real Property owned or
operated
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by SCIS, Caterair or any Subsidiary of SCIS or Caterair where such generation,
use, treatment or storage has violated any Environmental Law. Hazardous
Materials have not at any time been Released on or from any Real Property owned
or operated by SCIS, Caterair or any Subsidiary of SCIS or Caterair where such
Release has violated any applicable Environmental Law. There are no underground
storage tanks located on any Real Property owned or operated by SCIS, Caterair
or any Subsidiary of SCIS or Caterair that are not in compliance with all
Environmental Laws.
(c) Notwithstanding anything to the contrary in this Section 5.19,
the representations made in this Section 5.19 shall only be untrue if the effect
of the failures and noncompliances of the types described above, either
individually or in the aggregate, have had, or could reasonably be expected to
have, a material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of SCIS, Caterair,
SCIS and its Subsidiaries taken as a whole or Caterair and its Subsidiaries
taken as a whole.
5.20 Labor Relations. None of SCIS, Caterair nor any Subsidiary of
SCIS or Caterair is engaged in any unfair labor practice that could reasonably
be expected to have a material adverse effect on SCIS, Caterair, SCIS and its
Subsidiaries taken as a whole or Caterair and its Subsidiaries taken as a whole.
There is (i) no unfair labor practice complaint pending against SCIS, Caterair
or any Subsidiary of SCIS or Caterair or threatened against any of them, before
the National Labor Relations Board or pursuant to the Railway Labor Act, and no
grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against SCIS, Caterair or any Subsidiary of
SCIS or Caterair or threatened against any of them, (ii) no strike, labor
dispute, slowdown or stoppage pending against SCIS, Caterair or any Subsidiary
of SCIS or Caterair or threatened against any of them and (iii) no union
representation proceeding pending with respect to the employees of SCIS,
Caterair or any Subsidiary of SCIS or Caterair except (with respect to any
matter specified in clause (i), (ii) or (iii) above, either individually or in
the aggregate) such as could not reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of SCIS, Caterair, SCIS and its
Subsidiaries taken as a whole or Caterair and its Subsidiaries taken as a whole.
5.21 Patents, Licenses, Franchises and Formulas. Each of SCIS,
Caterair and each Subsidiary of SCIS and Caterair owns all patents, trademarks,
permits, service marks, trade names, copyrights, licenses, franchises and
formulas, or has rights with respect to the foregoing, and has obtained
assignments of all leases and other rights of whatever nature, reasonably
necessary for the present conduct of its business, without any known conflict
with the rights of others which, or the failure to
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obtain which, as the case may be, could reasonably be expected to result in a
material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of SCIS, Caterair,
SCIS and its Subsidiaries taken as a whole or Caterair and its Subsidiaries
taken as a whole.
5.22 Indebtedness; Subordination Provisions; etc. (a) Schedule V
sets forth a true and complete list of all Indebtedness of SCIS, Caterair and
their respective Subsidiaries as of the Closing Date and which is to remain
outstanding after giving effect thereto (excluding the Loans, the obligations
under the SCIS Credit Agreement, the Senior Subordinated Notes and the
SCIS/Caterair Loan), in each case showing the aggregate principal amount thereof
and the name of the respective borrower and any Credit Party or any of its
Subsidiaries which directly or indirectly guaranteed such debt.
(b) The subordination provisions contained in the Senior
Subordinated Notes and in the other Senior Subordinated Note Documents are
enforceable against SCIS, Caterair, the other Subsidiary Guarantors and the
holders of the Senior Subordinated Notes, and all Obligations and Guaranteed
Obligations (as defined herein and in the Subsidiaries Guaranty) are within the
definition of "Senior Indebtedness" or "Guarantor Senior Indebtedness", as the
case may be, included in such subordination provisions.
5.23 Consummation of Transaction. At the time of consummation
thereof, the Transaction shall have been consummated in accordance with the
terms of the respective Documents and all applicable United States and other
laws. At the time of consummation thereof, all consents, approvals of and
permits for, and filings and registrations with, and all other actions in
respect of, all governmental agencies, authorities or instrumentalities required
in order to make or consummate the Transaction have been (or will, within the
time frame required, be) obtained, given, filed or taken and are or will be in
full force and effect (or effective judicial relief with respect thereto has
been obtained). All applicable waiting periods with respect to the Transaction
shall have expired without any action being taken by any competent authority
which restrains, prevents or imposes material adverse conditions upon the
Transaction. Additionally, there does not exist any judgment, order or
injunction prohibiting or imposing material adverse conditions upon the
Transaction or the performance by SCIS, Caterair or any of their respective
Subsidiaries of their obligations under the respective Documents. All actions
taken by SCIS, Caterair any of their respective Subsidiaries pursuant to or in
furtherance of the issuance of the consummation of the Transaction have been
taken in compliance with the respective Documents therefor and all applicable
United States and other laws.
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SECTION 6. Affirmative Covenants. Each of SCIS and Caterair
covenants and agrees that on and after the Effective Date and so long as this
Agreement is in effect and until the Loans and Notes, together with interest,
Fees and all other Obligations incurred hereunder and thereunder are paid in
full (other than indemnity and similar obligations that are not then due and
payable):
6.01 Information Covenants. SCIS and Caterair will, as applicable,
furnish to the Administrative Agent (with sufficient copies for each of the
Banks) (and the Administrative Agent will promptly thereafter furnish to each
Bank):
(a) Monthly Reports. Within 30 days after the end of each fiscal
month of Caterair and SCIS (or 60 days after the end of each December),
the consolidated balance sheet of each of Caterair and its Subsidiaries
and SCIS and its Subsidiaries as at the end of such fiscal month and the
related consolidated statements of income and retained earnings and
statement of cash flows for such fiscal month and for the elapsed portion
of the fiscal year ended with the last day of such fiscal month in the
prior fiscal year, in each case setting forth comparative figures for the
corresponding fiscal month in the prior fiscal year and, to the extent the
respective budget has previously been delivered, comparative figures for
such fiscal month as set forth in the respective budget delivered pursuant
to Section 6.01(e), all of which shall be certified by an Authorized
Financial Officer of Caterair or SCIS, as applicable, subject to normal
year-end audit adjustments and the absence of footnotes.
(b) Quarterly Financial Statements. Within 45 days after the close
of the first three quarterly accounting periods in each fiscal year of
SCIS and Caterair, (x) in the case of SCIS, the consolidated balance sheet
of SCIS and its Subsidiaries as at the end of such quarterly accounting
period and the related consolidated statements of income and retained
earnings and the statement of cash flows, in each case for such quarterly
accounting period and for the elapsed portion of the fiscal year ended
with the last date of such quarterly accounting period, (y) in the case of
Caterair, the consolidated balance sheet of Caterair and its Subsidiaries
as at the end of such quarterly accounting period and the related
consolidated statements of income and retained earnings and the statement
of cash flows, in each case for such quarterly accounting period and for
the elapsed portion of the fiscal year ended with the last day of such
quarterly accounting period, and (z) also in the case of SCIS, a statement
of the combined debt of SCIS, Caterair and their respective Subsidiaries
as at the end at such quarterly accounting period and the combined
statements of income and the combined statement of cash flows for SCIS,
Caterair and their respective Subsidiaries, in each case for such
quarterly accounting period and for the
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elapsed portion of the fiscal year ended with the last day of such
quarterly accounting period (with such combined statements to be prepared
on a basis consistent with those combined statements delivered under the
Original SCIS/Caterair Credit Agreement), in each case (with respect to
preceding clauses (x), (y) and (z)) setting forth comparative figures for
the corresponding periods in the prior fiscal year, all of which shall be
certified by an Authorized Financial Officer of SCIS or Caterair, as
applicable, subject to normal year-end audit adjustments and the absence
of footnotes.
(c) Annual Financial Statements. Within 105 days after the close of
each fiscal year of SCIS and Caterair, (x) in the case of SCIS, the
consolidated balance sheet of SCIS and its Subsidiaries as at the end of
such fiscal year and the related consolidated statements of income and
retained earnings and the statement of cash flows for such fiscal year
setting forth comparatives for the preceding fiscal year, (y) in the case
of Caterair, the consolidated balance sheet of Caterair and its
Subsidiaries as at the end of such fiscal year and the related
consolidated statements of income and retained earnings and the statement
of cash flows for such fiscal year, setting forth comparatives for the
preceding fiscal year, and (z) also in the case of SCIS, a statement of
the combined debt of SCIS, Caterair and their respective Subsidiaries as
at the end of such fiscal year and the combined statements of income and
the combined statement of cash flows for SCIS, Caterair and their
respective Subsidiaries for such fiscal year setting forth comparative
figures for the preceding fiscal year (with such combined statements to be
prepared on a basis consistent with those combined statements delivered
under the Original SCIS/Caterair Credit Agreement), in each case (with
respect to preceding clauses (x), (y) and (z)) certified (A) in the case
of the consolidated financial statements of SCIS and Caterair, by Coopers
and Lybrand L.L.P. or such other independent certified public accounting
firm of recognized national standing reasonably acceptable to the Agents,
together with a report of such accounting firm stating that in the course
of its regular audit of the consolidated financial statements of each of
SCIS and its Subsidiaries and Caterair and its Subsidiaries, which audit
was conducted in accordance with generally accepted auditing standards,
such accounting firm obtained no knowledge of any Default or Event of
Default which has occurred and is continuing under Section 7 or 8 insofar
as such Sections relate to accounting matters, or, if in the opinion of
such accounting firm such a Default or an Event of Default has occurred
and is continuing, a statement as to the nature thereof and (B) in the
case of the combined statements of SCIS and Caterair, the Authorized
Financial Officer of SCIS and (ii) management's discussions and analysis
of the important operational and financial developments during such fiscal
year.
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(d) Management Letters. Promptly after the receipt thereof by SCIS,
Caterair or any Domestic Subsidiary of SCIS or Caterair, a copy of any
"management letter" received by SCIS, Caterair or such Subsidiary from its
certified public accountants and the management's responses thereto.
(e) Budgets. No later than 120 days following the commencement of
the first day of each fiscal year of SCIS and Caterair, consolidated
budgets for each of SCIS and Caterair in form satisfactory to the Agents
(including budgeted statements of income and sources and uses of cash and
balance sheets) prepared by SCIS and Caterair respectively for each of the
twelve months of such fiscal year prepared in detail, and accompanied by
the statement of an Authorized Financial Officer of SCIS or Caterair, as
the case may be, that the respective budget is a reasonable estimate of
the period covered thereby.
(f) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Sections 6.01(a), (b) and (c), a
certificate of an Authorized Financial Officer of SCIS or Caterair, as
applicable, to the effect that, to the best of such officer's knowledge,
no Default or Event of Default has occurred and is continuing or, if any
Default or Event of Default has occurred and is continuing, specifying the
nature and extent thereof, which certificate shall set forth in reasonable
detail the calculations required to establish whether SCIS, Caterair and
their respective Subsidiaries were in compliance with the provisions of
Sections 7.01, 7.03 and 7.05 at the end of such fiscal quarter or year, as
the case may be.
(g) Notice of Default or Litigation. Promptly, and in any event
within three Business Days after an executive officer of SCIS or Caterair
obtains knowledge thereof, notice of (i) the occurrence of any event which
constitutes a Default or an Event of Default and (ii) any litigation or
governmental investigation or proceeding pending (x) against SCIS,
Caterair or any of their respective Subsidiaries which could reasonably be
expected to materially and adversely affect the business, operations,
property, assets, liabilities, condition (financial or otherwise) or
prospects of SCIS, Caterair, SCIS and its Subsidiaries taken as a whole or
Caterair and its Subsidiaries taken as a whole, or (y) with respect to any
Document.
(h) Other Reports and Filings. Promptly, copies of all financial
information, proxy materials and other information and reports, if any,
which SCIS, Caterair or any Subsidiary of SCIS or Caterair shall file with
the Securities and Exchange Commission or any successor thereto (the
"SEC") or deliver to holders of the Senior Subordinated Notes or any other
issue of its
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Indebtedness pursuant to the terms of the documentation governing any such
Indebtedness (or any trustee, agent or other representative therefor).
(i) Environmental Matters. Promptly, and in any event within ten
Business Days, after an executive officer of SCIS or Caterair obtains
knowledge thereof, notice of one or more of the following environmental
matters, unless such environmental matters could not, individually or when
aggregated with all other such environmental matters, be reasonably
expected to materially and adversely affect the business, operations,
property, assets, liabilities, condition (financial or otherwise) or
prospects of SCIS, Caterair, SCIS and its Subsidiaries taken as a whole or
Caterair and its Subsidiaries taken as a whole:
(i) any pending or threatened Environmental Claim in writing
against SCIS, Caterair or any Subsidiary of SCIS or Caterair or any
Real Property owned or operated by SCIS, Caterair or any Subsidiary
of SCIS or Caterair;
(ii) any condition or occurrence on or arising from any Real
Property owned or operated by SCIS, Caterair or any Subsidiary of
SCIS or Caterair that (a) results in noncompliance by SCIS, Caterair
or any Subsidiary of SCIS or Caterair with any applicable
Environmental Law or (b) could reasonably be expected to form the
basis of an Environmental Claim against SCIS, Caterair or any
Subsidiary of SCIS or Caterair or any such Real Property;
(iii) any condition or occurrence on any Real Property owned
or operated by SCIS, Caterair or any Subsidiary of SCIS or Caterair
that could reasonably be expected to cause such Real Property to be
subject to any restrictions on the ownership, occupancy, use or
transferability by SCIS, Caterair or any Subsidiary of SCIS or
Caterair of any such Real Property under any Environmental Law; and
(iv) the taking of any removal or remedial action in response
to the actual or alleged presence of any Hazardous Material on any
Real Property owned or operated by SCIS, Caterair or any Subsidiary
of SCIS or Caterair as required by any Environmental Law or any
governmental or other administrative agency.
All such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial action
and SCIS', Caterair's or such Subsidiary's response thereto. In addition,
SCIS, Caterair or
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any Subsidiary of SCIS or Caterair will provide the Banks with copies of
all material communications with any government or governmental agency
relating to Environmental Laws, all communications with any Person
relating to any Environmental Claim of which notice is required to be
given pursuant to this Section 6.01(i), and such detailed reports of any
such Environmental Claim as may reasonably be requested by any Agent;
provided that in any event such Persons shall deliver to each Bank all
notices received by them from any government or governmental agency under,
or pursuant to, CERCLA.
(j) Annual Meetings with Banks. At the request of the Administrative
Agent, SCIS shall within 135 days after the close of each fiscal year of
SCIS hold a meeting (at a mutually agreeable location and time) with all
of the Banks at which meeting shall be reviewed the financial results of
the previous fiscal year and the financial condition of SCIS and its
Subsidiaries and Caterair and its Subsidiaries and the annual plan and
budgets presented for the current fiscal year of SCIS and its Subsidiaries
and Caterair and its Subsidiaries.
(k) Other Information. From time to time, such other information or
documents (financial or otherwise) with respect to SCIS, Caterair or any
of their respective Subsidiaries as any Bank may reasonably request in
writing.
6.02 Books, Records and Inspections. Each of SCIS and Caterair will,
and will cause each of its respective Subsidiaries to, keep proper books of
record and account in which true and correct entries in conformity with
generally accepted accounting principles and all requirements of law shall be
made of all dealings and transactions in relation to its business and
activities. Each of SCIS and Caterair will, and will cause each of its
respective Subsidiaries to, permit officers and designated representatives of
any Agent or any Bank to visit and inspect, during regular business hours and
under guidance of officers of, SCIS, Caterair or such Subsidiary, any of the
properties of SCIS, Caterair or such Subsidiary, and to examine the books of
account of SCIS, Caterair or such Subsidiary and discuss the affairs, finances
and accounts of SCIS, Caterair or such Subsidiary with, and be advised as to the
same by, its and their officers and independent accountants, all at such
reasonable times and intervals and to such reasonable extent as any Agent or any
Bank may reasonably request.
6.03 Maintenance of Property; Insurance. (a) Each of SCIS and
Caterair will, and will cause each of its respective Subsidiaries to, (i) keep
all property necessary in its business in good working order and condition
(ordinary wear and tear excepted), (ii) maintain property insurance with
financially sound and reputable insurance companies on all its property for the
lower of replacement cost or market value against such risks as applicable per
property location, (iii) maintain public liability
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insurance with financially sound and reputable insurance companies in such
amounts and coverage as determined in good faith by senior management of SCIS or
Caterair to be appropriate for SCIS, Caterair and their respective Subsidiaries,
(iv) maintain workers' compensation insurance with financially sound and
reputable insurance companies as statutorily required by each applicable locale,
and (v) furnish to each Bank, upon written request, full information as to all
insurance carried.
(b) Each of SCIS and Caterair will, and will cause each of its
respective Domestic Subsidiaries to, at all times keep their respective
properties insured in favor of the Collateral Agent, and all policies (including
Mortgage Policies) or certificates with respect to such insurance (and any other
insurance maintained by SCIS, Caterair or any such Domestic Subsidiary) (i)
shall be endorsed to the Collateral Agent's satisfaction for the benefit of the
Collateral Agent (including, without limitation, by naming the Collateral Agent
as loss payee or as an additional insured), (ii) shall state that such insurance
policies shall not be cancelled without at least 30 days' prior written notice
thereof by the respective insurer to the Collateral Agent, (iii) shall provide
that the respective insurers irrevocably waive any and all rights of subrogation
with respect to the Collateral Agent and the Secured Creditors, (iv) shall
contain the standard non-contributory mortgagee clause endorsement in favor of
the Collateral Agent with respect to hazard insurance coverage, (v) shall,
except in the case of public liability insurance and workers' compensation
insurance, provide that any losses shall be payable notwithstanding (A) any act
or neglect of SCIS, Caterair or any such Domestic Subsidiary, (B) the occupation
or use of the properties for purposes more hazardous than those permitted by the
terms of the respective policy, (C) any foreclosure or other proceeding relating
to the insured properties or (D) any change in the title to or ownership or
possession of the insured properties and (vi) shall be deposited with the
Collateral Agent.
(c) If SCIS, Caterair or any of their respective Subsidiaries to
which this Section 6.03 applies shall fail to maintain insurance in accordance
herewith, or if SCIS, Caterair or any such Subsidiary shall fail to so endorse
and deposit all policies or certificates with respect thereto, the
Administrative Agent and/or the Collateral Agent shall have the right (but shall
be under no obligation) to procure such insurance and SCIS and Caterair agree to
reimburse the Administrative Agent or the Collateral Agent, as the case may be,
for all costs and expenses of procuring such insurance.
6.04 Corporate Franchises. Each of SCIS and Caterair will, and will
cause each of its respective Subsidiaries to, do or cause to be done, all things
necessary to preserve and keep in full force and effect its existence and its
material rights, franchises, licenses and patents; provided, however, that
nothing in this Section 6.04 shall prevent (i) the sale or other disposal of
assets by SCIS, Caterair or any Subsidiary
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of SCIS or Caterair in accordance with Section 7.05, (ii) the withdrawal by
SCIS, Caterair or any Subsidiary of SCIS or Caterair of its qualification as a
foreign corporation in any jurisdiction where such withdrawal could not
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or otherwise) or
prospects of SCIS, Caterair, SCIS and its Subsidiaries taken as a whole or
Caterair and its Subsidiaries taken as a whole or (iii) SCIS or Caterair from
not maintaining the corporate existence of any Subsidiary of SCIS or Caterair
(other than a Subsidiary Guarantor or a Significant Subsidiary) to the extent
that the Board of Directors of SCIS or Caterair shall determine in good faith
that the preservation of such existence is no longer desirable in the conduct of
the business of SCIS and its Restricted Subsidiaries taken as a whole or
Caterair and its Subsidiaries taken as a whole, as the case may be.
6.05 Compliance with Statutes, etc. Each of SCIS and Caterair will
comply, and will cause each of its respective Subsidiaries to comply, with all
applicable statutes, laws, ordinances, codes, rules, regulations and orders of,
and all applicable restrictions imposed by all governmental bodies, domestic or
foreign, in respect of the conduct of its business and the ownership and
operation of its property and business, except such instances of noncompliance
as could not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of SCIS, Caterair,
SCIS and its Subsidiaries taken as a whole or Caterair and its Subsidiaries
taken as a whole.
6.06 Compliance with Environmental Laws. (a) Each of SCIS and
Caterair will comply, and will cause each of its respective Subsidiaries to
comply, with all Environmental Laws applicable to the ownership or use of its
Real Property now or hereafter owned or operated by SCIS, Caterair or any such
Subsidiary, except such instances of noncompliance as could not, individually or
in the aggregate, reasonably be expected to have a material adverse effect on
the business, operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of SCIS, Caterair and its Subsidiaries taken as a whole
or Caterair and its Subsidiaries taken as a whole, and will promptly pay or
cause to be paid all costs and expenses incurred in connection with such
compliance, and will keep or cause to be kept all such Real Property free and
clear of any Liens imposed pursuant to such Environmental Laws. None of SCIS,
Caterair nor any Subsidiary of SCIS or of Caterair will generate, use, treat,
store, release or dispose of, or permit the generation, use, treatment, storage,
release or disposal of Hazardous Materials on any Real Property now or hereafter
owned or operated by SCIS, Caterair or any such Subsidiary, or transport or
permit the transportation of Hazardous Materials to or from any such Real
Property except for Hazardous Materials used or stored at any such Real
Properties in material compliance with all ap-
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plicable Environmental Laws and used in connection with the operation, use and
maintenance of any such Real Property.
(b) At the written request of the Administrative Agent or the
Required Banks, which request shall specify in reasonable detail the basis
therefor, at any time and from time to time, SCIS and Caterair will provide, at
their own expense an environmental site assessment report concerning any Real
Property now or hereafter owned or operated by SCIS, Caterair or any Domestic
Subsidiary of SCIS or Caterair, prepared by an environmental consulting firm
approved by the Administrative Agent, indicating the presence or absence of
Hazardous Materials and the potential cost of any removal or remedial action in
connection with any Hazardous Materials on such Real Property; provided that
such request may be made only if (i) the Administrative Agent or the Required
Banks reasonably believe that SCIS, Caterair or any Domestic Subsidiary of SCIS
or Caterair or any such Real Property is not in compliance with Section 6.06(a)
or (ii) any notice is delivered to the Administrative Agent or any Bank pursuant
to Section 6.01(i). If any such Credit Party fails to provide the same within
120 days after such request was made, the Administrative Agent may order the
same, and each of SCIS, Caterair and each Domestic Subsidiary of SCIS and
Caterair shall grant and hereby grants, to the extent that it is legally and
contractually able to do so, to the Administrative Agent and the Banks and their
agents access to such Real Property and specifically, to the extent that it is
legally and contractually able to do so, grants the Administrative Agent and the
Banks an irrevocable non-exclusive license, subject to the rights of tenants, to
undertake such an assessment, all at the respective Credit Party's expense.
6.07 Performance of Obligations. Each of SCIS and Caterair will, and
will cause each of its respective Subsidiaries to, perform all of its
obligations under the terms of each mortgage, indenture, security agreement,
loan agreement, credit agreement or any other material agreement, contract or
instrument by which it is bound, except such non-performances as could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of SCIS, Caterair, SCIS and its
Subsidiaries taken as a whole or Caterair and its Subsidiaries taken as a whole.
In addition to the requirements of the immediately preceding sentence, each of
SCIS and Caterair will, and will cause each of its respective Subsidiaries to,
perform all of its obligations under the terms of each Lease Agreement, License
Agreement and the Non-Compete Agreement.
6.08 Payment of Taxes. Each of SCIS and Caterair will pay and
discharge or cause to be paid and discharged, and will cause each of its
respective Subsidiaries to pay and discharge, all material taxes, assessments
and governmental
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charges or levies imposed upon it or upon its income or profits, or upon any
material properties belonging to it, in each case on a timely basis (giving
effect to applicable extensions for filings), and all material lawful claims
which, if unpaid, might become a lien or charge upon any properties of SCIS,
Caterair or any of their respective Subsidiaries; provided that neither SCIS,
Caterair nor any of their respective Subsidiaries shall be required to pay any
such tax, assessment, charge, levy or claim which is being contested in good
faith and by proper proceedings if it has maintained adequate reserves with
respect thereto in accordance with generally accepted accounting principles.
6.09 Additional Security; Further Assurances. (a) Each of SCIS and
Caterair will, and will cause each of its respective Wholly-Owned Domestic
Subsidiaries to, grant to the Collateral Agent security interests and mortgages
in such Real Property of such Credit Party as are not covered by the Existing
Mortgages, as may be requested from time to time by the Administrative Agent or
the Required Banks or as may be required to be granted from time to time
pursuant to the SCIS Credit Agreement. All such security interests and mortgages
shall be granted pursuant to Mortgages reasonably satisfactory in form and
substance to the Administrative Agent and shall constitute valid and enforceable
perfected Liens superior to and prior to the rights of all third Persons and
subject to no other Liens except for Permitted Liens. Such Mortgages or
instruments related thereto shall have been duly recorded or filed in such
manner and in such places as are required by law to establish, perfect, preserve
and protect the Liens in favor of the Collateral Agent required to be granted
pursuant to such Mortgages and all taxes, fees and other charges payable in
connection therewith shall have been paid in full.
(b) Each of SCIS and Caterair will, and will cause each of its
respective Wholly-Owned Domestic Subsidiaries to, at their expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to the Collateral covered by any of the Security Documents as the
Collateral Agent may reasonably require. Furthermore, each of SCIS and Caterair
will cause to be delivered to the Collateral Agent such opinions of counsel,
Mortgage Policies, surveys and other related documents as may be requested by
the Collateral Agent to assure itself that this Section 6.09 has been complied
with.
(c) Each of SCIS and Caterair agrees that each action required above
by this Section 6.09 shall be completed as soon as possible, but in no event
later than 90
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days after such action is requested to be taken by the Administrative Agent or
the Required Banks or is required to be taken pursuant to the SCIS Credit
Agreement.
(d) To the extent SCIS, Caterair or any of their respective
Subsidiaries create, establish or acquire any Wholly-Owned Domestic Subsidiary
after the Closing Date, each such Wholly-Owned Domestic Subsidiary shall be
required to become a party to each of the Subsidiaries Guaranty, the Security
Agreement and the General Pledge Agreement by executing a counterpart thereof or
by entering into an amendment thereto satisfactory to the Administrative Agent
and 100% of the capital stock of such new Wholly-Owned Domestic Subsidiary shall
be pledged pursuant to the General Pledge Agreement. In connection with the
foregoing, to the extent requested by the Administrative Agent or the Collateral
Agent, such Wholly-Owned Domestic Subsidiary shall be required to deliver such
relevant documentation (including opinions of counsel, UCC-1 Financing
Statements and officer's certificates) of the type described in Section 4 as the
respective Wholly-Owned Domestic Subsidiary would have had delivered if it were
a Credit Party on the Closing Date. Each of SCIS and Caterair agrees that each
action required to be taken pursuant to this clause (d) shall be completed
contemporaneously with the creation, establishment or acquisition of such
Wholly-Owned Domestic Subsidiary. In addition to the foregoing, all other
Pledged Securities acquired after the Closing Date by any Credit Party shall, to
the extent required by the respective Pledge Agreement, be pledged and, in the
case of certificated Pledged Securities, delivered to the Collateral Agent for
pledge pursuant to such Pledge Agreement.
6.10 13% Senior Subordinated Note Tender Offer; Escrows. (a) On the
13% Senior Subordinated Note Tender Offer Expiration Date or within one Business
Day thereafter, SCIS will pay for all 13% Senior Subordinated Notes that have
been tendered (and not withdrawn) pursuant to the 13% Senior Subordinated Note
Tender Offer, and all such 13% Senior Subordinated Notes shall be duly
cancelled.
(b) If on September 30, 1997 more than $25,000,000 in aggregate
principal amount of 13% Senior Subordinated Notes remain outstanding, SCIS shall
enter into an escrow agreement reasonably satisfactory to the Administrative
Agent (the "Bank Escrow Agreement") pursuant to which SCIS shall deposit cash
with the Collateral Agent in an amount equal to the aggregate principal amount
of the 13% Senior Subordinated Notes that remain outstanding, which cash shall
be held in the escrow account referred to in the Bank Escrow Agreement as
security for the Obligations hereunder and for the obligations under the SCIS
Credit Agreement, although (i) such cash shall upon request of SCIS be released
from such escrow account from time to time to repurchase or redeem outstanding
13% Senior Subordinated Notes so long as no Default or Event of Default then
exists and (ii) such cash shall upon
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request of SCIS be released from such escrow account at such time as the
aggregate principal amount of outstanding 13% Senior Subordinated Notes is
$25,000,000 or less so long as no Default or Event of Default then exists.
(c) If on September 30, 1997, $25,000,000 or less of 13% Senior
Subordinated Notes remain outstanding, SCIS shall have the option, in its sole
discretion, to enter into the Bank Escrow Agreement and deposit cash up to an
amount equal to the aggregate principal amount of 13% Senior Subordinated Notes
that remain outstanding, which cash shall be subject to the same security and
release arrangements as set forth in clause (b) of this Section 6.10.
SECTION 7. Negative Covenants. Each of SCIS and Caterair covenants
and agrees that on and after the Effective Date and so long as this Agreement is
in effect and until the Loans and Notes, together with interest, Fees and all
other Obligations incurred hereunder and thereunder, are paid in full (other
than indemnity and similar obligations that are not then due and payable):
7.01 Limitation on Restricted Payments. SCIS will not, and will not
cause or permit any of its Restricted Subsidiaries to, directly or indirectly,
(a) declare or pay any dividend or make any distribution (other than dividends
or distributions payable in Qualified Capital Stock of SCIS) on or in respect of
shares of SCIS' Capital Stock to holders of such Capital Stock, (b) purchase,
redeem or otherwise acquire or retire for value any Capital Stock of SCIS or any
warrants, rights or options to purchase or acquire shares of any class of such
Capital Stock, other than the exchange of such Capital Stock or any warrants,
rights or options to acquire shares of any class of such Capital Stock for
Qualified Capital Stock of SCIS or warrants, rights or options to acquire such
Qualified Capital Stock, (c) make any principal payment on, purchase, defease,
redeem, prepay, decrease or otherwise acquire or retire for value, prior to any
scheduled final maturity, scheduled repayment or scheduled sinking fund payment,
any Indebtedness of SCIS or its Restricted Subsidiaries that is subordinate or
junior in right of payment to the Obligations or the Guaranteed Obligations, or
(d) make any Investment (other than Permitted Investments) (each of the
foregoing actions set forth in clauses (a), (b), (c) and (d) being referred to
as a "Restricted Payment"), if at the time of such Restricted Payment or
immediately after giving effect thereto, (i) a Default or an Event of Default
shall have occurred and be continuing, (ii) SCIS is not able to incur at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with Section 7.03 or (iii) the aggregate amount of Restricted
Payments made subsequent to the Closing Date (the amount expended for such
purposes, if other than in cash, being the fair market value of such property as
determined by the Board of Directors of SCIS in good faith) shall exceed the sum
of: (x) 50% of the cumulative
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Consolidated Net Income (or if cumulative Consolidated Net Income shall be a
loss, minus 100% of such loss) of SCIS earned subsequent to the Closing Date and
on or prior to the date the Restricted Payment occurs (the "Reference Date")
(treating such period as a single accounting period); plus (y) 100% of the
aggregate Net Equity Proceeds received by SCIS from any Person (other than a
Subsidiary of SCIS) from the issuance and sale subsequent to the Closing Date
and on or prior to the Reference Date of Qualified Capital Stock of SCIS
(including proceeds from the issuance and sale of any securities of SCIS
convertible in to or exchangeable for Qualified Capital Stock of SCIS to the
extent such securities are so converted or exchanged and including any
additional proceeds received by SCIS upon such conversion or exchange); plus (z)
without duplication of any amounts included in clause (iii)(y) above, 100% of
the aggregate Net Equity Proceeds received by SCIS as capital contributions
subsequent to the Closing Date and on or prior to the Reference Date.
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph do not prohibit (1) the payment of any dividend
or the consummation of any irrevocable redemption within 60 days after the date
of declaration of such dividend or notice of such redemption if the dividend or
payment of the redemption price, as the case may be, would have been permitted
on the date of declaration of notice; (2) the acquisition of any shares of
Capital Stock of SCIS or warrants, options or other rights to acquire Capital
Stock of SCIS, either (i) solely in exchange for shares of Qualified Capital
Stock of SCIS or warrants, options or other rights to acquire such Qualified
Capital Stock, or (ii) through the application of the net proceeds of a
substantially concurrent sale for cash (other than to a Subsidiary of SCIS) of
shares of Qualified Capital Stock of SCIS or warrants, options or other rights
to acquire such Qualified Capital Stock; (3) the acquisition of Indebtedness of
SCIS that is subordinate or junior in right or payment to the Obligations or the
Guaranteed Obligations, either (i) solely in exchange for shares of Qualified
Capital Stock of SCIS or warrants, options or other fights to acquire such
Qualified Capital Stock or for Indebtedness of SCIS which is subordinate or
junior in right of payment to the Obligations or the Guaranteed Obligations, at
least to the extent that the Indebtedness being acquired is subordinated to the
Obligations or the Guaranteed Obligations, and has a Weighted Average Life to
Maturity no less than that of the Indebtedness being acquired or (ii) through
the application of the net proceeds of a substantially concurrent sale for cash
(other than to a Subsidiary of SCIS) of shares of Qualified Capital Stock of
SCIS or warrants, options or other rights to acquire such Qualified Capital
Stock or Indebtedness of SCIS which is subordinate or junior in right of payment
to the Obligations or the Guaranteed Obligations, at least to the extent that
the Indebtedness being acquired is subordinated to the Obligations or the
Guaranteed Obligations, and has a Weighted Average Life to Maturity no less than
that of the Indebtedness being refinanced; (4) payments by SCIS to OFSI to
enable OFSI to pay a dividend to
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LSG/Lufthansa (or a Subsidiary thereof), in an aggregate amount not to exceed
$2,500,000 in any 12-month period; provided that any unused portion of such
amount may be carried over to any subsequent 12-month period; (5) payments by
SCIS to OFSI on or after January 1, 1997 to enable OFSI to pay dividends to
stockholders of OFSI other than LSG/Lufthansa (or a Subsidiary thereof), in an
aggregate amount not to exceed $6,000,000 in any 12-month; provided that any
unused portion of such amount may be carried over to any subsequent 12-month
period; (6) payments by SCIS or any of its Subsidiaries to OFSI pursuant to the
OFSI Tax Sharing Agreement; (7) payments by SCIS to OFSI sufficient to enable
OFSI to (i) pay franchise taxes and other fees and expenses necessary to
maintain its corporate existence, (ii) pay reasonable fees to its directors and
(iii) perform accounting, legal, corporate reporting and administrative
functions in the ordinary course of business, other than those functions which
are related exclusively to OFSI's investments in Persons other than SCIS and
Subsidiaries of SCIS; (8) payments by SCIS or any of its Subsidiaries to OFSI in
an aggregate amount not to exceed $6,000,000 in any 12-month period, the
proceeds of which are used by OFSI to repurchase outstanding shares of OFSI's
common stock held by current or former employees or directors of SCIS or any of
its Subsidiaries (A) following the death, disability or termination of
employment of any such person or (B) pursuant to one or more written plans
approved by the Board of Directors of OFSI and (9) payments by SCIS or any of
its Subsidiaries to OFSI, the proceeds of which are used by OFSI to fund
payments under a plan implemented to compensate management of SCIS and its
Subsidiaries based on the value of OFSI's common stock; provided, however, that
in the case of preceding clauses (4), (5) and (8)(B), no Default or Event of
Default shall have occurred or be continuing at the time of such payment or as a
result thereof. In determining the aggregate amount of Restricted Payments made
subsequent to the Closing Date in accordance with clause (iii) of the
immediately preceding paragraph, (x) 100% of each of the payments described in
clauses (1), (4) and (5) above (to the extent such expenditure is in the form of
cash) and (y) 50% of the payments described in clauses (8)(A) and (8)(B) above
(to the extent such expenditure is in the form of cash), other than amounts paid
to the SCIS or a Subsidiary of SCIS by OFSI or such employee in satisfaction of
loans of advances made by SCIS or such Subsidiary pursuant to clause (v) (A) of
the definition of "Permitted Investments" (which shall not be included in such
calculation or in the calculation of payments made pursuant to clause (8)
above), shall be included in such calculation.
Caterair will not, and will not cause or permit any of its
Subsidiaries to, directly or indirectly, (a) declare or pay any dividend or make
any distribution on or in respect of shares of Caterair's Capital Stock to
holders of such Capital Stock, (B) purchase, redeem or otherwise acquire or
return for value any Capital Stock of Caterair or any warranties, rights or
options to purchase or acquire shares of any class of such Capital Stock, (c)
make any principal payment on, purchase, defease, redeem, prepay,
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decrease or otherwise acquire of retire for value, prior to any scheduled final
maturity, scheduled repayment or scheduling sinking fund payment, any
Indebtedness of Caterair or its Subsidiaries that is subordinate or junior in
right of payment to the Obligations or the Guaranteed Obligations, or (d) make
any Investment (other than Permitted Investments) (each of the foregoing actions
set forth in clauses (a), (b), (c) and (d) being referred to as a "Caterair
Restricted Payment").
Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph do not prohibit: (1) the payment of any dividend
within 30 days after the date of declaration of such dividend if the dividend
would have been permitted on the date of declaration; (2) payments by Caterair
to Caterair Holdings sufficient to enable Caterair Holdings to (i) pay franchise
taxes and other fees and expenses necessary to maintain its corporate existence,
(ii) pay reasonable fees to its directors and (iii) perform accounting, legal,
corporate reporting and administrative functions in the ordinary course of
business; (3) payments by Caterair or any of its Subsidiaries to Caterair
Holdings pursuant to the Caterair Tax Sharing Agreement; and (4) payments by
Caterair or any Subsidiary of the Borrower to SCIS or any Restricted Subsidiary
of SCIS.
Prior to any Restricted Payment under the first paragraph of this
Section 7.01, SCIS shall deliver to the Administrative Agent a certificate of an
Authorized Financial Officer of SCIS setting forth the computation by which the
amount available for Restricted Payments pursuant to such paragraph was
determined. The Administrative Agent shall have no duty or responsibility to
determine the accuracy or correctness of this computation and shall be fully
protected in relying on such officer's certificate.
7.02 Limitation on Transactions with Affiliates. SCIS will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
enter into or permit to exist any transaction or series of related transactions
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service), with, or for the benefit of, any of
its Affiliates (an "Affiliate Transaction"), other than (x) Affiliate
Transactions permitted under the paragraph below and (y) Affiliate Transactions
on terms that are no less favorable than those that might reasonably have been
obtained in a comparable transaction at such time on an arm's-length basis from
a Person that is not an Affiliate; provided, however, that for a transaction or
series of related transactions with an aggregate value of $5,000,000 or more (i)
such determination shall be made in good faith by a majority of the
disinterested members of the Board of Directors of SCIS or (ii) the Board of
Directors of SCIS shall have received an opinion from a nationally recognized
investment banking firm that such Affiliate Transaction is on terms no less
favorable than those that might
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reasonably have been obtained in a comparable transaction at such time on an
arm's-length basis from a Person that is not an Affiliate; and provided,
further, that for a transaction or series of related transactions with an
aggregate value of $10,000,000 or more, the Board of Directors of SCIS shall
have received an opinion from a nationally recognized investment banking firm
that such Affiliate Transaction is on terms no less favorable than those that
might reasonably have been obtained in a comparable transaction at such time on
an arm's-length basis from a Person that is not an Affiliate.
The restrictions set forth in the preceding paragraph shall not
apply to (1) reasonable fees and compensating paid to and indemnity provided on
behalf of, officers, directors, employees or consultants of SCIS or any
Subsidiary of SCIS as determined in good faith by SCIS' Board of Directors or
senior management; (2) transactions between or among SCIS or any Restricted
Subsidiary of SCIS, on the one hand, and any Subsidiary of SCIS or other Person
controlled (as such term is defined in the definition of "Affiliate") by SCIS,
on the other hand, so long as no portion of the remaining interest in such
Subsidiary or other Person is owned by a Person who controls (as such term is
defined in the definition of "Affiliate") SCIS, or between or among such
Subsidiaries and Persons, provided such transactions are not otherwise
prohibited by this Agreement; (3) any agreement as in effect as of the Closing
Date or any amendment thereto or any transaction contemplated thereby (including
pursuant to any amendment thereto) in any replacement agreement thereto so long
as any such amendment or replacement agreement is not more disadvantageous to
the Banks in any material respect than the original agreement as in effect on
the Closing Date; (4) transactions between SCIS or any Restricted Subsidiary of
SCIS, on the one hand and Caterair or any Subsidiary of Caterair, on the other
hand; and (5) Restricted Payments permitted by this Agreement.
Caterair will not, and will not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction or series
of related transactions (including, without limitation, the purchase, sale,
lease or exchange of any property or the rendering of any service) with, or for
the benefit of, any of its Affiliates.
The restrictions set forth in the preceding paragraph shall not
apply to (1) transactions between Caterair or any Subsidiary of Caterair, on the
one hand, and SCIS or any Restricted Subsidiary of SCIS, on the other hand; (2)
transactions between or among Caterair or any Subsidiary of Caterair, on the one
hand, and any Subsidiary of Caterair or other Person controlled (as such term is
defined in the definition of "Affiliate") by Caterair, on the other hand, so
long as no portion of the remaining interest in such Subsidiary or other Person
is owned by a Person who controls (as such term is defined in the definition of
"Affiliate') Caterair, or between or among such
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Subsidiaries and Person; provided that such transactions are not otherwise
prohibited by this Agreement; (3) reasonable fees and compensation paid to and
indemnity provided on behalf of, officers, directors, employees or consultants
of Caterair or any Subsidiary of Caterair as determined in good faith by
Caterair's Board of Directors or senior management; (4) any agreement as in
effect as of the Closing Date or any amendment thereto or any transaction
contemplated thereby (including pursuant to any amendment thereto) in any
replacement agreement thereto so long as any such amendment or replacement
agreement is not more disadvantageous to the Banks in any material respect than
the original agreement as in effect on the Closing Date; and (5) Caterair
Restricted Payments permitted by this Agreement.
7.03 Limitation on Incurrence of Additional Indebtedness. SCIS will
not, and will not permit any of its Restricted Subsidiaries to, and Caterair
will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create, incur, assume, guarantee, acquire, become liable,
contingently or otherwise, with respect to, or otherwise become responsible for
payment of (collectively, "incur") any Indebtedness (other than Permitted
Indebtedness); provided, however, that if no Default or Event of Default shall
have occurred and be continuing at the time or as a consequence of the
incurrence of any such Indebtedness, SCIS, Caterair or any Restricted Subsidiary
of SCIS may incur Indebtedness if on the date of the incurrence of such
Indebtedness, after giving effect to the incurrence thereof, the Consolidated
Fixed Charge Coverage Ratio of SCIS is greater than 2.00 to 1.0.
7.04 Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. SCIS will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary of SCIS to (a) pay dividends or make any other
distributions on or in respect of its Capital Stock; (b) make loans or advances
to or pay any Indebtedness or other obligations owed to SCIS or any other
Restricted Subsidiary of SCIS; or (c) transfer any of its property or assets to
SCIS or any other Restricted Subsidiary of SCIS, except for such encumbrances or
restrictions existing under or by reason of: (1) applicable law; (2) this
Agreement; (3) customary non-assignment provisions of any contract or any lease
entered into in the ordinary course of business; (4) any agreement or instrument
governing Acquired Indebtedness, which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person or the properties or assets of the Person so acquired; (5) any
agreement existing on the Closing Date (including, without limitation, the SCIS
Credit Agreement and the Senior Subordinated Note Documents); (6) in the case of
clause (c) above, (A) restrictions on the transfer of assets subject to any Lien
permitted under this Agreement imposed by the holder of such Lien and (B)
restrictions on the transfer of assets imposed by any
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agreement, lease or permit entered into or obtained in the ordinary course of
business in connection with the operation of flight kitchens; (7) (A)
restrictions imposed by any agreement to sell assets permitted under this
Agreement to any Person pending the closing of such sale, (B) any agreement or
instrument governing Capital Stock of any Person that is acquired or (C) any
joint venture, stockholder of similar agreements; (8) any agreement or
instrument governing any Indebtedness of a Restricted Subsidiary of SCIS which
is a Foreign Subsidiary or which conducts substantially all of its business
outside the United States so long as all Restricted Subsidiaries of SCIS whose
Indebtedness agreements contain such restrictions, in the aggregate, did not
account for more than 10% of Consolidated EBITDA of SCIS (after giving pro forma
effect to the inclusion of any additional Restricted Subsidiary proposing to
enter into such an agreement) during the four full fiscal quarter period ending
immediately prior to the date of determination thereof; or (9) an agreement
effecting an amendment, refinancing, replacement or substitution of Indebtedness
issued, assumed or incurred pursuant to an agreement referred to in clause (2),
(4) or (5) above or any other agreement evidencing Indebtedness permitted under
this Agreement; provided, however, that the provisions relating to such
encumbrance or restriction contained in any such amendment, refinancing,
replacement or substitution agreement or any such other agreement are no less
favorable to SCIS in any material respect as determined by the Board of
Directors of SCIS than the provisions relating to such encumbrance or
restriction contained in agreements referred to in such clause (2), (4) or (5).
Caterair will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause or permit to exist or become
effective any encumbrance or restriction on the ability of any Subsidiary of
Caterair to (a) pay dividends or make any other distributions on or in respect
of its Capital Stock; (b) make loans or advances or to pay any Indebtedness or
other obligation owed to Caterair or any other Subsidiary of Caterair, or (c)
transfer any of its property or assets to Caterair or any other Subsidiary of
Caterair, except for such encumbrances existing under or by reason of: (1)
applicable law; (2) this Agreement; (3) customary non-assignment provisions of
any contract or any lease entered into in the ordinary course of business; (4)
any agreement or instrument governing Acquired Indebtedness, which encumbrance
or restriction is not applicable or any Person, or the properties or assets of
any Person, other that the Person or the properties or assets of the Person so
acquired; (5) any agreement existing on the Closing Date (including, without
limitation, the SCIS Credit Agreement and the Senior Subordinated Note
Documents); (6) in the case of clause (c) above, (A) restrictions on the
transfer of assets subject to any Lien permitted under this Agreement imposed by
the holder of such Lien and (B) restrictions on the transfer of assets imposed
by any agreement, lease or permit entered into or obtained in the ordinary
course of business in connection with the operation of flight kitchens; (7)
restrictions imposed by any agreement to sell assets permitted under this
Agreement to
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any Person pending the closing of such sale; or (8) an agreement effecting an
amendment, refinancing, replacement or substitution of Indebtedness issued,
assumed or incurred pursuant to an agreement referred to in clause (2), (4) or
(5) above; provided, however, that the provisions relating to such encumbrance
or restriction contained in any such amendment, refinancing, replacement or
substitution agreement are not less favorable to Caterair in any material
respect as determined by the Board of Directors of Caterair than the provisions
relating to such encumbrance or restriction contained in agreements referred to
in such clause (2), (4) or (5).
7.05 Limitation on Asset Sales; etc.. (a) SCIS will not, and will
not permit any of its Restricted Subsidiaries to, consummate an Asset Sale
unless (i) other than with respect to the Australian Assets to the extent sold
pursuant to the existing option granted to Qantas Flight Catering Holdings
Limited, SCIS or the applicable Restricted Subsidiary, as the case may be,
receives consideration at the time of such Asset Sale at least equal to the fair
market value of the assets sold or otherwise disposed of (as determined in good
faith by SCIS' Board of Directors); (ii) at least 75% of the consideration
received by SCIS or such Restricted Subsidiary, as the case may be, from such
Asset Sale shall be cash or Cash Equivalents and is received at the time of such
disposition; and (iii) upon the consummation of an Asset Sale, SCIS shall apply,
or cause such Restricted Subsidiary to apply, the Net Sale Proceeds relating to
such Asset Sale within 365 days of receipt thereof either (A) to permanently
prepay principal of loans outstanding under the SCIS Credit Agreement (and, in
the case of any repayment of outstandings pursuant to any revolving loan or
similar commitment, so long as such revolving loan or similar commitment is
permanently reduced by the amount of such prepayment), provided to the extent
that any portion of such proceeds are to be so applied, then at least a
proportionate share of such proceeds shall be applied as a mandatory repayment
of principal of outstanding Loans (with such proportionate share to be based on
the relative outstanding principal amount of loans, letters of credit and
unutilized commitments under the SCIS Credit Agreement and the outstanding
principal amount of Loans under this Agreement), (B) to reinvest in Productive
Assets, or (C) a combination of prepayment, reduction and investment permitted
by the foregoing clauses (iii)(A) and (iii)(B). On the 366th day after an Asset
Sale or such earlier date, if any, as the Board of Directors of SCIS or of such
Restricted Subsidiary determines not to apply the Net Sale Proceeds relating to
such Asset Sale as set forth in clauses (iii)(A), (iii)(B) and/or (iii)(C) of
the immediately preceding sentence (each, a "Net Proceeds Trigger Date"), such
aggregate amount of Net Sale Proceeds which have not been applied on or before
such Net Proceeds Trigger Date as permitted in clauses (iii)(A), (iii)(B) and/or
(iii)(C) of the immediately preceding sentence (each a "Net Proceeds Prepayment
Amount") shall be applied by SCIS or such Restricted Subsidiary to prepay
outstanding principal of the Loans on a date not more than 5 Business Days
following the applicable Net Proceeds Trigger
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Date, with such prepayment being applied in accordance with Sections 3.02(c) and
3.02(h) and shall include accrued interest thereon to the date of repayment;
provided, however, that if at any time any non-cash consideration received by
SCIS or any Restricted Subsidiary of SCIS, as the case may be, in connection
with any Asset Sale is converted into or sold or otherwise disposed of for cash,
then such conversion or disposition shall be deemed to constitute an Asset Sale
hereunder and the Net Sale Proceeds thereof shall be applied in accordance with
this Section 7.05.
(b) Notwithstanding Section 7.05(a), if a Net Proceeds Prepayment
Amount is less than $5,000,000, the application of the Net Sale Proceeds
constituting such Net Proceeds Prepayment Amount may be deferred until such time
as such Net Proceeds Prepayment Amount plus the aggregate amount of all Net
Proceeds Prepayment Amounts arising subsequent to the Net Proceeds Trigger Date
relating to such initial Net Proceeds Prepayment Amount from all Asset Sales by
SCIS and its Restricted Subsidiaries aggregates at least $5,000,000, at which
time SCIS or such Restricted Subsidiary shall apply all Net Sale Proceeds
constituting all Net Proceeds Prepayment Amounts that have been so deferred to
prepay the Loans as provided above in this Section 7.05 (the first date the
aggregate of all such deferred Net Proceeds Prepayment Amounts is equal to
$5,000,000 or more shall be deemed to be a "Net Proceeds Trigger Date").
(c) Notwithstanding Sections (a) and (b) of this Section 7.05, SCIS
and its Restricted Subsidiaries will be permitted to consummate an Asset Sale
without complying with Sections (a) and (b) of this Section 7.05 to the extent
(i) at least 75% of the consideration for such Asset Sale constitutes Productive
Assets and (ii) such Asset Sale is for fair market value (as determined in good
faith by the Board of Directors of SCIS); provided that the Net Sale Proceeds,
if any, received by SCIS or any of its Restricted Subsidiaries in connection
with any Asset Sale permitted to be consummated under this Section 7.05(c) shall
constitute Net Sale Proceeds subject to the provisions of Sections 7.05(a) and
7.05(b).
(d) Caterair will not, and will not permit any of its Subsidiaries
to, consummate a Caterair Asset Sale unless (i) Caterair or the applicable
Subsidiary, as the case may be, receives consideration at the time of such
Caterair Asset Sale at least equal to the fair market value of the assets sold
or otherwise disposed of (as determined in good faith by Caterair's Board of
Directors); (ii) at least 75% of the consideration received by Caterair or such
Subsidiary, as the case may be, from such Caterair Asset Sale shall be cash or
Cash Equivalents and is received at the time of such disposition; and (iii) upon
the consummation of a Caterair Asset Sale, Caterair shall apply, or cause such
Subsidiary to apply, the Net Sale Proceeds relating to such Caterair Asset Sale
within 365 days of receipt thereof either (A) to permanently prepay principal of
loans
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outstanding under the SCIS Credit Agreement (and, in the case of any repayment
of outstandings pursuant to any revolving loan or similar commitment, so long as
such revolving loan or similar commitment is permanently reduced by the amount
of such prepayment), provided to the extent that any portion of such proceeds
are to be so applied, then at least a proportionate share of such proceeds shall
be applied as a mandatory repayment of principal of outstanding Loans (with such
proportionate share to be based on the relative outstanding principal amount of
loans, letters of credit and unutilized commitments under the SCIS Credit
Agreement and the outstanding principal amount of Loans under this Agreement),
(B) to repay the SCIS/Caterair Note; provided that SCIS treats the proceeds
received from such repayment as proceeds of an Asset Sale by SCIS in compliance
with Section 7.05(a) of this Agreement, (C) to reinvest in Productive Assets, or
(D) a combination of prepayment, repayment, reduction and investment permitted
by the foregoing clauses (iii)(A), (iii)(B) and (iii)(C). On the 366th day after
a Caterair Asset Sale or such earlier date, if any, as the Board of Directors of
Caterair or of such Subsidiary determines not to apply the Net Sale Proceeds
relating to such Caterair Asset Sale as set forth in clause (iii) of the next
preceding sentence (each, a "Caterair Net Proceeds Sale Trigger Date"), such
aggregate amount of Net Sale Proceeds which have not been applied on or before
such Caterair Net Proceeds Prepayment Trigger Date as permitted in clauses
(iii)(A), (iii)(B), (iii)(C) and/or (iii)(D) of the immediately preceding
sentence (each, a "Caterair Net Proceeds Prepayment Amount") shall be applied by
Caterair or such Subsidiary to prepay outstanding principal of the Loans on a
date not more than 5 Business Days following the applicable Caterair Net
Proceeds Trigger Date, with such prepayment being applied in accordance with
Sections 3.02(c) and 3.02(h) and shall include accrued interest thereon to the
date of prepayment; provided, however, that if at any time any non-cash
consideration received by Caterair or any Subsidiary of Caterair, as the case
may be, in connection with any Caterair Asset Sale is converted into or sold or
otherwise disposed of for cash, then such conversion or disposition shall be
deemed to constitute a Caterair Asset Sale hereunder and the Net Sale Proceeds
thereof shall be applied in accordance with this Section 7.05.
7.06 Limitation on Preferred Stock of Subsidiaries. SCIS will not
permit any of its Restricted Subsidiaries to issue any Preferred Stock to any
Person or permit any Person to own any Preferred Stock of a Restricted
Subsidiary of SCIS, unless SCIS' percentage interest in the Preferred Stock of
such Restricted Subsidiary is equal to or greater than SCIS' percentage interest
in the common equity of such Restricted Subsidiary.
Caterair will not permit any of its Subsidiaries to issue any
Preferred Stock (other than to SCIS, a Wholly-Owned Restricted Subsidiary of
SCIS, Caterair or a Wholly-Owned Subsidiary of Caterair) or permit any Person
(other than SCIS, a
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Wholly-Owned Restricted Subsidiary of SCIS, Caterair or a Wholly-Owned
Subsidiary of Caterair) to own any Preferred Stock of any Subsidiary of
Caterair.
7.07 Limitation on Liens. SCIS will not, and will not permit any of
its Restricted Subsidiaries to, create, incur, assume or suffer to exist any
Liens of any kind against or upon any of its property or assets, or any proceeds
therefrom, except for (A) Liens created under the Security Documents and (B)
Permitted Liens.
Caterair will not, and will not permit any of its Subsidiaries to,
create, incur, assume or suffer to exist any Liens of any kind against or upon
any of its property or assets, or any proceeds therefrom, except for (i)
Permitted Liens and, (ii) Liens created under the Security Documents.
7.08 Conduct of Business of SCIS and Its Restricted Subsidiaries.
SCIS will not, and will not permit any of its Restricted Subsidiaries to, engage
in any business other than (i) the businesses in which SCIS, Caterair and their
respective Subsidiaries and joint ventures are engaged on the Closing Date; (ii)
the businesses of (A) producing, distributing, selling or delivering, or
providing management or other services with respect to, meals or other food
products, (B) providing catering services, (C) providing goods or services to
Persons engaged in providing transportation services, including, but not limited
to, Persons engaged in the airline or other passenger transportation business,
or (D) providing goods or services to or at, transportation terminals and other
facilities, including, but not limited to, airports, train stations, bus
stations or roadside service facilities (including, but not limited to,
providing goods or services to any Person who conducts operations at any such
facility); or (iii) any business which is determined in good faith by the SCIS'
Board of Directors to be similar, ancillary, complimentary or related to, or an
extension of, any business described in clause (i) or (ii) above.
7.09 Conduct of Business of Caterair. So long as any Lease Agreement
or License Agreement that is in effect on the Closing Date remains in effect,
Caterair will not, and will not permit any of its Subsidiaries to, engage in any
business other than the leasing of Leased Assets pursuant to the Lease
Agreements and the licensing of Licensed Assets pursuant to the License
Agreements; provided, however, (i) that Caterair may continue to operate certain
of its flight kitchens if Caterair has not received as of the Closing Date the
requisite consents to lease such flight kitchens to the SCIS or a Restricted
Subsidiary of SCIS and (ii) from and after the termination of the Lease
Agreements and the License Agreements that are in effect on the Closing Date,
Caterair and its Subsidiaries will not engage in any business other than the
businesses permitted to be engaged in by SCIS and its Restricted Subsidiaries
pursuant to Section 7.08, including entering into lease and license arrangements
with
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respect to those flight kitchens then owned by Caterair and its Subsidiaries
pursuant to arm's-length arrangements.
7.10 Guarantor Capital Stock. SCIS or a Subsidiary Guarantor will
own all of the Capital Stock of each Subsidiary Guarantor (other than Caterair).
7.11 Merger, etc. (a) SCIS will not, in a single transaction or a
series of related transactions, consolidate with or merge with or into, or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its assets to, another Person or Persons or adopt a Plan of Liquidation
unless:
(i) SCIS shall be the survivor of such merger or consolidation;
(ii) except in the case of a transaction between SCIS and a
Subsidiary Guarantor, immediately after giving effect to such transaction
(on a pro forma basis, including any Indebtedness incurred or anticipated
to be incurred in connection with such transaction), SCIS is able to incur
at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with Section 7.03.
(iii) immediately before and immediately after giving effect to such
transaction (including any Indebtedness incurred or anticipated to be
incurred in connection with the transaction), no Default or Event of
Default shall have occurred and be continuing; and
(iv) SCIS shall have delivered to the Administrative Agent a
certificate of the Chief Financial Officer of SCIS and opinion of counsel
of SCIS satisfactory to the Administrative Agent, each stating that such
consolidation, merger or transfer complies with this Agreement, and that
all conditions precedent in this Agreement relating to such transaction
have been satisfied.
(b) For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of related
transactions) of all or substantially all of the properties and assets of one or
more Subsidiaries of SCIS, the Capital Stock of which constitutes all or
substantially all of the properties and assets of SCIS, shall be deemed to be
the transfer of all or substantially all of the properties and assets of SCIS.
7.12 Senior Subordinated Notes, etc. Neither SCIS, Caterair nor any
of their respective Subsidiaries shall designate any Indebtedness, other than
the Obligations and the obligations under the SCIS Credit Documents, as
"Designated
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Senior Debt" for purposes of the Senior Subordinated Notes, the other Senior
Subordinated Note Documents or any other issue of subordinated Indebtedness.
Notwithstanding anything to the contrary contained herein or in the
SCIS/Caterair Note, upon the occurrence and during the continuance of a Default
or an Event of Default, SCIS will not take any enforcement action whatsoever in
connection with any default or event of default under, or in respect of, the
SCIS/Caterair Note.
SECTION 8. Events of Default. Upon the occurrence of any of the
following specified events (each an "Event of Default"):
8.01 Payments. Any Borrower shall (i) default in the payment when
due of any principal of any Loan or any Note or (ii) default, and such default
shall continue unremedied for three or more days, in the payment when due of any
interest on any Loan or Note, any Fees or any other amounts owing hereunder or
thereunder; or
8.02 Representations, etc. Any representation, warranty or statement
made (or deemed made) by any Credit Party herein or in any other Credit Document
or in any certificate delivered pursuant hereto or thereto shall prove to be
untrue in any material respect on the date as of which made or deemed made; or
8.03 Covenants. Any Credit Party shall default in the due
performance or observance by it of any other term, covenant or agreement
contained in this Agreement and such default shall continue unremedied for a
period of 45 days after written notice to any Borrower by the Administrative
Agent or the 25% Banks (except in the case of a default with respect to Section
7.11, which will constitute an Event of Default with such notice requirement but
without such passage of time requirement); or
8.04 Default Under the SCIS Credit Agreement. (i) OFSI, Caterair
Holdings, SCIS or any Subsidiary of Caterair Holdings (including Caterair) or
SCIS shall (x) default in the payment of any Indebtedness under the SCIS Credit
Agreement beyond the period of grace, if any, provided in the SCIS Credit
Agreement or (y) default in the observance or performance of any other agreement
or condition contained in the SCIS Credit Agreement or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition would permit the holder or holders of the loans under the SCIS
Credit Agreement (or a trustee or agent on behalf of such holder or holders) to
cause (determined without regard to whether any notice is required), any such
loan to become due prior to its stated maturity and such default or other event
or condition shall continue unremedied or unwaived for a period of twenty (20)
days or
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(ii) any default shall occur or other event or condition shall exist under the
SCIS Credit Agreement the effect of which default or other event or condition is
to cause the loans under the SCIS Credit Agreement to become due prior to its
stated maturity (other than as a result of an asset sale or receipt of proceeds
in connection with a Recovery Event);
8.05 Default Under Other Indebtedness. (i) SCIS, Caterair, any
Significant Subsidiary of SCIS or Caterair or any combination of two or more
Non-Significant Subsidiaries of SCIS which at the time of determination own a
combined basis more than 10% of the consolidated assets of SCIS (determined on a
basis consistent with the definition of "Significant Subsidiary") shall (x)
default in any payment of any Indebtedness (other than the Obligations and any
Indebtedness arising under or in connection with the SCIS Credit Agreement)
beyond the period of grace, if any, provided in the instrument or agreement
under which such Indebtedness was created or (y) default in the observance or
performance of any agreement or condition relating to any Indebtedness (other
than the Obligations and any Indebtedness arising under or in connection with
the SCIS Credit Agreement) or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or would permit the holder or holders of such Indebtedness (or a trustee
or agent on behalf of such holder or holders) to cause (determined without
regard to whether any notice is required), any such Indebtedness to become due
prior to its stated maturity, or (ii) any Indebtedness (other than the
Obligations and any Indebtedness arising under or in connection with the SCIS
Credit Agreement) of SCIS, Caterair, any Significant Subsidiary of SCIS or
Caterair or any combination of two or more Non-Significant Subsidiaries of SCIS
which at the time of determination own a combined basis more than 10% of the
consolidated assets of SCIS (determined on a basis consistent with the
definition of "Significant Subsidiary") shall be declared to be due and payable,
or required to be prepaid other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof, provided that it shall not be
a Default or an Event of Default under this Section 8.05 unless the aggregate
principal amount of all Indebtedness as described in preceding clauses (i) and
(ii) is at least $15,000,000; or
8.06 Bankruptcy, etc. SCIS, Caterair or any Significant Subsidiary
of SCIS or Caterair shall commence a voluntary case concerning itself under
Title 11 of the United States Code entitled "Bankruptcy," as now or hereafter in
effect, or any successor thereto (the "Bankruptcy Code"); or an involuntary case
is commenced against SCIS, Caterair or any Significant Subsidiary of SCIS or
Caterair and the petition is not controverted within 10 days, or is not
dismissed within 60 days, after commencement of the case; or a custodian (as
defined in the Bankruptcy Code) is appointed for, or takes charge of, all or
substantially all of the property of SCIS, Caterair or any Significant
Subsidiary of SCIS or Caterair, or SCIS, Caterair or any
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Significant Subsidiary of SCIS or Caterair commences any other proceeding under
any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency, administration or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to SCIS, Caterair or
any Significant Subsidiary of SCIS or Caterair, or there is commenced against
SCIS, Caterair or any Significant Subsidiary of SCIS or Caterair any such
proceeding which remains undismissed for a period of 60 days, or SCIS, Caterair
or any Significant Subsidiary of SCIS or Caterair is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or SCIS, Caterair or any Significant Subsidiary of SCIS
or Caterair suffers any appointment of any custodian, liquidator, administrator,
receiver or the like for it or any substantial part of its property to continue
undischarged or unstayed for a period of 60 days; or SCIS, Caterair or any
Significant Subsidiary of SCIS or Caterair makes a general assignment for the
benefit of creditors; or any corporate action is taken by SCIS, Caterair or any
Significant Subsidiary of SCIS or Caterair for the purpose of effecting any of
the foregoing.
8.07 Security Documents. At any time after the execution and
delivery thereof, any of the Security Documents shall cease to be in full force
and effect, or shall cease to give the Collateral Agent for the benefit of the
Secured Creditors the Liens, rights, powers and privileges purported to be
created thereby (including, without limitation, a perfected security interest
in, and Lien on, all of the Collateral (other than Collateral with an aggregate
value of up to $1,000,000)), in favor of the Collateral Agent, superior to and
prior to the rights of all third Persons (except as permitted by Section 7.07),
and subject to no other Liens (except as permitted by Section 7.07), or any
Credit Party shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed pursuant to any of
the Security Documents and such default shall continue unremedied for a period
of 30 days (or such longer period of time as may be specifically applicable
thereto pursuant to the terms of any Mortgage); or
8.08 Guaranties; etc. Any Guaranty or any provision thereof shall
cease to be in full force and effect, or any Guarantor or any Person acting for
or on behalf of any Guarantor shall deny or disaffirm such Guarantor's
obligations under the relevant Guaranty, or any Guarantor shall default in its
due performance of any term, covenant or agreement on its part to be performed
or observed pursuant to the relevant Guaranty or any OFSI Event of Default shall
occur; or
8.09 Judgments. One or more judgments or decrees shall be entered
against SCIS, Caterair or any Significant Subsidiary of SCIS or Caterair
involving in the aggregate for SCIS, Caterair and such Significant Subsidiaries
a liability (not paid or fully covered by a reputable and solvent insurance
company) and such judgments and
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decrees either shall be final and non-appealable or shall not be vacated,
discharged or stayed or bonded pending appeal for any period of 60 consecutive
days, and the aggregate amount of all such judgments exceeds $15,000,000; or
8.10 Change of Control. A Change of Control shall occur; then, and
in any such event, and at any time thereafter, if any Event of Default shall
then be continuing, the Administrative Agent, upon the written request of the
Required Banks, shall by written notice to the Borrowers, take any or all of the
following actions, without prejudice to the rights of the Administrative Agent,
any Bank or the holder of any Note to enforce its claims against any Credit
Party (provided that, if an Event of Default specified in Section 8.06 shall
occur with respect to any Borrower, the result which would occur upon the giving
of written notice by the Administrative Agent to such Borrower as specified in
clauses (i) and (ii) below shall occur automatically without the giving of any
such notice): (i) declare the Total Commitments terminated, whereupon the
Commitment of each Bank shall forthwith terminate immediately; (ii) declare the
principal of and any accrued interest in respect of all Loans and the Notes and
all Obligations owing hereunder and thereunder to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by each Credit Party; and/or
(iii) direct the Collateral Agent to enforce any or all of the Liens and
security interests created pursuant to the Security Documents in accordance
with, and to the extent permitted by, such Security Documents.
SECTION 9. Definitions and Accounting Terms.
9.01 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Acquired Indebtedness" shall mean Indebtedness of a Person or any
of its Subsidiaries existing at the time such Person becomes a Restricted
Subsidiary of SCIS or a Subsidiary of Caterair, as the case may be, or at the
time it merges or consolidates with SCIS or any Subsidiary of SCIS or Caterair
or any Subsidiary of Caterair, as the case may be, or assumed in connection with
the acquisition of assets from such Person and not incurred by such Person in
connection with, or in anticipation or contemplation of such Person becoming a
Restricted Subsidiary of SCIS or a Subsidiary of Caterair, as the case may be,
or such acquisition, merger or consolidation.
"Administrative Agent" shall have the meaning provided in the first
paragraph of this Agreement.
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"Affiliate" shall mean a Person who directly or indirectly through
one or more intermediaries controls, or is controlled by, or is under common
control with, another Person. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Affiliate Transaction" shall have the meaning provided in Section
7.02.
"Agent" shall mean each of the Administrative Agent, the Syndication
Agent and, for purposes of Sections 10, 11 and 12, each such Agent also in its
capacity as a Co-Arranger.
"Agreement" shall mean this Term Loan Agreement, as modified,
supplemented, amended, restated (including any amendment and restatement
thereof), extended, renewed, refinanced or replaced from time to time.
"Airline Catering Joint Venture" shall mean any joint venture,
partnership, limited liability company or other Person engaged in the business
of providing airline catering services.
"American Airlines" shall mean American Airlines, Inc., a Delaware
corporation.
"Applicable Margin" shall mean a percentage per annum equal to (i)
in the case of Base Rate Loans, .50%, and (ii) in the case of Eurodollar Loans,
1.50%.
"Asset Acquisition" shall mean (a) an Investment by SCIS or any
Restricted Subsidiary of SCIS in any other Person pursuant to which such Person
shall become a Restricted Subsidiary of SCIS or a Subsidiary of any Restricted
Subsidiary of SCIS, or shall be merged with or into SCIS or any Restricted
Subsidiary of SCIS, or (b) the acquisition by SCIS or any Restricted Subsidiary
of SCIS of the assets of any Person which constitute all or substantially all of
the assets of such Person, any division or line of business of such Person or
any other properties or assets of such Person other than in the ordinary course
of business.
"Asset Sale" shall mean any direct or indirect sale, issuance,
conveyance, transfer, lease (other than pursuant to operating leases of real or
personal property entered into in the ordinary course of business), assignment
or other transfer for value by SCIS or any Restricted Subsidiary of SCIS
(including any Sale and Leaseback Transaction) to any Person other than SCIS or
a Restricted Subsidiary of SCIS of (a) any Capital Stock of any Restricted
Subsidiary of SCIS or (b) any other property or
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assets of SCIS or any Restricted Subsidiary of SCIS other than in the ordinary
course of business; provided, however, that an Asset Sale shall not include (i)
a transaction or series of related transactions for which SCIS or its Restricted
Subsidiaries receive aggregate consideration of less than $1,000,000, (ii) the
sale or discount, in each case without recourse (other than recourse for breach
of a representation or warranty), of accounts receivable arising in the ordinary
course of business, but only in connection with the compromise or collection
thereof, (iii) the factoring or securitization of accounts receivable arising in
the ordinary course of business, and (iv) the sale or other disposition in the
ordinary course of business of equipment or materials which, in the reasonable
judgment of such Person, are obsolete, worn out or otherwise no longer useful in
the conduct of such Person's business.
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement substantially in the form of Exhibit K (appropriately
completed).
"Australian Assets" shall mean any of the shares of Caterair Airport
Services Pty Limited owned by Caterair Australia Pty Limited which Qantas Flight
Catering Holdings Limited has the option to acquire pursuant to the exercise of
the call options respectively described in clauses 19A, 19B and 19C of the
Restated Shareholders Deed made on December 18, 1996 among Caterair Airport
Services Pty Limited, Caterair Australia Pty Limited, Caterair, CII, OFSI,
Qantas Airways Limited and Qantas Flight Catering Holdings Limited.
"Authorized Financial Officer" of SCIS or Caterair, as the case may
be, shall mean any of the Chief Financial Officer, Treasurer, Assistant
Treasurer, Controller or any other senior financial officer of SCIS or Caterair,
as the case may be, reasonably acceptable to the Administrative Agent.
"Bank" shall mean each financial institution listed on Schedule I,
as well as any Person which becomes a "Bank" hereunder pursuant to Section 1.11
or 11.04(b).
"Bank Escrow Agreement" shall have the meaning provided in Section
6.10.
"Bankruptcy Code" shall have the meaning provided in Section 8.06.
"Base Rate" for any day shall mean a rate per annum equal to the
higher of (i) the sum of 1/2 of 1% plus the Federal Funds Rate for such day and
(ii) the Prime Lending Rate for such day.
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"Base Rate Loan" shall mean (i) each Loan until same is converted
into a Eurodollar Loan pursuant to Section 1.12 and (ii) each Loan converted
into such pursuant to Section 1.08 until such time (if any) as such Loan has
converted back into a Eurodollar Loan in accordance with the requirements of
Section 1.08(d).
"Board of Directors" shall mean, as to any Person, the board of
directors of such Person or any duly authorized committee thereof.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrowing" shall mean (i) the borrowing of Loans hereunder from all
the Banks on the Closing Date and (ii) the effectiveness of new Interest Periods
thereafter in respect of such Loans pursuant to Section 1.07, provided that Base
Rate Loans incurred pursuant to Section 1.08(b) shall be considered part of the
related Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company in its individual capacity.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day except Saturday, Sunday and any day which shall be
in New York City a legal holiday or a day on which banking institutions are
authorized or required by law or other government action to close and (ii) with
respect to all notices and determinations in connection with, and payments of
principal and interest on, Eurodollar Loans, any day which is a Business Day
described in clause (i) above and which is also a day for trading by and between
banks in the London interbank Eurodollar market.
"Canex" shall mean Canex, Inc., a Cayman Islands corporation.
"Capital Stock" shall mean (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated) of corporate stock, including each class of common stock
and Preferred Stock of such Person, and (ii) with respect to any Person that is
not a corporation, any and all partnership or other equity interests of such
Person.
"Capitalized Lease Obligation" shall mean, as to any Person, the
obligations of such Person under a lease that are required for financial
reporting purposes to be classified and accounted for as capital lease
obligations under GAAP and, for purposes of this definition, the amount of such
obligations at any date shall be
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the capitalized amount of such obligations at such date, determined in
accordance with GAAP.
"Cash Equivalents" shall mean (i) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition thereof; (ii) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Ratings Service or
Moody's Investors Service, Inc.; (iii) commercial paper maturing no more than
one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from Standard & Poor's Ratings Service or at
least P-1 from Moody's Investors Service, Inc.; (iv) time deposits, certificates
of deposit or bankers' acceptances (or, with respect to foreign banks, similar
instruments) maturing within one year from the date of acquisition thereof
issued by any bank organized under the laws of the United States of America or
any state thereof or the District of Columbia or any U.S. branch of a foreign
bank having at the date of acquisition thereof combined capital and surplus of
not less than $200,000,000; (v) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clause (i)
above entered into with any bank meeting the qualifications specified in clause
(iv) above; (vi) investments in money market funds substantially all of whose
assets are comprised of securities of the types described in clauses (i) through
(v) above; and (vii) overnight deposits and demand deposits maintained in the
ordinary course of business.
"Caterair" shall have the meaning provided in the first paragraph of
this Agreement.
"Caterair Asset Sale" shall mean any direct or indirect sale,
issuance, conveyance, transfer, lease (other than pursuant to operating leases
of real or personal property entered into in the ordinary course of business),
assignment or other transfer for value by Caterair or any Subsidiary of Caterair
(including any Sale and Leaseback Transaction) to any Person other than Caterair
or a Wholly Owned Subsidiary of Caterair of (a) any Capital Stock of any
Subsidiary of Caterair or (b) any other property or assets of Caterair or any
Subsidiary of Caterair other than in the ordinary course of business; provided,
however, that "Caterair Asset Sale" shall not include (i) a transaction or
series of related transactions for which Caterair or its Subsidiaries receive
aggregate consideration of less than $1,000,000, (ii) the sale or discount, in
each case without recourse (other than recourse for breach of a representation
or warranty), of
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accounts receivable arising in the ordinary course of business, but only in
connection with the compromise or collection thereof, (iii) the factoring or
securitization of accounts receivable arising in the ordinary course of
business, (iv) the sale or other disposition in the ordinary course of business
of equipment or materials which, in the reasonable judgment of such Person, are
obsolete, worn out or otherwise no longer useful in the conduct of such Person's
business and (v) the sale of assets to SCIS or any Restricted Subsidiary of SCIS
in connection with the exercise of the Purchase Option or any similar purchase
option for Leased Assets or Licensed Assets.
"Caterair" shall have the meaning provided in the first paragraph of
this Agreement.
"Caterair Commitment" shall mean, for each Bank, the amount set
forth opposite such Bank's name in Schedule I directly below the column entitled
"Caterair Commitment", as the same may be terminated pursuant to Sections 2.02
and/or 8.
"Caterair Holdings" shall mean Caterair Holdings Corporation, a
Delaware corporation.
"Caterair Holdings Escrow Agreement" shall mean the Escrow Agreement
in the form attached to the Caterair Holdings Subordination Agreement.
"Caterair Holdings Subordination Agreement" shall have the meaning
provided in Section 4.16.
"Caterair Loan" shall have the meaning provided in Section 1.01(b).
"Caterair Net Proceeds Prepayment Amount" shall have the meaning
provided in Section 7.05.
"Caterair Net Proceeds Trigger Date" shall have the meaning provided
in Section 7.05.
"Caterair Note" shall have the meaning provided in Section 1.04.
"Caterair Restricted Payment" shall have the meaning provided in
Section 7.01.
"Caterair Scheduled Repayment" shall have the meaning provided in
Section 3.02(a).
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"Caterair Tax Sharing Agreement" shall mean the Income Tax Sharing
Agreement, dated December 15, 1989, among Host Marriott Corporation, Caterair
Holdings and Caterair.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C. ss. 9601 et seq.
"Change of Control" shall mean at any time (i) the Permitted Holders
(individually or collectively) shall cease to own (directly or indirectly) in
the aggregate at least 51% on a fully diluted basis of the voting interests of
OFSI, (ii) the Permitted Holders (individually or collectively) shall cease to
own (directly or indirectly) in the aggregate at least 35% on a fully diluted
basis of the economic interests in OFSI, (iii) OFSI shall cease to own on a
fully diluted basis 100% of the economic and voting interests of SCIS, (iv) the
Permitted Holders (individually or collectively) shall cease to own (directly or
indirectly) in the aggregate at least 51% on a fully diluted basis of the voting
interests of Caterair Holdings, (v) Caterair Holdings shall cease to own on a
fully diluted basis 100% of the economic and voting interests of Caterair or
(vi) any "change of control" or similar event shall occur under the Senior
Subordinated Notes Indentures or any other issue of subordinated Indebtedness of
SCIS, Caterair or any of their respective Subsidiaries.
"CII" shall mean Caterair International, Inc. (II), a Delaware
corporation and a Wholly-Owned Domestic Subsidiary of SCIS.
"Closing Date" shall mean the date occurring on or after the
Effective Date on which the Loans are incurred hereunder.
"Co-Arrangers" shall have the meaning provided in the first
paragraph of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time. Section references to the Code are to the Code, as in effect at
the date of this Agreement, and to any subsequent provisions of the Code,
amendatory thereof, supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or personal) with
respect to which any security interests have been granted (or purported to be
granted) pursuant to any Security Document, including, without limitation, all
Pledge Agreement Collateral, all Security Agreement Collateral, all Mortgaged
Properties and all cash and Cash Equivalents delivered as collateral pursuant to
any Security Document.
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"Collateral Agent" shall mean Morgan acting as collateral agent for
the Secured Creditors pursuant to the Security Documents, and any successor
thereto appointed pursuant to the terms of the respective Security Documents.
"Commitment" shall mean any of the commitments of any Bank
hereunder, i.e. whether the SCIS Commitment or the Caterair Commitment.
"Consent Solicitation" shall mean the solicitation of 13% Senior
Subordinated Note Consents to amend the 13% Senior Subordinated Note Indenture
performed by or on behalf of SCIS simultaneously with the 13% Senior
Subordinated Note Tender Offer.
"Consent Solicitation Documents" shall mean each of the documents
distributed to holders of the 13% Senior Subordinated Notes or otherwise entered
into by SCIS or any of such holders in connection with the consummation of the
Consent Solicitation, including, without limitation, the 13% Senior Subordinated
Note Consents and the 13% Senior Subordinated Note Indenture Supplement.
"Consolidated Amortization Expense" shall mean, with respect to any
Person for any period, the consolidated amortization expense of such Person for
such period, determined on a consolidated basis for such Person and its
Restricted Subsidiaries (and, in the case of SCIS, Caterair and its
Subsidiaries) in conformity with GAAP.
"Consolidated Depreciation Expense" shall mean, with respect to any
Person for any period, the consolidated depreciation expense of such Person for
such period, determined on a consolidated basis for such Person and its
Restricted Subsidiaries (and, in the case of SCIS, Caterair and its
Subsidiaries) in conformity with GAAP.
"Consolidated EBITDA" shall mean, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Net Income, (ii) to
the extent Consolidated Net Income has been reduced thereby, all income taxes of
such Person and its Restricted Subsidiaries (and, in the case of SCIS, Caterair
and its Subsidiaries) paid or accrued in conformity with GAAP for such period
(other than income taxes attributable to extraordinary or nonrecurring gains or
losses), (iii) Consolidated Interest Expense, (iv) Consolidated Amortization
Expense, (v) Consolidated Depreciation Expense and (vi) Consolidated Non-cash
Charges.
"Consolidated Fixed Charge Coverage Ratio" shall mean, with respect
to any Person, the ratio of Consolidated EBITDA of such Person during the four
full
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fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
such Person for the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to (i) the incurrence or
repayment of any Indebtedness (excluding the incurrence of Indebtedness under
any revolving credit facility and including the repayment of Indebtedness under
any revolving credit facility only to the extent that such repayment effects a
permanent reduction in the availability thereunder) of such Person or any of its
Restricted Subsidiaries (and, in the case of SCIS, Caterair and its
Subsidiaries, other than Indebtedness between SCIS or any Subsidiary of SCIS and
Caterair or any Subsidiary of Caterair) (and the application of the proceeds
thereof) giving rise to the need to make such calculation and any incurrence or
repayment of other Indebtedness (and the application of the proceeds thereof) at
any time subsequent to the first day of the Four Quarter Period and on or prior
to the Transaction Date, as if such incurrence or repayment, as the case may be
(and the application of the proceeds thereof), occurred on the first day of the
Four Quarter Period and (ii) any Asset Sales or Asset Acquisitions (including,
without limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Restricted Subsidiaries
(including any person who becomes a Restricted Subsidiary as a result of the
Asset Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA (including any pro forma
expense and cost reductions calculated on a basis consistent with Regulation S-X
under the Securities Act) attributable to the assets which are the subject of
the Asset Acquisition or Asset Sale during the Four Quarter Period) occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if such Asset
Sale or Asset Acquisition (including the incurrence, assumption or liability for
any such Indebtedness or Acquired Indebtedness) occurred on the first day of the
Four Quarter Period. If such Person or any of its Restricted Subsidiaries
directly or indirectly guarantees Indebtedness of a third Person, the preceding
sentence shall give effect to the incurrence of such guaranteed Indebtedness as
if such Person or any Restricted Subsidiary of such Person had directly incurred
or otherwise assumed such guaranteed Indebtedness. Furthermore, in calculating
"Consolidated Fixed Charges" for purposes of determining the denominator (but
not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1)
interest on outstanding Indebtedness determined on a fluctuating basis as of the
Transaction Date and which will continue to be so determined thereafter shall be
deemed to have accrued at a fixed rate per annum equal to the rate of interest
on such Indebtedness in effect on the Transaction Date; (2) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest
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rate based upon a factor of a prime or similar rate, a eurocurrency interbank
offered rate, or other rates, then the interest rate in effect on the
Transaction Date will be deemed to have been in effect during the Four Quarter
Period; (3) notwithstanding clause (1) above, interest on Indebtedness
determined on a fluctuating basis, to the extent such interest is covered by
agreements relating to Interest Swap Obligations, shall be deemed to accrue at
the rate per annum (not in excess of the maximum possible rate if such agreement
is an interest rate cap, interest rate collar or similar agreement) resulting
after giving effect to the operation of such agreements; and (4) the permanent
retirement of any Indebtedness during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to the
Transaction Date shall be given effect as if it occurred at the beginning of
such Four Quarter Period.
"Consolidated Fixed Charges" shall mean, with respect to any Person
for any period, the sum, without duplication, of (i) Consolidated Interest
Expense (including amortization or write-off of debt issuance costs), plus (ii)
the product of (x) the amount of all dividend payments on any series of
Preferred Stock of such Person (other than dividends paid in common stock) paid,
accrued or scheduled to be paid or accrued during such period and (y) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current effective consolidated federal, state and local tax rate
of such Person expressed as a decimal.
"Consolidated Interest Expense" shall mean, with respect to any
Person for any period, the sum, without duplication, of (i) the aggregate of all
cash and non-cash interest expense with respect to all outstanding Indebtedness
of such Person and its Restricted Subsidiaries (and, in the case of SCIS,
Caterair and its Subsidiaries), including the net costs associated with Interest
Swap Obligations and capitalized interest, for such period determined on a
consolidated basis in conformity with GAAP and (ii) the interest component of
Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or
accrued by such Person and its Restricted Subsidiaries (and, in the case of
SCIS, Caterair and its Subsidiaries) during such period as determined on a
consolidated basis in accordance with GAAP. In addition, in calculating the
Consolidated Interest Expense of SCIS, interest expense with respect to
Indebtedness between SCIS or any Subsidiary of SCIS and Caterair or any
Subsidiary of Caterair shall be excluded therefrom.
"Consolidated Net Income" shall mean, with respect to any Person for
any period, the aggregate net income (or loss) of such Person and its
Subsidiaries (and, in the case of SCIS, Caterair) for such period on a
consolidated basis, determined in accordance with GAAP; provided that there
shall be excluded therefrom (a) gains and losses from Asset Sales (without
regard to the $1,000,000 limitation set forth in the
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definition thereof) and Caterair Asset Sales (without regard to the $1,000,000
limitation set forth in the definition thereof) or abandonments or reserves
relating thereto and the related tax effects, (b) items classified as
extraordinary or nonrecurring gains and losses, and the related tax effects
according to GAAP, (c) the net income (or loss) of any Person acquired in a
pooling of interests transaction accrued prior to the date it becomes a
Subsidiary of such first Person or is merged or consolidated with such first
Person or any Subsidiary of such first Person, (d) the net income of any
Subsidiary of such Person to the extent that the declaration of dividends or
similar distributions by that Subsidiary of that income is restricted by
contract, operation of law or otherwise, (e) the net loss of any Person, other
than a Restricted Subsidiary of such first Person and (f) the net income of any
Person, other than a Restricted Subsidiary of such first Person, in which such
first Person has an equity interest, except to the extent of cash dividends or
distributions paid to such first Person or a Restricted Subsidiary of such first
Person. Notwithstanding the foregoing, in calculating the Consolidated Net
Income of SCIS, (i) charges incurred by SCIS in connection with the consummation
of the transactions contemplated by the Master Agreement (including, without
limitation, (A) severance payments and other employee costs and (B) external
consulting services primarily associated with the implementation of labor
savings programs) shall not be deducted therefrom, (ii) the goodwill and the
increases in amortization and depreciation resulting from the consummation of
the transactions contemplated by the Master Agreement shall not be deducted
therefrom and (iii) interest payments or accruals on the SCIS/Caterair Note
shall not be taken into account.
"Consolidated Non-Cash Charges" shall mean, with respect to any
Person for any period, the aggregate depreciation, amortization and other
non-cash expenses of such Person and its Restricted Subsidiaries (and, in the
case of SCIS, Caterair and its Subsidiaries) reducing Consolidated Net Income of
such Person and its Restricted Subsidiaries (and, in the case of SCIS, Caterair
and its Subsidiaries) for such period, determined on a consolidated basis in
conformity with GAAP (excluding any such charges constituting an extraordinary
item or loss or any such charge which requires an accrual of or a reserve for
cash charges for any future period).
"Credit Documents" shall mean this Agreement and, after the
execution and delivery thereof pursuant to the terms of this Agreement, each
Note, the OFSI Guaranty, the Subsidiaries Guaranty, the Designated Onex
Subsidiaries Guaranty, each Security Document, the Caterair Holdings
Subordination Agreement and the Caterair Holdings Escrow Agreement.
"Credit Party" shall mean OFSI, Caterair Holdings, SCIS, Caterair
and each other Subsidiary Guarantor and solely for purposes of Sections 8.07 and
8.08, the Designated Onex Sub.
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"Default" shall mean any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Designated Onex Sub" shall mean Onex OFSI Holdings Inc., a
corporation incorporated under the laws of the Province of Ontario and a
Subsidiary of Onex.
"Designated Onex Sub Guaranty" shall have the meaning provided in
Section 4.11.
"Designated Onex Sub Pledge Agreement" shall have the meaning
provided in Section 4.08.
"Disqualified Capital Stock" shall mean any Capital Stock which, by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event (other than an
event which would constitute a Change of Control), matures (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the sole option of the holder thereof (except, in each case,
upon the occurrence of a Change of Control), in whole or in part, on or prior to
the final maturity date of the Securities.
"Documents" shall mean the Credit Documents, the SCIS Credit
Agreement, the Senior Subordinated Note Documents, the 13% Senior Subordinated
Note Tender Offer Documents and the Consent Solicitation Documents.
"Dollars" and the sign "$" shall each mean freely transferable legal
tender of the United States.
"Domestic Subsidiary" shall mean each Subsidiary of SCIS or Caterair
incorporated or organized in the United States or any state or territory
thereof.
"Effective Date" shall have the meaning provided in Section 11.10.
"Eligible Transferee" shall mean and include a commercial bank, a
financial institution, a "qualified institutional buyer" (as defined in the
Securities Act), or a fund which is regularly engaged in making, purchasing or
investing in loans or securities.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, notices of
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noncompliance or violation, investigations or proceedings relating in any way to
any Environmental Law or any permit issued, or any approval given, under any
such Environmental Law (hereafter, "Claims"), including, without limitation, (a)
any and all Claims by governmental or regulatory authorities for enforcement,
cleanup, removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law, and (b) any and all Claims by any governmental
agency seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief in connection with alleged injury or threat of
injury to health, safety or the environment due to the presence of Hazardous
Materials.
"Environmental Law" shall mean any applicable Federal, state,
foreign or local statute, law, rule, regulation, ordinance, code, guideline,
written policy and rule of common law now or hereafter in effect and in each
case as amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment,
relating to the environment, employee health and safety or Hazardous Materials,
including, without limitation, CERCLA; RCRA; the Federal Water Pollution Control
Act, 33 U.S.C. ss. 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss.
2601 et seq.; the Clean Air Act, 42 U.S.C. ss. 7401 et seq.; the Safe Drinking
Water Act, 42 U.S.C. ss. 3803 et seq.; the Oil Pollution Act of 1990, 33 U.S.C.
ss. 2701 et seq.; the Emergency Planning and the Community Right-to-Know Act of
1986, 42 U.S.C. ss. 11001 et seq.; the Hazardous Material Transportation Act, 49
U.S.C. ss. 1801 et seq.; and the Occupational Safety and Health Act, 29 U.S.C.
ss. 651 et seq. (to the extent it regulates occupational exposure to Hazardous
Materials); and any state and local or foreign counterparts or equivalents, in
each case as amended from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time. Section references to ERISA are to ERISA, as
in effect at the date of this Agreement and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with SCIS, Caterair or a Subsidiary of SCIS or Caterair
would be deemed to be a "single employer" (i) within the meaning of Section
414(b),(c), (m) or (o) of the Code or (ii) as a result of SCIS, Caterair or a
Subsidiary of SCIS or Caterair being or having been a general partner of such
person.
"Eurodollar Loan" shall mean each Loan outstanding at any time
hereunder on and after the Syndication Date, except during such time (and then
only to the extent) as such Loan is required to be maintained as a Base Rate
Loan in accordance with the provisions of Section 1.08.
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"Eurodollar Rate" shall mean (a) the offered quotation to
first-class banks in the London interbank Eurodollar market by Morgan for Dollar
deposits of amounts in immediately available funds comparable to the outstanding
principal amount of the Eurodollar Loan of Morgan with maturities comparable to
the Interest Period applicable to such Eurodollar Loan commencing two Business
Days thereafter as of 11:00 A.M. (London time) on the date which is two Business
Days prior to the commencement of such Interest Period, divided (and rounded
upward to the nearest 1/100 of 1%) by (b) a percentage equal to 100% minus the
then stated maximum rate of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental, special or other reserves
required by applicable law) applicable to any member bank of the Federal Reserve
System in respect of Eurocurrency funding or liabilities as defined in
Regulation D (or any successor category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section 8.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"Existing Mortgaged Properties" shall mean all Real Property of the
Credit Parties listed on Schedule III and designated as "Existing Mortgaged
Properties" therein.
"Existing Mortgages" shall mean all Mortgages granted by the Credit
Parties pursuant to the Original SCIS/Caterair Credit Agreement and which have
not been released by the lenders thereunder prior to the Effective Date.
"Federal Funds Rate" shall mean for any period, the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal for each day
during such period to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Administrative Agent as determined by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or referred to in
Section 2.01.
"Final Maturity Date" shall mean March 1, 2007.
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"Financial Projections" shall have the meaning provided in Section
5.05(d).
"Foreign Pension Plan" shall mean any plan, fund (including, without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States of America by SCIS, Caterair or any one or
more of their respective Subsidiaries primarily for the benefit of employees of
SCIS, Caterair or such Subsidiaries residing outside the United States of
America, which plan, fund or other similar program provides, or results in,
retirement income, a deferral of income in contemplation of retirement or
payments to be made upon termination of employment, and which plan is not
subject to ERISA or the Code.
"Foreign Subsidiary" shall mean each Subsidiary of SCIS or Caterair
that is incorporated under the laws of any jurisdiction other than the United
States of America or any State thereof.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect as of the Closing Date, including, without
limitation, those set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as approved by a significant segment
of the accounting profession.
"General Pledge Agreement" shall have the meaning provided in
Section 4.08.
"Guaranteed Obligations" shall mean the irrevocable and
unconditional guaranty made by SCIS under the SCIS Guaranty (i) to the
Administrative Agent, the Collateral Agent and each Bank for the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of the principal and interest on each Caterair Note issued by Caterair to such
Bank, and Caterair Loans made, under this Agreement, together with all the other
obligations and liabilities (including, without limitation, indemnities, fees
and interest thereon) of Caterair to the Administrative Agent, the Collateral
Agent and each Bank now existing or hereafter incurred under, arising out of or
in connection with this Agreement or any other Credit Document and the due
performance and compliance with the terms of the Credit Documents by Caterair
and (ii) to each Other Creditor which has entered into, or in the future enters
into, an Interest Rate Protection Agreement or Other Hedging Agreement with any
Subsidiary of SCIS, Caterair or any of Caterair's Subsidiaries, the full and
prompt payment when due (whether by acceleration or otherwise) of all
obligations of any such
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Subsidiary of SCIS, Caterair or any such Subsidiary of Caterair owing under, or
with respect to, any such Interest Rate Protection Agreement or Other Hedging
Agreement, whether now in existence or hereafter arising, and the due
performance and compliance with all terms, conditions and agreements contained
therein.
"Guaranties" shall mean the OFSI Guaranty, the SCIS Guaranty, the
Subsidiaries Guaranty and the Designated Onex Sub Guaranty.
"Guarantor" shall mean OFSI, SCIS, Caterair, each other Subsidiary
Guarantor and the Designated Onex Sub.
"Hazardous Materials" shall mean (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; (b) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances," "hazardous waste," "hazardous
materials," "extremely hazardous substances," "restricted hazardous waste,"
"toxic substances," "toxic pollutants," "contaminants," or "pollutants," or
words of similar import, under any applicable Environmental Law; and (c) any
other chemical, material or substance, exposure to which is prohibited, limited
or regulated by any governmental authority under Environmental Laws.
"Indebtedness" shall mean with respect to any Person, without
duplication, (i) all obligations of such Person for borrowed money, (ii) all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all Capitalized Lease Obligations of such Person,
(iv) all obligations of such Person issued or assumed as the deferred purchase
price of property, all conditional sale obligations and all obligations under
any title retention agreement (but excluding trade account payable and accrued
expenses arising in the ordinary course of business), (v) all obligations for
the reimbursement of an obligor on any letter of credit, banker's acceptance or
similar credit transaction, (vi) guarantees and other contingent obligations in
respect of Indebtedness referred to in clauses (i) through (v) above and clause
(viii) below, (vii) all obligations of any other Person of the type referred to
in clauses (i) through (vi) which are secured by any lien on any property or
asset of such Person, the amount of such obligation being deemed to be the
amount of the obligation so secured, (viii) all obligations under Other Hedging
Agreements and Interest Rate Protection Agreements of such Person, and (ix) all
Disqualified Capital Stock issued by such Person with the amount of Indebtedness
represented by such Disqualified Capital Stock being equal to the greater of its
voluntary or involuntary liquidation preference and its maximum fixed repurchase
price, but excluding accrued dividends, if any. For
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purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Indenture, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value shall be determined reasonably and in good
faith by the Board of Directors of the issuer of such Disqualified Capital
Stock. The amount of Indebtedness of any Person at any date shall be the
outstanding principal amount of all unconditional obligations described above,
as such amount would be reflected on a balance sheet prepared in conformity with
GAAP, and the maximum liability at such date of such Person for any contingent
obligations described above.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section 1.07.
"Interest Rate Protection Agreement" shall mean any interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedging agreement, interest rate floor agreement or other similar
agreement or arrangement.
"Interest Swap Obligations" shall mean the obligations of any
Person, pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount.
"Investment" shall mean, with respect to any Person, any direct or
indirect loan or other extension of credit (including, without limitation, a
guarantee) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any Person. "Investment" shall exclude extensions of trade credit by SCIS
and its Restricted Subsidiaries and Caterair and its Subsidiaries on
commercially reasonable terms in accordance with normal trade practices of SCIS
and its Restricted Subsidiaries or Caterair and its Subsidiaries, as the case
may be. In no event shall this definition of "Investment" include payments by
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SCIS to a trust established in connection with a Voluntary Employees'
Beneficiary Association (as referred to in Section 501(c)(9) of the Internal
Revenue Code of 1986). For the purposes of Section 7.01, (i) an "Investment"
shall include and be valued at the fair market value of the net assets of any
Restricted Subsidiary of SCIS at the time that such Restricted Subsidiary is
designated an Unrestricted Subsidiary of SCIS and shall exclude the fair market
value of the net assets of any Unrestricted Subsidiary of SCIS at the time that
such Unrestricted Subsidiary is designated a Restricted Subsidiary of SCIS and
(ii) the amount of any Investment shall be the original cost of such Investment
plus the cost of all additional Investments by SCIS or any Restricted Subsidiary
of SCIS or Caterair or any Subsidiary of Caterair, as the case may be, without
any adjustments for increases or decreases in value, or write-ups, write-downs
or write-offs with respect to such Investment, reduced by the payment of
dividends or distributions (including tax sharing payments) in connection with
such Investment or any other amounts received in respect of such Investment, to
the extent constituting a return on capital in conformity with GAAP.
"Lease Agreements" shall mean each of the leases entered into by Sky
Chefs, CII and Caterair pursuant to the Master Agreement and substantially in
the form of Exhibit 2.2(k) to the Master Agreement with respect to Leased
Assets.
"Leased Assets" shall mean (i) the premises and property set forth
on Schedule 2.2(k) to the Master Agreement, including all or substantially all
of the Leasehold interests and tangible assets of Caterair related thereto and
(ii) all other property and assets acquired by Caterair and substantially
contemporaneously with such acquisition leased by Caterair to SCIS or a
Restricted Subsidiary of SCIS.
"Leaseholds" of any Person means all the right, title and interest
of such Person as lessee or licensee in, to and under any lease.
"License Agreements" shall mean each of the license agreements
entered into by Sky Chefs, CII and Caterair pursuant to the Master Agreement and
substantially in the form of Exhibit 2.2(o) to the Master Agreement, which
license agreements relate to Licensed Assets.
"Licensed Assets" shall mean (i) the properties set forth on
Schedule 2.2(o) to the Master Agreement and (ii) all other property and assets
acquired by the Borrower and substantially contemporaneously with such
acquisition licensed by Caterair to SCIS or a Restricted Subsidiary of SCIS.
"Lien" shall mean any lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind (including any conditional
sale or other
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title retention agreement, any lease in the nature thereof and any agreement to
give any security interest, but excluding any operating lease of real or
personal property).
"Loan" shall mean each SCIS Loan and each Caterair Loan.
"LSG/Lufthansa" shall mean LSG/Lufthansa Service GmbH, a company
organized under the laws of the Federal Republic of Germany.
"Lufthansa" shall mean Deutsch Lufthansa AG, an Aktiengesellschaft
organized under the laws of the Federal Republic of Germany.
"Margin Stock" shall have the meaning provided in Regulation U.
"Master Agreement" means the Master Agreement dated as of April 26,
1995, among OFSI, Caterair Holdings and Caterair, as amended from time to time.
"Minimum Borrowing Amount" shall mean $10,000,000.
"Morgan" shall mean Morgan Guaranty Trust Company of New York, in
its individual capacity.
"Mortgage" shall mean each mortgage, deed to secure debt or deed of
trust pursuant to which any Credit Party shall have granted to the Collateral
Agent a mortgage lien on such Credit Party's Mortgaged Property.
"Mortgage Amendments" shall have the meaning provided in Section
4.10.
"Mortgage Policy" shall mean each mortgage title insurance policy in
form and substance reasonably satisfactory to the Administrative Agent insuring
the mortgage lien on each Mortgage Property.
"Mortgaged Property" shall mean each Real Property owned or leased
by any Credit Party designated as a Mortgaged Property on Schedule III or
pursuant to Section 6.09(a).
"NAIC" shall mean the National Association of Insurance
Commissioners.
"Net Equity Proceeds" shall mean with respect to the sale of Capital
Stock by any Person not constituting an Asset Sale or Caterair Asset Sale, as
the case
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may be, the aggregate net cash proceeds received by such Person after payment of
expenses, commissions and other similar charges incurred in connection
therewith.
"Net Proceeds Prepayment Amount" has the meaning provided in Section
7.05.
"Net Proceeds Trigger Date" has the meaning provided in Section
7.05.
"Net Sale Proceeds" shall mean with respect to any Asset Sale or
Caterair Asset Sale, as the case may be, the proceeds in the form of cash or
Cash Equivalents including payments in respect of deferred payment obligations
when received in the form of cash or Cash Equivalents (other than the portion of
any such deferred payment constituting interest) received by SCIS or any
Restricted Subsidiary of SCIS or Caterair or any Subsidiary of Caterair, as the
case may be, from such Asset Sale or Caterair Asset Sale, as the case may be,
net of (a) out-of-pocket expenses and fees relating to such Asset Sale or
Caterair Asset Sale, as the case may be (including, without limitation, legal,
accounting and investment banking fees and sales commissions), (b) any and all
taxes paid or payable after taking into account any reduction in consolidated
tax liability due to available tax credits or deductions and any tax sharing
arrangements, (c) repayment of Indebtedness that is required to be repaid in
connection with such Asset Sale or Caterair Asset Sale, as the case may be
(other than the Obligations and the obligations under the SCIS Credit
Agreement), (d) any portion of cash proceeds which SCIS or Caterair, as the case
may be, determines in good faith should be reserved for post-closing adjustments
or indemnities, it being understood and agreed that on the day that all such
post-closing adjustments or indemnities have been determined, the amount (if
any) by which the reserved amount in respect of such Asset Sale or Caterair
Asset Sale, as the case may be, exceeds the actual post-closing adjustments or
indemnities payable by SCIS or any Restricted Subsidiary of SCIS or Caterair or
any Subsidiary of Caterair, as the case may be, shall constitute Net Sale
Proceeds on such date.
"9 1/4% Senior Subordinated Note Documents" shall mean the 9.25%
Senior Subordinated Notes, the 9 1/4% Senior Subordinated Note Indenture and all
other documents and agreements executed and delivered in connection therewith.
"9 1/4% Senior Subordinated Note Indenture" shall mean the
Indenture, dated as of August 15, 1997, between SCIS and The Bank of New York,
as Trustee, as amended, modified or supplemented from time to time in accordance
with the terms hereof and thereof.
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"9 1/4% Senior Subordinated Notes" shall mean SCIS' 9 1/4% Senior
Subordinated Notes due 2007 in aggregate principal amount of $300,000,000 issued
pursuant to the 9 1/4% Senior Subordinated Note Indenture.
"Non-Compete Agreement" shall mean the Non-Compete Agreement, dated
as of September 29, 1995, between Sky Chefs and Caterair.
"Non-Significant Subsidiary" of any Person shall mean any Restricted
Subsidiary of such Person which at the time of determination is not a
Significant Subsidiary of such Person.
"Note" shall mean each SCIS Note and each Caterair Note.
"Notice of Borrowing" shall have the meaning provided in Section
1.02.
"Notice Office" shall mean the office of the Administrative Agent,
located at 500 Stanton Christiana Road, Newark, Delaware 19713 Attention: Andrew
Lipsett, or such other office as the Administrative Agent may hereafter
designate in writing as such to the other parties hereto.
"Obligations" shall mean all amounts owing to any of, the Agents,
the Co-Arrangers, the Collateral Agent or any Bank pursuant to the terms of this
Agreement or any other Credit Document.
"OFSI" shall mean Onex Food Services, Inc., a Delaware corporation.
"OFSI Event of Default" shall have the meaning provided in the OFSI
Guaranty.
"OFSI Guaranty" shall have the meaning provided in Section 4.11.
"OFSI Pledge Agreement" shall have the meaning provided in Section
4.08.
"OFSI Tax Sharing Agreement" shall mean the Tax Sharing Agreement,
dated September 29, 1995, among OFSI, SCIS, Sky Chefs and CII.
"OnCap" shall mean OnCap Holding Corp., a corporation incorporated
under the laws of Ontario.
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"Onex" shall mean Onex Corporation, a corporation incorporated under
the laws of Ontario.
"Original SCIS/Caterair Credit Agreement" shall mean the Credit
Agreement, dated as of September 29, 1995, among OFSI, Caterair Holdings, SCIS,
Caterair, the lenders party thereto in their capacities as lenders thereunder,
Bankers Trust Company, Morgan Guaranty Trust Company of New York and Goldman,
Sachs & Co., as co-arrangers, Bankers Trust Company, as syndication agent,
Morgan Guaranty Trust Company of New York, as administrative agent, Goldman,
Sachs & Co., as documentation agent, and The Bank of New York, as co-agent, as
such Credit Agreement is in effect on the Closing Date and immediately prior to
the incurrence of the Loans hereunder.
"Other Creditor" shall have the meaning provided in the Security
Documents.
"Other Hedging Agreement" shall mean any foreign exchange contracts,
currency swap agreements, commodity agreements or other similar agreements or
arrangements designed to protect against the fluctuations in currency values.
"Payment Office" shall mean the office of the Administrative Agent
located at 60 Wall Street, New York, New York 10260-0060, or such other office
as the Administrative Agent may hereafter designate in writing as such to the
other parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Permitted Holders" shall mean (i) Gerald W. Schwartz, (ii) Onex,
(iii) OnCap, (iv) Lufthansa and/or (v) LSG/Lufthansa.
"Permitted Indebtedness" shall mean, without duplication, (i) the
Obligations, (ii) Indebtedness incurred pursuant to the SCIS Credit Agreement,
the aggregate outstanding principal amount of which shall not at any time exceed
the sum of the aggregate commitments pursuant to the SCIS Credit Agreement as in
effect on the Closing Date (A) less the amount of all mandatory principal
payments actually made in respect of any term loans thereunder and (B) reduced
by any required repayments (which are accompanied by a corresponding permanent
commitment reduction) thereunder actually effected in satisfaction of the
application of proceeds in accordance with Section 3.02(c) or 7.05, (iii) other
Indebtedness of SCIS, Caterair and their respective Subsidiaries outstanding on
the Closing Date (including the Senior
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Subordinated Notes), (iv) Interest Swap Obligations covering Indebtedness of the
Borrower or any of their respective Subsidiaries; provided that any Indebtedness
to which any such Interest Swap Obligations correspond is otherwise permitted to
be incurred under this Agreement; provided, further, that such Interest Swap
Obligations are entered into, in the judgment of SCIS or Caterair, as the case
may be, to protect SCIS or any Subsidiary of SCIS or Caterair or any Subsidiary
of Caterair, as the case may be, from fluctuations in interest rates on their
respective outstanding Indebtedness, (v) Indebtedness under Other Hedging
Agreements, (vi) (A) intercompany Indebtedness owed by SCIS to any Wholly-Owned
Restricted Subsidiary of SCIS or by any Restricted Subsidiary of SCIS to SCIS or
any Wholly-Owned Restricted Subsidiary of SCIS, (B) intercompany Indebtedness
owed by Caterair to any Wholly-Owned Subsidiary of Caterair or by any Subsidiary
of Caterair to Caterair or any Wholly-Owned Subsidiary of Caterair and (C)
Indebtedness between SCIS or any Wholly-Owned Restricted Subsidiary of SCIS, on
the one hand, and Caterair or any Wholly-Owned Subsidiary of Caterair, on the
other hand; provided that (x) any such intercompany indebtedness that is owed to
a Credit Party shall be evidenced by a promissory note which shall be duly
pledged and delivered pursuant to the General Pledge Agreement and (y) any such
intercompany indebtedness that is owed by a Credit Party to a non-Credit Party
shall contain the subordination provisions set forth on Exhibit M, (vii)
Acquired Indebtedness to the extent SCIS could have incurred such Indebtedness
in accordance with Section 7.03, (viii) (A) performance bonds, completion
guarantees and similar obligations (exclusive of obligations for the payment of
borrowed money) and (B) (1) guarantees by SCIS or any Wholly-Owned Restricted
Subsidiary of SCIS of Indebtedness of Caterair or any Wholly-Owned Subsidiary of
Caterair, (2) guarantees by Caterair or any Wholly-Owned Subsidiary of Caterair
of Indebtedness of SCIS or any Wholly-Owned Restricted Subsidiary of SCIS, (3)
guarantees by SCIS and its Wholly-Owned Restricted Subsidiaries of each other's
Indebtedness and (4) guarantees by Caterair and its Wholly-Owned Subsidiaries of
each other's Indebtedness; provided that in the case of each guarantee of
Indebtedness pursuant to preceding clauses (B) (1), (B) (2), (B) (3) or (B) (4),
such Indebtedness is incurred in accordance with Section 7.03, (ix) in addition
to Capitalized Lease Obligations permitted under any other clause of this
definition, purchase money Indebtedness and Indebtedness evidenced by
Capitalized Lease Obligations not to exceed an aggregate of $10,000,000 at any
one time outstanding, (x) any refinancing, modification, replacement, renewal,
restatement, refunding, deferral, extension, substitution, supplement,
reissuance or resale of existing or future Indebtedness, including Capitalized
Lease Obligations incurred after the repayment of all or a portion of the
Capitalized Lease Obligations outstanding as of the Closing Date so long as the
aggregate amount of Capitalized Lease Obligations incurred and outstanding at
any time pursuant to clause (iii) above and this clause (x) does not exceed the
amount of Capitalized Lease Obligations outstanding on the Closing Date, and any
additional Indebtedness incurred to pay premiums required by the instruments
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governing such existing or future Indebtedness as in effect at the time of
issuance thereof ("Required Premiums") and fees in connection therewith;
provided that any such event shall not (1) result in an increase in the
aggregate principal amount of Permitted Indebtedness (except to the extent such
increase is a result of a simultaneous incurrence of additional Indebtedness (A)
to pay Required Premiums and related fees or (B) otherwise permitted to be
incurred under Section 7.03) of SCIS, Caterair and their respective Subsidiaries
and (2) create Indebtedness with a Weighted Average Life to Maturity at the time
such Indebtedness is incurred that is less than the Weighted Average Life to
Maturity at such time of the Indebtedness being refinanced, modified, replaced,
renewed, restated, refunded, deferred, extended, substituted, supplemented,
reissued or resold (except that this subclause (2) will not apply in the event
the Indebtedness being refinanced, modified, replaced, renewed, restated,
refunded, deferred, extended, substituted, supplemented, reissued or resold was
originally incurred in reliance upon clause (ii), (x) or (xii) of this
definition), (xi) Indebtedness incurred in connection with the exercise of the
Purchase Option; provided that any payment made to Caterair in connection with
the exercise of the Purchase Option is used by Caterair to prepay the Loans or,
if there are no Loans outstanding, to repay the SCIS/Caterair Note; provided
that if Caterair elects to repay the SCIS/Caterair Note, SCIS immediately uses
the proceeds received from such repayment to prepay outstanding loans under the
SCIS Credit Agreement (and, in the case of any repayment of outstandings
pursuant to any revolving loan or similar Commitment, so long as such revolving
loan or similar Commitment is permanently reduced by the amount of such
prepayment), and (xii) additional Indebtedness of SCIS, Caterair and Restricted
Subsidiaries of SCIS in an aggregate principal amount not to exceed $75,000,000
at any one time outstanding (which amount may, but need not, be incurred in
whole or in part under the SCIS Credit Agreement). Notwithstanding anything to
the contrary contained in this definition or in Section 7.03, in no event shall
the aggregate outstanding principal amount of Indebtedness under the SCIS Credit
Agreement, when added to the aggregate outstanding principal amount of Loans,
exceed (x) at any time on or prior to December 31, 2000, $490,000,000, and (y)
at any time during any fiscal year of SCIS thereafter, an amount not to exceed
the product of Consolidated EBITDA of SCIS for the immediately preceding four
consecutive full fiscal quarters multiplied by 2.75.
"Permitted Investments" means (i) (A) Investments by SCIS or any
Restricted Subsidiary of SCIS in, or for the benefit of, any Restricted
Subsidiary of SCIS (whether existing on the Closing Date or created thereafter
and including Investments in any Person, if after giving effect to such
Investment, such Person would be a Restricted Subsidiary of SCIS) and
Investments in, or for the benefit of, SCIS by any Restricted Subsidiary of SCIS
and (B) Investments by Caterair in, or for the benefit of, any Subsidiary of
Caterair and Investments in, or for the benefit of, Caterair by any Subsidiary
of Caterair, (ii) cash and Cash Equivalents, (iii) Investments existing on the
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Closing Date, except for Investments in Restricted Subsidiaries of SCIS which
shall be governed by clause (i) (A) above, (iv) Investments in securities of
trade creditors or customers received pursuant to any plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of such trade creditors or
customers, (v) loans and advances by SCIS and its Subsidiaries to their
respective employees (A) the proceeds of which are used to purchase common stock
of OFSI and which proceeds are contemporaneously contributed by OFSI to SCIS
(which contribution shall not be included as a capital contribution for purposes
of clause (iii) (z) of the first paragraph of Section 7.01) or (B) in the
ordinary course of business, which loans or advances do not exceed $3,000,000 at
any one time outstanding (determined without regard to any write-downs or
write-offs thereof), (vi) the Guaranties, (viii) any Investment that qualifies
as Permitted Indebtedness, (viii) Investments by SCIS or any Restricted
Subsidiary of SCIS in Unrestricted Subsidiaries of SCIS or in other Persons in
an amount not to exceed $30,000,000 at any one time outstanding (determined
without regard to any write-downs or write-offs thereof), (ix) (A) Investments
by SCIS or any Restricted Subsidiary of SCIS in Caterair or any Wholly-Owned
Subsidiary of Caterair and (B) Investments by Caterair or any Subsidiary of
Caterair in SCIS or any Restricted Subsidiary of SCIS, (x) Investments received
by SCIS or any Restricted Subsidiary of SCIS or Caterair or any Subsidiary of
Caterair, as the case may be, as consideration for asset sales, including Asset
Sales or Caterair Asset Sales; provided that in the case of an Asset Sale or
Caterair Asset Sale, such Asset Sale or Caterair Asset Sale is effected in
compliance with Section 7.05 and (xi) in addition to Investments permitted under
clause (viii) above, Investments in Unrestricted Subsidiaries that are engaged
in the business of providing airline catering services and in Airline Catering
Joint Ventures in an aggregate amount not to exceed $50,000,000 at any one time
outstanding (determined without regard to any write-downs or write-offs
thereof).
"Permitted Liens" shall mean the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims
either (a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which SCIS or its Restricted Subsidiaries or
Caterair or its Subsidiaries, as the case may be, shall have set aside on
its books such reserves as may be required in conformity with GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens
imposed by law incurred in the ordinary course of business, as well as
deposits to secure each of the foregoing, for sums not yet delinquent more
than 60 days or being contested in good faith, if such reserve or other
appropriate provision, if any,
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as shall be required by GAAP for financial reporting purposes shall have
been made in respect thereof;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, including any Lien securing letters of
credit issued in the ordinary course of business consistent with past
practice in connection therewith, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(iv) judgment Liens not giving rise to an Event of Default;
(v) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of SCIS and its
Restricted Subsidiaries, taken as a whole, or of Caterair and its
Subsidiaries, taken as a whole, as the case may be;
(vi) any interest or title of a lessor under any Capitalized Lease
Obligation permitted under Section 7.03 and precautionary filings made for
informational purposes in connection with true leases, consignments and
similar arrangements;
(vii) purchase money Liens to finance property or assets of SCIS or
any Restricted Subsidiary of SCIS or Caterair or any Subsidiary of
Caterair, as the case may be, acquired in the ordinary course of business;
provided, however, that (A) the related purchase money Indebtedness shall
not exceed the cost of such property or assets and shall not be secured by
any property or assets of SCIS or any Restricted Subsidiary of SCIS or
Caterair or any Subsidiary of Caterair, as the case may be, other than the
property and assets so acquired and (B) the Lien securing such
Indebtedness shall be created within 90 days of such acquisition;
(viii) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptance issued or created for the account of such Person to
facilitate the purchase, shipment, or storage of such inventory or other
goods;
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(ix) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(x) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual, or warranty requirements of SCIS
or any Restricted Subsidiary of SCIS or Caterair or any Subsidiary of the
Borrower, as the case may be, including rights of offset and set-off;
(xi) Liens created under the Security Documents;
(xii) Liens existing on the Closing Date as generally set forth on
Schedule VI, together with any extensions, renewals or refinancings of
such Liens in reliance on clause (x) of the definition of Permitted
Indebtedness; provided that the Liens securing the refinancing
Indebtedness shall not extend to property other than that pledged under
the Liens securing the Indebtedness being refinanced;
(xiii) Liens placed upon the assets of any Foreign Subsidiary of
SCIS or the Borrower to secure Indebtedness incurred by such Foreign
Subsidiary to the extent such Indebtedness is permitted under Section
7.03;
(xiv) Liens that are deemed to exist in favor of each trustee under
the Senior Subordinated Notes Indentures pursuant to Section 7.07 thereof
so long as at no time shall there be any property or assets of SCIS,
Caterair or any of their respective Subsidiaries on deposit with such
trustees to secure any amounts owing to such trustees pursuant to such
Section; and
(xv) non-consensual Liens which do not individually or in the
aggregate materially detract from the value or transferability of the
property or assets of SCIS, any Restricted Subsidiary of SCIS, Caterair or
any Subsidiary of Caterair, or materially impair the use of any such
property or assets in the operation of the respective businesses of SCIS,
any Restricted Subsidiary of SCIS, Caterair or any Subsidiary the
Borrower.
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Plan" shall mean any multiemployer or single-employer plan, as
defined in Section 4001 of ERISA (other than a Foreign Pension Plan), which is
maintained or
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contributed to by (or to which there is an obligation to contribute of), SCIS,
Caterair or a Subsidiary or an ERISA Affiliate of SCIS or Caterair and each such
plan for the five year period immediately following the latest date on which
SCIS, Caterair or a Subsidiary or an ERISA Affiliate of maintained, contributed
to or had an obligation to contribute to such plan.
"Plan of Liquidation" shall mean, with respect to any Person, a plan
that provides for, contemplates or the effectuation of which is preceded or
accompanied by (whether or not substantially contemporaneously, in phases or
otherwise) (i) the sale, lease, conveyance or other disposition of all or
substantially all of the assets of such Person otherwise than as an entirety or
substantially as an entirety and (ii) the distribution of all or substantially
all of the proceeds of such sale, lease, conveyance or other disposition and all
or substantially all of the remaining assets of such person to holders of
Capital Stock of such Person.
"Pledge Agreement Collateral" shall mean all "Collateral" as defined
in the Pledge Agreements.
"Pledge Agreements" shall mean the OFSI Pledge Agreement, the
General Pledge Agreement and the Designated Onex Sub Pledge Agreement.
"Pledged Securities" shall mean all "Pledged Securities" as defined
in the Pledge Agreements.
"Preferred Stock" of any Person shall mean any Capital Stock of such
person that has preferential rights to any other Capital Stock of such Person
with respect to dividends or redemptions or upon liquidation.
"Prime Lending Rate" shall mean the rate which Morgan announces from
time to time as its prime lending rate, the Prime Lending Rate to change when
and as such prime lending rate changes. The Prime Lending Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
to any customer. Morgan may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate.
"Productive Assets" shall mean assets of a kind used or usable in
the businesses of SCIS and its Restricted Subsidiaries or Caterair and its
Subsidiaries, as the case may be, or similar, ancillary, complementary or
related to such businesses, as conducted on the date of the relevant Asset Sale
or Caterair Asset Sale, as the case may be, including, without limitation,
equity interests and other assets the acquisition of
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which would constitute a "Permitted Investment" under clause (i)(A) of the
definition thereof.
"pro forma" shall mean, with respect to any calculation made or
required to be made pursuant to the terms of this Agreement, a calculation in
accordance with Article 11 of Regulation S-X under the Securities Act.
"Public Equity Offering" shall mean an underwritten public offering
of Qualified Capital Stock of OFSI or SCIS pursuant to a registration statement
filed with the SEC in accordance with the Securities Act.
"Purchase Option" shall collectively refer to the option given to
Sky Chefs and CII pursuant to the Lease Agreements and the License Agreements
that are in effect on the Closing Date to purchase Leased Assets and Licensed
Assets.
"Qualified Capital Stock" shall mean stock that is not Disqualified
Capital Stock.
"Quarterly Payment Date" shall mean the 15th day of each March,
June, September and December occurring after the Closing Date.
"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C. ss. 6901 et seq.
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Recovery Event" shall mean the receipt by SCIS, Caterair or any
Subsidiary of SCIS or Caterair of any cash insurance proceeds or condemnation
award payable by reason of theft, loss, physical destruction or damage or any
other similar event with respect to any property or assets of SCIS, Caterair or
any Subsidiary of SCIS or Caterair.
"Reference Date" shall have the meaning provided in Section 7.01.
"Register" shall have the meaning provided in Section 11.16.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
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"Regulation G" shall mean Regulation G of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation T" shall mean Regulation T of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing or migration into the environment.
"Replaced Bank" shall have the meaning provided in Section 1.11.
"Replacement Bank" shall have the meaning provided in Section 1.11.
"Reportable Event" shall mean an event described in Section 4043(c)
of ERISA with respect to a Plan described in PBGC Regulation Section 2615.1(b)
other than those events as to which the 30-day notice period is waived under
subsection .13, .14, .16, .18, .19 or .20 of PBGC Regulation Section 2615.
"Required Banks" shall mean, collectively, Banks the sum of whose
outstanding Loans represent an amount greater than fifty percent of the sum of
all outstanding Loans.
"Restricted Payment" shall have the meaning provided in Section
7.01.
"Restricted Subsidiary" of any Person shall mean any Subsidiary of
such Person which at the time of determination is not an Unrestricted Subsidiary
of such Person.
"Returns" shall have the meaning provided in Section 5.09.
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"Sale and Leaseback Transaction" shall mean any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to SCIS or a Restricted Subsidiary of SCIS or to Caterair or a
Subsidiary of Caterair, as the case may be, of any property, whether owned by
SCIS or a Restricted Subsidiary of SCIS or Caterair or a Subsidiary of Caterair,
as the case may be, on the Closing Date or later acquired, which has been or is
to be sold or transferred by SCIS or a Restricted Subsidiary of SCIS or Caterair
or a Subsidiary of Caterair, as the case may be, to such Person or to any other
Person from whom funds have been or are to be advanced by such Person on the
security of such Property.
"Scheduled Repayment" shall mean an SCIS Scheduled Repayment or a
Caterair Scheduled Repayment, as the case may be.
"SCIS" shall have the meaning provided in the first paragraph of
this Agreement.
"SCIS/Caterair Loan" shall mean the $37,788,000 subordinated loan
previously made by SCIS to Caterair and evidenced by the SCIS/Caterair Note.
"SCIS/Caterair Note" shall mean the 8% Pay-in-kind Promissory Note
due 2001 issued by Caterair to SCIS.
"SCIS Commitment" shall mean, for each Bank, the amount set forth
opposite such Bank's name in Schedule I directly below the column entitled "SCIS
Commitment", as the same may be terminated pursuant to Sections 2.02 and/or 8.
"SCIS Credit Agreement" shall mean the Credit Agreement, dated as of
September 29, 1995 and amended and restated as of August 28, 1997, among OFSI,
Caterair Holdings, SCIS, Caterair, the lenders party thereto from time to time
in their capacities as lenders thereunder, BTCo and J.P. Morgan Securities Inc.,
as co-arrangers, BTCo, as syndication agent, Morgan, as administrative agent,
and The Bank of New York, as co-agent, together with the related documents
thereto (including, without limitation, any guarantee agreements and security
documents), in each case as such agreements may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from time
to time, including any agreement extending the maturity of, increasing the total
commitment under, refinancing, replacing or otherwise restructuring all or any
portion of the Indebtedness under such agreement or any successor or replacement
agreement and whether by the same or any other syndication agent, documentation
agent, administrative agent, lender or group of lenders.
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"SCIS Guaranty" shall mean the guaranty made by SCIS pursuant to
Section 12.
"SCIS Loan" shall have the meaning provided in Section 1.01(a).
"SCIS Note" shall have the meaning provided in Section 1.04.
"SCIS Scheduled Repayment" shall have the meaning provided in
Section 3.02(b).
"SEC" shall have the meaning provided in Section 6.01(h).
"Section 3.04(b)(ii) Certificate" shall have the meaning provided in
Section 3.04(b).
"Secured Creditors" shall have the meaning provided in the
respective Security Documents.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Security Agreement" shall have the meaning provided in Section
4.09.
"Security Agreement Collateral" shall mean all "Collateral" as
defined in the Security Agreement.
"Security Documents" shall mean the Pledge Agreements, the Security
Agreement, each Mortgage and, after the execution and delivery thereof, the Bank
Escrow Agreement.
"Senior Subordinated Note Documents" shall mean the Senior
Subordinated Notes, the Senior Subordinated Notes Indentures and all other
documents and agreements executed and delivered in connection therewith.
"Senior Subordinated Notes" shall mean the 13% Senior Subordinated
Notes and the 9 1/4% Senior Subordinated Notes.
"Senior Subordinated Notes Indentures" shall mean the 13% Senior
Subordinated Note Indenture and the 9 1/4% Senior Subordinated Note Indenture.
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"Significant Subsidiary" shall mean, as of any date of
determination, for any Person, each Subsidiary of such Person (or, in the case
of SCIS, each Restricted Subsidiary of SCIS) which (i) for the most recent
fiscal year of such Person accounted for more than 10% of consolidated revenues
of 10% of Consolidated EBITDA of such Person or (ii) as at the end of such
fiscal year, was the owner of more than 10% of the consolidated assets of such
Person.
"Sky Chefs" shall mean Sky Chefs, Inc., a Delaware corporation.
"Subordinated Intercompany Security Agreement" shall mean the
Subordinated Security Agreement, dated as of September 29, 1995, between SCIS
and Caterair.
"Subsidiaries Guaranty" shall have the meaning provided in Section
4.11.
"Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a 50% equity interest at the time.
"Subsidiary Guarantor" shall mean (i) Caterair, (ii) each
Wholly-Owned Domestic Subsidiary of SCIS and Caterair, (iii) any other
Subsidiary of OFSI (other than SCIS) or Caterair Holdings that becomes a
guarantor under the SCIS Credit Agreement.
"Syndication Agent" shall have the meaning provided in the first
paragraph of this Agreement.
"Taxes" shall have the meaning provided in Section 3.04(a).
"13% Senior Subordinated Note Consent" shall mean each written
consent permitting SCIS to enter into the 13% Senior Subordinated Note Indenture
Supplement from a holder of one or more 13% Senior Subordinated Notes
outstanding on the record date for determining those holders entitled to consent
to such 13% Senior Subordinated Note Indenture Supplement.
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"13% Senior Subordinated Note Indenture" shall mean the Indenture,
dated as of September 15, 1995, between SCIS and The Bank of New York, as
Trustee, as amended, modified or supplemented from time to time in accordance
with the terms hereof and thereof.
"13% Senior Subordinated Note Indenture Supplement" shall mean the
Supplemental Indenture to the 13% Senior Subordinated Note Indenture entered
into by SCIS and the 13% Senior Subordinated Note Indenture Trustee in
connection with the Consent Solicitation.
"13% Senior Subordinated Note Indenture Trustee" shall mean The Bank
of New York.
"13% Senior Subordinated Note Tender Offer" shall mean the offer by
SCIS to purchase for cash any and all of the 13% Senior Subordinated Notes, the
foregoing to be effected pursuant to the 13% Senior Subordinated Note Tender
Offer Documents.
"13% Senior Subordinated Note Tender Offer Documents" shall mean the
offer to purchase distributed by SCIS in connection with the 13% Senior
Subordinated Note Tender Offer, and all amendments and exhibits thereto, and all
documents related to any of the foregoing filed with the SEC or distributed to
the holders (or representatives) of the 13% Senior Subordinated Notes in
connection with the 13% Senior Subordinated Note Tender Offer.
"13% Senior Subordinated Note Tender Offer Expiration Date" shall
have the meaning provided in Section 4.19.
"13% Senior Subordinated Notes" shall mean SCIS' 13% Senior
Subordinated Notes due 2005 in aggregate principal amount of $125,000,000 issued
pursuant to the 13% Senior Subordinated Note Indenture.
"Total Commitments" shall mean, at any time, the sum of the
Commitments of each of the Banks.
"Tranche" shall mean the respective facility and commitments
utilized in making Loans hereunder, with there being two separate Tranches,
i.e., SCIS Loans and Caterair Loans.
"Transaction" shall mean (i) the amendment and restatement of the
Original SCIS/Caterair Credit Agreement in the form of the SCIS Credit
Agreement,
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(ii) the issuance of the 9 1/4% Senior Subordinated Notes, (iii) the
consummation of the 13% Senior Subordinated Note Tender Offer and the Consent
Solicitation and (iv) the entering into of this Agreement and the incurrence of
the Loans hereunder on the Closing Date.
"25% Banks" shall mean, collectively, Banks the sum of whose
outstanding Loans represent an amount equal to or greater than twenty-five
percent of the sum of all outstanding Loans.
"Type" shall mean the type of Loan determined with regard to the
interest option applicable thereto, i.e., whether a Base Rate Loan or a
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
the Plan as of the close of its most recent plan year exceeds the fair market
value of the assets allocable thereto, each determined in accordance with
Statement of Financial Accounting Standards No. 35, based upon the actuarial
assumptions used by the Plan's actuary in the most recent annual valuation of
the Plan.
"United States" and "U.S." shall each mean the United States of
America.
"Unrestricted Subsidiary" of any Person shall mean (i) any
Subsidiary of such Person that at the time of determination shall be or continue
to be designated an Unrestricted Subsidiary by the Board of Directors of such
Person in the manner provided below and (ii) any Subsidiary of an Unrestricted
Subsidiary. The Board of Directors of SCIS may designate any Subsidiary of SCIS
(including any newly acquired or newly formed Subsidiary), other than a
Subsidiary Guarantor, to be an Unrestricted Subsidiary of SCIS unless such
Subsidiary of SCIS owns any Capital Stock of, or owns or holds any Lien on any
property of, SCIS or any other Subsidiary of SCIS that is not a Subsidiary of
the Subsidiary to be so designated; provided that (x) SCIS certifies to the
Administrative Agent that such designation complies with Section 7.01 and (y)
each Subsidiary of SCIS to be so designated and each of its Subsidiaries has not
at the time of designation, and does not thereafter, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable with respect
to any Indebtedness pursuant to which the lender has recourse to any of the
assets of SCIS or any of its Restricted Subsidiaries. Notwithstanding the
foregoing, SCIS or a Restricted Subsidiary of SCIS may guarantee Indebtedness of
an Unrestricted Subsidiary of SCIS if such guarantee is
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made in accordance with Section 7.01. The Board of Directors of SCIS may
designate any Unrestricted Subsidiary of SCIS to be a Restricted Subsidiary of
SCIS only if (x) immediately after giving effect to such designation, SCIS is
able to incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with Section 7.03 and (y) immediately before and
immediately after giving effect to such designation, no Default or Event of
Default shall have occurred and be continuing. Any such designation by the Board
of Directors of SCIS shall be evidenced to the Administrative Agent by promptly
filing with the Administrative Agent a copy of the resolution giving effect to
such designation and a certificate of an Authorized Financial Officer of SCIS
certifying that such designation complied with the foregoing provisions.
"Weighted Average Life to Maturity" shall mean, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly-Owned Restricted Subsidiary" shall mean, as to any Person,
any Wholly-Owned Subsidiary of such Person which is a Restricted Subsidiary of
such Person.
"Wholly-Owned Domestic Subsidiary" shall mean, as to any Person, any
Wholly-Owned Subsidiary of such Person which is a Domestic Subsidiary.
"Wholly-Owned Foreign Subsidiary" shall mean, as to any Person, any
Wholly-Owned Subsidiary of such Person which is a Foreign Subsidiary.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock is at the time owned by such Person
and/or one or more Wholly-Owned Subsidiaries of such Person (other than
directors' qualifying shares) and (ii) any partnership, association, joint
venture or other entity in which such Person and/ or one or more Wholly-Owned
Subsidiaries of such Person has a 100% equity interest at such time (other than
directors' qualifying shares).
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SECTION 10. The Agents.
10.01 Appointment. The Banks hereby designate Morgan as
Administrative Agent (for purposes of this Section 10, the term "Administrative
Agent" shall include Morgan (and/or any of its affiliates) in its capacity as
Collateral Agent pursuant to any of the Security Documents where it at any time
acts as such) to act as specified herein and in the other Credit Documents. The
Banks hereby designate BTCo as Syndication Agent to act as specified herein and
in the other Credit Documents. Each Bank hereby irrevocably authorizes, and each
holder of any Note by the acceptance of such Note shall be deemed irrevocably to
authorize, any Agent to take such action on its behalf under the provisions of
this Agreement, the other Credit Documents and any other instruments and
agreements referred to herein or therein and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically delegated to or
required of such Agent by the terms hereof and thereof and such other powers as
are reasonably incidental thereto. Each Agent may perform any of its duties
hereunder or under any of the other Credit Documents by or through its
respective officers, directors, agents, employees or affiliates.
10.02 Nature of Duties. No Agent shall have any duties or
responsibilities except those expressly set forth in this Agreement and in the
other Credit Documents. Neither any Agent nor any of its affiliates nor any of
their respective officers, directors, agents or employees shall be liable for
any action taken or omitted by it or them hereunder or under any other Credit
Document or in connection herewith or therewith, (i) with the consent or at the
request of the Required Banks or (ii) in the absence of its or their gross
negligence or willful misconduct. The duties of each Agent shall be mechanical
and administrative in nature; no Agent shall have by reason of this Agreement or
any other Credit Document a fiduciary relationship in respect of any Bank or the
holder of any Note; and nothing in this Agreement or any other Credit Document,
expressed or implied, is intended to or shall be so construed as to impose upon
any Agent any obligations in respect of this Agreement or any other Credit
Document except as expressly set forth herein or therein.
10.03 Lack of Reliance on the Agents. Independently and without
reliance upon any Agent, each Bank and the holder of each Note, to the extent it
deems appropriate, has made and shall continue to make (i) its own independent
investigation of the financial condition and affairs of the Credit Parties and
each of their Subsidiaries in connection with the making and the continuance of
the Loans and the taking or not taking of any action in connection herewith and
(ii) its own appraisal of the credit-worthiness of the Credit Parties and each
of their Subsidiaries and, except as expressly provided in this Agreement, no
Agent shall have any duty or responsibility, either initially or on a continuing
basis, to provide any Bank or the holder of any Note with
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any credit or other information with respect thereto, whether coming into its
possession before the making of the Loans or at any time or times thereafter. No
Agent nor any of its affiliates nor any of their respective officers, directors,
agents or employees shall be responsible to any Bank or the holder of any Note
or any other Person for, or be required or have any duty to ascertain, inquire
or verify the accuracy of, (i) any recitals, statements, information,
representations or warranties herein, in any other Credit Document or in any
document, certificate or other writing delivered in connection herewith or
therewith, (ii) the execution, effectiveness, genuineness, validity,
enforceability, perfection, collectibility, priority or sufficiency of this
Agreement or any other Credit Document, (iii) the financial condition of the
Credit Parties or any of their Subsidiaries, (iv) the performance or observance
by any Credit Party or any of its Subsidiaries of any of the terms, provisions
or conditions of this Agreement or any other Credit Document, (v) the
satisfaction of any of the conditions precedent set forth in Section 4 or (vi)
the existence or possible existence of any Default or Event of Default.
10.04 Certain Rights of the Agents. If any Agent shall request
instructions from the Required Banks with respect to any act or action
(including failure to act) in connection with this Agreement or any other Credit
Document, such Agent shall be entitled to refrain from such act or taking such
action unless and until such Agent shall have received instructions from the
Required Banks; and such Agent shall not incur liability to any Person by reason
of so refraining. Without limiting the foregoing, no Bank or holder of any Note
shall have any right of action whatsoever against any Agent as a result of such
Agent acting or refraining from acting hereunder or under any other Credit
Document in accordance with the instructions of the Required Banks.
10.05 Reliance. Each Agent shall be entitled to rely, and shall be
fully protected (and shall have no liability to any Person) in relying, upon any
note, writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order or other document or telephone
message signed, sent or made by any Person that such Agent believed to be the
proper Person, and each Agent may consult with legal counsel (who may be counsel
for the Credit Parties), independent public accountants and other experts
selected by it and shall not be liable to any Person for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.
10.06 Indemnification. To the extent any Agent is not reimbursed and
indemnified by the Credit Parties, each Bank will reimburse and indemnify such
Agent, its affiliates and their respective officers, directors, agents and
employees, in proportion to their respective "percentages" as used in
determining the Required Banks, for and against any and all liabilities,
obligations, losses, damages, penalties, claims, actions,
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judgments, costs, expenses or disbursements of whatsoever kind or nature which
may be imposed on, asserted against or incurred by such Agent in performing its
respective duties hereunder or under any other Credit Document, in any way
relating to or arising out of this Agreement or any other Credit Document;
provided that no Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from such Agent's gross negligence or
willful misconduct.
10.07 Each Agent in its Individual Capacity. With respect to its
obligation to make Loans under this Agreement, each Agent shall have the rights
and powers specified herein for a "Bank" and may exercise the same rights and
powers as though it were not performing the duties specified herein; and the
term "Banks," "Required Banks," "holders of Notes" or any similar terms shall,
unless the context clearly otherwise indicates, include each Agent in its
individual capacity. Each Agent may accept deposits from, lend money to, and
generally engage in any kind of banking, trust or other business with any Credit
Party or any Affiliate or Subsidiary of any Credit Party as if they were not
performing the duties specified herein, and may accept fees and other
consideration from any other Credit Party for services in connection with this
Agreement and otherwise without having to account for the same to the Banks.
10.08 Holders. The Administrative Agent may deem and treat the payee
of any Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been filed with the Administrative Agent. Any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or consent, is the holder of any Note shall be conclusive
and binding on any subsequent holder, transferee, assignee or indorsee, as the
case may be, of such Note or of any Note or Notes issued in exchange therefor.
10.09 Resignation by the Agents. (a) The Administrative Agent may
resign from the performance of all its functions and duties hereunder and/or
under the other Credit Documents at any time by giving 20 Business Days' prior
written notice to the Borrowers and the Banks. Such resignation shall take
effect upon the appointment of a successor Administrative Agent pursuant to
clauses (b) and (c) below or as otherwise provided below. Each other Agent may
resign from the performance of all of its functions and duties hereunder and/or
under the other Credit Documents at any time by giving notice to the Borrowers,
the Administrative Agent and the Banks. Such resignation shall take effect upon
delivery of such notice.
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(b) Upon any such notice of resignation by the Administrative Agent,
the Required Banks shall appoint a successor Administrative Agent hereunder who
shall be a commercial bank or trust company reasonably acceptable to the
Borrowers.
(c) If a successor Administrative Agent shall not have been so
appointed within such 20 Business Day period, the Administrative Agent, with the
consent of the Borrowers, which consent shall not be unreasonably withheld,
shall then appoint a successor Administrative Agent who shall serve as
Administrative Agent hereunder until such time, if any, as the Required Banks
appoint a successor Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed pursuant
to clause (b) or (c) above by the 25th Business Day after the date such notice
of resignation was given by the Administrative Agent, the Administrative Agent's
resignation shall become effective and the Required Banks shall thereafter
perform all the duties of the Administrative Agent hereunder and/or under any
other Credit Document until such time, if any, as the Required Banks appoint a
successor Administrative Agent as provided above.
SECTION 11. Miscellaneous.
11.01 Payment of Expenses, etc. The Borrowers, jointly and
severally, shall: (i) whether or not the transactions contemplated herein are
consummated, pay all reasonable out-of-pocket costs and expenses of the Agents
(including, without limitation, the reasonable fees and disbursements of White &
Case and local and foreign counsel and all appraisal fees, trustee's fees,
documentary and recording taxes, title insurance and recording, filing and other
expenses) in connection with the preparation, execution and delivery of this
Agreement and the other Credit Documents and the documents and instruments
referred to herein and therein and any amendment, waiver or consent relating
hereto or thereto, of the Agents in connection with their syndication efforts
with respect to this Agreement and of each Agent, and each of the Banks in
connection with the protection or preservation of their respective rights under
the Credit Documents during the continuance of an Event of Default and the
enforcement of this Agreement and the other Credit Documents and the documents
and instruments referred to herein and therein (including in each case, without
limitation, the reasonable fees and disbursements of counsel (including
allocated costs of in-house counsel) for each Agent and for each of the Banks);
(ii) pay and hold each of the Agents and each of the Banks harmless from and
against any and all present and future stamp, excise and other similar taxes
with respect to the foregoing matters and save each of the Agents and each of
the Banks harmless from and against any and all liabilities with respect to or
resulting from any delay or omission (other than to the extent attributable to
such Agent
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or Bank, as the case may be) to pay such taxes; and (iii) indemnify each Agent
and each Bank, and each of their respective officers, directors, employees,
representatives, trustees and agents from and hold each of them harmless against
any and all liabilities, obligations (including removal or remedial actions),
losses, damages, penalties, claims, actions, judgments, suits, costs, expenses
and disbursements (including reasonable attorneys' (including allocated costs of
in-house counsel) and consultants' fees and disbursements, whether any such
attorney's and consultant's fees and disbursements are incurred in connection
with any investigation, litigation or other proceeding between any Credit Party
and any Agent or any Bank or between any Agent or any Bank and any third Person
or otherwise) incurred by, imposed on or assessed against any of them as a
result of, or arising out of, or in any way related to, or by reason of, (a) any
investigation, litigation or other proceeding (whether or not any Agent or any
Bank is a party thereto) related to the entering into and/or performance of this
Agreement or any other Credit Document or the use of the proceeds of any Loans
or the consummation of any transactions contemplated herein (including, without
limitation, the Transaction) or in any other Credit Document or the exercise of
any of their rights or remedies provided herein or in the other Credit
Documents, or (b) the actual or alleged presence of Hazardous Materials in the
air, surface water or groundwater or on the surface or subsurface of any Real
Property owned, leased or at any time operated by any Credit Party or any of its
Subsidiaries, the Release, generation, storage, transportation, handling or
disposal of Hazardous Materials at any location, whether or not owned or
operated by any Credit Party or any of its Subsidiaries, the non-compliance of
any Real Property with foreign, federal, state and local laws, regulations, and
ordinances (including applicable permits thereunder) applicable to any Real
Property, or any Environmental Claim asserted against any Credit Party or any of
its Subsidiaries, its operations, or any Real Property owned, leased or at any
time operated by any Credit Party or any of its Subsidiaries, including, in each
case, without limitation, the reasonable fees and disbursements of counsel and
other consultants incurred in connection with any such investigation, litigation
or other proceeding (but excluding any losses, liabilities, claims, damages or
expenses to the extent incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified). To the extent that the undertaking
to indemnify, pay or hold harmless any Agent or any Bank set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, the Borrowers shall make the maximum contribution to the payment
and satisfaction of each of the indemnified liabilities which is permissible
under applicable law.
11.02 Right of Setoff. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of an Event of
Default, each Bank is hereby authorized at any time or from time to time,
without presentment, demand, pro-
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test or other notice of any kind to any Credit Party or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any other Indebtedness at
any time held or owing by such Bank (including, without limitation, by branches
and agencies of such Bank wherever located) to or for the credit or the account
of any Credit Party or any of its Subsidiaries against and on account of the
Obligations and liabilities of such Credit Party or such Subsidiary to such Bank
under this Agreement or under any of the other Credit Documents, including,
without limitation, all interests in Obligations purchased by such Bank pursuant
to Section 11.06(b), and all other claims of any nature or description arising
out of or connected with this Agreement or any other Credit Document,
irrespective of whether or not such Bank shall have made any demand hereunder
and although said Obligations, liabilities or claims, or any of them, shall be
contingent or unmatured. Notwithstanding anything to the contrary contained in
this Section 11.02, no Bank shall exercise any such right of set-off without the
prior consent of the Administrative Agent or the Required Banks so long as the
Obligations shall be secured by any Real Property located in the State of
California, it being understood and agreed, however, that this sentence is for
the sole benefit of the Banks and may be amended, modified or waived in any
respect by the Required Banks without the requirement of prior notice to or
consent by any Credit Party and does not constitute a waiver of any rights
against any Credit Party or against any Collateral.
11.03 Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to SCIS or Caterair,
at such Credit Party's address specified opposite its signature below; if to any
Bank, at its address specified opposite its name on Schedule II, and if to the
Administrative Agent, at the Notice Office; or, as to any Credit Party or any
Agent, at such other address as shall be designated by such party in a written
notice to the other parties hereto and, as to each Bank, at such other address
as shall be designated by such Bank in a written notice to SCIS and Caterair and
the Administrative Agent. All such notices and communications shall, when
mailed, telegraphed, telexed, telecopied, or cabled or sent by overnight
courier, be effective when deposited in the mails, delivered to the telegraph
company, cable company or overnight courier, as the case may be, or sent by
telex or telecopier, except that notices and communications to the Agents shall
not be effective until received by the Agents.
11.04 Benefit of Agreement. (a) This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided, however, neither SCIS nor Caterair may
assign or transfer any of its rights, obligations or interest hereunder or under
any other Credit
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Document without the prior written consent of the Banks (except as otherwise
expressly permitted under this Agreement) and, provided further, that, although
any Bank may transfer, assign or grant participations in its rights hereunder to
an Eligible Transferee, such Bank shall remain a "Bank" for all purposes
hereunder (and may not transfer or assign all or any portion of its outstanding
Loans hereunder except as provided in Section 11.04(b)) and the transferee,
assignee or participant, as the case may be, shall not constitute a "Bank"
hereunder and, provided further, that no Bank shall transfer or grant any
participation under which the participant shall have rights to approve any
amendment to or waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (i) extend the final scheduled
maturity of any Loan or Note in which such participant is participating, or
reduce the rate or extend the time of payment of interest or Fees thereon
(except in connection with a waiver of applicability of any post-default
increase in interest rates) or reduce the principal amount thereof, or increase
the amount of the participant's participation over the amount thereof then in
effect (it being understood that a waiver of any Default or Event of Default or
of a mandatory repayment of Loans shall not constitute a change in the terms of
such participation), (ii) consent to the assignment or transfer by SCIS or
Caterair of any its rights and obligations under this Agreement (except as
otherwise expressly permitted under this Agreement), (iii) release all or
substantially all of the Collateral under all of the Security Documents (except
as expressly provided in the Credit Documents) supporting the Obligations
hereunder in which such participant is participating or (iv) release SCIS from
its obligations under the SCIS Guaranty. In the case of any such participation,
the participant shall not have any rights under this Agreement or any of the
other Credit Documents (the participant's rights against such Bank in respect of
such participation to be those set forth in the agreement executed by such Bank
in favor of the participant relating thereto) and all amounts payable by the
Borrowers hereunder shall be determined as if such Bank had not sold such
participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank together
with one or more other Banks) may (x) assign all or a portion of its outstanding
Obligations hereunder to (i) its parent company and/or any affiliate of such
Bank which is at least 50% owned by such Bank or its parent company or to one or
more Banks or (ii) in the case of any Bank that is a fund that invests in bank
loans, any other fund that invests in bank loans and is managed or advised by
the same investment advisor of such Bank or by an Affiliate of such investment
advisor or (y) assign all, or if less than all, a portion equal to at least
$5,000,000 in the aggregate for the assigning Bank or assigning Banks, of such
outstanding Obligations hereunder to one or more Eligible Transferees (treating
any fund that invests in bank loans and any other fund that invests in bank
loans and is managed or advised by the same investment advisor of such fund or
by an Affiliate of such investment advisor as a single Eligible Transferee),
each of which
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assignees shall become a party to this Agreement as a Bank by execution of an
Assignment and Assumption Agreement, provided that (i) at the time of each
assignment pursuant to this Section 11.04(b) Schedule I shall be deemed modified
to reflect the outstanding Loans of such new Bank and of the existing Banks,
(ii) upon surrender of the old Notes, new Notes will be issued, at the
respective Borrower's expense, to such new Bank and to the assigning Bank, such
new Notes to be in conformity with the requirements of Section 1.04 (with
appropriate modifications) to the extent needed to reflect the revised
outstanding Loans, (iii) the consent of the Administrative Agent shall be
required in connection with any such assignment pursuant to clause (y) above
(which consent shall not be unreasonably withheld or delayed), and (iv) the
Administrative Agent shall receive at the time of each such assignment, from the
assigning or assignee Bank, the payment of a non-refundable assignment fee of
$3,500 and, provided further, that such transfer or assignment will not be
effective until recorded by the Administrative Agent on the Register pursuant to
Section 11.16. To the extent of any assignment pursuant to this Section
11.04(b), the assigning Bank shall be relieved of its obligations hereunder with
respect to its assigned Loans. At the time of each assignment pursuant to this
Section 11.04(b) to a Person which is not already a Bank hereunder and which is
not a United States person (as such term is defined in Section 7701(a)(30) of
the Code) for Federal income tax purposes, the respective assignee Bank shall
provide to the respective Borrower and the Administrative Agent the appropriate
Internal Revenue Service Forms (and, if applicable a Section 3.04(b)(ii)
Certificate). To the extent that an assignment of all or any portion of a Bank's
outstanding Obligations pursuant to Section 1.11 or this Section 11.04(b) would,
at the time of such assignment, result in increased costs under Section 1.08 or
3.04 from those being charged by the respective assigning Bank prior to such
assignment, then the respective Borrower shall not be obligated to pay such
increased costs (although the Borrower shall be obligated to pay any other
increased costs of the type described above resulting from changes after the
date of the respective assignment).
(c) Nothing in this Agreement shall prevent or prohibit any Bank
from pledging its Loans and Notes hereunder to a Federal Reserve Bank in support
of borrowings made by such Bank from such Federal Reserve Bank and, with the
consent of the Administrative Agent, any Bank which is a fund may pledge all or
any portion of its Loans and Notes to its trustee in support of its obligations
to its trustee. No pledge pursuant to this clause (c) shall release the
transferor Bank from any of its obligations hereunder.
11.05 No Waiver; Remedies Cumulative. No failure or delay on the
part of any Agent, or any Bank or any holder of any Note in exercising any
right, power or privilege hereunder or under any other Credit Document and no
course of dealing between any Credit Party and any Agent or any Bank or the
holder of any Note
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shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder or under any other Credit Document
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder or thereunder. The rights, powers and
remedies herein or in any other Credit Document expressly provided are
cumulative and not exclusive of any rights, powers or remedies which any Agent
or any Bank or the holder of any Note would otherwise have. No notice to or
demand on any Credit Party in any case shall entitle such Credit Party to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of any Agent or any Bank or the holder of any
Note to any other or further action in any circumstances without notice or
demand.
11.06 Payments Pro Rata. (a) Except as otherwise provided in this
Agreement, the Administrative Agent agrees that promptly after its receipt of
each payment from or on behalf of any Borrower in respect of any Obligations
hereunder, the Administrative Agent shall distribute such payment to the Banks
(other than any Bank that has consented in writing to waive its pro rata share
of any such payment) pro rata based upon their respective shares, if any, of the
Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder or under any other Credit Document (whether by voluntary payment, by
realization upon security, by the exercise of the right of setoff or banker's
lien, by counterclaim or cross action, by the enforcement of any right under the
Credit Documents, or otherwise), which is applicable to the payment of the
principal of, or interest on, the Loans, of a sum which with respect to the
related sum or sums received by other Banks is in a greater proportion than the
total of such Obligation then owed and due to such Bank bears to the total of
such Obligation then owed and due to all of the Banks immediately prior to such
receipt, then such Bank receiving such excess payment shall purchase for cash
without recourse or warranty from the other Banks an interest in the Obligations
of the respective Borrower to such Banks in such amount as shall result in a
proportional participation by all the Banks in such amount; provided that, if
all or any portion of such excess amount is thereafter recovered from such Bank,
such purchase shall be rescinded and the purchase price restored to the extent
of such recovery, but without interest.
11.07 Calculations; Computations. (a) The financial statements to be
furnished to the Banks pursuant hereto shall be made and prepared in accordance
with GAAP, consistently applied throughout the periods involved (except as set
forth in the notes thereto or as otherwise disclosed in writing by SCIS or
Caterair to the Banks) and (ii) for purposes of calculating financial terms, all
covenants and related definitions, all such calculations based on the operations
of SCIS and its Restricted Subsidiaries on a
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consolidated basis shall be made without giving effect to the results of
operations of any Unrestricted Subsidiaries (which for this purpose shall be
treated as if same did not exist).
(b) All computations of interest and Fees hereunder shall be made on
the basis of a year of 360 days for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest or other are payable.
11.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHERWISE
PROVIDED IN CERTAIN OF THE MORTGAGES AND PLEDGE AGREEMENTS, BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION
OF THE AFORESAID COURTS. EACH SUCH PARTY HEREBY FURTHER IRREVOCABLY WAIVES ANY
CLAIM THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION OVER SUCH PARTY, AND
AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF THE AFORESAID
COURTS, THAT SUCH COURT LACKS PERSONAL JURISDICTION OVER SUCH PARTY. EACH SUCH
PARTY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH PARTY AT ITS
ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW OR ON SCHEDULE II, SUCH SERVICE
TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. EACH SUCH PARTY HEREBY
IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING
COMMENCED HEREUNDER OR UNDER ANY CREDIT DOCUMENT THAT SERVICE OF PROCESS WAS IN
ANY WAY
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INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY AGENT, ANY
BANK OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY PARTY IN
ANY OTHER JURISDICTION.
(b) EACH PARTY TO THIS AGREEMENT HERETO HEREBY IRREVOCABLY WAIVES TO
THE FULLEST EXTENT PERMITTED UNDER APPLICABLE LAW ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
11.09 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with SCIS, Caterair and the
Administrative Agent.
11.10 Effectiveness. This Agreement shall become effective on the
date (the "Effective Date") on which each of SCIS, Caterair, the Administrative
Agent and each of the Banks shall have signed a counterpart hereof (whether the
same or different counterparts) and shall have delivered the same to the
Administrative Agent at the Notice Office. The Administrative Agent will give
SCIS, Caterair and each Bank prompt written notice of the occurrence of the
Effective Date.
11.11 Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
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11.12 Amendment or Waiver; etc. (a) Neither this Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the respective Credit Parties party thereto and the
Required Banks (or, in the case of the Subsidiaries Guaranty, the Designated
Onex Sub Guaranty and the Security Documents, as otherwise provided in such
Credit Documents), provided that no such change, waiver, discharge or
termination shall, without the consent of each Bank (with Obligations being
directly affected thereby in the case of following clause (i)), (i) extend the
final scheduled maturity of any Loan or any Note, or reduce the rate or extend
the time of payment of interest or Fees thereon, or reduce the principal amount
thereof (except to the extent repaid in cash), (ii) release all or substantially
all of the Collateral (except as expressly provided in the Credit Documents)
under all the Security Documents, (iii) release SCIS from its obligations under
the SCIS Guaranty, (iv) amend, modify or waive any provision of this Section
11.12, (v) reduce the percentage specified in the definition of Required Banks
(it being understood that, with the consent of the Required Banks, additional
extensions of credit pursuant to this Agreement may be included in the
determination of the Required Banks on substantially the same basis as the
outstanding Loans are included on the Closing Date) or (vi) consent to the
assignment or transfer by SCIS or Caterair of any of their rights and
obligations under this Agreement (except as otherwise expressly permitted under
this Agreement); provided further, that no such change, waiver, discharge or
termination shall (x) increase the Commitment of any Bank over the amount
thereof then in effect without the consent of such Bank (y) without the consent
of each Agent affected thereby, amend, modify or waive any provision of Section
10 as same applies to such Agent or any other provision as same relates to the
rights or obligations of such Agent or (z) without the consent of the Collateral
Agent, amend, modify or waive any provision relating to the rights or
obligations of the Collateral Agent.
(b) If, in connection with any proposed change, waiver, discharge or
termination with respect to any of the provisions of this Agreement as
contemplated by clauses (i) through (vi), inclusive, of the first proviso to
Section 11.12(a), the consent of the Required Banks is obtained but the consent
of one or more of such other Banks whose consent is required is not obtained,
then the Borrowers shall have the right, so long as all non-consenting Banks
whose individual consent is required are treated as described below, to replace
each such non-consenting Bank or Banks with one or more Replacement Banks
pursuant to Section 1.11 so long as at the time of such replacement, each such
Replacement Bank consents to the proposed change, waiver, discharge or
termination, provided that in any event the Borrowers shall not have the right
to replace a Bank solely as a result of the exercise of such Bank's rights (and
the withholding of any required consent by such Bank) pursuant to the second
proviso to Section 11.12(a).
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11.13 Survival. All indemnities set forth herein including, without
limitation, in Sections 1.08, 1.09, 3.04, 11.01 and 11.06, shall survive the
execution, delivery and termination of this Agreement and the Notes and the
making and repayment of the Loans (it being understood and agreed that all such
indemnities shall also survive as to any Bank that has assigned all of its
obligations hereunder pursuant to Section 11.04(b) with respect to the period of
time in which such Bank was a "Bank" hereunder).
11.14 Domicile of Loans. Each Bank may transfer and carry its Loans
at, to or for the account of any office, Subsidiary or Affiliate of such Bank.
Notwithstanding anything to the contrary contained herein, to the extent that a
transfer of Loans pursuant to this Section 11.14 would, at the time of such
transfer, result in increased costs under Section 1.08, 1.09 or 3.04 from those
being charged by the respective Bank prior to such transfer, then the respective
Borrower shall not be obligated to pay such increased costs (although such
Borrower shall be obligated to pay any other increased costs of the type
described above resulting from changes after the date of the respective
transfer).
11.15 Confidentiality. (a) Each Agent and each Bank agrees that any
information concerning the Credit Parties or any of their Subsidiaries or
Affiliates furnished to the Agents or the Banks by or on behalf of the Credit
Parties or their respective representatives (at any time on, before or after the
date of this Agreement) (including, but not limited to, copies of, or
information concerning, Sky Chefs' and Caterair's respective catering agreements
with American Airlines, together with analyses, compilations, studies or other
documents prepared by each Agent's and each Bank's agents, representatives
(including attorneys, accountants, financial advisors or to any other Person who
evaluates, approves, structures or administers the Loans on behalf of a Bank and
who is subject to this confidentiality provision) or employees (collectively,
"Representatives") that in each case contain or otherwise reflect such
information is collectively referred to as the "Information") shall be kept
confidential and shall not, without the prior written consent of SCIS, be
disclosed (other than to Representatives of the Agents and the Banks) in any
manner whatsoever, in whole or in part, or used other than in connection with
the Credit Documents, in evaluating the Transaction and in evaluating and
monitoring the creditworthiness of the Credit Parties, provided that disclosure
may be made of any Information (i) as has become generally available to the
public through no fault or action by such Agent, Bank or Representative in
violation of this Section 11.15, (ii) as may be required in any report,
statement or testimony submitted to any municipal, state or Federal regulatory
body having or claiming to have jurisdiction over such disclosing Agent or Bank,
or to the Federal Reserve Board, the Federal Deposit Insurance Corporation, the
NAIC or similar organizations (whether in the United States or elsewhere) or
their successors, (iii) as
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may be required by any law, order, regulation or ruling applicable to such
disclosing Agent or Bank, and (iv) to the Collateral Agent who shall agree to be
bound hereunder; and provided further that the Information may be disclosed to
any Bank or an Eligible Transferee that is a participant of such Bank so long as
any such participant shall have entered into confidentiality agreements
(containing provisions substantially the same as those contained herein) with
the Credit Parties as well as to any Person that qualifies as an Eligible
Transferee and is a prospective assignee or participant in connection with such
transaction provided that such prospective assignee or participant also executes
an agreement containing provisions substantially the same as those contained
herein. Each Agent and each Bank shall be responsible for any breach of this
Section 11.15 by its respective Representatives (including former
Representatives).
(b) Notwithstanding anything contained herein to the contrary, the
obligation to keep confidential the Information as set forth herein shall
automatically terminate two years after satisfaction in full of the obligations
of the Credit Parties hereunder (except in the case of the respective catering
agreements with American Airlines, and Information with respect thereto, for
which the confidentiality obligation shall in any event continue until December
31, 2007).
(c) In the event that an Agent, a Bank or a Representative or anyone
to whom information was transmitted pursuant to this Section 11.15 is requested
or becomes legally compelled (by oral questions, interrogatories, requests for
information or documents, summons, subpoena, civil investigative demand or
similar process) to disclose any of the Information, such Person shall provide
SCIS (to the extent such Person is legally permitted to do so) with prompt
notice so that SCIS or any other Credit Party may seek a protective order or
other appropriate remedy or waive compliance with the provisions of this Section
11.15. In the event that such protective order or other remedy is not obtained
on or prior to the date on which such Information is required to be disclosed,
or that the Credit Parties waive compliance with the provisions of this Section
11.15, such Agent or Bank shall furnish that portion of the Information that as
advised by counsel is legally required or advisable.
(d) This Section 11.15 shall be inoperative as to such portions of
the Information that become available to the Agents, the Banks or their
Representatives from a source, other than the Credit Parties or their respective
representatives, that such Agent, Bank or Representative does not have actual
knowledge (without any obligation of inquiry) is prohibited from disclosing such
portions by a contractual, legal or fiduciary obligation to the Credit Parties.
(e) Each of the Credit Parties hereby acknowledges and agrees that
each Agent and each Bank may share with any of its respective affiliates the
Information
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(including, without limitation, any nonpublic customer information regarding
creditworthiness of the Credit Parties and their Subsidiaries), provided such
affiliates shall be subject to the provisions herein to the same extent as if it
were an Agent or a Bank hereunder, it being understood that for purposes of this
Section 11.15 the term "affiliate" shall mean direct or indirect holding
company(ies), if any, as well as direct or indirect subsidiary(ies), if any.
(f) Each Agent and each Bank agrees that in the event of any actual
or threatened breach of this Section 11.15 the Credit Parties shall be entitled,
without the requirement of posting a bond or other security, to equitable
relief, including temporary, preliminary and permanent injunctive relief and
specific performance. Such remedy shall not be the exclusive remedy for any
breach of this Section 11.15 but shall be in addition to all other remedies
available at law or equity to the Credit Parties.
11.16 Register. Each Borrower hereby designates the Administrative
Agent to serve as such Borrower's agent, solely for purposes of this Section
11.16, to maintain a register (the "Register") on which it will record the Loans
made by each of the Banks to such Borrower and each repayment in respect of the
principal amount of the Loans of each Bank. Failure to make any such
recordation, or any error in such recordation shall not affect the respective
Borrower's obligations in respect of such Loans. With respect to any Bank, the
transfer of the rights to the principal of, and interest on, any Loan shall not
be effective until such transfer is recorded on the Register maintained by the
Administrative Agent with respect to ownership of such Loans and prior to such
recordation all amounts owing to the transferor with respect to such Loans shall
remain owing to the transferor. The registration of assignment or transfer of
all or part of any Loans shall be recorded by the Administrative Agent on the
Register only upon the acceptance by the Administrative Agent of a properly
executed and delivered Assignment and Assumption Agreement pursuant to Section
11.04(b). Coincident with the delivery of such an Assignment and Assumption
Agreement to the Administrative Agent for acceptance and registration of
assignment or transfer of all or part of a Loan, or as soon thereafter as
practicable, the assigning or transferor Bank shall surrender the Note
evidencing such Loan, and thereupon one or more new Notes in the same aggregate
principal amount shall be issued to the assigning or transferor Bank and/or the
new Bank. Each Borrower agrees to indemnify the Administrative Agent from and
against any and all losses, claims, damages and liabilities of whatsoever nature
which may be imposed on, asserted against or incurred by the Administrative
Agent in performing its duties under this Section 11.16.
11.17 Assumption by SCIS. In the event that SCIS assumes any of the
Obligations of Caterair hereunder, SCIS, Caterair, the Administrative Agent and
the Banks shall enter into an amendment to this Agreement and, to the extent
necessary,
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<PAGE> 120
each of the other Credit Documents, pursuant to which SCIS shall assume from
Caterair, and Caterair shall assign to SCIS, such of the Obligations of Caterair
as are assumed by SCIS pursuant to the terms of this Agreement.
11.18 Certain Matters Relating to OFSI. Notwithstanding anything to
the contrary contained in this Agreement or in any other Credit Document, the
Banks hereby agree that OFSI shall have the right, so long as no Default or
Event of Default then exists and a similar request is made under the SCIS Credit
Agreement, to establish a direct Wholly-Owned Domestic Subsidiary of OFSI
("Parent") the sole purpose of which is to own 100% of the issued and
outstanding shares of capital stock of SCIS. In connection with such request,
OFSI shall have the right to transfer all of the outstanding shares of capital
stock of SCIS to Parent so long as at the time of such transfer, (i) no Default
or Event of Default then exists, (ii) Parent shall enter into a guaranty in form
and substance satisfactory to the Administrative Agent pursuant to which Parent
shall unconditionally guaranty all of the Obligations, (iii) Parent shall enter
into a pledge agreement in form and substance satisfactory to the Administrative
Agent pursuant to which Parent shall pledge all of the issued and outstanding
shares of capital stock of SCIS to secure the guaranty referred to in preceding
clause (ii), (iv) OFSI shall pledge all of the issued and outstanding shares of
the capital stock of Parent pursuant to the OFSI Pledge Agreement, (v) OFSI,
SCIS, Caterair, the other Credit Parties and the Banks shall enter into
technical amendments and modifications to this Agreement and the other Credit
Documents which have been agreed to by the Co-Arrangers to give effect to the
foregoing and to release OFSI from its obligations under Sections 8 and 9 of the
SCIS Credit Agreement as such Sections are incorporated into the OFSI Guaranty
by reference, except for its obligations under Sections 8.01(b), 8.01(c),
8.01(g), 8.04 (as it relates to the preservation of OFSI's existence), and 9.01
(as it relates to the creation of any Liens on the capital stock of Parent), and
the Required Banks agree that they will not unreasonably withhold their consent
to any such proposed amendments and modifications, and (v) corresponding
amendments and modifications are made to the SCIS Credit Documents.
11.19 Certain Post-Closing Actions. Notwithstanding anything to the
contrary contained in Section 4.08, SCIS, Caterair and the Banks hereby
acknowledge and agree that any amendments or modifications to any of the
localized foreign Pledge Agreements that may be required in connection with the
transactions contemplated hereby shall not be required to be delivered by the
respective Credit Parties on the Closing Date but shall instead be required to
be delivered within 90 days following the Closing Date.
-114-
<PAGE> 121
SECTION 12. SCIS Guaranty.
12.01 The Guaranty. In order to induce the Agents and the Banks to
enter into this Agreement and to extend credit hereunder, to induce the Other
Creditors to enter into the Interest Rate Protection Agreements or Other Hedging
Agreements and in recognition of the direct benefits to be received by SCIS from
the proceeds of the Caterair Loans and the entering into of the Interest Rate
Protection Agreements or Other Hedging Agreements, SCIS hereby agrees with the
Secured Creditors as follows: SCIS hereby unconditionally and irrevocably
guarantees, as primary obligor and not merely as surety the full and prompt
payment when due, whether upon maturity, acceleration or otherwise, of any and
all of the Guaranteed Obligations of Caterair to the Secured Creditors. If any
or all of the Guaranteed Obligations of Caterair to the Secured Creditors
becomes due and payable hereunder, SCIS unconditionally promises to pay such
indebtedness to the Secured Creditors, or order, on demand, together with any
and all expenses which may be incurred by the Secured Creditors in collecting
any of the Guaranteed Obligations.
12.02 Bankruptcy. Additionally, SCIS unconditionally and irrevocably
guarantees the payment of any and all of the Guaranteed Obligations of Caterair
to the Secured Creditors whether or not due or payable by Caterair upon the
occurrence of any of the events specified in Section 8.06, and unconditionally
promises to pay such indebtedness to the Secured Creditors, or order, on demand,
in lawful money of the United States.
12.03 Nature of Liability. The liability of SCIS hereunder is
exclusive and independent of any security for or other guaranty of the
Guaranteed Obligations of Caterair whether executed by SCIS, any other guarantor
or by any other party, and the liability of SCIS hereunder is not affected or
impaired by (a) any direction as to application of payment by Caterair or by any
other party, or (b) any other continuing or other guaranty, undertaking or
maximum liability of a guarantor or of any other party as to the Guaranteed
Obligations of Caterair, or (c) any payment on or in reduction of any such other
guaranty or undertaking, or (d) any dissolution, termination or increase,
decrease or change in personnel by Caterair, or (e) any payment made to the
Secured Creditors on the Guaranteed Obligations which any such Secured Creditor
repays to Caterair pursuant to court order in any bankruptcy, reorganization,
arrangement, moratorium or other debtor relief proceeding, and SCIS waives any
right to the deferral or modification of its obligations hereunder by reason of
any such proceeding.
12.04 Independent Obligation. The obligations of SCIS hereunder are
independent of the obligations of any other guarantor, any other party or
Caterair, and
-115-
<PAGE> 122
a separate action or actions may be brought and prosecuted against SCIS whether
or not action is brought against any other guarantor, any other party or
Caterair and whether or not any other guarantor, any other party or Caterair be
joined in any such action or actions. SCIS waives, to the full extent permitted
by law, the benefit of any statute of limitations affecting its liability
hereunder or the enforcement thereof. Any payment by Caterair or other
circumstance which operates to toll any statute of limitations as to Caterair
shall operate to toll the statute of limitations as to SCIS.
12.05 Authorization. SCIS authorizes the Secured Creditors without
notice or demand (except as shall be required by applicable law and cannot be
waived), and without affecting or impairing its liability hereunder, from time
to time to:
(a) change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew, increase, accelerate or alter,
any of the Guaranteed Obligations (including any increase or decrease in
the rate of interest thereon), any security therefor, or any liability
incurred directly or indirectly in respect thereof, and the Guaranty
herein made shall apply to the Guaranteed Obligations as so changed,
extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any of
those hereunder) incurred directly or indirectly in respect thereof or
hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against Caterair,
any other Credit Party or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, guarantors,
Caterair or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of Caterair to its creditors other than the
Secured Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of Caterair to the Secured Creditors regardless
of what liability or liabilities of Caterair remain unpaid;
-116-
<PAGE> 123
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement or any of the instruments or agreements
referred to herein, or otherwise amend, modify or supplement this
Agreement or any of such other instruments or agreements; and/or
(h) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of
SCIS from its liabilities under this Guaranty.
12.06 Reliance. It is not necessary for the Secured Creditors to
inquire into the capacity or powers of Caterair or the officers, directors,
partners or agents acting or purporting to act on their behalf, and any
Guaranteed Obligations made or created in reliance upon the professed exercise
of such powers shall be guaranteed hereunder.
12.07 Subordination. Any of the indebtedness of Caterair now or
hereafter owing to SCIS is hereby subordinated to the Guaranteed Obligations of
Caterair owing to the Secured Creditors; and if the Administrative Agent so
requests at a time when an Event of Default exists, all such indebtedness of
Caterair to SCIS shall be collected, enforced and received by SCIS for the
benefit of the Secured Creditors and be paid over to the Administrative Agent on
behalf of the Secured Creditors on account of the Guaranteed Obligations of
Caterair to the Secured Creditors, but without affecting or impairing in any
manner the liability of SCIS under the other provisions of this Guaranty. Prior
to the transfer by SCIS of any note or negotiable instrument evidencing any of
the indebtedness of Caterair to SCIS, SCIS shall mark such note or negotiable
instrument with a legend that the same is subject to this subordination. Without
limiting the generality of the foregoing, SCIS agrees with the Secured Creditors
that it will not exercise any right of subrogation which it may otherwise have
as a result of this Guaranty (whether contractual, under Section 509 of the
Bankruptcy Code, or otherwise) until all Guaranteed Obligations have been paid
in full in cash.
12.08 Waiver. (a) SCIS waives any right (except as shall be required
by applicable law and cannot be waived) to require the Secured Creditors to (i)
proceed against Caterair, any other guarantor or any other party, (ii) proceed
against or exhaust any security held from Caterair, any other guarantor or any
other party or (iii) pursue any other remedy in the Secured Creditors' power
whatsoever. SCIS waives any defense based on or arising out of any defense of
Caterair, any other guarantor or any other party, other than payment in full of
the Guaranteed Obligations, based on or arising out of the disability of
Caterair, any other guarantor or any other party, or the unenforceability of the
Guaranteed Obligations or any part thereof from any cause, or
-117-
<PAGE> 124
the cessation from any cause of the liability of Caterair other than payment in
full of the Guaranteed Obligations. The Secured Creditors may, at their
election, foreclose on any security held by any Agent, the Collateral Agent or
the other Secured Creditors by one or more judicial or nonjudicial sales,
whether or not every aspect of any such sale is commercially reasonable, or
exercise any other right or remedy the Secured Creditors may have against
Caterair or any other party, or any security, without affecting or impairing in
any way the liability of SCIS hereunder except to the extent the Guaranteed
Obligations have been paid. SCIS waives any defense arising out of any such
election by the Secured Creditors, even though such election operates to impair
or extinguish any right of reimbursement or subrogation or other right or remedy
of SCIS against Caterair or any other party or any security.
(b) SCIS waives all presentments, demands for performance, protests
and notices, including, without limitation, notices of nonperformance, notices
of protest, notices of dishonor, notices of acceptance of this Guaranty, and
notices of the existence, creation or incurring of new or additional Guaranteed
Obligations. SCIS assumes all responsibility for being and keeping itself
informed of Caterair's financial condition and assets, and of all other
circumstances bearing upon the risk of non-payment of the Guaranteed Obligations
and the nature, scope and extent of the risks which SCIS assumes and incurs
hereunder, and agrees that neither any Agent nor any Bank shall have any duty to
advise SCIS of information known to them regarding such circumstances or risks.
(c) SCIS hereby acknowledges and affirms that it understands that to
the extent the Guaranteed Obligations are secured by Real Property located in
California, SCIS shall be liable for the full amount of the liability hereunder
notwithstanding the foreclosure on such Real Property by trustee sale or any
other reason impairing SCIS' or any Secured Creditor's right to proceed against
Caterair or any other guarantor of the Guaranteed Obligations. In accordance
with Section 2856 of the California Civil Code, SCIS hereby waives:
(i) all rights of subrogation, reimbursement, indemnification, and
contribution and any other rights and defenses that are or may become
available to SCIS by reason of Sections 2787 to 2855, inclusive, 2899 and
3433 of the California Civil Code;
(ii) all rights and defenses that SCIS may have because the
Guaranteed Obligations are secured by Real Property located in California.
This means, among other things: (A) the Secured Creditors may collect from
SCIS without first foreclosing on any real or personal property collateral
pledged by Caterair; and (B) if the Secured Creditors foreclose on any
Real
-118-
<PAGE> 125
Property collateral pledged by Caterair, (1) the amount of the Guaranteed
Obligations may be reduced only by the price for which that collateral is
sold at the foreclosure sale, even if the collateral is worth more than
the sale price, and (2) the Secured Creditors may collect from SCIS even
if the Secured Creditors, by foreclosing on the Real Property collateral,
have destroyed any right SCIS may have to collect from Caterair. This is
an unconditional and irrevocable waiver of any rights and defenses SCIS
may have because the Guaranteed Obligations are secured by Real Property.
These rights and defenses include, but are not limited to, any rights or
defenses based upon Section 580a, 580b, 580d or 726 of the California Code
of Civil Procedure; and
(iii) all rights and defenses arising out of an election of remedies
by the Secured Creditors, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for the Guaranteed
Obligations, has destroyed SCIS' rights of subrogation and reimbursement
against the Borrower by the operation of Section 580d of the Code of Civil
Procedure or otherwise.
SCIS warrants and agrees that each of the waivers set forth above is made with
full knowledge of its significance and consequences and that if any of such
waivers are determined to be contrary to any applicable law or public policy,
such waivers shall be effective only to the maximum extent permitted by law.
12.09 Maximum Amount. It is the desire and intent of SCIS and the
Secured Creditors that this Guaranty shall be enforced against SCIS to the
fullest extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. If, however, and to the extent
that, the obligations of SCIS under this Guaranty shall be adjudicated to be
invalid or unenforceable for any reason (including, without limitation, because
of any applicable state or federal law relating to fraudulent conveyances or
transfers), then the amount of SCIS obligations under this Guaranty shall be
deemed to be reduced and SCIS shall pay the maximum amount of the Guaranteed
Obligations which would be permissible under applicable law.
* * *
-119-
<PAGE> 126
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
524 East Lamar Boulevard SC INTERNATIONAL SERVICES, INC.
Arlington, Texas 76011-3999
Telephone No.: (817) 792-2146
Telecopier No.: (817) 792-2222 By: /s/ Thomas J. Lee
Attention: President ------------------------------
Name: Thomas J. Lee
Title: Authorized Signatory
6550 Rock Spring Drive CATERAIR INTERNATIONAL
Bethesda, Maryland 20817 CORPORATION
Telephone No.: (301) 897-7860
Telecopier No.: (301) 897-7797 By: /s/ Thomas J. Lee
Attention: President ------------------------------
Name: Thomas J. Lee
Title: Authorized Signatory
with a copy to:
c/o Sky Chefs, Inc.
524 East Lamar Boulevard
Arlington, Texas 76011-3999
Telephone No.: (817) 792-2146
Telecopier No.: (817) 792-2222
Attention: Patrick W. Tolbert,
Executive Vice President
<PAGE> 127
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, Individually and as
Administrative Agent
By: /s/ Laura E. Loffredo
-------------------------------------
Name: LAURA E. LOFFREDO
Title: VICE PRESIDENT
<PAGE> 128
J.P. MORGAN SECURITIES INC.,
as a Co-Arranger
By: /s/ Martin R. Pryor
-------------------------------------
Name: MARTIN R. PRYOR
Title: VP
<PAGE> 129
BANKERS TRUST COMPANY,
Individually and as Syndication Agent
and a Co-Arranger
By: /s/ Timothy Morris
-------------------------------------
Name: TIMOTHY MORRIS
Title: VICE PRESIDENT
<PAGE> 130
THE BANK OF NEW YORK
By: /s/ Steven M. Ross
-------------------------------------
Name: STEVEN M. ROSS
Title: Vice President
<PAGE> 131
CREDIT SUISSE FIRST BOSTON
By: /s/ Barry A. Zamore
-------------------------------------
Name: BARRY A. ZAMORE
Title: Associate
By: /s/ Mathew M. Tuck
------------------------------------
MATTHEW M. TUCK
ASSOCIATE
<PAGE> 132
GOLDMAN SACHS CREDIT PARTNERS
L.P.
By: /s/ Stephen B. King
-------------------------------------
Name: STEPHEN B. KING
Title: AUTHORIZED SIGNATORY
<PAGE> 133
BANKBOSTON, N.A.
By: /s/ Mark M. Andrew
-------------------------------------
Name: MARK M. ANDREW
Title: VICE PRESIDENT
<PAGE> 134
HELLER FINANCIAL, INC.
By: /s/ Linda W. Wolf
-------------------------------------
Name: Linda W. Wolf
Title: Senior Vice President
<PAGE> 135
CITIBANK, N.A.
By: /s/ Hans L. Christensen
-------------------------------------
Name: Hans L. Christensen
Title: Vice President
<PAGE> 136
OCTAGON CREDIT INVESTORS LOAN PORTFOLIO
(A UNIT OF THE CHASE MANHATTAN BANK)
By: /s/ Richard W. Stewart
-------------------------------------
Name: RICHARD W. STEWART
Title: MANAGING DIRECTOR
<PAGE> 137
DEEPROCK & COMPANY
BY: Eaton Vance Management
as Investment Advisor
By: /s/ Scott H. Page
-------------------------------------
Name: Scott H. Page
Title: Vice President
<PAGE> 138
Van Kampen American Capital
Prime Rate Income Trust
By: /s/ Kathleen A. Zarn
-------------------------------------
Name: KATHLEEN A. ZARN
Title: Vice President
<PAGE> 139
CIBC INC.
By: /s/ Elizabeth S. Schreiber
-------------------------------------
Name: Elizabeth S. Schreiber
Title: Director
CIBC Wood Gundy Securities
Corp, As Agent
<PAGE> 140
KZH-SOLEIL CORPORATION
By: /s/ Virginia Conway
-------------------------------------
Name: Virginia R. Conway
Title: Authorized Agent
<PAGE> 141
PRIME INCOME TRUST
By: /s/ Rafael Scolari
-------------------------------------
Name: RAFAEL SCOLARI
Title: V.P. PORTFOLIO MANAGER
<PAGE> 142
PACIFIC INVESTMENT MANAGEMENT COMPANY,
as Investment Advisor for PIMCO High
Yield Fund (Acct 705) acting through
Investors Fiduciary Trust Company in
the Nominee Name of IFTCO
By: /s/ Raymond Kennedy
-------------------------------------
Name: Raymond Kennedy
Title: Vice President
<PAGE> 143
KZH-SOLEIL CORPORATION
By: /s/ Virginia Conway
-------------------------------------
Name: Virginia Conway
Title: Authorized Agent
<PAGE> 144
KZH-CRESCENT CORPORATION
By: /s/ Virginia Conway
-------------------------------------
Name: Virginia Conway
Title: Authorized Agent
<PAGE> 145
SCHEDULE I
COMMITMENTS
Banks Caterair SCIS
- ----- Commitments Commitments
----------- -----------
Morgan Guaranty Trust Company $58,560,000 $32,940,000
Deeprock & Company 1,280,000 720,000
Van Kampen American Prime Rate 13,760,000 7,740,000
Income Trust
CIBC Inc. 6,400,000 3,600,000
KZH-Crescent Corporation 6,400,000 3,600,000
BankBoston, N.A. 6,400,000 3,600,000
Bankers Trust Company 12,800,000 7,200,000
Citibank N.A. 6,400,000 3,600,000
Credit Suisse First Boston 6,400,000 3,600,000
Prime Income Trust 6,400,000 3,600,000
Goldman Sachs Credit Partners L.P. 6,400,000 3,600,000
Heller Financial, Inc. 6,400,000 3,600,000
Octagon Credit Investors Loan 6,400,000 3,600,000
Portfolio
KZH-Soleil Corporation 6,400,000 3,600,000
The Bank of New York 6,400,000 3,600,000
PIMCO High Yield Fund 3,200,000 1,800,000
----------- -----------
Total $160,000,000 $90,000,000
<PAGE> 146
SCHEDULE II
BANK ADDRESSES
Morgan Guaranty Trust 60 Wall Street
Company of New York New York, New York 10260-0060
Telephone No.: (212) 648-6793
Telecopier No.: (212) 648-5336
Attention: Laura Loffredo
Bankers Trust Company 130 Liberty Street
New York, New York 10006
Telephone No.: (212) 250-9545
Telecopier No.: (212) 250-7218
Attention: Jim Reilly
The Bank of New York One Wall Street
New York, New York 10005
Telephone No.: (212) 635-6724
Telecopier No.: (212) 635-6434
Attention: Steven M. Ross
BankBoston, N.A. 100 Federal Street
Boston, MA 02106
Telephone No.: (617) 434-3051
Telecopier No.: (617) 434-4929
Attention: Chip Gaysonas
Citibank, N.A. 399 Park Avenue
New York, NY 10043
Telephone No.: (212) 559-4706
Telecopier No.: (212) 291-5928
Attention: Hans Christianson
Credit Suisse First Boston 11 Madison Avenue
New York, NY 10010-3629
Telephone No.: (212) 325-4078
Telecopier No.: (212) 325-8017
Attention: John Wollen
<PAGE> 147
SCHEDULE II
Page 2
KZH-Crescent Corporation 200 Park Avenue
Suite 2200
New York, NY 10166-0228
Telephone No.: (212) 297-4138
Telecopier No.: (212) 297-4159
Attention: Mark Gold
Deeprock & Company State Street Bank & Trust Company
Corporate Trust Division
One Enterprise Drive
North Quincy, MA 02171
Telephone No.: (617)
Telephone No.: (617) 664-5367
Attention: Patrick McEnroe
Goldman Sachs Credit Partners 85 Broad Street
New York, NY 10004
Telephone No.: (212) 902-8123
Telecopier No.: (212) 902-2417
Attention:
Heller Financial 500 West Monroe Street
16th Floor
Chicago, IL 60661
Telephone No.: (312) 441-7894
Telecopier No.: (312) 441-7357
Attention: Linda Wolf
CIBC Inc. 333 South Grand Avenue
Suite 4250
Los Angeles, CA 90071
Telephone No.: (213) 346-3971
Telecopier No.: (213) 346-3995
Attention: Beth Dijati
<PAGE> 148
SCHEDULE II
Page 3
Octagon Credit Investors Loan 380 Madison Avenue
Portfolio New York, NY 10017
Telephone No.: (212) 622-3062
Telecopier No.: (212) 622-3797
Attention: Richard Stewart
Pacific Investment Management 840 Newport Center Drive
Company Newport Beach, CA 92658
Telephone No.: (714) 640-3407
Telecopier No.: (714) 725-6839
Attention: Jason R. Rosiak
Prime Income Trust Two World Trade Center
New York, NY 10048
Telephone No.: (212) 392-9034
Telecopier No.: (212) 392-5345
Attention: Peter Gewirtz
KZH-Soleil Corporation One Sun America Center
Century City, 38th Floor
Los Angeles, CA 90067
Telephone No.: (310) 772-6256
Telecopier No.: (310) 772-6078
Attention: Sabur Moini
Van Kampen American Prime One Parkview Plaza
Rate Income Trust Fifth Floor
Oakbrook Terrace, IL 60181
Telephone No.: (630) 684-6438
Telecopier No.: (630) 684-6740
Attention: Jeff Maillet
SCHEDULE III
REAL PROPERTY
This schedule details the owned or leased properties of the
following entities:
<TABLE>
<CAPTION>
COMPANY LOCATION OF PROPERTY
------- --------------------
<S> <C>
ONEX FOOD SERVICES, INC. NONE
SC INTERNATIONAL SERVICES, INC. NONE
CATERAIR INTERNATIONAL CORPORATION SEE LIST BELOW FOR ENTRIES
ENTITLED "CATERAIR"
SKY CHEFS, INC. SEE LISTS BELOW FOR ENTRIES
ENTITLED "SKY CHEFS"
CATERAIR INTERNATIONAL, INC. (II) NONE
SKY CHEFS INTERNATIONAL CORP. NONE
ARLINGTON SERVICES, INC. Office space leased from PNC Bank at
300 Delaware Avenue
Wilmington, DE 19801
ARLINGTON SERVICES HOLDING CORPORATION Office space leased from PNC Bank at
300 Delaware Avenue
Wilmington, DE 19801
CATERAIR CONSULTING SERVICES CORPORATION NONE
JFK CATERERS, INC. NONE
CATERAIR ST. THOMAS HOLDINGS CORPORATION NONE
WESTERN AIRE CHEF, INC. NONE
CATERAIR AIRPORT PROPERTIES, INC. NONE
SKY CHEFS ARGENTINE, INC. NONE IN THE U.S.
ADDRESS IN ARGENTINA:
TENIENTE GENERAL MORILLAS
S/N Y
AUTOPISTA AV. GVAL.
RICCHIERI
AEROPUERTO EZEIZA P.1804
PROVINCIA DE BUENOS AIRES,
ARGENTINA
CATERAIR INTERNATIONAL TRANSITION CORPORATION NONE
</TABLE>
<PAGE> 149
<TABLE>
<CAPTION>
COMPANY LOCATION OF PROPERTY
------- --------------------
<S> <C>
BETHESDA SERVICES, INC. Office space leased from PNC Bank at
300 Delaware Avenue
Wilmington, DE 19801
CATERAIR NEW ZEALAND LIMITED Office space leased from PNC Bank at
300 Delaware Avenue
Wilmington, DE 19801
ONEX OHIO ACCEPTANCE CORPORATION NONE
ONEX OHIO CREDIT CORP. NONE
ONEX OHIO EQUITY CORP. NONE
ONEX OHIO FINANCE CORP. NONE
ONEX OHIO FINANCE CORP. II NONE
ONEX OHIO CAPITAL CORP. NONE
ONEX OHIO FISCAL CORP. NONE
ONEX OHIO FUNDS CORP. NONE
ONEX OHIO CREDIT CORP. II NONE
ONEX OHIO FUNDS CORP. II NONE
ONEX OHIO FISCAL CORP. II NONE
ONEX OHIO EQUITY CORP. II NONE
ONEX OHIO CAPITAL CORP. II NONE
</TABLE>
<PAGE> 150
<TABLE>
<CAPTION>
==================================================================================================================================
Owned/
Shop # Address City State Country Zip Airport Leased
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Sky Chefs 3830 W. International Airport Road (Closed - warehouse) Anchorage AK US 99502 ANC L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 4370 W. International Airport Road Anchorage AK US 99502 ANC L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 1449 S. 23rd Street Phoenix AZ US 85034 PHX O
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 1235 S 23rd (Closed - Warehouse) Phoenix AZ US 85034 PHX L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 1451 S. 23rd Street Phoenix AZ US 85034 PHX O
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 2771 E. Airport Drive Tuscon AZ US 85706 TUS L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 810 Malcolm Rd. Burlingame CA US 94010 SF0 O
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 370 Adrian Rd. Millbrae CA US 94010 SF0 L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 1634 Rollins Road (1/2 of building leased to tennant) Burlingame CA US 94010 SF0 L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 50 Adrian Court Burlingame CA US 94010 SF0 L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 868 Cowan Road Burlingame CA US 94010 SF0 L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 10741 Sherman Way, Unit 8 (Remote Facility - SNA 381) Sun Valley CA US 91352 BUR L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 2990-B Airway Ave. Costa Mesa CA US 92626 SNA L
- ----------------------------------------------------------------------------------------------------------------------------------
380 3250 East 29th Street Long Beach CA US 90806 LGB L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 7000 World Way West Los Angeles CA US 90045 LAX L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 6901 W. Imperial Highway Los Angeles CA US 90045 LAX L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Building M-111, Neil Armstrong Way Oakland CA US 94603 OAK L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 1902 East Avion Street Ontario CA US 91761 ONT L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 1251 Montalvo Way, Ste. B. Palm Springs CA US 92262 PSP L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 6671 Lindbergh Drive Sacramento CA US 95837 SMF L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 2415 Winship Lane San Diego CA US 92101 SAN L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 1355 Airport Blvd. San Jose CA US 95112 SJC L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 26210 E 100th Ave Denver CO US 80249 DEN L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 3 Shoephoester Rd. Windsor Locks CT US 06096 BDL L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Washington National Airport, South Area Washington DC US 20001 DCA L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 12420 Fuel Farm Rd. Fort Myers FL US 33913 FTM L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 210 S.W. 41st Court (Closed - Warehouse) Ft. Lauderdale FL US 33145 FLL L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 3260 S.W. 11th Street (Closed - Warehouse) Ft. Lauderdale FL US 33145 FLL L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 220 S.W. 34 Street Ft. Lauderdale FL US 33315 FLL L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 3500 N.W. 24th Street Miami FL US 33142 MIA O
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 3755 N.W. 2lst Miami FL US 33142 MIA L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 4104 N.W. 25 street Miami FL US 33142 MIA L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 3630 N.W. 25th Street Miami FL US 33142 MIA O
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Bldg. No. 3088, Miami Int'l Airport (sub Let to United) Miami FL US 33142 MIA L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 2800 Collingswood Dr (Leased to A & C Bakery) (Southland) Orlando FL US 32827 MCO O
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 8680 Bear Road Orlando FL US 32827 MCO L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 5401 West Spruce St. Tampa FL US 33607 TPA L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Bldg. S1169, Duncan Ave. West Palm Beach FL US 33406 PBI L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 1102 S. Central Ave. East Point GA US 30344 ATL L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 110 Pohekulana Place Honolulu HI US 96819 HNL L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 3129 Lualena (Closed - Warehouse) Honolulu HI US 96819 HNL L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 2635 Wai Wai Loop (Closed - Warehouse - Leased) Honolulu HI US 96819 HNL L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 3239 Koapaka Street (Closed - Warehouse) (leased to 4 tennants) Honolulu HI US 96819 HNL L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs O'Hare International Airport Chicago IL US 60666 ORD L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 200 Crofton Road Kenner LA US 70062 MSY L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 30 Wellington Road Boston MA US 02128 BOS L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 357 Griffin Way Warehouse, Chelsea Boston MA US 02150 BOS L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs #1 Wood Island Park, Logan Int Airport (Closed - Warehouse) Boston MA US 02150 BOS L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 5 Wood Island Park Boston MA US 02128 BOS L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 776 Elkridge Landing Road Baltimore MD US 21240 BWI L
- ----------------------------------------------------------------------------------------------------------------------------------
060 Bldg. 113, Elk Road (Warehouse) Baltimore MD US 21240 BWI L
- ----------------------------------------------------------------------------------------------------------------------------------
Caterair 6550 Rock Spring Drive Bethesda MD US 20854 L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Bldg. No.534, Detroit Metro Airport Detroit MI US 48242 DTW L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Bldg. No. 505, Detroit Metro Airport Detroit MI US 48242 DTW L
- ----------------------------------------------------------------------------------------------------------------------------------
397 221 West 79th Street (storage) Bloomington MN US 55420 MSP L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 3100 East 73rd Street Minneapolis MN US 55450 MSP L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 566 Brasilia Avenue Kansas City MO US 64153 MCI L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Terminal C RDU Airport Raleigh NC US 80307 RDU L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 2700-W Terminal Blvd Raleigh NC US 80307 RDU L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 5303 Lockheed Court Omaha NE US 68110 OMA L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 2101 George Road, SE Alburquerque NM US 87110 ALB L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Building 95, Brewster Rd South Newark NJ US 71141 EWR L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 625 Kitty Hawk Way Las Vegas NV US 89119 LAS L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 1085 Bible Way Reno NV US 89502 RNO O
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Hanger #5, LaGuardia Airport Flushing NY US 11371 LGA
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 24-20 49th Street (Vacant - Warehouse) Astoria NY US 11103 LGA O
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 45-10 19th Avenue Astoria NY US 11105 LGA O
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Building 122, JFK International Airport Jamaica NY US 11430 JFK L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Building 143, JFK International Airport (LSG Kitchen) Jamaica NY US 11430 JFK L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs AA Terminal Concessions, JFK International Aiport Jamaica NY US 11430 JFK L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 15606 Rockaway Blvd (Warehouse for Surplus Equipment) Jamaica NY US 11430 JFK L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 182-20 50th Road - (Warehouse) Jamaica NY US 11430 JFK L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Building 139, West Hangar R Jamaica NY US 11430 JFK L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 147-35 Farmers Blvd. Jamaica NY US 11434 JFK L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 1200 Brooks Ave. Rochester NY US 14624 ROC L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 18 Govenor Drive, Stewart Int'l Airport Newburgh NY US 12550 SWF L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 300 Gateway Rd North Syracuse NY USA 13212 SYR L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs South Jackson Road Cleveland OH US 44135 CLE L
- ----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 4400 SW 36th Street Oklahoma City OK US 73119 OKC L
==================================================================================================================================
</TABLE>
9/9/97 Page 1
<PAGE> 151
<TABLE>
<CAPTION>
================================================================================================================================
Owned/
Shop # Address City State Country Zip Airport Leased
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Sky Chefs Cargo Building/Cargo Road Tulsa OK US 74115 TUL L
- --------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 7201 N E Alderwood Portland OR US 97218 PDX L
- --------------------------------------------------------------------------------------------------------------------------------
628 9009 N.E. Airport Way Portland OR US 90045 PDX L
- --------------------------------------------------------------------------------------------------------------------------------
300 Cherrington Corp. Ctr (office space only) Coraopolis PA US 15108 CST L
- --------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 8401 Escort Street Philadelphia PA US 19153 PHL O
- --------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 2720 Midland Park Road Charleston SC US 29418 CHS O
- --------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 524 E Lamar Blvd Arlington TX US 76011 L
- --------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 3851 Airport Blvd, Suites 108-109 Austin TX US 78722 AUS L
- --------------------------------------------------------------------------------------------------------------------------------
317 9101 Wall Street, Bldg. C, Ste 420 Austin TX US 78754 AUS L
- --------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 2120 W 33rd Dallas/Ft Worth TX US 75261 DFW L
- --------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 1535 W 20th St (Closed - Warehouse) Dallas/Ft Worth TX US 75261 DFW L
- --------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 3000 South 22nd Street Dallas/Ft Worth TX US 75261 DFW L
- --------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 2200 West 33rd St. (Closed - Warehouse) Dallas/Ft Worth TX US 75261 DFW L
- --------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 6501 Convair Rd El Paso TX US 79925 ELP L
- --------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 18950 Colonel Fischer Drive Houston TX US 77205 HOU L
- --------------------------------------------------------------------------------------------------------------------------------
CST 4825 W. Royal Lane (office) Irving TX US
- --------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 815 Hanger Lane Nashville TN US 37217 BNA L
- --------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 550 North Cargo Rd. Salt Lake City UT US 34122 SLC L
- --------------------------------------------------------------------------------------------------------------------------------
Sky Chefs East Service Rd., Dulles International Airport Chantilly VA US 22021 IAD L
- --------------------------------------------------------------------------------------------------------------------------------
624 P.O. Box 86 Kingshill (idle) St. Croix VI US 851 STX L
- --------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 18850 28th Ave. South Seattle WA US 98188 SEA O
- --------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 2358 South 154 St. Seattle WA US 98199 SEA L
- --------------------------------------------------------------------------------------------------------------------------------
Sky Chefs 5220 S 3rd Street Milwaukee WI US 53207 MKE L
================================================================================================================================
</TABLE>
9/9/97 Page 2
<PAGE> 152
<TABLE>
<CAPTION>
====================================================================================================================================
Owned/
Shop # Address City State Country Zip Airport Leased
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sky Chefs Marriott Argentina Airline Catering,
Teniente General Morillas S/N Y,
Autopista Av. Gval. Ricchieri,
Aeropuerto Ezeiza P. 1804 Buenos Aires BUE Argentina BUE
- ------------------------------------------------------------------------------------------------------------------------------------
Caterair Caterair Airport Services,
GPO Box 1036 (Quantas Drive), Eagle Farm Brisbane QLD Australia 4009 BNE
- ------------------------------------------------------------------------------------------------------------------------------------
Caterair Caterair Airport Services, GPO Box 576 Cairnes QLD Australia 4870 CNS
- ------------------------------------------------------------------------------------------------------------------------------------
Caterair Caterair Airport Services, Hangar 1,
Vickers Avenue, Sydney Int'l Airport Sydney NSW Australia 2020 SYD
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Services de Bordo e Hotelaria, S.A.,
Aeroporto Internatacional do Galeao,
Caixa postal 32858, CEP 2193 Rio De Janeiro Brazil RIO
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Brasil, S.A., Orlando,
Bergamo No. 100, Guarulnos Sao Paulo Brazil GRU
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Chile, S.A., Casilla 14469,
Aeropuerto Internacional, Arturo Merino Benitez Santiago Chile SCL
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Aeromar Ltd., Sherometeyvo Airport No. 1, K-340 Moscow CIS
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair France, 14-16, Rue de la Pomme Bleue,
B.P. 20316, 95713 Roissy-Aeroport
Charles de Gaulle Paris France CDG
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair In-Flite Services de Mexico,
S.A. de C.V., KM. 19 Caretera,
Boulevard De Las Naciones KM195 Acapulco Mexico 39490 ACA O
- ------------------------------------------------------------------------------------------------------------------------------------
Marraca Caterair In-Flite Services de Mexico,
S.A. de C.V., KM. 19 Caretera,
Boulevard De Las Naciones KM195 Acapulco Mexico 39490 ACA O
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Calidad en Alimentos S.A. de C.V.,
Aeropuerto Internacional Midguel Hidalgo,
Zona de Hangares, Puerto No. 3 Guadalajara Mexico 45659 GDL L
- ------------------------------------------------------------------------------------------------------------------------------------
339.04 Comisariato Mazatlan, Aeropuerto
Internacional Miguel Midalgo Guadalajara Mexico 45659 GDL
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Comisariato Mazatlan, S.A. de C.V.,
Aeropuerto Internacional Rafael Buelna Mazatlan Mexico 82080 MZT L
- ------------------------------------------------------------------------------------------------------------------------------------
338.01 Caterair In-Flite Services de Mexico,
Aviacion Militar 30, Colonia Federal Mexico City Mexco 15700 O
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Casa ponce de Leon, S.A. de C.V.,
Posicion No. 67, Aeropuerto Internacional Mexico City Mexico 15620 L
- ------------------------------------------------------------------------------------------------------------------------------------
339.01 Cocina del Aire, S.A. de C.V.,
Aeropuerto Internacional Interior Mexico City Mexico 15620 L
- ------------------------------------------------------------------------------------------------------------------------------------
338.91 Hidalgo #132, Col. Penon De Los Banos C.P. 15520 Mexico City Mexico 15520
- ------------------------------------------------------------------------------------------------------------------------------------
341 Hidalgo #132, Col. Penon De Los Banos C.P. 15520 Mexico City Mexico 15520
- ------------------------------------------------------------------------------------------------------------------------------------
va Galicia Hidalgo #132, Col. Penon De Los Banos C.P. 15520 Mexico City Mexico 15520 O
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Comisariato Monterrey, S.A. de C.V.,
Aeropuerto Internacional Gral.
Mariano Escobedo, Apodaco, N.L. 66600 Monterrey Mexico 66600 MTY L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Comisariato Mazatlan, S.A. de C.V.,
Aeropuerto Civil Gustavo Diaz Ordaz,
Apartade Postal 16-A Puerto Vallarta Mexico 48300 PVR L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Comisariato de Baja California
S.A. de C.V., Calle Uno Norte No. 114 Tijuana Mexico 22500 TIJ O
- ------------------------------------------------------------------------------------------------------------------------------------
Auckland New Zealand L
- ------------------------------------------------------------------------------------------------------------------------------------
Wellington New Zealand L
- ------------------------------------------------------------------------------------------------------------------------------------
Christchurch New Zealand L
- ------------------------------------------------------------------------------------------------------------------------------------
Rarotonga New Zealand L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Internacional de Panama,
P.O. Box 7026, Zona 5 Tocumen Panama PTY L
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Portugal, Assistencia A Bordo,
Rua de Guine, Nr. 9, Prior Velho, 2685 Sacavem Lisbon Portugal LIS
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Barcelona, Aeropuerto de Barcelona,
Post Office Box 10.510, Prat de Liobregat Barcelona Spain BCN
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Barcelona, Aeropuerto Vilova D'Onar,
Costa Brava Gerona Spain 17185 GRO
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Madrid, c/o Tresparderne, No. 25,
Barrio Aeropureto Barajas Madrid Spain 28042 MAD
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Madrid, Frente Aeropuerto de Malaga Malaga Spain 29004 AGP
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Barcelona, Apartodo 390,
Aeropuerto de Mahon Mahon Spain MAH
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Barcelona, Aeropuerto Son San Juan Palma de Mallorca Spain PMI
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair U.K., Manor Royal Trading Estates,
Faraday, Road, Crawley, Sussex Gatwick U.K. 10-2PX LGW
- ------------------------------------------------------------------------------------------------------------------------------------
323 Gatwick Bond Gatwick U.K. LGW
- ------------------------------------------------------------------------------------------------------------------------------------
324.01 Administrative Office Horley U.K. Admin.
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair/GCC In-Flite Services,
Faggs Road, Feltham, Middlesex London U.K. 13ONQ LHR
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair U.K., Pinfold Lane Ringway,
Altrincham Cheshire Manchester U.K. 158XA MAN
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Caterair Internacional Venezuela,
Aparado postal N.165, Distrito Federal Caracas Venezuela CCS
- ------------------------------------------------------------------------------------------------------------------------------------
304.01 Maricabo Venezuela
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 153
SCHEDULE IV
SUBSIDIARIES
As required by Section 5.15 of the Caterair Term Loan Agreement, this
schedule details each subsidiary of which SCIS or CIC owns or holds, directly or
indirectly, more than 50% of the ordinary voting power or more than a 50% equity
interest.
Subsidiaries of SC International Services. Inc. ("SCIS"):
<TABLE>
<CAPTION>
Class of % of Direct
Name Stock Ownership Owner
---- ----- --------- -----
<S> <C> <C> <C>
Caterair International, Inc. (II) Common 100% SCIS
Sky Chefs, Inc. Common 100% SCIS
Sky Chefs International Corp. Common 100% Sky Chefs, Inc.
LSG-Sky Chefs do Brasil Catering--Refeicoes Quotas 100% Sky Chefs Int'l
Ltda.
ServCater Internacional Ltda. Quotas 80% Sky Chefs do
Brasil
Arlington Services, Inc. Common 100% Sky Chefs, Inc.
Arlington Services Holding Corporation Common 100% Sky Chefs, Inc.
("ASH")
Bethesda Services, Inc. Common 100% Caterair
International,
Inc. (II)
Caterair New Zealand Ltd. ("CNZ") Common 100% Bethesda
Services, Inc.
Onex Ohio Acceptance Corporation Common 100% SCIS
Onex Ohio Credit Corp. Common 100% SCIS
Onex Ohio Equity Corp. Common 100% SCIS
Onex Ohio Finance Corp. Common 100% SCIS
Onex Ohio Finance Corp. II Common 100% SCIS
Onex Ohio Capital Corp. Common 100% SCIS
Onex Ohio Fiscal Corp. Common 100% SCIS
</TABLE>
<PAGE> 154
<TABLE>
<CAPTION>
Class of % of Direct
Name Stock Ownership Owner
---- ----- --------- -----
<S> <C> <C> <C>
Onex Ohio Funds Corp. Common 100% SCIS
Onex Ohio Credit Corp. II Common 100% SCIS
Onex Ohio Funds Corp. II Common 100% SCIS
Onex Ohio Fiscal Corp. II Common 100% SCIS
Onex Ohio Equity Corp. II Common 100% SCIS
Onex Ohio Capital Corp. II Common 100% SCIS
Caterair International Transition Corporation Common 100% SCIS
SC International Services of Barbados Ltd. Common 100% SCIS
Caterair Consulting Services Corporation Common 100% ASH
JFK Caterers, Inc. Common 100% ASH
Sky Chefs Argentine, Inc. Common 100% ASH
Caterair St. Thomas Holdings Corporation Common 100% ASH
Cater Suprimento de Refeicoes, Ltd.
("CSRL") Quotas 100% ASH
Caterair Servicos de Bordo e Hotelaria S/A Ordinary 100% CSRL
Sky Chefs Canada, Limited Ordinary 100% ASH
SC International Services Ireland Ordinary 100% ASH
Shares
Caterair Airport Properties, Inc. ("CAP") Common 100% CNZ
Caterair Australia Pry. Ltd. ("Aust") Ordinary; 100% CAP
Preferred
Caterair Airport Services Pry. Ltd. ("Pty") Classes 51%JV Aust
A&B
Caterair Airport Services (Sydney) Pty. Ltd. Ordinary 51% Pty
Waruda Holdings Pty., Ltd. ("Waruda") Common 51% Pty
Cairns Wholesale Bakery Pty., Ltd. Common 51% Waruda
Western Aire Chef, Inc. Common 100% ASH
</TABLE>
-2-
<PAGE> 155
<TABLE>
<CAPTION>
Class of % of Direct
Name Stock Ownership Owner
---- ----- --------- -----
<S> <C> <C> <C>
Sky Chefs Chile, S.A. ("Chile") ---- 100% Western Aire
Caterair Servicos Industriales, Ltda. ---- 94% Chile
Comercialindora de Servicios, Ltda. ---- 91% Chile
LSG Lufthansa Service Sky Chefs France, ---- 100% ASH
S.A.
Marriott In-Flite Services of Korea, Ltd. ---- 100% ASH
Arlington Services de Panama S.A. ("ASP") 100% ASH
Inversiones Turisticas Aeropuerto Panama, Norninal 100% ASP
S.A. ("ITAP") Common
Sky Chefs de Panama S.A. --- 100% ITAP
Caterair Portugal - Assistencia a Bordo ---- 26% CAP (26%)
Limitada
Caterair Barcelona, S.A. Registered 100% ASH (80%)
Shares Caterair Madrid
(20%)
Caterair Madrid, S.A. Registered 100% ASH
Shares
Caterair Taiwan Inflight Services, Inc. ---- 100% Caterair New
Zealand, Ltd.
Sky Chefs-UK, Ltd. Ordinary 100% ASH
Shares
LSG Sky Chefs Venezuela C.A. ---- 100% ASH
Arlington Services Mexico, S.A. de C.V. Class A&B 100% ASH
("Mexico") Registered
Shares
Caterair de Mexico, S.A. de C.V. Series B 100% Mexico
Casa Ponce de Leon, S.A. de C.V. Fixed; 100% Mexico
Variable
Comisariato Gotre, S.A. 2 Series 100% Mexico
Bearer
Shares
</TABLE>
-3-
<PAGE> 156
<TABLE>
<S> <C> <C> <C>
Cocina del Aire Provincia, S.A. de C.V. Registered 100% Mexico
Shares
Immobiliaria Marracas, S.A. de C.V. Nominal 100% Mexico
Shares,
2 classes
Sky Chefs de Mexico, S.A. de C.V. ----- 100% Mexico
</TABLE>
Subsidiaries of Caterair International Corporation ("CIC"):
<TABLE>
<CAPTION>
Class of % Holdings' Direct
Name Stock Ownership Owner
---- ----- --------- -----
<S> <C> <C> <C>
Caterair Portugal - Assistencia A Bordo --- 74% CIC
Limitada
</TABLE>
-4-
<PAGE> 157
SCHEDULE V
EXISTING INDEBTEDNESS
OF SCIS, CIC
AND THEIR
RESPECTIVE SUBSDIARIES
As required by Section 5.22(a) of the Term Loan Agreement, this schedule
details, by entity, all the obligations for borrowed money, all obligations
evidenced by bonds, debentures, notes, etc., all deferred purchase price
obligations other than trade accounts payable, all capitalized leases, all
letters of credit and banker's acceptances, all third party debt secured by a
lien, all guarantees and all interest rate protection agreements or other
hedging agreements, exclusive of the loans under the SCIS Credit Agreement and
this Agreement, the letters of credit listed on Schedule III to the SCIS Credit
Agreement, the Senior Subordinated Notes, the Caterair Holdings Unsecured
Debentures, the Caterair Holdings Secured Note, and the SCIS/Caterair Loan, as
of the Closing Date:
<TABLE>
<CAPTION>
Borrowing Principal
Entity Lender/Lessor Amount Guarantor
------ ------------- ------ ---------
<S> <C> <C> <C>
Sky Chefs, Inc. SC International Services, Inc. $99,326,452 None
Sky Chefs, Inc. (ORD) American Airlines $ 4,432,245 None
Sky Chefs, Inc. (DFW) American Airlines $13,500,000 None
Sky Chefs, Inc. (BNA) American Airlines $ 5,053,341 None
Sky Chefs, Inc. (RDU) American Airlines $ 3,404,690 None
Sky Chefs, Inc. (TUL) American Airlines $ 479,938 None
Sky Chefs, Inc. (TUS) Tucson Airport Authority $ 279,015 None
Caterair International, SC International Services, Inc. $27,612,618 None
Inc. (II)
Bethesda Services, Inc. ---None---
Caterair New Zealand Limited SC Int'l Services Ireland $2,651,600 None
Cateringpor Sky Chefs, Inc. $2,669,490 None
Arlington Services, Inc. Sky Chefs, Inc. $32,439,960 None
</TABLE>
<PAGE> 158
<TABLE>
<CAPTION>
Borrowing Principal
Entity Lender/Lessor Amount Guarantor
------ ------------- ------ ---------
<S> <C> <C> <C>
Arlington Services Holding Arlington Services, Inc. $25,116,726 None
Corporation
LSG-Sky Chefs do Brasil Sky Chefs, Inc. $7,726,151 None
Catering-Refeicoes Ltda. Arlington Services Holding Corp. $2,000,000 None
Boavista Bank $1,000,000 None
Garantida Bank $3,731,366 None
ServCater Internacional Ltda. Sky Chefs, Inc. $3,731,366 None
Onex Ohio Acceptance SC International Services, Inc. $303,338 None
Corporation
Onex Ohio Credit Corp. SC International Services, Inc. $4,034,553 None
Onex Ohio Equity Corp. SC International Services, Inc. $213,812 None
Onex Ohio Finance Corp. SC International Services, Inc. $106,149 None
Onex Ohio Finance Corp. II SC International Services, Inc. $43,256 None
Onex Ohio Capital Corp. SC International Services, Inc. $94,613 None
Onex Ohio Fiscal Corp. SC International Services, Inc. $102,425 None
Onex Ohio Funds Corp. SC International Services, Inc. $108,656 None
Onex Ohio Credit Corp. II SC International Services, Inc. $47,521 None
Onex Ohio Funds Corp. II SC International Services, Inc. $33,876 None
Onex Ohio Fiscal Corp. II SC International Services, Inc. $45,938 None
Onex Ohio Equity Corp. II SC International Services, Inc. $46,448 None
Onex Ohio Capital Corp. II SC International Services, Inc. $34,474 None
Caterair International City of Houston $2,025,000 None
Corporation
</TABLE>
-2-
<PAGE> 159
<TABLE>
<CAPTION>
Borrowing Principal
Entity Lender/Lessor Amount Guarantor
------ ------------- ------ ---------
<S> <C> <C> <C>
Caterair International SC International Services, Inc. $40,811,040 None
Corporation
Caterair Consulting Services --None--
Corporation
JFK Caterers, Inc. --None--
Caterair St. Thomas Holdings --None---
Corporation
Western Aire Chef, Inc. --None--
Caterair Airport Properties, Inc. --None---
Sky Chefs Argentine, Inc. SC Int'l Services Ireland $14,088,729 None
Arlington Services Holding $ 800,000 None
Caterair International Transition
Corporation --None---
Cater Suprimento de Refeicoes, LSG Sky Chefs doBrasil $ 149,286 None
Ltda. LSG/Sky Chefs Chile $ 2,000,000 None
Cocina del Aire $ 300,000 None
SC Int'l Services Ireland $ 2,152,967 None
Servcater $ 39,766 None
LSG/Sky Chefs Chile, S.A. Banco Credito Inversiones $ 1,318,684 None
Banco Boston $ 4,878 None
Caterair Madrid, S.A. La Caixa $ 57,964 None
Caterair Barcelona, S.A. $ 945,918 None
LSG Sky Chefs France $ 10,869 None
Caterair Taiwan Dah An Comm $ 1,742,160 None
In-Flite Services, Inc. Caterair International, Inc. (II) $ 1,209,056 None
LSG/Sky Chefs SC Int'l Services Ireland $ 650,000 None
Venezuela C.A.
</TABLE>
-3-
<PAGE> 160
<TABLE>
<CAPTION>
Borrowing Principal
Entity Lender/Lessor Amount Guarantor
------ ------------- ------ ---------
<S> <C> <C> <C>
Caterair Airport Westpac $3,109,564 None
Services (Sydney)
LSG/Sky Chefs France, S.A. Selectbank $1,360,429 None
B.N.P. $850,268 None
Banque De Picardie $154,281 None
Cocina del Aire $350,000 None
Sky Chefs-UK, Ltd. $9,238 None
Caterair Australia Pty. Ltd. Caterair Airport $1,099,785 None
Properties, Inc.
Caterair Airport Services Caterair Airport Services $5,534,625 None
Pty. Ltd. Westpac $1,489,197 None
Westpac $1,325,895 None
Sky Chefs-U.K., Ltd. Midland Bank $2,204,591 None
Forward Trust Co. $32,599
SC Int'l Services Ireland $10,058,822 None
LSG/Sky Chefs Chile $1,500,000 None
Caterair Barcelona, S.A. SC Int'l Services Ireland $1,012,193 None
Caterair Portugal - Caterair Madrid $4,332 None
Assistancia A Bordo, Ltda. Caterair Barcelona $19,442 None
Sky Chefs-U.K., Ltd. $405,434 None
LSG-Sky Chefs do Brasil $2,742 None
Sky Chefs Canada, Limited $25,083 None
SC Int'l Services $1,886,525 None
Sky Chefs de Panama Riande Continental Airport $60,000 None
Arlington Services Panama, SC Int'l Services Ireland $3,000,000 None
S.A.
Sky Chefs Canada Ltd. SC Int'l Services, Inc. $13,558,780 None
Sky Chefs de Mexico Immobilaria Marracas $48,288 None
Arlington Services Mexico $45,080 None
Casa Ponce de Leon Sky Chefs de Mexico $262,344 None
</TABLE>
-4-
<PAGE> 161
<TABLE>
<CAPTION>
Borrowing Principal
Entity Lender/Lessor Amount Guarantor
------ ------------- ------ ---------
<S> <C> <C> <C>
Comisariatos Gotre Sky Chefs de Mexico $6,058 None
Arlington Services Mexico Casa Ponce de Leon $35,890 None
</TABLE>
all existing Interest Swap Obligations in connection with an Interest Rate
Protection Agreement between SCIS and Morgan Guaranty Trust Company of New York
or an affiliate of Morgan Guaranty Trust Company of New York;
and all Capitalized Lease Obligations and purchase money Indebtedness in
existence on the Closing Date. The aggregate amount of such purchase money
Indebtedness and Capitalized Lease Obligations outstanding at June 30, 1997
approximated $31,800,000.
-5-
<PAGE> 162
SCHEDULE VI
EXISTING LIENS
This schedule sets forth the liens in existence on the Closing Date to be
included in the definition of Permitted Liens:
All liens placed on assets subject to Capitalized Lease Obligations
and to secure purchase money Indebtedness which are in existence on the
Closing Date. The aggregate amount of such purchase money Indebtedness and
Capitalized Lease Obligations outstanding at June 30, 1997 approximated
$31,800,000.
<PAGE> 163
EXHIBIT A
NOTICE OF BORROWING
[Date]
Morgan Guaranty Trust Company of New York,
as Administrative Agent for the Banks party
to the Term Loan Agreement
referred to below
c/o J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, Delaware 19713
Attention: Andrew Lipsett
Gentlemen:
The undersigned, [Caterair International Corporation] [SC
International Services, Inc.] (the "Borrower"), refers to the Term Loan
Agreement, dated as of August 28, 1997 (as amended from time to time, the "Term
Loan Agreement," the terms defined therein being used herein as therein
defined), among the Borrower, [SC International Services, Inc.] [Caterair
International Corporation], various Banks from time to time party thereto,
Bankers Trust Company and J.P. Morgan Securities Inc., as Co-Arrangers, Bankers
Trust Company, as Syndication Agent, and you, as Administrative Agent for such
Banks, and hereby gives you notice, irrevocably, pursuant to Section 1.02 of the
Term Loan Agreement, that the undersigned hereby requests the Borrowing of
[Caterair] [SCIS] Loans under the Term Loan Agreement, and in that connection
sets forth below the information relating to such Borrowing (the "Proposed
Borrowing") as required by Section 1.02 of the Term Loan Agreement:
(i) The Business Day of the Proposed Borrowing is _________,
19__.(1)
(ii) The aggregate principal amount of the Proposed Borrowing
is $___________.
(iii) The Loans to be made pursuant to the Proposed Borrowing
shall be maintained as Eurodollar Loans.
(iv) The initial Interest Period for the Proposed Borrowing is
___ month(s).
____________
(1) Shall be a Business Day at least three Business Days after the date
hereof.
<PAGE> 164
EXHIBIT A
Page 2
The Borrower hereby certifies that the following statements
are true and correct on the date hereof, and will be true and correct on the
date of the Proposed Borrowing:
(A) the representations and warranties contained in the Credit
Documents are and will be true and correct in all material respects,
both before and after giving effect to the Proposed Borrowing and to
the application of the proceeds thereof, as though made on such date
(it being understood and agreed that any representation or warranty
which by its terms is made as of a specified date shall be required to
be true and correct in all material respects only as of such specified
date); and
(B) no Default or Event of Default has occurred and is
continuing, or would result from such Proposed Borrowing or from the
application of the proceeds thereof.
Very truly yours,
[CATERAIR INTERNATIONAL CORPORATION]
[SC INTERNATIONAL SERVICES, INC.]
By________________________________
Name:
Title:
<PAGE> 165
EXHIBIT B-1
NOTE
$________________ New York, New York
__________ __, ____
FOR VALUE RECEIVED, SC INTERNATIONAL SERVICES, INC., a
Delaware corporation (the "Borrower"), hereby promises to pay to
_________________________ or its registered assigns (the "Bank"), in lawful
money of the United States of America in immediately available funds, at the
office of Morgan Guaranty Trust Company of New York (the "Administrative Agent")
located at 60 Wall Street, New York, New York 10260-0060 on the Final Maturity
Date (as defined in the Agreement referred to below) the principal sum of
_______________ DOLLARS ($_____________) or, if less, the then unpaid principal
amount of all SCIS Loans (as defined in the Agreement) made by the Bank pursuant
to the Agreement.
The Borrower promises also to pay interest on the unpaid
principal amount hereof in like money at said office from the date hereof until
paid at the rates and at the times provided in Section 1.06 of the Agreement.
This Note is one of the SCIS Notes referred to in the Term
Loan Agreement, dated as of August 28, 1997, among Caterair International
Corporation, the Borrower, the lenders from time to time party thereto
(including the Bank), Bankers Trust Company and J.P. Morgan Securities Inc., as
Co-Arrangers, Bankers Trust Company, as Syndication Agent, and Morgan Guaranty
Trust Company of New York, as Administrative Agent (as from time to time in
effect, the "Agreement"), and is entitled to the benefits thereof and of the
other Credit Documents (as defined in the Agreement). This Note is secured by
the Security Documents (as defined in the Agreement) and is entitled to the
benefits of the Guaranties (as defined in the Agreement). As provided in the
Agreement, this Note is subject to voluntary prepayment and mandatory repayment
prior to the Final Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement)
shall occur and be continuing, the principal of and accrued interest on this
Note may be declared to be due and payable in the manner and with the effect
provided in the Agreement.
<PAGE> 166
EXHIBIT B-1
Page 2
The Borrower hereby waives presentment, demand, protest or
notice of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
SC INTERNATIONAL SERVICES, INC.
By________________________________
Title:
<PAGE> 167
EXHIBIT B-2
NOTE
$________________ New York, New York
________ __, ____
FOR VALUE RECEIVED, CATERAIR INTERNATIONAL CORPORATION, a
Delaware corporation (the "Borrower"), hereby promises to pay to
_________________________ or its registered assigns (the "Bank"), in lawful
money of the United States of America in immediately available funds, at the
office of Morgan Guaranty Trust Company of New York (the "Administrative Agent")
located at 60 Wall Street, New York, New York 10260-0060 on the Final Maturity
Date (as defined in the Agreement referred to below) the principal sum of
_______________ DOLLARS ($_____________) or, if less, the then unpaid principal
amount of all Caterair Loans (as defined in the Agreement) made by the Bank
pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid
principal amount hereof in like money at said office from the date hereof until
paid at the rates and at the times provided in Section 1.06 of the Agreement.
This Note is one of the Caterair Notes referred to in the Term
Loan Agreement, dated as of August 28, 1997, among SC International Services,
Inc., the Borrower, the lenders from time to time party thereto (including the
Bank), Bankers Trust Company and J.P. Morgan Securities Inc., as Co-Arrangers,
Bankers Trust Company, as Syndication Agent, and Morgan Guaranty Trust Company
of New York, as Administrative Agent (as from time to time in effect, the
"Agreement"), and is entitled to the benefits thereof and of the other Credit
Documents (as defined in the Agreement). This Note is secured by the Security
Documents (as defined in the Agreement) and is entitled to the benefits of the
Guaranties (as defined in the Agreement). As provided in the Agreement, this
Note is subject to voluntary prepayment and mandatory repayment prior to the
Final Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement)
shall occur and be continuing, the principal of and accrued interest on this
Note may be declared to be due and payable in the manner and with the effect
provided in the Agreement.
<PAGE> 168
EXHIBIT B-2
Page 2
The Borrower hereby waives presentment, demand, protest or
notice of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
CATERAIR INTERNATIONAL CORPORATION
By________________________________
Title:
<PAGE> 169
EXHIBIT C
SECTION 3.04(b)(ii) CERTIFICATE
Reference is hereby made to the Term Loan Agreement, dated as
of August 28, 1997, among SC International Services, Inc., Caterair
International Corporation, various Banks, Bankers Trust Company and J.P. Morgan
Securities Inc., as Co-Arrangers, Bankers Trust Company, as Syndication Agent,
and Morgan Guaranty Trust Company of New York, as Administrative Agent (the
"Term Loan Agreement"). Pursuant to the provisions of Section 3.04(b)(ii) of the
Term Loan Agreement, the undersigned hereby certifies that it is not a "bank" as
such term is used in Section 881(c)(3)(A) of the Internal Revenue Code of 1986,
as amended.
[NAME OF BANK]
By________________________________
Title:
<PAGE> 170
EXHIBIT E
[NAME OF CREDIT PARTY]
Officers' Certificate
I, the undersigned, an authorized officer of [NAME OF CREDIT
PARTY], a corporation organized and existing under the laws of _________________
(the "Company"), do hereby certify that:
1. This Certificate is furnished pursuant to Sections 4.03 and
4.05 of the Term Loan Agreement, dated as of August 28, 1997, among SC
International Services, Inc., Caterair International Corporation, the lenders
from time to time party thereto, Bankers Trust Company and J.P. Morgan
Securities Inc., as Co-Arrangers, Bankers Trust Company, as Syndication Agent,
and Morgan Guaranty Trust Company of New York, as Administrative Agent (such
Term Loan Agreement, as in effect on the date of this Certificate, being herein
called the "Term Loan Agreement"). Unless otherwise defined herein, capitalized
terms used in this Certificate shall have the meanings set forth in the Term
Loan Agreement.
2. The following named individuals are elected officers of the
Company, each holds the offices of the Company set forth opposite each one's
name and each has held such office since __________, 19__.(1) The signature
adjacent to the name and title of each such officer is such officer's correct
signature.
Name(2) Title Signature
- --------------------------- ------------------ ----------------------
- --------------------------- ------------------ ----------------------
- --------------------------- ------------------ ----------------------
- --------
(1) Insert a date prior to the time of any corporate action relating to the Term
Loan Agreement or any other Credit Document.
(2) Include name, office and signature of each officer who will sign any Credit
Document, including the officer who will sign the certification at the end of
this Certificate.
<PAGE> 171
EXHIBIT E
Page 2
3. Attached hereto as Exhibit A is a certified copy of the
[Certificate of Incorporation or equivalent organizational document] of the
Company as filed in the Office of ___________________ on ___________, 19__,
together with all amendments thereto adopted through the date hereof.
4. Attached hereto as Exhibit B is a true and correct copy of
the [By-Laws or equivalent organizational document] of the Company which were
duly adopted, are in full force and effect on the date hereof, and have been in
effect since _____________, 19__.
5. Attached hereto as Exhibit C is a true and correct copy of
resolutions which were duly adopted on __________, 1997 by unanimous written
consent of the Board of Directors of the Company, and said resolutions have not
been rescinded, amended or modified. Except as attached hereto as Exhibit C, no
resolutions have been adopted by the Board of Directors of the Company which
deal with the execution, delivery or performance of any of the Documents to
which the Company is party.
[6. Attached hereto as Exhibits D and E are true and correct
copies of all 9-1/4% Senior Subordinated Note Documents and all Consent
Solicitation Documents.](3)
[7.][6.] On the date hereof, all of the conditions set forth
in Sections 4.02, 4.07, 4.12, 4.13, 4.17 and 4.19 of the Term Loan Agreement
have been satisfied.](4)
[6.][8.][7.] On the date hereof, the representations and warranties
made by the Company in the Credit Documents to which the Company is a party are
true and correct in all material respects, both before and after giving effect
to each Credit Event to occur on the date hereof and the application of the
proceeds thereof (it being understood and agreed that any representation or
warranty which by its terms is made as of a specified date shall be required to
be true and correct in all material respects only as of such specified date).
[7.][9.][8.] On the date hereof, no Default or Event of Default has
occurred and is continuing or would result from the Credit Events to occur on
the date hereof or from the application of the proceeds thereof.
- ---------------
(3) Insert in Certificate for SCIS only.
(4) Insert in Certificate for SCIS and Caterair only.
<PAGE> 172
EXHIBIT E
Page 3
[8.][10.][9.] There is no proceeding for the dissolution or liquidation
of the Company or threatening its existence.
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day
of __________, 1997.
______________________________
Name:
Title:
<PAGE> 173
EXHIBIT E
Page 4
[NAME OF CREDIT PARTY]
I, the undersigned, [Secretary/Assistant Secretary/other Authorized Officer] of
the Company, do hereby certify that:
1. [Name of Person making above certifications] is the duly
elected and qualified [President/Vice President] of the Company and the
signature above is his genuine signature.
2. The certifications made by [name of Person making above
certifications] in Items 2, 3, 4, 5 and [8] [9] [10] above are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand this _____ day
of _________, 1997.
____________________________
Name:
Title:
<PAGE> 174
EXHIBIT F
OFFICER'S SOLVENCY CERTIFICATE
I, the undersigned, the _______________________ of Caterair
International Corporation, a corporation organized and existing under the laws
of the State of Delaware (the "Company"), do hereby certify on behalf of the
Borrower that:
1. This Certificate is furnished pursuant to Section 4.14 of
the Term Loan Agreement, dated as of August 28, 1997 (as amended from time to
time, the "Credit Agreement") among SC International Services, Inc. ("SCIS"),
the Company, various Banks from time to time party thereto, Bankers Trust
Company and J.P. Morgan Securities Inc., as Co-Arrangers, Bankers Trust Company,
as Syndication Agent, and Morgan Guaranty Trust Company of New York, as
Administrative Agent for such Banks. Unless otherwise defined herein,
capitalized terms used in this Certificate shall have the meanings set forth in
the Credit Agreement.
2. For purposes of this Certificate, the terms below shall
have the following definitions:
(a) "Fair Value"
The amount at which the assets, in their entirety, of the
Borrowers and their respective Subsidiaries (taken as a whole)
would change hands between a willing buyer and a willing
seller, within a commercially reasonable period of time, each
having reasonable knowledge of the relevant facts, with
neither being under any compulsion to act.
(b) "Present Fair Salable Value"
The amount that could be obtained by an independent willing
seller from an independent willing buyer if the assets of the
Borrowers and their respective Subsidiaries (taken as a whole)
are sold in an arm's-length transaction with reasonable
promptness under present conditions for the sale of comparable
business enterprises.
<PAGE> 175
EXHIBIT F
Page 2
(c) "New Financing"
The indebtedness incurred or to be incurred by the Borrowers
under the Credit Documents and all other financing
contemplated by the Credit Documents (including the SCIS
Credit Agreement and the 9 1/4% Senior Subordinated Notes)
(and any guaranties of the foregoing), in each case after
giving effect to the Transaction and the incurrence of all
financings contemplated therewith.
(d) "Stated Liabilities"
The recorded liabilities (including Contingent Liabilities
that would be recorded in accordance with generally accepted
accounting principles ("GAAP") consistently applied) of the
Borrowers and their respective Subsidiaries (taken as a whole)
at December 31, 1996, together with (i) the net change in
long-term debt (including current maturities) between December
31, 1996 and the date hereof and (ii) without duplication, the
amount of all New Financing.
(e) "Contingent Liabilities"
The maximum estimated amount of liability reasonably likely to
result from pending litigation, asserted claims and
assessments, guaranties, uninsured risks and other contingent
liabilities of the Borrowers and their respective Subsidiaries
(taken as a whole) (exclusive of such Contingent Liabilities
to the extent reflected in Stated Liabilities).
(f) "Will be able to pay its Stated Liabilities, including
Contingent Liabilities, as they mature."
For the period from the date hereof through the stated
maturity of all New Financing, the Borrowers and their
respective Subsidiaries (taken as a whole), will have
sufficient assets and cash flow to pay its Stated Liabilities
and Contingent Liabilities as those liabilities mature or
otherwise become due.
<PAGE> 176
EXHIBIT F
Page 3
(g) "Does not have Unreasonably Small Capital"
For the period from the date hereof through the stated
maturity of all New Financing, the Borrowers and their
respective Subsidiaries (taken as a whole), after consummation
of the Transaction and all Indebtedness being incurred or
assumed and Liens created in connection therewith, is a going
concern and has sufficient capital to ensure that it will
continue to be a going concern for such period and to remain a
going concern despite moderately negative deviations from the
Projections discussed below.
3. For purposes of this Certificate, I, or officers of the
Company under my direction and supervision, have performed the following
procedures as of and for the periods set forth below.
(a) I have reviewed the consolidated statements of financial
condition of the Borrowers at December 31, 1996 and June 30,
1997, and the related consolidated statements of income and
cash flow and changes in shareholders' equity of the Borrowers
for the fiscal year and six-month period ended on such date,
as the case may be.
(b) I have reviewed the unaudited pro forma consolidated financial
statements of the Borrowers for the period ending June 30,
1997 prepared in accordance with GAAP after giving effect to
the Transaction and the incurrence of the New Financing, and
verified the mathematical accuracy of the application of the
pro forma adjustments to the amounts in the audited
consolidated financial statements.
(c) I have made inquiries of certain other officials of the
Borrowers who have responsibility for financial and accounting
matters regarding:
1. whether the unaudited pro forma consolidated
financial statements referred to in paragraph (b)
above are in conformity with GAAP and applied on a
basis substantially consistent with that of the
unaudited financial statements as at June 30, 1997;
and
2. whether, at December 31, 1996, there were any
decreases as compared with June 30, 1997, in the
consolidated net assets or the excess of consolidated
current assets over consolidated current liabilities
of each Borrower.
<PAGE> 177
EXHIBIT F
Page 4
(d) I have read:
1. the Credit Documents, the SCIS Credit Documents, the
Senior Subordinated Note Documents and the respective
Schedules and Exhibits thereto.
(e) With respect to Contingent Liabilities, I:
1. inquired of certain officials of the Borrowers who
have responsibility for legal, financial and
accounting matters as to the existence and estimated
liability with respect to all Contingent Liabilities
known to them;
2. confirmed with senior officers of the Borrowers that,
to the best of such officers' knowledge, (i) all
appropriate items were included in Stated Liabilities
or Contingent Liabilities made known to me in the
course of my inquiry and that (ii) the amounts
relating thereto were the maximum estimated amount of
liability reasonably likely to result therefrom as of
the date hereof;
3. I hereby certify that, to the best of my knowledge,
all material Contingent Liabilities that may arise
from any pending litigation, asserted claims and
assessments, guarantees, uninsured risks and other
Contingent Liabilities of the Borrowers (exclusive of
such Contingent Liabilities to the extent reflected
in Stated Liabilities) have been considered in making
the certification set forth in paragraph 4 below, and
with respect to each such Contingent Liability the
estimable maximum estimated amount of liability with
respect thereto was used in making such
certification.
(f) I have had the Projections, which have been previously
delivered to the Banks, prepared under my direction and have
re-examined the Projections on the date hereof and considered
the effect thereon of any changes since the date of the
preparation thereof on the results projected therein.
(g) I have made inquiries of certain officers of the Borrowers
which have responsibility for financial reporting and
accounting matters regarding whether they were aware of any
events or conditions that, as of the date hereof, would cause
the Borrowers and their respective Subsidiaries (taken
<PAGE> 178
EXHIBIT F
Page 5
as a whole) after giving effect to the consummation of the
Transaction and the related financing transactions (including
the incurrence of the New Financing), to (i) have assets with
a Fair Value or Present Fair Salable Value that are less than
the sum of Stated Liabilities and Contingent Liabilities; (ii)
have Unreasonably Small Capital; or (iii) not be able to pay
its Stated Liabilities and Contingent Liabilities as they
mature or otherwise become due.
4. Based on and subject to the foregoing, I hereby certify on
behalf of the Company that, after giving effect to the Transaction and the
related financing transactions (including the New Financing), it is my informed
opinion that as of the date hereof (i) the Fair Value and Present Fair Salable
Value of the assets of the Borrowers and their respective Subsidiaries (taken as
a whole) exceed its Stated Liabilities and Contingent Liabilities; (ii) the
Borrowers and their respective Subsidiaries (taken as a whole) will not have
Unreasonably Small Capital; and (iii) the Borrowers and their respective
Subsidiaries (taken as a whole) will be able to pay its Stated Liabilities and
Contingent Liabilities as they mature or otherwise become due.
<PAGE> 179
EXHIBIT F
Page 6
IN WITNESS WHEREOF, the Company has caused its duly authorized
_______________________ to execute and deliver this Certificate this 28th day of
August, 1997.
CATERAIR INTERNATIONAL
CORPORATION
By______________________________
Name:
Title:
<PAGE> 180
EXHIBIT G-1
AMENDED AND RESTATED GENERAL PLEDGE AGREEMENT
AMENDED AND RESTATED PLEDGE AGREEMENT (as amended, modified or
supplemented from time to time, this "Agreement"), dated as of September 29,
1995 and amended and restated as of August 28, 1997, made by each of the
undersigned pledgors (each a "Pledgor" and, together with any other entity that
becomes a party hereto pursuant to Section 23 hereof, the "Pledgors"), in favor
of MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Collateral Agent (together with
any successor pledgee, the "Pledgee"), for the benefit of the Secured Creditors
(as defined below). Except as otherwise defined herein, capitalized terms used
herein and defined in the SCIS Credit Agreement (as defined below) or in the
Caterair Credit Agreement (as defined below), as the case may be, shall be used
herein as therein defined.
W I T N E S S E T H :
WHEREAS, Onex Food Services, Inc. ("OFSI"), SC International Services,
Inc. ("SCIS"), Caterair Holdings Corporation ("Caterair Holdings"), Caterair
International Corporation ("Caterair"), various lenders from time to time party
thereto (the "SCIS Banks"), Bankers Trust Company and J.P. Morgan Securities
Inc., as Co-Arrangers (the "SCIS Co-Arrangers"), Bankers Trust Company, as
Syndication Agent, The Bank of New York, as Co-Agent, and Morgan Guaranty Trust
Company of New York, as Administrative Agent (together with any successor
administrative agent, the "SCIS Administrative Agent"), have entered into a
Credit Agreement, dated as of September 29, 1995 and amended and restated as of
August 28, 1997, providing for the making of loans to SCIS and the issuance of,
and participation in, letters of credit for the account of SCIS as contemplated
therein (as used herein, the term "SCIS Credit Agreement" means the Credit
Agreement described above in this paragraph, as the same may be amended,
modified, extended, renewed, replaced, restated or supplemented from time to
time, and including any agreement extending the maturity of, or restructuring
all or any portion of the Indebtedness under such agreement or any successor
agreements) (the SCIS Banks, the SCIS Co-Arrangers and the SCIS Administrative
Agent are herein called the "SCIS Bank Creditors");
WHEREAS, SCIS, Caterair, various lenders from time to time party
thereto (the "Caterair Banks", and together with the SCIS Banks, the "Banks"),
Bankers Trust Company and J.P. Morgan Securities Inc., as Co-Arrangers (the
"Caterair Co-Arrangers", and together with the SCIS Co-Arrangers, the
"Co-Arrangers"), Bankers Trust Company, as Syndication Agent, and Morgan
Guaranty Trust Company of New York, as Administra-
<PAGE> 181
EXHIBIT G-1
Page 2
tive Agent (together with any successor administrative agent, the "Caterair
Administrative Agent", and together with the SCIS Administrative Agent, the
"Administrative Agents"), have entered into a Term Loan Agreement, dated as of
August 28, 1997, providing for the making of loans to SCIS and Caterair as
contemplated therein (as used herein, the term "Caterair Credit Agreement" means
the Term Loan Agreement described above in this paragraph, as the same may be
amended, modified, extended, renewed, replaced, restated or supplemented from
time to time, and including any agreement extending the maturity of, or
restructuring all or any portion of the Indebtedness under such agreement or any
successor agreements, and the Caterair Credit Agreement, together with the SCIS
Credit Agreement, are herein called the "Credit Agreements") (the Caterair
Banks, the Caterair Co-Arrangers and the Caterair Administrative Agent are
herein called the "Caterair Bank Creditors", and together with the SCIS Bank
Creditors, are herein called the "Bank Creditors");
WHEREAS, SCIS, Caterair and/or one or more of their respective
Subsidiaries may at any time and from time to time enter into one or more
Interest Rate Protection Agreements or Other Hedging Agreements with one or more
Banks or any affiliate thereof (each such Bank or affiliate, even if the
respective Bank subsequently ceases to be a Bank under the applicable Credit
Agreement for any reason, together with such Bank's or affiliate's successors
and assigns, if any, collectively, the "Other Creditors," and together with the
Bank Creditors and the Pledgee, the "Secured Creditors");
WHEREAS, pursuant to the Subsidiaries Guaranty, each Subsidiary
Guarantor (including Caterair) has jointly and severally guaranteed to the
Secured Creditors the payment when due of all Guaranteed Obligations as
described therein;
WHEREAS, the Pledgors entered into a General Pledge Agreement, dated as
of September 29, 1995 (as amended, modified or supplemented to the date hereof,
the "Original General Pledge Agreement");
WHEREAS, it is a condition precedent to the making of loans and the
issuance of letters of credit under the Credit Agreements that each Pledgor
shall have executed and delivered a counterpart to this Agreement; and
WHEREAS, each Pledgor will obtain benefits from the incurrence of loans
and the issuance of letters of credit under the Credit Agreements and the
entering into of Interest Rate Protection Agreements or Other Hedging Agreements
with the Other Creditors and, accordingly, each Pledgor desires to enter into
this Agreement in order to satisfy the conditions described in the preceding
paragraph and to amend and restate the Original General Pledge Agreement in its
entirety in the form of this Agreement;
<PAGE> 182
EXHIBIT G-1
Page 3
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to each Pledgor, the receipt and sufficiency of which are hereby
acknowledged, each Pledgor hereby makes the following representations and
warranties to the Pledgee for the benefit of the Secured Creditors and hereby
covenants and agrees with the Pledgee for the benefit of the Secured Creditors
as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by each Pledgor for
the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities and
indebtedness (including, without limitation, the principal of and interest
on the notes issued by, and loans made to, SCIS under the SCIS Credit
Agreement, all reimbursement obligations and unpaid drawings in respect of
letters of credit issued under the SCIS Credit Agreement, and all
indemnities, fees and interest thereon or owed there-under) of such Pledgor
to the SCIS Bank Creditors, whether now existing or hereafter incurred
under, arising out of, or in connection with the SCIS Credit Agreement and
the other SCIS Credit Documents (such term to mean the "Credit Documents"
as defined in the SCIS Credit Agreement) (including, without limitation, in
the case of each Subsidiary Guarantor (including Caterair), all of its
obligations, liabilities and indebtedness under the Subsidiaries Guaranty)
to which such Pledgor is a party and the due performance and compliance by
such Pledgor with all of the terms, conditions and agreements contained in
the SCIS Credit Agreement and such other SCIS Credit Documents, provided
that in the case of Caterair Holdings, the security interests created under
this Agreement in the Collateral (as defined below) owned by Caterair
Holdings shall also secure all such obligations, liabilities and
indebtedness of SCIS under the SCIS Credit Documents to which it is a party
(all such obligations, liabilities and indebtedness under this clause (i),
except to the extent consisting of obligations, liabilities or indebtedness
with respect to Interest Rate Protection Agreements or Other Hedging
Agreements, being herein collectively called the "SCIS Credit Document
Obligations");
(ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities and
indebtedness (including, without limitation, the principal of and interest
on the notes issued by, and loans made to, SCIS and Caterair under the
Caterair Credit Agreement, and all indemnities, fees and interest thereon
or owed thereunder) of such Pledgor to the Caterair Bank Creditors, whether
now existing or hereafter incurred under, arising out of, or in connection
with the Caterair Credit Agreement and the other Caterair
<PAGE> 183
EXHIBIT G-1
Page 4
Credit Documents (such term to mean the "Credit Documents" as defined in
the Caterair Credit Agreement, and the Caterair Credit Documents, together
with the SCIS Credit Documents, are referred to herein as the "Credit
Documents") (including, without limitation, in the case of SCIS, all of its
obligations, liabilities and indebtedness under the SCIS Guaranty and, in
the case of each Subsidiary Guarantor (including Caterair), all of its
obligations, liabilities and indebtedness under the Subsidiaries Guaranty)
to which such Pledgor is a party and the due performance and compliance by
such Pledgor with all of the terms, conditions and agreements contained in
the Caterair Credit Agreement and such other Caterair Credit Documents,
provided that in the case of Caterair Holdings, the security interests
created under this Agreement in the Collateral owned by Caterair Holdings
shall also secure all such obligations, liabilities and indebtedness of
SCIS and Caterair under the Caterair Credit Documents to which they are a
party (all such obligations, liabilities and indebtedness under this clause
(ii), except to the extent consisting of obligations, liabilities or
indebtedness with respect to Interest Rate Protection Agreements or Other
Hedging Agreements, being herein collectively called the "Caterair Credit
Document Obligations");
(iii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities
and indebtedness owing by such Pledgor to the Other Creditors under,
arising out of or with respect to, any Interest Rate Protection Agreement
or Other Hedging Agreement (including, without limitation, in the case of
each Pledgor, all of its obligations, liabilities and indebtedness under
the Guaranties to which it is a party in respect of such Interest Rate
Protection Agreements or Other Hedging Agreements, whether such Interest
Rate Protection Agreement or Other Hedging Agreement is now in existence or
hereafter arising, and the due performance and compliance by such Pledgor
with all of the terms, conditions and agreements contained therein,
provided that in the case of Caterair Holdings, the security interests
created under this Agreement in the Collateral owned by Caterair Holdings
shall also secure all such obligations, liabilities and indebtedness of
SCIS and Caterair under, or in respect of, such Interest Rate Protection
Agreement or Other Hedging Agreements (all such obligations, liabilities
and indebtedness described in this clause (iii) being herein collectively
called the "Other Obligations");
(iv) any and all sums advanced by the Pledgee in order to preserve the
Collateral or preserve its security interest in the Collateral;
(v) in the event of any proceeding for the collection or enforcement of
any indebtedness, obligations or liabilities of such Pledgor referred to in
clauses (i),
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(ii) and (iii) above, upon the occurrence and during the continuance of an
Event of Default (such term, as used in this Agreement, shall mean any
Event of Default under, and as defined in, either Credit Agreement, or any
payment default under any Interest Rate Protection Agreement or Other
Hedging Agreement, and shall, in any event, include without limitation, any
payment default (after the expiration of any applicable grace period) on
any of the Obligations (as hereinafter defined)) shall have occurred and be
continuing, the reasonable expenses of retaking, holding, preparing for
sale or lease, selling or otherwise disposing of or realizing on the
Collateral, or of any exercise by the Pledgee of its rights hereunder,
together with reasonable attorneys' fees and court costs; and
(vi) all amounts paid by any Secured Creditor as to which such Secured
Creditor has the right to reimbursement under Section 11 of this Agreement.
All such obligations, liabilities, indebtedness, sums and expenses set forth in
clauses (i) through (vi) of this Section 1 being herein collectively called the
"Obligations," it being acknowledged and agreed that the "Obligations" shall
include extensions of credit of the types described above, whether outstanding
on the date of this Agreement or extended from time to time after the date of
this Agreement.
2. DEFINITION OF STOCK, NOTES, SECURITIES, ETC. As used herein, (i) the
term "Stock" shall mean all of the issued and outstanding shares of capital
stock (including, but not limited to, warrants, options or other rights to
acquire shares thereof) at any time owned by any Pledgor of any corporation,
provided that the term "Stock" shall not include, except as otherwise provided
below, more than 65% of the total combined voting power of all classes of
capital stock of any Foreign Subsidiary owned by such Pledgor (other than in
respect of the capital stock of IFSC, 100% of whose shares of capital stock
shall be pledged hereunder); (ii) the term "Notes" shall mean all promissory
notes from time to time issued to, or held by, any Pledgor (including, but not
limited to, the SCIS/Caterair Note and all Intercompany Notes held by any
Pledgor, but excluding the Caterair Holdings Certificate of Deposit and all
promissory notes issued by employees or directors of any Pledgor); and (iii) the
term "Securities" shall mean all of the Stock and Notes. Each Pledgor represents
and warrants that, on the date hereof, (a) the Stock held by such Pledgor
consists of the number and type of shares of the stock of the corporations as
described in Annex A hereto, (b) such Stock constitutes that percentage of the
issued and outstanding shares of capital stock of the issuing corporation as is
set forth in Annex A hereto, (c) the Notes held by such Pledgor consist of the
promissory notes described in Annex B hereto, (d) such Pledgor is the holder of
record and sole beneficial owner of the Stock and the Notes and there exist no
options or preemption rights in respect of any of the Stock and (e) such Pledgor
owns no other Securities. Following a change in the relevant
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provisions of the Code or the regulations, published rules, published rulings,
notices or other official pronouncements issued or promulgated thereunder, if
the Pledgee requests a pledge of additional stock of any Foreign Subsidiary of a
Pledgor, all of the stock of which Foreign Subsidiary has not already been
pledged pursuant to this Agreement, then within 90 days after such request the
relevant Pledgor shall either (i) pledge such additional stock of such Foreign
Subsidiary or (ii) deliver to the Pledgee an opinion of the counsel of the
respective Pledgor, which counsel shall be reasonably acceptable to the Pledgee,
that the requested pledge of such additional stock is more likely than not to
cause the undistributed earnings of such Foreign Subsidiary to be treated as a
deemed dividend to such Foreign Subsidiary's United States parent for Federal
income tax purposes.
3. PLEDGE OF SECURITIES, ETC.
3.1. Pledge. To secure the Obligations of such Pledgor (and, in the
case of Caterair Holdings, to secure the Obligations of SCIS and Caterair), each
Pledgor hereby (i) grants to the Pledgee a security interest in all of the
Collateral owned by such Pledgor, (ii) pledges and deposits as security with the
Pledgee, the Securities owned by such Pledgor on the date hereof, and delivers
to the Pledgee certificates or instruments, if any, therefor, (x) duly endorsed
in blank by such Pledgor in the case of Notes, and (y) accompanied by undated
stock powers duly executed in blank by such Pledgor (and accompanied by any
transfer tax stamps required in connection with the pledge of such Securities)
in the case of Stock, or such other instruments of transfer as are reasonably
acceptable to the Pledgee and (iii) assigns, transfers, hypothecates mortgages,
charges and sets over to the Pledgee all of such Pledgor's right, title and
interest in and to such Securities (and in and to the certificates or
instruments evidencing such Securities), to be held by the Pledgee upon the
terms and conditions set forth in this Agreement.
3.2. Subsequently Acquired Securities. If any Pledgor shall acquire (by
purchase, stock dividend or otherwise) any additional Securities at any time or
from time to time after the date hereof, such Pledgor will promptly thereafter
pledge and deposit such Securities (or certificates or instruments representing
such Securities) as security with the Pledgee and deliver to the Pledgee
certificates therefor or instruments thereof, duly endorsed in blank in the case
of such Notes, accompanied by undated stock powers duly executed in blank by
such Pledgor (and accompanied by any transfer tax stamps required in connection
with the pledge of such Securities) in the case of such Stock, or such other
instruments of transfer as are reasonably acceptable to the Pledgee, and
accompanied by a certificate executed by a principal executive officer of such
Pledgor in the form attached as Annex C hereto describing such Securities and
certifying that the same has been duly pledged with the Pledgee hereunder.
Except as otherwise provided in the last sentence of Section 2 hereof, no
Pledgor shall be required at any time to pledge hereunder any Stock
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which is more than 65% of the total combined voting power of all classes of
capital stock of any Foreign Subsidiary owned by such Pledgor.
3.3. Uncertificated Securities. Notwithstanding anything to the
contrary contained in Sections 3.1 and 3.2 hereof, if any Securities (whether
now owned or hereafter acquired) are uncertificated securities, the relevant
Pledgor shall promptly notify the Pledgee thereof, and shall promptly take all
actions required to perfect the security interest of the Pledgee under
applicable law (including, in any event, under Sections 8-313 and 8- 321 of the
New York Uniform Commercial Code, if applicable). Each Pledgor further agrees to
take such actions as the Pledgee deems reasonably necessary or desirable to
effect the foregoing and to permit the Pledgee to exercise any of its rights and
remedies hereunder, and agrees to provide an opinion of counsel reasonably
satisfactory to the Pledgee with respect to any such pledge of uncertificated
Securities promptly upon the reasonable request of the Pledgee.
3.4. Definitions of Pledged Stock; Pledged Notes; Pledged Securities
and Collateral. All Stock at any time pledged or required to be pledged
hereunder is hereinafter called the "Pledged Stock"; all Notes at any time
pledged or required to be pledged hereunder are hereinafter called the "Pledged
Notes"; all Pledged Stock and Pledged Notes together are called the "Pledged
Securities"; and the Pledged Securities, together with all proceeds thereof,
including any securities and moneys received and at the time held by the Pledgee
hereunder, are herein called the "Collateral."
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall have
the right to appoint one or more sub-agents for the purpose of retaining
physical possession of the Pledged Securities, which may be held (in the
discretion of the Pledgee) in the name of the relevant Pledgor, endorsed or
assigned in blank or in favor of the Pledgee or any nominee or nominees of the
Pledgee or a sub-agent appointed by the Pledgee.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until there
shall have occurred and be continuing an Event of Default and the Pledgee has
exercised any of its remedies under Section 7(d) hereof (or has given notice to
such Pledgor that it intends to exercise such remedies, although no such notice
shall be required and the Pledgee shall be entitled to exercise such remedies
immediately upon the occurrence of a bankruptcy or insolvency Event of Default
of the type described in either Credit Agreement in respect of such Pledgor),
each Pledgor shall be entitled to exercise any and all voting and other
consensual rights and powers pertaining to the Pledged Securities owned by it,
and to give consents, waivers or ratifications in respect thereof, provided,
that no vote shall be cast or any consent, waiver or ratification given or any
action taken which would violate
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or be inconsistent with any of the terms of this Agreement, the Credit
Agreements, any other Credit Document or any Interest Rate Protection Agreement
or Other Hedging Agreement (collectively, the "Secured Debt Agreements"), or
which would have the effect of impairing the value of the Collateral or any part
thereof or the position or interests of the Pledgee in the Collateral. All such
rights of each Pledgor to vote and to give consents, waivers and ratifications
shall cease in case an Event of Default has occurred and is continuing, and the
Pledgee has exercised any of its remedies under Section 7(d) hereof (or has
given notice to such Pledgor that it intends to exercise such remedies, although
no such notice shall be required and the Pledgee shall be entitled to exercise
such remedies immediately upon the occurrence of a bankruptcy or insolvency
Event of Default of the type described in either Credit Agreement in respect of
such Pledgor).
6. DIVIDENDS AND OTHER DISTRIBUTIONS. (a) Unless and until there shall
have occurred and be continuing an Event of Default and the Pledgee has
exercised any of its remedies under Section 7(a) hereof (or has given notice to
such Pledgor that it intends to exercise such remedies, although no such notice
shall be required and the Pledgee shall be entitled to exercise such remedies
immediately upon the occurrence of a bankruptcy or insolvency Event of Default
of the type described in either Credit Agreement in respect of such Pledgor),
(i) all dividends and other distributions payable in respect of the Pledged
Stock shall be paid to the respective Pledgor in accordance with (and to the
extent permitted by) the Credit Agreements, and (ii) all payments in respect of
the Pledged Notes shall be paid to the respective Pledgor.
(b) Nothing contained in this Section 6 shall limit or restrict in any
way the Pledgee's right to receive proceeds of the Collateral in any form in
accordance with Section 3 of this Agreement. All dividends, distributions or
other payments in respect of the Collateral which are received by any Pledgor
contrary to the provisions of this Section 6 or Section 7 hereof shall be held
in trust for the benefit of the Pledgee, shall be segregated from other property
or funds of such Pledgor and shall be forthwith delivered to the Pledgee as
Collateral in the same form as so received (with any necessary endorsement).
7. REMEDIES UPON EVENTS OF DEFAULT. If there shall have occurred and be
continuing an Event of Default, then and in every such case, the Pledgee shall
be entitled to exercise all of the rights, powers and remedies (whether vested
in it by this Agreement, any other Secured Debt Agreement or by law) for the
protection and enforcement of its rights in respect of the Collateral, and the
Pledgee shall be entitled to exercise all the rights and remedies of a secured
party under the Uniform Commercial Code and also shall be entitled, without
limitation, to exercise the following rights, which each Pledgor hereby agrees
to be commercially reasonable:
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(a) to receive all amounts payable in respect of the Collateral
otherwise payable under Section 6 hereof to the respective Pledgor;
(b) to transfer all or any part of the Collateral into the Pledgee's
name or the name of its nominee or nominees;
(c) to accelerate any Pledged Note which may be accelerated in
accordance with its terms, and take any other lawful action to collect upon
any Pledged Note (including, without limitation, to make any demand for
payment thereon);
(d) to vote all or any part of the Pledged Stock (whether or not
transferred into the name of the Pledgee) and give all consents, waivers
and ratifications in respect of the Collateral and otherwise act with
respect thereto as though it were the outright owner thereof (each Pledgor
hereby irrevocably constituting and appointing the Pledgee the proxy and
attorney-in-fact of such Pledgor, with full power of substitution to do
so); and
(e) at any time and from time to time to sell, assign and deliver, or
grant options to purchase, all or any part of the Collateral, or any
interest therein, at any public or private sale, without demand of
performance, advertisement or notice of intention to sell or of the time or
place of sale or adjournment thereof or to redeem or otherwise (all of
which are hereby waived by each Pledgor), for cash, on credit or for other
property, for immediate or future delivery without any assumption of credit
risk, and for such price or prices and on such terms as the Pledgee in its
absolute discretion may determine; provided that at least 10 days' written
notice of the time and place of any such sale shall be given to such
Pledgor. The Pledgee shall not be obligated to make any such sale of
Collateral regardless of whether any such notice of sale has theretofore
been given. Each Pledgor hereby waives and releases to the fullest extent
permitted by law any right or equity of redemption with respect to the
Collateral, whether before or after sale hereunder, and all rights, if any,
of marshalling the Collateral and any other security for the Obligations or
otherwise. At any such sale, unless prohibited by applicable law, the
Pledgee on behalf of the Secured Creditors may bid for and purchase all or
any part of the Collateral so sold free from any such right or equity of
redemption. Neither the Pledgee nor any other Secured Creditor shall be
liable for failure to collect or realize upon any or all of the Collateral
or for any delay in so doing nor shall any of them be under any obligation
to take any action whatsoever with regard thereto.
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8. REMEDIES, ETC. Each and every right, power and remedy of the Pledgee
provided for in this Agreement or any other Secured Debt Agreement, or now or
hereafter existing at law or in equity or by statute shall be cumulative and
concurrent and shall be in addition to every other such right, power or remedy.
The exercise or beginning of the exercise by the Pledgee or any other Secured
Creditor of any one or more of the rights, powers or remedies provided for in
this Agreement or any other Secured Debt Agreement or now or hereafter existing
at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Pledgee or any other Secured Creditor of
all such other rights, powers or remedies, and no failure or delay on the part
of the Pledgee or any other Secured Creditor to exercise any such right, power
or remedy shall operate as a waiver thereof. No notice to or demand on any
Pledgor in any case shall entitle it to any other or further notice or demand in
similar or other circumstances or constitute a waiver of any of the rights of
the Pledgee or any other Secured Creditor to any other or further action in any
circumstances without notice or demand. The Secured Creditors agree that this
Agreement may be enforced only by the action of the Pledgee, in each case acting
upon the instructions of the Required Secured Creditors (as defined in the
Security Agreement) and that no other Secured Creditor shall have any right
individually to seek to enforce or to enforce this Agreement or to realize upon
the security to be granted hereby, it being understood and agreed that such
rights and remedies may be exercised by the Pledgee for the benefit of the
Secured Creditors upon the terms of this Agreement.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the Pledgee
upon any sale or other disposition of the Collateral, together with all other
moneys received by the Pledgee hereunder, shall be applied to the payment of the
Obligations in the manner provided in Section 7.4 of the Security Agreement.
(b) It is understood and agreed that the Pledgors shall remain jointly
and severally liable to the extent of any deficiency between the amount of the
proceeds of the Collateral hereunder and the aggregate amount of the
Obligations.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
11. INDEMNITY. (a) Each Pledgor jointly and severally agrees to
indemnify and hold harmless the Pledgee in such capacity and each other Secured
Creditor
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and their respective successors, assigns, employees, agents and servants
(individually an "Indemnitee," and collectively the "Indemnitees") harmless from
any and all liabilities, obligations, damages, injuries, penalties, claims,
demands, actions, suits, judgments and any and all reasonable costs, expenses or
disbursements (including reasonable attorneys' fees and expenses) (for the
purposes of this Section 11 the foregoing are collectively called "expenses") of
whatever kind and nature imposed on, asserted against or incurred by any of the
Indemnitees in any way relating to or arising out of this Agreement or the
enforcement of any of the terms of, or the preservation of any rights hereunder,
or in any way relating to or arising out of the ownership, control, acceptance,
possession, condition, sale or other disposition, or use of the Collateral,
provided that no Indemnitee shall be indemnified pursuant to this Section 11(a)
for losses, damages or liabilities to the extent caused by the gross negligence
or wilful misconduct of such Indemnitee. Each Pledgor agrees that upon written
notice by any Indemnitee of the assertion of such a liability, obligation,
damage, injury, penalty, claim, demand, action, suit or judgment, the relevant
Pledgor shall to the extent requested to do so assume full responsibility for
the defense thereof.
(b) Without limiting the application of Section 11(a) hereof, each
Pledgor agrees jointly and severally to pay or reimburse the Pledgee for any and
all fees, costs and expenses, including reasonable attorneys' fees, of whatever
kind or nature incurred in connection with the creation, preservation or
protection of the Pledgee's Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment or
discharge of any taxes or Liens upon or in respect of the Collateral, and all
other reasonable fees, costs and expenses in connection with protecting,
maintaining or preserving the Collateral and the Pledgee's interest therein,
whether through judicial proceedings or otherwise, or in defending or
prosecuting any actions, suits or proceedings arising out of or relating to the
Collateral.
(c) If and to the extent that the obligations of any Pledgor under this
Section 11 are unenforceable for any reason, such Pledgor hereby agrees to make
the maximum contribution to the payment and satisfaction of such obligations
which is permissible under applicable law.
12. FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) Each Pledgor agrees that
it will join with the Pledgee in executing and, at such Pledgor's own expense,
file and refile under the Uniform Commercial Code of any jurisdiction or other
applicable law such financing statements, continuation statements and other
documents in such offices as the Pledgee may deem reasonably necessary and
wherever required by law in order to perfect and preserve the Pledgee's security
interest in the Collateral and hereby authorizes the Pledgee to file financing
statements and amendments thereto relative to all
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or any part of the Collateral without the signature of such Pledgor where
permitted by law, and agrees to do such further acts and things and to execute
and deliver to the Pledgee such additional conveyances, assignments, agreements
and instruments as the Pledgee may reasonably require or deem necessary to carry
into effect the purposes of this Agreement or to further assure and confirm unto
the Pledgee its rights, powers and remedies hereunder.
(b) Each Pledgor hereby appoints the Pledgee such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor
and in the name of such Pledgor or otherwise, from time to time after the
occurrence and during the continuance of an Event of Default, in the Pledgee's
reasonable discretion to take any action and to execute any instrument which the
Pledgee may deem reasonably necessary or advisable to accomplish the purposes of
this Agreement.
13. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance with this
Agreement all items of the Collateral at any time received under this Agreement.
It is expressly understood and agreed by each Secured Creditor that by accepting
the benefits of this Agreement each such Secured Creditor acknowledges and
agrees that the obligations of the Pledgee as holder of the Collateral and
interests therein and with respect to the disposition thereof, and otherwise
under this Agreement, are only those expressly set forth in this Agreement. The
Pledgee shall act hereunder on the terms and conditions set forth herein and in
Article X of the Security Agreement.
14. TRANSFER BY THE PLEDGORS. No Pledgor will sell or otherwise dispose
of, grant any option with respect to, or mortgage, pledge or otherwise encumber
any of the Collateral or any interest therein (except as may be permitted in
accordance with the terms of the Credit Agreement).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS. Each
Pledgor represents, warrants and covenants that (i) it is the legal, record and
beneficial owner of, and has good and marketable title to, all Pledged
Securities pledged by it hereunder, subject to no Lien (except the Lien created
by this Agreement and Liens of the type described in Sections 9.01(i), (v) and
(xii) of the SCIS Credit Agreement); (ii) it has the corporate power and
authority to pledge all the Pledged Securities pledged by it pursuant to this
Agreement; (iii) this Agreement has been duly authorized, executed and delivered
by such Pledgor and constitutes a legal, valid and binding obligation of such
Pledgor enforceable in accordance with its terms, except to the extent that the
enforceability hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting creditors'
rights and by equitable principles (regardless of whether enforcement is sought
in equity or at law); (iv) no consent of any
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other party (including, without limitation, any stockholder or creditor of such
Pledgor or any of its Subsidiaries) and no consent, license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with, any governmental authority is required to be obtained by such
Pledgor for the execution, delivery or performance of this Agreement by such
Pledgor, the validity or enforceability of this Agreement and the perfection or
enforceability of the Pledgee's security interest in the Collateral (other than,
in respect of the proceeds of the Pledged Securities, the filing of Form UCC-1
financing statements or the appropriate equivalent (which filings have been
made)) or except for compliance with or as may be required by applicable
securities laws, the exercise by the Pledgee of any of its rights or remedies
provided herein; (v) the execution, delivery and performance of this Agreement
by such Pledgor, and compliance by it with the terms and provisions hereof, will
not violate any provision of any applicable law, statute, rule or regulation or
of any applicable order, judgment, writ, injunction or decree of any court or
governmental authority, domestic or foreign, applicable to such Pledgor, or of
the certificate of incorporation or by-laws (or equivalent organizational
documents) of such Pledgor or of any securities issued by such Pledgor or any of
its Subsidiaries, or of any mortgage, indenture, lease, deed of trust, loan
agreement, credit agreement or any other material contract, agreement or
instrument to which such Pledgor or any of its Subsidiaries is a party or which
purports to be binding upon such Pledgor or any of its Subsidiaries or upon any
of their respective assets and will not result in the creation or imposition of
(or the obligation to create or impose) any lien or encumbrance on any of the
Collateral of such Pledgor or any of its Subsidiaries except as contemplated by
this Agreement; (vi) all the shares of Stock have been duly and validly issued,
are fully paid and non-assessable and are subject to no options to purchase or
similar rights; (vii) each of the Pledged Notes issued by any Credit Party or by
any of its Subsidiaries constitutes, or when executed by the respective obligor
thereof will constitute, the legal, valid and binding obligation of such
obligor, enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting creditors'
rights and by equitable principles (regardless of whether enforcement is sought
in equity or at law); and (viii) the pledge, assignment and delivery to the
Pledgee of the Securities (other than uncertificated securities) pursuant to
this Agreement creates a valid and perfected first priority Lien in the
Securities, and the proceeds thereof, subject to no other Lien or to any
agreement purporting to grant to any third party a Lien on the property or
assets of the Pledgor which would include the Securities. Each Pledgor covenants
and agrees that it will defend the Pledgee's right, title and security interest
in and to the Securities and the proceeds thereof against the claims and demands
of all persons whomsoever; and such Pledgor covenants and agrees that it will
have like title to and right to pledge any other property at any time hereafter
pledged to the Pledgee as Collateral hereunder and will like-
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wise defend the right thereto and security interest therein of the Pledgee and
the Secured Creditors.
16. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of each
Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (i) any renewal,
extension, amendment or modification of or addition or supplement to or deletion
from any Secured Debt Agreement or any other instrument or agreement referred to
therein, or any assignment or transfer of any thereof; (ii) any waiver, consent,
extension, indulgence or other action or inaction under or in respect of any
such Secured Debt Agreement or other agreement or instrument including, without
limitation, this Agreement; (iii) any furnishing of any additional security to
the Pledgee or its assignee or any acceptance thereof or any release of any
security by the Pledgee or its assignee; (iv) any limitation on any party's
liability or obligations under any such instrument or agreement or any
invalidity or unenforceability, in whole or in part, of any such instrument or
agreement or any term thereof; or (v) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to any Pledgor or any Subsidiary of any Pledgor, or any
action taken with respect to this Agreement by any trustee or receiver, or by
any court, in any such proceeding, whether or not such Pledgor shall have notice
or knowledge of any of the foregoing (it being understood that the enforcement
hereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws generally affecting creditors' rights and by
equitable principles (regardless of whether enforcement is sought in equity or
at law)).
17. REGISTRATION, ETC. (a) If there shall have occurred and be con-
tinuing an Event of Default then, and in every such case, upon receipt by any
Pledgor from the Pledgee of a written request or requests that such Pledgor
cause any registration, qualification or compliance under any Federal, state or
other applicable securities law or laws to be effected with respect to all or
any part of the Pledged Stock, such Pledgor as soon as practicable and at its
expense will cause such registration to be effected (and be kept effective) and
will cause such qualification and compliance to be declared effected (and be
kept effective) as may be so requested and as would permit or facilitate the
sale and distribution of such Pledged Stock, including, without limitation,
registration under the Securities Act of 1933, as then in effect (or any similar
statute then in effect), appropriate qualifications under applicable blue sky,
state or other applicable securities laws and appropriate compliance with any
other government requirements, provided, that the Pledgee shall furnish to such
Pledgor such information regarding the Pledgee as such Pledgor may reasonably
request in writing and as shall be required in connection with any such
registration, qualification or compliance. Such Pledgor will cause the Pledgee
to be kept advised
<PAGE> 194
EXHIBIT G-1
Page 15
in writing as to the progress of each such registration, qualification or
compliance and as to the completion thereof, will furnish to the Pledgee such
number of prospectuses, offering circulars or other documents incident thereto
as the Pledgee from time to time may reasonably request, and will indemnify the
Pledgee, each other Secured Creditor and all others participating in the
distribution of such Pledged Stock against all claims, losses, damages and
liabilities caused by any untrue statement (or alleged untrue statement) of a
material fact contained therein (or in any related registration statement,
notification or the like) or by any omission (or alleged omission) to state
therein (or in any related registration statement, notification or the like) a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same may have been caused by an
untrue statement or omission based upon information furnished in writing to such
Pledgor by the Pledgee or such other Secured Creditor expressly for use therein.
(b) If at any time when the Pledgee shall determine to exercise its
right to sell all or any part of the Pledged Securities pursuant to Section 7
hereof, and such Pledged Securities or the part thereof to be sold shall not,
for any reason whatsoever, be effectively registered under the Securities Act of
1933, as then in effect, the Pledgee may, in its sole and absolute discretion,
sell such Pledged Securities or part thereof by private sale in such manner and
under such circumstances as the Pledgee may deem necessary or advisable in order
that such sale may legally be effected without such registration. Without
limiting the generality of the foregoing, in any such event the Pledgee, in its
sole and absolute discretion (i) may proceed to make such private sale
notwithstanding that a registration statement for the purpose of registering
such Pledged Securities or part thereof shall have been filed under such
Securities Act, (ii) may approach and negotiate with a single possible purchaser
to effect such sale, and (iii) may restrict such sale to a purchaser who will
represent and agree that such purchaser is purchasing for its own account, for
investment, and not with a view to the distribution or sale of such Pledged
Securities or part thereof. In the event of any such sale, the Pledgee shall
incur no responsibility or liability for selling all or any part of the Pledged
Securities at a price which the Pledgee, in its sole and absolute discretion, in
good faith deems reasonable under the circumstances, notwithstanding the
possibility that a substantially higher price might be realized if the sale were
deferred until after registration as aforesaid.
18. TERMINATION; RELEASE. (a) On the Termination Date (as defined in
the Security Agreement), but only after giving effect to the repayments to be
made on such date, this Agreement and the security interest created hereby shall
terminate (provided that all indemnities set forth herein including, without
limitation, in Section 11 hereof shall survive any such termination), and the
Pledgee, at the request and expense of any Pledgor, will execute and deliver to
each Pledgor such proper instrument or instruments acknowledging the
satisfaction and termination of this Agreement, and will duly assign,
<PAGE> 195
EXHIBIT G-1
Page 16
release, transfer and deliver to each Pledgor (without recourse and without any
representation or warranty) all of the Collateral as has not theretofore been
sold or otherwise applied or released pursuant to this Agreement, together with
any moneys at the time held by the Pledgee or any of its sub-agents hereunder.
(b) In the event that all or any part of the Collateral is sold,
conveyed or disposed of in connection with any form of asset disposition
permitted by the Credit Agreements or otherwise released, in whole or in part,
at the direction of the Required Secured Creditors and the proceeds of such
asset disposition are applied in accordance with, and to the extent required by,
the provisions of the Credit Agreements, the Pledgee, at the request and expense
of any Pledgor, will duly assign, release, transfer and deliver to the
appropriate Pledgor (without recourse and without any representation or
warranty) such of the Collateral (and releases therefor) as is then being (or
has been) so sold or released and has not theretofore been released pursuant to
this Agreement.
(c) At any time that a Pledgor desires that the Pledgee assign,
release, transfer and deliver Collateral as provided in Section 18(a) or (b)
hereof, it shall deliver to the Pledgee a certificate signed by a principal
executive officer of such Pledgor stating that the release of the respective
Collateral is in accordance with Section 18(a) or (b).
(d) The Pledgee shall have no liability whatsoever to any Secured
Creditor as the result of any release of Collateral by it in accordance with
this Section 18.
19. NOTICES ETC. All such notices and communications hereunder shall be
sent or delivered by mail, telegraph, telex, telecopy, cable or overnight
courier service and all such notices and communications shall, when mailed,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be
effective when delivered to the telegraph company, cable company or overnight
courier, as the case may be, or sent by telex or telecopier and when mailed
shall be effective three Business Days following deposit in the mail with proper
postage, except that notices and communications to the Pledgee shall not be
effective until received by the Pledgee. All notices and other communications
shall be in writing and addressed as follows:
<PAGE> 196
EXHIBIT G-1
Page 17
(a) if to any Pledgor, to the address and communications information
set forth opposite its signature below;
(b) if to the Pledgee, at the following address of, and the
communications information for, the Pledgee:
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260-0060
Attention: Laura Loffredo
Telephone No.: (212) 648-6793
Facsimile No.: (212) 648-5336
(c) if to any Bank Creditor, either (x) to the respective
Administrative Agent, at the address of such Administrative Agent specified
in the respective Credit Agreement or (y) at such address and
communications information as such Bank Creditor shall have specified in
the respective Credit Agreement;
(d) if to any Other Creditor at such address and communications
information as such Other Creditor shall have specified in writing to the
Pledgors and the Pledgee;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
20. WAIVER; AMENDMENT. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing and duly signed by each Pledgor directly affected thereby and
the Pledgee (with the written consent of the Required Secured Creditors);
provided, that any change, waiver, modification or variance affecting the rights
and benefits of a single Class (as defined below) of Secured Creditors (and not
all Secured Creditors in a like or similar manner) shall also require the
written consent of the Requisite Creditors (as defined below) of such affected
Class. For the purpose of this Agreement, the term "Class" shall mean each class
of Secured Creditors, i.e., whether (i) the SCIS Bank Creditors as holders of
the SCIS Credit Document Obligations, (ii) the Caterair Bank Creditors as
holders of the Caterair Credit Document Obligations or (iii) the Other Creditors
as the holders of the Other Obligations. For the purpose of this Agreement, the
term "Requisite Creditors" of any Class shall mean each of (i) with respect to
the SCIS Credit Document Obligations, the Required Banks under, and as defined
in, the SCIS Credit Agreement, (ii) with respect to the Caterair Credit Document
Obligations, the Required Banks under, and as defined in,
<PAGE> 197
EXHIBIT G-1
Page 18
the Caterair Credit Agreement and (iii) with respect to the Other Obligations,
the holders of a majority of all obligations outstanding from time to time under
the Interest Rate Protection Agreements or Other Hedging Agreements.
21. MISCELLANEOUS. This Agreement shall be binding upon the successors
and assigns of each Pledgor (although no Pledgor may assign its rights and
obligations hereunder except in accordance with the provisions of the Secured
Debt Agreements) and shall inure to the benefit of and be enforceable by each of
the parties hereto and its successors and assigns. THIS AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE
OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS EXCEPT FOR THE CHOICE OF LAW
PROVISIONS OF THE NEW YORK UNIFORM COMMERCIAL CODE. EACH OF THE PARTIES TO THIS
AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. The
headings in this Agreement are for purposes of reference only and shall not
limit or define the meaning hereof. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which shall
constitute one instrument. In the event that any provision of this Agreement
shall prove to be invalid or unenforceable, such provision shall be deemed to be
severable from the other provisions of this Agreement which shall remain binding
on all parties hereto.
22. RECOURSE. This Agreement is made with full recourse to each Pledgor
(including, without, limitation, with full recourse to all assets of such
Pledgor) and pursuant to and upon all the representations, warranties, covenants
and agreements on the part of such Pledgor contained herein, in the other
Secured Debt Agreements and otherwise in writing in connection herewith or
therewith, provided that, notwithstanding anything to the contrary contained
herein, any recourse under this Agreement against Caterair Holdings is limited
solely to the Collateral of Caterair Holdings pledged pursuant to this Agreement
and any proceeds or earnings thereon.
23. ADDITIONAL PLEDGORS. It is understood and agreed that any
Wholly-Owned Domestic Subsidiary of any Pledgor that is required to execute a
counterpart of this Agreement after the date hereof pursuant to either Credit
Agreement shall automatically become a Pledgor hereunder by executing a
counterpart hereof and delivering the same to the Pledgee.
* * *
<PAGE> 198
EXHIBIT G-1
Page 19
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written
Addresses:
- ---------
524 East Lamar Boulevard SC INTERNATIONAL SERVICES, INC.,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
6550 Rock Spring Drive CATERAIR HOLDINGS CORPORATION,
Bethesda, Maryland 20817 as a Pledgor
By: ___________________________________
Name:
Title:
6550 Rock Spring Drive CATERAIR INTERNATIONAL CORPORATION,
Bethesda, Maryland 20817 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard SKY CHEFS, INC.,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
<PAGE> 199
EXHIBIT G-1
Page 20
6550 Spring Rock Drive CATERAIR INTERNATIONAL, INC. (II),
Bethesda, Maryland 20817 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard SKY CHEFS INTERNATIONAL CORP.,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
300 Delaware Avenue, Suite 315 ARLINGTON SERVICES, INC.,
Wilmington, Delaware 19801-1622 as a Pledgor
By: ___________________________________
Name:
Title:
300 Delaware Avenue, Suite 315 ARLINGTON SERVICES HOLDING
Wilmington, Delaware 19801-1622 CORPORATION, as a Pledgor
By: ___________________________________
Name:
Title:
300 Delaware Avenue BETHESDA SERVICES, INC.,
Wilmington, Delaware 19801-1622 as a Pledgor
By: ___________________________________
Name:
Title:
<PAGE> 200
EXHIBIT G-1
Page 21
300 Delaware Avenue CATERAIR NEW ZEALAND LIMITED,
Wilmington, Delaware 19801-1622 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard CATERAIR CONSULTING SERVICES
Arlington, Texas 76011 CORPORATION,
as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard JFK CATERERS, INC.,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard CATERAIR ST. THOMAS HOLDINGS
Arlington, Texas 76011 CORPORATION, as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard WESTERN AIRE CHEF, INC.
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
<PAGE> 201
EXHIBIT G-1
Page 22
6550 Rock Spring Drive CATERAIR AIRPORT PROPERTIES, INC.,
Bethesda, Maryland 20817 as a Pledgor
By: ___________________________________
Name:
Title:
6550 Rock Spring Drive SKY CHEFS ARGENTINE, INC.,
Bethesda, Maryland 20817 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard CATERAIR INTERNATIONAL TRANSITION
Arlington, Texas 76011 CORPORATION,
as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO ACCEPTANCE CORP.,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO CREDIT CORP.,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
<PAGE> 202
EXHIBIT G-1
Page 23
524 East Lamar Boulevard ONEX OHIO EQUITY CORP.,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO FINANCE CORP.,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevar ONEX OHIO FINANCE CORP. II,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO CAPITAL CORP.,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevar ONEX OHIO FISCAL CORP.,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
<PAGE> 203
EXHIBIT G-1
Page 24
524 East Lamar Boulevard ONEX OHIO FUNDS CORP.,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO CREDIT CORP. II,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO FUNDS CORP. II,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO FISCAL CORP. II,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO EQUITY CORP. II,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
<PAGE> 204
EXHIBIT G-1
Page 25
524 East Lamar Boulevard ONEX OHIO CAPITAL CORP. II,
Arlington, Texas 76011 as a Pledgor
By: ___________________________________
Name:
Title:
in each case, with a copy to:
SC International Services, Inc.
524 East Lamar Boulevard
Arlington, Texas 76011
Attention: Patrick Tolbert
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Pledgee,
Collateral Agent
By: ___________________________________
Name:
Title:
<PAGE> 205
<TABLE>
<CAPTION>
ANNEX A
to
AMENDED AND RESTATED
GENERAL
LIST OF STOCK PLEDGE AGREEMENT
====================================================================================================================================
# OF
PERCENTAGE SHARES
ISSUER/JURISDICTION OF AUTH. ISSUED PERCENTAGE TO BE STOCK CERT. TO BE
INCORPORATION OWNER CLASS OF STOCK SHARES SHARES HELD PLEDGED NUMBER PLEDGED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sky Chefs, Inc.
(Delaware) SCIS Common - 5,000,000 100 100% 100% 3 100
$100 Par
- ------------------------------------------------------------------------------------------------------------------------------------
Caterair International, Inc.
(II) (Delaware) SCIS Common - 3,000 100 100% 100% 2 100
$.01 Par
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs International
Corp.
(Delaware) Sky Chefs, Inc. Common - 1,000 1,000 100% 100% 2 1,000
$.01 Par
- ------------------------------------------------------------------------------------------------------------------------------------
Arlington Services, Inc.
(Delaware) Sky Chefs, Inc. Common - 1,000 100 100% 100% 2 100
$.01 Par
- ------------------------------------------------------------------------------------------------------------------------------------
Arlington Services
Holding Corporation Sky Chefs, Inc. Common - 3,000 1,000 100% 100% 1 1,000
(Delaware) ("ASH") $.01 Par
- ------------------------------------------------------------------------------------------------------------------------------------
Bethesda Services, Inc.
(Delaware) Caterair Common - 3,000 1,000 100% 100% 1 1,000
International, $.01 Par
Inc. (II)
- ------------------------------------------------------------------------------------------------------------------------------------
Caterair New Zealand Limited
(Delaware) Bethesda Common - 3,000 1,000 100% 100% 1 1,000
Services, Inc. $.01 Par
- ------------------------------------------------------------------------------------------------------------------------------------
Delta Dailyfood Texas, Inc.
(Texas) Sky Chefs, Inc. Common - 1,000 100 33% 33% 3 33
No Par
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 206
<TABLE>
<CAPTION>
ANNEX A
Page 2
===================================================================================================================================
# OF
PERCENTAGE SHARES
ISSUER/JURISDICTION OF AUTH. ISSUED PERCENTAGE TO BE STOCK CERT. TO BE
INCORPORATION OWNER CLASS OF STOCK SHARES SHARES HELD PLEDGED NUMBER PLEDGED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LSG-Sky Chefs do Brasil
Catering Refeicoes Sky Chefs Quotas 166,201 166,201 100% 65% -- --
Ltda. (Brazil)1 International
Corp.
- -----------------------------------------------------------------------------------------------------------------------------------
CateringPor - Catering
de Portugal, S.A.2 Sky Chefs 1,000 PTE per 700 700 49% -- -- --
International share par million million
Corp.
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Acceptance
Corporation SCIS Common - 100 100 100% 100% 3 100
(Delaware) $.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Credit Corp.
(Delaware) SCIS Common - 1,000 100 100% 100% 3 100
$.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Equity Corp.
(Delaware) SCIS Common - 1,000 100 100% 100% 2 100
$.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Finance Corp.
(Delaware) SCIS Common - 1,000 1,000 100% 100% 2 1,000
$.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Finance Corp. II
(Delaware) SCIS Common - 1,000 100 100% 100$ 2 100
$.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Capital Corp.
(Delaware) SCIS Common - 1,000 1,000 100% 100% 2 1,000
$.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Fiscal Corp.
(Delaware) SCIS Common - 1,000 1,000 100% 100% 2 1,000
$.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Funds Corp.
(Delaware) SCIS Common - 1,000 1,000 100% 100% 2 1,000
$.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Credit Corp. II
(Delaware) SCIS Common - 1,000 100 100% 100% 2 100
$.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Funds Corp. II
(Delaware) SCIS Common - 1,000 100 100% 100% 2 100
$.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Fiscal Corp. II
(Delaware) SCIS Common - 1,000 100 100% 100% 2 100
$.01 Par
</TABLE>
- --------
1 The quotas of LSG Sky Chefs do Brasil cannot be delivered, however,
physical possession is not necessary to perfect a pledge. A contract
of pledge is valid upon registration in the company books.
2 The shares of CateringPor cannot be delivered and cannot be pledged as
there will have to be an exorbitant stamp tax paid to the Portuguese
authorities.
<PAGE> 207
<TABLE>
<CAPTION>
ANNEX A
Page 3
===================================================================================================================================
# OF
CLASS PERCENTAGE STOCK SHARES
ISSUER/JURISDICTION OF AUTH. ISSUED PERCENTAGE TO BE CERT. TO BE
OF INCORPORATION OWNER STOCK SHARES SHARES HELD PLEDGED NUMBER PLEDGED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Onex Ohio Equity Corp. II
(Delaware) SCIS Common - 1,000 100 100% 100% 2 100
$.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Onex Ohio Capital Corp. II
(Delaware) SCIS Common - 1,000 100 100% 100% 2 100
$.01 Par
- -----------------------------------------------------------------------------------------------------------------------------------
Caterair International
Corporation Caterair Common - 10,000 10,000 100% 100% 1 10,000
("Caterair") (Delaware Holdings $.01 par
Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
Caterair Consulting Services
Corporation ASH Common - 100 100 100% 100% 4 100
(Delaware - formerly KCI No Par
Caterers, Inc.)
- ------------------------------------------------------------------------------------------------------------------------------------
JFK Caterers, Inc.
(Delaware) ASH Common - 100 100 100% 100% 4 100
No Par
- ------------------------------------------------------------------------------------------------------------------------------------
Caterair Airport Properties, Caterair New Common - 100 100 100% 100% 5 100
Inc. (Delaware - formerly Zealand No Par
Marriott Airport Properties, Limited
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Caterair Taiwan Inflight
Services, Inc. Caterair New Common 1,200,000 100,000 100% Held in
(Taiwan) Zealand Trust
Limited
- ------------------------------------------------------------------------------------------------------------------------------------
Western Aire Chef, Inc.
(Delaware) ASH Common - 100 100 100% 100% 5 100
No Par
- ------------------------------------------------------------------------------------------------------------------------------------
Caterair International
Transition Common - 3,000 100 100% 100% 1 100
Corporation $.01 Par
- ------------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Canada, Limited
(Canada) ASH Common 1 1 100% 100% CS-5 1
====================================================================================================================================
</TABLE>
<PAGE> 208
<TABLE>
<CAPTION>
ANNEX A
Page 4
=================================================================================================================================
PERCENTAGE STOCK # Of SHARES
ISSUER/JURISDICTION AUTH. ISSUED PERCENTAGE TO BE CERT. TO BE
OF INCORPORATION OWNER CLASS OF STOCK SHARES SHARES HELD PLEDGED NUMBER PLEDGED
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SC International ASH pound sterling1 100,000
Services Ireland Ordinary
(Ireland) Shares
US$1 A 30,000,000 1,000 100%
Ordinary
Shares
- ---------------------------------------------------------------------------------------------------------------------------------
Sky Chefs - U.K., Ltd. ASH pound sterling1 10,000,000 3,741,582 100% 65% 65
(England) Ordinary
Shares
- ---------------------------------------------------------------------------------------------------------------------------------
LSG Sky Chefs Venezuela, ASH Class B:
C.A. 100,000
(Venezuela) Bolivars
per share
Class C: 100 100 80% 65% 52
43,000
Bolivars
per share
- ---------------------------------------------------------------------------------------------------------------------------------
Arlington Services ASH Series B 1 50,000 50,000 100% 65% 32,500
Mexico, S.A. de C.V. peso per
share par
- ---------------------------------------------------------------------------------------------------------------------------------
Nova Galicia S.A. ASH Class A 25 25 100% 65% of
de C.V. (Mexico) Class B
Common
Stock
Class B 14,473,000 14,473,000
- ---------------------------------------------------------------------------------------------------------------------------------
Cater Suprimento ASH Quotas 2,169,162 2,169,162 100% 69%
de Refeicoes, Ltda. 4,347 4,347
(Brazil)
- ---------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Chile, S.A. Western Aire Common 99% 65% 990
(Chile) Chef, Inc.
1,000 1,000
Caterair Airport Common 1%
Properties
("CAP")
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 209
<TABLE>
<CAPTION>
ANNEX A
Page 5
===================================================================================================================================
PERCENTAGE # OF SHARES
ISSUER/JURISDICTION AUTH. ISSUED PERCENTAGE TO BE STOCK CERT. TO BE
OF INCORPORATION OWNER CLASS OF STOCK SHARES SHARES HELD PLEDGED NUMBER PLEDGED
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cocina de Vuelos, S.A. ASH Common - 2,700 2,700 49% 49% -- --
de C.V. (El Salvador) 10,000 Colones
per share
- -----------------------------------------------------------------------------------------------------------------------------------
Caterair Madrid, S.A. ASH Common 64,800 64,800 100% 65% 42,120
(Spain)
- -----------------------------------------------------------------------------------------------------------------------------------
Caterair Barcelona, ASH (80%) Class A 14,000 14,000 100% [52.8%]
S.A. (Spain) Caterair Madrid
(20%)
Class B 3,500 3,500
- -----------------------------------------------------------------------------------------------------------------------------------
Caterair Portugal 74% CIC - 40,600,000 40,600,000 74% -- -- --
Servicios Profissionaise 26% CAP ESC ESC 26%
Aero de Assistencia a
Bordo, Limitada (Portugal)
- -----------------------------------------------------------------------------------------------------------------------------------
LSG Lufthansa Service ASH - 160,000 160,000 100% 65% -- --
Sky Chefs
France, S.A. (France)
- -----------------------------------------------------------------------------------------------------------------------------------
Caterair Australia Pty. CAP Ordinary 5,000,000 102 100% 65% 17,18 67
Ltd. (Australia) Common &
(formerly Marriott Hotel 100%
Corporation Pty. Ltd.) Preferred
Preferred 475,900 475,900 11 475,900
- -----------------------------------------------------------------------------------------------------------------------------------
Sky Chefs Argentine, Inc. ASH Common - 100 100 100% 100% 3 100
(Delaware) No Par
- -----------------------------------------------------------------------------------------------------------------------------------
Caterair St. Thomas ASH Common - 100 100 100% 100% 2 100
Holdings Corporation No Par
(Delaware)
- -----------------------------------------------------------------------------------------------------------------------------------
Arlington Services ASH Common - 500 2 100% 1
de Panama S.A. No Par
- -----------------------------------------------------------------------------------------------------------------------------------
Inflite Holdings ASH US$1 50,000 100 49% -- -- --
(Cayman) Ltd. Ordinary
(Cayman Islands) Shares
- -----------------------------------------------------------------------------------------------------------------------------------
Versair In-Flite ASH Class A 7,001,000 7,001,000 7, yrs. 1,683,640
Services Limited 24% 24% 1994/1
(Jamaica)
Class B 7,016,000 7,016,000 8, VIPS 1,680,240
1994/2
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 210
<TABLE>
<CAPTION>
ANNEX A
Page 6
==================================================================================================================================
PERCENTAGE # OF SHARES
ISSUER/JURISDICTION AUTH. ISSUED PERCENTAGE TO BE STOCK CERT. TO BE
OF INCORPORATION OWNER CLASS OF STOCK SHARES SHARES HELD PLEDGED NUMBER PLEDGED
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Antigua Catering ASH Eastern 1,040,000 540,000 49% -- -- --
Services Limited Caribbean
(Antigua) US$1
Ordinary
Shares
- ----------------------------------------------------------------------------------------------------------------------------------
St. Lucia Catering ASH US$1 Par SLCS 300,000 49% -- -- --
Services Ltd. 300,000
(St.Lucia)
- ----------------------------------------------------------------------------------------------------------------------------------
Caterair Lebanon ASH LL 100,000 1,000 1,000 20% -- -- --
SAL Par
- ----------------------------------------------------------------------------------------------------------------------------------
Gulf International CAP Bahraini 30,000,000 10,000 49% -- -- --
Caterers, W.L.L. Dinars
(Bahrain)
- ----------------------------------------------------------------------------------------------------------------------------------
Marriott In-Flite ASH Common 110,000 50,000 100% -- Held in --
Services of Korea Trust
(Korea)
- ----------------------------------------------------------------------------------------------------------------------------------
Barbados Flight ASH Common No Limit 80,000 49% -- Held in --
Kitchen Limited Trust
(Barbados)
- ----------------------------------------------------------------------------------------------------------------------------------
Airport Restaurants ASH Common No Limit 10,000 49% -- Held in --
(1992) Limited Trust
(Barbados)
==================================================================================================================================
</TABLE>
<PAGE> 211
ANNEX B
to AMENDED
AND RESTATED
GENERAL
PLEDGE AGREEMENT
LIST OF NOTES
================================================================================
BORROWER PLEDGOR/LENDER
- --------------------------------------------------------------------------------
Sky Chefs, Inc. SC International Services, Inc.
- --------------------------------------------------------------------------------
Arlington Services, Inc. SC International Services, Inc.
- --------------------------------------------------------------------------------
Arlington Services Holding Corporation SC International Services, Inc.
- --------------------------------------------------------------------------------
Caterair International, Inc. (II) SC International Services, Inc.
- --------------------------------------------------------------------------------
Bethesda Services, Inc. SC International Services, Inc.
- --------------------------------------------------------------------------------
Caterair New Zealand Limited SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Acceptance Corporation SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Credit Corp. SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Equity Corp. SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Finance Corp. SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Capital Corp. SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Fiscal Corp. SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Funds Corp. SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Credit Corp. II SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Equity corp. II SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Finance Corp. II SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Capital Corp. II SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Fiscal Corp. II SC International Services, Inc.
- --------------------------------------------------------------------------------
Onex Ohio Funds Corp. II SC International Services, Inc.
- --------------------------------------------------------------------------------
Caterair International Corporation SC International Services, Inc.
- --------------------------------------------------------------------------------
JFK Caterers, Inc. SC International Services, Inc.
- --------------------------------------------------------------------------------
Caterair St. Thomas Holdings Corporation SC International Services, Inc.
- --------------------------------------------------------------------------------
Western Aire Chef, Inc. SC International Services, Inc.
- --------------------------------------------------------------------------------
Caterair Airport Properties, Inc. SC International Services, Inc.
- --------------------------------------------------------------------------------
Sky Chefs Argentine, Inc. SC International Services, Inc.
- --------------------------------------------------------------------------------
Caterair Consulting Services Corporation SC International Services, Inc.
- --------------------------------------------------------------------------------
SC International Services, Inc. Caterair International Corporation
- --------------------------------------------------------------------------------
<PAGE> 212
ANNEX B
Page 2
<TABLE>
<CAPTION>
==========================================================================================
BORROWER PLEDGOR/LENDER
- ------------------------------------------------------------------------------------------
<S> <C>
SC International Servics, Inc. Sky Chefs, Inc.
- ------------------------------------------------------------------------------------------
Sky Chefs International Corp. Sky Chefs, Inc.
- ------------------------------------------------------------------------------------------
Arlington Services, Inc. Sky Chefs, Inc.
- ------------------------------------------------------------------------------------------
Sky Chefs, Inc. Arlington Services, Inc.
- ------------------------------------------------------------------------------------------
Arlington Services Holding Corporation Arlington Services, Inc.
- ------------------------------------------------------------------------------------------
Bethesda Services, Inc. Caterair International, Inc. (II)
- ------------------------------------------------------------------------------------------
Caterair New Zealand Limited Bethesda Services, Inc.
- ------------------------------------------------------------------------------------------
Caterair Airport Properties, Inc. Caterair International, Inc. (II)
- ------------------------------------------------------------------------------------------
Caterair Airport Properties, Inc. Caterair New Zealand Limited
- ------------------------------------------------------------------------------------------
Arlington Services de Panama, S.A. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Sky Chefs de Panama S.A. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Inversiones Turisticas Aeropuerto Panama, S.A. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
LSG Lufthansa Service Sky Chefs France, S.A SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Sky Chefs Chile, S.A. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Caterair Servicos Industriales, Ltda. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Cater Suprimento De Refeicoes, Ltda. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
LSG-Sky Chefs do Brasil Catering --Refeicoes Ltda. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
ServCater Internacional Ltda. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
ServCater Internacional Ltda. Sky Chefs, Inc.
- ------------------------------------------------------------------------------------------
ServCater Internacional Ltda. Sky Chefs International Corp.
- ------------------------------------------------------------------------------------------
Caterair Servicos de Bordo e Hotelaria, S.A. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Sky Chefs - U.K., Ltd. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Arlington Services Mexico, S.A. de C.V. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Nova Galicia, S.A. de C.V. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Caterair de Mexico, S.A. de C.V. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Immobiliaria Marracas, S.A. de C.V. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Casa Ponce de Leon, S.A. de C.V. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
Comisariato Gotre, S.A. de C.V. SC International Services, Inc.
- ------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 213
<TABLE>
<CAPTION>
ANNEX B
Page 3
========================================================================================
BORROWER PLEDGOR/LENDER
- ----------------------------------------------------------------------------------------
<S> <C>
Cocina del Aire Provincia, S.A. de C.V. SC International Services, Inc.
- ----------------------------------------------------------------------------------------
Sky Chefs de Mexico, S.A. de C.V. SC International Services, Inc.
- ----------------------------------------------------------------------------------------
Caterair Taiwan Inflight Services, Inc. SC International Services, Inc.
- ----------------------------------------------------------------------------------------
Caterair Madrid, S.A. SC International Services, Inc.
- ----------------------------------------------------------------------------------------
Caterair Barcelona, S.A. SC International Services, Inc.
- ----------------------------------------------------------------------------------------
Caterair Australia Pty. Ltd. SC International Services, Inc.
- ----------------------------------------------------------------------------------------
Caterair Portugal-Assistencia A Bordo Limitada SC International Services, Inc.
- ----------------------------------------------------------------------------------------
Sky Chefs Canada, Limited SC International Services, Inc.
- ----------------------------------------------------------------------------------------
LSG Sky Chefs Venezuela C.A. SC International Services, Inc.
- ----------------------------------------------------------------------------------------
Sky Chefs Ireland SC International Services, Inc.
- ----------------------------------------------------------------------------------------
SC International Services Ireland Arlington Services Holding Corporation
- ----------------------------------------------------------------------------------------
Arlington Services Panama, S.A. Arlington Services Holding Corporation
- ----------------------------------------------------------------------------------------
Caterair Taiwan Inflight Services, Inc. Bethesda Services Holding Corporation
- ----------------------------------------------------------------------------------------
Caterair Australia Pty. Ltd. Caterair Airport Properties,Inc.
========================================================================================
</TABLE>
<PAGE> 214
ANNEX C
to
AMENDED AND
RESTATED GENERAL
PLEDGE AGREEMENT
FORM OF CERTIFICATE
[Letterhead of Pledgor]
[Date]
Morgan Guaranty Trust Company
of New York, as Collateral Agent
60 Wall Street
New York, New York 10260-0060
Attention: ___________________
Ladies and Gentlemen:
Reference is hereby made to the Pledge Agreement, dated as of September 29,
1995 and amended and restated as of August 28, 1997, among the undersigned, the
other pledgors party thereto, and you, as Collateral Agent (the "Pledge
Agreement"). Pursuant to Section 3.2 of the Pledge Agreement, the undersigned
hereby pledges and delivers to you under the Pledge Agreement [stock certificate
number ____, representing ____ shares of the capital stock of ____, together
with a duly executed and undated stock power for such shares] [a promissory note
issued by __________ in favor of the undersigned, duly endorsed in blank].
Very truly yours,
[NAME OF PLEDGOR]
By_______________________
Title:
Accepted this ____ day
of ________, _____:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Collateral Agent
By________________________
Title:
<PAGE> 215
EXHIBIT G-2
AMENDED AND RESTATED OFSI PLEDGE AGREEMENT
AMENDED AND RESTATED PLEDGE AGREEMENT (as amended, modified or
supplemented from time to time, this "Agreement"), dated as of September 29,
1995 and amended and restated as of August 28, 1997, made by Onex Food Services,
Inc. (the "Pledgor"), in favor of MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Collateral Agent (together with any successor pledgee, the "Pledgee"), for the
benefit of the Secured Creditors (as defined below). Except as otherwise defined
herein, capitalized terms used herein and defined in the SCIS Credit Agreement
(as defined below) or in the Caterair Credit Agreement (as defined below), as
the case may be, shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, the Pledgor, SC International Services, Inc.
("SCIS"), Caterair Holdings Corporation ("Caterair Holdings"), Caterair
International Corporation ("Caterair"), various lenders from time to time party
thereto (the "SCIS Banks"), Bankers Trust Company and J.P. Morgan Securities
Inc., as Co-Arrangers (the "SCIS Co-Arrangers"), Bankers Trust Company, as
Syndication Agent, The Bank of New York, as Co-Agent, and Morgan Guaranty Trust
Company of New York, as Administrative Agent, (together with any successor
administrative agent, the "SCIS Administrative Agent"), have entered into a
Credit Agreement, dated as of September 29, 1995 and amended and restated as of
August 28, 1997, providing for the making of loans to SCIS and the issuance of,
and participation in, letters of credit for the account of SCIS as contemplated
therein (as used herein, the term "SCIS Credit Agreement" means the Credit
Agreement described above in this paragraph, as the same may be amended,
modified, extended, renewed, replaced, restated or supplemented from time to
time, and including any agreement extending the maturity of, or restructuring
all or any portion of the Indebtedness under such agreement or any successor
agreements) (the SCIS Banks, the SCIS Co-Arrangers and the SCIS Administrative
Agent are herein called the "SCIS Bank Creditors");
WHEREAS, SCIS, Caterair, various lenders from time to time
party thereto (the "Caterair Banks", and together with the SCIS Banks, the
"Banks"), Bankers Trust Company and J.P. Morgan Securities Inc., as Co-Arrangers
(the "Caterair Co-Arrangers", and together with the SCIS Co-Arrangers, the
"Co-Arrangers"), Bankers Trust Company, as Syndication Agent, and Morgan
Guaranty Trust Company of New York, as Administrative Agent (together with any
successor administration agent, the "Caterair Administrative Agent", and
together with the SCIS Administrative Agent, the "Administrative Agents"), have
entered into a Term Loan Agreement, dated as of August 28, 1997, providing for
the
<PAGE> 216
EXHIBIT G-2
Page 2
making of loans to SCIS and Caterair as contemplated therein (as used herein,
the term "Caterair Credit Agreement" means the Term Loan Agreement described
above in this paragraph, as the same may be amended, modified, extended,
renewed, replaced, restated or supplemented from time to time, and including any
agreement extending the maturity of, or restructuring all or any portion of the
Indebtedness under such agreement or any successor agreements, and the SCIS
Credit Agreement, together with the Caterair Credit Agreement, are herein called
the "Credit Agreements") (the Caterair Banks, the Caterair Co-Arrangers and the
Caterair Administrative Agent are herein called the "Caterair Bank Creditors",
and together with the SCIS Bank Creditors, are herein called "Bank Creditors");
WHEREAS, SCIS, Caterair and/or one or more of their respective
Subsidiaries may at any time and from time to time enter into one or more
Interest Rate Protection Agreements or Other Hedging Agreements with one or more
Banks or any affiliate thereof (each such Bank or affiliate, even if the
respective Bank subsequently ceases to be a Bank under the applicable Credit
Agreement for any reason, together with such Bank's or affiliate's successors
and assigns, if any, collectively, the "Other Creditors," and together with the
Bank Creditors and the Pledgee, the "Secured Creditors");
WHEREAS, pursuant to each OFSI Guaranty, the Pledgor has
guaranteed to the Secured Creditors the payment when due of all Guaranteed
Obligations as described therein;
WHEREAS, the Pledgor entered into the OFSI Pledge Agreement,
dated as of September 29, 1995 (as amended, modified or supplemented to the date
hereof, the "Original OFSI Pledge Agreement");
WHEREAS, it is a condition precedent to the making of loans
and the issuance of letters of credit under the Credit Agreements that the
Pledgor shall have executed and delivered a counterpart to this Agreement; and
WHEREAS, the Pledgor will obtain benefits from the incurrence
of loans and the issuance of letters of credit under the Credit Agreements and
the entering into of Interest Rate Protection Agreements or Other Hedging
Agreements with the Other Creditors and, accordingly, the Pledgor desires to
enter into this Agreement in order to satisfy the conditions described in the
preceding paragraph and to amend and restate the Original OFSI Pledge Agreement
in its entirety in the form of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to the Pledgor, the receipt and sufficiency of which are
hereby acknowledged, the Pledgor hereby makes the following representations and
warranties to the Pledgee for the
<PAGE> 217
EXHIBIT G-2
Page 3
benefit of the Secured Creditors and hereby covenants and agrees with the
Pledgee for the benefit of the Secured Creditors as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by the
Pledgor for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations,
liabilities and indebtedness of the Pledgor to the SCIS Bank Creditors,
whether now existing or hereafter incurred under, arising out of, or in
connection with the SCIS Credit Agreement and the other SCIS Credit
Documents (such term to mean the "Credit Documents" as defined in the
SCIS Credit Agreement") (including, without limitation, all of its
obligations, liabilities and indebtedness under the OFSI Guaranty (as
defined in the SCIS Credit Agreement)) to which the Pledgor is a party
and the due performance and compliance by the Pledgor with all of the
terms, conditions and agreements contained in the SCIS Credit Agreement
and such other SCIS Credit Documents (all such obligations, liabilities
and indebtedness under this clause (i), except to the extent consisting
of obligations, liabilities or indebtedness with respect to Interest
Rate Protection Agreements or Other Hedging Agreements, being herein
collectively called the "SCIS Credit Document Obligations");
(ii) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations,
liabilities and indebtedness of the Pledgor to the Caterair Bank
Creditors, whether now existing or hereafter incurred under, arising
out of, or in connection with the Caterair Credit Agreement and the
other Caterair Credit Documents (such term to mean the "Credit
Documents" as defined in the Caterair Credit Agreement", and the
Caterair Credit Documents, together with the SCIS Credit Documents, are
referred to herein as the "Credit Documents") (including, without
limitation, all of its obligations, liabilities and indebtedness under
the OFSI Guaranty (as defined in the Caterair Credit Agreement)) to
which the Pledgor is a party and the due performance and compliance by
the Pledgor with all of the terms, conditions and agreements contained
in the Caterair Credit Agreement and such other Caterair Credit
Documents (all such obligations, liabilities and indebtedness under
this clause (i), except to the extent consisting of obligations,
liabilities or indebtedness with respect to Interest Rate Protection
Agreements or Other Hedging Agreements, being herein collectively
called the "Caterair Credit Document Obligations");
(iii) the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of all obligations,
liabilities and indebtedness owing by the Pledgor to the Other
Creditors under, arising out of or with respect to, any Interest Rate
Protection Agreement or Other Hedging Agreement (including,
<PAGE> 218
EXHIBIT G-2
Page 4
without limitation, all of its obligations, liabilities and
indebtedness under each OFSI Guaranty in respect of such Interest Rate
Protection Agreements or Other Hedging Agreements), whether such
Interest Rate Protection Agreement or Other Hedging Agreement is now in
existence or hereafter arising, and the due performance and compliance
by the Pledgor with all of the terms, conditions and agreements
contained therein (all such obligations, liabilities and indebtedness
described in this clause (iii) being herein collectively called the
"Other Obligations");
(iv) any and all sums advanced by the Pledgee in order to
preserve the Collateral (as hereinafter defined) or preserve its
security interest in the Collateral;
(v) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations or liabilities of the
Pledgor referred to in clauses (i), (ii) and (iii) above, upon the
occurrence and during the continuance of an Event of Default (such
term, as used in this Agreement, shall mean any Event of Default under,
and as defined in, either the Credit Agreement, or any payment default
under any Interest Rate Protection Agreement or Other Hedging
Agreement, and shall, in any event, include without limitation, any
payment default (after the expiration of any applicable grace period)
on any of the Obligations (as hereinafter defined)) shall have occurred
and be continuing, the reasonable expenses of retaking, holding,
preparing for sale or lease, selling or otherwise disposing of or
realizing on the Collateral, or of any exercise by the Pledgee of its
rights hereunder, together with reasonable attorneys' fees and court
costs; and
(vi) all amounts paid by any Secured Creditor as to which such
Secured Creditor has the right to reimbursement under Section 11 of
this Agreement.
All such obligations, liabilities, indebtedness, sums and expenses set forth in
clauses (i) through (vi) of this Section 1 being herein collectively called the
"Obligations," it being acknowledged and agreed that the "Obligations" shall
include extensions of credit of the types described above, whether outstanding
on the date of this Agreement or extended from time to time after the date of
this Agreement.
2. DEFINITION OF STOCK, NOTES, SECURITIES, ETC. As used
herein, (i) the term "Stock" shall mean all of the issued and outstanding shares
of capital stock (including, but not limited to, warrants, options or other
rights to acquire shares thereof) at any time owned by the Pledgor of SCIS or
any of its Subsidiaries or Caterair Holdings or any of its Subsidiaries,
provided that the term "Stock" shall not include, except as otherwise provided
below, more than 65% of the total combined voting power of all classes of
capital stock of any Foreign Subsidiary owned by the Pledgor or any stock held
<PAGE> 219
EXHIBIT G-2
Page 5
as part of the Class B Assets; (ii) the term "Notes" shall mean all of the
promissory notes from time to time issued to, or held by, the Pledgor
representing obligations of SCIS or any of its Subsidiaries, Caterair Holdings
or any of its Subsidiaries (including the Caterair Holdings Unsecured Debenture
to the extent held by the Pledgor) or any of the Lufthansa Companies (to the
extent the obligations of the Lufthansa Companies are evidenced by a Note); and
(iii) the term "Securities" shall mean all of the Stock and Notes. The Pledgor
represents and warrants that, on the date hereof, (a) the Stock held by the
Pledgor consists of the number and type of shares of the stock of the
corporations as described in Annex A hereto, (b) such Stock constitutes that
percentage of the issued and outstanding shares of capital stock of the issuing
corporation as is set forth in Annex A hereto, (c) the Notes held by the Pledgor
consist of the promissory notes described in Annex B hereto, (d) the Pledgor is
the holder of record and sole beneficial owner of the Stock and the Notes and
there exist no options or preemption rights in respect of any of the Stock and
(e) the Pledgor owns no other Securities. Following a change in the relevant
provisions of the Code or the regulations, published rules, published rulings,
notices or other official pronouncements issued or promulgated thereunder, if
the Pledgee requests a pledge of additional stock of any Foreign Subsidiary of
the Pledgor, all of the stock of which Foreign Subsidiary has not already been
pledged pursuant this Agreement, then within 90 days after such request the
Pledgor shall either (i) pledge such additional stock of such Foreign Subsidiary
or (ii) deliver to the relevant Pledgee an opinion of the counsel of the
Pledgor, which counsel shall be reasonably acceptable to the Pledgee, that the
requested pledge of such additional stock is more likely than not to cause the
undistributed earnings of such Foreign Subsidiary to be treated as a deemed
dividend to such Foreign Subsidiary's United States parent for Federal income
tax purposes.
3. PLEDGE OF SECURITIES, ETC.
3.1. Pledge. To secure the Obligations of the Pledgor, the
Pledgor hereby (i) grants to the Pledgee a security interest in all of the
Collateral owned by the Pledgor, (ii) pledges and deposits as security with the
Pledgee, the Securities owned by the Pledgor on the date hereof, and delivers to
the Pledgee certificates or instruments, if any, therefor, (x) duly endorsed in
blank by the Pledgor in the case of Notes, and (y) accompanied by undated stock
powers duly executed in blank by the Pledgor (and accompanied by any transfer
tax stamps required in connection with the pledge of such Securities) in the
case of Stock, or such other instruments of transfer as are reasonably
acceptable to the Pledgee and (iii) assigns, transfers, hypothecates mortgages,
charges and sets over to the Pledgee all of the Pledgor's right, title and
interest in and to such Securities (and in and to the certificates or
instruments evidencing such Securities), to be held by the Pledgee upon the
terms and conditions set forth in this Agreement.
3.2. Subsequently Acquired Securities. If the Pledgor shall
acquire (by purchase, stock dividend or otherwise) any additional Securities at
any time or from time
<PAGE> 220
EXHIBIT G-2
Page 6
to time after the date hereof, the Pledgor will promptly thereafter pledge and
deposit such Securities (or certificates or instruments representing such
Securities) as security with the Pledgee and deliver to the Pledgee certificates
therefor or instruments thereof, duly endorsed in blank in the case of such
Notes, accompanied by undated stock powers duly executed in blank by the Pledgor
(and accompanied by any transfer tax stamps required in connection with the
pledge of such Securities) in the case of such Stock, or such other instruments
of transfer as are reasonably acceptable to the Pledgee, and accompanied by a
certificate executed by a principal executive officer of the Pledgor in the form
attached as Annex C hereto describing such Securities and certifying that the
same has been duly pledged with the Pledgee hereunder. Except as otherwise
provided in the last sentence of Section 2 hereof, the Pledgor shall not be
required at any time to pledge hereunder any Stock which is more than 65% of the
total combined voting power of all classes of capital stock of any Foreign
Subsidiary owned by the Pledgor.
3.3. Uncertificated Securities. Notwithstanding anything to
the contrary contained in Sections 3.1 and 3.2 hereof, if any Securities
(whether now owned or hereafter acquired) are uncertificated securities, the
Pledgor shall promptly notify the Pledgee thereof, and shall promptly take all
actions required to perfect the security interest of the Pledgee under
applicable law (including, in any event, under Sections 8-313 and 8-321 of the
New York Uniform Commercial Code, if applicable). The Pledgor further agrees to
take such actions as the Pledgee deems reasonably necessary or desirable to
effect the foregoing and to permit the Pledgee to exercise any of its rights and
remedies hereunder, and agrees to provide an opinion of counsel reasonably
satisfactory to the Pledgee with respect to any such pledge of uncertificated
Securities promptly upon the reasonable request of the Pledgee.
3.4. Definitions of Pledged Stock; Pledged Notes; Pledged
Securities and Collateral. All Stock at any time pledged or required to be
pledged hereunder is hereinafter called the "Pledged Stock;" all Notes at any
time pledged or required to be pledged hereunder are hereinafter called the
"Pledged Notes;" all Pledged Stock and Pledged Notes together are called the
"Pledged Securities;" and the Pledged Securities, together with all proceeds
thereof, including any securities and moneys received and at the time held by
the Pledgee hereunder, are herein called the "Collateral."
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee
shall have the right to appoint one or more sub-agents for the purpose of
retaining physical possession of the Pledged Securities, which may be held (in
the discretion of the Pledgee) in the name of the Pledgor, endorsed or assigned
in blank or in favor of the Pledgee or any nominee or nominees of the Pledgee or
a sub-agent appointed by the Pledgee.
<PAGE> 221
EXHIBIT G-2
Page 7
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until
there shall have occurred and be continuing an Event of Default and the Pledgee
has exercised any of its remedies under Section 7(d) hereof (or has given notice
to the Pledgor that it intends to exercise such remedies, although no such
notice shall be required and the Pledgee shall be entitled to exercise such
remedies immediately upon the occurrence of a bankruptcy or insolvency Event of
Default of the type described in either Credit Agreement in respect of the
Pledgor), the Pledgor shall be entitled to exercise any and all voting and other
consensual rights and powers pertaining to the Pledged Securities owned by it,
and to give consents, waivers or ratifications in respect thereof; provided that
no vote shall be cast or any consent, waiver or ratification given or any action
taken which would violate or be inconsistent with any of the terms of this
Agreement, the Credit Agreements, any other Credit Document or any Interest Rate
Protection Agreement or Other Hedging Agreement (collectively, the "Secured Debt
Agreements"), or which would have the effect of impairing the value of the
Collateral or any part thereof or the position or interests of the Pledgee in
the Collateral. All such rights of the Pledgor to vote and to give consents,
waivers and ratifications shall cease in case an Event of Default has occurred
and is continuing, and the Pledgee has exercised any of its remedies under
Section 7(d) hereof (or has given notice to the Pledgor that it intends to
exercise such remedies, although no such notice shall be required and the
Pledgee shall be entitled to exercise such remedies immediately upon the
occurrence of a bankruptcy or insolvency Event of Default of the type described
in either Credit Agreement in respect of the Pledgor).
6. DIVIDENDS AND OTHER DISTRIBUTIONS. (a) Unless and until
there shall have occurred and be continuing an Event of Default and the Pledgee
has exercised any of its remedies under Section 7(a) hereof (or has given notice
to the Pledgor that it intends to exercise such remedies, although no such
notice shall be required and the Pledgee shall be entitled to exercise such
remedies immediately upon the occurrence of an Event of Default of the type
described in either Credit Agreement in respect of the Pledgor), (i) all
dividends and other distributions payable in respect of the Pledged Stock shall
be paid to the Pledgor in accordance with (and to the extent permitted by) the
Credit Agreements, and (ii) all payments in respect of the Pledged Notes shall
be paid to the Pledgor.
(b) Nothing contained in this Section 6 shall limit or
restrict in any way the Pledgee's right to receive proceeds of the Collateral in
any form in accordance with Section 3 of this Agreement. All dividends,
distributions or other payments in respect of the Collateral which are received
by the Pledgor contrary to the provisions of this Section 6 or Section 7 hereof
shall be held in trust for the benefit of the Pledgee, shall be segregated from
other property or funds of the Pledgor and shall be forthwith delivered to the
Pledgee as Collateral in the same form as so received (with any necessary
endorsement).
<PAGE> 222
EXHIBIT G-2
Page 13
full force and effect without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstance or occurrence
whatsoever, including, without limitation: (i) any renewal, extension, amendment
or modification of or addition or supplement to or deletion from any Secured
Debt Agreement or any other instrument or agreement referred to therein, or any
assignment or transfer of any thereof; (ii) any waiver, consent, extension,
indulgence or other action or inaction under or in respect of any such Secured
Debt Agreement or other agreement or instrument including, without limitation,
this Agreement; (iii) any furnishing of any additional security to the Pledgee
or its assignee or any acceptance thereof or any release of any security by the
Pledgee or its assignee; (iv) any limitation on any party's liability or
obligations under any such instrument or agreement or any invalidity or
unenforceability, in whole or in part, of any such instrument or agreement or
any term thereof; or (v) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceeding
relating to the Pledgor or any Subsidiary of the Pledgor, or any action taken
with respect to this Agreement by any trustee or receiver, or by any court, in
any such proceeding, whether or not the Pledgor shall have notice or knowledge
of any of the foregoing (it being understood that the enforcement hereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar rights generally affecting creditors' rights and by equitable
principles (regardless of whether enforcement is sought in equity or at law)).
17. REGISTRATION, ETC. (a) If there shall have occurred and be
continuing an Event of Default then, and in every such case, upon receipt by the
Pledgor from the Pledgee of a written request or requests that the Pledgor cause
any registration, qualification or compliance under any Federal, state or other
applicable securities law or laws to be effected with respect to all or any part
of the Pledged Stock, the Pledgor as soon as practicable and at its expense will
cause such registration to be effected (and be kept effective) and will cause
such qualification and compliance to be declared effected (and be kept
effective) as may be so requested and as would permit or facilitate the sale and
distribution of such Pledged Stock, including, without limitation, registration
under the Securities Act of 1933, as then in effect (or any similar statute then
in effect), appropriate qualifications under applicable blue sky, state or other
applicable securities laws and appropriate compliance with any other government
requirements; provided that the Pledgee shall furnish to the Pledgor such
information regarding the Pledgee as the Pledgor may reasonably request in
writing and as shall be required in connection with any such registration,
qualification or compliance. The Pledgor will cause the Pledgee to be kept
advised in writing as to the progress of each such registration, qualification
or compliance and as to the completion thereof, will furnish to the Pledgee such
number of prospectuses, offering circulars or other documents incident thereto
as the Pledgee from time to time may reasonably request, and will indemnify the
Pledgee, each other Secured Creditor and all others participating in the
distribution of such Pledged Stock against all claims, losses, damages and
liabilities caused by any untrue statement (or alleged untrue statement) of a
material fact contained therein (or in any related registration statement,
notification or the like) or by any
<PAGE> 223
EXHIBIT G-2
Page 14
omission (or alleged omission) to state therein (or in any related registration
statement, notification or the like) a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as the same may have been caused by an untrue statement or omission
based upon information furnished in writing to the Pledgor by the Pledgee or
such other Secured Creditor expressly for use therein.
(b) If at any time when the Pledgee shall determine to
exercise its right to sell all or any part of the Pledged Securities pursuant to
Section 7 hereof, and such Pledged Securities or the part thereof to be sold
shall not, for any reason whatsoever, be effectively registered under the
Securities Act of 1933, as then in effect, the Pledgee may, in its sole and
absolute discretion, sell such Pledged Securities or part thereof by private
sale in such manner and under such circumstances as the Pledgee may deem
necessary or advisable in order that such sale may legally be effected without
such registration. Without limiting the generality of the foregoing, in any such
event the Pledgee, in its sole and absolute discretion (i) may proceed to make
such private sale notwithstanding that a registration statement for the purpose
of registering such Pledged Securities or part thereof shall have been filed
under such Securities Act, (ii) may approach and negotiate with a single
possible purchaser to effect such sale, and (iii) may restrict such sale to a
purchaser who will represent and agree that such purchaser is purchasing for its
own account, for investment, and not with a view to the distribution or sale of
such Pledged Securities or part thereof. In the event of any such sale, the
Pledgee shall incur no responsibility or liability for selling all or any part
of the Pledged Securities at a price which the Pledgee, in its sole and absolute
discretion, in good faith deems reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might be
realized if the sale were deferred until after registration as aforesaid.
18. TERMINATION; RELEASE. (a) On the Termination Date (as
defined in the Security Agreement), but only after giving effect to the
repayments to be made on such date, this Agreement and the security interest
created hereby shall terminate (provided that all indemnities set forth herein
including, without limitation, in Section 11 hereof shall survive any such
termination), and the Pledgee, at the request and expense of the Pledgor, will
execute and deliver to the Pledgor such proper instrument or instruments
acknowledging the satisfaction and termination of this Agreement, and will duly
assign, release, transfer and deliver to the Pledgor (without recourse and
without any representation or warranty) all of the Collateral as has not
theretofore been sold or otherwise applied or released pursuant to this
Agreement, together with any moneys at the time held by the Pledgee or any of
its sub-agents hereunder.
(b) In the event that all or any part of the Collateral is
sold, conveyed or disposed of in connection with any form of asset disposition
permitted by the Credit Agreements or otherwise released, in whole or in part,
at the direction of the Required Secured Creditors and the proceeds of such
asset disposition are applied in accordance with,
<PAGE> 224
EXHIBIT G-2
Page 15
and to the extent required by, the provisions of the Credit Agreements, the
Pledgee, at the request and expense of the Pledgor, will duly assign, release,
transfer and deliver to the Pledgor (without recourse and without any
representation or warranty) such of the Collateral (and releases therefor) as is
then being (or has been) so sold or released and has not theretofore been
released pursuant to this Agreement.
(c) At any time that the Pledgor desires that the Pledgee
assign, release, transfer and deliver Collateral as provided in Section 18(a) or
(b) hereof, it shall deliver to the Pledgee a certificate signed by a principal
executive officer of the Pledgor stating that the release of the respective
Collateral is in accordance with Section 18(a) or (b).
(d) The Pledgee shall have no liability whatsoever to any
Secured Creditor as the result of any release of Collateral by it in accordance
with this Section 18.
19. NOTICES ETC. All such notices and communications hereunder
shall be sent or delivered by mail, telegraph, telex, telecopy, cable or
overnight courier service and all such notices and communications shall, when
mailed, telegraphed, telexed, telecopied, or cabled or sent by overnight
courier, be effective when delivered to the telegraph company, cable company or
overnight courier, as the case may be, or sent by telex or telecopier and when
mailed shall be effective three Business Days following deposit in the mail with
proper postage, except that notices and communications to the Pledgee shall not
be effective until received by the Pledgee. All notices and other communications
shall be in writing and addressed as follows:
(a) if to the Pledgor, to the address and communications
information set forth opposite its signature below;
(b) if to the Pledgee, at the following address of, and the
communications information for, the Pledgee:
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260-0060
Attention: Laura Loffredo
Telephone No.: (212) 648-6793
Facsimile No.: (212) 648-5336
(c) if to any Bank Creditor, either (x) to the respective
Administrative Agent, at the address of such Administrative Agent
specified in the respective Credit Agreement or (y) at such address and
communications information as such Bank Creditor shall have specified
in the Credit Agreement;
<PAGE> 225
EXHIBIT G-2
Page 16
(d) if to any Other Creditor at such address and
communications information as such Other Creditor shall have specified
in writing to the Pledgor and the Pledgee;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
20. WAIVER; AMENDMENT. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing and duly signed by the Pledgor and the Pledgee
(with the written consent of the Required Secured Creditors); provided, that any
change, waiver, modification or variance affecting the rights and benefits of a
single Class (as defined below) of Secured Creditors (and not all Secured
Creditors in a like or similar manner) shall also require the written consent of
the Requisite Creditors (as defined below) of such affected Class. For the
purpose of this Agreement, the term "Class" shall mean each class of Secured
Creditors, i.e., whether (i) the SCIS Bank Creditors as holders of the SCIS
Credit Document Obligations, (ii) the Caterair Bank Creditors as holders of the
Caterair Credit Document Obligations or (iii) the Other Creditors as the holders
of the Other Obligations. For the purpose of this Agreement, the term "Requisite
Creditors" of any Class shall mean each of (i) with respect to the SCIS Credit
Document Obligations, the Required Banks under, and as defined in, the SCIS
Credit Agreement, (ii) with respect to the Caterair Credit Document Obligations,
the Required Banks under, and as defined in, the Caterair Credit Agreement and
(iii) with respect to the Other Obligations, the holders of a majority of all
obligations outstanding from time to time under the Interest Rate Protection
Agreements or Other Hedging Agreements.
21. MISCELLANEOUS. This Agreement shall be binding upon the
successors and assigns of the Pledgor (although the Pledgor may not assign its
rights and obligations hereunder except in accordance with the provisions of the
Secured Debt Agreements) and shall inure to the benefit of and be enforceable by
each of the parties hereto and its successors and assigns. THIS AGREEMENT SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS EXCEPT FOR THE CHOICE OF
LAW PROVISIONS OF THE NEW YORK UNIFORM COMMERCIAL CODE. EACH OF THE PARTIES TO
THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS DOCUMENT,
THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
The headings in this Agreement are for purposes of reference only and shall not
limit or define the meaning hereof. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which shall
constitute one instrument. In the event that any
<PAGE> 226
EXHIBIT G-2
Page 17
provision of this Agreement shall prove to be invalid or unenforceable, such
provision shall be deemed to be severable from the other provisions of this
Agreement which shall remain binding on all parties hereto.
22. RECOURSE. This Agreement is made with full recourse to the
Pledgor (including, without limitation, with full recourse to all assets of the
Pledgor) and pursuant to and upon all the representations, warranties, covenants
and agreements on the part of the Pledgor contained herein, in the other Secured
Debt Agreements and otherwise in writing in connection herewith or therewith.
Notwithstanding anything to the contrary contained in this Agreement, the
Secured Creditors acknowledge and agree that they shall have no recourse against
the Pledgor under this Agreement in respect of the Class B Assets (but, in the
case of any Class B Assets constituting cash, only to the extent that such cash
has been segregated from the other assets (including other cash) of the
Pledgor).
* * *
<PAGE> 227
EXHIBIT G-2
Page 18
IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused
this Agreement to be executed by their duly elected officers duly authorized as
of the date first above written.
Address:
c/o Sky Chefs,Inc. ONEX FOOD SERVICES, INC.,
524 East Lamar Boulevard as Pledgor
Arlington, Texas 76011
By__________________________
Title:
60 Wall Street MORGAN GUARANTY TRUST
New York, New York 10260-0060 COMPANY OF NEW YORK,
as Pledgee, Collateral Agent
By__________________________
Title:
<PAGE> 228
ANNEX A
to
AMENDED AND RESTATED
OFSI PLEDGE AGREEMENT
LIST OF STOCK
<TABLE>
<CAPTION>
===========================================================================================================
ISSUER/JURISDICTION OF PLEDGOR CLASS OF AUTHORIZED SHARES PERCENT- STOCK # OF
INCORPORATION STOCK SHARES ISSUED AGE TO BE CERT. SHARES
PLEDGED NUMBER PLEDGED
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SC International OFSI Common-$.01 3,000 100 100% 1 100
Services, Inc. (Delaware) par
- -----------------------------------------------------------------------------------------------------------
===========================================================================================================
</TABLE>
<PAGE> 229
ANNEX B
to
AMENDED AND RESTATED
OFSI PLEDGE AGREEMENT
LIST OF NOTES
<TABLE>
<CAPTION>
==========================================================================================
DEBTOR DATE ISSUED PRINCIPAL AMOUNT
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Caterair Holdings Corporation June 15, 1995 $4,245,103.00
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation March 15, 1995 $3,990,696.12
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation Dec. 15, 1994 $3,875,832.01
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation Sept. 15, 1994 $3,762,188.25
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation June 15, 1994 $3,612,182.34
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation March 15, 1994 $3,395,706.08
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation Dec. 15, 1993 $3,297,967.55
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation Sept. 15, 1993 $3,201,267.43
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation June 15, 1993 $3,073,626.55
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation March 15, 1993 $2,889,425.66
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation Dec. 15, 1992 $2,806,259.39
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation Sept. 15, 1992 $2,723,976.71
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation June 15, 1992 $2,615,366.35
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation March 15, 1992 $2,484,869.01
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation Dec. 15, 1991 $2,386,826.79
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation Sept. 15, 1991 $2,316,842.34
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation June 15, 1991 $2,224,465.24
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation March 15, 1991 $2,091,154.16
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation Dec. 15, 1990 $2,030,964.52
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation Sept. 15, 1990 $1,971,414.36
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation June 15, 1990 $1,892,810.16
- ------------------------------------------------------------------------------------------
Caterair Holdings Corporation March 15, 1990 $1,779,375.00
==========================================================================================
</TABLE>
<PAGE> 230
ANNEX C
to
OFSI
PLEDGE AGREEMENT
FORM OF CERTIFICATE
[Date]
Morgan Guaranty Trust Company
of New York, as Collateral Agent
60 Wall Street
New York, New York 10260-0060
Attention: ___________________
Ladies and Gentlemen:
Reference is hereby made to the Pledge Agreement, dated as of
September 29, 1995 and amended and restated as of August 28, 1997, between the
undersigned and you, as Collateral Agent (the "Pledge Agreement"). Pursuant to
Section 3.2 of the Pledge Agreement, the undersigned hereby pledges and delivers
to you under the Pledge Agreement [stock certificate number ____, representing
____ shares of the capital stock of ____, together with a duly executed and
undated stock power for such shares] [a promissory note issued by __________ in
favor of the undersigned, duly endorsed in blank].
Very truly yours,
[NAME OF PLEDGOR]
By_______________________
Title:
Accepted this ____ day
of ________, _____:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Collateral Agent
By________________________
Title:
<PAGE> 231
EXHIBIT G-3
AMENDED AND RESTATED DESIGNATED ONEX SUB PLEDGE AGREEMENT
AMENDED AND RESTATED PLEDGE AGREEMENT (as amended, modified or
supplemented from time to time, this "Agreement"), dated as of January 1, 1997
and amended and restated as of August 28, 1997, made by ONEX OFSI HOLDINGS INC.,
an Ontario corporation (the "Pledgor"), in favor of MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Collateral Agent (together with any successor pledgee,
the "Pledgee"), for the benefit of the Secured Creditors (as defined below).
Except as otherwise defined herein, capitalized terms used herein and defined in
the SCIS Credit Agreement (as defined below) or in the Caterair Credit Agreement
(as defined below), as the case may be, shall be used herein as therein defined.
WITNESSETH:
WHEREAS, Onex Food Services, Inc. ("OFSI"), SC International Services,
Inc. ("SCIS"), Caterair Holdings Corporation ("Caterair Holdings"), Caterair
International Corporation ("Caterair"), various lenders from time to time party
thereto (the "SCIS Banks"), Bankers Trust Company and J.P. Morgan Securities
Inc., as Co-Arrangers (the "SCIS Co-Arrangers"), Bankers Trust Company, as
Syndication Agent, The Bank of New York, as Co-Agent, and Morgan Guaranty Trust
Company of New York, as Administrative Agent, (together with any successor
administrative agent, the "SCIS Administrative Agent"), have entered into a
Credit Agreement, dated as of September 29, 1995 and amended and restated as of
August 28, 1997, providing for the making of loans to SCIS and the issuance of,
and participation in, letters of credit for the account of SCIS as contemplated
therein (as used herein, the term "SCIS Credit Agreement" means the Credit
Agreement described above in this paragraph, as the same may be amended,
modified, extended, renewed, replaced, restated or supplemented from time to
time, and including any agreement extending the maturity of, or restructuring
all or any portion of the Indebtedness under such agreement or any successor
agreements) (the SCIS Banks, the SCIS Co-Arrangers and the SCIS Administrative
Agent are herein called the "SCIS Bank Creditors");
WHEREAS, SCIS, Caterair, various lenders from time to time party
thereto (the "Caterair Banks", and together with the SCIS Banks, the "Banks"),
Bankers Trust Company and J.P. Morgan Securities Inc., as Co-Arrangers (the
"Caterair Co-Arrangers", and together with the SCIS Co-Arrangers, the
"Co-Arrangers"), Bankers Trust Company,
<PAGE> 232
EXHIBIT G-3
Page 2
as Syndication Agent, and Morgan Guaranty Trust Company of New York, as
Administrative Agent (together with any successor administrative agent, the
"Caterair Administrative Agent", and together with the SCIS Administrative
Agent, the "Administrative Agents"), have entered into a Term Loan Agreement,
dated as of August 28, 1997, providing for the making of loans to SCIS and
Caterair as contemplated therein (as used herein, the term "Caterair Credit
Agreement" means the Term Loan Agreement described above in this paragraph, as
the same may be amended, modified, extended, renewed, replaced, restated or
supplemented from time to time, and including any agreement extending the
maturity of, or restructuring all or any portion of the Indebtedness under such
agreement or any successor agreements, and the Caterair Credit Agreement,
together with the SCIS Credit Agreement, are herein called the "Credit
Agreements") (the Caterair Banks, the Caterair Co-Arrangers and the Caterair
Administrative Agent are herein called the "Caterair Bank Creditors", and
together with the SCIS Bank Creditors, are herein called the "Bank Creditors");
WHEREAS, SCIS, Caterair and/or one or more of their respective
Subsidiaries may at any time and from time to time enter into one or more
Interest Rate Protection Agreements or Other Hedging Agreements with one or more
Banks or any affiliate thereof (each such Bank or affiliate, even if the
respective Bank subsequently ceases to be a Bank under the applicable Credit
Agreement for any reason, together with such Bank's or affiliate's successors
and assigns, if any, collectively, the "Other Creditors," and together with the
Bank Creditors and the Pledgee, the "Secured Creditors");
WHEREAS, the Pledgor is an Affiliate of OFSI, SCIS and Caterair;
WHEREAS, pursuant to the Designated Onex Sub Guaranty, the Pledgor has
guaranteed to the Secured Creditors the payment when due of all Guaranteed
Obligations as described therein;
WHEREAS, the Pledgor entered into a Designated Onex Sub Pledge
Agreement, dated as of January 1, 1997 (as amended, modified or supplemented to
the date hereof, the "Original Designated Onex Sub Pledge Agreement");
WHEREAS, it is a condition precedent to the making of loans and the
issuance of letters of credit under the Credit Agreements that the Pledgor shall
have executed and delivered a counterpart to this Agreement; and
WHEREAS, the Pledgor will obtain benefits from the incurrence of loans
and the issuance of letters of credit under the Credit Agreements and the
entering into of
<PAGE> 233
EXHIBIT G-3
Page 3
Interest Rate Protection Agreements or Other Hedging Agreements with the Other
Creditors and, accordingly, the Pledgor desires to enter into this Agreement in
order to satisfy the conditions described in the preceding paragraph and to
amend and restate the Original Designated Onex Sub Pledge Agreement in its
entirety in the form of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to the Pledgor, the receipt and sufficiency of which are hereby
acknowledged, the Pledgor hereby makes the following representations and
warranties to the Pledgee for the benefit of the Secured Creditors and hereby
covenants and agrees with the Pledgee for the benefit of the Secured Creditors
as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by the Pledgor for
the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities and
indebtedness of the Pledgor to the SCIS Bank Creditors, whether now
existing or hereafter incurred under, arising out of, or in connection with
the Designated Onex Sub Guaranty and the due performance and compliance by
the Pledgor with all of the terms, conditions and agreements contained in
the Designated Onex Sub Guaranty and herein (all such obligations,
liabilities and indebtedness under this clause (i), except to the extent
consisting of obligations, liabilities or indebtedness with respect to
Interest Rate Protection Agreements or Other Hedging Agreements, being
herein collectively called the "SCIS Credit Document Obligations");
(ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities and
indebtedness of the Pledgor to the Caterair Bank Creditors, whether now
existing or hereafter incurred under, arising out of, or in connection with
the Designated Onex Sub Guaranty and the due performance and compliance by
the Pledgor with all of the terms, conditions and agreements contained in
the Designated Onex Sub Guaranty and herein (all such obligations,
liabilities and indebtedness under this clause (i), except to the extent
consisting of obligations, liabilities or indebtedness with respect to
Interest Rate Protection Agreements or Other Hedging Agreements, being
herein collectively called the "Caterair Credit Document Obligations");
(iii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities and
indebtedness
<PAGE> 234
EXHIBIT G-3
Page 4
owing by the Pledgor to the Other Creditors under, arising out of or with
respect to, the Designated Onex Sub Guaranty in respect of any Interest
Rate Protection Agreements or Other Hedging Agreements, whether such
Interest Rate Protection Agreement or Other Hedging Agreement is now in
existence or hereafter arising, and the due performance and compliance by
the Pledgor with all of the terms, conditions and agreements contained in
the Designated Onex Sub Guaranty and herein (all such obligations,
liabilities and indebtedness described in this clause (iii) being herein
collectively called the "Other Obligations");
(iv) any and all sums advanced by the Pledgee in order to preserve
the Collateral (as hereinafter defined) or preserve its security interest
in the Collateral;
(v) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations or liabilities of the Pledgor
referred to in clauses (i) and (ii) above, upon the occurrence and during
the continuance of an Event of Default (such term, as used in this
Agreement, shall mean any Event of Default under, and as defined in, either
Credit Agreement, or any payment default under any Interest Rate Protection
Agreement or Other Hedging Agreement, and shall, in any event, include
without limitation, any payment default (after the expiration of any
applicable grace period) on any of the Obligations (as hereinafter
defined)) shall have occurred and be continuing, the reasonable expenses of
retaking, holding, preparing for sale or lease, selling or otherwise
disposing of or realizing on the Collateral, or of any exercise by the
Pledgee of its rights hereunder, together with reasonable attorneys' fees
and court costs; and
(vi) all amounts paid by any Secured Creditor as to which such
Secured Creditor has the right to reimbursement under Section 11 of this
Agreement.
All such obligations, liabilities, indebtedness, sums and expenses set forth in
clauses (i) through (vi) of this Section 1 being herein collectively called the
"Obligations," it being acknowledged and agreed that the "Obligations" shall
include extensions of credit of the types described above, whether outstanding
on the date of this Agreement or extended from time to time after the date of
this Agreement.
2. DEFINITION OF SECURITIES, ETC. As used herein, the term
"Securities" shall mean all of the issued and outstanding shares of capital
stock (including, but not limited to, warrants, options or other rights to
acquire shares thereof) at any time owned by the Pledgor of Caterair Holdings.
The Pledgor represents and warrants that, on the date hereof, (a) the Securities
held by the Pledgor consists of the number and type of
<PAGE> 235
EXHIBIT G-3
Page 5
shares of the capital stock of Caterair Holdings as described in Annex A hereto,
(b) such Securities constitutes that percentage of the issued and outstanding
shares of capital stock of Caterair Holdings as is set forth in Annex A hereto
and (c) the Pledgor is the holder of record and sole beneficial owner of the
Securities and there exist no options or preemption rights in respect of any of
the Securities.
3. PLEDGE OF SECURITIES, ETC.
3.1. Pledge. To secure the Obligations of the Pledgor, the Pledgor
hereby (i) grants to the Pledgee a security interest in all of the Collateral
owned by the Pledgor, (ii) pledges and deposits as security with the Pledgee,
the Securities owned by the Pledgor on the date hereof, and delivers to the
Pledgee certificates or instruments, if any, therefor, accompanied by undated
stock powers duly executed in blank by the Pledgor (and accompanied by any
transfer tax stamps required in connection with the pledge of such Securities)
or such other instruments of transfer as are reasonably acceptable to the
Pledgee and (iii) assigns, transfers, hypothecates mortgages, charges and sets
over to the Pledgee all of the Pledgor's right, title and interest in and to
such Securities (and in and to the certificates or instruments evidencing such
Securities), to be held by the Pledgee upon the terms and conditions set forth
in this Agreement.
3.2. Subsequently Acquired Securities. If the Pledgor shall acquire (by
purchase, stock dividend or otherwise) any additional Securities at any time or
from time to time after the date hereof, the Pledgor will promptly thereafter
pledge and deposit such Securities (or certificates or instruments representing
such Securities) as security with the Pledgee and deliver to the Pledgee
certificates therefor or instruments thereof, accompanied by undated stock
powers duly executed in blank by the Pledgor (and accompanied by any transfer
tax stamps required in connection with the pledge of such Securities) or such
other instruments of transfer as are reasonably acceptable to the Pledgee, and
accompanied by a certificate executed by a principal executive officer of the
Pledgor in the form attached as Annex B hereto describing such Securities and
certifying that the same has been duly pledged with the Pledgee hereunder.
3.3. Uncertificated Securities. Notwithstanding anything to the
contrary contained in Sections 3.1 and 3.2 hereof, if any Securities (whether
now owned or hereafter acquired) are uncertificated securities, the Pledgor
shall promptly notify the Pledgee thereof, and shall promptly take all actions
required to perfect the security interest of the Pledgee under applicable law
(including, in any event, under Sections 8-313 and 8-321 of the New York Uniform
Commercial Code, if applicable). The Pledgor further agrees to take such actions
as the Pledgee deems reasonably necessary or desirable to effect the foregoing
and
<PAGE> 236
EXHIBIT G-3
Page 6
to permit the Pledgee to exercise any of its rights and remedies hereunder, and
agrees to provide an opinion of counsel reasonably satisfactory to the Pledgee
with respect to any such pledge of uncertificated Securities promptly upon the
reasonable request of the Pledgee.
3.4. Definitions of Pledged Securities and Collateral. All Securities
at any time pledged or required to be pledged hereunder is hereinafter called
the "Pledged Securities;" and the Pledged Securities, together with all proceeds
thereof, including any securities and moneys received and at the time held by
the Pledgee hereunder, are herein called the "Collateral."
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The Pledgee shall have
the right to appoint one or more sub-agents for the purpose of retaining
physical possession of the Pledged Securities, which may be held (in the
discretion of the Pledgee) in the name of the Pledgor, endorsed or assigned in
blank or in favor of the Pledgee or any nominee or nominees of the Pledgee or a
sub-agent appointed by the Pledgee.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until there
shall have occurred and be continuing an Event of Default and the Pledgee has
exercised any of its remedies under Section 7(d) hereof (or has given notice to
the Pledgor that it intends to exercise such remedies, although no such notice
shall be required and the Pledgee shall be entitled to exercise such remedies
immediately upon the occurrence of a bankruptcy or insolvency Event of Default
of the type described in either Credit Agreement in respect of the Pledgor), the
Pledgor shall be entitled to exercise any and all voting and other consensual
rights and powers pertaining to the Pledged Securities owned by it, and to give
consents, waivers or ratifications in respect thereof; provided that no vote
shall be cast or any consent, waiver or ratification given or any action taken
which would violate or be inconsistent with any of the terms of this Agreement,
the Credit Agreements, any other Credit Document or any Interest Rate Protection
Agreement or Other Hedging Agreement (collectively, the "Secured Debt
Agreements"), or which would have the effect of impairing the value of the
Collateral or any part thereof or the position or interests of the Pledgee in
the Collateral. All such rights of the Pledgor to vote and to give consents,
waivers and ratifications shall cease in case an Event of Default has occurred
and is continuing, and the Pledgee has exercised any of its remedies under
Section 7(d) hereof (or has given notice to the Pledgor that it intends to
exercise such remedies, although no such notice shall be required and the
Pledgee shall be entitled to exercise such remedies immediately upon the
occurrence of a bankruptcy or insolvency Event of Default of the type described
in either Credit Agreement in respect of the Pledgor).
<PAGE> 237
EXHIBIT G-3
Page 7
6. DIVIDENDS AND OTHER DISTRIBUTIONS. (a) Unless and until there shall
have occurred and be continuing an Event of Default and the Pledgee has
exercised any of its remedies under Section 7(a) hereof (or has given notice to
the Pledgor that it intends to exercise such remedies, although no such notice
shall be required and the Pledgee shall be entitled to exercise such remedies
immediately upon the occurrence of a bankruptcy or insolvency Event of Default
of the type described in either Credit Agreement in respect of the Pledgor), all
dividends and other distributions (if any) payable in respect of the Pledged
Securities shall be paid to the Pledgor in accordance with (and to the extent
permitted by) the Credit Agreements.
(b) Nothing contained in this Section 6 shall limit or restrict in any
way the Pledgee's right to receive proceeds of the Collateral in any form in
accordance with Section 3 of this Agreement. All dividends, distributions or
other payments in respect of the Collateral which are received by the Pledgor
contrary to the provisions of this Section 6 or Section 7 hereof shall be held
in trust for the benefit of the Pledgee, shall be segregated from other property
or funds of the Pledgor and shall be forthwith delivered to the Pledgee as
Collateral in the same form as so received (with any necessary endorsement).
7. REMEDIES UPON EVENTS OF DEFAULT. If there shall have occurred and
be continuing an Event of Default, then and in every such case, the Pledgee
shall be entitled to exercise all of the rights, powers and remedies (whether
vested in it by this Agreement, any other Secured Debt Agreement or by law) for
the protection and enforcement of its rights in respect of the Collateral, and
the Pledgee shall be entitled to exercise all the rights and remedies of a
secured party under the Uniform Commercial Code and also shall be entitled,
without limitation, to exercise the following rights, which the Pledgor hereby
agrees to be commercially reasonable:
(a) to receive all amounts payable in respect of the Collateral
otherwise payable under Section 6 hereof to the Pledgor;
(b) to transfer all or any part of the Collateral into the Pledgee's
name or the name of its nominee or nominees;
(c) to vote all or any part of the Pledged Securities (whether or
not transferred into the name of the Pledgee) and give all consents,
waivers and ratifications in respect of the Collateral and otherwise act
with respect thereto as though it were the outright owner thereof (the
Pledgor hereby irrevocably constituting and appointing the Pledgee the
proxy and attorney-in-fact of the Pledgor, with full power of substitution
to do so); and
<PAGE> 238
EXHIBIT G-3
Page 8
(d) at any time and from time to time to sell, assign and deliver,
or grant options to purchase, all or any part of the Collateral, or any
interest therein, at any public or private sale, without demand of
performance, advertisement or notice of intention to sell or of the time or
place of sale or adjournment thereof or to redeem or otherwise (all of
which are hereby waived by the Pledgor), for cash, on credit or for other
property, for immediate or future delivery without any assumption of credit
risk, and for such price or prices and on such terms as the Pledgee in its
absolute discretion may determine; provided that at least 10 days' written
notice of the time and place of any such sale shall be given to the
Pledgor. The Pledgee shall not be obligated to make any such sale of
Collateral regardless of whether any such notice of sale has theretofore
been given. The Pledgor hereby waives and releases to the fullest extent
permitted by law any right or equity of redemption with respect to the
Collateral, whether before or after sale hereunder, and all rights, if any,
of marshalling the Collateral and any other security for the Obligations or
otherwise. At any such sale, unless prohibited by applicable law, the
Pledgee on behalf of the Secured Creditors may bid for and purchase all or
any part of the Collateral so sold free from any such right or equity of
redemption. Neither the Pledgee nor any other Secured Creditor shall be
liable for failure to collect or realize upon any or all of the Collateral
or for any delay in so doing nor shall any of them be under any obligation
to take any action whatsoever with regard thereto.
8. REMEDIES, ETC. Each and every right, power and remedy of the
Pledgee provided for in this Agreement or any other Secured Debt Agreement, or
now or hereafter existing at law or in equity or by statute shall be cumulative
and concurrent and shall be in addition to every other such right, power or
remedy. The exercise or beginning of the exercise by the Pledgee or any other
Secured Creditor of any one or more of the rights, powers or remedies provided
for in this Agreement or any other Secured Debt Agreement or now or hereafter
existing at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Pledgee or any other Secured Creditor of
all such other rights, powers or remedies, and no failure or delay on the part
of the Pledgee or any other Secured Creditor to exercise any such right, power
or remedy shall operate as a waiver thereof. No notice to or demand on the
Pledgor in any case shall entitle it to any other or further notice or demand in
similar or other circumstances or constitute a waiver of any of the rights of
the Pledgee or any other Secured Creditor to any other or further action in any
circumstances without notice or demand. The Secured Creditors agree that this
Agreement may be enforced only by the action of the Pledgee, in each case acting
upon the instructions of the Required Secured Creditors (as defined in the
Security Agreement) and that no other Secured Creditor shall have any right
individually
<PAGE> 239
EXHIBIT G-3
Page 9
to seek to enforce or to enforce this Agreement or to realize upon the security
to be granted hereby, it being understood and agreed that such rights and
remedies may be exercised by the Pledgee for the benefit of the Secured
Creditors upon the terms of this Agreement.
9. APPLICATION OF PROCEEDS. All monies collected by the Pledgee upon
any sale or other disposition of the Collateral, together with all other moneys
received by the Pledgee hereunder, shall be applied to the payment of the
Obligations in the manner provided in Section 7.4 of the Security Agreement.
10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by the
Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
11. INDEMNITY. (a) The Pledgor agrees to indemnify and hold harmless
the Pledgee in such capacity and each other Secured Creditor and their
respective successors, assigns, employees, agents and servants (individually an
"Indemnitee," and collectively, the "Indemnitees") harmless from any and all
liabilities, obligations, damages, injuries, penalties, claims, demands,
actions, suits, judgments and any and all reasonable costs, expenses or
disbursements (including reasonable attorneys' fees and expenses) (for the
purposes of this Section 11 the foregoing are collectively called "expenses") of
whatever kind and nature imposed on, asserted against or incurred by any of the
Indemnitees in any way relating to or arising out of this Agreement or the
enforcement of any of the terms of, or the preservation of any rights hereunder,
or in any way relating to or arising out of the ownership, control, acceptance,
possession, condition, sale or other disposition, or use of the Collateral,
provided that no Indemnitee shall be indemnified pursuant to this Section 11(a)
for losses, damages or liabilities to the extent caused by the gross negligence
or wilful misconduct of such Indemnitee. The Pledgor agrees that upon written
notice by any Indemnitee of the assertion of such a liability, obligation,
damage, injury, penalty, claim, demand, action, suit or judgment, the Pledgor
shall to the extent requested to do so assume full responsibility for the
defense thereof.
(b) Without limiting the application of Section 11(a) hereof, the
Pledgor agrees to pay or reimburse the Pledgee for any and all fees, costs and
expenses, including reasonable attorneys' fees, of whatever kind or nature
incurred in connection with the creation, preservation or protection of the
Pledgee's Liens on, and security interest in, the
<PAGE> 240
EXHIBIT G-3
Page 10
Collateral, including, without limitation, all fees and taxes in connection with
the recording or filing of instruments and documents in public offices, payment
or discharge of any taxes or Liens upon or in respect of the Collateral, and all
other reasonable fees, costs and expenses in connection with protecting,
maintaining or preserving the Collateral and the Pledgee's interest therein,
whether through judicial proceedings or otherwise, or in defending or
prosecuting any actions, suits or proceedings arising out of or relating to the
Collateral.
(c) If and to the extent that the obligations of the Pledgor under
this Section 11 are unenforceable for any reason, the Pledgor hereby agrees to
make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
12. FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) The Pledgor agrees that
it will join with the Pledgee in executing and, at the Pledgor's own expense,
file and refile under the Uniform Commercial Code of any jurisdiction or other
applicable law such financing statements, continuation statements and other
documents in such offices as the Pledgee may deem reasonably necessary and
wherever required by law in order to perfect and preserve the Pledgee's security
interest in the Collateral and hereby authorizes the Pledgee to file financing
statements and amendments thereto relative to all or any part of the Collateral
without the signature of the Pledgor where permitted by law, and agrees to do
such further acts and things and to execute and deliver to the Pledgee such
additional conveyances, assignments, agreements and instruments as the Pledgee
may reasonably require or deem necessary to carry into effect the purposes of
this Agreement or to further assure and confirm unto the Pledgee its rights,
powers and remedies hereunder.
(b) The Pledgor hereby appoints the Pledgee the Pledgor's
attorney-in-fact, with full authority in the place and stead of the Pledgor and
in the name of the Pledgor or otherwise, from time to time after the occurrence
and during the continuance of an Event of Default, in the Pledgee's reasonable
discretion to take any action and to execute any instrument which the Pledgee
may deem reasonably necessary or advisable to accomplish the purposes of this
Agreement.
13. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance with this
Agreement all items of the Collateral at any time received under this Agreement.
It is expressly understood and agreed by each Secured Creditor that by accepting
the benefits of this Agreement each such Secured Creditor acknowledges and
agrees that the obligations of the Pledgee as holder of the Collateral and
interests therein and with respect to the disposition thereof, and otherwise
under this Agreement, are only those expressly set forth
<PAGE> 241
EXHIBIT G-3
Page 11
in this Agreement. The Pledgee shall act hereunder on the terms and conditions
set forth herein and in Article X of the Security Agreement.
14. TRANSFER BY THE PLEDGOR. The Pledgor will not sell or otherwise
dispose of, grant any option with respect to, or mortgage, pledge or otherwise
encumber any of the Collateral or any interest therein (except pursuant to the
terms of this Agreement).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGOR. The
Pledgor represents, warrants and covenants that (i) it is the legal, record and
beneficial owner of, and has good and marketable title to, all Pledged
Securities pledged by it hereunder, subject to no Lien (except the Lien created
by this Agreement and Liens of the type described in Sections 9.01(i), (v) and
(xii) of the SCIS Credit Agreement); (ii) it has the corporate power and
authority to pledge all the Pledged Securities pledged by it pursuant to this
Agreement; (iii) this Agreement has been duly authorized, executed and delivered
by the Pledgor and constitutes a legal, valid and binding obligation of the
Pledgor enforceable in accordance with its terms, except to the extent that the
enforceability hereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting creditors'
rights and by equitable principles (regardless of whether enforcement is sought
in equity or at law); (iv) no consent of any other party (including, without
limitation, any stockholder or creditor of the Pledgor or any of its
Subsidiaries) and no consent, license, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing or declaration with,
any governmental authority is required to be obtained by the Pledgor for the
execution, delivery or performance of this Agreement by the Pledgor, the
validity or enforceability of this Agreement and the perfection or
enforceability of the Pledgee's security interest in the Collateral (other than,
in respect of the proceeds of the Pledged Securities, the filing of Form UCC-1
financing statements or the appropriate equivalent (which filings have been
made)) or except for compliance with or as may be required by applicable
securities laws, the exercise by the Pledgee of any of its rights or remedies
provided herein; (v) the execution, delivery and performance of this Agreement
by the Pledgor, and the compliance by it with the terms and provisions hereof,
will not violate any provision of any applicable law or regulation or of any
applicable order, judgment, writ, injunction or decree of any court, arbitrator
or governmental authority, domestic or foreign, applicable to the Pledgor, or of
the certificate of incorporation or by-laws (or equivalent organizational
documents) of the Pledgor or of any securities issued by the Pledgor or any of
its Subsidiaries, or of any mortgage, indenture, lease, deed of trust, loan
agreement, credit agreement or any other material contract, agreement or
instrument or undertaking to which the Pledgor or any of its Subsidiaries is a
party or which purports to be binding upon the Pledgor or any of its Subsi-
<PAGE> 242
EXHIBIT G-3
Page 12
diaries or upon any of their respective assets and will not result in the
creation or imposition of (or the obligation to create or impose) any lien or
encumbrance on any of the Collateral of the Pledgor or any of its Subsidiaries
except as contemplated by this Agreement; (vi) all the shares of Securities have
been duly and validly issued, are fully paid and non-assessable and are subject
to no options to purchase or similar rights; and (vii) the pledge, assignment
and delivery to the Pledgee of the Securities (other than uncertificated
securities) pursuant to this Agreement creates a valid and perfected first
priority Lien in the Securities, and the proceeds thereof, subject to no other
Lien or to any agreement purporting to grant to any third party a Lien on the
property or assets of the Pledgor which would include the Securities. The
Pledgor covenants and agrees that it will defend the Pledgee's right, title and
security interest in and to the Securities and the proceeds thereof against the
claims and demands of all persons whomsoever; and the Pledgor covenants and
agrees that it will have like title to and right to pledge any other property at
any time hereafter pledged to the Pledgee as Collateral hereunder and will
likewise defend the right thereto and security interest therein of the Pledgee
and the Secured Creditors.
16. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of the Pledgor
under this Agreement shall be absolute and unconditional and shall remain in
full force and effect without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by, any circumstance or occurrence
whatsoever, including, without limitation: (i) any renewal, extension, amendment
or modification of or addition or supplement to or deletion from any Secured
Debt Agreement or any other instrument or agreement referred to therein, or any
assignment or transfer of any thereof; (ii) any waiver, consent, extension,
indulgence or other action or inaction under or in respect of any such Secured
Debt Agreement or other agreement or instrument including, without limitation,
this Agreement; (iii) any furnishing of any additional security to the Pledgee
or its assignee or any acceptance thereof or any release of any security by the
Pledgee or its assignee; (iv) any limitation on any party's liability or
obligations under any such instrument or agreement or any invalidity or
unenforceability, in whole or in part, of any such instrument or agreement or
any term thereof; or (v) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceeding
relating to the Pledgor or any Subsidiary of the Pledgor, or any action taken
with respect to this Agreement by any trustee or receiver, or by any court, in
any such proceeding, whether or not the Pledgor shall have notice or knowledge
of any of the foregoing (it being understood that the enforcement hereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar rights generally affecting creditors' rights and by equitable
principles (regardless of whether enforcement is sought in equity or at law)).
<PAGE> 243
EXHIBIT G-3
Page 13
17. REGISTRATION, ETC. (a) If there shall have occurred and be
continuing an Event of Default then, and in every such case, upon receipt by the
Pledgor from the Pledgee of a written request or requests that the Pledgor cause
any registration, qualification or compliance under any Federal, state or other
applicable securities law or laws to be effected with respect to all or any part
of the Pledged Securities, the Pledgor as soon as practicable and at its expense
will cause such registration to be effected (and be kept effective) and will
cause such qualification and compliance to be declared effected (and be kept
effective) as may be so requested and as would permit or facilitate the sale and
distribution of such Pledged Securities, including, without limitation,
registration under the Securities Act of 1933, as then in effect (or any similar
statute then in effect), appropriate qualifications under applicable blue sky,
state or other applicable securities laws and appropriate compliance with any
other government requirements; provided that the Pledgee shall furnish to the
Pledgor such information regarding the Pledgee as the Pledgor may reasonably
request in writing and as shall be required in connection with any such
registration, qualification or compliance. The Pledgor will cause the Pledgee to
be kept advised in writing as to the progress of each such registration,
qualification or compliance and as to the completion thereof, will furnish to
the Pledgee such number of prospectuses, offering circulars or other documents
incident thereto as the Pledgee from time to time may reasonably request, and
will indemnify the Pledgee, each other Secured Creditor and all others
participating in the distribution of such Pledged Securities against all claims,
losses, damages and liabilities caused by any untrue statement (or alleged
untrue statement) of a material fact contained therein (or in any related
registration statement, notification or the like) or by any omission (or alleged
omission) to state therein (or in any related registration statement,
notification or the like) a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same may have been caused by an untrue statement or omission based upon
information furnished in writing to the Pledgor by the Pledgee or such other
Secured Creditor expressly for use therein.
(b) If at any time when the Pledgee shall determine to exercise its
right to sell all or any part of the Pledged Securities pursuant to Section 7
hereof, and such Pledged Securities or the part thereof to be sold shall not,
for any reason whatsoever, be effectively registered under the Securities Act of
1933, as then in effect, the Pledgee may, in its sole and absolute discretion,
sell such Pledged Securities or part thereof by private sale in such manner and
under such circumstances as the Pledgee may deem necessary or advisable in order
that such sale may legally be effected without such registration. Without
limiting the generality of the foregoing, in any such event the Pledgee, in its
sole and absolute discretion (i) may proceed to make such private sale
notwithstanding that a registration statement for the purpose of registering
such Pledged Securities or part thereof shall have been filed under such
Securities Act, (ii) may approach and negotiate with a single
<PAGE> 244
EXHIBIT G-3
Page 14
possible purchaser to effect such sale, and (iii) may restrict such sale to a
purchaser who will represent and agree that such purchaser is purchasing for its
own account, for investment, and not with a view to the distribution or sale of
such Pledged Securities or part thereof. In the event of any such sale, the
Pledgee shall incur no responsibility or liability for selling all or any part
of the Pledged Securities at a price which the Pledgee, in its sole and absolute
discretion, in good faith deems reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might be
realized if the sale were deferred until after registration as aforesaid.
18. TERMINATION; RELEASE. (a) On the Termination Date (as defined in
the Security Agreement), but only after giving effect to the repayments to be
made on such date, this Agreement and the security interest created hereby shall
terminate (provided that all indemnities set forth herein including, without
limitation, in Section 11 hereof shall survive any such termination), and the
Pledgee, at the request and expense of the Pledgor, will execute and deliver to
the Pledgor such proper instrument or instruments acknowledging the satisfaction
and termination of this Agreement, and will duly assign, release, transfer and
deliver to the Pledgor (without recourse and without any representation or
warranty) all of the Collateral as has not theretofore been sold or otherwise
applied or released pursuant to this Agreement, together with any moneys at the
time held by the Pledgee or any of its sub-agents hereunder.
(b) In the event that all or any part of the Collateral is sold,
conveyed or disposed of in connection with any form of asset disposition
permitted by the Credit Agreements or otherwise released, in whole or in part,
at the direction of the Required Secured Creditors and the proceeds of such
asset disposition are applied in accordance with, and to the extent required by,
the provisions of the Credit Agreements, the Pledgee, at the request and expense
of the Pledgor, will duly assign, release, transfer and deliver to the Pledgor
(without recourse and without any representation or warranty) such of the
Collateral (and releases therefor) as is then being (or has been) so sold or
released and has not theretofore been released pursuant to this Agreement.
(c) At any time that the Pledgor desires that the Pledgee assign,
release, transfer and deliver Collateral as provided in Section 18(a) or (b)
hereof, it shall deliver to the Pledgee a certificate signed by a principal
executive officer of the Pledgor stating that the release of the respective
Collateral is in accordance with Section 18(a) or (b).
(d) The Pledgee shall have no liability whatsoever to any Secured
Creditor as the result of any release of Collateral by it in accordance with
this Section 18.
<PAGE> 245
EXHIBIT G-3
Page 15
19. NOTICES ETC. All such notices and communications hereunder shall be
sent or delivered by mail, telegraph, telex, telecopy, cable or overnight
courier service and all such notices and communications shall, when mailed,
telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be
effective when delivered to the telegraph company, cable company or overnight
courier, as the case may be, or sent by telex or telecopier and when mailed
shall be effective three Business Days following deposit in the mail with proper
postage, except that notices and communications to the Pledgee shall not be
effective until received by the Pledgee. All notices and other communications
shall be in writing and addressed as follows:
(a) if to the Pledgor, to the address and communications information
set forth opposite its signature below;
(b) if to the Pledgee, at the following address of, and the
communications information for, the Pledgee:
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260-0060
Attention: Laura Loffredo
Telephone No.: (212) 648-6793
Facsimile No.: (212) 648-5336
(c) if to any Bank Creditor, either (x) to the respective
Administrative Agent, at the address of such Administrative Agent specified
in the respective Credit Agreement or (y) at such address and
communications information as such Bank Creditor shall have specified in
the respective Credit Agreement;
(d) if to any Other Creditor at such address and communications
information as such Other Creditor shall have specified in writing to the
Pledgor and the Pledgee;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
20. WAIVER; AMENDMENT. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing and duly signed by the Pledgor and the Pledgee (with the
written consent of the Required Secured Creditors); provided, that any change,
waiver, modification or variance
<PAGE> 246
EXHIBIT G-3
Page 16
affecting the rights and benefits of a single Class (as defined below) of
Secured Creditors (and not all Secured Creditors in a like or similar manner)
shall also require the written consent of the Requisite Creditors (as defined
below) of such affected Class. For the purpose of this Agreement, the term
"Class" shall mean each class of Secured Creditors, i.e., whether (i) the SCIS
Bank Creditors as holders of the SCIS Credit Document Obligations, (ii) the
Caterair Bank Creditors as holders of the Caterair Credit Document Obligations
or (iii) the Other Creditors as the holders of the Other Obligations. For the
purpose of this Agreement, the term "Requisite Creditors" of any Class shall
mean each of (i) with respect to the Credit Document Obligations, the Required
Banks under, and as defined in, the SCIS Credit Agreement, (ii) with respect to
the Caterair Credit Document Obligations, the Required Banks under, and as
defined in, the Caterair Credit Agreement and (iii) with respect to the Other
Obligations, the holders of a majority of all obligations outstanding from time
to time under the Interest Rate Protection Agreements or Other Hedging
Agreements.
21. MISCELLANEOUS. This Agreement shall be binding upon the successors
and assigns of the Pledgor (although the Pledgor may not assign its rights and
obligations hereunder except in accordance with the provisions of the Secured
Debt Agreements) and shall inure to the benefit of and be enforceable by each of
the parties hereto and its successors and assigns. THIS AGREEMENT SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE
OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS EXCEPT FOR THE CHOICE OF LAW
PROVISIONS OF THE NEW YORK UNIFORM COMMERCIAL CODE. EACH OF THE PARTIES TO THIS
AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS DOCUMENT, THE
OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. The
headings in this Agreement are for purposes of reference only and shall not
limit or define the meaning hereof. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which shall
constitute one instrument. In the event that any provision of this Agreement
shall prove to be invalid or unenforceable, such provision shall be deemed to be
severable from the other provisions of this Agreement which shall remain binding
on all parties hereto.
22. RECOURSE. Notwithstanding the foregoing or anything else contained
in this Agreement, the Secured Creditors, by their acceptance of the benefits of
this Agreement, expressly acknowledge and agree that recourse against the
Pledgor in respect
<PAGE> 247
EXHIBIT G-3
Page 17
of the Obligations shall be limited to the Collateral and the Pledgor's right,
title and interest therein.
* * *
<PAGE> 248
EXHIBIT G-3
Page 18
IN WITNESS WHEREOF, the Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.
Address:
c/o Onex Corporation ONEX OFSI HOLDINGS INC.,
161 Bay Street as Pledgor
Toronto, Ontario M5J2S1
Canada
Attention: By________________________
Telecopier No.: Name:
Title:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Pledgee, Collateral Agent
By________________________
Name:
Title:
<PAGE> 249
ANNEX A
to
DESIGNATED ONEX SUB
PLEDGE AGREEMENT
LIST OF STOCK
<TABLE>
<CAPTION>
==================================================================================================
ISSUER/JURISDICTION OF CLASS OF AUTHORIZED SHARES PERCENT- STOCK # OF
INCORPORATION STOCK SHARES ISSUED AGE TO BE CERT. SHARES
PLEDGED NUMBER PLEDGED
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Caterair Holdings Class A 1,000,000 1,000,000 100% A-1/A 250,000
Corporation Common
(Delaware) $.01 par
==================================================================================================
</TABLE>
<PAGE> 250
ANNEX B
to
AMENDED AND RESTATED
DESIGNATED ONEX SUB
PLEDGE AGREEMENT
FORM OF CERTIFICATE
[Date]
Morgan Guaranty Trust Company
of New York, as Collateral Agent
60 Wall Street
New York, New York 10260-0060
Attention: ___________________
Ladies and Gentlemen:
Reference is hereby made to the Amended and Restated Designated Onex
Sub Pledge Agreement, dated as of January 1, 1997 and amended and restated as of
August 28, 1997 between the undersigned and you, as Collateral Agent (the
"Pledge Agreement"). Pursuant to Section 3.2 of the Pledge Agreement, the
undersigned hereby pledges and delivers to you under the Pledge Agreement stock
certificate number ____, representing ____ shares of the capital stock of
Caterair Holdings, together with a duly executed and undated stock power for
such shares.
Very truly yours,
ONEX OFSI HOLDINGS INC.,
as Pledgor
By_______________________
Title:
Accepted this ____ day
of ________, _____:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Collateral Agent
By________________________
Title:
<PAGE> 251
EXHIBIT H
[Conformed as Executed]
================================================================================
AMENDED AND RESTATED
SECURITY AGREEMENT
among
SC INTERNATIONAL SERVICES, INC.,
CATERAIR INTERNATIONAL CORPORATION,
VARIOUS SUBSIDIARIES OF
SC INTERNATIONAL SERVICES, INC.
and
CATERAIR INTERNATIONAL CORPORATION,
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Collateral Agent
================================================================================
Dated as of September 29, 1995
and Amended and Restated as of
August 28, 1997
================================================================================
<PAGE> 252
TABLE OF CONTENTS
Page
----
ARTICLE I SECURITY INTERESTS........................................ 3
1.1. Grant of Security Interests.................................... 3
1.2. Power of Attorney.............................................. 3
ARTICLE II GENERAL REPRESENTATIONS, WARRANTIES AND
COVENANTS................................................. 4
2.1. Necessary Filings.............................................. 4
2.2. No Liens....................................................... 4
2.3. Other Financing Statements..................................... 4
2.4. Chief Executive Office; Records................................ 5
2.5. Location of Inventory and Equipment............................ 5
2.6. Recourse....................................................... 6
2.7. Trade Names; Change of Name.................................... 6
ARTICLE III SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS................. 7
3.1. Maintenance of Records......................................... 7
3.2. Direction to Account Debtors; Contracting Parties; etc......... 7
3.3. Rights in the Receivables and Contracts........................ 8
3.4. Delivery of Instruments........................................ 8
3.5. Assignors Remain Liable Under Receivables...................... 8
3.6. Assignors Remain Liable Under Contracts........................ 8
3.7. Further Actions................................................ 9
ARTICLE IV SPECIAL PROVISIONS CONCERNING TRADEMARKS.................. 9
4.1. Additional Representations and Warranties...................... 9
4.2. Licenses and Assignments....................................... 10
4.3. Infringements.................................................. 10
4.4. Preservation of Marks.......................................... 10
4.5. Maintenance of Registration.................................... 10
4.6. Future Registered Marks........................................ 10
4.7. Remedies....................................................... 10
(i)
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ARTICLE V SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS..................... 11
5.1. Additional Representations and Warranties...................... 11
5.2. Licenses and Assignments....................................... 11
5.3. Infringements.................................................. 12
5.4. Maintenance of Patents or Copyrights........................... 12
5.5. Prosecution of Patent or Copyright Application................. 12
5.6. Other Patents or Copyrights.................................... 12
5.7. Remedies....................................................... 12
ARTICLE VI PROVISIONS CONCERNING ALL COLLATERAL...................... 13
6.1. Protection of Collateral Agent's Security...................... 13
6.2. Warehouse Receipts Non-negotiable.............................. 13
6.3. Further Actions; Louisiana Matters............................. 13
6.4. Financing Statements........................................... 14
ARTICLE VII REMEDIES UPON OCCURRENCE OF EVENT OF
DEFAULT................................................... 14
7.1. Remedies; Obtaining the Collateral Upon Default................ 14
7.2. Remedies; Disposition of the Collateral........................ 16
7.3. Waiver of Claims............................................... 17
7.4. Application of Proceeds........................................ 17
7.5. Remedies Cumulative............................................ 20
7.6. Discontinuance of Proceedings.................................. 20
ARTICLE VIII INDEMNITY................................................. 21
8.1. Indemnity...................................................... 21
8.2. Indemnity Obligations Secured by Collateral; Survival.......... 22
ARTICLE IX DEFINITIONS............................................... 22
ARTICLE X THE COLLATERAL AGENT...................................... 29
10.1. Appointment................................................... 29
10.2. Nature of Duties.............................................. 30
10.3. Lack of Reliance on the Collateral Agent...................... 31
10.4. Certain Rights of the Collateral Agent........................ 31
10.5. Reliance...................................................... 32
10.6. Indemnification............................................... 32
10.7. The Collateral Agent in its Individual Capacity............... 33
10.8. Holders....................................................... 33
(ii)
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10.9. Resignation by the Collateral Agent........................... 33
10.10. Fees of Collateral Agent..................................... 34
ARTICLE XI MISCELLANEOUS............................................. 34
11.1. Notices....................................................... 34
11.2. Waiver; Amendment............................................. 35
11.3. Obligations Absolute.......................................... 35
11.4. Successors and Assigns........................................ 36
11.5. Headings Descriptive.......................................... 36
11.6. Governing Law................................................. 36
11.7. Assignor's Duties............................................. 37
11.8. Termination; Release.......................................... 37
11.9. Counterparts.................................................. 38
11.10. Severability................................................. 38
11.11. Additional Assignors......................................... 38
ANNEX A SCHEDULE OF CHIEF EXECUTIVE OFFICES AND
OTHER RECORD LOCATIONS
ANNEX B SCHEDULE OF INVENTORY AND EQUIPMENT LOCATIONS
ANNEX C LIST OF TRADE AND FICTITIOUS NAMES
ANNEX D LIST OF MARKS
ANNEX E LIST OF PATENTS AND APPLICATIONS
ANNEX F LIST OF COPYRIGHTS AND APPLICATIONS
ANNEX G ASSIGNMENT OF SECURITY INTEREST IN
UNITED STATES TRADEMARKS AND PATENTS
SCHEDULE A
SCHEDULE B
ANNEX H ASSIGNMENT OF SECURITY INTEREST IN
UNITED STATES COPYRIGHTS
SCHEDULE A
ANNEX I LOUISIANA ADDENDUM TO SECURITY AGREEMENT
(iii)
<PAGE> 255
EXHIBIT H
[Conformed as Executed]
AMENDED AND RESTATED SECURITY AGREEMENT
AMENDED AND RESTATED SECURITY AGREEMENT, dated as of September 29,
1995 and amended and restated as of August 28, 1997, among each of the
undersigned assignors (each an "Assignor" and, together with any other entity
that becomes a party hereto pursuant to Section 11.11 hereof, the "Assignors")
and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Collateral Agent (together
with any successor collateral agent, the "Collateral Agent"), for the benefit of
the Secured Creditors (as defined below). Except as otherwise defined herein,
capitalized terms used herein and defined in the SCIS Credit Agreement (as
defined below) or in the Caterair Credit Agreement (as defined below), as the
case may be, shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, Onex Food Services, Inc. ("OFSI"), SC International
Services, Inc. ("SCIS"), Caterair Holdings Corporation ("Caterair Holdings"),
Caterair International Corporation ("Caterair"), various lenders from time to
time party thereto (the "SCIS Banks"), Bankers Trust Company and J.P. Morgan
Securities Inc., as Co-Arrangers (the "SCIS Co-Arrangers"), Bankers Trust
Company, as Syndication Agent, The Bank of New York, as Co-Agent and Morgan
Guaranty Trust Company of New York, as Administrative Agent (together with any
successor administrative agent, the "SCIS Administrative Agent"), have entered
into a Credit Agreement, dated as of September 29, 1995 and amended and restated
as of August 28, 1997, providing for the making of loans to SCIS and the
issuance of, and participation in, letters of credit for the account of SCIS as
contemplated therein (as used herein, the term "SCIS Credit Agreement" means the
Credit Agreement described above in this paragraph as the same may be amended,
modified, extended, renewed, replaced, restated or supplemented from time to
time, and including any agreement extending the maturity of, or restructuring
all or any portion of the Indebtedness under such agreement or any successor
agreement) (the SCIS Banks, the SCIS Co-Arrangers and the SCIS Administrative
Agent are herein called the "SCIS Bank Creditors");
WHEREAS, SCIS, Caterair, various lenders from time to time party
thereto (the "Caterair Banks", and together with the SCIS Banks, the "Banks"),
Bankers Trust Company and J. P. Morgan Securities Inc., as Co-Arrangers (the
"Caterair Co-Arrangers", and together with the SCIS Co-Arrangers, the
"Co-Arrangers"), Bankers Trust Company,
<PAGE> 256
EXHIBIT H
Page 2
as Syndication Agent, and Morgan Guaranty Trust Company of New York, as
Administrative Agent (together with any successor administrative agent, the
"Caterair Administrative Agent, and together with the SCIS Administrative Agent,
the "Administrative Agents"), have entered into a Term Loan Agreement, dated as
of August 28, 1997, providing for the making of loans to SCIS and Caterair as
contemplated therein (as used herein, the term "Caterair Credit Agreement" means
the Term Loan Agreement described above in this paragraph, as the same may be
amended, modified, extended, renewed, replaced, restated or supplemented from
time to time, and including any agreement extending the maturity of, or
restructuring all or any portion of the Indebtedness under such agreement or any
successor agreements, and the Caterair Credit Agreement, together with the SCIS
Credit Agreement, are herein called the "Credit Agreements") (the Caterair
Banks, the Caterair Co-Arrangers and the Caterair Administrative Agent are
herein called the "Caterair Bank Creditors", and together with the SCIS Bank
Creditors, are herein called the "Bank Creditors");
WHEREAS, SCIS, Caterair and/or one or more of their respective
subsidiaries may at any time and from time to time enter into one or more
Interest Rate Protection Agreements or Other Hedging Agreements with one or more
Banks or any affiliate thereof (each such Bank or affiliate, even if the
respective Bank subsequently ceases to be a Bank under the applicable Credit
Agreement for any reason, together with such Bank's or affiliate's successors
and assigns, if any, collectively, the "Other Creditors," and together with the
Bank Creditors and the Collateral Agent, the "Secured Creditors");
WHEREAS, pursuant to the Subsidiaries Guaranty, each Subsidiary
Guarantor (including Caterair) has jointly and severally guaranteed to the
Secured Creditors the payment when due of all Guaranteed Obligations as
described therein;
WHEREAS, the Assignors entered into a Security Agreement, dated as
of September 29, 1995 (as amended, modified or supplemented to the date hereof,
the "Original Security Agreement");
WHEREAS, it is a condition precedent to the making of loans and the
issuance of letters of credit under the Credit Agreements that each Assignor
shall have executed and delivered this Agreement; and
WHEREAS, each Assignor will obtain benefits from the incurrence of
loans and the issuance of letters of credit under the Credit Agreements and the
entering into of Interest Rate Protection Agreements or Other Hedging Agreements
with the Other Creditors and, accordingly, each Assignor desires to execute this
Agreement to satisfy the conditions
<PAGE> 257
EXHIBIT H
Page 3
described in the preceding paragraph and to amend and restate the Original
Security Agreement in its entirety in the form of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to each Assignor, the receipt and sufficiency of which are hereby
acknowledged, each Assignor hereby makes the following representations and
warranties to the Collateral Agent for the benefit of the Secured Creditors and
hereby covenants and agrees with the Collateral Agent for the benefit of the
Secured Creditors as follows:
ARTICLE I
SECURITY INTERESTS
1.1. Grant of Security Interests. (a) As security for the prompt and
complete payment and performance when due of all of the Obligations of such
Assignor, each Assignor does hereby assign and transfer unto the Collateral
Agent, and does hereby pledge and grant to the Collateral Agent for the benefit
of the Secured Creditors, a continuing security interest in, all of the right,
title and interest of such Assignor in, to and under all of the following,
whether now existing or hereafter from time to time acquired: (i) each and every
Receivable, (ii) all Contracts, together with all Contract Rights arising
thereunder, (iii) all Inventory, (iv) all Equipment, (v) all Marks, together
with the registrations and right to all renewals thereof, and the goodwill of
the business of such Assignor symbolized by the Marks, (vi) all Patents and
Copyrights, and all reissues, renewals or extensions thereof, (vii) all computer
programs of such Assignor and all intellectual property rights therein and all
other proprietary information of such Assignor, including, but not limited to,
trade secrets, (viii) all other Goods, General Intangibles, Chattel Paper,
Documents, Instruments and other assets of such Assignor, (ix) the Cash
Collateral Account and all monies, securities and Instruments deposited or
required to be deposited in such Cash Collateral Account and (x) all Proceeds
and products of any and all of the foregoing (all of the above, collectively,
the "Collateral"). Notwithstanding anything to the contrary contained in this
Agreement, the term Collateral shall not include any American Supplies as
defined in the American Airlines Catering Agreements with Sky Chefs and Caterair
(as in effect on the date hereof).
(b) The security interest of the Collateral Agent under this
Agreement extends to all Collateral of the kind which is the subject of this
Agreement which any Assignor may acquire at any time during the continuation of
this Agreement.
<PAGE> 258
EXHIBIT H
Page 4
1.2. Power of Attorney. Each Assignor hereby constitutes and
appoints the Collateral Agent its true and lawful attorney, irrevocably, with
full power after the occurrence of and during the continuance of an Event of
Default (in the name of such Assignor or otherwise) to act, require, demand,
receive, compound and give acquittance for any and all monies and claims for
monies due or to become due to such Assignor under or arising out of the
Collateral, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or take any action or institute any proceedings
which the Collateral Agent may deem to be necessary or advisable to protect the
interests of the Secured Creditors, which appointment as attorney is coupled
with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
Each Assignor represents, warrants and covenants, which
representations, warranties and covenants shall survive execution and delivery
of this Agreement, as follows:
2.1. Necessary Filings. All filings, registrations and recordings
necessary or appropriate to create, preserve and perfect the security interest
granted by such Assignor to the Collateral Agent hereby in respect of the
Collateral have been accomplished and the security interest granted to the
Collateral Agent pursuant to this Agreement in and to the Collateral creates a
perfected security interest therein prior to the rights of all other Persons
therein and subject to no other Liens (other than Permitted Liens) and is
entitled to all the rights, priorities and benefits afforded by the Uniform
Commercial Code or other relevant law as enacted in any relevant jurisdiction to
perfected security interests, in each case to the extent that the Collateral
consists of the type of property in which a security interest may be perfected
by filing a financing statement under the Uniform Commercial Code as enacted in
any relevant jurisdiction or in the United States Patent and Trademark Office or
the United States Copyright Office.
2.2. No Liens. Such Assignor is, and as to Collateral acquired by it
from time to time after the date hereof such Assignor will be, the owner of all
Collateral free from any Lien, security interest, encumbrance or other right,
title or interest of any other Person (other than Permitted Liens), and such
Assignor shall defend the Collateral to the extent of its rights therein against
all claims and demands of all Persons at any time claiming the same or any
interest therein adverse to the Collateral Agent.
<PAGE> 259
EXHIBIT H
Page 5
2.3. Other Financing Statements. As of the date hereof, there is no
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) on file or of record in any relevant jurisdiction
covering or purporting to cover any interest of any kind in the Collateral
(other than filings in respect of Permitted Liens), and so long as the
Termination Date has not occurred, such Assignor will not execute or authorize
to be filed in any public office any financing statement (or similar statement
or instrument of registration under the law of any jurisdiction) or statements
relating to the Collateral, except financing statements filed or to be filed in
respect of and covering the security interests granted hereby by such Assignor
or in respect of Permitted Liens.
2.4. Chief Executive Office; Records. The chief executive office of
such Assignor is located, as of the date hereof, at the address indicated on
Annex A hereto for such Assignor. Such Assignor will not move its chief
executive office except to such new location as such Assignor may establish in
accordance with the last sentence of this Section 2.4. The originals of all
documents evidencing all Receivables and Contract Rights and Trade Secret Rights
of such Assignor and the only original books of account and records of such
Assignor relating thereto are, and will continue to be, kept at such chief
executive office, at one or more of the other record locations set forth on
Annex A hereto or at such new locations as such Assignor may establish in
accordance with the last sentence of this Section 2.4. All Receivables and
Contract Rights of such Assignor are, and will continue to be, maintained at,
and controlled and directed (including, without limitation, for general
accounting purposes) from, the office locations described above or such new
location established in accordance with the last sentence of this Section 2.4.
No Assignor shall establish new locations for such offices until (i) such
Assignor shall have given to the Collateral Agent not less than 30 days' prior
written notice of its intention to do so, clearly describing such new location
and providing such other information in connection therewith as the Collateral
Agent may reasonably request, (ii) with respect to such new location, such
Assignor shall have taken all action, reasonably satisfactory to the Collateral
Agent, to maintain the security interest of the Collateral Agent in the
Collateral intended to be granted hereby at all times fully perfected and in
full force and effect, (iii) at the reasonable request of the Collateral Agent,
such Assignor shall have furnished an opinion of counsel reasonably acceptable
to the Collateral Agent to the effect that all financing or continuation
statements and amendments or supplements thereto have been filed in the
appropriate filing office or offices, and all other actions (including, without
limitation, the payment of all filing fees and taxes, if any, payable in
connection with such filings) have been taken in order to perfect (and maintain
the perfection and priority of) the security interest granted hereby and (iv)
the Collateral Agent shall have received evidence that all other actions
(including, without limitation, the payment of all filing fees and taxes, if
any, payable in connection
<PAGE> 260
EXHIBIT H
Page 6
with such filings) have been taken, in order to perfect (and maintain the
perfection and priority of) the security interest granted hereby.
2.5. Location of Inventory and Equipment. All Inventory and
Equipment held on the date hereof by each Assignor is located at one of the
locations shown on Annex B hereto for such Assignor. Each Assignor agrees that
all Inventory and Equipment now held or subsequently acquired by it shall be
kept at (or shall be in transport to) any one of the locations shown on Annex B
hereto for such Assignor, or at such new location as such Assignor may establish
in accordance with the last sentence of this Section 2.5. Any Assignor may
establish a new location for its Inventory and Equipment if (i) such Assignor
shall have given to the Collateral Agent not less than 30 days' prior written
notice of its intention so to do, clearly describing such new location and
providing such other information in connection therewith as the Collateral Agent
may request, (ii) with respect to such new location, such Assignor shall have
taken all action reasonably satisfactory to the Collateral Agent to maintain the
security interest of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect, (iii)
at the reasonable request of the Collateral Agent, such Assignor shall have
furnished an opinion of counsel reasonably acceptable to the Collateral Agent to
the effect that all financing or continuation statements and amendments or
supplements thereto have been filed in the appropriate filing office or offices,
and all other actions (including, without limitation, the payment of all filing
fees and taxes, if any, payable in connection with such filings) have been taken
in order to perfect (and maintain the perfection and priority of) the security
interest granted hereby and (iv) the Collateral Agent shall have received
evidence that all other actions (including, without limitation, the payment of
all filing fees and taxes, if any, payable in connection with such filings) have
been taken, in order to perfect (and maintain the perfection and priority of)
the security interest granted hereby.
2.6. Recourse. This Agreement is made with full recourse to each
Assignor and pursuant to and upon all the warranties, representations, covenants
and agreements on the part of such Assignor contained herein, in the other
Credit Documents, in the Interest Rate Protection Agreements or Other Hedging
Agreements and otherwise in writing in connection herewith or therewith.
2.7. Trade Names; Change of Name. No Assignor operates in any
jurisdiction under, or in the preceding 12 months has had or has operated in any
jurisdiction under, any trade names, fictitious names or other names except its
legal name and such other trade or fictitious names as are listed on Annex C
hereto for such Assignor. No Assignor shall change its legal name or assume or
operate in any jurisdiction under any trade, fictitious or other name except
those names listed on Annex C hereto for such Assignor and new
<PAGE> 261
EXHIBIT H
Page 7
names established in accordance with the last sentence of this Section 2.8. No
Assignor shall assume or operate in any jurisdiction under any new trade,
fictitious or other name until (i) such Assignor shall have given to the
Collateral Agent not less than 30 days' prior written notice of its intention so
to do, clearly describing such new name and the jurisdictions in which such new
name shall be used and providing such other information in connection therewith
as the Collateral Agent may reasonably request, (ii) with respect to such new
name, such Assignor shall have taken all action to maintain the security
interest of the Collateral Agent in the Collateral intended to be granted hereby
at all times fully perfected and in full force and effect, (iii) at the
reasonable request of the Collateral Agent, such Assignor shall have furnished
an opinion of counsel reasonably acceptable to the Collateral Agent to the
effect that all financing or continuation statements and amendments or
supplements thereto have been filed in the appropriate filing office or offices,
and all other actions (including, without limitation, the payment of all filing
fees and taxes, if any, payable in connection with such filings) have been taken
in order to perfect (and maintain the perfection and priority of) the security
interest granted hereby and (iv) the Collateral Agent shall have received
evidence that all other actions (including, without limitation, the payment of
all filing fees and taxes, if any, payable in connection with such filings) have
been taken, in order to perfect (and maintain the perfection and priority of)
the security interest granted hereby.
ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS
3.1. Maintenance of Records. Each Assignor will keep and maintain at
its own cost and expense true and correct records of its Receivables and
Contracts, including, but not limited to, the originals of all documentation
(including each Contract) with respect thereto, records of all payments
received, all credits granted thereon, all merchandise returned and all other
dealings therewith, and such Assignor will make the same available on such
Assignor's premises to the Collateral Agent for inspection, at such Assignor's
own cost and expense, at any and all reasonable times and intervals and to such
extent as the Collateral Agent may reasonably request. Upon the
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EXHIBIT H
Page 8
occurrence and during the continuance of an Event of Default, such Assignor
shall, at its own cost and expense, upon the request of the Collateral Agent,
deliver all tangible evidence of its Receivables and Contract Rights (including,
without limitation, all documents evidencing the Receivables and all Contracts)
and such books and records to the Collateral Agent or to its representatives
(copies of which evidence and books and records may be retained by such
Assignor). Upon the occurrence and during the continuance of an Event of
Default, if the Collateral Agent so directs, such Assignor shall legend, in form
and manner satisfactory to the Collateral Agent, its Receivables and the
Contracts, as well as books, records and documents (if any) of such Assignor
evidencing or pertaining to such Receivables and Contracts with an appropriate
reference to the fact that such Receivables and Contracts have been assigned to
the Collateral Agent and that the Collateral Agent has a security interest
therein.
3.2. Direction to Account Debtors; Contracting Parties; etc. Upon
the occurrence and during the continuance of an Event of Default and if the
Collateral Agent so directs any Assignor, such Assignor agrees (x) to cause all
payments on account of the Receivables and Contracts to be made directly to the
Cash Collateral Account, (y) that the Collateral Agent may, at its option,
directly notify the obligors with respect to any Receivables and/or under any
Contracts to make payments with respect thereto as provided in the preceding
clause (x) and (z) that the Collateral Agent may enforce collection of any such
Receivables and Contracts and may adjust, settle or compromise the amount of
payment thereof, in the same manner and to the same extent as such Assignor.
Without notice to or assent by any Assignor, the Collateral Agent may apply any
or all amounts then in, or thereafter deposited in, the Cash Collateral Account
in the manner provided in Section 7.4 of this Agreement. The reasonable costs
and expenses (including reasonable attorneys' fees) of collection, whether
incurred by an Assignor or the Collateral Agent, shall be borne by the relevant
Assignor.
3.3. Rights in the Receivables and Contracts. Each Assignor will do
nothing to impair the rights of the Collateral Agent in the Receivables or
Contracts.
3.4. Delivery of Instruments. If any Assignor owns or acquires any
Instruments constituting Collateral in excess of $100,000 and such Collateral is
not otherwise required to be pledged pursuant to the General Pledge Agreement,
such Assignor will within 10 days thereafter notify the Collateral Agent
thereof, and upon request by the Collateral Agent will promptly deliver such
Instrument to the Collateral Agent, appropriately endorsed in a manner
reasonably satisfactory to the Collateral Agent, to be held as Collateral
pursuant to this Agreement. Until such Collateral is delivered to the Collateral
Agent, such Assignor shall hold such property in trust for the Secured
Creditors, segregated from other property of such Assignor, as additional
collateral security for the Obligations.
3.5. Assignors Remain Liable Under Receivables. Anything herein to
the contrary notwithstanding, the Assignors shall remain liable under each of
the Receivables to observe and perform all of the conditions and obligations to
be observed and performed by them thereunder, all in accordance with the terms
of any agreement giving rise to such
<PAGE> 263
EXHIBIT H
Page 9
Receivables. Neither the Collateral Agent nor any other Secured Creditor shall
have any obligation or liability under any Receivable (or any agreement giving
rise thereto) by reason of or arising out of this Agreement or the receipt by
the Collateral Agent or any other Secured Creditor of any payment relating to
such Receivable pursuant hereto, nor shall the Collateral Agent or any other
Secured Creditor be obligated in any manner to perform any of the obligations of
any Assignor under or pursuant to any Receivable (or any agreement giving rise
thereto), to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by them or as to the sufficiency of any
performance by any party under any Receivable (or any agreement giving rise
thereto), to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to them or to which they may be entitled at any time or times.
3.6. Assignors Remain Liable Under Contracts. Anything herein to the
contrary notwithstanding, the Assignors shall remain liable under each of the
Contracts to observe and perform all of the conditions and obligations to be
observed and performed by them thereunder, all in accordance with and pursuant
to the terms and provisions of each Contract. Neither the Collateral Agent nor
any other Secured Creditor shall have any obligation or liability under any
Contract by reason of or arising out of this Agreement or the receipt by the
Collateral Agent or any other Secured Creditor of any payment relating to such
Contract pursuant hereto, nor shall the Collateral Agent or any other Secured
Creditor be obligated in any manner to perform any of the obligations of any
Assignor under or pursuant to any Contract, to make any payment, to make any
inquiry as to the nature or the sufficiency of any performance by any party
under any Contract, to present or file any claim, to take any action to enforce
any performance or to collect the payment of any amounts which may have been
assigned to them or to which they may be entitled at any time or times.
3.7. Further Actions. Each Assignor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to its Receivables, Contracts, Instruments and other property or
rights covered by the security interest hereby granted, as the Collateral Agent
may require.
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EXHIBIT H
Page 10
ARTICLE IV
SPECIAL PROVISIONS CONCERNING TRADEMARKS
4.1. Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful exclusive owner of the
United States Marks listed in Annex D hereto for such Assignor and that said
listed Marks include all United States marks and applications for registrations
of United States marks in the United States Patent and Trademark Office that
such Assignor owns or uses in connection with its business as of the date
hereof. Each Assignor represents and warrants that it owns, is licensed to use
or otherwise has the right to use and is not prohibited from using all Marks
that is uses. Each Assignor further warrants that it is aware of no third party
claim that any aspect of such Assignor's present or contemplated business
operations infringes or will infringe any trademark, service mark or trade name.
Each Assignor represents and warrants that it is the true and lawful owner of or
otherwise has the right to use all United States trademark registrations and
applications listed in Annex D hereto and that said registrations are valid,
subsisting, have not been cancelled and that such Assignor is not aware of any
third-party claim that any of said registrations is invalid or unenforceable, or
is not aware that there is any reason that any of said registrations is invalid
or unenforceable, or is not aware that there is any reason that any of said
material applications will not pass to registration. Each Assignor hereby grants
to the Collateral Agent an absolute power of attorney to sign, upon the
occurrence and during the continuance of an Event of Default, any document which
may be required by the United States Patent and Trademark Office (or the
equivalent foreign office) in order to effect an absolute assignment of all
right, title and interest in each Mark, and record the same.
4.2. Licenses and Assignments. Except as otherwise permitted by the
Credit Agreements, each Assignor hereby agrees not to divest itself of any right
under any Mark absent prior written approval of the Collateral Agent.
4.3. Infringements. Each Assignor agrees, promptly upon learning
thereof, to notify the Collateral Agent in writing of any potential infringement
claim and, upon and during the continuance of an Event of Default, to furnish
such pertinent information that may be available with respect to, any party who
such Assignor believes is infringing or diluting or otherwise violating any of
such Assignor's rights in and to any material Mark, or with respect to any party
claiming that such Assignor's use of any material Mark violates any property
right of that party. Each Assignor further agrees, unless otherwise agreed by
the Collateral Agent, to prosecute in accordance with reasonable business
practices any Person infringing any material Mark.
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4.4. Preservation of Marks. Except as otherwise permitted by the
Credit Agreements, each Assignor agrees to take such actions to preserve its
United States Marks as trademarks or service marks under the laws of the United
States.
4.5. Maintenance of Registration. Each Assignor shall, at its own
expense, diligently process all documents required to maintain those trademark
registrations deemed by such Assignor's senior management or Board of Directors
to be in the best interests of such Assignor, including but not limited to
affidavits of use and applications for renewals of registration in the United
States Patent and Trademark Office for all of its material registered Marks, and
shall pay all fees and disbursements in connection therewith.
4.6. Future Registered Marks. If any United States Mark registration
issues hereafter to any Assignor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office, within 30 days of
receipt of such certificate, such Assignor shall deliver to the Collateral Agent
a copy of such certificate, and an assignment for security in such Mark, to the
Collateral Agent and at the expense of such Assignor, confirming the assignment
for security in such Mark to the Collateral Agent hereunder, the form of such
security to be substantially the same as the form hereof.
4.7. Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may, by written notice to the relevant Assignor, take any
or all of the following actions: (i) declare the entire right, title and
interest of such Assignor in and to each of the Marks and the goodwill of the
business associated therewith, together with all trademark rights and rights of
protection to the same, vested in the Collateral Agent for the benefit of the
Secured Creditors, in which event such rights, title and interest shall
immediately vest in the Collateral Agent for the benefit of the Secured
Creditors, and the Collateral Agent shall be entitled to exercise the power of
attorney referred to in Section 4.1 hereof to execute, cause to be acknowledged
and notarized and record said absolute assignment with the applicable agency;
(ii) take and use or sell the Marks and the goodwill of such Assignor's business
symbolized by the Marks and the right to carry on the business and use the
assets of such Assignor in connection with which the Marks have been used; (iii)
direct such Assignor to refrain, in which event such Assignor shall as promptly
as practicable refrain, from using the Marks in any manner whatsoever, directly
or indirectly, and, if requested by the Collateral Agent, change such Assignor's
corporate name to eliminate therefrom any use of any Mark; and (iv) direct such
Assignor to execute such other and further documents that the Collateral Agent
may request to further confirm the foregoing and to transfer ownership of the
Marks and registrations and any pending trademark application in the United
States Patent and Trademark Office to the Collateral Agent.
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ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS, COPYRIGHTS AND TRADE SECRETS
5.1. Additional Representations and Warranties. Each Assignor
represents and warrants that it is the true and lawful owner of all rights in
(i) all United States trade secrets and proprietary information necessary to
operate the business of such Assignor (the "Trade Secret Rights"), (ii) the
United States Patents listed in Annex E hereto for such Assignor and that said
Patents include all United States patents and applications for United States
patents that such Assignor owns as of the date hereof and (iii) the United
States Copyrights listed in Annex F hereto for such Assignor and that said
Copyrights constitute all the United States copyrights registered with the
United States Copyright Office and applications to United States copyrights that
such Assignor now owns. Each Assignor represents and warrants that it owns or is
licensed to practice under all Patents and Copyrights that it now uses or
practices under. Each Assignor further warrants that it has no knowledge of any
third party claim that any aspect of such Assignor's present or contemplated
business operations infringes or will infringe any patent or any copyright or
such Assignor has misappropriated any trade secret or proprietary information.
Each Assignor hereby grants to the Collateral Agent an absolute power of
attorney to sign, upon the occurrence and during the continuance of any Event of
Default, any document which may be required by the United States Patent and
Trademark Office (or the equivalent foreign office) or United States Copyright
Office (or the equivalent foreign office), as the case may be, in order to
effect an absolute assignment of all right, title and interest in each Patent
and Copyright, and to record the same.
5.2. Licenses and Assignments. Except as otherwise permitted by the
Credit Agreements, each Assignor hereby agrees not to divest itself of any right
under any Patent or Copyright absent prior written approval of the Collateral
Agent.
5.3. Infringements. Each Assignor agrees, promptly upon learning
thereof, to notify the Collateral Agent in writing of any potential infringement
claim and, upon and during the continuance of an Event of Default, to furnish
all pertinent information available to such Assignor with respect to any
infringement in any material Patent or Copyright or to any claim that the
practice of any Patent or Copyright violates any property right of a third
party, or with respect to any misappropriation of any Trade Secret Right or any
claim that practice of any Trade Secret Right violates any property right of a
third party. Each Assignor further agrees, absent direction of the Collateral
Agent to the contrary, diligently
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to prosecute in accordance with reasonable business practices any Person
infringing any Patent or Copyright or any Person misappropriating any Trade
Secret Right.
5.4. Maintenance of Patents or Copyrights. At its own expense, each
Assignor shall make timely payment of all post-issuance fees required to
maintain in force rights under each material Patent or Copyright.
5.5. Prosecution of Patent or Copyright Application. At its own
expense, each Assignor shall diligently prosecute those applications for (i)
United States Patents listed in Annex E hereto and (ii) United States Copyrights
listed in Annex F hereto, in each case for such Assignor as deemed by such
Assignor's senior management or Board of Directors to be in the best interests
of such Assignor.
5.6. Other Patents or Copyrights. Within 30 days of the acquisition
or issuance of a United States Patent or United States Copyright or of filing of
an application for a United States Patent or United States Copyright, the
relevant Assignor shall deliver to the Collateral Agent a copy of said
certificate or registration of, or application for, said Patent or Copyright, as
the case may be, with an assignment for security as to such Patent or Copyright,
as the case may be, to the Collateral Agent and at the expense of such Assignor,
confirming the assignment for security, the form of such assignment for security
to be substantially the same as the form hereof.
5.7. Remedies. If an Event of Default shall occur and be continuing,
the Collateral Agent may by written notice to the relevant Assignor, take any or
all of the following actions: (i) declare the entire right, title, and interest
of such Assignor in each of the Patents and Copyrights vested in the Collateral
Agent for the benefit of the Secured Creditors, in which event such right,
title, and interest shall immediately vest in the Collateral Agent for the
benefit of the Secured Creditors, in which case the Collateral Agent shall be
entitled to exercise the power of attorney referred to in Section 5.1 hereof to
execute, cause to be acknowledged and notarized and to record said absolute
assignment with the applicable agency; (ii) take and practice or sell the
Patents and Copyrights; (iii) direct such Assignor to refrain, in which event
such Assignor shall as promptly as practicable refrain, from practicing the
Patents and Copyrights directly or indirectly; and (iv) such Assignor shall
execute such other and further documents as the Collateral Agent may request
further to confirm the foregoing and to transfer ownership of the Patents and
Copyrights to the Collateral Agent for the benefit of the Secured Creditors.
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ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
6.1. Protection of Collateral Agent's Security. Each Assignor will
do nothing to impair the rights of the Collateral Agent in the Collateral. Each
Assignor will at all times keep its Inventory and Equipment insured in favor of
the Collateral Agent, at such Assignor's own expense to the extent and in the
manner provided in the Credit Agreement. If any Assignor shall fail to insure
its Inventory and Equipment in accordance with the preceding sentence, or if
such Assignor shall fail to so endorse and deposit all policies with respect
thereto to the extent required by the Credit Agreements, the Collateral Agent
shall have the right (but shall be under no obligation) to procure such
insurance and such Assignor agrees to promptly reimburse the Collateral Agent
for all costs and expenses of procuring such insurance. The Collateral Agent
shall, at the time such proceeds of such insurance are distributed to the
Secured Creditors, apply such proceeds in accordance with Section 7.4 hereof.
Each Assignor assumes all liability and responsibility in connection with the
Collateral acquired by it and the liability of such Assignor to pay the
Obligations shall in no way be affected or diminished by reason of the fact that
such Collateral may be lost, destroyed, stolen, damaged or for any reason
whatsoever unavailable to such Assignor.
6.2. Warehouse Receipts Non-negotiable. Each Assignor agrees that if
any warehouse receipt or receipt in the nature of a warehouse receipt is issued
with respect to any of its Inventory, such Assignor shall request that such
warehouse receipt or receipt in the nature thereof shall not be "negotiable" (as
such term is used in Section 7-104 of the Uniform Commercial Code as in effect
in any relevant jurisdiction or under other relevant law).
6.3. Further Actions; Louisiana Matters. (a) Each Assignor will, at
its own expense, make, execute, endorse, acknowledge, file and/or deliver to the
Collateral Agent from time to time such lists, descriptions and designations of
its Collateral, warehouse receipts, receipts in the nature of warehouse
receipts, bills of lading, documents of title, vouchers, invoices, schedules,
confirmatory assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, reports and other assurances or
instruments and take such further steps relating to the Collateral and other
property or rights covered by the security interest hereby granted, which the
Collateral Agent reasonably deems appropriate or advisable to perfect, preserve
or protect its security interest in the Collateral.
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(b) Notwithstanding anything contained in this Agreement to the
contrary, each Assignor agrees that at all times during which any portion of the
Collateral, or any proceeds thereof, are located in Louisiana or are otherwise
subject to the application of Louisiana law in any respect, the security
interest granted by each Assignor to the Collateral Agent in such portions of
such Collateral shall be subject to the provisions of Louisiana law and to the
terms of the Louisiana Addendum annexed hereto and each Assignor hereby agrees
to execute and deliver to the Collateral Agent the Louisiana Addendum
substantially in the form of Annex I hereto.
6.4. Financing Statements. Each Assignor agrees to execute and
deliver to the Collateral Agent such financing statements, in form reasonably
acceptable to the Collateral Agent, as the Collateral Agent may reasonably deem
necessary or desirable to establish and maintain a valid, enforceable, first
priority perfected security interest in the Collateral as provided herein and in
the other rights and security contemplated hereby all in accordance with the
Uniform Commercial Code as enacted in any and all relevant jurisdictions or any
other relevant law. Each Assignor will pay any applicable filing fees,
recordation taxes and related expenses relating to its Collateral. Each Assignor
hereby authorizes the Collateral Agent to file any such financing statements
without the signature of such Assignor where permitted by law.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
7.1. Remedies; Obtaining the Collateral Upon Default. Each Assignor
agrees that, if any Event of Default shall have occurred and be continuing, then
and in every such case, the Collateral Agent, in addition to any rights now or
hereafter existing under applicable law, shall have all rights as a secured
creditor under the Uniform Commercial Code in all relevant jurisdictions and may
take each of the following actions, each of which such Assignor agrees to be
commercially reasonable:
(i) personally, or by agents or attorneys, immediately take
possession of the Collateral or any part thereof, from such Assignor or
any other Person who then has possession of any part thereof with or
without notice or process of law, and for that purpose may enter upon such
Assignor's premises where any of the Collateral is located and remove the
same and use in connection with such removal any and all services,
supplies, aids and other facilities of such Assignor;
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(ii) instruct the obligor or obligors on any agreement, instrument
or other obligation (including, without limitation, the Receivables and
the Contracts) constituting the Collateral to make any payment required by
the terms of such agreement, instrument or other obligation directly to
the Collateral Agent and may exercise any and all remedies and rights of
such Assignor in respect of such Collateral;
(iii) withdraw all monies, securities and instruments in the Cash
Collateral Account for application to the Obligations in accordance with
Section 7.4 hereof;
(iv) sell, assign or otherwise liquidate any or all of the
Collateral or any part thereof in accordance with Section 7.2 hereof, or
direct the relevant Assignor to sell, assign or otherwise liquidate any or
all of the Collateral or any part thereof, and, in each case, take
possession of the proceeds of any such sale or liquidation;
(v) take possession of the Collateral or any part thereof, by
directing the relevant Assignor in writing to deliver the same to the
Collateral Agent at any place or places designated by the Collateral
Agent, in which event such Assignor shall at its own expense:
(x) forthwith cause the same to be moved to the place or
places so designated by the Collateral Agent;
(y) store and keep any Collateral so delivered to the
Collateral Agent at such place or places pending further action by
the Collateral Agent as provided in Section 7.2 hereof;
(z) while the Collateral shall be so stored and kept, provide
such guards and maintenance services as shall be necessary to
protect the same and to preserve and maintain them in good
condition;
(vi) license or sublicense, whether on an exclusive or nonexclusive
basis, any Marks, Patents and Copyrights included in the Collateral for
such term and on such conditions and in such manner as the Collateral
Agent shall in its sole judgment determine;
it being understood that each Assignor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity hav-
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ing jurisdiction, the Collateral Agent shall be entitled to a decree requiring
specific performance by such Assignor of said obligation. The Secured Creditors
agree that this Agreement may be enforced only by the action of the Collateral
Agent, in each case acting upon the instructions of the Required Secured
Creditors and that no other Secured Creditor shall have any right individually
to seek to enforce or to enforce this Agreement or to realize upon the security
to be granted hereby, it being understood and agreed that such rights and
remedies may be exercised by the Collateral Agent or the holders of at least a
majority of the outstanding Other Obligations, as the case maybe, for the
benefit of the Secured Creditors upon the terms of this Agreement and the Credit
Agreements.
7.2. Remedies; Disposition of the Collateral. Any Collateral
repossessed by the Collateral Agent under or pursuant to Section 7.1 hereof and
any other Collateral whether or not so repossessed by the Collateral Agent, may
be sold, assigned, leased or otherwise disposed of under one or more contracts
or as an entirety, and without the necessity of gathering at the place of sale
the property to be sold, and in general in such manner, at such time or times,
at such place or places and on such terms as the Collateral Agent may, in
compliance with any mandatory requirements of applicable law, determine to be
commercially reasonable. Any of the Collateral may be sold, leased or otherwise
disposed of, in the condition in which the same existed when taken by the
Collateral Agent or after any overhaul or repair at the expense of the relevant
Assignor which the Collateral Agent shall determine to be commercially
reasonable. Any such disposition which shall be a private sale or other private
proceedings permitted by such requirements shall be made upon not less than 10
days' written notice to the relevant Assignor specifying the time at which such
disposition is to be made and the intended sale price or other consideration
therefor, and shall be subject, for the 10 days after the giving of such notice,
to the right of the relevant Assignor or any nominee of such Assignor to acquire
the Collateral involved at a price or for such other consideration at least
equal to the intended sale price or other consideration so specified. Any such
disposition which shall be a public sale permitted by such requirements shall be
made upon not less than 10 days' written notice to the relevant Assignor
specifying the time and place of such sale and, in the absence of applicable
requirements of law, shall be by public auction (which may, at the Collateral
Agent's option, be subject to reserve), after publication of notice of such
auction not less than 10 days prior thereto in two newspapers in general
circulation in the City of New York. To the extent permitted by any such
requirement of law, the Collateral Agent and the other Secured Creditors may bid
for and become the purchaser of the Collateral or any item thereof, offered for
sale in accordance with this Section without accountability to the relevant
Assignor. If, under mandatory requirements of applicable law, the Collateral
Agent shall be required to make disposition of the Collateral within a period of
time which does not permit the giving of notice to the relevant Assignor as
hereinabove specified, the Collateral
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Agent need give such Assignor only such notice of disposition as shall be
reasonably practicable in view of such mandatory requirements of applicable law.
Each Assignor agrees to do or cause to be done all such other acts and things as
may be reasonably necessary to make such sale or sales of all or any portion of
the Collateral valid and binding and in compliance with any and all applicable
laws, regulations, orders, writs, injunctions, decrees or awards of any and all
courts, arbitrators or governmental instrumentalities, domestic or foreign,
having jurisdiction over any such sale or sales, all at such Assignor's expense.
7.3. Waiver of Claims. Except as otherwise provided in this
Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL
AGENT'S TAKING POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY OR ALL PRIOR NOTICE AND HEARING
FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH SUCH ASSIGNOR
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES
OR OF ANY STATE, and each Assignor hereby further waives, to the extent
permitted by law:
(i) all damages occasioned by such taking of possession except any
damages which are the direct result of the Collateral Agent's gross
negligence or willful misconduct;
(ii) all other requirements as to the time, place and terms of sale
or other requirements with respect to the enforcement of the Collateral
Agent's rights hereunder; and
(iii) all rights of redemption, appraisement, valuation, stay,
extension or moratorium now or hereafter in force under any applicable law
in order to prevent or delay the enforcement of this Agreement or the
absolute sale of the Collateral or any portion thereof, and each Assignor,
for itself and all who may claim under it, insofar as it or they now or
hereafter lawfully may, hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the relevant Assignor therein and
thereto, and shall be a perpetual bar both at law and in equity against such
Assignor and against any and all Persons claiming or at-
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tempting to claim the Collateral so sold, optioned or realized upon, or any part
thereof, from, through and under such Assignor.
7.4. Application of Proceeds. (a) All moneys collected by the
Collateral Agent (or, to the extent any Pledge Agreement or any Mortgage
requires proceeds of collateral under such Security Documents to be applied in
accordance with the provisions of this Agreement, the Pledgee or Mortgagee under
such other Security Document) upon any sale or other disposition of the
Collateral, together with all other moneys received by the Collateral Agent
hereunder, shall be applied as follows:
(i) first, to the payment of all Obligations owing the Collateral
Agent of the type provided in clauses (iv) and (v) of the definition of
Obligations;
(ii) second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding
Primary Obligations shall be paid to the Secured Creditors as provided in
Section 7.4(e) hereof, with each Secured Creditor receiving an amount
equal to its outstanding Primary Obligations or, if the proceeds are
insufficient to pay in full all such Primary Obligations, its Pro Rata
Share of the amount remaining to be distributed;
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii), an amount equal to the
outstanding Secondary Obligations shall be paid to the Secured Creditors
as provided in Section 7.4(e) hereof, with each Secured Creditor receiving
an amount equal to its outstanding Secondary Obligations or, if the
proceeds are insufficient to pay in full all such Secondary Obligations,
its Pro Rata Share of the amount remaining to be distributed; and
(iv) fourth, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) through (iii) inclusive and
following the termination of this Agreement pursuant to Section 11.8
hereof, to the relevant Assignor or, to the extent directed by such
Assignor or a court of competent jurisdiction, to whomever may be lawfully
entitled to receive such surplus.
(b) For purposes of this Agreement, (x) "Pro Rata Share" shall mean,
when calculating a Secured Creditor's portion of any distribution or amount,
that amount (expressed as a percentage) equal to a fraction the numerator of
which is the then unpaid amount of such Secured Creditor's Primary Obligations
or Secondary Obligations, as the case may be, and the denominator of which is
the then outstanding amount of all Primary
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Obligations or Secondary Obligations, as the case may be, (y) "Primary
Obligations" shall mean (i) in the case of the SCIS Credit Document Obligations
and the Caterair Credit Document Obligations, all principal of, and interest on,
all loans, all unpaid drawings in respect of letters of credit (together with
all interest accrued thereon), the aggregate stated amounts of all letters of
credit issued under the SCIS Credit Agreement, and all fees and (ii) in the case
of the Other Obligations, all amounts due under the Interest Rate Protection
Agreements or Other Hedging Agreements (other than indemnities, fees (including,
without limitation, attorneys' fees) and similar obligations and liabilities)
and (z) "Secondary Obligations" shall mean all Obligations other than Primary
Obligations.
(c) When payments to the Secured Creditors are based upon their
respective Pro Rata Shares, the amounts received by such Secured Creditors
hereunder shall be applied (for purposes of making determinations under this
Section 7.4 only) (i) first, to their Primary Obligations and (ii) second, to
their Secondary Obligations. If any payment to any Secured Creditor of its Pro
Rata Share of any distribution would result in overpayment to such Secured
Creditor, such excess amount shall instead be distributed in respect of the
unpaid Primary Obligations or Secondary Obligations, as the case may be, of the
other Secured Creditors, with each Secured Creditor whose Primary Obligations or
Secondary Obligations, as the case may be, have not been paid in full to receive
an amount equal to such excess amount multiplied by a fraction the numerator of
which is the unpaid Primary Obligations or Secondary Obligations, as the case
may be, of such Secured Creditor and the denominator of which is the unpaid
Primary Obligations or Secondary Obligations, as the case may be, of all Secured
Creditors entitled to such distribution.
(d) Each of the Secured Creditors agrees and acknowledges that if
the SCIS Bank Creditors are to receive a distribution on account of undrawn
amounts with respect to letters of credit issued under the SCIS Credit Agreement
(which shall only occur after all outstanding loans under the SCIS Credit
Agreement and unpaid drawings with respect to such letters of credit have been
paid in full), such amounts shall be paid to the SCIS Administrative Agent under
the SCIS Credit Agreement and held by it, for the equal and ratable benefit of
the SCIS Bank Creditors, as cash security for the repayment of Obligations owing
to the SCIS Bank Creditors as such. If any amounts are held as cash security
pursuant to the immediately preceding sentence, then upon the termination of all
outstanding letters of credit under the SCIS Credit Agreement, and after the
application of all such cash security to the repayment of all Obligations owing
to the SCIS Bank Creditors after giving effect to the termination of all such
letters of credit, if there remains any excess cash, such excess cash shall be
returned by the SCIS Administrative Agent to the Collateral Agent for
distribution in accordance with Section 7.4(a) hereof.
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(e) Except as set forth in Section 7.4(c) hereof, all payments
required to be made to the SCIS Bank Creditors hereunder shall be made to the
SCIS Administrative Agent under the SCIS Credit Agreement for the account of the
SCIS Bank Creditors, all payments required to be made to the Caterair Bank
Creditors hereunder shall be made to the Caterair Administrative Agent under the
Caterair Credit Agreement for the account of the Caterair Bank Creditors and all
payments required to be made to the Other Creditors hereunder shall be made
directly to the respective Other Creditor.
(f) For purposes of applying payments received in accordance with
this Section 7.4, the Collateral Agent shall be entitled to rely upon (i) the
respective Administrative Agent under the respective Credit Agreement and (ii)
the Other Creditors for a determination (which each Administrative Agent, each
Other Creditor and the Secured Creditors agree (or shall agree) to provide upon
request of the Collateral Agent) of the outstanding Obligations owed to the SCIS
Bank Creditors, the Caterair Bank Creditors or the Other Creditors, as the case
may be. Unless it has actual knowledge (including by way of written notice from
an SCIS Bank Creditor, a Caterair Bank Creditor or an Other Creditor) to the
contrary, each Administrative Agent under the applicable Credit Agreement, in
furnishing information pursuant to the preceding sentence, and the Collateral
Agent, in acting hereunder, shall be entitled to assume that (x) no Secondary
Obligations are owing to any SCIS Bank Creditor, Caterair Bank Creditor or Other
Creditor and (y) no Interest Rate Protection Agreement or Other Hedging
Agreement, or Other Obligations in respect thereof, are in existence.
(g) It is understood that the Assignors shall remain jointly and
severally liable to the extent of any deficiency between the amount of the
proceeds of the Collateral and the aggregate amount of the sums referred to in
clause (a) of this Section 7.4 with respect to the relevant Assignor.
7.5. Remedies Cumulative. Each and every right, power and remedy
hereby specifically given to the Collateral Agent shall be in addition to every
other right, power and remedy specifically given under this Agreement, the
Interest Rate Protection Agreements or Other Hedging Agreements, the other
Credit Documents or now or hereafter existing at law, in equity or by statute
and each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time or simultaneously and as
often and in such order as may be deemed expedient by the Collateral Agent. All
such rights, powers and remedies shall be cumulative and the exercise or the
beginning of the exercise of one shall not be deemed a waiver of the right to
exercise any other or others. No delay or omission of the Collateral Agent in
the exercise of any such right, power or remedy and no renewal or extension of
any of the Obligations shall impair
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any such right, power or remedy or shall be construed to be a waiver of any
Default or Event of Default or an acquiescence therein. No notice to or demand
on any Assignor in any case shall entitle it to any other or further notice or
demand in similar or other circumstances or constitute a waiver of any of the
rights of the Collateral Agent to any other or further action in any
circumstances without notice or demand. In the event that the Collateral Agent
shall bring any suit to enforce any of its rights hereunder and shall be
entitled to judgment, then in such suit the Collateral Agent may recover
expenses, including attorneys' fees, and the amounts thereof shall be included
in such judgment.
7.6. Discontinuance of Proceedings. In case the Collateral Agent
shall have instituted any proceeding to enforce any right, power or remedy under
this Agreement by foreclosure, sale, entry or otherwise, and such proceeding
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Collateral Agent, then and in every such case the
relevant Assignor, the Collateral Agent and each holder of any of the
Obligations shall be restored to their former positions and rights hereunder
with respect to the Collateral subject to the security interest created under
this Agreement, and all rights, remedies and powers of the Collateral Agent
shall continue as if no such proceeding had been instituted.
ARTICLE VIII
INDEMNITY
8.1. Indemnity. (a) Each Assignor jointly and severally agrees to
indemnify, reimburse and hold the Collateral Agent, each other Secured Creditor
and their respective successors, permitted assigns, employees, agents and
servants (hereinafter referred to individually as "Indemnitee," and collectively
as "Indemnitees") harmless from any and all liabilities, obligations, damages,
injuries, penalties, claims, demands, actions, suits, judgments and any and all
costs, expenses or disbursements (including reasonable attorneys' fees and
expenses) (for the purposes of this Section 8.1 the foregoing are collectively
called "expenses") of whatsoever kind and nature imposed on, asserted against or
incurred by any of the Indemnitees in any way relating to or arising out of this
Agreement, or in any other way connected with the administration of the
transactions contemplated hereby or the enforcement of any of the terms hereof,
or the preservation of any rights hereunder, or in any way relating to or
arising out of the manufacture, ownership, ordering, purchase, delivery,
control, acceptance, lease, financing, possession, operation, condition, sale,
return or other disposition, or use of the Collateral (including, without
limitation, latent or other defects, whether or not discoverable), the violation
of the laws
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of any country, state or other governmental body or unit, any tort (including,
without limitation, claims arising or imposed under the doctrine of strict
liability, or for or on account of injury to or the death of any Person
(including any Indemnitee), or property damage), or contract claim; provided
that no Indemnitee shall be indemnified pursuant to this Section 8.1(a) for
losses, damages or liabilities to the extent caused by the gross negligence or
willful misconduct of such Indemnitee. Each Assignor agrees that upon written
notice by any Indemnitee of the assertion of such a liability, obligation,
damage, injury, penalty, claim, demand, action, suit or judgment, the relevant
Assignor shall assume full responsibility for the defense thereof. Each
Indemnitee agrees to use its best efforts to promptly notify the relevant
Assignor of any such assertion of which such Indemnitee has knowledge.
(b) Without limiting the application of Section 8.1(a) hereof, each
Assignor agrees, jointly and severally, to pay, or reimburse the Collateral
Agent for any and all reasonable fees, costs and expenses of whatever kind or
nature incurred in connection with the creation, preservation or protection of
the Collateral Agent's Liens on, and security interest in, the Collateral,
including, without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public offices, payment or
discharge of any taxes or Liens upon or in respect of the Collateral, premiums
for insurance with respect to the Collateral and all other reasonable fees,
costs and expenses in connection with protecting, maintaining or preserving the
Collateral and the Collateral Agent's interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions, suits or
proceedings arising out of or relating to the Collateral.
(c) If and to the extent that the obligations of any Assignor under
this Section 8.1 are unenforceable for any reason, such Assignor hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
8.2. Indemnity Obligations Secured by Collateral; Survival. Any
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnity obligations of each Assignor contained in Section 8.1 hereof shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement, the termination of all Interest Rate
Protection Agreements or Other Hedging Agreements and the payment of all other
Obligations and notwithstanding the discharge thereof.
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ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified. Such
definitions shall be equally applicable to the singular and plural forms of the
terms defined.
"Administrative Agent" shall have the meaning provided in the
recitals to this Agreement.
"Agreement" shall mean this Amended and Restated Security Agreement,
as the same may be modified, supplemented or amended from time to time in
accordance with its terms.
"American Airports" shall mean the Dallas/Fort Worth, Chicago
O'Hare, Nashville and Raleigh-Durham airports.
"Assignor" shall have the meaning provided in the first paragraph of
this Agreement.
"Bank Creditors" shall have the meaning provided in the recitals to
this Agreement.
"Banks" shall have the meaning provided in the recitals to this
Agreement.
"Cash Collateral Account" shall mean a non-interest bearing cash
collateral account maintained with the Collateral Agent for the benefit of the
Secured Creditors.
"Caterair" shall have the meaning provided in the recitals to this
Agreement.
"Caterair Administrative Agent" shall have the meaning provided in
the recitals to this Agreement.
"Caterair Bank Creditors" shall have the meaning provided in the
recitals to this Agreement.
"Caterair Banks" shall have the meaning provided in the recitals to
this Agreement.
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"Caterair Co-Arrangers" shall have the meaning provided in the
recitals to this Agreement.
"Caterair Credit Agreement" shall have the meaning provided in the
recitals to this Agreement.
"Caterair Credit Document Obligations" shall have the meaning
provided in the definition of "Obligations" in this Article IX.
"Caterair Holdings" shall have the meaning provided in the recitals
to this Agreement.
"Chattel Paper" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Class" shall have the meaning provided in Section 11.2 of this
Agreement.
"Collateral" shall have the meaning provided in Section 1.1(a) of
this Agreement.
"Collateral Agent" shall have the meaning provided in the first
paragraph of this Agreement.
"Contract Rights" shall mean all rights of any Assignor (including,
without limitation, all rights to payment) under each Contract.
"Contracts" shall mean all contracts between any Assignor and one or
more additional parties (including, without limitation, each Catering Agreement,
any Interest Rate Protection Agreement or Other Hedging Agreement, each
partnership agreement and joint venture agreement to which any Assignor is a
party and the Subordinated Intercompany Security Agreement), but excluding any
contract (other than the right to the payment of money that is due or is to
become due thereunder which shall in any event be subject to the security
interests under this Agreement) to the extent that the terms thereof prohibit
the assignment of, or granting a security interest in, such contract.
"Copyrights" shall mean any copyright owned by any Assignor,
including any registrations of any Copyrights, in the United States Copyright
Office (or the equivalent foreign office), as well as any application for a
copyright registration now or hereafter
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made with the United States Copyright Office (or the equivalent foreign office)
by any Assignor.
"Credit Agreements" shall have the meaning provided in the recitals
to this Agreement.
"Credit Documents" shall have the meaning provided in the definition
of "Obligations" in this Article IX.
"Default" shall mean any event which, with notice or lapse of time,
or both, would constitute an Event of Default.
"Documents" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Equipment" shall mean any "equipment," as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all machinery, equipment, furnishings, movable
trade fixtures and vehicles now or hereafter owned by any Assignor and any and
all additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.
"Event of Default" shall mean any Event of Default under, and as
defined in, either Credit Agreement and shall in any event, without limitation,
include any payment default on any of the Obligations after the expiration of
any applicable grace period.
"General Intangibles" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Goods" shall have the meaning provided in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.
"Indemnitee" shall have the meaning provided in Section 8.1 of this
Agreement.
"Instrument" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
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"Inventory" shall mean merchandise, inventory and goods, and all
additions, substitutions and replacements thereof, wherever located, together
with all goods, supplies, incidentals, packaging materials, labels, materials
and any other items used or usable in manufacturing, processing, packaging or
shipping same; in all stages of production -- from raw materials through
work-in-process to finished goods -- and all products and proceeds of whatever
sort and wherever located and any portion thereof which may be returned,
rejected, reclaimed or repossessed by the Collateral Agent from any Assignor's
customers, and shall specifically include all "inventory" as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York, now or hereafter owned by any Assignor.
"Liens" shall mean any security interest, mortgage, pledge, lien,
claim, charge, encumbrance, title retention agreement, lessor's interest in a
financing lease or analogous instrument, in, of, or on any Assignor's property.
"Marks" shall mean all right, title and interest in and to any
trademarks, service marks and trade names now held or hereafter acquired by any
Assignor, including any registration of any trademarks and service marks, or the
equivalent thereof in any foreign country or in the United States Patent and
Trademark Office and any trade dress including logos and/or designs used by any
Assignor in the United States or any foreign country.
"Obligations" shall mean:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities
and indebtedness (including, without limitation, the principal of and
interest on the notes issued by, and loans made to, SCIS under the SCIS
Credit Agreement, all reimbursement obligations and unpaid drawings in
respect of letters of credit issued under the SCIS Credit Agreement, and
all indemnities, fees and interest thereon or owed thereunder) of each
Assignor to the SCIS Bank Creditors, whether now existing or hereafter
incurred under, arising out of, or in connection with the SCIS Credit
Agreement and the other SCIS Credit Documents (such term to mean the
"Credit Documents" as defined in the SCIS Credit Agreement) (including,
without limitation, in the case of each Subsidiary Guarantor (including
Caterair), all of its obligations, liabilities and indebtedness under the
Subsidiaries Guaranty) to which such Assignor is a party and the due
performance and compliance by such Assignor with all of the terms,
conditions and agreements contained in the SCIS Credit Agreement and such
other SCIS Credit Documents (all such obligations, liabilities and
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indebtedness under this clause (i), except to the extent consisting of
obligations, liabilities or indebtedness with respect to Interest Rate
Protection Agreements or Other Hedging Agreements, being herein
collectively called the "SCIS Credit Document Obligations");
(ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities
and indebtedness (including, without limitation, the principal of and
interest on the notes issued by, and loans made to, SCIS and Caterair
under the Caterair Credit Agreement, and all indemnities, fees and
interest thereon or owed thereunder) of each Assignor to the Caterair Bank
Creditors, whether now existing or hereafter incurred under, arising out
of, or in connection with the Caterair Credit Agreement and the other
Caterair Credit Documents (such term to mean the "Credit Documents" as
defined in the Caterair Credit Agreement, and the Caterair Credit
Documents, together with the SCIS Credit Documents, are referred to herein
as the "Credit Documents") (including, without limitation, in the case of
SCIS, all of its obligations, liabilities and indebtedness under the SCIS
Guaranty and, in the case of each Subsidiary Guarantor (including
Caterair), all of its obligations, liabilities and indebtedness under the
Subsidiaries Guaranty) to which such Assignor is a party and the due
performance and compliance by such Assignor with all of the terms,
conditions and agreements contained in the Caterair Credit Agreement and
such other Caterair Credit Documents (all such obligations, liabilities
and indebtedness under this clause (ii), except to the extent consisting
of obligations, liabilities or indebtedness with respect to Interest Rate
Protection Agreements or Other Hedging Agreements, being herein
collectively called the "Caterair Credit Document Obligations");
(iii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations, liabilities
and indebtedness owing by each Assignor to the Other Creditors under,
arising out of or with respect to, any Interest Rate Protection Agreement
or Other Hedging Agreement (including, without limitation, in the case of
each Assignor, all of its obligations, liabilities and indebtedness under
the Guaranties to which it is a party in respect of such Interest Rate
Protection Agreements or Other Hedging Agreements), whether such Interest
Rate Protection Agreement or Other Hedging Agreement is now in existence
or hereafter arising, and the due performance and compliance by such
Assignor with all of the terms, conditions and agreements contained
therein (all such obligations, liabilities and indebtedness described in
this clause (iii) being herein collectively called the "Other
Obligations");
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(iv) any and all sums advanced by the Collateral Agent in order to
preserve the Collateral or preserve its security interest in the
Collateral;
(v) in the event of any proceeding for the collection or enforcement
of any indebtedness, obligations or liabilities of each Assignor referred
to in clauses (i), (ii) and (iii) above, upon the occurrence and during
the continuance of an Event of Default shall have occurred and be
continuing, the reasonable expenses of retaking, holding, preparing for
sale or lease, selling or otherwise disposing of or realizing on the
Collateral, or of any exercise by the Collateral Agent of its rights
hereunder, together with reasonable attorneys' fees and court costs; and
(vi) all amounts paid by any Secured Creditor as to which such
Secured Creditor has the right to reimbursement under Section 11 of this
Agreement.
"OFSI" shall have the meaning provided in the recitals to this
Agreement.
"Original Security Agreement" shall have the meaning provided in the
recitals to this Agreement.
"Other Creditors" shall have the meaning provided in the recitals to
this Agreement.
"Other Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
"Patents" shall mean any United States or foreign patent to which
any Assignor now or hereafter has title and any divisions or continuations
thereof, as well as any application for a United States or foreign patent now or
hereafter made by any Assignor.
"Primary Obligations" shall have the meaning provided in Section
7.4(b) of this Agreement.
"Pro Rata Share" shall have the meaning provided in Section 7.4(b)
of this Agreement.
"Proceeds" shall have the meaning provided in the Uniform Commercial
Code as in effect in the State of New York on the date hereof or under other
relevant law and, in any event, shall include, but not be limited to, (i) any
and all proceeds of any insur-
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ance, indemnity, warranty or guaranty payable to the Collateral Agent or any
Assignor from time to time with respect to any of the Collateral, (ii) any and
all payments (in any form whatsoever) made or due and payable to any Assignor
from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental authority (or any person acting under color of governmental
authority) and (iii) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
"Receivables" shall mean any "account" as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by any Assignor and, in any event, shall include,
but shall not be limited to, all of such Assignor's rights to payment for goods
sold or leased or services performed by such Assignor, whether now in existence
or arising from time to time hereafter, including, without limitation, rights
evidenced by an account, note, contract, security agreement, chattel paper, or
other evidence of indebtedness or security, together with (a) all security
pledged, assigned, hypothecated or granted to or held by such Assignor to secure
the foregoing, (b) all of any Assignor's right, title and interest in and to any
goods, the sale of which gave rise thereto, (c) all guarantees, endorsements and
indemnifications on, or of, any of the foregoing, (d) all powers of attorney for
the execution of any evidence of indebtedness or security or other writing in
connection therewith, (e) all books, records, ledger cards, and invoices
relating thereto, (f) all evidences of the filing of financing statements and
other statements and the registration of other instruments in connection
therewith and amendments thereto, notices to other creditors or secured parties,
and certificates from filing or other registration officers, (g) all credit
information, reports and memoranda relating thereto and (h) all other writings
related in any way to the foregoing.
"Required Secured Creditors" shall mean (i) prior to the occurrence
of an Event of Default, those Banks the sum of whose outstanding loans,
percentage participation in outstanding letters of credit and unutilized
commitments under the Credit Agreements represent an amount greater than 50% of
the sum of all outstanding loans, percentage participations in all outstanding
letters of credit and unutilized commitments under the Credit Agreements (or, to
the extent required by each Credit Agreement, each of the Banks under each of
the Credit Agreements), (ii) on and after the occurrence and during the
continuance of an Event of Default, those Banks the sum of whose outstanding
loans and percentage participation in outstanding letters of credit represent an
amount greater than 50% of the sum of all outstanding loans and percentage
participations in all outstanding letters of credit under the Credit Agreements
(or, to the extent required by each Credit Agreement, each of the Banks under
each of the Credit Agreements) or (iii) after all SCIS Credit Document
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Obligations and all Caterair Credit Document Obligations have been paid in full,
the holders of a majority of the outstanding principal amount of the Other
Obligations.
"Requisite Creditors" shall have the meaning provided in Section
11.2 of this Agreement.
"SCIS" shall have the meaning provided in the recitals to this
Agreement.
"SCIS Administrative Agent" shall have the meaning provided in the
recitals to this Agreement.
"SCIS Bank Creditors" shall have the meaning provided in the
recitals to this Agreement.
"SCIS Banks" shall have the meaning provided in the recitals to this
Agreement.
"SCIS Co-Arrangers" shall have the meaning provided in the recitals
to this Agreement.
"SCIS Credit Agreement" shall have the meaning provided in the
recitals to this Agreement.
"SCIS Credit Document Obligations" shall have the meaning provided
in the definition of "Obligations" in this Article IX.
"Secondary Obligations" shall have the meaning provided in Section
7.4(b) of this Agreement.
"Secured Creditors" shall have the meaning provided in the recitals
to this Agreement.
"Secured Debt Agreements" shall mean and include this Agreement, the
other Credit Documents and the Interest Rate Protection Agreements and the Other
Hedging Agreements.
"Termination Date" shall have the meaning provided in Section 11.8
of this Agreement.
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"Trade Secret Rights" shall have the meaning provided in Section 5.1
of this Agreement.
ARTICLE X
THE COLLATERAL AGENT
10.1. Appointment. The Secured Creditors, by their acceptance of the
benefits of this Agreement and the other Security Documents, hereby irrevocably
designate Morgan Guaranty Trust Company of New York, as Collateral Agent, to act
as specified herein and in the other Credit Documents. Each Secured Creditor
hereby irrevocably authorizes, and each holder of any Note by the acceptance of
such Note and by the acceptance of the benefits of this Agreement and the other
Credit Documents shall be deemed irrevocably to authorize, the Collateral Agent
to take such action on its behalf under the provisions of this Agreement and the
other Credit Documents and any other instruments and agreements referred to
herein or therein and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of the
Collateral Agent by the terms hereof or thereof and such other powers as are
reasonably incidental thereto. The Collateral Agent may perform any of its
duties hereunder and under the other Credit Documents by or through its
authorized agents or employees.
10.2. Nature of Duties. (a) The Collateral Agent shall have no
duties or responsibilities except those expressly set forth in this Agreement
and in the other Credit Documents. The duties of the Collateral Agent shall be
mechanical and administrative in nature; the Collateral Agent shall not have by
reason of this Agreement, any other Credit Document or any other Secured Debt
Agreement a fiduciary relationship in respect of any Secured Creditor; and
nothing in this Agreement, any other Credit Document or any other Secured Debt
Agreement, expressed or implied, is intended to or shall be so construed as to
impose upon the Collateral Agent any obligations in respect of this Agreement or
any other Credit Document except as expressly set forth herein or therein.
(b) The Collateral Agent shall not be responsible for insuring the
Collateral hereunder or any collateral under the other Security Documents or for
the payment of taxes, charges or assessments or discharging of Liens upon the
Collateral hereunder or any collateral under the Security Documents or otherwise
as to the maintenance of the Collateral hereunder or any collateral under the
Security Documents.
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(c) The Collateral Agent shall not be required to ascertain or
inquire as to the performance by any Assignor of any of the covenants or
agreements contained in this Agreement, any other Credit Document or any other
Secured Debt Agreement.
(d) The Collateral Agent shall be under no obligation or duty to
take any action under this Agreement or any other Credit Document if taking such
action (i) would subject the Collateral Agent to a tax in any jurisdiction where
it is not then subject to a tax or (ii) would require the Collateral Agent to
qualify to do business in any jurisdiction where it is not then so qualified,
unless the Collateral Agent receives security or indemnity satisfactory to it
against such tax (or equivalent liability), or any liability resulting from such
qualification, in each case as results from the taking of such action under this
Agreement or any other Credit Document or (iii) would subject the Collateral
Agent to in personam jurisdiction in any locations where it is not then so
subject.
(e) Notwithstanding any other provision of this Agreement or any
other Credit Document, neither the Collateral Agent nor any of its officers,
directors, employees, affiliates or agents shall, in its individual capacity, be
personally liable for any action taken or omitted to be taken by it in
accordance with this Agreement or any other Credit Document except for its own
gross negligence or willful misconduct.
10.3. Lack of Reliance on the Collateral Agent. Independently and
without reliance upon the Collateral Agent, each Secured Creditor, to the extent
it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of each
Assignor in connection with the making and the continuance of the Obligations
and the taking or not taking of any action in connection therewith, and (ii) its
own appraisal of the creditworthiness of each Assignor, and the Collateral Agent
shall have no duty or responsibility, either initially or on a continuing basis,
to provide any Secured Creditor with any credit or other information with
respect thereto, whether coming into its possession before the extension of any
Obligations or the purchase of any Notes or at any time or times thereafter. The
Collateral Agent shall not be responsible in any manner whatsoever to any
Secured Creditor for the correctness of any recitals, statements, information,
representations or warranties in any Credit Document or in any document,
certificate or other writing delivered in connection therewith or for the
execution, effectiveness, genuineness, validity, enforceability, perfection,
collectibility, priority or sufficiency of this Agreement or the other Credit
Documents or the security interests granted hereunder or thereunder or the
financial condition of any Assignor or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement or any other Credit Document, or the financial
condition of any Assignor, or the existence or possible existence of any Default
or Event
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of Default. The Collateral Agent makes no representations as to the value or
condition of the Collateral hereunder or the collateral under any other Security
Document or any part thereof, or as to the title of any Assignor thereto or as
to the security afforded by this Agreement or the other Security Documents.
10.4. Certain Rights of the Collateral Agent. (a) No Secured
Creditor shall have the right to cause the Collateral Agent to take any action
with respect to the Collateral hereunder or the collateral under any other
Security Document, with only the Required Secured Creditors having the right to
direct the Collateral Agent to take any such action. If the Collateral Agent
shall request instructions from the Required Secured Creditors, with respect to
any act or action (including failure to act) in connection with this Agreement
or any other Security Document, the Collateral Agent shall be entitled to
refrain from such act or taking such action unless and until it shall have
received instructions from the Required Secured Creditors and to the extent
requested, appropriate indemnification in respect of actions to be taken, and
the Collateral Agent shall not incur liability to any Person by reason of so
refraining. Without limiting the foregoing, no Secured Creditor shall have any
right of action whatsoever against the Collateral Agent as a result of the
Collateral Agent acting or refraining from acting hereunder in accordance with
the instructions of the Required Secured Creditors.
(b) The Collateral Agent shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement or any other Credit
Document at the request or direction of any of the Secured Creditors, unless
such Secured Creditors shall have offered to the Collateral Agent reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
10.5. Reliance. The Collateral Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
the proper Person or entity, and, with respect to all legal matters pertaining
to this Agreement or any other Credit Document and its duties hereunder or
thereunder, upon advice of counsel selected by it.
10.6. Indemnification. To the extent the Collateral Agent is not
reimbursed and indemnified by any Assignor under this Agreement or any other
Credit Document, the Secured Creditors will reimburse and indemnify the
Collateral Agent, in proportion to their respective outstanding principal
amounts (including, for this purpose, any unpaid Primary Obligations in respect
of Interest Rate Protection Agreements or Other Hedging Agreements, as
outstanding principal) of Obligations, for and against any and all liabilities,
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obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Collateral Agent in performing its
duties hereunder or under any other Credit Document, or in any way relating to
or arising out of its actions as Collateral Agent in respect of this Agreement
or under any other Credit Document (including any amounts required to be
returned by the Collateral Agent in respect of Collateral hereunder or
collateral under any other Security Document) except for those resulting solely
from the Collateral Agent's own gross negligence or willful misconduct. The
indemnities set forth in this Article X shall survive the repayment of all
Obligations, with the respective indemnification at such time to be based upon
the outstanding principal amounts (determined as described above) of Obligations
at the time of the respective occurrence upon which the claim against the
Collateral Agent is based or, if same is not reasonably determinable, based upon
the outstanding principal amounts (determined as described above) of Obligations
as in effect immediately prior to the termination of this Agreement. The
indemnities set forth in this Article X are in addition to any indemnities
provided by the Banks to the Collateral Agent pursuant to the Credit Agreements,
with the effect being that the Banks shall be responsible for indemnifying the
Collateral Agent to the extent the Collateral Agent does not receive payments
pursuant to this Section 10.6 from the Secured Creditors (although in such
event, and upon the payment in full of all such amounts owing to the Collateral
Agent, the respective Banks who paid same shall be subrogated to the rights of
the Collateral Agent to receive payment from the Secured Creditors).
10.7. The Collateral Agent in its Individual Capacity. With respect
to its obligations as a lender under either Credit Agreement and any other
Credit Documents to which the Collateral Agent is a party, and to act as agent
under one or more of such Credit Documents, the Collateral Agent shall have the
rights and powers specified therein and herein for a "Bank", or an "Agent", as
the case may be, and may exercise the same rights and powers as though it were
not performing the duties specified herein; and the terms "Banks," "Required
Banks," "Required Secured Creditors, "holders of Notes," or any similar terms
shall, unless the context clearly otherwise indicates, include the Collateral
Agent in its individual capacity. The Collateral Agent may accept deposits from,
lend money to, and generally engage in any kind of banking, trust or other
business with any Assignor or any Affiliate or Subsidiary of any Assignor as if
it were not performing the duties specified herein or in the other Credit
Documents, and may accept fees and other consideration from any Assignor for
services in connection with the Credit Agreement, the other Credit Documents and
otherwise without having to account for the same to the Secured Creditors.
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10.8. Holders. The Collateral Agent may deem and treat the payee of
any Note as the owner thereof for all purposes hereof unless and until written
notice of the assignment, transfer or endorsement thereof, as the case may be,
shall have been filed with the Collateral Agent. Any request, authority or
consent of any person or entity who, at the time of making such request or
giving such authority or consent, is the holder of any Note, shall be final and
conclusive and binding on any subsequent holder, transferee, assignee or
endorsee, as the case may be, of such Note or of any Note or Notes issued in
exchange therefor.
10.9. Resignation by the Collateral Agent. (a) The Collateral Agent
may resign from the performance of all of its functions and duties under this
Agreement and the other Credit Documents at any time by giving 20 Business Days'
prior written notice to each Assignor and the Secured Creditors. Such
resignation shall take effect upon the appointment of a successor Collateral
Agent pursuant to clause (b) or (c) below.
(b) If a successor Collateral Agent shall not have been appointed
within said 20 Business Day period by the Required Secured Creditors, the
Collateral Agent, with the consent of each Assignor, which consent shall not be
unreasonably withheld, shall then appoint a successor Collateral Agent who shall
serve as Collateral Agent hereunder and under the other Credit Documents until
such time, if any, as the Required Secured Creditors appoint a successor
Collateral Agent as provided above. Notwithstanding the foregoing, the initial
Collateral Agent (in its capacity as such) may, without the consent of any
Assignor or any Secured Creditor (but upon at least 10 Business Days' prior
written notice to SCIS and the Secured Creditors), assign any or all of its
rights and obligations, as Collateral Agent under this Agreement or any other
Credit Document to J.P. Morgan Delaware.
(c) If no successor Collateral Agent has been appointed pursuant to
clause (b) above by the 25th Business Day after the date of such notice of
resignation was given by the Collateral Agent, the Required Secured Creditors
shall then appoint a successor Collateral Agent who shall serve as Collateral
Agent hereunder and under the other Credit Documents until such time, if any, as
the Required Secured Creditors appoint a successor Collateral Agent as provided
above.
10.10. Fees of Collateral Agent. Each Assignor (by its execution and
delivery hereof) hereby agrees that it shall pay to Morgan Guaranty Trust
Company of New York as the initial Collateral Agent, such fees as have been
separately agreed to in writing with Morgan Guaranty Trust Company of New York
for acting as Collateral Agent hereunder and under the other Security Documents.
In the event a successor Collateral
<PAGE> 291
EXHIBIT H
Page 37
Agent is at any time appointed pursuant to the preceding Section 10.9, each
Assignor hereby agrees to pay such successor Collateral Agent such fees for
acting as such as would customarily be charged by such Collateral Agent for
acting in such capacity in similar situations.
ARTICLE XI
MISCELLANEOUS
11.1. Notices. Except as otherwise specified herein, all notices and
communications hereunder shall be sent or delivered by mail, telegraph, telex,
telecopy, cable or overnight courier service and all such notices and
communications shall, when mailed, telegraphed, telexed, telecopied, or cabled
or sent by overnight courier, be effective when delivered to the telegraph
company, cable company or overnight courier, as the case may be, or sent by
telex or telecopier and when mailed shall be effective three Business Days
following deposit in the mail with proper postage, except that notices and
communications to the Collateral Agent shall not be effective until received by
the Collateral Agent. All notices and other communications shall be in writing
and addressed as follows:
(a) if to any Assignor, to the address and communications
information set forth opposite its signature below;
(b) if to the Collateral Agent, at the following address of, and the
communications information for, the Collateral Agent:
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260-0060
Attention: Laura Loffredo
Telephone No.: (212) 648-6793
Facsimile No.: (212) 648-5336
(c) if to any Bank Creditor (other than the Collateral Agent), at
such address and communications information as such Bank Creditor shall
have specified in the applicable Credit Agreement;
<PAGE> 292
EXHIBIT H
Page 38
(d) if to any Other Creditor, at such address and communications
information as such Other Creditor shall have specified in writing to each
Assignor and the Collateral Agent;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
11.2. Waiver; Amendment. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by each Assignor directly affected thereby and the
Collateral Agent (with the consent of the Required Secured Creditors); provided,
that any change, waiver, modification or variance affecting the rights and
benefits of a single Class of Secured Creditors (and not all Secured Creditors
in a like or similar manner) shall also require the written consent of the
Requisite Creditors of such Class of Secured Creditors. For the purpose of this
Agreement, the term "Class" shall mean each class of Secured Creditors, i.e.,
whether (x) the SCIS Bank Creditors as holders of the SCIS Credit Document
Obligations, (y) the Caterair Bank Creditors as holders of the Caterair Credit
Document Obligations or (z) the Other Creditors as the holders of the Other
Obligations. For the purpose of this Agreement, the term "Requisite Creditors"
of any Class shall mean each of (x) with respect to the SCIS Credit Document
Obligations, the Required Banks under, and as defined in, the SCIS Credit
Agreement, (y) with respect to the Caterair Credit Document Obligations, the
Required Banks under, and as defined in, the Caterair Credit Agreement and (z)
with respect to the Other Obligations, the holders of at least a majority of all
obligations outstanding from time to time under the Interest Rate Protection
Agreements or Other Hedging Agreements.
11.3. Obligations Absolute. The obligations of each Assignor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of such Assignor (it being
understood that the enforcement hereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar rights generally
affecting creditors' rights and by equitable principles (regardless of whether
enforcement is sought in equity or at law)); (b) any exercise or non-exercise,
or any waiver of, any right, remedy, power or privilege under or in respect of
this Agreement, any other Credit Document or any Interest Rate Protection
Agreement or Other Hedging Agreement; (c) any renewal, extension, amendment or
modification of or addition or supplement to or deletion from any Credit
Document or any Interest Rate Protection Agreement or Other Hedging Agreement or
any security for any of the Obligations; (d) any waiver, consent, extension,
indulgence or other action or inaction under or in respect of any such agreement
<PAGE> 293
EXHIBIT H
Page 39
or instrument including, without limitation, this Agreement; (e) any furnishing
of any additional security to the Collateral Agent or its assignee or any
acceptance thereof or any release of any security by the Collateral Agent or its
assignee; or (f) any limitation on any party's liability or obligations under
any such instrument or agreement or any invalidity or unenforceability, in whole
or in part, of any such instrument or agreement or any term thereof; whether or
not any Assignor shall have notice or knowledge of any of the foregoing.
11.4. Successors and Assigns. This Agreement shall be binding upon
each Assignor and its successors and assigns and shall inure to the benefit of
the Collateral Agent and each other Secured Creditor and their respective
successors and assigns; provided, that no Assignor may transfer or assign any or
all of its rights or obligations hereunder except in accordance with the
provisions of the Secured Debt Agreements. All agreements, statements,
representations and warranties made by each Assignor herein or in any
certificate or other instrument delivered by such Assignor or on its behalf
under this Agreement shall be considered to have been relied upon by the Secured
Creditors and shall survive the execution and delivery of this Agreement, the
other Credit Documents and the Interest Rate Protection Agreements or Other
Hedging Agreements regardless of any investigation made by the Secured Creditors
or on their behalf.
11.5. Headings Descriptive. The headings of the several sections of
this Agreement are inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agreement.
11.6. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK. EACH OF THE PARTIES TO THIS AGREEMENT
HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
11.7. Assignor's Duties. It is expressly agreed, anything herein
contained to the contrary notwithstanding, that each Assignor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Collateral Agent be required or obligated in any
<PAGE> 294
EXHIBIT H
Page 40
manner to perform or fulfill any of the obligations of each Assignor under or
with respect to any Collateral.
11.8. Termination; Release. (a) On the Termination Date, but only
after giving effect to the payments to be made on such date, this Agreement
shall terminate (provided that all indemnities set forth herein including,
without limitation, in Section 8.1 hereof shall survive such termination) and
the Collateral Agent, at the request and expense of the respective Assignor,
will promptly execute and deliver to such Assignor proper instruments (including
Uniform Commercial Code termination statements on form UCC-3 (or the equivalent
form thereof)) acknowledging the satisfaction and termination of this Agreement,
and will duly assign, release, transfer and deliver to such Assignor (without
recourse and without any representation or warranty) all of the Collateral as
may be in the possession of the Collateral Agent and as has not theretofore been
sold or otherwise applied or released pursuant to this Agreement. As used in
this Agreement, "Termination Date" shall mean the date upon which the total
commitments under the Credit Agreements and all Interest Rate Protection
Agreements or Other Hedging Agreements have been terminated, no note under the
Credit Agreements is outstanding (and all loans thereunder have been repaid in
full), and all letters of credit issued under the SCIS Credit Agreement have
been terminated and all Obligations then owing have been paid in full.
(b) In the event that all or any part of the Collateral is sold,
conveyed or disposed of in connection with any form of asset disposition
permitted by the Credit Agreements or otherwise released, in whole or in part,
at the direction of the Required Secured Creditors and the proceeds of such
asset disposition or from such release are applied in accordance with, and to
the extent required by, the provisions of the Credit Agreements, such Collateral
will be sold or otherwise disposed of free and clear of the Liens created by
this Agreement and the Collateral Agent, at the request and expense of the
respective Assignor, will duly assign, release, transfer and deliver to such
Assignor (without recourse and without any representation or warranty) such of
the Collateral as is then being (or has been) so sold or released and has not
theretofore been released pursuant to this Agreement, it being understood and
agreed, however, that the Required Banks under, and as defined in, the SCIS
Credit Agreement may agree to release Collateral from the Liens created by the
Security Documents with an aggregate value of up to $1,000,000 in any fiscal
year of SCIS without the consent of the Caterair Bank Creditors.
(c) Notwithstanding anything contained in this Agreement to the
contrary, the Collateral Agent agrees (i) to fully release any or all of the
Collateral constituting Catering Assets (as defined in the American Airlines
Catering Agreement with Sky Chefs)
<PAGE> 295
EXHIBIT H
Page 41
to the extent (but only to the extent) subject to the option granted in Section
9 of the American Airlines Catering Agreement upon receipt by the Collateral
Agent from American Airlines of the purchase price in cash as specified in
Section 9 of such American Airlines Catering Agreement with respect to such
Catering Assets and (ii) to deliver to American Airlines at least 10 days prior
written notice prior to any foreclosure action or other exercise of remedies in
respect of the Catering Assets referred to in preceding clause (i) and deliver
to American Airlines the letter required by clause (i)(y) of the first sentence
of Section 11(f) of such American Airlines Catering Agreement.
(d) At any time that an Assignor desires that the Collateral Agent
take any action to acknowledge or give effect to any release of Collateral
pursuant to the foregoing Section 11.8(a), (b) or (c), as the case may be, such
Assignor shall deliver to the Collateral Agent a certificate signed by a
principal executive officer of such Assignor stating that the release of the
respective Collateral is permitted pursuant to such Section 11.8(a), (b) or (c),
as the case may be.
(e) The Collateral Agent shall have no liability whatsoever to any
other Secured Creditor as a result of any release of Collateral by it in
accordance with this Section 11.8.
11.9. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
11.10. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11.11. Additional Assignors. It is understood and agreed that any
Wholly-Owned Domestic Subsidiary of SCIS or Caterair Holdings that is required
to execute a counterpart of this Agreement after the date hereof pursuant to the
Credit Agreements shall automatically become an Assignor hereunder by executing
a counterpart hereof and delivering the same to the Collateral Agent.
* * *
<PAGE> 296
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
Addresses:
524 East Lamar Boulevard SC INTERNATIONAL
Arlington, Texas 76011 SERVICES, INC., as an
Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: Authorized Signatory
Taxpayer
I.D. No.: 75-2607219
6550 Rock Spring Drive CATERAIR INTERNATIONAL
Bethesda, Maryland 20817 CORPORATION, as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: Authorized Signatory
Taxpayer
I.D. No.: 52-1640561
524 East Lamar Boulevard SKY CHEFS, INC., as an
Arlington, Texas 76011 Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: Authorized Signatory
Taxpayer
I.D. No: 13-1318367
6550 Rock Spring Drive CATERAIR INTERNATIONAL,
Bethesda, Maryland 20817 INC. (II), as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: Authorized Signatory
Taxpayer
I.D. No. 75-2607218
<PAGE> 297
524 East Lamar Boulevard SKY CHEFS INTERNATIONAL
Arlington, Texas 76011 CORP., as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 13-3800220
300 Delaware Avenue, Suite 315 ARLINGTON SERVICES, INC.,
Wilmington, Delaware 19801-1622 as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 51-0344713
300 Delaware Avenue, Suite 315 ARLINGTON SERVICES
Wilmington, Delaware 19801-1622 HOLDING CORPORATION,
as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 58-1524154
300 Delaware Avenue, Suite 315 BETHESDA SERVICES, INC.,
Wilmington, Delaware 19801-1622 as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: Authorized Signatory
Taxpayer
I.D. No: 13-2740073
<PAGE> 298
300 Delaware Avenue, Suite 315 CATERAIR NEW ZEALAND
Wilmington, Delaware 19801-1622 LIMITED,
as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: Authorized Signatory
Taxpayer
I.D. No: 13-2740073
524 East Lamar Boulevard CATERAIR CONSULTING
Arlington, Texas 76011 SERVICES CORPORATION,
as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 52-0936585
524 East Lamar Boulevard JFK CATERERS, INC.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 52-1312557
524 East Lamar Boulevard CATERAIR ST. THOMAS
Arlington, Texas 76011 HOLDINGS CORPORATION,
as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 52-1805211
<PAGE> 299
524 East Lamar Boulevard WESTERN AIRE CHEF, INC.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 52-0974724
6550 Rock Spring Drive CATERAIR AIRPORT
Bethesda, Maryland 20817 PROPERTIES, INC.,
as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 52-1047952
524 East Lamar Boulevard SKY CHEFS ARGENTINE,
Arlington, Texas 76011 INC.,
as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Treasurer
Taxpayer
I.D. No: 52-1689276
524 East Lamar Boulevard CATERAIR INTERNATIONAL
Arlington, Texas 76011 TRANSITION CORPORATION,
as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 52-1947041
524 East Lamar Boulevard ONEX OHIO ACCEPTANCE
Arlington, Texas 76011 CORP., as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
<PAGE> 300
Taxpayer
I.D. No: 75-2137075
524 East Lamar Boulevard ONEX OHIO CREDIT CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 75-2137074
524 East Lamar Boulevard ONEX OHIO EQUITY CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 75-2184952
524 East Lamar Boulevard ONEX OHIO FINANCE CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 75-2228384
524 East Lamar Boulevard ONEX OHIO FINANCE CORP.
Arlington, Texas 76011 II, as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 75-2344670
<PAGE> 301
524 East Lamar Boulevard ONEX OHIO CAPITAL CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 75-2272627
524 East Lamar Boulevard ONEX OHIO FISCAL CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 75-2273325
524 East Lamar Boulevard ONEX OHIO FUNDS CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 75-2272625
524 East Lamar Boulevard ONEX OHIO CREDIT CORP.
Arlington, Texas 76011 II, as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 31-1024320
524 East Lamar Boulevard ONEX OHIO FUNDS CORP. II,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 31-1024320
<PAGE> 302
524 East Lamar Boulevard ONEX OHIO FISCAL CORP.
Arlington, Texas 76011 II, as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 31-1024320
524 East Lamar Boulevard ONEX OHIO EQUITY CORP.
Arlington, Texas 76011 II, as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 31-1024320
524 East Lamar Boulevard ONEX OHIO CAPITAL CORP.
Arlington, Texas 76011 II, as an Assignor
By: /s/ Thomas J. Lee
-----------------------
Title: President
Taxpayer
I.D. No: 31-1024320
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Collateral Agent
By: /s/ Laura Loffredo
-----------------------
Title: Vice President
Taxpayer
I.D. No: 13-5123346
<PAGE> 303
ANNEX A
to
AMENDED AND
RESTATED
SECURITY
AGREEMENT
SCHEDULE OF CHIEF EXECUTIVE OFFICES
AND OTHER RECORD LOCATIONS
SC INTERNATIONAL SERVICES, INC.
524 East Lamar Blvd.
Arlington, Texas 76011
CATERAIR INTERNATIONAL CORPORATION
6550 Rock Spring Drive
Bethesda, Maryland 20817
SKY CHEFS, INC.
524 East Lamar Boulevard
Arlington, Texas 76011
CATERAIR INTERNATIONAL, INC. (II)
6550 Rock Spring Drive
Bethesda, Maryland 20817
SKY CHEFS INTERNATIONAL CORP.
524 East Lamar Blvd.
Arlington, Texas 76011
ARLINGTON SERVICES, INC.
300 Delaware Avenue, Suite 315
Wilmington, Delaware 19801-1622
ARLINGTON SERVICES HOLDING CORPORATION
300 Delaware Avenue, Suite 315
Wilmington, Delaware 19801-1622
BETHESDA SERVICES, INC.
300 Delaware Avenue, Suite 315
Wilmington, Delaware 19801-1622
<PAGE> 304
ANNEX A
to Security
Agreement
Page 2
CATERAIR NEW ZEALAND LIMITED
300 Delaware Avenue, Suite 315
Wilmington, Delaware 19801-1622
CATERAIR CONSULTING SERVICES CORPORATION
524 East Lamar Blvd.
Arlington, Texas 76011
JFK CATERERS, INC.
524 East Lamar Blvd.
Arlington, Texas 76011
CATERAIR ST. THOMAS HOLDINGS CORPORATION
524 East Lamar Blvd.
Arlington, Texas 76011
WESTERN AIRE CHEF, INC.
524 East Lamar Blvd.
Arlington, Texas 76011
CATERAIR AIRPORT PROPERTIES, INC.
6550 Rock Spring Drive
Bethesda, Maryland 20817
SKY CHEFS ARGENTINE, INC.
524 East Lamar Blvd.
Arlington, Texas 76011
CATERAIR INTERNATIONAL TRANSITION CORPORATION
524 East Lamar Blvd.
Arlington, Texas 76011
ONEX OHIO ACCEPTANCE CORPORATION
524 East Lamar Blvd.
Arlington, Texas 76011
<PAGE> 305
ANNEX A
to Security
Agreement
Page 3
ONEX OHIO CREDIT CORP.
524 East Lamar Blvd.
Arlington, Texas 76011
ONEX OHIO EQUITY CORP.
524 East Lamar Blvd.
Arlington, Texas 76011
ONEX OHIO FINANCE CORP.
524 East Lamar Blvd.
Arlington, Texas 76011
ONEX OHIO FINANCE CORP. II
524 East Lamar Blvd.
Arlington, Texas 76011
ONEX OHIO CAPITAL CORP.
524 East Lamar Blvd.
Arlington, Texas 76011
ONEX OHIO FISCAL CORP.
524 East Lamar Blvd.
Arlington, Texas 76011
ONEX OHIO FUNDS CORP.
524 East Lamar Blvd.
Arlington, Texas 76011
ONEX OHIO CREDIT CORP. II
524 East Lamar Blvd.
Arlington, Texas 76011
ONEX OHIO FUNDS CORP. II
524 East Lamar Blvd.
Arlington, Texas 76011
<PAGE> 306
ANNEX A
to Security
Agreement
Page 4
ONEX OHIO FISCAL CORP. II
524 East Lamar Blvd.
Arlington, Texas 76011
ONEX OHIO EQUITY CORP. II
524 East Lamar Blvd.
Arlington, Texas 76011
ONEX OHIO CAPITAL CORP. II
524 East Lamar Blvd.
Arlington, Texas 76011
<PAGE> 307
ANNEX B
to
AMENDED AND
RESTATED
SECURITY
AGREEMENT
SCHEDULE OF INVENTORY AND EQUIPMENT LOCATIONS
LOCATION OF PROPERTY/
COMPANY EQUIPMENT HELD
------- ---------------------
SC INTERNATIONAL SERVICES, INC. NONE
CATERAIR INTERNATIONAL CORPORATION SEE ATTACHED LIST FOR ENTRIES
ENTITLED "CATERAIR"
SKY CHEFS, INC. SEE ATTACHED LIST FOR ENTRIES,
ENTITLED "SKY CHEFS"
CATERAIR INTERNATIONAL, INC. (II) NONE
SKY CHEFS INTERNATIONAL CORP. NONE
ARLINGTON SERVICES, INC. NONE
ARLINGTON SERVICES HOLDING CORPORATION NONE
CATERAIR CONSULTING SERVICES CORPORATION NONE
JFK CATERERS, INC. NONE
CATERAIR ST. THOMAS HOLDINGS CORPORATION NONE
WESTERN AIRE CHEF, INC. NONE
CATERAIR AIRPORT PROPERTIES, INC. NONE
SKY CHEFS ARGENTINE, INC. ADDRESS IN ARGENTINA: TENIENTE
GENERAL MORILLAS S/N Y AUTOPISTA
AV. GVAL. RICCHIERI AEROPUERTO
EZEIZA P. 1804 PROVINCIA DE BUENOS
AIRES, ARGENTINA
BETHESDA SERVICES, INC. NONE
CATERAIR NEW ZEALAND LIMITED NONE
CATERAIR INTERNATIONAL TRANSITION NONE
CORPORATION
ONEX OHIO ACCEPTANCE CORPORATION NONE
ONEX OHIO CREDIT CORP. NONE
ONEX OHIO EQUITY CORP. NONE
ONEX OHIO FINANCE CORP. NONE
ONEX OHIO FINANCE CORP. II NONE
ONEX OHIO CAPITAL CORP. NONE
ONEX OHIO FISCAL CORP. NONE
ONEX OHIO FUNDS CORP. NONE
<PAGE> 308
ANNEX B
Page 2
ONEX OHIO CREDIT CORP. II NONE
ONEX OHIO FUNDS CORP. II NONE
ONEX OHIO FISCAL CORP. II NONE
ONEX OHIO EQUITY CORP. II NONE
ONEX OHIO CAPITAL CORP. II NONE
<PAGE> 309
ANNEX B
Page 3
SKY CHEFS, INC.
<TABLE>
<CAPTION>
Location Street Address Leased or Owned Type of Facility
- -------- -------------- --------------- ----------------
<S> <C> <C> <C>
Headquarters 524 East Lamar Blvd. Leased Corporate Offices
Arlington, TX 76011-3999
Austin 1924 E. 38 1/2 St. Leased Flight Kithchen
Austin, TX 78723
Austin 3851 Airport Blvd. Leased Office and
Suite 105 Storage Space
Austin, TX 78722
Boston Logan Int'l Airport Leased Flight Kitchen
30 Wellington Rd.
East Boston, MA 02128-2055
Chicago 511 Cargo Rd. Leased Flight Kitchen
O'Hare Int'l Airport
Chicago, IL 60666-0287
Cincinnati Air Cargo Building Leased, but no Former Flight
West Service Road longer occupied by Kitchen
Greater Cincinnati Airport Sky Chefs
Boone County, KY
Cleveland Sky Chefs United Kitchen Leased Flight Kitchen
Cleveland Hopkins Int'l Airport
Jackson Road
Cleveland, OH 44135
Cleveland Cleveland Hopkins Int'l Airport Leased Formerly a Flight
South Cargo Road Kitchen, but
Cleveland, OH 44135 closed and used
as a storage
facility now
Dallas/Fort Worth 2120 W. 33rd Street Leased Flight Kitchen
Int'l DFW Airport, TX 75261-9103
Dallas/Fort Worth 3000 S. 22nd Street Leased Flight Kitchen
Domestic DFW Airport, TX 75261-0012
</TABLE>
<PAGE> 310
ANNEX B
Page 4
<TABLE>
<CAPTION>
Location Address Leased or Owned Type of Facility
- -------- ------- --------------- ----------------
<S> <C> <C> <C>
Dallas/Fort Worth 1535 West 20th St. Leased, but not Former Flight
(DFN) DFW Airport, TX 75261 operated by Sky Kitchen
Chefs
Denver (New Airport) 26210 East 100th Street Lease under Flight Kitchen
Denver, CO 80249 negotiation
Detroit Building #534 Leased Flight Kitchen
Detroit Metro Airport
Detroit, MI 48242
El Paso 6501 Convair Leased Flight Kitchen
Suite G
El Paso, TX 79925
Fort Lauderdale 3260 S.W. 11th Avenue Leased Flight Kitchen
Unit A
Ft. Lauderdale, FL 33315
Honolulu 3129 Ualena Street Leased Flight Kitchen
Honolulu, HI 96819
Honolulu 2635 WaiWai Loop Subleased by Sky Warehouse
Honolulu, HI Chefs to American
Pacific Transport
Co., Ltd.
Los Angeles 7000 World Way West Leased Flight Kitchen
Los Angeles, CA 90045
Miami 3755 N.W. 21st Street Leased Flight Kitchen
Miami, FL 33142
Miami 3601 N.W. 22nd Street Leased Flight Kitchen
Miami, FL 33142
Milwaukee 5220 South 3rd Street Owned Flight Kitchen
Milwaukee, WI 53207
Newark Newark Int'l Airport Leased Flight Kitchen
Building #95
Brewster Road South
Newark, NJ 07114
</TABLE>
<PAGE> 311
ANNEX B
Page 5
<TABLE>
<CAPTION>
Location Address Leased or Owned Type of Facility
- -------- ------- --------------- ----------------
<S> <C> <C> <C>
Newark 560-590 Bercik Street Leased Warehouse Space
Elizabeth, NJ
Nashville 815 Hangar Lane Leased Flight Kitchen
Nashville, TN 37217
Nashville 1504 Vultee Blvd. Leased Formerly Flight
Nashville, TN 37217 Kitchen, but
closed and used
for storage now
New Orleans 200 Crofton Road Leased Flight Kitchen
Kenner, LA 70062
New York Onex Investment Corp. Leased Office
712 Fifth Avenue
New York, NY 10019
New York Building #122 Leased Flight Kitchen
JFK Int'l Airport
Jamaica, NY 11430-1683
New York American Airlines Terminal Leased Restaurant
Building #57 Facilities
JFK Int'l Airport
Jamaica, NY 11430-1683
New York 156-06 - 156-08 Rockaway Blvd. Leased Former Flight
Queens, NY Kitchen no
longer operated
by Sky Chefs
New York 182-20 150th Road Leased Warehouse Space
Jamaica, NY 11413
New York American Airlines Hangar #5 Leased Flight Kitchen
LaGuardia Airport
Flushing, NY 11371
Oklahoma City 4400 SW 36th Street Owned Flight Kitchen
Oklahoma City, OK 73119
</TABLE>
<PAGE> 312
ANNEX B
Page 6
<TABLE>
<CAPTION>
Location Address Leased or Owned Type of Facility
- -------- ------- --------------- ----------------
<S> <C> <C> <C>
Omaha 5303 Lockheed Ct. Leased Flight Kitchen
Eppley Field
Omaha, NE 68110
Phoenix 1235 S. 23rd St. Leased Flight Kitchen
Phoenix, AZ 85034
Portland Portland Int'l Airport Leased Flight Kitchen
7201 N.E. Alderwood Rd.
Portland, OR 97218-1080
Raleigh-Durham 2700 W. Terminal Blvd. Leased Flight Kitchen
Raleigh, NC 27623
Raleigh-Durham Terminal C Leased Restaurant and
RDU Int'l Airport Retail Facilities
Raleigh, NC 27623
San Diego 2415 Winship Lane Leased Flight Kitchen
San Diego, CA 92101
San Francisco 810 Malcolm Road Owned Flight Kitchen
Burlingame, CA 94010-1492
San Francisco 1755 Bay Shore Highway Owned Parking car
Burlingame, CA facility (leased to
Alamo Rent-A-
Car, Inc.)
Stewart Air Force 18 Governors Drive Leased Flight Kitchen
Base, Newburgh, NY Newburgh, NY 12550
Syracuse 300 Gateway Drive Leased Flight Kitchen
N. Syracuse, NY 13212 and Storage
Space
Tucson 2771 E. Airport Dr. Leased Flight Kitchen
Tucson, AZ 85706
Tucson TowerGrille Leased Restaurant
7061 South Plumber Facility
Tucson, AZ 85706
</TABLE>
<PAGE> 313
ANNEX B
Page 7
<TABLE>
<CAPTION>
Location Address Leased or Owned Type of Facility
- -------- ------- --------------- ----------------
<S> <C> <C> <C>
Tulsa Cargo Building Leased Flight Kitchen
Cargo Road
Tulsa, OK 74115
</TABLE>
<PAGE> 314
ANNEX B
Page 8
LSG/USA CORPORATION
<TABLE>
<CAPTION>
Location Address Leased or Owned Type of Facility
- -------- ------- --------------- ----------------
<S> <C> <C> <C>
Miami(1) 4101 N.W. 25th Street Leased Flight Kitchen
Miami, FL 33142
New York JFK Int'l. Airport Leased Flight Kitchen
Building 143
Jamaica, NY 11430
San Francisco(1) 370 Adrian Road Leased Flight Kitchen
Millbrae, CA 94030
</TABLE>
- --------
(1) Managed by Sky Chefs.
<PAGE> 315
ANNEX B
Page 9
LSG/SKY CHEFS
<TABLE>
<CAPTION>
Street
Location Address Leased, Owned Type of Facility
- -------- ------- or Managed ----------------
----------
<S> <C> <C> <C>
Sacramento Metropolitan Airport Leased Flight Kitchen
6671 Lindberg Drive
Sacramento, CA 95837
Reno 1085 Bible Way Leased Flight Kitchen
Reno, NV 89502
Dallas/Ft. Worth 2200 W. 33rd Leased Flight Kitchen
P.O. Box 610072
Dallas/Ft. Worth Airport
Dallas, TX 75261
Atlanta 1102 S. Central Avenue Leased Flight Kitchen
East Point, GA 30344
Houston 4420 Wright Bros. Road Leased Flight Kitchen
P.O. Box 60464
Houston, TX 77205
West Palm Beach Building S1169 Duncan Leased Flight Kitchen
Avenue
Palm Beach Int'l Airport
West Palm Beach, FL 33406
Seattle 18850 28th Avenue, South Leased Flight Kitchen
Seattle, WA 98188
Anchorage 3830 International Airport Leased Flight Kitchen
Road
Western Air Freight Building
Anchorage, AL 99519
Kansas City P.O. Box 20546 Leased Flight Kitchen
566 Brasilia Avenue
Kansas City, MI 64195
Orlando 8680 Bear Road Leased Flight Kitchen
Orlando, FL 32827
</TABLE>
<PAGE> 316
ANNEX B
Page 10
<TABLE>
<CAPTION>
Street
Location Address Leased, Owned Type of Facility
- -------- ------- or Managed ----------------
----------
<S> <C> <C> <C>
Washington, D.C. Washington National Airport Leased Flight Kitchen
Washington, DC 20001
Albuquerque Albuquerque International Leased Flight Kitchen
Airport
P.O. Box 9106
Albuquerque, NM 87119
Tampa 5401 W. Spruce Street Leased Flight Kitchen
Tampa, FL 33607
Rochester P.O. Box 24966 Leased Flight Kitchen
1200 Brooks Avenue
Rochester, NY 14624
Hartford Bradley International Airport Leased Flight Kitchen
Windsor Locks, CT 06096
Palm Springs 1251 Montalvo Way, Ste. B Leased Flight Kitchen
Palm Springs, CA 92262
New Orleans New Orleans International Leased Flight Kitchen
Airport
200 Crofton Road
Kenner, LA 7006
Miami 3500 N.W. 24th Street Leased Flight Kitchen
Miami, FL 33142
San Diego San Diego International Leased Flight Kitchen
Airport
2311 Airlane Road
San Diego, CA 92101
Las Vegas 625 Kitty Hawk Way Leased Flight Kitchen
Las Vegas, NV 89119
Charleston 6900 Midland Park Road Leased Flight Kitchen
Charleston Heights, SC
29418
Ft. Lauderdale 220 SW 34th Street Leased Flight Kitchen
Ft. Lauderdale, FL 33315
</TABLE>
<PAGE> 317
ANNEX B
Page 11
<TABLE>
<CAPTION>
Street
Location Address Leased, Owned Type of Facility
- -------- ------- or Managed ----------------
----------
<S> <C> <C> <C>
Minneapolis 3100 East 73rd Street Leased Flight Kitchen
Minneapolis, MN 55450
Portland 9009 N.E. Airport Way Leased Flight Kitchen
Portland International Airport
Portland, OR 97220
Detroit Building 505 Leased Flight Kitchen
Detroit Metropolitan Airport
Detroit, MI 48242
Washington, DC P.O. Box 17087 Leased Flight Kitchen
Washington, DC 20041
Dulles International
Airport
East Service Road
Chantilly, VA 22021
Ft. Myers 12420 Fuel Farm Road Leased Flight Kitchen
Ft. Myers, FL 33913
Phoenix 1451 S. 23rd Street Leased Flight Kitchen
Phoenix, AR 85034
Honolulu 110 Pohakulana Place Leased Flight Kitchen
Honolulu, HI 96819
</TABLE>
<PAGE> 318
ANNEX B
Page 12
CATERAIR
<TABLE>
<CAPTION>
Street
Location Address Leased, Owned Type of Facility
- -------- ------- or Managed ----------------
----------
<S> <C> <C> <C>
Headquarters 6550 Rock Spring Drive Leased Corporate Offices
Bethesda, MD 20817
Charleston 6900 Midland Park Road Owned Flight Kitchen
Charleston Heights, SC 29418
</TABLE>
<PAGE> 319
ANNEX B
Page 13
CATERAIR INTERNATIONAL, INC. (II)
<TABLE>
<CAPTION>
Location Address Leased or Owned Type of Facility
- -------- ------- --------------- ----------------
<S> <C> <C> <C>
Austin 9101 Wallstreet Leased Flight Kitchen
Bldg. C, Ste. 420
Austin, Texas 78754
Baltimore Baltimore/Washington Int'l Leased Flight Kitchen
Airport
776 Elkridge Landing Road
Baltimore, Maryland 21240
Boston #1 Wood Island Park Leased Flight Kitchen
Logan International Airport
Boston, Massachusetts 02128
Los Angeles 6901 W. Imperial Highway Leased Flight Kitchen
Los Angeles, California 90045
New York/ JFK International Airport Leased Flight Kitchen
JFK Building 139
Jamaica, New York 11430
New York/ 147-35 Farmers Boulevard Leased Flight Kitchen
JFK Jamaica, New York 11434
New York/ 45-10 19th Avenue Leased Flight Kitchen
La Guardia Astoria, New York 11434
Oakland Oakland International Airport Leased Flight Kitchen
Neil Armstrong Way
Building M-111
P.O. Box 14088
Oakland, California 94614
Ontario 1902 East Avion Street Leased Flight Kitchen
Ontario, California 91761
Philadelphia 8401 Escort Street Leased Flight Kitchen
Philadelphia, Pennsylvania 19153
</TABLE>
<PAGE> 320
ANNEX B
Page 14
<TABLE>
<CAPTION>
Location Address Leased or Owned Type of Facility
- -------- ------- --------------- ----------------
<S> <C> <C> <C>
Salt Lake City AMF Box 22104 Leased Flight Kitchen
550 North Cargo Road
Salt Lake International Airport
Salt Lake City, Utah 84122
San Francisco 50 Adrian Court Leased Flight Kitchen
Burlingame, California 94010
San Jose 385 Commercial Street Leased Flight Kitchen
San Jose, California 95212
Santa Ana 2990-B Airway Avenue Leased Flight Kitchen
Costa Mesa, California 92626
</TABLE>
<PAGE> 321
ANNEX C
to
AMENDED AND
RESTATED
SECURITY
AGREEMENT
LIST OF TRADE AND FICTITIOUS NAMES
SC INTERNATIONAL SERVICES, INC. NONE
CATERAIR INTERNATIONAL CORPORATION Marriott In-Flight Services
Fort Lauderdale Catering Company
[Caterair International Europe (used
by Caterair France, S.A.)]
SKY CHEFS, INC. LSG/Sky Chefs
LSG Lufthansa Service/Sky Chefs
Servcater (in Brazil)
Cateringpor (in Portugal)
CATERAIR INTERNATIONAL, INC. (II) NONE
SKY CHEFS INTERNATIONAL CORP. NONE
ARLINGTON SERVICES, INC. NONE
ARLINGTON SERVICES HOLDING CORPORATION NONE
BETHESDA SERVICES, INC. NONE
CATERAIR NEW ZEALAND LIMITED NONE
CATERAIR CONSULTING SERVICES CORPORATION NONE
JFK CATERERS, INC. NONE
CATERAIR ST. THOMAS HOLDINGS CORPORATION NONE
WESTERN AIRE CHEF, INC. NONE
CATERAIR AIRPORT PROPERTIES, INC. NONE
SKY CHEFS ARGENTINE, INC. NONE
CATERAIR INTERNATIONAL TRANSITION NONE
CORPORATION
ONEX OHIO ACCEPTANCE CORPORATION NONE
ONEX OHIO CREDIT CORP. NONE
ONEX OHIO EQUITY CORP. NONE
<PAGE> 322
ANNEX C
Page 2
ONEX OHIO FINANCE CORP. NONE
ONEX OHIO FINANCE CORP. II NONE
ONEX OHIO CAPITAL CORP. NONE
ONEX OHIO FISCAL CORP. NONE
ONEX OHIO FUNDS CORP. NONE
ONEX OHIO CREDIT CORP. II NONE
ONEX OHIO FUNDS CORP. II NONE
ONEX OHIO FISCAL CORP. II NONE
ONEX OHIO EQUITY CORP. II NONE
ONEX OHIO CAPITAL CORP. II NONE
<PAGE> 323
ANNEX D
to
AMENDED AND
RESTATED
SECURITY
AGREEMENT
LIST OF MARKS
SKY CHEFS, INC.
NONE
SC INTERNATIONAL SERVICES, INC.
NONE
CATERAIR HOLDINGS CORPORATION
NONE
CATERAIR INTERNATIONAL CORPORATION
NONE
CATERAIR INTERNATIONAL, INC. (II)
NONE
SKY CHEFS INTERNATIONAL CORP.
NONE
ARLINGTON SERVICES HOLDING CORPORATION
NONE
<PAGE> 324
ANNEX D
Page 2
ARLINGTON SERVICES, INC.
Trademark Registration Number Registration Date
--------- ------------------- -----------------
SKYCHEFS 1,081,378 1/3/78
The "Spork" 1,081,379 1/3/78
SKYCHEFS 1,081,380 1/3/78
BETHESDA SERVICES, INC.
Caterair 1,639,399 3/26/91
Caterair International 1,643,177 4/30/91
stylized aircraft graphic 1,666,254 11/26/91
CATERAIR NEW ZEALAND LIMITED
NONE
CATERAIR CONSULTING SERVICES CORPORATION
NONE
JFK CATERERS, INC.
NONE
CATERAIR ST. THOMAS HOLDINGS CORPORATION
NONE
WESTERN AIRE CHEF, INC.
NONE
<PAGE> 325
ANNEX D
Page 3
CATERAIR AIRPORT PROPERTIES, INC.
NONE
SKY CHEFS ARGENTINE, INC.
NONE
CATERAIR INTERNATIONAL TRANSITION CORPORATION
NONE
ONEX OHIO ACCEPTANCE CORPORATION
NONE
ONEX OHIO CREDIT CORP.
NONE
ONEX OHIO EQUITY CORP.
NONE
ONEX OHIO FINANCE CORP.
NONE
ONEX OHIO FINANCE CORP. II
NONE
ONEX OHIO CAPITAL CORP.
NONE
ONEX OHIO FISCAL CORP.
NONE
<PAGE> 326
ANNEX D
Page 4
ONEX OHIO FUNDS CORP.
NONE
ONEX OHIO CREDIT CORP. II
NONE
ONEX OHIO FUNDS CORP. II
NONE
ONEX OHIO FISCAL CORP. II
NONE
ONEX OHIO EQUITY CORP. II
NONE
ONEX OHIO CAPITAL CORP. II
NONE
<PAGE> 327
ANNEX E
to
AMENDED AND
RESTATED
SECURITY
AGREEMENT
LIST OF PATENTS AND APPLICATIONS
SC INTERNATIONAL SERVICES, INC. NONE
SKY CHEFS, INC. NONE
CATERAIR INTERNATIONAL CORPORATION NONE
CATERAIR INTERNATIONAL, INC. (II) NONE
SKY CHEFS INTERNATIONAL CORP. NONE
ARLINGTON SERVICES, INC. NONE
ARLINGTON SERVICES HOLDING CORPORATION NONE
BETHESDA SERVICES, INC. NONE
CATERAIR NEW ZEALAND LIMITED NONE
CATERAIR CONSULTING SERVICES CORPORATION NONE
JFK CATERERS, INC. NONE
CATERAIR ST. THOMAS HOLDINGS CORPORATION NONE
WESTERN AIRE CHEF, INC. NONE
CATERAIR AIRPORT PROPERTIES, INC. NONE
SKY CHEFS ARGENTINE, INC. NONE
CATERAIR INTERNATIONAL TRANSITION NONE
CORPORATION
ONEX OHIO ACCEPTANCE CORPORATION NONE
ONEX OHIO CREDIT CORP. NONE
ONEX OHIO EQUITY CORP. NONE
<PAGE> 328
ANNEX E
Page 2
ONEX OHIO FINANCE CORP. NONE
ONEX OHIO FINANCE CORP. II NONE
ONEX OHIO CAPITAL CORP. NONE
ONEX OHIO FISCAL CORP. NONE
ONEX OHIO FUNDS CORP. NONE
ONEX OHIO CREDIT CORP. II NONE
ONEX OHIO FUNDS CORP. II NONE
ONEX OHIO FISCAL CORP. II NONE
ONEX OHIO EQUITY CORP. II NONE
ONEX OHIO CAPITAL CORP. II NONE
<PAGE> 329
ANNEX F
to
AMENDED AND
RESTATED
SECURITY
AGREEMENT
LIST OF COPYRIGHTS AND APPLICATIONS
SC INTERNATIONAL SERVICES, INC.
NONE
SKY CHEFS, INC.
Copyright Registration Number Registration Date
--------- ------------------- -----------------
Fire House 5 - Model GP 42976 6/18/64
Fire House 5 - Design GP 44210 6/11/64
CATERAIR INTERNATIONAL CORPORATION
NONE
CATERAIR INTERNATIONAL, INC. (II)
NONE
SKY CHEFS INTERNATIONAL CORP.
NONE
ARLINGTON SERVICES, INC.
NONE
ARLINGTON SERVICES HOLDING CORPORATION
NONE
<PAGE> 330
ANNEX F
Page 2
BETHESDA SERVICES, INC.
NONE
CATERAIR NEW ZEALAND LIMITED
NONE
CATERAIR CONSULTING SERVICES CORPORATION
NONE
JFK CATERERS, INC.
NONE
CATERAIR ST. THOMAS HOLDINGS CORPORATION
NONE
WESTERN AIRE CHEF, INC.
NONE
CATERAIR AIRPORT PROPERTIES, INC.
NONE
SKY CHEFS ARGENTINE, INC.
NONE
CATERAIR INTERNATIONAL TRANSITION CORPORATION
NONE
ONEX OHIO ACCEPTANCE CORPORATION
NONE
<PAGE> 331
ANNEX F
Page 3
ONEX OHIO CREDIT CORP.
NONE
ONEX OHIO EQUITY CORP.
NONE
ONEX OHIO FINANCE CORP.
NONE
ONEX OHIO FINANCE CORP. II
NONE
ONEX OHIO CAPITAL CORP.
NONE
ONEX OHIO FISCAL CORP.
NONE
ONEX OHIO FUNDS CORP.
NONE
ONEX OHIO CREDIT CORP. II
NONE
ONEX OHIO FUNDS CORP. II
NONE
ONEX OHIO FISCAL CORP. II
NONE
<PAGE> 332
ANNEX F
Page 4
ONEX OHIO EQUITY CORP. II
NONE
ONEX OHIO CAPITAL CORP. II
NONE
<PAGE> 333
ANNEX G
to
AMENDED AND
RESTATED
SECURITY
AGREEMENT
ASSIGNMENT OF SECURITY INTEREST
IN UNITED STATES TRADEMARKS AND PATENTS
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which are hereby acknowledged, [Name of Grantor], a __________ corporation (the
"Grantor") with principal offices at __________________________, hereby grants
to Morgan Guaranty Trust Company of New York as Collateral Agent, with principal
offices at 60 Wall Street, New York, New York 10260-0060 (the "Grantee"), a
security interest in (i) all of the Grantor's right, title and interest in and
to the United States trademarks, trademark registrations and trademark
applications (the "Marks") set forth on Schedule A attached hereto, (ii) all of
the Grantor's rights, title and interest in and to the United States patents
(the "Patents") set forth on Schedule B attached, in each case together with
(iii) all Proceeds (as such term is defined in the Security Agreement referred
to below) and products of the Marks and Patents, (iv) the goodwill of the
businesses with which the Marks are associated and (v) all causes of action
arising prior to or after the date hereof for infringement of any of the Marks
and Patents or unfair competition regarding the same.
THIS ASSIGNMENT is made to secure the satisfactory performance and
payment of all the Obligations of the Grantor, as such term is defined in the
Security Agreement among the Grantor, the other assignors from time to time
party thereto and the Grantee, dated as of September 29, 1995 and amended and
restated as of August 28, 1997 (as amended from time to time, the "Security
Agreement"). Upon the occurrence of the
<PAGE> 334
ANNEX G
Page 2
Termination Date (as defined in the Security Agreement), the Grantee shall, upon
such satisfaction, execute, acknowledge, and deliver to the Grantor an
instrument in writing releasing the security interest in the Marks and Patents
acquired under this Assignment.
This Assignment has been granted in conjunction with the security
interest granted to the Grantee under the Security Agreement. The rights and
remedies of the Grantee with respect to the security interest granted herein are
without prejudice to, and are in addition to those set forth in the Security
Agreement, all terms and provisions of which are incorporated herein by
reference. In the event that any provisions of this Assignment are deemed to
conflict with the Security Agreement, the provisions of the Security Agreement
shall govern.
IN WITNESS WHEREOF, the undersigned have executed this Assignment as
of the ____ day of _________, ____.
[NAME OF GRANTOR], as Grantor
By
-----------------------------
Title:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Collateral Agent, Grantee
By
-----------------------------
Title:
<PAGE> 335
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of _________, ____, before me personally came
________ _________________ who, being by me duly sworn, did state as follows:
that [s]he is _______________ of [Name of Grantor], that [s]he is authorized to
execute the foregoing Assignment on behalf of said corporation and that [s]he
did so by authority of the Board of Directors of said corporation.
-------------------------
Notary Public
<PAGE> 336
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of _________, ____, before me personally came
________ _____________________ who, being by me duly sworn, did state as
follows: that [s]he is __________________ of Morgan Guaranty Trust Company of
New York, that he is authorized to execute the foregoing Assignment on behalf of
said corporation and that he did so by authority of the Board of Directors of
said corporation.
----------------------------
Notary Public
<PAGE> 337
SCHEDULE A
MARK REG. NO. REG. DATE
- ---- -------- ---------
<PAGE> 338
SCHEDULE B
PATENT PATENT NO. ISSUE DATE
- ------ ---------- ----------
<PAGE> 339
ANNEX H
to
AMENDED AND
RESTATED
SECURITY
AGREEMENT
ASSIGNMENT OF SECURITY INTEREST
IN UNITED STATES COPYRIGHTS
WHEREAS, [Name of Assignor], a _______________ corporation (the
"Assignor"), having its chief executive office at
______________________________, _____________________, is the owner of all
right, title and interest in and to the United States copyrights and associated
United States copyright registrations and applications for registration set
forth in Schedule A attached hereto;
WHEREAS, MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Collateral
Agent, having its principal offices at 60 Wall Street, New York, New York
10260-0060 (the "Assignee"), desires to acquire a security interest in said
copyrights and copyright registrations and applications therefor; and
WHEREAS, the Assignor is willing to assign to the Assignee, and to
grant to the Assignee, a security interest in and lien upon the copyrights and
copyright registrations and applications therefor described above.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and subject to the terms and conditions of the
Security Agreement, dated as of September 29, 1995 amended and restated as of
August 28, 1997, made by the Assignor, the other assignors from time to time
party thereto and the Assignee (as amended from time to time, the "Security
Agreement"), the Assignor hereby assigns to the Assignee, and grants to the
Assignee, a security interest in the copyrights and copyright registrations and
applications therefor set forth in Schedule A attached hereto.
This Assignment has been granted in conjunction with the security
interest granted to the Assignee under the Security Agreement. The rights and
remedies of the Assignee with respect to the security interest granted herein
are without prejudice to, and are in addition to those set forth in the Security
Agreement, all terms and provisions of which are incorporated herein by
reference. In the event that any provisions of this
<PAGE> 340
ANNEX H
Page 2
Assignment are deemed to conflict with the Security Agreement, the provisions of
the Security Agreement shall govern.
Executed at New York, New York, the __ day of ____________, ____.
[NAME OF ASSIGNOR], as Assignor
By
-----------------------------
Title:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Collateral Agent, Assignee
By
-----------------------------
Title:
<PAGE> 341
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this __ day of ________, ____ before me personally came
_______________, who being duly sworn, did depose and say that [s]he is
___________________ of [Name of Assignor], that [s]he is authorized to execute
the foregoing Assignment on behalf of said corporation and that [s]he did so by
authority of the Board of Directors of said corporation.
-------------------------
Notary Public
<PAGE> 342
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this __ day of ________, ____ before me personally came
_______________, who being duly sworn, did depose and say that [s]he is
___________________ of Morgan Guaranty Trust Company of New York that [s]he is
authorized to execute the foregoing Assignment on behalf of said corporation and
that [s]he did so by authority of the Board of Directors of said corporation.
-------------------------
Notary Public
<PAGE> 343
SCHEDULE A
U.S. COPYRIGHTS
REGISTRATION PUBLICATION
NUMBERS DATE COPYRIGHT TITLE
- ------------ ----------- ---------------
<PAGE> 344
ANNEX I
to
SECURITY
AGREEMENT
[Conformed as Executed]
LOUISIANA ADDENDUM TO SECURITY AGREEMENT
THIS LOUISIANA ADDENDUM (the "Addendum") is made and entered into as of
the 28th day of August, 1997, among each of the undersigned, with each of
the undersigned having the taxpayer identification number set out in its
signature block below (each an "Assignor" and, together with any other entity
that becomes a party hereto pursuant to Section 11.11 of the Security Agreement
(as hereinafter defined), the "Assignors"), and Morgan Guaranty Trust Company of
New York, having a taxpayer identification number of 13-5123346, as the
Collateral Agent (the "Collateral Agent") for the benefit of the Secured
Creditors (as defined in the Security Agreement).
1. This Addendum supplements the Security Agreement dated as of September
29, 1995 and amended and restated as of August 28, 1997 by and among the
Assignors and the Collateral Agent for the benefit of the Secured Creditors (the
"Security Agreement"). This Addendum shall apply to each Assignor's Collateral
(as defined in the Security Agreement) and all proceeds thereof at all times
during which such Collateral or the proceeds thereof are located in Louisiana or
are otherwise subject to the application of Louisiana law in any respect (the
term "Louisiana Collateral" as used herein shall refer to all portions of the
Collateral and the proceeds thereof that are at any time located in the state of
Louisiana or are otherwise subject to Louisiana law at all times during which
such portions or proceeds thereof are located in Louisiana or are otherwise
subject to the application of Louisiana law).
2. The parties hereto recognize and agree that the security interest
granted by each Assignor to the Collateral Agent in the Louisiana Collateral
shall be subject to the provisions of Chapter 9 of the Louisiana Commercial Laws
(La. R.S. ss.ss. 10:9-101, et seq.) and all other provisions of Louisiana law.
3. Contemporaneously with the execution of this Addendum, each Assignor
has completed and signed one or more appropriate Louisiana UCC-1 financing
statements with regard to the Louisiana Collateral and the proceeds thereof.
Each Assignor authorizes the Collateral Agent, at the Assignors' expense, to
file multiple originals, or photocopies, carbon copies or facsimile copies of
such Louisiana UCC-1 financing statements with the
<PAGE> 345
ANNEX I
Page 2
appropriate filing officer or officers in the State of Louisiana, pursuant to
the provisions of Chapter 9 of the Louisiana Commercial Laws (La. R.S. ss.ss.
10:9-101, et seq.).
4. Each Assignor hereby represents and warrants to the Collateral Agent
that their respective taxpayer identification numbers are correctly set out in
that Assignor's signature block in this Addendum. Each Assignor shall give the
Collateral Agent thirty (30) days notice prior to any change in each Assignor's
taxpayer identification number. In the event of any change in any Assignor's
taxpayer identification number, that Assignor will execute and file any new
financing statements or any other documents that are necessary or desirable to
preserve and continue the Collateral Agent's security interest in the Louisiana
Collateral under the Security Agreement and this Addendum within thirty (30)
days after such change.
5. Upon the occurrence of any Event of Default (as defined in the Security
Agreement), the Collateral Agent shall have the following rights and remedies
with respect to the Louisiana Collateral, which rights and remedies are in
addition to and are not in lieu or limitation of any other rights and remedies
that may be provided in the Security Agreement, under Chapter 9 of the Louisiana
Commercial Laws (La. R.S. ss.ss. 10:9-101, et seq.), under the Uniform
Commercial Code of any state other than Louisiana, or at law or in equity
generally:
A. The Collateral Agent may cause the Louisiana Collateral, or any
part or parts thereof, to be immediately seized wherever found, and sold,
whether in term of court or in vacation, under ordinary or executory process, in
accordance with applicable Louisiana law, to the highest bidder for cash, with
or without appraisement, without the necessity of making additional demand, or
of notifying any Assignor, or placing any Assignor in default.
B. For purposes of foreclosure under Louisiana executory process
procedures, each Assignor confesses judgment and acknowledges to be indebted
unto and in favor of the Collateral Agent up to the full amount of each
Assignor's Obligations, in principal, interest, costs, expenses, attorneys' fees
and other fees and charges. To the extent permitted under applicable Louisiana
law, each Assignor additionally waives: (a) the benefit of appraisal as provided
in Articles 2332, 2336, 2723 and 2724 of the Louisiana Code of Civil Procedure
and all other laws with regard to appraisal upon judicial sale; (b) the demand
and three (3) days' delay as provided under Articles 2639 and 2721 of the
Louisiana Code of Civil Procedure; (c) the Notice of Seizure as provided under
Articles 2293 and 2721 of the Louisiana Code of Civil Procedure; (d) the three
(3) days' delay provided under Articles 2331 and 2722 of the Louisiana Code of
Civil Procedure; and (e) all other benefits provided under Articles 2331, 2722
and 2723 of the Louisiana Code of Civil Procedure and all other Articles not
specifically mentioned above.
<PAGE> 346
ANNEX I
Page 3
C. Should any of the Louisiana Collateral be seized as an incident
to an action for the recognition or enforcement of the Obligations or the
Security Agreement and this Addendum, by executory process, sequestration,
attachment, writ of fieri facias or otherwise, each Assignor agrees that the
court issuing any such order shall, if requested by the Collateral Agent,
appoint the Collateral Agent or any person or entity named by the Collateral
Agent at the time such seizure is requested, or at any time thereafter, as
keeper of the Louisiana Collateral as provided under La. R.S. ss.ss. 9:5136, et
seq. Each Assignor agrees to pay the reasonable fees of such keeper, which are
hereby fixed at $50.00 per hour per location, which compensation to the keeper
shall also be a part of the Obligation under the Security Agreement and this
Addendum.
D. Should it become necessary for the Collateral Agent to foreclose
against the Louisiana Collateral, all declarations of fact that are made under
an authentic act before a Notary Public in the presence of two witnesses, by a
person declaring such facts to lie within his or her knowledge, shall constitute
authentic evidence for purposes of executory process and also for purposes of
La. R.S. ss. 9:3509.1, La. R.S. ss. 9:3504(D)(6) and La. R.S. ss. 10:9-508, as
applicable.
6. ANYTHING TO THE CONTRARY CONTAINED IN THE SECURITY AGREEMENT
NOTWITHSTANDING, THE SECURITY INTERESTS IN THE LOUISIANA COLLATERAL GRANTED IN
THE SECURITY AGREEMENT, AND IN THIS ADDENDUM, AND THE REMEDIES OF THE SECURED
CREDITORS IN THE COURTS SITTING IN AND FOR THE STATE OF LOUISIANA WITH RESPECT
TO THE LOUISIANA COLLATERAL SHALL BE GOVERNED BY LOUISIANA LAW, WITH NEW YORK
LAW GOVERNING THE PROVISIONS OF THE SECURITY AGREEMENT, THE APPLICATION OF THE
SECURITY AGREEMENT TO THE COLLATERAL AND THE PROCEEDS THEREOF, AND ALL RIGHTS
AND OBLIGATIONS OF THE PARTIES THEREUNDER IN ALL OTHER RESPECTS. EACH OF THE
PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
7. This Addendum shall form a part of the Security Agreement for all
purposes, and, except as supplemented hereby, the terms of the Security
Agreement are ratified and shall remain in full force and effect. All
capitalized terms used herein and not otherwise defined will have the meanings
assigned to them in the Security Agreement.
<PAGE> 347
IN WITNESS WHEREOF, the parties to the Security Agreement and this
Addendum have caused this Addendum to be executed by their duly authorized
officers as of the date first above written.
524 East Lamar Boulevard SC INTERNATIONAL SERVICES, INC.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: Authorized Signatory
6550 Rock Spring Drive CATERAIR INTERNATIONAL
Bethesda, Maryland 20817 CORPORATION, as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: Authorized Signatory
524 East Lamar Boulevard SKY CHEFS, INC., as an Assignor
Arlington, Texas 76011
By: /s/ Thomas J. Lee
------------------------------
Title: Authorized Signatory
6550 Rock Spring Drive CATERAIR INTERNATIONAL,
Bethesda, Maryland 20817 INC. (II), as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: Authorized Signatory
524 East Lamar Boulevard SKY CHEFS INTERNATIONAL
Arlington, Texas 76011 CORP., as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
<PAGE> 348
300 Delaware Avenue, Suite 315 ARLINGTON SERVICES, INC.,
Wilmington, Delaware 19801-1622 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
300 Delaware Avenue, Suite 315 ARLINGTON SERVICES HOLDING
Wilmington, Delaware 19801-1622 CORPORATION, as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
300 Delaware Avenue, Suite 315 BETHESDA SERVICES, INC.,
Wilmington, Delaware 19801-1622 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: Authorized Signatory
300 Delaware Avenue, Suite 315 CATERAIR NEW ZEALAND
Wilmington, Delaware 19801-1622 LIMITED, as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: Authorized Signatory
524 East Lamar Boulevard CATERAIR CONSULTING SERVICES
Arlington, Texas 76011 CORPORATION, as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
<PAGE> 349
524 East Lamar Boulevard JFK CATERERS, INC.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard CATERAIR ST. THOMAS
Arlington, Texas 76011 HOLDINGS CORPORATION,
as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard WESTERN AIRE CHEF, INC.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
6550 Rock Spring Drive CATERAIR AIRPORT PROPERTIES,
Bethesda, Maryland 20817 INC., as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
6550 Rock Spring Drive SKY CHEFS ARGENTINE,
Bethesda, Maryland 20817 INC., as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
<PAGE> 350
524 East Lamar Boulevard CATERAIR INTERNATIONAL
Arlington, Texas 76011 TRANSITION CORPORATION,
as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: Authorized Signatory
524 East Lamar Boulevard ONEX OHIO ACCEPTANCE
Arlington, Texas 76011 CORP., as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard ONEX OHIO CREDIT CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard ONEX OHIO EQUITY CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard ONEX OHIO FINANCE CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
<PAGE> 351
524 East Lamar Boulevard ONEX OHIO FINANCE CORP. II,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard ONEX OHIO CAPITAL CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard ONEX OHIO FISCAL CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard ONEX OHIO FUNDS CORP.,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard ONEX OHIO CREDIT CORP. II,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
<PAGE> 352
524 East Lamar Boulevard ONEX OHIO FUNDS CORP. II,
Arlington, Texas 76011 as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard ONEX OHIO FISCAL CORP.
Arlington, Texas 76011 II, as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard ONEX OHIO EQUITY CORP.
Arlington, Texas 76011 II, as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
524 East Lamar Boulevard ONEX OHIO CAPITAL CORP.
Arlington, Texas 76011 II, as an Assignor
By: /s/ Thomas J. Lee
------------------------------
Title: President
in each case, with a copy to:
SC International Services, Inc.
524 East Lamar Boulevard
Arlington, Texas 76011
Attention: Patrick Tolbert
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Collateral Agent
By: /s/ Laura Loffredo
------------------------------
Title: Vice President
<PAGE> 353
EXHIBIT I-1
AMENDED AND RESTATED SUBSIDIARIES GUARANTY
AMENDED AND RESTATED GUARANTY, dated as of September 29, 1995 and
amended and restated as of August 28, 1997 (as amended, modified or supplemented
from time to time, this "Guaranty"), made by each of the undersigned guarantors
(each a "Guarantor," and together with any other entity that becomes a party
hereto pursuant to Section 24 hereof, the "Guarantors"). Except as otherwise
defined herein, capitalized terms used herein and defined in the SCIS Credit
Agreement (as defined below) or in the Caterair Credit Agreement (as defined
below), as the case may be, shall be used herein as therein defined.
W I T N E S S E T H:
WHEREAS, Onex Food Services, Inc. ("OFSI"), SC International Services,
Inc. ("SCIS"), Caterair Holdings Corporation ("Caterair Holdings"), Caterair
International Corporation ("Caterair", and together with SCIS, the "Borrowers"),
various lenders from time to time party thereto (the "SCIS Banks"), Bankers
Trust Company and J.P. Morgan Securities Inc., as Co-Arrangers (the "SCIS
Co-Arrangers"), Bankers Trust Company, as Syndication Agent, The Bank of New
York, as Co-Agent, and Morgan Guaranty Trust Company of New York, as
Administrative Agent (together with any successor administrative agent, the
"SCIS Administrative Agent"), have entered into a Credit Agreement, dated as of
September 29, 1995 and amended and restated as of August 28, 1997, providing for
the making of loans to SCIS and the issuance of, and participation in, letters
of credit for the account of SCIS, as contemplated therein (as used herein, the
term "SCIS Credit Agreement" means the Credit Agreement described above in this
paragraph, as the same may be amended, modified, extended, renewed, replaced or
supplemented from time to time, and including any agreement extending the
maturity of, or restructuring all or any portion of the Indebtedness under such
agreement or any successor agreement) (the SCIS Banks, the SCIS Co-Arrangers and
the SCIS Administrative Agent are herein called the "SCIS Bank Creditors");
WHEREAS, SCIS, Caterair, various lenders from time to time party
thereto (the "Caterair Banks", and together with the SCIS Banks, the "Banks"),
Bankers Trust Company and J.P. Morgan Securities Inc., as Co-Arrangers (the
"Caterair Co-Arrangers", and together with the SCIS Co-Arrangers, the
"Co-Arrangers"), Bankers Trust Company, as Syndication Agent, and Morgan
Guaranty Trust Company of New York, as Administrative Agent (together with any
successor administrative agent, the "Caterair
<PAGE> 354
EXHIBIT I-1
Page 2
Administrative Agent", and together with the SCIS Administrative Agent, the
"Administrative Agents"), have entered into a Term Loan Agreement, dated as of
August 28, 1997, providing for the making of loans to SCIS and Caterair as
contemplated therein (as used herein, the term "Caterair Credit Agreement" means
the Term Loan Agreement described above in this paragraph, as the same may be
amended, modified, extended, renewed, replaced, restated or supplemented from
time to time, and including any agreement extending the maturity of, or
restructuring all or any portion of the Indebtedness under such agreement or any
successor agreements, and the Caterair Credit Agreement, together with the SCIS
Credit Agreement, are herein called the "Credit Agreements") (the Caterair
Banks, the Caterair Co-Arrangers and the Caterair Administrative Agent are
herein called the "Caterair Bank Creditors", and together with the SCIS Bank
Creditors, are herein called the "Bank Creditors");
WHEREAS, SCIS, Caterair or one or more of their respective Subsidiaries
may at any time and from time to time enter into one or more Interest Rate
Protection Agreements or Other Hedging Agreements with one or more Banks or any
affiliate thereof (each such Bank or affiliate, even if the respective Bank
subsequently ceases to be a Bank under the applicable Credit Agreement for any
reason, together with such Bank's or affiliate's successors and assigns, if any,
collectively, the "Other Creditors," and together with the Bank Creditors and
the Collateral Agent, the "Secured Creditors");
WHEREAS, each Guarantor (other than Caterair) is a direct or indirect
Subsidiary of SCIS or Caterair;
WHEREAS, the Guarantors (other than Caterair) entered into a Guaranty,
dated as of September 29, 1995 (as amended, modified or supplemented to the date
hereof, the "Original Subsidiaries Guaranty");
WHEREAS, it is a condition to the making of loans and the issuance of
letters of credit under the Credit Agreements that each Guarantor shall have
executed and delivered this Guaranty; and
WHEREAS, each Guarantor will obtain benefits from the incurrence of
loans and the issuance of letters of credit under the Credit Agreements and the
entering into of Interest Rate Protection Agreements or Other Hedging Agreements
and, accordingly, desires to execute this Guaranty in order to satisfy the
conditions described in the preceding paragraph and to amend and restate the
Original Subsidiaries Guaranty in its entirety in the form of this Guaranty;
<PAGE> 355
EXHIBIT I-1
Page 3
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to each Guarantor, the receipt and sufficiency of which are hereby
acknowledged, each Guarantor hereby makes the following representations and
warranties to the Secured Creditors and hereby covenants and agrees with each
Secured Creditor as follows:
1. Each Guarantor, jointly and severally, irrevocably, absolutely and
unconditionally guarantees: (i) to the SCIS Bank Creditors the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of (x) the principal of and interest on the notes issued by, and the loans made
to, SCIS under the SCIS Credit Agreement, and all reimbursement obligations and
unpaid drawings with respect to letters of credit issued under the SCIS Credit
Agreement and (y) all other obligations (including obligations which, but for
the automatic stay under Section 362(a) of the Bankruptcy Code, would become
due), liabilities and indebtedness owing by SCIS to the SCIS Bank Creditors
under the SCIS Credit Agreement or any other SCIS Credit Document (such term to
mean the "Credit Documents" as defined in the SCIS Credit Agreement) to which
SCIS is a party (including, without limitation, indemnities, fees and interest
thereon), whether now existing or hereafter incurred under, arising out of or in
connection with the SCIS Credit Agreement or any such other SCIS Credit Document
and the due performance and compliance by any Borrower with all of the terms,
conditions and agreements contained in the SCIS Credit Documents (all such
principal, interest, liabilities, indebtedness and obligations being herein
collectively called the "SCIS Credit Document Obligations"); (ii) to the
Caterair Bank Creditors the full and prompt payment when due (whether at the
stated maturity, by acceleration or otherwise) of (x) the principal of and
interest on the notes issued by, and the loans made to, SCIS and Caterair under
the Caterair Credit Agreement and (y) all other obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code, would become due), liabilities and indebtedness owing by SCIS
and Caterair to the Caterair Bank Creditors under the Caterair Credit Agreement
or any other Caterair Credit Document (such term to mean the "Credit Documents"
as defined in the Caterair Credit Agreement, and the Caterair Credit Documents,
together with the SCIS Credit Documents, are referred to herein as the "Credit
Documents") to which Caterair or SCIS is a party (including, without limitation,
indemnities, fees and interest thereon), whether now existing or hereafter
incurred under, arising out of or in connection with the Caterair Credit
Agreement or any such other Caterair Credit Document and the due performance and
compliance by SCIS and Caterair with all of the terms, conditions and agreements
contained in the Caterair Credit Documents (all such principal, interest,
liabilities, indebtedness and obligations being herein collectively called the
"Caterair Credit Document Obligations"); and (iii) to each Other Creditor the
full and prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of all obligations (including obligations which, but
for the automatic stay under Section 362(a) of the Bankruptcy Code, would become
due), liabilities and indebtedness owing by any Borrower
<PAGE> 356
EXHIBIT I-1
Page 4
or any Subsidiary of such Borrower under any Interest Rate Protection Agreement
or Other Hedging Agreement, whether now in existence or hereafter arising, and
the due performance and compliance by any Borrower or such Subsidiary with all
of the terms, conditions and agreements contained in the Interest Rate
Protection Agreements or Other Hedging Agreements (all such obligations,
liabilities and indebtedness being herein collectively called the "Other
Obligations," and together with the Credit Document Obligations, the "Guaranteed
Obligations"). Each Guarantor understands, agrees and confirms that the Secured
Creditors may enforce this Guaranty up to the full amount of the Guaranteed
Obligations against such Guarantor without proceeding against any other
Guarantor, any Borrower, against any security for the Guaranteed Obligations, or
under any other guaranty covering all or a portion of the Guaranteed
Obligations. For purposes of this Guaranty, the term "Guarantor" as applied to
Caterair shall refer to Caterair as a guarantor of indebtedness incurred by
SCIS, as opposed to indebtedness directly incurred by it.
2. Additionally, each Guarantor, jointly and severally,
unconditionally, absolutely and irrevocably, guarantees the payment of any and
all Guaranteed Obligations whether or not due or payable by any Borrower or any
Subsidiary thereof upon the occurrence in respect of such Borrower or any such
Subsidiary of any of the events of the type specified in Section 10.05 of the
SCIS Credit Agreement, and unconditionally and irrevocably, jointly and
severally, promises to pay such Guaranteed Obligations to the Secured Creditors,
or order, on demand, in legal tender of the United States. This Guaranty shall
constitute a guaranty of payment, and not of collection.
3. The liability of each Guarantor hereunder is primary, absolute and
unconditional and is exclusive and independent of any security for or other
guaranty of the indebtedness of any Borrower or any Subsidiary thereof whether
executed by such Guarantor, any other Guarantor, any other guarantor or by any
other party, and the liability of each Guarantor hereunder shall not be affected
or impaired by any circumstance or occurrence whatsoever (other than the
indefeasible satisfaction in full in cash of the Guaranteed Obligations),
including, without limitation: (a) any direction as to application of payment by
any Borrower or any Subsidiary thereof or by any other party, (b) any other
continuing or other guaranty, undertaking or maximum liability of a guarantor or
of any other party as to the Guaranteed Obligations, (c) any payment on or in
reduction of any such other guaranty or undertaking, (d) any dissolution,
termination or increase, decrease or change in personnel by any Borrower or any
Subsidiary thereof, (e) any payment made to any Secured Creditor on the
indebtedness which any Secured Creditor repays any Borrower or any Subsidiary
thereof pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and each Guarantor waives any
right to the deferral or modification of its obligations hereunder by
<PAGE> 357
EXHIBIT I-1
Page 5
reason of any such proceeding, (f) any action or inaction by the Secured
Creditors as contemplated in Section 6 hereof or (g) any invalidity,
irregularity or unenforceability of all or any part of the Guaranteed
Obligations or of any security therefor.
4. The obligations of each Guarantor hereunder are independent of the
obligations of any other Guarantor, any other guarantor, any Borrower or any
Subsidiary thereof, and a separate action or actions may be brought and
prosecuted against each Guarantor whether or not action is brought against any
other Guarantor, any other guarantor, any Borrower or any Subsidiary thereof and
whether or not any other Guarantor, any other guarantor, any Borrower or any
Subsidiary thereof be joined in any such action or actions. Each Guarantor
waives, to the fullest extent permitted by law, the benefits of any statute of
limitations affecting its liability hereunder or the enforcement thereof. Any
payment by any Borrower or any Subsidiary thereof or other circumstance which
operates to toll any statute of limitations as to such Borrower or any such
Subsidiary shall operate to toll the statute of limitations as to each
Guarantor.
5. Each Guarantor hereby waives notice of acceptance of this Guaranty
and notice of any liability to which it may apply, and waives promptness,
diligence, presentment, demand of payment, protest, notice of dishonor or
nonpayment of any such liabilities, suit or taking of other action by any
Administrative Agent or any other Secured Creditor against, and any other notice
to, any party liable thereon (including such Guarantor, any other Guarantor, any
other guarantor, any Borrower or any Subsidiary thereof).
6. Any Secured Creditor may at any time and from time to time without
the consent of, or notice to, any Guarantor, without incurring responsibility to
such Guarantor, without impairing or releasing the obligations of such Guarantor
hereunder, upon or without any terms or conditions and in whole or in part:
(a) change the manner, place or terms of payment of, and/or change or
extend the time of payment of, renew or alter, any of the Guaranteed
Obligations (including any increase or decrease in the rate of interest
thereon), any security therefor, or any liability incurred directly or
indirectly in respect thereof, and the guaranty herein made shall apply to
the Guaranteed Obligations as so changed, extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any
<PAGE> 358
EXHIBIT I-1
Page 6
liabilities (including any of those hereunder) incurred directly or
indirectly in respect thereof or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against any
Borrower, any other Credit Party, any Subsidiary thereof or otherwise act
or refrain from acting;
(d) release or substitute any one or more endorsers, Guarantors, other
guarantors, any Borrower, any Subsidiary thereof or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of any Borrower or any Subsidiary thereof to
creditors of such Borrower or such Subsidiary other than the Secured
Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of any Borrower or any Subsidiary thereof to the
Secured Creditors regardless of what liabilities of such Borrower or such
Subsidiary remain unpaid;
(g) consent to or waive any breach of, or any act, omission or default
under, any of the Interest Rate Protection Agreements or Other Hedging
Agreements, the Credit Documents or any of the instruments or agreements
referred to therein, or otherwise amend, modify or supplement any of the
Interest Rate Protection Agreements or Other Hedging Agreements, the Credit
Documents or any of such other instruments or agreements;
(h) act or fail to act in any manner referred to in this Guaranty which
may deprive such Guarantor of its right to subrogation against any Borrower
or any Subsidiary thereof to recover full indemnity for any payments made
pursuant to this Guaranty; and/or
(i) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of
such Guarantor from its liabilities under this Guaranty.
7. This Guaranty is a continuing one and all liabilities to which it
applies or may apply under the terms hereof shall be conclusively presumed to
have been created in reliance hereon. No failure or delay on the part of any
Secured Creditor in exercising
<PAGE> 359
EXHIBIT I-1
Page 7
any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein expressly specified
are cumulative and not exclusive of any rights or remedies which any Secured
Creditor would otherwise have. No notice to or demand on any Guarantor in any
case shall entitle such Guarantor to any other further notice or demand in
similar or other circumstances or constitute a waiver of the rights of any
Secured Creditor to any other or further action in any circumstances without
notice or demand. It is not necessary for any Secured Creditor to inquire into
the capacity or powers of any Borrower or any Subsidiary thereof or the
officers, directors, partners or agents acting or purporting to act on its
behalf, and any indebtedness made or created in reliance upon the professed
exercise of such powers shall be guaranteed hereunder.
8. Any indebtedness of any Borrower or any Subsidiary thereof now or
hereafter held by any Guarantor is hereby subordinated to the indebtedness of
such Borrower or such Subsidiary to the Secured Creditors, and such indebtedness
of such Borrower or such Subsidiary to any Guarantor, if any Administrative
Agent, after the occurrence and during the continuance of an Event of Default,
so requests, shall be collected, enforced and received by such Guarantor as
trustee for the Secured Creditors and be paid over to the Secured Creditors on
account of the indebtedness of such Borrower or such Subsidiary to the Secured
Creditors, but without affecting or impairing in any manner the liability of
such Guarantor under the other provisions of this Guaranty. Without limiting the
generality of the foregoing, each Guarantor hereby agrees with the Secured
Creditors that it will not exercise any right of subrogation which it may at any
time otherwise have as a result of this Guaranty (whether contractual, under
Section 509 of the Bankruptcy Code or otherwise) until all Guaranteed
Obligations have been irrevocably paid in full in cash.
9. (a) Each Guarantor waives any right (except as shall be required by
applicable law and cannot be waived) to require the Secured Creditors to: (i)
proceed against any Borrower, any Subsidiary thereof, any other Guarantor, any
other guarantor of the Guaranteed Obligations or any other party; (ii) proceed
against or exhaust any security held from any Borrower, any Subsidiary thereof,
any other Guarantor, any other guarantor of the Guaranteed Obligations or any
other party; or (iii) pursue any other remedy in the Secured Creditors' power
whatsoever. Each Guarantor waives any defense based on or arising out of any
defense of any Borrower, any Subsidiary thereof, any other Guarantor, any other
guarantor of the Guaranteed Obligations or any other party other than payment in
full of the Guaranteed Obligations, including, without limitation, any defense
based on or arising out of the disability of any Borrower, any Subsidiary
thereof, any other Guarantor, any other guarantor of the Guaranteed Obligations
or any other party, or the
<PAGE> 360
EXHIBIT I-1
Page 8
unenforceability of the Guaranteed Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of any Borrower or any
Subsidiary thereof other than payment in full of the Guaranteed Obligations. The
Secured Creditors may, at their election, foreclose on any security held by the
Administrative Agent, the Collateral Agent or the other Secured Creditors by one
or more judicial or nonjudicial sales, whether or not every aspect of any such
sale is commercially reasonable, or exercise any other right or remedy the
Secured Creditors may have against any Borrower or any Subsidiary thereof or any
other party, or any security, without affecting or impairing in any way the
liability of any Guarantor hereunder except to the extent the Guaranteed
Obligations have been paid in full. Each Guarantor waives any defense arising
out of any such election by the Secured Creditors, even though such election
operates to impair or extinguish any right of reimbursement or subrogation or
other right or remedy of such Guarantor against any Borrower or any Subsidiary
thereof or any other party or any security.
(b) Each Guarantor waives all presentments, demands for performance,
protests and notices, including, without limitation, notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
indebtedness. Each Guarantor assumes all responsibility for being and keeping
itself informed of each Borrower's and each of its Subsidiary's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Guaranteed Obligations and the nature, scope and extent of the
risks which such Guarantor assumes and incurs hereunder, and agrees that the
Secured Creditors shall have no duty to advise any Guarantor of information
known to them regarding such circumstances or risks.
(c) Each Guarantor hereby acknowledges and affirms that it understands
that to the extent the Guaranteed Obligations are secured by Real Property
located in California, such Guarantor shall be liable for the full amount of the
liability hereunder notwithstanding the foreclosure on such Real Property by
trustee sale or any other reason impairing such Guarantor's or any Secured
Creditor's right to proceed against any Borrower or any other guarantor of the
Guaranteed Obligations. In accordance with Section 2856 of the California Civil
Code, each Guarantor hereby waives:
(i) all rights of subrogation, reimbursement, indemnification, and
contribution and any other rights and defenses that are or may become
available to such Guarantor by reason of Sections 2787 to 2855, inclusive,
2899 and 3433 of the California Civil Code;
(ii) all rights and defenses that such Guarantor may have because the
Guaranteed Obligations are secured by Real Property located in California.
This
<PAGE> 361
EXHIBIT I-1
Page 9
means, among other things: (A) the Secured Creditors may collect from each
Guarantor without first foreclosing on any real or personal property
collateral pledged by any Borrower; and (B) if the Secured Creditors
foreclose on any Real Property collateral pledged by any Borrower, (1) the
amount of the Guaranteed Obligations may be reduced only by the price for
which that collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price, and (2) the Secured Creditors
may collect from each Guarantor even if the Secured Creditors, by
foreclosing on the Real Property collateral, have destroyed any right such
Guarantor may have to collect from such Borrower. This is an unconditional
and irrevocable waiver of any rights and defenses each Guarantor may have
because the Guaranteed Obligations are secured by Real Property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure; and
(iii) all rights and defenses arising out of an election of remedies
by the Secured Creditors, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for the Guaranteed
Obligations, has destroyed such Guarantor's rights of subrogation and
reimbursement against any Borrower by the operation of Section 580d of the
Code of Civil Procedure or otherwise.
Each Guarantor warrants and agrees that each of the waivers set forth above is
made with full knowledge of its significance and consequences and that if any of
such waivers are determined to be contrary to any applicable law or public
policy, such waivers shall be effective only to the maximum extent permitted by
law.
10. The Secured Creditors agree that this Guaranty may be enforced only
by the action of any Administrative Agent or the Collateral Agent, in each case
acting upon the instructions of the Required Secured Creditors (as defined in
the Security Agreement) and that no other Secured Creditors shall have any right
individually to seek to enforce or to enforce this Guaranty or to realize upon
the security to be granted by the Security Documents, it being understood and
agreed that such rights and remedies may be exercised by each Administrative
Agent or the Collateral Agent for the benefit of the Secured Creditors upon the
terms of this Guaranty and the Security Documents. The Secured Creditors further
agree that this Guaranty may not be enforced against any director, officer,
employee, or stockholder of any Guarantor (except to the extent such stockholder
is also a Guarantor hereunder).
11. In order to induce the Banks to make loans and issue or participate
in letters of credit pursuant to the Credit Agreements, and in order to induce
the Other
<PAGE> 362
EXHIBIT I-1
Page 10
Creditors to execute, deliver and perform the Interest Rate Protection
Agreements or Other Hedging Agreements, each Guarantor represents, warrants and
covenants that:
(a) Such Guarantor (i) is a duly organized and validly existing
corporation in good standing under the laws of the jurisdiction of its
organization, (ii) has the corporate power and authority to own its
property and assets and to transact the business in which it is engaged and
presently proposes to engage and (iii) is duly qualified and is authorized
to do business and is in good standing in each jurisdiction where the
conduct of its business requires such qualification except for failures to
be so qualified which, individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of each Borrower and its Subsidiaries taken as a
whole.
(b) Such Guarantor has the corporate power and authority to execute,
deliver and perform the terms and provisions of this Guaranty and each
other Document to which it is a party and has taken all necessary corporate
action to authorize the execution, delivery and performance by it of this
Guaranty and each such other Document. Such Guarantor has duly executed and
delivered this Guaranty and each other Document to which it is a party, and
this Guaranty and each such other Document constitutes the legal, valid and
binding obligation of such Guarantor enforceable in accordance with its
terms, except to the extent that the enforceability hereof or thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws generally affecting creditors' rights and by
equitable principles (regardless of whether enforcement is sought in equity
or at law).
(c) Neither the execution, delivery or performance by such Guarantor
of this Guaranty or any other Document to which it is a party, nor
compliance by it with the terms and provisions hereof and thereof, will (i)
contravene any provision of any applicable law, statute, rule or regulation
or any applicable order, writ, injunction or decree of any court or
governmental instrumentality, (ii) conflict with or result in any breach of
any of the terms, covenants, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien (except pursuant to the Security
Documents and the Subordinated Intercompany Security Agreement) upon any of
the property or assets of such Guarantor or any of its Subsidiaries
pursuant to the terms of any indenture, mortgage, deed of trust, loan
agreement, credit agreement, or any other material agreement, contract or
instrument to which such Guarantor or any of its Subsidiaries is a party or
by which it or any of its property or assets is bound or to
<PAGE> 363
EXHIBIT I-1
Page 11
which it may be subject or (iii) violate any provision of the certificate
of incorporation or by-laws (or equivalent organizational documents) of
such Guarantor or any of its Subsidiaries.
(d) No order, consent, approval, license, authorization or validation
of, or filing, recording or registration with (except as have been obtained
or made), or exemption by, any governmental or public body or authority, or
any subdivision thereof, is required to authorize, or is required for, (i)
the execution, delivery and performance of this Guaranty by such Guarantor
or any other Document to which such Guarantor is a party or (ii) the
legality, validity, binding effect or enforceability of this Guaranty or
any other Document to which such Guarantor is a party.
(e) There are no actions, suits or proceedings pending or threatened
(i) with respect to this Guaranty or any other Document to which such
Guarantor is a party or (ii) with respect to such Guarantor that could
reasonably be expected to materially and adversely affect (a) the business,
operations, property, assets, liabilities, condition (financial or
otherwise) or prospects of any Borrower and its Subsidiaries taken as a
whole or (b) the rights or remedies of the Secured Creditors hereunder or
under the other Credit Documents to which such Guarantor is a party or the
ability of such Guarantor to perform its respective obligations to the
Secured Creditors hereunder and under the other Credit Documents to which
it is a party.
12. Each Guarantor covenants and agrees that on and after the
Restatement Effective Date and until the Termination Date (as defined in the
Security Agreement) has occurred and all Guaranteed Obligations have been paid
in full, such Guarantor will comply, and will cause each of its Subsidiaries to
comply, with all of the applicable provisions, covenants and agreements
contained in the Credit Agreements, and will take, or will refrain from taking,
as the case may be, all actions that are necessary to be taken or not taken so
that it is not in violation of any provision, covenant or agreement contained in
the Credit Agreements, and so that no Default or Event of Default, is caused by
the actions of such Guarantor or any of its Subsidiaries.
13. The Guarantors hereby jointly and severally agree to pay all
reasonable out-of-pocket costs and expenses of the Administrative Agents and the
Collateral Agent in connection with any amendment, waiver or consent relating
hereto and of the Administrative Agents, the Collateral Agent and each other
Secured Creditor in connection with any enforcement of this Guaranty (including
in each case, without limitation, the reasonable fees and disbursements of
counsel employed by each Secured Creditor).
<PAGE> 364
EXHIBIT I-1
Page 12
14. This Guaranty shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the Secured Creditors
and their successors and assigns.
15. Neither this Guaranty nor any provision hereof may be changed,
waived, discharged or terminated except with the written consent of each
Guarantor directly affected thereby and with the written consent of the Required
Secured Creditors; provided, that any change, waiver, modification or variance
affecting the rights and benefits of a single Class (as defined below) of
Secured Creditors (and not all Secured Creditors in a like or similar manner)
shall also require the written consent of the Requisite Creditors (as defined
below) of such Class of Secured Creditors (it being understood that the addition
or release of any Guarantor hereunder shall not constitute a change, waiver,
discharge or termination affecting any Guarantor other than the Guarantor so
added or released). For the purpose of this Guaranty the term "Class" shall mean
each class of Secured Creditors, i.e., whether (i) the SCIS Bank Creditors as
holders of the SCIS Credit Document Obligations, (ii) the Caterair Bank
Creditors as holders of the Caterair Credit Document Obligations or (iii) the
Other Creditors as the holders of the Other Obligations. For the purpose of this
Guaranty, the term "Requisite Creditors" of any Class shall mean (i) with
respect to the SCIS Credit Document Obligations, the Required Banks under, and
as defined in, the SCIS Credit Agreement (or to the extent required by Section
13.12 of the SCIS Credit Agreement, with the written consent of each SCIS Bank),
(ii) with respect to the Caterair Credit Document Obligations the Required Banks
under, and as defined in, the Caterair Credit Agreement (or to the extent
required by Section 11.12 of the Caterair Credit Agreement, with the written
consent of each Caterair Bank) and (iii) with respect to the Other Obligations,
the holders of at least a majority of all obligations outstanding from time to
time under the Interest Rate Protection or Other Hedging Agreements.
16. Each Guarantor acknowledges that an executed (or conformed) copy of
each of the Credit Documents and Interest Rate Protection Agreements or Other
Hedging Agreements has been made available to its principal executive officers
and such officers are familiar with the contents thereof.
17. In addition to any rights now or hereafter granted under applicable
law (including, without limitation, Section 151 of the New York Debtor and
Secured Creditor Law) and not by way of limitation of any such rights, upon the
occurrence and during the continuance of an Event of Default (such term to mean
and include any "Event of Default" as defined in either Credit Agreement or any
payment default under any Interest Rate Protection Agreement or Other Hedging
Agreement continuing after any applicable grace period), each Secured Creditor
is hereby authorized, at any time or from time to time, without notice to any
Guarantor or to any other Person, any such notice being expressly
<PAGE> 365
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Page 13
waived, to set off and to appropriate and apply any and all deposits (general or
special) and any other indebtedness at any time held or owing by such Secured
Creditor to or for the credit or the account of such Guarantor, against and on
account of the obligations and liabilities of such Guarantor to such Secured
Creditor under this Guaranty, irrespective of whether or not such Secured
Creditor shall have made any demand hereunder and although said obligations,
liabilities, deposits or claims, or any of them, shall be contingent or
unmatured. Notwithstanding anything to the contrary contained in this Section
17, no Secured Creditor shall exercise any such right of set-off without the
prior written consent of either Administrative Agent or the Required Secured
Creditors so long as the Guaranteed Obligations shall be secured by any real
property located in the State of California, it being understood and agreed,
however, that this sentence is for the sole benefit of the Secured Creditors and
may be amended, modified or waived in any respect by the Required Secured
Creditors without the requirement of prior notice to or consent by any Credit
Party and does not constitute a waiver of any rights against any Credit Party or
against any Collateral.
18. All notices, requests, demands or other communications pursuant
hereto shall be deemed to have been duly given or made when delivered to the
Person to which such notice, request, demand or other communication is required
or permitted to be given or made under this Guaranty, addressed to such party at
(i) in the case of any Bank Creditor, as provided in the applicable Credit
Agreement, (ii) in the case of any Guarantor, at its address set forth opposite
its signature below and (iii) in the case of any Other Creditor, at such address
as such Other Creditor shall have specified in writing to the Guarantors; or in
any case at such other address as any of the Persons listed above may hereafter
notify the others in writing.
19. If claim is ever made upon any Secured Creditor for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (ii) any settlement or compromise of any such claim effected by such payee
with any such claimant (including any Borrower), then and in such event each
Guarantor agrees that any such judgment, decree, order, settlement or compromise
shall be binding upon such Guarantor, notwithstanding any revocation hereof or
other instrument evidencing any liability of any Borrower, and such Guarantor
shall be and remain liable to the aforesaid payees hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally
been received by any such payee.
20. (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE SECURED
CREDITORS AND OF THE UNDERSIGNED HEREUNDER
<PAGE> 366
EXHIBIT I-1
Page 14
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF
NEW YORK. Any legal action or proceeding with respect to this Guaranty or any
other Credit Document to which any Guarantor is a party may be brought in the
courts of the State of New York or of the United States of America for the
Southern District of New York, and, by execution and delivery of this Guaranty,
each Guarantor hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each Guarantor hereby further irrevocably waives any claim that any such
court lacks personal jurisdiction over such Guarantor, and agrees not to plead
or claim in any legal action or proceeding with respect to this Guaranty or any
other Credit Document to which such Guarantor is a party brought in any of the
aforesaid courts that any such court lacks personal jurisdiction over such
Guarantor. Each Guarantor further irrevocably consents to the service of process
out of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
such Guarantor at its address set forth opposite its signature below, such
service to become effective 30 days after such mailing. Each Guarantor hereby
irrevocably waives any objection to such service of process and further
irrevocably waives and agrees not to plead or claim in any action or proceeding
commenced hereunder or under any other Credit Document to which such Guarantor
is a party that such service of process was in any way invalid or ineffective.
Nothing herein shall affect the right of any of the Secured Creditors to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against each Guarantor in any other jurisdiction.
(b) Each Guarantor hereby irrevocably waives (to the fullest extent
permitted by applicable law) any objection which it may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Guaranty or any other Credit Document to which
such Guarantor is a party brought in the courts referred to in clause (a) above
and hereby further irrevocably waives and agrees not to plead or claim in any
such court that such action or proceeding brought in any such court has been
brought in an inconvenient forum.
(c) EACH GUARANTOR AND EACH SECURED CREDITOR (BY ITS ACCEPTANCE OF THE
BENEFITS OF THIS GUARANTY) HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS GUARANTY, THE OTHER CREDIT DOCUMENTS TO WHICH SUCH GUARANTOR IS A PARTY OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
<PAGE> 367
EXHIBIT I-1
Page 15
21. In the event that all of the capital stock of one or more
Guarantors is sold or otherwise disposed of or liquidated in compliance with the
requirements of the Credit Agreements (or such sale or other disposition has
been approved in writing by the Required Secured Creditors) and the proceeds of
such sale, disposition or liquidation are applied in accordance with the
provisions of the Credit Agreements, to the extent applicable, such Guarantor
shall upon consummation of such sale or other disposition be released from this
Guaranty automatically and without further action and this Guaranty shall, as to
each such Guarantor or Guarantors, terminate, and have no further force or
effect (it being understood and agreed that the sale of one or more Persons that
own, directly or indirectly, all of the capital stock or partnership interests
of any Guarantor shall be deemed to be a sale of such Guarantor for the purposes
of this Section 21).
22. This Guaranty may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with the Guarantors and the Administrative
Agents.
23. All payments made by any Guarantor hereunder will be made without
setoff, counterclaim or other defense and on the same basis as payments are made
by the applicable Borrower under Sections 4.03 and 4.04 of the SCIS Credit
Agreement or Sections 3.03 and 3.04 of the Caterair Credit Agreement, as the
case may be.
24. It is understood and agreed that any Wholly-Owned Domestic
Subsidiary of SCIS or Caterair Holdings that is required to execute a
counterpart of this Guaranty after the date hereof pursuant to the Credit
Agreements shall automatically become a Guarantor hereunder by executing a
counterpart hereof and delivering the same to the Administrative Agents.
25. At any time a payment in respect of the Guaranteed Obligations is
made under this Guaranty, the right of contribution of each Guarantor against
each other Guarantor shall be determined as provided in the immediately
following sentence, with the right of contribution of each Guarantor to be
revised and restated as of each date on which a payment (a "Relevant Payment")
is made on the Guaranteed Obligations under this Guaranty. At any time that a
Relevant Payment is made by a Guarantor that results in the aggregate payments
made by such Guarantor in respect of the Guaranteed Obligations to and including
the date of the Relevant Payment exceeding such Guarantor's Contribution
Percentage (as defined below) of the aggregate payments made by all Guarantors
in respect of the Guaranteed Obligations to and including the date of the
Relevant Payment (such excess, the "Aggregate Excess Amount"), each such
Guarantor shall have a right of
<PAGE> 368
EXHIBIT I-1
Page 16
contribution against each other Guarantor who has made payments in respect of
the Guaranteed Obligations to and including the date of the Relevant Payment in
an aggregate amount less than such other Guarantor's Contribution Percentage of
the aggregate payments made to and including the date of the Relevant Payment by
all Guarantors in respect of the Guaranteed Obligations (the aggregate amount of
such deficit, the "Aggregate Deficit Amount") in an amount equal to (x) a
fraction the numerator of which is the Aggregate Excess Amount of such Guarantor
and the denominator of which is the Aggregate Excess Amount of all Guarantors
multiplied by (y) the Aggregate Deficit Amount of such other Guarantor. A
Guarantor's right of contribution pursuant to the preceding sentences shall
arise at the time of each computation, subject to adjustment to the time of any
subsequent computation; provided, that no Guarantor may take any action to
enforce such right until the Guaranteed Obligations have been paid in full and
the Termination Date (as defined in the Security Agreement) has occurred, it
being expressly recognized and agreed by all parties hereto that any Guarantor's
right of contribution arising pursuant to this Section 25 against any other
Guarantor shall be expressly junior and subordinate to such other Guarantor's
obligations and liabilities in respect of the Guaranteed Obligations and any
other obligations owing under this Guaranty. As used in this Section 25: (i)
each Guarantor's "Contribution Percentage" shall mean the percentage obtained by
dividing (x) the Adjusted Net Worth (as defined below) of such Guarantor by (y)
the aggregate Adjusted Net Worth of all Guarantors; (ii) the "Adjusted Net
Worth" of each Guarantor shall mean the greater of (x) the Net Worth (as defined
below) of such Guarantor and (y) zero; and (iii) the "Net Worth" of each
Guarantor shall mean the amount by which the fair salable value of such
Guarantor's assets on the date of any Relevant Payment exceeds its existing
debts and other liabilities (including contingent liabilities, but without
giving effect to any Guaranteed Obligations arising under this Guaranty or
under, or in respect of, the Senior Subordinated Notes or any other issue of
subordinated Indebtedness) on such date. All parties hereto recognize and agree
that, except for any right of contribution arising pursuant to this Section 25,
each Guarantor who makes any payment in respect of the Guaranteed Obligations
shall have no right of contribution or subrogation against any other Guarantor
in respect of such payment until all of the Guaranteed Obligations have been
irrevocably paid in full in cash. Each of the Guarantors recognizes and
acknowledges that the rights to contribution arising hereunder shall constitute
an asset in favor of the party entitled to such contribution. In this
connection, each Guarantor has the right to waive its contribution right against
any Guarantor to the extent that after giving effect to such waiver such
Guarantor would remain solvent, in the determination of the Required Secured
Creditors.
26. Each Guarantor hereby confirms that it is its intention that this
Guaranty not constitute a fraudulent transfer or conveyance for purposes of the
Bankruptcy Code, the Uniform Fraudulent Conveyance Act or any similar Federal or
state law. To effectuate the foregoing intention, each Guarantor and each
Secured Creditor hereby
<PAGE> 369
EXHIBIT I-1
Page 17
irrevocably agrees that the Guaranteed Obligations guaranteed by such Guarantor
shall be limited to such amount as will, after giving effect to such maximum
amount and all other (contingent or otherwise) liabilities of such Guarantor
that are relevant under such laws (excluding liabilities in respect of the
Senior Subordinated Notes and any other issue of subordinated Indebtedness), and
after giving effect to any rights to contribution pursuant to any agreement
providing for an equitable contribution among such Guarantor and the other
Guarantors, result in the Guaranteed Obligations of such Guarantor in respect of
such maximum amount not constituting a fraudulent transfer or conveyance.
* * *
<PAGE> 370
EXHIBIT I-1
Page 18
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be
executed and delivered as of the date first above written.
Addresses:
524 East Lamar Boulevard SKY CHEFS, INC., as a Guarantor
Arlington, Texas 76011
By: _____________________________________
Name:
Title:
6550 Rock Spring Drive CATERAIR INTERNATIONAL
Bethesda, Maryland 20817 CORPORATION, as a Guarantor
By: _____________________________________
Name:
Title:
6550 Rock Spring Drive CATERAIR INTERNATIONAL, INC. (II),
Bethesda, Maryland 20817 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard SKY CHEFS INTERNATIONAL CORP.,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
<PAGE> 371
EXHIBIT I-1
Page 19
300 Delaware Avenue, Suite 315 ARLINGTON SERVICES, INC.,
Wilmington, Delaware 19801-1622 as a Guarantor
By: _____________________________________
Name:
Title:
300 Delaware Avenue, Suite 315 ARLINGTON SERVICES HOLDING
Wilmington, Delaware 19801-1622 CORPORATION, as a Guarantor
By: _____________________________________
Name:
Title:
300 Delaware Avenue, Suite 315 BETHESDA SERVICES, INC.,
Wilmington, Delaware 19801-1622 as a Guarantor
By: _____________________________________
Name:
Title:
300 Delaware Avenue, Suite 315 CATERAIR NEW ZEALAND
Wilmington, Delaware 19801-1622 LIMITED, as a Guarantor
By: _____________________________________
Name:
Title:
<PAGE> 372
EXHIBIT I-1
Page 20
524 East Lamar Boulevard CATERAIR CONSULTING SERVICES
Arlington, Texas 76011 CORPORATION,
as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard JFK CATERERS, INC.,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard CATERAIR ST. THOMAS HOLDINGS
Arlington, Texas 76011 CORPORATION,
as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard WESTERN AIRE CHEF, INC.,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
6550 Rock Spring Drive CATERAIR AIRPORT PROPERTIES, INC.,
Bethesda, Maryland 20817 as a Guarantor
By: _____________________________________
Name:
Title:
<PAGE> 373
EXHIBIT I-1
Page 21
524 East Lamar Boulevard SKY CHEFS ARGENTINE, INC.,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard CATERAIR INTERNATIONAL
Arlington, Texas 76011 TRANSITION CORPORATION
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO ACCEPTANCE CORP.,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO CREDIT CORP.,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO EQUITY CORP.,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
<PAGE> 374
EXHIBIT I-1
Page 22
524 East Lamar Boulevard ONEX OHIO FINANCE CORP.,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO FINANCE CORP. II,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO CAPITAL CORP.,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO FISCAL CORP.,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO FUNDS CORP.,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
<PAGE> 375
EXHIBIT I-1
Page 23
524 East Lamar Boulevard ONEX OHIO CREDIT CORP. II,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO FUNDS CORP. II,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO FISCAL CORP. II,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
524 East Lamar Boulevard ONEX OHIO EQUITY CORP. II,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
<PAGE> 376
EXHIBIT I-1
Page 24
524 East Lamar Boulevard ONEX OHIO CAPITAL CORP. II,
Arlington, Texas 76011 as a Guarantor
By: _____________________________________
Name:
Title:
in each case, with a copy to:
SC International Services, Inc.
524 East Lamar Boulevard
Arlington, Texas 76011
Attention: Patrick Tolbert
Accepted and Agreed to:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Administrative Agent and,
Collateral Agent
By: _____________________________________
Name:
Title:
<PAGE> 377
EXHIBIT I-2
AMENDED AND RESTATED DESIGNATED ONEX SUB GUARANTY
AMENDED AND RESTATED GUARANTY, dated as of January 1, 1997 and
amended and restated as of August 28, 1997 (as amended, modified or supplemented
from time to time, this "Guaranty"), made by ONEX OFSI HOLDINGS INC., an Ontario
corporation (the "Guarantor"). Except as otherwise defined herein, capitalized
terms used herein and defined in the SCIS Credit Agreement (as defined below) or
in the Caterair Credit Agreement (as defined below), as the case may be, shall
be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, Onex Food Services, Inc. ("OFSI"), SC International
Services, Inc. ("SCIS"), Caterair Holdings Corporation ("Caterair Holdings"),
Caterair International Corporation ("Caterair", and together with SCIS, the
"Borrowers"), various lenders from time to time party thereto (the "SCIS
Banks"), Bankers Trust Company and J.P. Morgan Securities Inc., as Co-Arrangers
(the "SCIS Co-Arrangers"), Bankers Trust Company, as Syndication Agent, The Bank
of New York, as Co-Agent, and Morgan Guaranty Trust Company of New York, as
Administrative Agent (together with any successor administrative agent, the
"SCIS Administrative Agent"), have entered into a Credit Agreement, dated as of
September 29, 1995 and amended and restated as of August 28, 1997, providing for
the making of loans to SCIS and the issuance of, and participation in, letters
of credit for the account of SCIS, as contemplated therein (as used herein, the
term "SCIS Credit Agreement" means the Credit Agreement described above in this
paragraph, as the same may be amended, modified, extended, renewed, replaced or
supplemented from time to time, and including any agreement extending the
maturity of, or restructuring all or any portion of the Indebtedness under such
agreement or any successor agreement) (the SCIS Banks, the SCIS Co-Arrangers and
the SCIS Administrative Agent are herein called the "SCIS Bank Creditors");
WHEREAS, SCIS, Caterair, various lenders from time to time
party thereto (the "Caterair Banks", and together with the SCIS Banks, the
"Banks"), Bankers Trust Company and J.P. Morgan Securities Inc., as Co-Arrangers
(the "Caterair Co-Arrangers", and together with the SCIS Co-Arrangers, the
"Co-Arrangers"), Bankers Trust Company,
<PAGE> 378
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Page 2
as Syndication Agent, and Morgan Guaranty Trust Company of New York, as
Administrative Agent (together with any successor administrative agent, the
"Caterair Administrative Agent", and together with the SCIS Administrative
Agent, the "Administrative Agents"), have entered into a Term Loan Agreement,
dated as of August 28, 1997 providing for the making of loans to SCIS and
Caterair as contemplated therein (as used herein, the term "Caterair Credit
Agreement" means the Term Loan Agreement described above in this paragraph, as
the same may be amended, modified, extended, renewed, replaced, restated or
supplemented from time to time, and including any agreement extending the
maturity of, or restructuring all or any portion of the Indebtedness under such
agreement or any successor agreements, and the Caterair Credit Agreement,
together with the SCIS Credit Agreement, are herein called the "Credit
Agreements") (the Caterair Banks, the Caterair Co-Arrangers and the Caterair
Administrative Agent are herein called the "Caterair Bank Creditors", and
together with the SCIS Bank Creditors, are herein called the "Bank Creditors");
WHEREAS, the Borrowers or one or more of their respective
Subsidiaries may at any time and from time to time enter into one or more
Interest Rate Protection Agreements or Other Hedging Agreements with one or more
Banks or any affiliate thereof (each such Bank or affiliate, even if the
respective Bank subsequently ceases to be a Bank under the Credit Agreement for
any reason, together with such Bank's or affiliate's successors and assigns, if
any, collectively, the "Other Creditors," and together with the Bank Creditors
and the Collateral Agent, the "Secured Creditors");
WHEREAS, the Guarantor entered into the Designated Onex Sub
Guaranty, dated as of January 1, 1997 (as amended, modified or supplemented to
the date hereof, the "Original Designated Onex Sub Guaranty");
WHEREAS, the Guarantor is an Affiliate of OFSI, Caterair and
SCIS;
WHEREAS, it is a condition to the making of loans and the
issuance of letters of credit under the Credit Agreements that the Guarantor
shall have executed and delivered this Guaranty; and
WHEREAS, the Guarantor will obtain benefits from the
incurrence of loans and the issuance of letters of credit under the Credit
Agreements and the entering into of Interest Rate Protection Agreements or Other
Hedging Agreements and, accordingly, desires to execute this Guaranty in order
to satisfy the conditions described in the preceding paragraph and to amend and
restate the Original Designated Onex Sub Guaranty in its entirety in the form of
this Agreement;
<PAGE> 379
EXHIBIT I-2
Page 3
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to the Guarantor, the receipt and sufficiency of which are
hereby acknowledged, the Guarantor hereby makes the following representations
and warranties to the Secured Creditors and hereby covenants and agrees with
each Secured Creditor as follows:
1. The Guarantor, irrevocably, absolutely and unconditionally
guarantees: (i) to the SCIS Bank Creditors the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of (x) the
principal of and interest on the notes issued by, and the loans made to, SCIS
under the SCIS Credit Agreement, and all reimbursement obligations and unpaid
drawings with respect to letters of credit issued under the SCIS Credit
Agreement and (y) all other obligations (including obligations which, but for
the automatic stay under Section 362(a) of the Bankruptcy Code, would become
due), liabilities and indebtedness owing by SCIS to the SCIS Bank Creditors
under the SCIS Credit Agreement or any other SCIS Credit Document (such term to
mean the "Credit Documents" as defined in the SCIS Credit Agreement) to which
SCIS is a party (including, without limitation, indemnities, fees and interest
thereon), whether now existing or hereafter incurred under, arising out of or in
connection with the SCIS Credit Agreement or any such other SCIS Credit Document
and the due performance and compliance by SCIS with all of the terms, conditions
and agreements contained in the SCIS Credit Documents (all such principal,
interest, liabilities, indebtedness and obligations being herein collectively
called the "SCIS Credit Document Obligations"); (ii) to the Caterair Bank
Creditors the full and prompt payment when due (whether at the stated maturity,
by acceleration or otherwise) of (x) the principal of and interest on the notes
issued by, and the loans made to SCIS and Caterair, under the Caterair Credit
Agreement, and (y) all other obligations (including obligations which, but for
the automatic stay under Section 362(a) of the Bankruptcy Code, would become
due), liabilities and indebtedness owing by SCIS and Caterair to the Caterair
Bank Creditors under the Caterair Credit Agreement or any other Caterair Credit
Document (such term to mean the "Credit Documents" as defined in the Caterair
Credit Agreement, and the Caterair Credit Documents, together with the SCIS
Credit Documents, are referred to herein as the "Credit Documents") to which
SCIS or Caterair is a party (including, without limitation, indemnities, fees
and interest thereon), whether now existing or hereafter incurred under, arising
out of or in connection with the Caterair Credit Agreement or any such other
Caterair Credit Document and the due performance and compliance by SCIS and
Caterair with all of the terms, conditions and agreements contained in the
Caterair Credit Documents (all such principal, interest, liabilities,
indebtedness and obligations being herein collectively called the "Caterair
Credit Document Obligations"); and (iii) to each Other Creditor the full and
prompt payment when due (whether at the stated maturity, by acceleration or
otherwise) of all obligations (including obligations which, but for the
automatic stay under Section 362(a) of the Bankruptcy Code, would become due),
liabilities
<PAGE> 380
EXHIBIT I-2
Page 4
and indebtedness owing by any Borrower or any Subsidiary of such Borrower under
any Interest Rate Protection Agreement or Other Hedging Agreement, whether now
in existence or hereafter arising, and the due performance and compliance by any
Borrower or such Subsidiary with all of the terms, conditions and agreements
contained in the Interest Rate Protection Agreements or Other Hedging Agreements
(all such obligations, liabilities and indebtedness being herein collectively
called the "Other Obligations," and together with the Credit Document
Obligations, the "Guaranteed Obligations"). The Guarantor understands, agrees
and confirms that the Secured Creditors may enforce this Guaranty up to the full
amount of the Guaranteed Obligations against the Guarantor without proceeding
against any Borrower, against any security for the Guaranteed Obligations, or
under any other guaranty covering all or a portion of the Guaranteed
Obligations. Notwithstanding the foregoing or anything else contained in this
Guaranty, the Secured Creditors, by their acceptance of the benefits of this
Guaranty, expressly acknowledge and agree that recourse against the Guarantor in
respect of the Guaranteed Obligations shall be limited to the capital stock of
Caterair Holdings, the proceeds thereof and the Guarantor's right, title and
interest therein.
2. Additionally, the Guarantor, unconditionally, absolutely
and irrevocably, guarantees the payment of any and all Guaranteed Obligations
whether or not due or payable by any Borrower or any Subsidiary thereof upon the
occurrence in respect of such Borrower or any such Subsidiary of any of the
events of the type specified in Section 10.05 of the SCIS Credit Agreement, and
unconditionally and irrevocably, promises to pay such Guaranteed Obligations to
the Secured Creditors, or order, on demand, in legal tender of the United
States, but otherwise subject to the limitations on recourse set forth in the
final sentence of Section 1 of this Agreement. This Guaranty shall constitute a
guaranty of payment, and not of collection.
3. The liability of the Guarantor hereunder is primary,
absolute and unconditional and is exclusive and independent of any security for
or other guaranty of the indebtedness of any Borrower or any Subsidiary thereof
whether executed by the Guarantor, any other guarantor or by any other party,
and the liability of the Guarantor hereunder shall not be affected or impaired
by any circumstance or occurrence whatsoever (other than the indefeasible
satisfaction in full in cash of the Guaranteed Obligations), including, without
limitation: (a) any direction as to application of payment by any Borrower or
any Subsidiary thereof or by any other party, (b) any other continuing or other
guaranty, undertaking or maximum liability of a guarantor or of any other party
as to the Guaranteed Obligations, (c) any payment on or in reduction of any such
other guaranty or undertaking, (d) any dissolution, termination or increase,
decrease or change in personnel by any Borrower or any Subsidiary thereof, (e)
any payment made to any Secured Creditor on the indebtedness which any Secured
Creditor repays any Borrower or any Subsidiary thereof
<PAGE> 381
EXHIBIT I-2
Page 5
pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and the Guarantor waives any right
to the deferral or modification of its obligations hereunder by reason of any
such proceeding, (f) any action or inaction by the Secured Creditors as
contemplated in Section 6 hereof or (g) any invalidity, irregularity or
unenforceability of all or any part of the Guaranteed Obligations or of any
security therefor.
4. The obligations of the Guarantor hereunder are independent
of the obligations of any other guarantor, any Borrower or any Subsidiary
thereof, and a separate action or actions may be brought and prosecuted against
the Guarantor whether or not action is brought against any other guarantor, any
Borrower or any Subsidiary thereof and whether or not any other guarantor, any
Borrower or any Subsidiary thereof be joined in any such action or actions. The
Guarantor waives, to the fullest extent permitted by law, the benefits of any
statute of limitations affecting its liability hereunder or the enforcement
thereof. Any payment by any Borrower or any Subsidiary thereof or other
circumstance which operates to toll any statute of limitations as to such
Borrower or any such Subsidiary shall operate to toll the statute of limitations
as to the Guarantor.
5. The Guarantor hereby waives notice of acceptance of this
Guaranty and notice of any liability to which it may apply, and waives
promptness, diligence, presentment, demand of payment, protest, notice of
dishonor or nonpayment of any such liabilities, suit or taking of other action
by any Administrative Agent or any other Secured Creditor against, and any other
notice to, any party liable thereon (including the Guarantor, any other
guarantor, any Borrower or any Subsidiary thereof).
6. Any Secured Creditor may at any time and from time to time
without the consent of, or notice to, the Guarantor, without incurring
responsibility to the Guarantor, without impairing or releasing the obligations
of the Guarantor hereunder, upon or without any terms or conditions and in whole
or in part:
(a) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew or alter, any of the
Guaranteed Obligations (including any increase or decrease in the rate
of interest thereon), any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the guaranty herein made
shall apply to the Guaranteed Obligations as so changed, extended,
renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any
<PAGE> 382
EXHIBIT I-2
Page 6
manner and in any order any property by whomsoever at any time pledged
or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and/or
any offset thereagainst;
(c) exercise or refrain from exercising any rights against any
Borrower, any other Credit Party, any Subsidiary thereof or otherwise
act or refrain from acting;
(d) release or substitute any one or more endorsers, other
guarantors, any Borrower, any Subsidiary thereof or other obligors;
(e) settle or compromise any of the Guaranteed Obligations,
any security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect thereof or
hereof, and may subordinate the payment of all or any part thereof to
the payment of any liability (whether due or not) of any Borrower or
any Subsidiary thereof to creditors of such Borrower or such Subsidiary
other than the Secured Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of any Borrower or any Subsidiary thereof
to the Secured Creditors regardless of what liabilities of such
Borrower or such Subsidiary remain unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, any of the Interest Rate Protection Agreements or Other
Hedging Agreements, the Credit Documents or any of the instruments or
agreements referred to therein, or otherwise amend, modify or
supplement any of the Interest Rate Protection Agreements or Other
Hedging Agreements, the Credit Documents or any of such other
instruments or agreements;
(h) act or fail to act in any manner referred to in this
Guaranty which may deprive the Guarantor of its right to subrogation
against any Borrower or any Subsidiary thereof to recover full
indemnity for any payments made pursuant to this Guaranty; and/or
(i) take any other action which would, under otherwise
applicable principles of common law, give rise to a legal or equitable
discharge of the Guarantor from its liabilities under this Guaranty.
<PAGE> 383
EXHIBIT I-2
Page 7
7. This Guaranty is a continuing one and all liabilities to
which it applies or may apply under the terms hereof shall be conclusively
presumed to have been created in reliance hereon. No failure or delay on the
part of any Secured Creditor in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein expressly specified are cumulative and not
exclusive of any rights or remedies which any Secured Creditor would otherwise
have. No notice to or demand on the Guarantor in any case shall entitle the
Guarantor to any other further notice or demand in similar or other
circumstances or constitute a waiver of the rights of any Secured Creditor to
any other or further action in any circumstances without notice or demand. It is
not necessary for any Secured Creditor to inquire into the capacity or powers of
any Borrower or any Subsidiary thereof or the officers, directors, partners or
agents acting or purporting to act on its behalf, and any indebtedness made or
created in reliance upon the professed exercise of such powers shall be
guaranteed hereunder.
8. Any indebtedness of any Borrower or any Subsidiary thereof
now or hereafter held by the Guarantor is hereby subordinated to the
indebtedness of such Borrower or such Subsidiary to the Secured Creditors, and
such indebtedness of such Borrower or such Subsidiary to the Guarantor, if any
Administrative Agent, after the occurrence and during the continuance of an
Event of Default, so requests, shall be collected, enforced and received by the
Guarantor as trustee for the Secured Creditors and be paid over to the Secured
Creditors on account of the indebtedness of such Borrower or such Subsidiary to
the Secured Creditors, but without affecting or impairing in any manner the
liability of the Guarantor under the other provisions of this Guaranty. Without
limiting the generality of the foregoing, the Guarantor hereby agrees with the
Secured Creditors that it will not exercise any right of subrogation which it
may at any time otherwise have as a result of this Guaranty (whether
contractual, under Section 509 of the Bankruptcy Code or otherwise) until all
Guaranteed Obligations have been irrevocably paid in full in cash.
9. (a) The Guarantor waives any right (except as shall be
required by applicable law and cannot be waived) to require the Secured
Creditors to: (i) proceed against any Borrower, any Subsidiary thereof, any
other guarantor of the Guaranteed Obligations or any other party; (ii) proceed
against or exhaust any security held from any Borrower, any Subsidiary thereof,
any other guarantor of the Guaranteed Obligations or any other party; or (iii)
pursue any other remedy in the Secured Creditors' power whatsoever. The
Guarantor waives any defense based on or arising out of any defense of any
Borrower, any Subsidiary thereof, any other guarantor of the Guaranteed
Obligations or any other party other than payment in full of the Guaranteed
Obligations, including, without
<PAGE> 384
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limitation, any defense based on or arising out of the disability of any
Borrower, any Subsidiary thereof, any other Guarantor, any other guarantor of
the Guaranteed Obligations or any other party, or the unenforceability of the
Guaranteed Obligations or any part thereof from any cause, or the cessation from
any cause of the liability of any Borrower or any Subsidiary thereof other than
payment in full of the Guaranteed Obligations. The Secured Creditors may, at
their election, foreclose on any security held by the Administrative Agent, the
Collateral Agent or the other Secured Creditors by one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is commercially
reasonable, or exercise any other right or remedy the Secured Creditors may have
against any Borrower or any Subsidiary thereof or any other party, or any
security, without affecting or impairing in any way the liability of the
Guarantor hereunder except to the extent the Guaranteed Obligations have been
paid in full. The Guarantor waives any defense arising out of any such election
by the Secured Creditors, even though such election operates to impair or
extinguish any right of reimbursement or subrogation or other right or remedy of
the Guarantor against any Borrower or any Subsidiary thereof or any other party
or any security.
(b) The Guarantor waives all presentments, demands for
performance, protests and notices, including, without limitation, notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Guaranty, and notices of the existence, creation or incurring of new or
additional indebtedness. The Guarantor assumes all responsibility for being and
keeping itself informed of any Borrower's and each of its Subsidiary's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Guaranteed Obligations and the nature, scope and extent of the
risks which the Guarantor assumes and incurs hereunder, and agrees that the
Secured Creditors shall have no duty to advise the Guarantor of information
known to them regarding such circumstances or risks.
(c) The Guarantor hereby acknowledges and affirms that it
understands that to the extent the Guaranteed Obligations are secured by Real
Property located in California, the Guarantor shall be liable for the full
amount of the liability hereunder notwithstanding the foreclosure on such Real
Property by trustee sale or any other reason impairing the Guarantor's or any
Secured Creditor's right to proceed against any Borrower or any other guarantor
of the Guaranteed Obligations. In accordance with Section 2856 of the California
Civil Code, the Guarantor hereby waives:
(i) all rights of subrogation, reimbursement, indemnification,
and contribution and any other rights and defenses that are or may
become available
<PAGE> 385
EXHIBIT I-2
Page 9
to the Guarantor by reason of Sections 2787 to 2855, inclusive, 2899
and 3433 of the California Civil Code:
(ii) all rights and defenses that the Guarantor may have
because the Guaranteed Obligations are secured by Real Property located
in California. This means, among other things: (A) the Secured
Creditors may collect from the Guarantor without first foreclosing on
any real or personal property collateral pledged by any Borrower; and
(B) if the Secured Creditors foreclose on any Real Property collateral
pledged by any Borrower, (1) the amount of the Guaranteed Obligations
may be reduced only by the price for which that collateral is sold at
the foreclosure sale, even if the collateral is worth more than the
sale price, and (2) the Secured Creditors may collect from the
Guarantor even if the Secured Creditors, by foreclosing on the Real
Property collateral, have destroyed any right the Guarantor may have to
collect from the Borrower. This is an unconditional and irrevocable
waiver of any rights and defenses the Guarantor may have because the
Guaranteed Obligations are secured by Real Property. These rights and
defenses include, but are not limited to, any rights or defenses based
upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure and
(iii) all rights and defenses arising out of an election of
remedies by the Secured Creditors, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security
for the Guaranteed Obligations, has destroyed the Guarantor's rights of
subrogation and reimbursement against any Borrower by the operation of
Section 580d of the Code of Civil Procedure or otherwise.
The Guarantor warrants and agrees that each of the waivers set forth above is
made with full knowledge of its significance and consequences and that if any of
such waivers are determined to be contrary to any applicable law or public
policy, such waivers shall be effective only to the maximum extent permitted by
law.
10. The Secured Creditors agree that this Guaranty may be
enforced only by the action of either Administrative Agent or the Collateral
Agent, in each case acting upon the instructions of the Required Secured
Creditors (as defined in the Security Agreement) and that no other Secured
Creditors shall have any right individually to seek to enforce or to enforce
this Guaranty or to realize upon the security to be granted by the Security
Documents, it being understood and agreed that such rights and remedies may be
exercised by each Administrative Agent or the Collateral Agent for the benefit
of the Secured Creditors upon the terms of this Guaranty and the Security
Documents. The
<PAGE> 386
EXHIBIT I-2
Page 10
Secured Creditors further agree that this Guaranty may not be enforced against
any director, officer, employee, or stockholder of the Guarantor.
11. The Guarantor represents, warrants and covenants that:
(a) The Guarantor (i) is a duly organized and validly existing
corporation in good standing under the laws of the jurisdiction of its
organization, (ii) has the corporate power and authority to own its
property and assets and to transact the business in which it is engaged
and presently proposes to engage and (iii) is duly qualified and is
authorized to do business and is in good standing in each jurisdiction
where the conduct of its business requires such qualification except
for failures to be so qualified which, individually or in the
aggregate, could not reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Guarantor.
(b) The Guarantor has the corporate power and authority to
execute, deliver and perform the terms and provisions of this Guaranty
and the Designated Onex Sub Pledge Agreement and has taken all
necessary corporate action to authorize the execution, delivery and
performance by it of this Guaranty and the Designated Onex Sub Pledge
Agreement. The Guarantor has duly executed and delivered this Guaranty
and the Designated Onex Sub Pledge Agreement, and this Guaranty and the
Designated Onex Sub Pledge Agreement constitute legal, valid and
binding obligations of the Guarantor enforceable in accordance with
their terms, except to the extent that the enforceability hereof or
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting
creditors' rights and by equitable principles (regardless of whether
enforcement is sought in equity or at law).
(c) Neither the execution, delivery or performance by the
Guarantor of this Guaranty or the Designated Onex Sub Pledge Agreement,
nor compliance by it with the terms and provisions hereof and thereof,
will (i) contravene any provision of any applicable law, statute, rule
or regulation or any applicable order, writ, injunction or decree of
any court or governmental instrumentality, (ii) conflict with or result
in any breach of any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien (except
pursuant to the Designated Onex Sub Pledge Agreement) upon the capital
stock of Caterair Holdings or the proceeds thereof pursuant to the
terms of any indenture, mortgage, deed of trust, loan
<PAGE> 387
EXHIBIT I-2
Page 11
agreement, credit agreement, or any other material agreement, contract
or instrument to which the Guarantor or any of its Subsidiaries is a
party or by which it or any of its property or assets is bound or to
which it may be subject or (iii) violate any provision of the
certificate of incorporation or by-laws (or equivalent organizational
documents) of the Guarantor.
(d) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with (except as
have been obtained or made), or exemption by, any governmental or
public body or authority, or any subdivision thereof, is required to
authorize, or is required for, (i) the execution, delivery and
performance of this Guaranty by the Guarantor or the Designated Onex
Sub Pledge Agreement or (ii) the legality, validity, binding effect or
enforceability of this Guaranty or the Designated Onex Sub Pledge
Agreement.
(e) There are no actions, suits or proceedings pending or
threatened (i) with respect to this Guaranty or the Designated Onex Sub
Pledge Agreement or (ii) with respect to the Guarantor that could
reasonably be expected to materially and adversely affect (a) the
business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Guarantor or (b) the
rights or remedies of the Secured Creditors hereunder or under the
Designated Onex Sub Pledge Agreement or the ability of the Guarantor to
perform its respective obligations to the Secured Creditors hereunder
and under the Designated Onex Sub Pledge Agreement.
12. The Guarantor hereby agrees to pay all reasonable
out-of-pocket costs and expenses of the Administrative Agents and the Collateral
Agent in connection with any amendment, waiver or consent relating hereto and of
the Administrative Agents, the Collateral Agent and each other Secured Creditor
in connection with any enforcement of this Guaranty (including in each case,
without limitation, the reasonable fees and disbursements of counsel employed by
each Secured Creditor).
13. This Guaranty shall be binding upon the Guarantor and its
successors and assigns and shall inure to the benefit of the Secured Creditors
and their successors and assigns.
14. Neither this Guaranty nor any provision hereof may be
changed, waived, discharged or terminated except with the written consent of the
Guarantor and the Required Secured Creditors; provided, that any change, waiver,
modification or variance affecting the rights and benefits of a single Class (as
defined below) of Secured Creditors
<PAGE> 388
EXHIBIT I-2
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(and not all Secured Creditors in a like or similar manner) shall also require
the written consent of the Requisite Creditors (as defined below) of such Class
of Secured Creditors. For the purpose of this Guaranty the term "Class" shall
mean each class of Secured Creditors, i.e., whether (i) the SCIS Bank Creditors
as holders of the SCIS Credit Document Obligations, (ii) the Caterair Bank
Creditors as holders of the Caterair Credit Document Obligations or (iii) the
Other Creditors as the holders of the Other Obligations. For the purpose of this
Guaranty, the term "Requisite Creditors" of any Class shall mean (i) with
respect to the SCIS Credit Document Obligations, the Required Banks under, and
as defined in, the SCIS Credit Agreement (or to the extent required by Section
13.12 of the SCIS Credit Agreement, with the written consent of each Bank), (ii)
with respect to the Caterair Credit Document Obligations the Required Banks
under, and as defined in, the Caterair Credit Agreement (or to the extent
required by Section 11.12 of the Caterair Credit Agreement, with the written
consent of each Caterair Bank) and (iii) with respect to the Other Obligations,
the holders of at least a majority of all obligations outstanding from time to
time under the Interest Rate Protection or Other Hedging Agreements.
15. The Guarantor acknowledges that an executed (or conformed)
copy of each of the Credit Documents and Interest Rate Protection Agreements or
Other Hedging Agreements has been made available to its principal executive
officers and such officers are familiar with the contents thereof.
16. In addition to any rights now or hereafter granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Secured Creditor Law) and not by way of limitation of any such
rights, upon the occurrence and during the continuance of an Event of Default
(such term to mean and include any "Event of Default" as defined in either
Credit Agreement or any payment default under any Interest Rate Protection
Agreement or Other Hedging Agreement continuing after any applicable grace
period), each Secured Creditor is hereby authorized, at any time or from time to
time, without notice to the Guarantor or to any other Person, any such notice
being expressly waived, to set off and to appropriate and apply any and all
deposits (general or special) and any other indebtedness at any time held or
owing by such Secured Creditor to or for the credit or the account of the
Guarantor, against and on account of the obligations and liabilities of the
Guarantor to such Secured Creditor under this Guaranty, irrespective of whether
or not such Secured Creditor shall have made any demand hereunder and although
said obligations, liabilities, deposits or claims, or any of them, shall be
contingent or unmatured. Notwithstanding anything to the contrary contained in
this Section 16, no Secured Creditor shall exercise any such right of set-off
without the prior written consent of either Administrative Agent or the Required
Secured Creditors so long as the Guaranteed Obligations shall be secured by any
real property located in the State of California, it being
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understood and agreed, however, that this sentence is for the sole benefit of
the Secured Creditors and may be amended, modified or waived in any respect by
the Required Secured Creditors without the requirement of prior notice to or
consent by any Credit Party and does not constitute a waiver of any rights
against any Credit Party or against any Collateral.
17. All notices, requests, demands or other communications
pursuant hereto shall be deemed to have been duly given or made when delivered
to the Person to which such notice, request, demand or other communication is
required or permitted to be given or made under this Guaranty, addressed to such
party at (i) in the case of any Bank Creditor, as provided in the applicable
Credit Agreement, (ii) in the case of the Guarantor, at its address set forth
opposite its signature below and (iii) in the case of any Other Creditor, at
such address as such Other Creditor shall have specified in writing to the
Guarantor; or in any case at such other address as any of the Persons listed
above may hereafter notify the others in writing.
18. If claim is ever made upon any Secured Creditor for
repayment or recovery of any amount or amounts received in payment or on account
of any of the Guaranteed Obligations and any of the aforesaid payees repays all
or part of said amount by reason of (i) any judgment, decree or order of any
court or administrative body having jurisdiction over such payee or any of its
property or (ii) any settlement or compromise of any such claim effected by such
payee with any such claimant (including any Borrower), then and in such event
the Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon the Guarantor, notwithstanding any revocation
hereof or other instrument evidencing any liability of such Borrower, and the
Guarantor shall be and remain liable to the aforesaid payees hereunder for the
amount so repaid or recovered to the same extent as if such amount had never
originally been received by any such payee.
19. (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE
SECURED CREDITORS AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Any legal action
or proceeding with respect to this Guaranty or the Designated Onex Sub Pledge
Agreement may be brought in the courts of the State of New York or of the United
States of America for the Southern District of New York, and, by execution and
delivery of this Guaranty, the Guarantor hereby irrevocably accepts for itself
and in respect of its property, generally and unconditionally, the jurisdiction
of the aforesaid courts. The Guarantor hereby further irrevocably waives any
claim that any such court lacks personal jurisdiction over the Guarantor, and
agrees not to plead or claim in any legal action or proceeding with respect
<PAGE> 390
EXHIBIT I-2
Page 14
to this Guaranty or the Designated Onex Sub Pledge Agreement brought in any of
the aforesaid courts that any such court lacks personal jurisdiction over the
Guarantor. The Guarantor further irrevocably consents to the service of process
out of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
the Guarantor at its address set forth opposite its signature below, such
service to become effective 30 days after such mailing. The Guarantor hereby
irrevocably waives any objection to such service of process and further
irrevocably waives and agrees not to plead or claim in any action or proceeding
commenced hereunder or under the Designated Onex Sub Pledge Agreement that such
service of process was in any way invalid or ineffective. Nothing herein shall
affect the right of any of the Secured Creditors to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against the Guarantor in any other jurisdiction.
(b) The Guarantor hereby irrevocably waives (to the fullest
extent permitted by applicable law) any objection which it may now or hereafter
have to the laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Guaranty or the Designated Onex Sub
Pledge Agreement brought in the courts referred to in clause (a) above and
hereby further irrevocably waives and agrees not to plead or claim in any such
court that such action or proceeding brought in any such court has been brought
in an inconvenient forum.
(c) THE GUARANTOR AND EACH SECURED CREDITOR (BY ITS ACCEPTANCE
OF THE BENEFITS OF THIS GUARANTY) HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS GUARANTY, THE DESIGNATED ONEX SUB PLEDGE AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
20. This Guaranty may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Guarantor and the
Administrative Agent.
21. All payments made by the Guarantor hereunder will be made
without setoff, counterclaim or other defense and on the same basis as payments
are made by the applicable Borrower under Sections 4.03 and 4.04 of the SCIS
Credit Agreement or Sections 3.03 and 3.04 of the Caterair Credit Agreement, as
the case may be.
<PAGE> 391
EXHIBIT I-2
Page 15
* * *
<PAGE> 392
EXHIBIT I-2
Page 16
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to
be executed and delivered as of the date first above written.
Addresses:
c/o Onex Corporation ONEX OFSI HOLDINGS INC.,
161 Bay Street as Guarantor
Toronto, Ontario M5J2S1
Canada By: ____________________________
Attention: Name:
Telecopier No.: Title:
Accepted and Agreed to:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Administrative Agent and
Collateral Agent
By: ____________________________
Name:
Title:
<PAGE> 393
EXHIBIT J
OFSI GUARANTY
GUARANTY, dated as of August 28, 1997 (as amended, modified or
supplemented from time to time, this "Guaranty"), made by ONEX FOOD SERVICES,
INC., a Delaware corporation (the "Guarantor"), and for the limited purposes set
forth in Sections 11, 13, 14, 15, 17, 19 and 20 hereof, Caterair Holdings
Corporation ("Caterair Holdings"). Except as otherwise defined herein,
capitalized terms used herein and defined in the Credit Agreement (as defined
below) shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, SC International Services, Inc. ("SCIS"), Caterair
International Corporation ("Caterair", and together with SCIS, the "Borrowers"),
various lenders from time to time party thereto (the "Banks"), Bankers Trust
Company and J.P. Morgan Securities Inc., as Co-Arrangers (the "Co-Arrangers"),
Bankers Trust Company, as Syndication Agent, and Morgan Guaranty Trust Company
of New York, as Administrative Agent (together with any successor administrative
agent, the "Administrative Agent"), have entered into a Term Loan Agreement,
dated as of August 28, 1997, providing for the making of loans as contemplated
therein (as used herein, the term "Credit Agreement" means the Term Loan
Agreement described above in this paragraph, as the same may be amended,
modified, extended, renewed, replaced or supplemented from time to time, and
including any agreement extending the maturity of, or restructuring all or any
portion of the Indebtedness under such agreement or any successor agreement)
(the Banks, the Co-Arrangers and the Administrative Agent are herein called the
"Bank Creditors");
WHEREAS, each Borrower or one or more of its respective
Subsidiaries may at any time and from time to time enter into one or more
Interest Rate Protection Agreements or Other Hedging Agreements with one or more
Banks or any affiliate thereof in respect of the Credit Agreement (each such
Bank or affiliate, even if the respective Bank subsequently ceases to be a Bank
under the Credit Agreement for any reason, together with such Bank's or
affiliate's successors and assigns, if any, collectively, the "Other Creditors,"
and together with the Bank Creditors and the Collateral Agent, the "Secured
Creditors");
<PAGE> 394
EXHIBIT J
Page 2
WHEREAS, the Guarantor is an Affiliate of Caterair and the
parent company of SCIS;
WHEREAS, Caterair Holdings is an Affiliate of SCIS and the
parent company of Caterair;
WHEREAS, it is a condition to the making of Loans under the
Credit Agreement that the Guarantor and Caterair Holdings shall have executed
and delivered this Guaranty; and
WHEREAS, the Guarantor and Caterair Holdings will obtain
benefits from the incurrence of Loans under the Credit Agreement and the
entering into of Interest Rate Protection Agreements or Other Hedging Agreements
and, accordingly, desire to execute this Guaranty in order to satisfy the
conditions described in the preceding paragraph;
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to the Guarantor and Caterair Holdings, the receipt and
sufficiency of which are hereby acknowledged, the Guarantor and Caterair
Holdings hereby make (to the extent applicable to such Person) the following
representations and warranties to the Secured Creditors and hereby covenant and
agree with each Secured Creditor as follows:
1. The Guarantor, irrevocably, absolutely and unconditionally
guarantees: (i) to the Bank Creditors the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of (x) the
principal of and interest on the Notes issued by, and the Loans made to (or
assumed by), the Borrowers, under the Credit Agreement and (y) all other
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due), liabilities and
indebtedness owing by the Borrowers to the Bank Creditors under the Credit
Agreement or any other Credit Document to which any such Borrower is a party
(including, without limitation, indemnities, Fees and interest thereon), whether
now existing or hereafter incurred under, arising out of or in connection with
the Credit Agreement or any such other Credit Document and the due performance
and compliance by the Borrowers with all of the terms, conditions and agreements
contained in the Credit Documents (all such principal, interest, liabilities,
indebtedness and obligations being herein collectively called the "Credit
Document Obligations"); and (ii) to each Other Creditor the full and prompt
payment when due (whether at the stated maturity, by acceleration or otherwise)
of all obligations (including obligations which, but for the automatic stay
under Section 362(a) of the Bankruptcy Code, would become due), liabilities and
indebtedness owing by any Borrower or any Subsidiary of any Borrower under any
Interest Rate Protection Agreement or Other
<PAGE> 395
EXHIBIT J
Page 3
Hedging Agreement, whether now in existence or hereafter arising, and the due
performance and compliance by such Borrower or such Subsidiary with all of the
terms, conditions and agreements contained in the Interest Rate Protection
Agreements or Other Hedging Agreements (all such obligations, liabilities and
indebtedness being herein collectively called the "Other Obligations," and
together with the Credit Document Obligations, the "Guaranteed Obligations").
The Guarantor understands, agrees and confirms that the Secured Creditors may
enforce this Guaranty up to the full amount of the Guaranteed Obligations
against the Guarantor without proceeding against any Borrower, against any
security for the Guaranteed Obligations, or under any other guaranty covering
all or a portion of the Guaranteed Obligations.
2. Additionally, the Guarantor, unconditionally, absolutely
and irrevocably, guarantees the payment of any and all Guaranteed Obligations
whether or not due or payable by any Borrower or any Subsidiary thereof upon the
occurrence in respect of any Borrower or any such Subsidiary of any of the
events specified in Section 8.06 of the Credit Agreement, and unconditionally
and irrevocably, promises to pay such Guaranteed Obligations to the Secured
Creditors, or order, on demand, in legal tender of the United States. This
Guaranty shall constitute a guaranty of payment, and not of collection.
3. The liability of the Guarantor hereunder is primary,
absolute and unconditional and is exclusive and independent of any security for
or other guaranty of the indebtedness of any Borrower or any Subsidiary thereof
whether executed by the Guarantor, any other guarantor or by any other party,
and the liability of the Guarantor hereunder shall not be affected or impaired
by any circumstance or occurrence whatsoever (other than the indefeasible
satisfaction in full in cash of the Guaranteed Obligations), including, without
limitation: (a) any direction as to application of payment by any Borrower or
any Subsidiary thereof or by any other party, (b) any other continuing or other
guaranty, undertaking or maximum liability of a guarantor or of any other party
as to the Guaranteed Obligations, (c) any payment on or in reduction of any such
other guaranty or undertaking, (d) any dissolution, termination or increase,
decrease or change in personnel by any Borrower or any Subsidiary thereof, (e)
any payment made to any Secured Creditor on the indebtedness which any Secured
Creditor repays any Borrower or any Subsidiary thereof pursuant to court order
in any bankruptcy, reorganization, arrangement, moratorium or other debtor
relief proceeding, and the Guarantor waives any right to the deferral or
modification of its obligations hereunder by reason of any such proceeding, (f)
any action or inaction by the Secured Creditors as contemplated in Section 6
hereof or (g) any invalidity, irregularity or unenforceability of all or any
part of the Guaranteed Obligations or of any security therefor.
<PAGE> 396
EXHIBIT J
Page 4
4. The obligations of the Guarantor hereunder are independent
of the obligations of any other guarantor, any Borrower or any Subsidiary
thereof, and a separate action or actions may be brought and prosecuted against
the Guarantor whether or not action is brought against any other guarantor, any
Borrower or any Subsidiary thereof and whether or not any other guarantor, any
Borrower or any Subsidiary thereof be joined in any such action or actions. The
Guarantor waives, to the fullest extent permitted by law, the benefits of any
statute of limitations affecting its liability hereunder or the enforcement
thereof. Any payment by any Borrower or any Subsidiary thereof or other
circumstance which operates to toll any statute of limitations as to such
Borrower or any such Subsidiary shall operate to toll the statute of limitations
as to the Guarantor.
5. The Guarantor hereby waives notice of acceptance of this
Guaranty and notice of any liability to which it may apply, and waives
promptness, diligence, presentment, demand of payment, protest, notice of
dishonor or nonpayment of any such liabilities, suit or taking of other action
by the Administrative Agent or any other Secured Creditor against, and any other
notice to, any party liable thereon (including the Guarantor, any other
guarantor, any Borrower or any Subsidiary thereof).
6. Any Secured Creditor may at any time and from time to time
without the consent of, or notice to, the Guarantor, without incurring
responsibility to the Guarantor, without impairing or releasing the obligations
of the Guarantor hereunder, upon or without any terms or conditions and in whole
or in part:
(a) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew or alter, any of the
Guaranteed Obligations (including any increase or decrease in the rate
of interest thereon), any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the guaranty herein made
shall apply to the Guaranteed Obligations as so changed, extended,
renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any
of those hereunder) incurred directly or indirectly in respect thereof
or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against any
Borrower, any other Credit Party, any Subsidiary thereof or otherwise
act or refrain from acting;
<PAGE> 397
EXHIBIT J
Page 5
(d) release or substitute any one or more endorsers, other
guarantors, any Borrower, any Subsidiary thereof or other obligors;
(e) settle or compromise any of the Guaranteed Obligations,
any security therefor or any liability (including any of those
hereunder) incurred directly or indirectly in respect thereof or
hereof, and may subordinate the payment of all or any part thereof to
the payment of any liability (whether due or not) of any Borrower or
any Subsidiary thereof to creditors of such Borrower or such Subsidiary
other than the Secured Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of any Borrower or any Subsidiary thereof
to the Secured Creditors regardless of what liabilities of such
Borrower or such Subsidiary remain unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, any of the Interest Rate Protection Agreements or Other
Hedging Agreements, the Credit Documents or any of the instruments or
agreements referred to therein, or otherwise amend, modify or
supplement any of the Interest Rate Protection Agreements or Other
Hedging Agreements, the Credit Documents or any of such other
instruments or agreements;
(h) act or fail to act in any manner referred to in this
Guaranty which may deprive the Guarantor of its right to subrogation
against any Borrower or any Subsidiary thereof to recover full
indemnity for any payments made pursuant to this Guaranty; and/or
(i) take any other action which would, under otherwise
applicable principles of common law, give rise to a legal or equitable
discharge of the Guarantor from its liabilities under this Guaranty.
7. This Guaranty is a continuing one and all liabilities to
which it applies or may apply under the terms hereof shall be conclusively
presumed to have been created in reliance hereon. No failure or delay on the
part of any Secured Creditor in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein expressly specified are cumulative and not
exclusive of any rights or remedies which any Secured Creditor would otherwise
have. No notice to or demand on
<PAGE> 398
EXHIBIT J
Page 6
the Guarantor in any case shall entitle the Guarantor to any other further
notice or demand in similar or other circumstances or constitute a waiver of the
rights of any Secured Creditor to any other or further action in any
circumstances without notice or demand. It is not necessary for any Secured
Creditor to inquire into the capacity or powers of any Borrower or any
Subsidiary thereof or the officers, directors, partners or agents acting or
purporting to act on its behalf, and any indebtedness made or created in
reliance upon the professed exercise of such powers shall be guaranteed
hereunder.
8. Any indebtedness of any Borrower or any Subsidiary thereof
now or hereafter held by the Guarantor is hereby subordinated to the
indebtedness of such Borrower or such Subsidiary to the Secured Creditors, and
such indebtedness of such Borrower or such Subsidiary to the Guarantor, if the
Administrative Agent, after the occurrence and during the continuance of an
Event of Default, so requests, shall be collected, enforced and received by the
Guarantor as trustee for the Secured Creditors and be paid over to the Secured
Creditors on account of the indebtedness of such Borrower or such Subsidiary to
the Secured Creditors, but without affecting or impairing in any manner the
liability of the Guarantor under the other provisions of this Guaranty. Without
limiting the generality of the foregoing, the Guarantor hereby agrees with the
Secured Creditors that it will not exercise any right of subrogation which it
may at any time otherwise have as a result of this Guaranty (whether
contractual, under Section 509 of the Bankruptcy Code or otherwise) until all
Guaranteed Obligations have been irrevocably paid in full in cash.
9. (a) The Guarantor waives any right (except as shall be
required by applicable law and cannot be waived) to require the Secured
Creditors to: (i) proceed against any Borrower, any Subsidiary thereof, any
other guarantor of the Guaranteed Obligations or any other party; (ii) proceed
against or exhaust any security held from any Borrower, any Subsidiary thereof,
any other guarantor of the Guaranteed Obligations or any other party; or (iii)
pursue any other remedy in the Secured Creditors' power whatsoever. The
Guarantor waives any defense based on or arising out of any defense of any
Borrower, any Subsidiary thereof, any other guarantor of the Guaranteed
Obligations or any other party other than payment in full of the Guaranteed
Obligations, including, without limitation, any defense based on or arising out
of the disability of any Borrower, any Subsidiary thereof, any other Guarantor,
any other guarantor of the Guaranteed Obligations or any other party, or the
unenforceability of the Guaranteed Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of any Borrower or any
Subsidiary thereof other than payment in full of the Guaranteed Obligations. The
Secured Creditors may, at their election, foreclose on any security held by the
Administrative Agent, the Collateral Agent or the other Secured Creditors by one
or more judicial or nonjudicial sales, whether or not every aspect of any such
sale is commercially reasonable,
<PAGE> 399
EXHIBIT J
Page 7
or exercise any other right or remedy the Secured Creditors may have against any
Borrower or any Subsidiary thereof or any other party, or any security, without
affecting or impairing in any way the liability of the Guarantor hereunder
except to the extent the Guaranteed Obligations have been paid in full. The
Guarantor waives any defense arising out of any such election by the Secured
Creditors, even though such election operates to impair or extinguish any right
of reimbursement or subrogation or other right or remedy of the Guarantor
against any Borrower or any Subsidiary thereof or any other party or any
security.
(b) The Guarantor waives all presentments, demands for
performance, protests and notices, including, without limitation, notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Guaranty, and notices of the existence, creation or incurring of new or
additional indebtedness. The Guarantor assumes all responsibility for being and
keeping itself informed of each Borrower's and each of its Subsidiary's
financial condition and assets, and of all other circumstances bearing upon the
risk of nonpayment of the Guaranteed Obligations and the nature, scope and
extent of the risks which the Guarantor assumes and incurs hereunder, and agrees
that the Secured Creditors shall have no duty to advise the Guarantor of
information known to them regarding such circumstances or risks.
(c) The Guarantor hereby acknowledges and affirms that it
understands that to the extent the Guaranteed Obligations are secured by Real
Property located in California, the Guarantor shall be liable for the full
amount of the liability hereunder notwithstanding the foreclosure on such Real
Property by trustee sale or any other reason impairing the Guarantor's or any
Secured Creditor's right to proceed against any Borrower or any other guarantor
of the Guaranteed Obligations. In accordance with Section 2856 of the California
Civil Code, the Guarantor hereby waives:
(i) all rights of subrogation, reimbursement,
indemnification, and contribution and any other rights and defenses
that are or may become available to the Guarantor by reason of Sections
2787 to 2855, inclusive, 2899 and 3433 of the California Civil Code;
(ii) all rights and defenses that the Guarantor may have
because the Guaranteed Obligations are secured by Real Property located
in California. This means, among other things: (A) the Secured
Creditors may collect from the Guarantor without first foreclosing on
any real or personal property collateral pledged by any Borrower; and
(B) if the Secured Creditors foreclose on any Real Property collateral
pledged by any Borrower, (1) the amount of the Guaranteed
<PAGE> 400
EXHIBIT J
Page 8
Obligations may be reduced only by the price for which that collateral
is sold at the foreclosure sale, even if the collateral is worth more
than the sale price, and (2) the Secured Creditors may collect from the
Guarantor even if the Secured Creditors, by foreclosing on the Real
Property collateral, have destroyed any right the Guarantor may have to
collect from such Borrower. This is an unconditional and irrevocable
waiver of any rights and defenses the Guarantor may have because the
Guaranteed Obligations are secured by Real Property. These rights and
defenses include, but are not limited to, any rights or defenses based
upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure; and
(iii) all rights and defenses arising out of an election of
remedies by the Secured Creditors, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security
for the Guaranteed Obligations, has destroyed the Guarantor's rights of
subrogation and reimbursement against any Borrower by the operation of
Section 580d of the Code of Civil Procedure or otherwise.
The Guarantor warrants and agrees that each of the waivers set forth above is
made with full knowledge of its significance and consequences and that if any of
such waivers are determined to be contrary to any applicable law or public
policy, such waivers shall be effective only to the maximum extent permitted by
law.
10. The Secured Creditors agree that this Guaranty may be
enforced only by the action of the Administrative Agent or the Collateral Agent,
in each case acting upon the instructions of the Required Banks (or, after the
date on which all Credit Document Obligations have been paid in full, the
holders of at least a majority of the outstanding Other Obligations) and that no
other Secured Creditors shall have any right individually to seek to enforce or
to enforce this Guaranty, it being understood and agreed that such rights and
remedies may be exercised by the Administrative Agent or the Collateral Agent or
the holders of at least a majority of the outstanding Other Obligations, as the
case may be, for the benefit of the Secured Creditors upon the terms of this
Guaranty and the Security Documents. The Secured Creditors further agree that
this Guaranty may not be enforced against any director, officer, employee, or
stockholder of the Guarantor.
11. (a) In order to induce the Banks to make the Loans under
the Credit Agreement, and to induce the Other Creditors to enter into the
Interest Rate Protection Agreements and Other Hedging Agreements, each of OFSI
and Caterair Holdings, makes each of the representations and warranties set
forth in Section 7 of the SCIS Credit Agreement to the extent applicable solely
to such Credit Party (and not to any of the Subsidiaries of such Credit Party),
in each case after giving effect to the Transaction, all
<PAGE> 401
EXHIBIT J
Page 9
of which are incorporated herein in their entirety and as if fully set forth
herein and all of which shall survive the execution and delivery of this
Guaranty and the making of the Loans, with the occurrence of the Closing Date
and the making of the Loans on such date being deemed to constitute a
representation and warranty that the matters specified in this Section 11(a) are
true and correct in all material respects on and as of the Closing Date (it
being understood and agreed that any representation or warranty which by its
terms is made as of a specified date shall be required to be true and correct in
all material respects only as of such specified date).
(b) Each of the Guarantor and Caterair Holdings covenants and
agrees that on and after the Closing Date and so long as the Credit Agreement is
in effect and any Guaranteed Obligations remain outstanding, each of the
Guarantor and Caterair Holdings will comply with each of the covenants contained
in Sections 8, 9.01, 9.02 and 9.04 of the SCIS Credit Agreement to the extent
applicable solely to such Credit Party (and not to any of the Subsidiaries of
such Credit Party) which Sections, together with all definitions in the SCIS
Credit Agreement applicable to such Sections, are hereby incorporated by
reference as if set forth herein in their entirety.
(c) The occurrence of any of the following specified events
should constitute an "OFSI Event of Default":
(A) Representations, etc. Any representation, warranty or
statement made (or deemed made) by the Guarantor or Caterair Holdings herein or
in any certificate delivered pursuant hereto shall prove to be untrue in any
material respect on the date as of which made or deemed made; or
(B) Covenants. The Guarantor or Caterair Holdings shall
default in the due performance or observance by it of any term, covenant or
agreement of the SCIS Credit Agreement that is incorporated herein by reference
and such default shall continue unremedied for a period of 45 days after written
notice to the Guarantor or Caterair Holdings by the Administrative Agent or the
25% Banks (or, after the date on which all Credit Document Obligations have been
paid in full, the holders of at least 25% of the outstanding Other Obligations);
or
(C) Default Under Other Indebtedness. (i) The Guarantor,
Caterair Holdings or the Designated Onex Sub shall (x) default in any payment of
any Indebtedness (other than the Guaranteed Obligations and any Indebtedness
arising under or in connection with the Caterair Holdings Secured Note but only
to the extent that there is sufficient cash collateral to satisfy in full all
obligations in respect of the Caterair Holdings Secured Note)
<PAGE> 402
EXHIBIT J
Page 10
beyond the period of grace, if any, provided in the instrument or agreement
under which such Indebtedness was created or (y) default in the observance or
performance of any agreement or condition relating to any Indebtedness (other
than the Guaranteed Obligations and any Indebtedness arising under or in
connection with the Caterair Holdings Secured Note but only to the extent that
there is sufficient cash collateral to satisfy in full all obligations in
respect of the Caterair Holdings Secured Note) or contained in any instrument or
agreement evidencing, securing or relating thereto or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or would permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause (determined without regard to whether any notice is required), any such
Indebtedness to become due prior to its stated maturity, or (ii) any
Indebtedness (other than the Guaranteed Obligations and any Indebtedness arising
under or in connection with the Caterair Holdings Secured Note but only to the
extent that there is sufficient cash collateral to satisfy in full all
obligations in respect of the Caterair Holdings Secured Note) of the Guarantor,
Caterair Holdings or the Designated Onex Sub shall be declared to be due and
payable, or required to be prepaid other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof, provided that it shall not be
a Default or an OFSI Event of Default under this clause (C) unless the aggregate
principal amount of all Indebtedness as described in preceding clauses (i) and
(ii) is at least $15,000,000; or
(D) Bankruptcy, etc. The Guarantor, Caterair Holdings or the
Designated Onex Sub shall commence a voluntary case concerning itself under the
Bankruptcy Code; or an involuntary case is commenced against the Guarantor,
Caterair Holdings or the Designated Onex Sub and the petition is not
controverted within 10 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the property of
the Guarantor, Caterair Holdings, or the Designated Onex Sub, or the Guarantor,
Caterair Holdings or the Designated Onex Sub commences any other proceeding
under any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency, administration or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Guarantor,
Caterair Holdings or the Designated Onex Sub or there is commenced against the
Guarantor, Caterair Holdings or the Designated Onex Sub any such proceeding
which remains undismissed for a period of 60 days, or the Guarantor, Caterair
Holdings or the Designated Onex Sub is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
or the Guarantor, Caterair Holdings or the Designated Onex Sub suffers any
appointment of any custodian, liquidator, administrator, receiver or the like
for it or any substantial part of its property to continue undischarged or
unstayed for a period of 60 days; or the Guarantor, Caterair Holdings or the
Designated Onex Sub makes a general
<PAGE> 403
EXHIBIT J
Page 11
assignment for the benefit of creditors; or any corporate action is taken by the
Guarantor, Caterair Holdings or the Designated Onex Sub for the purpose of
effecting any of the foregoing; or
(E) Judgments. One or more judgments or decrees shall be
entered against the Guarantor, Caterair Holdings or the Designated Onex Sub
involving in the aggregate for the Guarantor, Caterair Holdings and the
Designated Onex Sub a liability (not paid or fully covered by a reputable and
solvent insurance company) and such judgments and decrees either shall be final
and non-appealable or shall not be vacated, discharged or stayed or bonded
pending appeal for any period of 60 consecutive days, and the aggregate amount
of all such judgments exceeds $15,000,000; or
(F) Caterair Holdings Subordination Agreement and Escrow
Agreement. The Caterair Holdings Subordination Agreement, the Caterair Holdings
Escrow Agreement (after the execution and delivery thereof) or any provision of
the foregoing agreements shall cease to be a legal, valid and binding obligation
enforceable against any party thereto, or any party to the Caterair Holdings
Subordination Agreement or the Caterair Holdings Escrow Agreement (after the
execution and delivery thereof) (other than the Administrative Agent) or any
Person acting by or on behalf of any such party shall deny or disaffirm such
party's obligations under the Caterair Holdings Subordination Agreement or the
Caterair Holdings Escrow Agreement (after the execution and delivery thereof),
or any such party shall default in the due performance of any term, covenant or
agreement on its part to be performed or observed pursuant to any such
Agreement.
For purposes of Section 11(b) of this Guaranty, the term "SCIS
Credit Agreement" shall mean the SCIS Credit Agreement as is in effect on the
Closing Date and giving effect to any amendments, restatements, modifications,
waivers or supplements thereto after the Closing Date, provided that from and
after the termination of the SCIS Credit Agreement, the covenants (and related
definitions) set forth therein and incorporated herein by reference shall be
those covenants (and related definitions) as in effect immediately prior to the
termination of the SCIS Credit Agreement.
12. The Guarantor hereby agrees to pay all reasonable
out-of-pocket costs and expenses of the Administrative Agent and the Collateral
Agent in connection with any amendment, waiver or consent relating hereto and of
the Administrative Agent, the Collateral Agent and each other Secured Creditor
in connection with any enforcement of this Guaranty (including in each case,
without limitation, the reasonable fees and disbursements of counsel employed by
each Secured Creditor).
<PAGE> 404
EXHIBIT J
Page 12
13. This Guaranty shall be binding upon the Guarantor and
Caterair Holdings and their respective successors and assigns and shall inure to
the benefit of the Secured Creditors and their successors and assigns.
14. Neither this Guaranty nor any provision hereof may be
changed, waived, discharged or terminated except with the written consent of the
Guarantor, Caterair Holdings (to the extent such change, waiver, discharge or
termination affects Caterair Holdings) and with the written consent of either
(x) the Required Banks at all times prior to the time on which all Credit
Document Obligations have been paid in full or (y) the holders of at least a
majority of the outstanding Other Obligations at all times after the time on
which all Credit Document Obligations have been paid in full; provided, that any
change, waiver, modification or variance affecting the rights and benefits of a
single Class (as defined below) of Secured Creditors (and not all Secured
Creditors in a like or similar manner) shall also require the written consent of
the Requisite Creditors (as defined below) of such Class of Secured Creditors.
For the purpose of this Guaranty the term "Class" shall mean each class of
Secured Creditors, i.e., whether (x) the Bank Creditors as holders of the Credit
Document Obligations or (y) the Other Creditors as the holders of the Other
Obligations. For the purpose of this Guaranty, the term "Requisite Creditors" of
any Class shall mean (x) with respect to the Credit Document Obligations, the
Required Banks and (y) with respect to the Other Obligations, the holders of at
least a majority of all obligations outstanding from time to time under the
Interest Rate Protection or Other Hedging Agreements.
15. Each of the Guarantor and Caterair Holdings acknowledges
that an executed (or conformed) copy of each of the Credit Documents and
Interest Rate Protection Agreements or Other Hedging Agreements has been made
available to its principal executive officers and such officers are familiar
with the contents thereof.
16. In addition to any rights now or hereafter granted under
applicable law (including, without limitation, Section 151 of the New York
Debtor and Secured Creditor Law) and not by way of limitation of any such
rights, upon the occurrence and during the continuance of an Event of Default
(such term to mean and include any "Event of Default" as defined in the Credit
Agreement or any payment default under any Interest Rate Protection Agreement or
Other Hedging Agreement continuing after any applicable grace period), each
Secured Creditor is hereby authorized, at any time or from time to time, without
notice to the Guarantor or to any other Person, any such notice being expressly
waived, to set off and to appropriate and apply any and all deposits (general or
special) and any other indebtedness at any time held or owing by such Secured
Creditor to or for the credit or the account of the Guarantor, against and on
account of the obligations and
<PAGE> 405
EXHIBIT J
Page 13
liabilities of the Guarantor to such Secured Creditor under this Guaranty,
irrespective of whether or not such Secured Creditor shall have made any demand
hereunder and although said obligations, liabilities, deposits or claims, or any
of them, shall be contingent or unmatured. Notwithstanding anything to the
contrary contained in this Section 16, no Secured Creditor shall exercise any
such right of set-off without the prior written consent of the Administrative
Agent or the Required Banks so long as the Guaranteed Obligations shall be
secured by any real property located in the State of California, it being
understood and agreed, however, that this sentence is for the sole benefit of
the Secured Creditors and may be amended, modified or waived in any respect by
the Required Banks without the requirement of prior notice to or consent by any
Credit Party and does not constitute a waiver of any rights against any Credit
Party or against any Collateral.
17. All notices, requests, demands or other communications
pursuant hereto shall be deemed to have been duly given or made when delivered
to the Person to which such notice, request, demand or other communication is
required or permitted to be given or made under this Guaranty, addressed to such
party at (i) in the case of any Bank Creditor, as provided in the Credit
Agreement, (ii) in the case of the Guarantor and Caterair Holdings at their
address set forth opposite their signature below and (iii) in the case of any
Other Creditor, at such address as such Other Creditor shall have specified in
writing to the Guarantor and Caterair Holdings; or in any case at such other
address as any of the Persons listed above may hereafter notify the others in
writing.
18. If claim is ever made upon any Secured Creditor for
repayment or recovery of any amount or amounts received in payment or on account
of any of the Guaranteed Obligations and any of the aforesaid payees repays all
or part of said amount by reason of (i) any judgment, decree or order of any
court or administrative body having jurisdiction over such payee or any of its
property or (ii) any settlement or compromise of any such claim effected by such
payee with any such claimant (including any Borrower), then and in such event
the Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon the Guarantor, notwithstanding any revocation
hereof or other instrument evidencing any liability of such Borrower, and the
Guarantor shall be and remain liable to the aforesaid payees hereunder for the
amount so repaid or recovered to the same extent as if such amount had never
originally been received by any such payee.
19. (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE
SECURED CREDITORS AND OF THE UNDERSIGNED HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Any legal action
or proceeding with respect
<PAGE> 406
EXHIBIT J
Page 14
to this Guaranty may be brought in the courts of the State of New York or of the
United States of America for the Southern District of New York, and, by
execution and delivery of this Guaranty, each of the Guarantor and Caterair
Holdings hereby irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. Each of
the Guarantor and Caterair Holdings hereby further irrevocably waives any claim
that any such court lacks personal jurisdiction over such Credit Party, and
agrees not to plead or claim in any legal action or proceeding with respect to
this Guaranty brought in any of the aforesaid courts that any such court lacks
personal jurisdiction over such Credit Party. Each of the Guarantor and Caterair
Holdings further irrevocably consents to the service of process out of any of
the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to such Credit
Party at its address set forth opposite its signature below, such service to
become effective 30 days after such mailing. Each of the Guarantor and Caterair
Holdings hereby irrevocably waives any objection to such service of process and
further irrevocably waives and agrees not to plead or claim in any action or
proceeding commenced hereunder that such service of process was in any way
invalid or ineffective. Nothing herein shall affect the right of any of the
Secured Creditors to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the Guarantor or
Caterair Holdings in any other jurisdiction.
(b) Each of the Guarantor and Caterair Holdings hereby
irrevocably waives (to the fullest extent permitted by applicable law) any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Guaranty brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that such action or proceeding brought in any such court has been brought in an
inconvenient forum.
(c) EACH OF THE GUARANTOR, CATERAIR HOLDINGS AND EACH SECURED
CREDITOR (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS GUARANTY) HEREBY IRREVOCABLY
WAIVES ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS GUARANTY, OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
20. This Guaranty may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same
<PAGE> 407
EXHIBIT J
Page 15
instrument. A set of counterparts executed by all the parties hereto shall be
lodged with the Guarantor, Caterair Holdings and the Administrative Agent.
21. All payments made by the Guarantor hereunder will be made
without setoff, counterclaim or other defense and on the same basis as payments
are made by the Borrowers under Sections 3.03 and 3.04 of the Credit Agreement.
22. Notwithstanding anything to the contrary contained in this
Guaranty, the Secured Creditors acknowledge and agree that they shall have no
recourse against the Guarantor under this Guaranty in respect of the Class B
Assets (as defined in the SCIS Credit Agreement as in effect on the date hereof)
but, in the case of any Class B Assets constituting cash, only to the extent
that such cash has been segregated from the other assets (including other cash)
of the Guarantor.
* * *
<PAGE> 408
EXHIBIT J
Page 16
IN WITNESS WHEREOF, each of the Guarantor and Caterair
Holdings has caused this Guaranty to be executed and delivered as of the date
first above written.
Addresses:
c/o Sky Chefs, Inc. ONEX FOOD SERVICES, INC.,
524 East Lamar Boulevard as Guarantor
Arlington, Texas 76011
Attention: President By:__________________________
Telephone No.: (817) 792-2146 Name:
Telecopier No.: (817) 792-2222 Title:
6550 Rock Spring Drive CATERAIR HOLDINGS CORPORATION
Bethesda, Maryland 20817
Telephone No.: (301) 897-7860
Telecopier No.: (301) 897-7797 By:__________________________
Attention: President Name:
Title:
with a copy to:
c/o Sky Chefs, Inc.
524 East Lamar Boulevard
Arlington, Texas 76011-3999
Telephone No.: (817) 792-2146
Telecopier No.: (817) 792-2222
Attention: Patrick W. Tolbert,
Executive Vice President
Accepted and Agreed to:
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK,
as Administrative Agent and
Collateral Agent
By:__________________________
Name:
Title:
<PAGE> 409
EXHIBIT K
ASSIGNMENT AND ASSUMPTION AGREEMENT
Date __________, 19__
Reference is made to the Term Loan Agreement described in Item
2 of Annex I hereto (as such Term Loan Agreement may hereafter be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement").
Unless defined in Annex I hereto, terms defined in the Credit Agreement are used
herein as therein defined. ___________ (the "Assignor") and __________ (the
"Assignee") hereby agree as follows:
1. The Assignor hereby sells and assigns to the Assignee
without recourse and without representation or warranty (other than as expressly
provided herein), and the Assignee hereby purchases and assumes from the
Assignor, that interest in and to all of the Assignor's rights and obligations
under the Credit Agreement as of the date hereof which represents the percentage
interest specified in Item 4 of Annex I hereto (the "Assigned Share") of all of
the Assignor's outstanding rights and obligations under the Credit Agreement
relating to the outstanding SCIS Loans and/or Caterair Loans as set forth in
Item 4 of such Annex A.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the other Credit Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or the other Credit Documents or any other instrument or document
furnished pursuant thereto; and (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of any
Borrower or any other Credit Party or the performance or observance by any
Borrower or any other Credit Party of any of its obligations under the Credit
Agreement or the other Credit Documents to which they are a party or any other
instrument or document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of
the Credit Agreement and the other Credit Documents, together with copies of the
financial statements referred to therein and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption Agreement; (ii) agrees
that it will, independently and without reliance upon the Administrative Agent,
any Co-Arranger, the Assignor or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement;
(iii) confirms that it is an Eligible Transferee as required under Section
11.04(b) of the Credit Agreement; (iv) appoints and authorizes each Agent and
the Collateral Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement and the other Credit Documents as are
delegated to such Agent and the Collateral Agent by the
<PAGE> 410
EXHIBIT K
Page 2
terms thereof, together with such powers as are reasonably incidental thereto;
[and] (v) agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement and other Credit
Documents are required to be performed by it as a Bank[; and (vi) to the extent
legally entitled to do so, attaches the forms described in Section 11.04(b) of
the Credit Agreement].(1)
4. Following the execution of this Assignment and Assumption
Agreement by the Assignor and the Assignee, an executed original hereof
(together with all attachments) will be delivered to the Administrative Agent.
This Assignment and Assumption shall be effective, unless otherwise specified in
Item 5 of Annex I hereto (the "Settlement Date"), upon the receipt of the
consent of the Administrative Agent and each Issuing Bank to the extent required
by Section 11.04(b) of the Credit Agreement, receipt by the Administrative Agent
of the assignment fee referred to in such Section 11.04(b) and the recordation
of the assignment as provided in Section 11.16 of the Credit Agreement.
5. Upon the delivery of a fully executed original hereof to
the Administrative Agent, as of the Settlement Date, (i) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment and
Assumption Agreement, have the rights and obligations of a Bank thereunder and
under the other Credit Documents and (ii) the Assignor shall, to the extent
provided in this Assignment and Assumption Agreement, relinquish its rights and
be released from its obligations under the Credit Agreement and the other Credit
Documents.
6. It is agreed that the Assignee shall be entitled to all
interest on the Assigned Share of the Loans at the rates specified in Item 6 of
Annex I which accrue on and after the Settlement Date, such interest to be paid
by the Administrative Agent directly to the Assignee. It is further agreed that
all payments of principal made on the Assigned Share of the Loans which occur on
and after the Settlement Date will be paid directly by the Administrative Agent
to the Assignee. Upon the Settlement Date, the Assignee shall pay to the
Assignor an amount specified by the Assignor in writing which represents the
Assigned Share of the principal amount of the Loans and made by the Assignor
pursuant to the Credit Agreement which are outstanding on the Settlement Date.
The Assignor and the Assignee shall make all appropriate adjustments in payments
under the Credit Agreement for periods prior to the Settlement Date directly
between themselves.
7. THIS ASSIGNMENT AND ASSUMPTION AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
- ------------
(1) Include if the Assignee is organized under the laws of a jurisdiction
outside of the United States.
<PAGE> 411
EXHIBIT K
Page 3
8. This Assignment and Assumption Agreement may be executed in
any number of counterparts each of which so executed and delivered shall be an
original, but all of which together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Assignment and Assumption
Agreement, as of the date first above written, such execution also being made on
Annex I hereto.
Accepted this _____ day [NAME OF ASSIGNOR]
of _______, ____ as Assignor
By_____________________________
Title:
[NAME OF ASSIGNEE]
as Assignee
By_____________________________
Title:
Consented to as of ____________ __, _____.
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent
By_________________________________________
Title:
<PAGE> 412
ANNEX FOR ASSIGNMENT AND ASSUMPTION AGREEMENT
ANNEX I
1. Borrowers: Caterair International Corporation and SC International
Services, Inc.
2. Name and Date of Term Loan Agreement:
Term Loan Agreement, dated as of August 28, 1997, among SC
International Services, Inc., Caterair International Corporation, the
Banks from time to time party thereto, Bankers Trust Company and J.P.
Morgan Securities Inc., as Co-Arrangers, Bankers Trust Company, as
Syndication Agent, and Morgan Guaranty Trust Company of New York, as
Administrative Agent, as amended to the date hereof.
3. Date of Assignment Agreement:
4. Amounts (as of date of item #3 above):
<TABLE>
<CAPTION>
Outstanding
Principal Outstanding
Amount of Principal Amount
Caterair Loans of SCIS Loans
-------------- ----------------
<S> <C> <C>
a. Aggregate $ $
Amount for ------------- -------------
all Banks
b. Assigned % %
Share ------------- -------------
c. Amount of $ $
Share ------------- -------------
</TABLE>
5. Settlement Date:
6. Rate of Interest As set forth in Section 1.06 of the
Term Loan Agreement (unless
otherwise agreed to by the Assignor and the
Assignee)(2)
- ------------
(2) The respective Borrower and the Administrative Agent shall direct the entire
amount of the interest to the Assignee at the rate set forth in Section 1.06 of
the Term Loan Agreement with the Assignor and Assignee effecting the agreed upon
sharing of the interest through payments by the Assignee to the Assignor.
<PAGE> 413
Annex I
Page 2
7. Notice:
ASSIGNOR:
____________
____________
____________
Attention:
Telephone:
Telecopier:
Reference:
ASSIGNEE:
____________
____________
____________
Attention:
Telephone:
Telecopier:
Reference:
<PAGE> 414
Annex I
Page 3
Payment Instructions:
ASSIGNOR:
____________
____________
____________
Attention:
Reference:
ASSIGNEE:
____________
____________
____________
Attention:
Reference:
Accepted and Agreed:
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By_______________________ By______________________
_________________________ ________________________
(Print Name and Title) (Print Name and Title)
<PAGE> 415
EXHIBIT L
AMENDED AND RESTATED
SUBORDINATION AGREEMENT
This Amended and Restated Subordination Agreement (the
"Subordination Agreement"), dated as of August 28, 1997, entered into by and
among Caterair Holdings Corporation, a Delaware corporation ("Holdings"), Renex
Corporation, a corporation organized under the laws of the Cayman Islands
("Debentureholder"), Caynex, Inc., a corporation organized under the laws of the
Cayman Islands ("Optionholder"), and Morgan Guaranty Trust Company of New York,
as Administrative Agent (together with any successor administrative agent, the
"Administrative Agent"), on behalf of the various lenders under (i) the Credit
Agreement, dated as of September 29, 1995 and amended and restated as of August
28, 1997, by and among Holdings, Caterair International Corporation
("Caterair"), Onex Food Services, Inc., SC International Services, Inc.
("SCIS"), the lenders from time to time party thereto, Bankers Trust Company and
J.P. Morgan Securities Inc., as Co-Arrangers, Bankers Trust Company, as
Syndication Agent, Morgan Guaranty Trust Company of New York, as Administrative
Agent, and The Bank of New York, as Co-Agent (the "Revolver"), and (ii) the Term
Loan Agreement, dated as of August 28, 1997, by and among SCIS, Caterair, the
lenders from time to time party thereto, Bankers Trust Company and J.P. Morgan
Securities Inc., as Co-Arrangers, Bankers Trust Company, as Syndication Agent,
and Morgan Guaranty Trust Company of New York as Administrative Agent (the "Term
Loan") (each of the Revolver and the Term Loan as amended, modified,
supplemented, extended, restated, refinanced, replaced or refunded from time to
time, collectively, the "Credit Agreements"), amends and restates that certain
Subordination Agreement dated as of December 19, 1995 by and among the parties
hereto.
WHEREAS, Holdings is the maker of that certain $43,800,000
principal amount Senior Debenture due 2001, dated September 29, 1995 (together
with all Interest Debentures (as defined therein) issued or to be issued
thereunder or issued prior to September 29, 1995 pursuant to the $280,000,000
principal amount Senior Debenture due 2001, dated December 15, 1989, made by
Holdings, the "Holdings Unsecured Debenture");
WHEREAS, Debentureholder is the holder of the Holdings Unsecured
Debenture;
WHEREAS, Optionholder is the holder of an option granted to it by
Debentureholder to purchase the Holdings Unsecured Debenture from
Debentureholder;
NOW THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
Section 1.01. Subordination of Liabilities. Holdings, for itself,
its successors and assigns, covenants and agrees, and each subsequent holder of
the Holdings Unsecured Debenture, including, without limitation, Debentureholder
and Optionholder, by their acceptance thereof likewise covenants and agrees,
that the payment of the principal of, interest on, and all other amounts owing
in respect of, the Holdings Unsecured Debenture (the "Subordinated
Indebtedness") is hereby expressly subordinated, to the extent and in the manner
hereinafter set
<PAGE> 416
forth, to the prior satisfaction and discharge in full in cash or termination of
the Obligations (as defined below) under the Credit Agreements. The provisions
of this Subordination Agreement shall constitute a continuing offer to all
persons who, in reliance upon such provisions, become holders of, or continue to
hold, the Obligations under the Credit Documents (as defined in each of the
Credit Agreements) and such provisions are made for the benefit of the holders
of the Obligations under the Credit Documents, and, they and/or each of them may
proceed to enforce such provisions. This provision shall in no manner limit the
right or obligation of Holdings to issue, in accordance with the terms of the
Holdings Unsecured Debenture, to the Holder of the Holdings Unsecured Debenture,
Interest Debentures. As used herein, the term "Obligation" shall mean any
principal, interest (including interest accruing after the commencement of any
bankruptcy, insolvency, receivership or similar proceeding, at the rate provided
for in the documentation in respect thereto, whether or not such interest is an
allowed claim against the debtor in any such proceeding), premium, penalties,
fees, expenses, indemnities and other liabilities and obligations payable under
a Credit Agreement or any other Credit Document.
Section 1.02. Holdings Not to Make Payments with Respect to
Subordinated Indebtedness in Certain Circumstances. (a) All Obligations owing in
respect of the Credit Documents shall first be paid in full in cash, before any
payment, whether in cash, property, securities or otherwise, is made on account
of the Subordinated Indebtedness.
(b) Holdings may not, directly or indirectly, make any payment to
the holder of any Subordinated Indebtedness (other than by issuance of Interest
Debentures) and may not acquire any Subordinated Indebtedness for cash or
property until all Obligations owing in respect of the Credit Documents shall
have been satisfied and discharged in full in cash or terminated.
Notwithstanding the preceding sentence until the satisfaction and discharge in
full in cash or termination of all Obligations owing in respect of the Credit
Documents, the Debentureholder, Optionholder (or any subsequent holder of the
Holdings Unsecured Debenture), Holdings and the Administrative Agent hereby
agree that Holdings shall pay all amounts due and payable (other than Interest
Debentures), at maturity or any time thereafter, in respect of the Holdings
Unsecured Debenture to an escrow agent (the "Escrow Agent") to be held by such
Escrow Agent under the terms and conditions contained in the form of Escrow
Agreement attached hereto as Exhibit A. The Escrow Agent shall be selected by
Holdings and shall be reasonably satisfactory to the Administrative Agent. Each
holder of the Holdings Unsecured Debenture hereby agrees that, so long as any
Obligations owing in respect of the Credit Documents remain outstanding, it will
not sue for, or otherwise take any action to enforce Holdings' obligations to
pay, amounts owing in respect of the Holdings Unsecured Debenture without the
prior written consent of the Required Banks (as such term is defined in each of
the Credit Agreements). However, the prohibition contained in the preceding
sentence shall in no way be construed to limit the right of any holder of the
Holdings Unsecured Debenture to sue for, or otherwise take action to enforce
Holdings' obligation (pursuant to the terms of this Section 1.02(b)) to pay
amounts of cash otherwise available to Holdings to the Escrow Agent in respect
of the Holdings Unsecured Debenture and for Holdings to issue Interest
Debentures, it being understood and agreed that (i) cash otherwise available to
Holdings shall not include (w) cash or other funds held by any subsidiary or
affiliate of Holdings, (x) cash that is necessary for Holdings to pay franchise
2
<PAGE> 417
taxes and other fees and expenses to maintain its corporate existence, (y) cash
necessary to pay fees to its directors and (z) cash necessary to perform its
accounting, legal, corporate reporting and other administrative functions and
(ii) until all Obligations under the Credit Documents have been paid in full in
cash, in no event shall any holder of the Holdings Unsecured Debenture take any
enforcement action whatsoever with respect to any outstanding shares of capital
stock of Caterair International Corporation or any other subsidiary of Holdings.
(c) In the event that notwithstanding the provisions of the
preceding subsections (a) and (b) of this Section 1.02, Holdings shall make any
payment to any holder of Subordinated Indebtedness on account of the
Subordinated Indebtedness at a time when such payment is not permitted by said
subsection (a) or (b), such payment shall be paid forthwith to the
Administrative Agent in satisfaction of any Obligations owing in respect of the
Credit Documents.
(d) To the extent any payment of indebtedness under the Credit
Documents (whether by or on behalf of Holdings, as proceeds of security or
enforcement of any right of setoff or otherwise) is declared to be fraudulent or
preferential, set aside or required to be paid to any receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar person under any
bankruptcy, insolvency, receivership, fraudulent conveyance or similar law,
then, if such payment is recovered by, or paid over to, such receiver, trustee
in bankruptcy, liquidating trustee, agent or other similar person, the
indebtedness under the Credit Documents or part thereof originally intended to
be satisfied shall be deemed to be reinstated and outstanding as if such payment
had not occurred.
Section 1.03. Subordination to Prior Payment of all Senior
Indebtedness on Dissolution, Liquidation or Reorganization of Holdings. Until
the satisfaction and discharge in full in cash or termination of all Obligations
owing in respect of the Credit Documents, upon any distribution of assets of
Holdings upon dissolution, winding up, liquidation or reorganization of Holdings
(whether in bankruptcy, insolvency or receivership proceedings or upon an
assignment for the benefit of creditors or otherwise):
(a) the holders of the Obligations under the Credit Documents shall
first be entitled to receive payment in full in cash in respect of such
Obligations (including, without limitation, post-petition interest at the
rate provided in the documentation with respect to such Obligations,
whether or not such post-petition interest is an allowed claim against
the debtor in any bankruptcy or similar proceeding) before the holder of
the Holdings Unsecured Debenture is entitled to receive any payment on
account of the Subordinated Indebtedness;
(b) any payment or distributions of assets of Holdings of any kind
or character, whether in cash, property or securities to which the holder
of the Holdings Unsecured Debenture would be entitled except for the
provisions of this Subordination Agreement, shall be paid by the
liquidating trustee or agent or other person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating
trustee
3
<PAGE> 418
or other trustee or agent, directly to the holders of the Obligations
under the Credit Documents or their representative or representatives, to
the extent necessary to make payment in full in cash in respect of the
Obligations owing in respect of the Credit Documents, after giving effect
to any concurrent payment or distribution to the holders of such
Obligations; and
(c) in the event that, notwithstanding the foregoing provisions of
this Section 1.03, any payment or distribution of assets of Holdings of
any kind or character, whether in cash, property or securities, shall be
received by the holder of the Holdings Unsecured Debenture on account of
Subordinated Indebtedness before the Obligations owing in respect of the
Credit Documents are paid in full in cash, such payment or distribution
shall be paid forthwith to the Administrative Agent in satisfaction of
any Obligations owing under the Credit Documents.
Without in any way modifying the provisions of this Subordination
Agreement or affecting the subordination effected hereby, Holdings shall give
prompt written notice to the holder of the Holdings Unsecured Debenture of any
dissolution, winding up, liquidation or reorganization of Holdings (whether in
bankruptcy, insolvency or receivership proceedings or upon assignment for the
benefit of creditors or otherwise).
Section 1.04. Subrogation. Upon the satisfaction and discharge in
full in cash or termination of all Obligations owing in respect of the Credit
Documents, the holder of the Holdings Unsecured Debenture shall be subrogated to
the rights of the holders of the indebtedness under the Credit Agreements to
receive payments or distributions of assets of Holdings applicable to the Credit
Agreements until all amounts owing on the Holdings Unsecured Debenture shall be
paid in full, and for the purpose of such subrogation no payments or
distributions to the holders of the indebtedness under the Credit Agreements by
or on behalf of Holdings or by or on behalf of the holder of the Holdings
Unsecured Debenture by virtue of this Subordination Agreement which otherwise
would have been made to the holder of the Holdings Unsecured Debenture shall, as
between Holdings, its creditors other than the holders of the indebtedness under
the Credit Agreements, and the holder of the Holdings Unsecured Debenture, be
deemed to be payment by Holdings to or on account of the Credit Agreements, it
being understood that the provisions of this Subordination Agreement are and are
intended solely for the purpose of defining the relative rights of the holder of
the Holdings Unsecured Debenture, on the one hand, and the holders of the
indebtedness under the Credit Agreements, on the other hand.
Section 1.05. Obligation of Holdings Unconditional. Nothing
contained in this Subordination Agreement is intended to or shall impair, as
between Holdings and the holder of the Holdings Unsecured Debenture, the
obligation of Holdings, which is absolute and unconditional, to pay to the
holder of the Holdings Unsecured Debenture the principal of and interest on the
Holdings Unsecured Debenture as and when the same shall become due and payable
in accordance with their terms, or is intended to or shall affect the relative
rights of the holder of the Holdings Unsecured Debenture and creditors of
Holdings other than the holders of
4
<PAGE> 419
the indebtedness under the Credit Agreements (it being understood that the
provisions of this Subordination Agreement are and are intended solely for the
purpose of defining the relative rights of the holder of the Holdings Unsecured
Debenture, on the one hand, and the holders of the indebtedness under the Credit
Agreements on the other hand), nor shall anything herein or therein prevent the
holder of the Holdings Unsecured Debenture from exercising all remedies
otherwise permitted by applicable law and this Subordination Agreement upon an
event of default under the Holdings Unsecured Debenture, subject to the rights,
if any, under this Subordination Agreement of the holders of the indebtedness
under the Credit Agreements in respect of cash, property, or securities of
Holdings received upon the exercise of any such remedy or as otherwise provided
herein with respect to exercising any such remedy. Upon any distribution of
assets of Holdings referred to in this Subordination Agreement, the holder of
the Holdings Unsecured Debenture shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are pending, or a
certificate of the liquidating trustee or agent or other person making any
distribution to the holder of the Holdings Unsecured Debenture, for the purpose
of ascertaining the persons entitled to participate in such distribution, the
holders of the indebtedness under the Credit Agreements and other indebtedness
of Holdings, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this
Subordination Agreement.
Section 1.06. Subordination Rights Not Impaired by Acts or
Omissions of Holdings or Holders of Senior Indebtedness. No right of any present
or future holders of the indebtedness under the Credit Agreements to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of Holdings or by any act or
failure to act in good faith by any such holder, or by any noncompliance by
Holdings with the terms and provisions of the Holdings Unsecured Debenture,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with. The holders of the indebtedness under the Credit
Agreements may, without in any way affecting the obligations of the holder of
the Holdings Unsecured Debenture with respect hereto, at any time or from time
to time and in their absolute discretion, change the manner, place or terms of
payment of, change or extend the time of payment of, or renew or alter, the
Credit Agreements or any other Credit Document or amend, modify or supplement
any agreement or instrument governing or evidencing the Credit Agreements, any
other Credit Documents, or any other document referred to therein, or exercise
or refrain from exercising any other of their rights under the Credit Agreements
or any other Credit Document, including, without limitation, the waiver of
default thereunder and the release of any collateral securing the Credit
Agreements or any other Credit Document, all without notice to or assent from
the holder of the Holdings Unsecured Debenture.
Section 2. Governing Law. This Agreement and (unless otherwise
provided), all amendments hereof and waivers and consents hereunder shall be
governed by the internal law of the State of New York without regard to the
conflicts of laws or principles thereof.
5
<PAGE> 420
Section 3. Submission to Jurisdiction.
(a) Any legal action or proceeding with respect to this
Agreement or any of the transactions contemplated hereby may be brought against
any of the parties in the courts of the State of New York or the United States
of America for the Southern District of New York; each of the parties hereby
consents to generally and unconditionally, the jurisdiction of the aforesaid
courts (and the appropriate appellate courts) in any such legal action or
proceedings.
(b) Each of the parties hereto hereby irrevocably waives, in
connection with any such action or proceeding, any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which it may now or hereafter have to bringing of any such
action or proceeding in such jurisdiction.
(c) Each of the parties hereto hereby irrevocably consents to
the service of process of any of the aforementioned courts in any such action or
proceeding anywhere in the world.
(d) Nothing herein shall affect the right of any party hereto
to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against any other party hereto in any other
jurisdiction.
Section 4. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be considered an original, but all
of which together shall constitute the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this
Subordination Agreement as of the date first written above.
CATERAIR HOLDINGS CORPORATION
By: /s/ Terry Roueche
--------------------------------
Name: Terry Roueche
Title: Assistant Secretary
6
<PAGE> 421
ACCEPTED AND AGREED TO
this 28th day of August, 1997
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent under the Revolver
on behalf of the other lenders named therein
By: /s/ Laura E. Loffredo
-----------------------------------------
Name: Laura E. Loffredo
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent under the Term
Loan on behalf of the other lenders named therein
By: /s/ Laura E. Loffredo
-----------------------------------------
Name: Laura E. Loffredo
Title: Vice President
RENEX CORPORATION
By: /s/ Donald F. West
-----------------------------------------
Name: Donald F. West
Title: Authorized Signer
CAYNEX, INC.
By: /s/ Donald F. West
-----------------------------------------
Name: Donald F. West
Title: President
7
<PAGE> 422
EXHIBIT A
to the
Amended and Restated Subordination Agreement
Form of Escrow Agreement
[Escrow Agent]
[Address]
Attention:
Re: Amended and Restated Escrow Agreement
Gentlemen:
This Amended and Restated Escrow Agreement (the "Escrow Agreement")
is hereby accepted as of August __, 1997, by Caterair Holdings Corporation, a
Delaware corporation ("Holdings"), the maker of that certain $43,800,000
principal amount Senior Debenture due 2001, dated September 29, 1995 (together
with all Interest Debentures (as defined therein) issued and to be issued
thereunder or issued prior to September 29, 1995 pursuant to the $280,000,000
principal amount Senior Debenture due 2001, dated December 15, 1989, made by
Holdings, the "Holdings Unsecured Debenture"), Renex Corporation, a corporation
organized under the laws of the Cayman Islands, the holder of the Holdings
Unsecured Debenture ("Debentureholder"), Caynex, Inc., a corporation organized
under the laws of the Cayman Islands, the holder of an option (the "Option") to
purchase the Holdings Unsecured Debenture from Debentureholder ("Optionholder"),
and Morgan Guaranty Trust Company of New York, as Administrative Agent (together
with any successor administrative agents, the "Administrative Agent"), on behalf
of the various lenders under (i) the Credit Agreement, dated as of September 29,
1995 and amended and restated as of August __, 1997, by and among Holdings,
Caterair International Corporation ("Caterair"), Onex Food Services, Inc., SC
International Services, Inc. ("SCIS"), the lenders from time to time party
thereto, Bankers Trust Company, and J.P. Morgan Securities Inc. as Co-Arrangers,
Bankers Trust Company as Syndication Agent, Morgan Guaranty Trust Company of New
York as Administrative Agent, and The Bank of New York as Co-Agent (the
"Revolver"), and (ii) the Term Loan Agreement, dated as of August __, 1997, by
and among SCIS, Caterair, the lenders from time to time party thereto, Bankers
Trust Company and J.P. Morgan Securities Inc., as Co-Arrangers, Bankers Trust
Company, as Syndication Agent, and Morgan Guaranty Trust Company of New York as
Administrative Agent (the "Term Loan") (each of the Revolver and the Term Loan
as amended, modified, supplemented, extended, restated, refinanced, replaced or
refunded from time to time, collectively, the "Credit Agreements").
The parties hereto, intending to be legally bound, hereby agree as
follows:
8
<PAGE> 423
1. Deposit and Investments. Holdings will, from time to time,
deposit with _________________, as escrow agent (the "Escrow Agent"), any and
all amounts to be paid to the holder of the Holdings Unsecured Debenture in
respect of all amounts due and payable (excluding any Interest Debentures) under
the Holdings Unsecured Debenture, at maturity or any other time (collectively,
the "Deposit"). The Deposit shall be held in a separate account maintained by
the Escrow Agent (the "Escrow") pursuant to this Escrow Agreement. The Escrow
Agent shall invest the Deposit in Permitted Investments in accordance with the
joint written instructions of Holdings, Debentureholder and Optionholder until
disbursement of amounts deposited therein. "Permitted Investments" means any of
the investments identified on Schedule A hereto.
2. Deposit. The Escrow Agent shall hold and disburse the Deposit
pursuant to the terms of this Escrow Agreement.
3. Retention of Earnings, Etc. All interest, earnings, and gains
received by the Escrow Agent from the investment of the Deposit shall be
reinvested and held as part of the Deposit. In connection with the investment of
the Deposit, Debentureholder or Optionholder, as the case may be, shall provide
the Escrow Agent with their respective taxpayer identification numbers.
4. Disbursement.
(a) The Escrow Agent is authorized and directed to deliver and
disburse the Deposit, together with any interest, earnings or gains on the
Deposit in accordance with the terms set forth below upon receipt of written
notice from the Administrative Agent:
(i) if a written notice from the Administrative Agent states
that the obligations under either of the Credit Agreements have been terminated
or satisfied in full, the Escrow Agent shall disburse the Deposit to
Debentureholder;
(ii) if a written notice from the Administrative Agent states
that an Event of Default has occurred under (and as defined in) either Credit
Agreement, the Escrow Agent shall disburse the Deposit to the Administrative
Agent on behalf of the other lenders under the Credit Agreements; or
(iii) if a written notice from the Administrative Agent
states that a Deposit is in violation of the Amended and Restated Subordination
Agreement, dated as of August __, 1997, among Holdings, Debentureholder,
Optionholder and the Administrative Agent, the Escrow Agent shall disburse the
Deposit to the Administrative Agent on behalf of the other lenders under the
Credit Agreements.
(b) In the event the Escrow Agent shall be instructed to disburse
the Deposit to the Administrative Agent in accordance with Section 4(a)(ii), and
the amount of the Deposit, together with all other amounts received by the
lenders under the Credit Agreements
9
<PAGE> 424
shall exceed the amounts owing under the Credit Agreements, the Escrow Agent
shall pay such excess to the holder of the Holdings Unsecured Debenture or as a
court may otherwise direct.
5. Rights, Duties, and Liabilities of Escrow Agent.
(a) The Escrow Agent shall have no duty to know or determine the
performance or non-performance of any provision of any agreement between the
parties to this Escrow Agreement, which shall not bind the Escrow Agent in any
manner. The Escrow Agent assumes no responsibility for the validity or
sufficiency of any document or paper or payment deposited or called for under
this Escrow Agreement except as may be expressly and specifically set forth in
this Escrow Agreement, and the duties and responsibilities of the Escrow Agent
under this Escrow Agreement are limited to those expressly and specifically
stated in this Escrow Agreement.
(b) The Escrow Agent shall not be personally liable for any act it
may do or omit to do under this Escrow Agreement as such agent while acting in
good faith and in the exercise of its own best judgment, and any act done or
omitted by it pursuant to the written advice of its counsel shall be conclusive
evidence of such good faith. The Escrow Agent shall have the right at any time
to consult with its counsel upon any question arising under this Escrow
Agreement and shall incur no liability for any delay reasonably required to
obtain the advice of counsel.
(c) Other than those notices or demands expressly provided in this
Escrow Agreement, the Escrow Agent is expressly authorized to disregard any and
all notices or demands given by any party hereto, or by any other person, firm,
or corporation, excepting only orders or process of court, and the Escrow Agent
is expressly authorized to comply with and obey any and all final process,
orders, judgments, or decrees of any court, and to the extent the Escrow Agent
obeys or complies with any thereof of any court, it shall not be liable to any
party to this Escrow Agreement or to any other person, firm, or corporation by
reason of such compliance.
(d) In consideration of the acceptance of this Escrow by the Escrow
Agent (as evidenced by its signature below), Holdings, Debentureholder and
Optionholder agree, for themselves and their successors and assigns, to pay the
Escrow Agent its charges, fees, and expenses as contemplated by this Escrow
Agreement. The escrow fees or charges shall be as written below the Escrow
Agent's signature.
(e) The Escrow Agent shall be under no duty or obligation to
ascertain the identity, authority, or right of any party hereto (or their
agents) to execute or deliver or purport to execute or deliver this Escrow
Agreement or any documents or papers or payments deposited or called for or
given under this Escrow Agreement.
10
<PAGE> 425
(f) The Escrow Agent shall not be liable for the outlawing of any
rights under any statute of limitations or by reason of laches in respect of
this Escrow Agreement or any documents or papers deposited with the Escrow
Agent.
(g) In the event of any dispute among the parties to this Escrow
Agreement, including a dispute as to the validity or meaning of any provision of
this Escrow Agreement, or any other fact or matter relating to this Escrow
Agreement or to the transactions between Holdings, Debentureholder or
Optionholder and the Administrative Agent, as the case may be, the Escrow Agent
is instructed that it shall be under no obligation to act, except in accordance
with this Escrow Agreement or under process or order of court or, if there by no
such process or order, until it has filed or caused to be filed an appropriate
action interpleading Holdings, Debentureholder or Optionholder and delivering
the Deposit (or the portion of the Deposit in dispute) to such court, and the
Escrow Agent shall sustain no liability for its failure to act pending such
process of court or order or interpleader of action.
6. Modification of Escrow Agreement. The provisions of this Escrow
Agreement may be supplemented, altered, amended, modified, or revoked by writing
only, signed by Holdings, Debentureholder, Optionholder and the Administrative
Agent and approved in writing by the Escrow Agent.
7. Assignment of Escrow Agreement. No assignment, transfer,
conveyance, or hypothecation of any right, title, or interest in and to the
subject matter of this Escrow Agreement shall be binding upon any party,
including the Escrow Agent, unless all fees have been paid and then only upon
the assent of all parties hereto in writing.
8. Binding. The undertakings and agreements contained in this
Escrow Agreement shall bind and inure to the benefit of the parties to this
Escrow Agreement and their respective heirs, personal representatives,
successors, and assigns.
9. Sale or Assignment of Holdings Unsecured Debenture. It shall be
a condition of the sale, assignment, hypothecation or other transfer by
Debentureholder or Optionholder, as the case may be, of the Holdings Unsecured
Debenture to any third party not a party to this Escrow Agreement (each a
"Nonparty Debentureholder"), that such Nonparty Debentureholder become a party
to, and agree to be bound by, the terms and conditions contained herein.
10. Notices. Any notice or other communication required or
permitted to be given under this Agreement shall be in writing and shall be
considered given when delivered or when sent by telecopier (with receipt
confirmed) provided that in each case a copy is mailed by registered mail to the
appropriate parties at the addresses set forth below (or at such other address
as a party may specify by notice to the other):
11
<PAGE> 426
If to Debentureholder, to:
Renex Corporation
c/o Caledonian Bank and Trust, Limited
P.O. Box 1043
George Town, Grand Cayman
Cayman Islands
British West Indies
Telecopier No.: ________________
Attention: _____________________
If to Optionholder, to:
Caynex, Inc.
c/o Coopers & Lybrand
Butterfield House
Grand Cayman
Cayman Islands
British West Indies
Attention: William Walmsley
with copies to:
c/o Onex Corporation
161 Bay Street
Toronto, Ontario M5J 2S1
Canada
Telecopier No.: (416) 362-5765
Attention: Mr. Ewout Heersink
Chief Financial Officer
and
Na-Churs Plant Food Co.
421 Leader Street
Marion, Ohio 43302
Telecopier No. (614) 383-2615
Attention: Donald F. West
12
<PAGE> 427
and
Onex Food Services, Inc.
c/o Sky Chefs, Inc.
524 E. Lamar Blvd.
Arlington, Texas 76011-3999
Telecopier No.: (817) 792-2222
Attention: Patrick Tolbert
Executive Vice President and Chief
Administrative and Financial Officer
and
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, New York 10022
Telecopier No.: (212) 836-7149
Attention: Joel I. Greenberg, Esq.
If to the Administrative Agent, to:
c/o J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, Delaware 19713
Telecopier No.: (212) 648-5336
Attention: Andrew Lipsett
If to Holdings, to:
[6550 Rock Spring Drive
Bethesda, Maryland 20817
Telecopier No.: (301) 897-7978]
Attention: _____________________
13
<PAGE> 428
with a copy to:
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, New York 10022
Telecopier No.: (212) 836-7149
Attention: Joel I. Greenberg, Esq.
If to the Escrow Agent, to:
[Address of Escrow Agent]
Telecopier No.: __________________
Attention: _______________________
14
<PAGE> 429
11. Counterparts. This Escrow Agreement may be executed in one or
more counterparts, each of which will be deemed an original. Whenever pursuant
to this Escrow Agreement any of the parties hereto are to deliver a jointly
signed writing to Escrow Agent or jointly advise Escrow Agent in writing, such
writing may in each and all cases be signed jointly or in counterparts and such
counterparts shall be deemed to be one instrument.
CATERAIR HOLDINGS CORPORATION
By:
--------------------------------------
Name:
Title:
RENEX CORPORATION
By:
--------------------------------------
Name:
Title:
CAYNEX, INC.
By:
--------------------------------------
Name:
Title:
15
<PAGE> 430
ACCEPTED this __ day of ___________________
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent under the
Revolver on behalf of the other lenders
named therein
By:
----------------------------------------
Name:
Title:
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent under the
Term Loan on behalf of the other lenders
named therein
By:
----------------------------------------
Name:
Title:
[ESCROW AGENT]
By:
----------------------------------------
Name:
Title:
Fee:
16
<PAGE> 431
Schedule A
Permitted Investments
Investments permitted shall include: (a) obligations issued or
guaranteed by the United States of America; (b) obligations issued or guaranteed
by any person controlled or supervised by and acting as an instrumentality of
the United States of America pursuant to authority granted by the Congress of
the United States of Americas; (c) obligations rated at the time of purchase not
less than "A" or the equivalent by Moody's Investors Service, Inc. or Standard &
Poor's Ratings Group, issued or guaranteed by any state of the United States of
America, or the District of Columbia; (d) commercial or finance company paper
which is rated at the time of purchase in the single highest classification,
"A-l+" by Standard & Poor's Ratings Group and "P-1" by Moody's Investors
Service, Inc. and which matures not more than 270 days after the date of
purchase; (e) United States dollar denominated deposit accounts, federal funds
and banker's acceptances with domestic commercial banks which have a rating on
their short term certificates of deposit on the date of purchase of "A-l" or
"A-l+" by Standard & Poor's Rating Group and "P-1" by Moody's Investors Service,
Inc. and maturing no more than 360 days after the date of purchase; (f)
repurchase agreements fully secured by any obligation set forth in clauses (a)
and (b) above; (g) shares in regulated investment companies substantially all of
the assets of which are invested in investments described in clauses (a) through
(f) above and (h) investment agreements with a bank or insurance company, which
has an unsecured, uninsured and unguaranteed obligation (or claims-paying
ability) rated "A-3" or better by Moody's Investors Service, Inc., or is the
lead bank of a parent bank holding company, or an affiliate of any such bank or
insurance company with an uninsured, unsecured and unguaranteed obligation
meeting such rating requirements and either (A) such affiliate meets the
applicable rating requirements or (B) such bank or insurance company guarantees
the obligations of such affiliate under such investment agreement, provided: (i)
interest is paid at least semi-annually at a fixed rate during the entire term
of the agreement, consistent with Bond payment dates; (ii) moneys invested
thereunder may be withdrawn without any penalty, redemption premium, or charge
upon not more than one day's notice (provided such notice may be amended or
canceled at any time prior to the withdrawal date); (iii) the agreement is not
subordinated to any other obligations of such insurance company or bank; (iv)
the same guaranteed interest rate will be paid on any future deposits made to
restore the reserve to its required amount; and (v) the borrower receives an
opinion of counsel that such agreement is an enforceable obligation of such
insurance company or bank.
17
<PAGE> 432
EXHIBIT M
ANNEX A
Subordination Provisions to be attached
to each note evidencing an intercompany
loan made by a non-Wholly Owned Subsidiary
of SCIS to SCIS, any Wholly-Owned
Domestic Subsidiary thereof or IFSC
Section 1.01. Subordination of Liabilities.
________________________ (the "Company"), for itself, its successors and
assigns, covenants and agrees, and each holder of the Note to which this Annex A
is attached (the "Note") by its acceptance thereof likewise covenants and
agrees, that the payment of the principal of, interest on, and all other amounts
owing in respect of, the Note (the "Subordinated Indebtedness") is hereby
expressly subordinated, to the extent and in the manner hereinafter set forth,
to the prior payment in full in cash of all Senior Indebtedness (as defined in
Section 1.07 of this Annex A). The provisions of this Annex A shall constitute a
continuing offer to all persons who, in reliance upon such provisions, become
holders of, or continue to hold, Senior Indebtedness, and such provisions are
made for the benefit of the holders of Senior Indebtedness, and such holders are
hereby made obligees hereunder the same as if their names were written herein as
such, and they and/or each of them may proceed to enforce such provisions.
Section 1.02. Company not to Make Payments with Respect to
Subordinated Indebtedness in Certain Circumstances. (a) Upon the maturity of any
Senior Indebtedness (including interest thereon or fees or any other amounts
owing in respect thereof), whether at stated maturity, by acceleration or
otherwise, all Obligations (as defined in Section 1.07 of this Annex A) owing in
respect thereof, in each case to the extent due and owing, shall first be paid
in full in cash, before any payment, whether in cash, property, securities or
otherwise, is made on account of the Subordinated Indebtedness.
(b) The Company may not, directly or indirectly, make any payment
of any Subordinated Indebtedness and may not acquire any Subordinated
Indebtedness for cash or property until all Senior Indebtedness has been paid in
full in cash if any default or event of default under the SCIS Credit Agreement
(as defined in Section 1.07 of this Annex A), the Caterair Credit Agreement (as
defined in Section 1.07 of this Annex A) or any other issue of Senior
Indebtedness is then in existence or would result therefrom. Each holder of the
Note hereby agrees that, so long as any such default or event of default in
respect of any issue of Senior Indebtedness exists or any restrictions set forth
in any issue of Senior Indebtedness reduces the amount permitted to be paid in
respect of the Note, such holder
<PAGE> 433
EXHIBIT M
ANNEX A
Page 2
will not sue for, or otherwise take any action to enforce the Company's
obligations to pay, amounts owing in respect of the Note.
(c) In the event that notwithstanding the provisions of the
preceding subsections (a) and (b) of this Section 1.02, the Company shall make
any payment on account of the Subordinated Indebtedness at a time when payment
is not permitted by said subsection (a) or (b), such payment shall be held by
the holder of the Note, in trust for the benefit of, and shall be paid forthwith
over and delivered to, the holders of Senior Indebtedness or their
representative or the trustee under the indenture or other agreement pursuant to
which any instruments evidencing any Senior Indebtedness may have been issued,
as their respective interests may appear, for application pro rata to the
payment of all Senior Indebtedness remaining unpaid to the extent necessary to
pay all Senior Indebtedness in full in accordance with the terms of such Senior
Indebtedness, after giving effect to any concurrent payment or distribution to
or for the holders of Senior Indebtedness. Without in any way modifying the
provisions of this Annex A or affecting the subordination effected hereby if the
hereafter referenced notice is not given, the Company shall give the holder of
the Note prompt written notice of any event which would prevent payments under
Section 1.02(a) or (b).
Section 1.03. Subordination to Prior Payment of all Senior
Indebtedness on Dissolution, Liquidation or Reorganization of Company. Upon any
distribution of assets of the Company upon dissolution, winding up, liquidation
or reorganization of the Company (whether in bankruptcy, insolvency or
receivership proceedings or upon an assignment for the benefit of creditors or
otherwise):
(a) the holders of all Senior Indebtedness shall first be entitled
to receive payment in full in cash of all Senior Indebtedness (including,
without limitation, post-petition interest at the rate provided in the
documentation with respect to the Senior Indebtedness, whether or not
such post-petition interest is an allowed claim against the debtor in any
bankruptcy or similar proceeding) before the holder of the Note is
entitled to receive any payment on account of the Subordinated
Indebtedness;
(b) any payment or distributions of assets of the Company of any
kind or character, whether in cash, property or securities to which the
holder of the Note would be entitled except for the provisions of this
Annex A, shall be paid by the liquidating trustee or agent or other
person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or other trustee or
<PAGE> 434
EXHIBIT M
ANNEX A
Page 3
agent, directly to the holders of Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under
any indenture under which any instruments evidencing any such Senior
Indebtedness may have been issued, to the extent necessary to make
payment in full in cash of all Senior Indebtedness remaining unpaid,
after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing provisions of
this Section 1.03, any payment or distribution of assets of the Company
of any kind or character, whether in cash, property or securities, shall
be received by the holder of the Note on account of Subordinated
Indebtedness before all Senior Indebtedness is paid in full in cash, such
payment or distribution shall be received and held in trust for and shall
be paid over to the holders of the Senior Indebtedness remaining unpaid
or unprovided for or their representative or representatives, or to the
trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Indebtedness may have been issued, for
application to the payment of such Senior Indebtedness until all such
Senior Indebtedness shall have been paid in full in cash, after giving
effect to any concurrent payment or distribution to the holders of such
Senior Indebtedness.
Without in any way modifying the provisions of this Annex A or
affecting the subordination effected hereby if the hereafter referenced notice
is not given, the Company shall give prompt written notice to the holder of the
Note of any dissolution, winding up, liquidation or reorganization of the
Company (whether in bankruptcy, insolvency or receivership proceedings or upon
assignment for the benefit of creditors or otherwise).
Section 1.04. Subrogation. Subject to the prior payment in full in
cash of all Senior Indebtedness, the holder of the Note 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 all amounts owing on the Note shall be paid in full, and for the purpose
of such subrogation no payments or distributions to the holders of the Senior
Indebtedness by or on behalf of the Company or by or on behalf of the holder of
the Note by virtue of this Annex A which otherwise would have been made to the
holder of the Note shall, as between the Company, its creditors other than the
holders of Senior Indebtedness, and the holder of the Note, be deemed to be
payment by the Company to or on account of the Senior Indebtedness, it being
understood that the provisions of this Annex A are and are intended solely or
the purpose of defining the
<PAGE> 435
EXHIBIT M
ANNEX A
Page 4
relative rights of the holder of the Note, on the one hand, and the holders of
the Senior Indebtedness, on the other hand.
Section 1.05. Obligation of the Company Unconditional. Nothing
contained in this Annex A or in the Note is intended to or shall impair, as
between the Company and the holder of the Note, the obligation of the Company,
which is absolute and unconditional, to pay to the holder of the Note the
principal of and interest on the Note as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the
relative rights of the holder of the Note and creditors of the Company other
than the holders of the Senior Indebtedness, nor shall anything herein or
therein (except to the extent set forth in this Annex A) prevent the holder of
the Note from exercising all remedies otherwise permitted by applicable law and
this Annex A upon an event of default under the Note, subject to the rights, if
any, under this Annex A of the holders of Senior Indebtedness in respect of
cash, property, or securities of the Company received upon the exercise of any
such remedy. Upon any distribution of assets of the Company referred to in this
Annex A, the holder of the Note shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are pending, or a
certificate of the liquidating trustee or agent or other person making any
distribution to the holder of the Note, for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Annex A.
Section 1.06. Subordination Rights not Impaired by Acts or
Omissions of Company or Holders of Senior Indebtedness. No right of any present
or future holders of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act in
good faith by any such holder, or by any noncompliance by the Company with the
terms and provisions of the Note, regardless of any knowledge thereof which any
such holder may have or be otherwise charged with. The holders of the Senior
Indebtedness may, without in any way affecting the obligations of the holder of
the Note with respect hereto, at any time or from time to time and in their
absolute discretion, change the manner, place or terms of payment of, change or
extend the time of payment of, or renew or alter, any Senior Indebtedness or
amend, modify or supplement any agreement or instrument governing or evidencing
such Senior Indebtedness or any other document referred to therein, or exercise
or refrain from exercising any other of their rights under the Senior
Indebtedness including, without limitation, the waiver of default
<PAGE> 436
EXHIBIT M
ANNEX A
Page 5
thereunder and the release of any collateral securing such Senior Indebtedness,
all without notice to or assent from the holder of the Note.
Section 1.07. Senior Indebtedness. The term "Senior Indebtedness"
shall mean all Obligations (as defined below) (i) of the Company under, or in
respect of, the Credit Agreement (as amended, modified, supplemented, extended,
restated, refinanced, replaced or refunded from time to time, the "SCIS Credit
Agreement"), dated as of September 29, 1995 and amended and restated as of
August 28, 1997, by and among Onex Food Services, Inc., SC International
Services, Inc. ("SCIS"), Caterair Holdings Corporation, Caterair International
Corporation ("Caterair"), the lenders from time to time party thereto, Bankers
Trust Company and J.P. Morgan Securities Inc., as Co-Arrangers, Bankers Trust
Company, as Syndication Agent, Morgan Guaranty Trust Company of New York, as
Administrative Agent, and The Bank of New York, as Co-Agent, and any renewal,
extension, restatement, refinancing or refunding thereof, (ii) of the Company
under the other Credit Documents (as defined in the SCIS Credit Agreement) to
which it is a party (including, under the Subsidiaries Guaranty (as defined in
the SCIS Credit Agreement)), (iii) of the Company under, or in respect of, any
Interest Rate Protection Agreements (as defined in the SCIS Credit Agreement) or
Other Hedging Agreements (as defined in the SCIS Credit Agreement), (iv) of the
Company, under, or in respect of, the Term Loan Agreement (as amended, modified,
supplemented, extended, restated, refinanced, replaced or refunded from time to
time, the "Caterair Credit Agreement"), dated as of August 28, 1997, by and
among SCIS, Caterair, the lenders from time to time party thereto, Bankers Trust
Company and J.P. Morgan Securities Inc., as Co-Arrangers, Bankers Trust Company,
as Syndication Agent, and Morgan Guaranty Trust Company of New York, as
Administrative Agent and (v) of the Company under the other Credit Documents (as
defined in the Caterair Credit Agreement) to which it is a party (including
under the Subsidiaries Guaranty (as defined in the Caterair Credit Agreement)).
As used herein, the term "Obligation" shall mean any principal, interest,
premium, penalties, fees, expenses, indemnities and other liabilities and
obligations payable under the documentation governing any Senior Indebtedness
(including interest accruing after the commencement of any bankruptcy,
insolvency, receivership or similar proceeding, whether or not such interest is
an allowed claim against the debtor in any such proceeding).
<PAGE> 437
EXHIBIT N
LETTER AGREEMENT
ONEX FOOD SERVICES, INC.
524 East Lamar Boulevard
Arlington, Texas 76011
CAYNEX, INC.
Butterfield House
P.O. Box 2019
Grand Cayman
Cayman Islands
British West Indies
August 28, 1997
Morgan Guaranty Trust Company
of New York
c/o J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, Delaware 19713
Re: Pledge by Renex Corporation ("Reflex") of the $43,800,000
principal amount Senior Debenture due 2001, dated
September 29, 1995, made by Caterair Holdings Corporation
("Holdings") (together with all Interest Debentures (as
defined therein) issued or to be issued thereunder or
issued prior to September 29, 1995 pursuant to the
$280,000,000 principal amount Senior Debenture due 2001,
dated December 25, 1989, made by Holdings, the "Holdings
Unsecured Debenture") to Onex Food Services, Inc. ("OFSI")
and Caynex, Inc. ("Caynex").
Ladies and Gentlemen:
Please be advised that, (i) pursuant to a Pledge Agreement, dated
December 19, 1995 (the "Pledge Agreement"), Renex has pledged to OFSI and
granted to OFSI a security interest in the Collateral (as defined in the Pledge
Agreement and including, without limitation, the Holdings Unsecured Debenture),
and (ii) pursuant to an Option Agreement, dated December 19, 1995 (the "Option
Agreement"), Renex has granted to Caynex a subordinated security interest in the
Holdings Unsecured Debenture. The Holdings Unsecured Debenture has been
<PAGE> 438
pledged by OFSI to you and is on deposit with you in connection with (i) that
certain Credit Agreement, dated as of September 29, 1995 and amended and
restated as of August 28, 1997, among Holdings, Caterair International
Corporation ("Caterair"), OFSI, SC International Services, Inc. ("SCIS"), the
lenders from time to time party thereto, Bankers Trust Company and J.P. Morgan
Securities Inc. as Co-Arrangers, Bankers Trust Company as Syndication Agent,
Morgan Guaranty Trust Company of New York as Administrative Agent, and The Bank
of New York as Co-Agent (the "Revolver") and (ii) that certain Term Loan
Agreement, dated as of August 28, 1997, among SCIS, Caterair, the lenders from
time to time party thereto, Bankers Trust Company and J.P. Morgan Securities
Inc. as Co-Arrangers, Bankers Trust Company as Syndication Agent, and Morgan
Guaranty Trust Company of New York as Administrative Agent (the "Term Loan")
(each of the Revolver and the Term Loan as amended, modified, supplemented,
extended, restated, refinanced, replaced or refunded from time to time,
collectively, the "Credit Agreements").
By your execution of this letter agreement in the space indicated
below, you hereby (i) agree to hold the Collateral, as bailee for OFSI and
Caynex, subject to your prior security interest, and (ii) agree that, upon
payment in full of all amounts and termination of all commitments to make
financial accommodations under the Credit Agreements, you will deliver the
Collateral to OFSI at do Sky Chefs, Inc., 524 East Lamar Boulevard, Arlington,
Texas 76011 (Attention: Patrick W. Tolbert, Executive Vice President and Chief
Financial and Administrative Officer), or to OFSI's designee if so notified in a
writing by OFSI.
OFSI and Caynex each acknowledge that you are acting merely as
bailee for purposes of perfecting their respective security interests and that
you have undertaken no duty to either of them (and shall have no liability
whatsoever to either of them in respect thereof) and are not otherwise acting as
agent for either of them with respect to the Collateral.
Very truly yours,
ONEX FOOD SERVICES, INC.
By: /s/ Terry Roueche
-----------------------------
Name: Terry Roueche
Title: Assistant Secretary
2
<PAGE> 439
CAYNEX, INC.
By: /s/ Donald F. West
---------------------------------
Name: Donald F. West
Title: President
Agreed to:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent under
the Revolver on behalf of the other
lenders named therein
By: /s/ Laura Loffredo
---------------------------------
Name: LAURA E. LOFFREDO
Title: VICE PRESIDENT
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent under
the Term Loan on behalf of the other
lenders named therein
By: /s/ [ILLEGIBLE]
---------------------------------
Name: [ILLEGIBLE]
Title: [ILLEGIBLE]
RENEX CORPORATION
By: /s/ Donald F. West
---------------------------------
Name: Donald F. West
Title: Authorized Signer
3
<PAGE> 1
EXHIBIT 10.37
MANAGEMENT SHAREHOLDERS AGREEMENT dated as of May 29, 1986, among Onex
Food Services, Inc., a Delaware corporation (the "Corporation"), OnCap Holdings
U.S., Inc. (formerly known as Onex Investment Corporation), a Delaware
corporation ("Onex"), and the individuals named on Schedule I to this Agreement
(each a "Managementholder" and collectively the "Managementholders"), as amended
as of December 6, 1993.*
The authorized capital stock of the Corporation consists of 21,000,000
shares of Class A common stock, $.01 par value per share ("Class A Shares") and
2,100,000 shares of Class B common stock, $.01 par value per share ("Class B
Shares"). Each of the Managementholders is an employee of Sky Chefs, Inc., a
wholly-owned subsidiary of the Corporation ("Sky Chefs"), and has purchased or
is purchasing Shares from the Corporation. The parties hereto wish to provide
for the stability of the Corporation and to restrict the manner and means by
which the Shares owned by the Managementholders may be transferred, voted and
otherwise dealt with, and they therefore agree as follows:
1. Restrictions on Transfer of Shares
1.1 Each of the Managementholders represents and agrees that the
Managementholder's Shares owned by him are being acquired for his own account
and will not be transferred in violation of this Agreement, the securities laws
of the United States, or any other applicable law. The Corporation may refuse to
register any transfer by the registered holder of the Managementholder's Shares
on its transfer books if such transfer would violate this Agreement, the
securities laws of the United States or any other applicable law, and may, as a
condition to registration of such transfer, require such holder to furnish to
the Corporation an opinion of counsel reasonably acceptable to the Corporation
as to compliance with the foregoing.
1.2 Except as provided in Sections 2.2, 3 or 4, the Managementholder's
Shares may not be transferred in part, and may not be transferred as a whole
without the consent of the Corporation. The Managementholder's Shares may be
transferred only in accordance with the other provisions of this Agreement. Any
purported transfer in any manner contrary to the terms of this Agreement shall
be void. For purposes of this Agreement, the term "transfer" shall mean any
sale, exchange, assignment, gift, bequest, pledge, creation of a lien or
security interest or other disposition or encumbrance of any kind, whether
voluntary or involuntary or by operation of law, affecting title to or
possession of the Managementholder's Shares.
1.3 The Managementholder's Shares may be pledged to a bank or other
Person approval by the Corporation as security for indebtedness incurred solely
to finance up to 66-2/3% of the purchase price paid by the Managementholder for
those Shares (or such higher percentage as may be determined from time to time
by the Board of Directors of the Corporation, in its sole discretion), on
condition that such bank or other Person executes and delivers to the
Corporation a written agreement that such pledge is subject to the terms of this
Agreement. With the prior consent of the Corporation, two or more
Managementholders may transfer their Shares to a Person, all of the equity
interests in which are held by the transferring Managementholders, in order to
facilitate such financing.
1.4 In connection with any sale pursuant to this Agreement, the
Managementholder shall discharge any indebtedness permitted by Section 1.3 and
deliver the Managementholder's Shares
- --------
* Each additional Person who at any time purchases common shares of the
Corporation and executes this Agreement (as amended) shall thereafter
be a Managementholder.
<PAGE> 2
2
being sold free and clear of any pledge, lien, security interest or other
encumbrance of any kind. If the Managementholder fails to comply with the
preceding sentence, the purchaser may withhold from the purchase price an amount
equal to the indebtedness secured by any such pledge, lien, security interest or
other encumbrance or, if the amount of such indebtedness is not known by the
purchaser, an amount equal to the purchaser's good faith estimate thereof (no
limitation of any other remedy available to the purchaser being intended). If
the Managementholder fails to deliver certificates representing
Managementholder's Shares being sold as required at the closing of such sale,
the purchaser may deposit the purchase price therefor with the Corporation and,
upon such deposit, those certificates shall be deemed cancelled and of no effect
(no limitation of any other remedy available to the purchaser being intended).
2. Sale of Managementholder's Shares
2.1 [Intentionally Omitted.]
2.2 At any time when the Corporation is a Public Company, except for
120 days after any Public Offering of shares of the same class as Class A
Shares, a Managementholder shall, subject to the following sentence, be entitled
during any 60-day period to sell up to 5% of the sum of (x) the Class A Shares
then held by him and (y) the Class A Shares previously sold by him pursuant to
this Section 2.2; any such sale or sales shall be through the facilities of any
securities exchange on which the Class A Shares may then be listed, and shall be
made in a manner which complies with applicable securities law and regulations.
However, such sales may not be made unless, not less than five and not more than
ten business days before effecting any such sale, the Management holder shall
first give notice to Onex offering to sell to it or, at Onex's option, to the
Corporation or a member of the Onex Group, all or any part of that number of
Class A Shares (which, in the case of a partial purchase, would not result in
the remaining Shares offered to be sold constituting an odd lot) which it
proposes to sell, at a price per share equal to the average closing price per
share on such exchange (or, if the Class A Shares are not then listed on a
securities exchange, the mean between the bid and asked prices in the
over-the-counter market) for the five trading days thereon immediately preceding
the notice. If Onex, or, at Onex's option, the Corporation or a member of the
Onex Group, wishes to accept such offer it shall do so by notice of election to
purchase given to the Managementholder within three days after receipt of such
notice by the Managementholder which designates the number of Class A Shares to
be purchased, and the Managementholder shall thereupon be bound to sell such
Class A Shares to Onex, the Corporation or a member of the Onex Group, as the
case may be, and Onex, the Corporation or a member of the Onex Group, as the
case may be, shall be obligated to buy such Class A Shares.
2.3 If a Managementholder ceases to be employed in a full-time capacity
by Sky Chefs or a direct or indirect subsidiary of Sky Chefs for any reason
(including but not limited to the Managementholder's voluntary termination,
termination by Sky Chefs with or without cause, or the Managementholder's death,
disability or retirement), Onex (or, if Onex so elects, a member of the Onex
Group or the Corporation) shall purchase, and the Managementholder shall sell,
all of the Class A Shares owned by such Managementholder. The purchase price
payable per share in any sale of Class A Shares pursuant to this Section 2.3
shall be equal to
(A)(x) the Class A Book Value Per Share, as to (i) any Class A
Shares that the Managementholder acquired at least five years prior to
the date on which his or her employment terminated, or (ii) all Class A
Shares held by such Managementholder, if the
<PAGE> 3
3
Managementholder's employment was terminated by the Corporation without
cause or as a result of his death, retirement or disability, or (y)
87.5% of the Class A Book Value Per Share, to the extent clause (x) is
not applicable, or
(B) if the Corporation is a Public Company at the closing of
the sale, (x) an amount equal to the average closing price per share on
the principal securities exchange in which it is listed (or, if the
Class A Shares are not then listed on a securities exchange, the mean
between the bid and asked prices in the over-the-counter market) for
the five trading days immediately preceding the closing, as to (i) any
Class A Shares that the Managementholder acquired at least five years
prior to the date on which his or her employment terminated, or (ii)
all Class A Shares held by such Managementholder, if the
Managementholder's employment was terminated by the Corporation without
cause or as a result of his death, retirement or disability, or (y)
87.5% of such average closing price, to the extent clause (x) is not
applicable. If the purchase price was based on the Class A Book Value
Per Share and the Corporation effects a Public Offering of Shares of
Class A Shares purchased pursuant to this Section 2.3 within 12 months
after the closing provided for in Section 2.4 with respect thereto and
if the Managementholder's employment was terminated under circumstances
described in clause (A)(x) of the second sentence of this paragraph,
the purchase price per Share shall be increased by an amount equal to
the excess, if any, of the public offering price per Class A Share
(after deduction of any applicable underwriter's commissions or
discounts) over the Class A Book Value Per Share used in calculating
the original purchase price. If the Managementholder's employment
terminates for any reason not described in such clause (A)(x), the
purchase price for his Class A Shares shall be paid in cash at the
closing. If the Managementholder's employment is terminated under
circumstances described in such clause (A)(x), the purchase price for
his Class A Shares shall be paid 1/2 in cash (or, if greater, the
outstanding balance of any financing pursuant to Section 1.3) at the
closing and the balance (with interest from the closing at the U.S.
Dollar prime rate announced from time to time by The Toronto-Dominion
Bank) one year after closing; provided, however, that if the employment
of any Managementholder who is a California resident is terminated
under circumstances described in such clause (A)(x), such
Managementholder may, at his sole option, receive the purchase price
for his Managementholder's Shares in cash within 90 days of termination
of his employment, instead of in accordance with the formula set forth
in this sentence. The determination by the Board of Directors of the
Corporation as to the reason for the termination of a
Managementholder's employment shall be conclusive. If the purchase
price payable is based on Class A Book Value Per Share, the Corporation
may deliver to the selling Managementholder a copy of the balance sheet
on which the determination of the Class A Book Value Per Share was
based and a calculation of the purchase price payable in reasonable
detail, together with a letter from the independent certified public
accountants then retained by the Corporation to the effect that they
have reviewed that calculation and that nothing has come to their
attention that caused them to believe that it did not comply with this
agreement; if the Corporation delivers those items, the determination
of the purchase price payable set forth therein shall be conclusive.
2.4 (a) The closing of any purchase and sale of Managementholder's
Shares pursuant to exercise by the Corporation, Onex or a member of the Onex
Group of a right under Section 2.2, 2.3 or 2.5 shall be held at the principal
offices of the Corporation on a date designated by the purchaser, but in any
event not later than 60 days after the date of the Notice or cessation of
employment, as the case may be. At the closing, the Managementholder selling
Management-
<PAGE> 4
4
holder's Shares shall deliver to the purchaser the stock certificates and other
instruments representing such Managementholder's Shares, together with stock
powers and other instruments transferring such Shares, duly endorsed for
transfer and free and clear of all claims, liens, encumbrances and security
interests, and the purchaser shall deliver to the Managementholder the
consideration payable upon closing.
(b) For purposes of Sections 2.3 and 2.5 hereof, securities
acquired from the Corporation as a dividend or pursuant to a stock split,
reverse split or recapitalization (including, without limitation, the Class A
Shares and the Class B Shares) shall be deemed to have been acquired at the same
time as the securities on which the dividend (or, if more than one, the initial
dividend) was paid, the securities involved in the stock split or reverse split,
or the securities surrendered in connection with the recapitalization.
2.5. From time to time after a Managementholder is required to sell
Class A Shares pursuant to Section 2.3 hereof, the Corporation, and if the
Corporation does not exercise its rights hereunder, Onex and/or any member of
the Onex Group, shall have the right, but not the obligation, to purchase any or
all of the Class B Shares held by such Managementholder, at a per share price
equal to (x) the Class B Fair Value Per Share, as to (i) any Class B Shares that
the Managementholder acquired at least five years prior to the date on which his
or her employment terminated, or (ii) all Class B Shares held by such
Managementholder, if the Managementholder's employment was terminated by the
Corporation without cause or as a result of his death, retirement or disability,
or (y) 87.5% of the Class B Fair Value Per Share, to the extent clause (x) is
not applicable.
2.6. Notwithstanding the provisions of Sections 2.3 and 2.4 hereof, in
the event that a Managementholder is required to sell Class A Shares held by
such Managementholder pursuant to Section 2.3 hereof prior to the expiration
date of the warrant to purchase shares of common stock of the Corporation held
by the AMR Corporation (the "AMR Warrant"), a number of such Managementholder's
Class A Shares, calculated in accordance with the provisions of an Acquisition
Agreement dated October 5, 1993 among the Company, LSG Lufthansa Service GmbH
("LSG") and certain other parties (the "Acquisition Agreement"), shall not be
repurchased as provided herein, and shall instead be held by the Corporation
until (a) the AMR Warrant expires without having been exercised, in which event
the amount payable hereunder with respect to such Class A Shares shall be
promptly paid by the Corporation to such Managementholder, (b) the AMR Warrant
is exercised in full, in which event such Class A Shares shall be transferred at
no cost to LSG in accordance with the provisions of the Acquisition Agreement or
(c) the AMR Warrant is exercised in part, in which event the corresponding
portion of such Class A Shares shall be transferred at no cost to LSG; if the
AMR Warrant thereafter expires without further being exercised, the amount
payable hereunder with respect to the Class A Shares not previously transferred
to LSG shall be promptly paid by the Corporation to such Managementholder.
3. Sale of Shares by Onex and the Corporation
3.1 If at any time any member of the Onex Group proposes to sell any or
all of the Onex Shares of the same class as the Managementholder's Shares to any
Person other than another member of the Onex Group and except for sales effected
on a national securities exchange in the regular way or in the over-the-counter
market or in transactions registered under the 1933 Act (a "Disposition"), Onex
shall, at least 20 days prior to the Disposition, give notice to each
Managementholder describing the terms of the Disposition in reasonable detail,
including the
<PAGE> 5
5
identity of the proposed purchaser, and stating that the Managementholder has
the option to sell to the proposed purchaser the same percentage of his
Managementholder's Shares as the members of the Onex Group are selling of Onex
Shares of the same class, simultaneously with and conditioned upon the closing
of the Disposition, at the price per share and on the other terms of the
Disposition.
3.2 (i) The option pursuant to Section 3.1 shall be exercisable by
notice to Onex given within the time specified in Onex's notice, which shall not
be less than 10 days after such notice. If a Managementholder gives notice of
his election to sell, he shall be obligated to sell, conditioned upon the
closing of the Disposition. If the purchaser has specified a limited number of
Shares which it is willing to purchase in the aggregate, each Managementholder
and each member of the Onex Group which is selling Onex Shares shall have the
right to sell its or his proportion of the number of Shares which the purchaser
is purchasing, i.e., the proportion which the number of Shares of the class
being sold owned by such Person bears to the aggregate number of Shares of that
class owned by the shareholders who are selling Shares. If any Person does not
elect to sell the full number of Shares which he or it is entitled to sell, the
balance shall be available, in accordance with such procedures as Onex may
designate, to the shareholder which has elected to sell the maximum number of
Shares initially available to it or him for such purpose.
(ii) If a transferee of Onex Shares pursuant to this Section 3.2
acquires such Onex Shares free of this Agreement, then such transferee shall
also take the Managementholder's Shares being sold by a Managementholder free of
this Agreement. However, if the members of the Onex Group are required to
transfer the Onex Shares subject to this Agreement, then the Managementholder
shall also transfer his Managementholder's Shares subject to this Agreement.
3.3 Notwithstanding anything herein to the contrary, if the members of
the Onex Group propose to sell all or any part of their Onex Shares in a
Disposition, they may also in such notice require the Managementholders to sell
all or the same proportion of their Managementholder's Shares as the Onex Group
is selling of their Onex Shares, simultaneously with and conditioned upon the
closing of the Disposition, at the price (whether in cash or other
consideration) per Share of the same class and on the other terms of the
Disposition, and the Managementholders shall thereupon be obligated to make such
disposition, conditioned upon the closing of the Disposition. Any transferee of
Shares owned by Onex or of the Managementholders pursuant to this Section 3.3
shall acquire such Shares free of this Agreement, unless the agreement between
members of the Onex Group and such transferee provides otherwise.
3.4 In connection with any Disposition in which Managementholder's
Shares are to be sold by a Managementholder, Onex may require the
Managementholder to enter into agreements with the purchaser representing and
warranting that, except as specifically disclosed to the purchaser in writing,
such Managementholder at the time of the closing of the Disposition, does not
have actual knowledge that any representation or warranty made by the
Corporation or any other shareholder in connection with the Disposition was
untrue in any material respect when made or is untrue in any material respect as
of the closing; the liability of the selling Managementholder under such
representation and warranty shall be limited to the amount which he receives
from the sale of his Managementholder's Shares in connection with the
Disposition and shall be pro rata in accordance with the number of Shares sold
by the Managementholder in relation to the Shares being sold by all holders.
<PAGE> 6
6
3.5 If, prior to the time when the Corporation becomes a Public
Company, the Corporation intends to sell shares of its capital stock or options,
warrants, rights to purchase, or securities convertible into, or exchangeable
for, shares of its capital stock to members of the Onex Group, the Corporation
shall give notice thereof (the "Sale Notice") to each of the Managementholders
describing the terms of the proposed sale in reasonable detail, including the
identity of the proposed purchasers. Each Managementholder shall then have the
right, exercisable by notice to the Corporation within 20 days after the receipt
of the Sale Notice, to purchase his Pro Rata Share of the securities referred to
in the Sale Notice as proposed to be sold to members of the Onex Group for the
same price per unit and on the same terms as are contained in the Sale Notice,
simultaneously with and conditioned upon the closing of the sale referred to in
the Sale Notice. As used in this Section 3.5, the term "Pro Rata Share" shall
mean the product of (x) the total number of securities referred to in the Sale
Notice as proposed to be sold to members of the Onex Group and (y) a fraction,
the numerator of which is the number of Managementholder's Shares of all classes
held by the Managementholder on the date the Sale Notice is given and the
denominator of which is the sum of the number of Shares of all classes of the
Corporation's stock of the same class or classes as Managementholder's Shares
outstanding on such date (including the Managementholder's Shares). Any
securities acquired by a Managementholder pursuant to this Section 3.5 shall be
subject to the terms of this Agreement. The provisions of this Section 3.5 shall
not apply to the issuance of securities, with or without consideration, to
officers and employees of the Corporation and its subsidiaries or plans for the
benefit of such employees, by the Corporation from time to time.
4. Registration Rights
If the Corporation proposes to effect an offering of securities
registered under the 1933 Act which involves an offering of securities of the
same class as any of the Class A Shares held by a Managementholder, it shall
give written notice of its intention to do so (the "Public Offering Notice") to
the Managementholder; provided that the Corporation shall not be required to
give a Public Offering Notice or to register Class A Shares in accordance with
the following sentence if the registration of securities of the Corporation
being proposed cannot, under then existing law and regulations, be combined (on
the registration form proposed to be used) with a registration of sales of Class
A Shares under the 1933 Act or if and to the extent the registration of Class A
Shares would contravene an agreement with a security holder that prohibits or
restricts the inclusion of securities to be sold by others. If a Public Offering
Notice is given, then, on the written request (a "Holder's Request") of a
Managementholder given no later than 10 days after receipt of the Public
Offering Notice (which request shall specify the number of Class A Shares
intended to be sold or disposed of by the Managementholder and describe the
nature of any proposed sale or other disposition thereof (if the offering
described in the Public Offering Notice is to be underwritten, the
Managementholder shall be required to make its offering through the same
underwriters and to sign the underwriting agreement)), the Corporation will, at
its expense (excluding commissions and expenses payable to underwriters in
respect of Class A Shares and the fees of any counsel or other advisors engaged
by the Managementholder), use its best efforts to cause the registration under
the 1933 Act of the Class A Shares stated in the Holder's Request or, if less,
the Pro Rata Number of such Class A Shares, for disposition in accordance with
the intended method of disposition as stated in the Holder's Request, and to
cause such registration to become effective and such disposition to be qualified
or exempt from qualification under "blue sky" laws of states in which the shares
referred to in the Public Offering Notice are to be offered. However, the
Corporation may at any time delay, abandon or withdraw any such registration
statement and shall not be required to register Class A Shares pursuant to this
Section 4 in connection with any
<PAGE> 7
7
proposed registration if, in the opinion of the managing underwriter, the
inclusion of such Class A Shares would adversely affect the offering. As used in
this Section 4, the term "Pro Rata Number" shall mean the product of (x) the
total number of securities of the class being offered held by the
Managementholder and requested to be registered and (y) a fraction, the
numerator of which is the number of securities of the class being offered by
selling security holders which are to be registered and the denominator of which
is the number of securities of the same class which are requested to be
registered by all holders thereof, including the Managementholder (as
distinguished from the Corporation).
5. Legend
All certificates representing Managementholder's Shares held by any
Managementholder (and held by a transferee of Managementholder's Shares, except
as set forth in Section 3, except for a transferee of Managementholder's Shares
which is a member of the Onex Group and except for a transferee pursuant to
Section 2.2, 2.3 or 2.5 or pursuant to a registration statement in accordance
with Section 4) shall bear the following legend:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933 and the
transfer and voting of such shares is subject to conditions
specified in the Management Shareholders Agreement dated May
29, 1986, between the Corporation, Onex Investment Corporation
and the holder hereof, among others, as such agreement may be
amended from time to time, and no transfer of such shares
shall be valid or effective until such conditions have been
fulfilled with respect to such transfer. A copy of such
Agreement will be furnished by the Corporation to the holder
of this Certificate upon written request and without charge."
6. Voting
Each Managementholder shall at all times vote his Managementholder's
Shares in the same manner as the Onex Shares are voted, on the election of
Directors and on all other matters which are submitted to a vote (or consent in
lieu of voting) of the Corporation's stockholders, and, for this purpose, shall
execute and deliver to Onex (or its designees) proxies to vote such Management-
holder's Shares in the same manner as the Onex Shares are voted. To the extent
permitted by law, each Managementholder, by his execution of this Agreement,
irrevocably constitutes and appoints the person who is at any time the president
of Onex, his proxy to vote all of his Managementholder's Shares at any meeting
of Stockholders of the Corporation, or to give consent in lieu of voting, on any
matter which is submitted for vote (or consent) to the stockholders, provided
that such Managementholder's Shares are voted (or consent is given with respect
to them) in the same manner as the Onex Shares.
7. Certain Prohibited Transactions and Required Actions
The Corporation shall not merge, consolidate or amalgamate with another
corporation, or sell all or substantially all of its assets to another Person,
if pursuant thereto any member of the Onex Group shall receive equity securities
as full or partial consideration for its Shares, unless all
<PAGE> 8
8
Managementholders shall have the right to receive the same securities in
proportion to their respective holdings of Shares.
8. Management Representatives
Each of the Managementholders hereby irrevocably constitutes and
appoints the Management Representatives (as defined in this Section 8) as his
representatives to take all actions on his behalf in connection with this
Agreement, in their sole and absolute discretion, including but not limited to,
executing any consents or waivers in connection with, or any amendments to, this
Agreement (but not any decision to sell his Managementholder's Shares pursuant
to Section 2.2, 3.1, or 4, or any decision to buy pursuant to Section 3.5). The
term "Management Representative" shall mean, any four of (or such lesser number
as shall constitute all of) the President and the Senior Vice Presidents and
Vice Presidents of Sky Chefs; the four individuals from whom action as
Management Representatives is sought shall act unanimously and shall include the
President and chief financial officer of Sky Chefs unless they are not available
on a reasonable basis.
9. Financial Statements
The Corporation shall deliver to each Managementholder so long as he
owns Managementholder's Shares:
(i) within 120 days after the end of each fiscal year of the
Corporation, a consolidated balance sheet of the Corporation and its
subsidiaries as at the end of such fiscal year, and a consolidated statement of
income and of changes in financial position of the Corporation and its
subsidiaries for such fiscal year, accompanied by a report thereon of
independent certified public accountants; and
(ii) within 45 days after the end of each fiscal quarter of the
Corporation, a consolidated balance sheet of the Corporation and its
subsidiaries as at the end of such quarter, and a consolidated statement of
income and of changes in financial position of the Corporation and its
subsidiaries for such quarter, and a certificate of an officer of the
Corporation certifying that, in his opinion, the statements fairly present the
financial position and results of operation of the Corporation and its
subsidiaries in accordance with generally accepted accounting principles (except
that such statements need not include complete notes).
10. Definitions
10.1 The term "Class A Book Value Per Share" as of any date shall mean
the quotient obtained by dividing (X) consolidated stockholders' equity of the
Corporation and its subsidiaries as of the end of the fiscal quarter immediately
preceding the date of the event that required the purchase and sale pursuant to
Section 2.3, determined in accordance with generally accepted accounting
principles in effect in the United States on the date of this Agreement, minus
the aggregate Class B Book Value Per Share of all of the Class B Shares
outstanding (or assumed to be outstanding pursuant to Section 10.3) on such
date, by (Y) the number of Class A Shares outstanding on such date; in making
calculations for purposes of clauses (X) and (Y), it shall be assumed that all
options and rights to purchase Class A Shares and securities convertible into
Class A shares outstanding on the date as of which the calculation is being made
had been
<PAGE> 9
9
exercised or converted to the extent that the exercise price or conversion price
(expressed in terms of principal amount of debt or liquidation preference in the
case of stock) does not exceed Class A Book Value Per Share (determined without
regard to this clause) and any purchase price for Class A Shares payable upon
such exercise had been paid. The determination of Class A Book Value Per Share
shall be based upon the audited (in the case of the end of a fiscal year) or
unaudited (in the case of the end of any of the first three quarters of a fiscal
year) balance sheet of the Corporation as at the end of the fiscal quarter in
question. Notwithstanding the foregoing, the Class A Book Value Per Share shall
be equitably adjusted by the Board of Directors of the Corporation if the
Managementholder's Shares include securities other than Class A Shares and Class
B Shares or if a stock dividend, recapitalization or other material event occurs
outside of the ordinary course of business after the end of such fiscal quarter
and before the closing of the sale in respect of which the determination is
being made.
10.2 The term "Class A Shares" shall have the meaning ascribed to such
term in the introductory paragraph of this Agreement.
10.3 The term "Class B Fair Value Per Share" as of any date shall mean
the quotient obtained by dividing (X) the amount of the Dividend Pool (as
defined in the Certificate of Amendment to the Certificate of Incorporation of
the Corporation which was filed with the Secretary of State of the State of
Delaware on December 3, 1993) as of the end of the fiscal quarter immediately
preceding the purchase and sale pursuant to Section 2.5 less, if the AMR Warrant
is then outstanding, a provision, in an amount determined by the Board of
Directors of the Corporation in its discretion, for the possible cost of
repurchasing the AMR Warrant, by (Y) the number of Class B Shares outstanding on
such date. The determination of Class B Fair Value Per Share shall be based, to
the extent relevant, upon the audited (in the case of the end of a fiscal year)
or unaudited (in the case of the end of any of the first three quarters of a
fiscal year) balance sheet of the Corporation as at the end of the fiscal
quarter in question. Notwithstanding the foregoing, the Class B Fair Value Per
Share shall be equitably adjusted by the Board of Directors of the Corporation
if a stock dividend, recapitalization or other material event occurs outside of
the ordinary course of business after the end of such fiscal quarter and before
the closing of the sale in respect of which the determination is being made.
10.4 The term "Class B Shares" shall have the meaning ascribed to such
term in the introductory paragraph of this Agreement.
10.5 The term "Class B Asset Pool" shall have the meaning given to the
term "Asset Pool" in the Certificate of Amendment to the Certificate of
Incorporation of the Corporation which was filed with the Secretary of State of
the State of Delaware on December 3, 1993.
10.6 The term "Managementholder's Shares" shall mean the Shares owned
at any time by any Managementholder.
10.7 The term "1933 Act" shall mean the Securities Act of 1933, as in
force on the date in question, or any similar federal statute then in force.
10.8 The term "Onex Group" shall mean Onex Corporation, Onex Capital
Corporation and any Person controlled by, controlling or under common control
with, or a shareholder of, Onex Corporation or Onex Capital Corporation. A
Person ("Parent") controls another Person if Parent or Persons controlled by it
(within the meaning of this sentence) own or have the right (by contract
<PAGE> 10
10
or otherwise) to vote or direct the vote of securities or other interests having
the power to elect a majority of that Person's Board of Directors or similar
governing body (other than securities or interests having that power only upon
the happening of a contingency that has not occurred) or to otherwise direct the
management of such Person.
10.9 The term "Onex Shares" shall mean the Shares owned at any time by
the Onex Group.
10.10 The term "Person" shall mean and include an individual, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.
10.11 The Corporation is a "Public Company" if shares of its capital
stock are registered under Section 12 of, or if the Corporation is subject to
reporting requirements under Section 15(d) of, the Securities Exchange Act of
1934 or similar federal statute in force.
11. Termination
This Agreement shall terminate if the members of the Onex Group cease
to hold in the aggregate 30% of the outstanding capital stock of the Corporation
and this Agreement shall terminate as to any Person when that Person no longer
owns any Managementholder's Shares or Onex Shares, as the case may be.
Notwithstanding the foregoing, the provisions of Article 6 hereof shall
terminate on December 3, 2003, unless earlier terminated pursuant to the first
clause of the first sentence of this Article 11.
12. Miscellaneous
12.1 Notices
All notices, consents and other communications under this Agreement
shall be in writing and shall be deemed to have been duly given when (a)
delivered by hand, (b) sent by telex or telecopier (with receipt confirmed),
provided that a copy is mailed by registered mail, return receipt requested, or
(c) when received by the addressee, if sent by Express Mail, Federal Express or
other express delivery service (receipt requested), in each case to the
appropriate addresses and telecopier numbers set forth below (or to such other
addresses and telecopier numbers as a party may designate as to itself by notice
to the other parties):
(a) if to Onex or the Corporation:
c/o Kaye, Scholer, Fierman, Hays & Handler
425 Park Avenue
New York, New York 10022
Attention: Joel I. Greenberg, Esq.
Telecopy: (212) 836-8687
with a copy to:
<PAGE> 11
11
Onex Corporation
161 Bay Street
Toronto, Ontario M5J 2S1
Canada
Attention: President and Chief
Executive Officer
Telecopy: (416) 362-5765
(b) if to any Managementholder, to him at his address as it appears on
Schedule I attached hereto or as shown on the records of the Corporation.
12.2 Assignment
No party may assign any rights or delegate any of its duties under this
Agreement, but this Agreement shall be binding upon and inure to the benefit of
the successors to the business and assets of the Corporation, Onex and the
Managementholders.
12.3 No Waiver
The failure of a party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver or deprive that
party of the right thereafter to insist upon strict adherence to that term or
any other term of this Agreement. Any waiver must be in writing.
12.4 Exclusive Agreement and Amendment
This Agreement supersedes all prior agreements among the parties with
respect to its subject matter, is intended as a complete and exclusive statement
of the terms of the Agreement among the parties with respect thereto and cannot
be changed or terminated orally. This Agreement may only be amended or altered
by the mutual agreement of the parties hereto, such amendments or alterations to
become effective when reduced to writing and signed by Onex, the Corporation and
Management Representatives or by Onex, the Corporation and the holders of at
least 75% of the Managementholder's Shares.
12.5 Governing Law
This Agreement and all amendments hereof and waivers and consents
hereunder shall be governed by the internal law of the State of New York,
without regard to the conflicts of law principles thereof, except that the laws
of the State of Delaware shall govern Section 6.
12.6 Captions
The captions in this Agreement are for convenience of reference only
and shall not be given any effect in the interpretation of this Agreement.
12.7 Jurisdiction
Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Agreement may be brought against any of the
parties in the courts of the State of New York, or, if it has or can acquire
jurisdiction, in the United States District Court for the Southern
<PAGE> 12
12
District of New York, and each of the parties hereby consents to the exclusive
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding, and waives any objection to venue laid therein.
Process in any such action or proceeding may be served anywhere in the world,
whether within or without the State of New York.
12.8 Counterparts
This Agreement may be executed in counterparts, each of which shall be
considered an original, but all of which together shall constitute one and the
same instrument.
12.9 Severability
The provisions of this Agreement are intended to be and shall be deemed
severable. The invalidity or unenforceability of any particular provision of
this Agreement shall not affect the other provisions hereof, and this Agreement
shall be construed in all respects as if such invalid or unenforceable provision
were omitted.
<PAGE> 13
13
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
ONEX FOOD SERVICES, INC.
----------------------------
Name:
Title:
ONCAP HOLDINGS U.S., INC.
----------------------------
Name:
Title:
----------------------------,
as Management Representative
pursuant to Section 8 of this
Agreement
Name:
Title:
----------------------------,
as Management Representative
pursuant to Section 8 of this
Agreement
Name:
Title:
----------------------------,
as Management Representative
pursuant to Section 8 of this
Agreement
Name:
Title:
----------------------------,
as Management Representative
pursuant to Section 8 of this
Agreement
Name:
Title:
<PAGE> 1
EXHIBIT 10.40.1
ACQUISITION AGREEMENT,
DATED AS OF AUGUST 29, 1997,
BETWEEN
CATERAIR INTERNATIONAL, INC. (II)
AND
SKY CHEFS, INC.
<PAGE> 2
ACQUISITION AGREEMENT
ACQUISITION AGREEMENT (this "AGREEMENT"), dated as of August 29, 1997, by
and between CATERAIR INTERNATIONAL, INC. (II), a Delaware corporation ("CII"),
and SKY CHEFS, INC., a Delaware corporation ("SKY CHEFS"). Each of CII and Sky
Chefs may be referred to herein as a "PARTY" and both may be referred to herein
as the "PARTIES".
WHEREAS, CII operates flight kitchen catering facilities (each a "KITCHEN"
and, collectively, the "KITCHENS") at Baltimore/Washington International Airport
in Baltimore, Maryland, Oakland International Airport in Oakland, California and
Salt Lake City International Airport in Salt Lake City, Utah (each an "AIRPORT"
and, collectively, the "AIRPORTS") from which CII provides airline catering and
other services to airlines and other customers; and
WHEREAS, CII desires to sell all of its business and the related assets at
the Kitchens to Sky Chefs and Sky Chefs desires to acquire all of CII's business
and assets at the Kitchens, all upon the terms and subject to the conditions set
forth herein;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS AND OTHER MATTERS
1.1 CERTAIN DEFINITIONS.
"ACCOUNTANTS" shall have the meaning ascribed to such term in Section
2.3(b) of this Agreement.
"ACQUIRED AGREEMENTS" shall mean all customer contracts, contracts with
suppliers, other contracts, leases, licenses, permits, commitments or any other
agreements (written or oral) related to, necessary for, or entered into in
connection with, the operation of any of the Kitchens, in which CII has any
rights, under which CII is subject to any obligation or liability, or by which
any of the assets owned or used by CII in connection with the operation of any
of the Kitchens are bound, including, without limitation, the Acquired Kitchens
CIC License Agreement Rights, the CIC Sublease Agreements, the Customer
Agreements and the other agreements listed on Schedule 1 hereto, but excluding
the Excluded Assets.
"ACQUIRED ASSETS" shall mean all privileges, rights, interests and claims,
real and personal, tangible, and intangible, of every type and description that
are owned, leased, used or held for use by CII in connection with the operation
of any of the Kitchens, in which CII has any right, title or interest,
including, without limitation, (i) the Acquired Agreements, (ii) accounts
receivable arising
2
<PAGE> 3
on or prior to the Closing Date associated with any of the Kitchens and the
business and operations conducted thereat, (iii) that portion of the net working
capital of CII that is allocable to the Kitchens and the business and operations
conducted thereat, (iv) that portion of the goodwill of CII that is attributable
to the Kitchens and the business and operations conducted thereat and (v) those
items listed on Schedule 1 hereto, but excluding the Excluded Assets.
"ACQUIRED KITCHENS CIC LICENSE AGREEMENT RIGHTS" shall mean any and all of
the rights licensed by CII from Caterair pursuant to the CIC License Agreement
in any of the "CUSTOMER CONTRACTS" (as such term is defined in the CIC License
Agreement) pursuant to which CII has provided, is providing or has the right to
provide goods, products or services to any airline or other customer at or from
any of the Airports or otherwise utilizing any of the Kitchens.
"AGREEMENT" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"ASSIGNMENT AGREEMENT" shall mean an Assignment Agreement, dated the
Closing Date, executed by each of Sky Chefs and CII, in substantially the form
attached as Exhibit D hereto.
"ASSUMED LIABILITIES" shall have the meaning ascribed to such term in
Section 2.2 of this Agreement.
"ASSUMPTION AGREEMENT" shall mean an Assumption Agreement, dated the
Closing Date, executed by each of Sky Chefs and CII, in substantially the form
attached as Exhibit E hereto.
"BILL OF SALE" shall mean a Bill of Sale, dated the Closing Date, executed
by each of Sky Chefs and CII, in substantially the form attached as Exhibit C
hereto.
"KITCHENS NET WORKING CAPITAL" shall have the meaning ascribed to such
term in Section 2.3(a) of this Agreement.
"CATERAIR" shall mean Caterair International Corporation, a Delaware
corporation.
"CIC LICENSE AGREEMENT" shall mean that certain License Agreement, dated
as of September 29, 1995, between CII and Caterair.
"CIC SUBLEASE AGREEMENTS" shall mean those three certain Sublease
Agreements, each dated as of September 29, 1995, between CII and Caterair
pursuant to which CII subleases from Caterair certain real and personal property
associated with the Kitchens.
"CII" shall have the meaning ascribed to such term in the introductory
paragraph of this Agreement.
"CLOSING" shall have the meaning ascribed to such term in Section 3.1 of
this Agreement.
3
<PAGE> 4
"CLOSING DATE" shall have the meaning ascribed to such term in Section 3.1
of this Agreement.
"CLOSING DATE KITCHENS NET WORKING CAPITAL STATEMENT" shall have the
meaning ascribed to such term in Section 2.3(b) of this Agreement.
"CUSTOMER AGREEMENTS" shall mean all contracts, agreements, commitments or
other arrangements (whether written or oral) between CII, on the one hand, and
any airline or other customer of CII, on the other hand, pursuant to which CII
provides to such airline or other customer goods, products or services at or
from any of the Airports or otherwise utilizing any of the Kitchens, together
with all customer lists, financial and accounting records (including, without
limitation, sales records and sales histories) related thereto.
"DAMAGES" shall have the meaning ascribed to such term in Section 8.2 of
this Agreement.
"EXCLUDED ASSETS" shall mean (i) any and all collective bargaining
agreements or other arrangements, commitments or understandings arising under
any collective bargaining agreements or otherwise related to any collective
bargaining agreements or any other commitments, plans, arrangements or
understandings regarding terms and conditions of employment for any individuals
employed by CII at any of the Airports or at any of the Kitchens in effect at
any time (collectively, the "CBAS"), (ii) all assets of CII other than the
Acquired Assets (i.e., those assets of CII (or portion thereof) not owned,
leased, used or held for use by CII in connection with the operation of any of
the Kitchens) and (iii) if applicable, that part, portion, or other subdivision
of any Acquired Asset that does not (and only to the extent that such part,
portion, or other subdivision does not) relate to any of the Kitchens, any of
the Airports and the business and operations conducted thereat or therefrom,
which Excluded Assets of CII are expressly not being transferred by CII to Sky
Chefs in connection with the transactions being effected hereby, and will be
retained by CII.
"EXCLUDED LIABILITIES" shall mean (i) any contingent liabilities of CII
(whether or not related to or arising in connection with the Acquired Assets)
that arise, or relate to events which occurred, prior to the Closing Date
(excluding trade payables and accounts payable arising in the ordinary course of
business consistent with past practice), (ii) any liabilities of CII arising at
any time in connection with any Excluded Asset, (iii) any liabilities or
obligations in any way related to, or arising in connection with any CBAs or
under any Federal, state or local law or regulation governing the status of CII
as an employer at any of the Kitchens, (iv) any liability or obligation of CII
to any union representative of any employees at any of the Kitchens, and (v) any
employment-related liabilities, obligations or commitments of CII arising in
connection with, or which in any manner related to, the conduct or operations of
any of the Kitchens prior to the Closing Date related to (A) any claims,
grievances, charges, arbitrations, litigations or other claims or actions,
including, without limitation, those against CII, that in any manner relate to
terms and conditions of employment at any of the Kitchens or individuals
employed at any of the Kitchens and (B) compensation and other benefits due
individuals employed at any of the Kitchens.
"KITCHENS" shall have the meaning ascribed to such term in the first
WHEREAS clause of this Agreement.
4
<PAGE> 5
"KITCHENS NET WORKING CAPITAL" shall have the meaning ascribed to such
term in Section 2.3(a) of this Agreement.
"NET WORKING CAPITAL" shall have the meaning ascribed to such term in
Section 2.3(a) of this Agreement.
"PARTY" shall have the meaning ascribed to such term in the introductory
paragraph of the Agreement.
"PURCHASE PRICE" shall have the meaning ascribed to such term in Section
2.1 of this Agreement.
"RECEIPT" shall mean a Receipt, dated the Closing Date, executed by each
of Sky Chefs and CII, in substantially the form attached as Exhibit B hereto.
"RELATED AGREEMENTS" shall mean the Assumption Agreement, the Assignment
Agreement, the Sublease Assignments, the Bill of Sale and the Receipt, and any
other agreements, instruments or certificates delivered hereunder or in
connection with the transactions contemplated by a Party.
"REQUIRED CONSENTS" shall mean the consents of any airline or other
customers of CII or other third parties that are required in connection with the
transactions contemplated hereby and in order for the Acquired Assets to be
properly transferred to Sky Chefs, including, without limitation, the consents
listed on Schedule 2 hereto.
"REQUIRED NOTICES" shall mean any notices required to be given to any
airline or other customers of CII or other third parties in connection with the
transactions contemplated hereby and in order for the Acquired Assets to be
properly transferred to Sky Chefs, including, without limitation, the notices
listed on Schedule 2 hereto.
"REVISED PURCHASE PRICE" shall have the meaning ascribed to such term in
Section 2.3(b) of this Agreement.
"REVISED PURCHASE PRICE STATEMENT" shall have the meaning ascribed to such
term in Section 2.3(b) of this Agreement.
"SKY CHEFS" shall have the meaning ascribed to such term in the
introductory paragraph of this Agreement.
"SUBLEASE ASSIGNMENTS" shall mean three Assignment Agreements, each in
substantially the form of Exhibit A hereto, dated the Closing Date, assigning
the CIC Sublease Agreements from CII to Sky Chefs.
1.2 PROVISO RELATING TO SYSTEM-WIDE OR MULTI-LOCATION CONTRACTS.
5
<PAGE> 6
Notwithstanding anything to the contrary contained in any definition or
other provision of this Agreement, if pursuant to any Acquired Agreement CII has
provided, does provide or enjoys the right to provide goods, products or
services to any airline or other customer or enjoys any other benefit at other
locations in addition to one of the Airports or otherwise utilizing any of the
Kitchens, then the rights enjoyed by CII with respect to such Acquired Agreement
shall be deemed to be an Acquired Agreement only to the extent that such rights
or benefits relate to the provision of goods, products or services to an airline
or other customer or other benefit enjoyed by CII at or from the Kitchens or at
or from the relevant Airport or otherwise utilizing the Kitchens (and not at the
other locations), and it is only such rights and benefits that are being
transferred by CII to Sky Chefs in connection with the transactions contemplated
hereby.
ARTICLE II
ACQUISITION OF ASSETS; ASSUMPTION OF LIABILITIES
2.1 PURCHASE AND SALE OF ASSETS
Upon the terms and subject to the conditions set forth herein, on the
Closing Date, in consideration of (i) $3,337,883 (the "PURCHASE PRICE") to be
paid by Sky Chefs to CII on the Closing Date by wire transfer of immediately
available funds to an account designated by CII or by such other method as may
be designated by CII and (ii) the assumption by Sky Chefs of the liabilities
described in Section 2.2 hereof, CII shall grant, sell, convey, assign, transfer
and deliver to Sky Chefs, and Sky Chefs shall purchase and accept from CII, all
right, title and interest of CII in the Acquired Assets.
2.2 ASSUMPTION OF LIABILITIES.
Upon the terms and subject to the conditions set forth herein, on the
Closing Date, Sky Chefs shall assume all liabilities and obligations associated
with the business and operations conducted at the Kitchens and with the Acquired
Assets, whether arising on, prior to or after the Closing Date, other than the
Excluded Liabilities (the "ASSUMED LIABILITIES").
2.3 ADJUSTMENT.
(a) Each of Sky Chefs and CII hereby acknowledge and agree that the
aggregate Net Working Capital associated with the business and operations at the
Kitchens (the "KITCHENS NET WORKING CAPITAL") as of July 31, 1997 hereof was
$3,103,354. For the purposes of this Agreement, "NET WORKING CAPITAL" is defined
as the difference between current assets and current liabilities each as would
be set forth on a balance sheet prepared in accordance with GAAP.
(b) CII shall prepare in good faith, and deliver to Sky Chefs, on or
before the date that is sixty (60) days following the Closing Date, a statement
setting forth the Kitchens Net Working Capital as of the Closing Date (which
statement shall set forth in reasonable detail the computation of such amount
including a listing of the assets and liabilities included in the Kitchens Net
Working
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Capital as of the Closing Date) (the "CLOSING DATE KITCHENS NET WORKING CAPITAL
STATEMENT"). If within thirty (30) days following delivery of the Closing Date
Kitchens Net Working Capital Statement, Sky Chefs does not give notice to CII of
its objection to the computation of the Kitchens Net Working Capital as of the
Closing Date (which notice must contain a statement of the basis of any
objection), then the calculation of the Kitchens Net Working Capital as of the
Closing Date set forth in the Closing Date Kitchens Net Working Capital
Statement shall be final and binding on all Parties. If a notice of objection is
given, then the Parties will attempt to settle the issues in dispute within
fifteen (15) days thereafter. If they are unable to resolve such issues, any
open items will be submitted to a nationally recognized accounting firm selected
by Sky Chefs and reasonably acceptable to CII (the "ACCOUNTANTS") for
resolution. If issues in dispute are submitted to the Accountants for
resolution, (i) each Party will furnish to the Accountants such work papers and
other documents and information relating to the disputed issues as the
Accountants may request and are available to that Party, and will be afforded
the opportunity to present to the Accountants any material relating to the
determination and to discuss the determination with the Accountants; (ii) the
determination by the Accountants, as set forth in a notice delivered to each of
CII and Sky Chefs, will be binding and conclusive on the Parties; and (iii) Sky
Chefs, on the one hand, and CII, on the other hand, will each bear 50% of the
fees of the Accountants for such determination.
(c) On or before the third business day following the final determination
of the Kitchens Net Working Capital as of the Closing Date, (i) in the event
that the Kitchens Net Working Capital as of the Closing Date is greater than the
Kitchens Net Working Capital as of July 31, 1997, Sky Chefs shall pay to CII the
amount of such excess, by wire transfer of immediately available funds, to an
account designated by CII and (ii) in the event that the Kitchens Net Working
Capital as of the Closing Date is less than the Kitchens Net Working Capital as
of July 31, 1997, CII shall pay to Sky Chefs the amount of such deficiency, by
wire transfer of immediately available funds, to an account designated by Sky
Chefs.
ARTICLE III
CLOSING
3.1 CLOSING.
Subject to the satisfaction (or waiver) of the conditions set forth in
Article V of this Agreement, the closing of the transactions contemplated hereby
(the "CLOSING") shall take place at the offices of Kaye, Scholer, Fierman, Hays
& Handler, LLP, on or about October __, 1997 (the "CLOSING DATE"), or at such
other place and on such other date as the Parties shall agree.
3.2 DELIVERY OBLIGATIONS OF CII.
At the Closing, CII shall deliver to Sky Chefs:
(a) the Sublease Assignments, executed by a duly authorized officer on
behalf of CII, transferring to Sky Chefs all of CII's right, title and interest
in and under the CIC Subleases;
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(b) the Bill of Sale, executed by a duly authorized officer on behalf of
CII;
(c) the Receipt, executed by a duly authorized officer on behalf of CII;
(d) the Assignment Agreement, executed by a duly authorized officer on
behalf of CII;
(e) the Assumption Agreement, executed by a duly authorized officer on
behalf of CII; and
(f) to the extent that Required Consents and Required Notices are required
to be given and/or received, documents reasonably satisfactory to Sky Chefs
evidencing the receipt of such Required Consents and the giving of such Required
Notices.
3.3 DELIVERY OBLIGATIONS OF SKY CHEFS.
At the Closing, Sky Chefs shall deliver to CII:
(a) the Purchase Price, as provided in Section 2.1 of this Agreement;
(b) the Sublease Assignments, executed by a duly authorized officer on
behalf of Sky Chefs;
(c) the Receipt, executed by a duly authorized officer on behalf of Sky
Chefs;
(d) the Bill of Sale, executed by a duly authorized officer on behalf of
Sky Chefs;
(e) the Assignment Agreement, executed by a duly authorized officer on
behalf of Sky Chefs; and
(f) the Assumption Agreement, executed by a duly authorized officer on
behalf of Sky Chefs.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1 REPRESENTATIONS AND WARRANTIES OF CII.
CII represents, warrants and covenants to Sky Chefs, with respect to the
transactions contemplated herein that:
(a) Organization and Authority of CII. CII is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power
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and authority to enter into and perform this Agreement and the Related
Agreements to which it is a party and the transactions herein and therein
contemplated.
(b) Authorization of Agreement. The execution, delivery and performance by
CII of this Agreement and the Related Agreements to which it is a party have
been duly authorized by all requisite corporate action. This Agreement and the
Related Agreements to which it is a party have been duly executed and delivered
by CII and constitute and will constitute a legal, valid and binding obligation
of CII enforceable against CII in accordance with their terms, except as may be
limited by bankruptcy or similar laws affecting creditors' rights generally and
general principles of equity.
(c) No Conflicts. The execution, delivery and performance of this
Agreement and the Related Agreements to which it is a party by CII do not
violate or conflict with (i) the certificate of incorporation or bylaws of CII
or (ii) any judicial, administrative or regulatory order, judgment or decree or
arbitration award to which CII is a party or by which it or its properties or
any of the Acquired Assets is bound.
(d) Acquired Assets. The Acquired Assets to be sold, transferred, or
assigned to Sky Chefs hereunder include all of the assets of CII used at, in
connection with, or in the operation of, the Kitchens and the business of CII
conducted thereat or therefrom and at the Airports.
(e) No Restrictions. Upon the consummation of the transactions
contemplated by this Agreement and the Related Agreements and the payment of the
Purchase Price by Sky Chefs to CII, Sky Chefs shall acquire good and valid title
to all of the Acquired Assets, free and clear of all restrictions on transfer.
(f) Severance. Except as set forth on Schedule 4.1(f) hereto, CII is not
liable for any severance payments or other payments on account of the
termination of any officer employee or shall be liable for any such payments as
a result of this Agreement.
(g) Collective Bargaining Agreements. Except as set forth on Schedule
4.1(g) hereto, CII is not a party to any CBAs in connection with the business
and operations conducted at any of the Kitchens.
(h) Labor Disputes. Except as set forth on Schedule 4.1(h) hereto, there
are no strikes, material work stoppages or material disputes pending or, to the
best knowledge of the management of CII, threatened between CII and any groups
of its employees employed in connection with the business and operations
conducted at any of the Kitchens.
(i) Unions. Except as set forth on Schedule 4.1(i) hereto, no labor union
or other collective bargaining unit represents any of the employees of CII
employed in connection with the business and operations conducted at any of the
Kitchens.
(j) Organizational Efforts. Except as set forth on Schedule 4.1(j) hereto,
to the best knowledge of the management of CII, no organizational effort by any
labor union or other collective
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bargaining unit currently is under way or threatened with respect to any
employees of CII employed in connection with the business and operations
conducted at any of the Kitchens.
(k) Certain Proceedings. Except as set forth on Schedule 4.1(k) hereto
with respect to the business and operations conducted by CII at any of the
Kitchens, there are no (i) material grievances or arbitration proceedings
arising out of or under any CBA, (ii) representation proceedings by any group of
CII's employees employed in connection with the business and operations
conducted at any of the Kitchens, (iii) unfair labor practice charges or
complaints pending before the National Labor Relations Board or any similar
foreign, state or local agency or (iv) charges, claims or litigations pending
before any local, state or Federal agency regarding any employment matter in
connection with the operation of any of the Kitchens or any wages or
compensation payable to any employee or third party in connection with the
operation of any of the Kitchens.
(l) No Brokers. CII has not incurred any obligation or liability,
contingent or otherwise, for brokers' or finders' fees or commissions in
connection with the transactions contemplated by this Agreement.
4.2 REPRESENTATIONS AND WARRANTIES OF SKY CHEFS.
Sky Chefs represents, warrants and covenants to CII, with respect to the
transactions contemplated herein that:
(a) Organization and Authority of Sky Chefs. Sky Chefs is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the corporate power and authority to enter into and
perform this Agreement and the Related Agreements to which it is a party and the
transactions herein and therein contemplated.
(b) Authorization of Agreement. The execution, delivery and performance by
Sky Chefs of this Agreement and the Related Agreements to which it is a party
have been duly authorized by all requisite corporate action. This Agreement and
the Related Agreements to which it is a party have been duly executed and
delivered by Sky Chefs and constitute and will constitute a legal, valid and
binding obligation of Sky Chefs enforceable against Sky Chefs in accordance with
their terms, except as may be limited by bankruptcy or similar laws affecting
creditors' rights generally and general principles of equity.
(c) No Conflicts. The execution, delivery and performance of this
Agreement and the Related Agreements to which it is a party by Sky Chefs do not
violate or conflict with (i) the certificate of incorporation or bylaws of Sky
Chefs or (ii) any judicial, administrative or regulatory order, judgment or
decree or arbitration aware to which Sky Chefs is a party or by which it or its
properties is bound.
(d) Condition of Acquired Assets. Sky Chefs hereby acknowledges that all
the Acquired Assets are being conveyed on an "as is - where is" basis, and CII
makes no representation or warranty as to the condition of the Acquired Assets.
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(e) No Brokers. Sky Chefs has not incurred any obligation or liability,
contingent or otherwise, for brokers' or finders' fees or commissions in
connection with the transactions contemplated by this Agreement.
(f) Transfer Taxes. Sky Chefs shall pay any Federal, state or local sales,
transfer, stamp or like taxes payable in connection with the transfer of the
Acquired Assets and the other transactions contemplated hereby.
ARTICLE V
CONDITIONS
5.1 CONDITIONS TO OBLIGATIONS OF SKY CHEFS AND CII.
Sky Chefs and CII's respective obligations to consummate the
transactions contemplated hereby are subject to the satisfaction on or prior to
the Closing Date of each of the following conditions (unless expressly waived by
Sky Chefs and CII at the Closing):
(a) all Required Consents be obtained and all Required Notices be
given, and that Sky Chefs shall have received written evidence thereof
reasonably satisfactory to Sky Chefs. If the Closing shall have occurred and any
Required Consent shall not have been obtained and/or any Required Notice shall
not have been given, the transfer effected hereby shall not be effective with
respect to the Acquired Asset the transfer of which required such Required
Notice to be given and/or Required Consent to be obtained; provided, however,
that the Parties shall use their respective reasonable efforts to obtain such
Required Consent or cause such Required Notice to be given as soon as is
reasonably practicable following the Closing Date and the related Acquired Asset
to be effectively transferred to Sky Chefs promptly thereafter. With respect to
any such Acquired Asset that cannot be assigned to Sky Chefs as of the date
hereof because of the failure or inability to obtain any Required Consent or to
give any Required Notice or for any other reason, CII hereby agrees, from and
after the date hereof and prior to the date of the proper and effective
assignment of such Acquired Asset to Sky Chefs in accordance with the
immediately preceding sentence, to cooperate with Sky Chefs in any reasonable
arrangement designed to provide to Sky Chefs the benefits and obligations
associated with such Acquired Asset (notwithstanding its non-assignment in
accordance with the second sentence of this subparagraph). Sky Chefs agrees
that, so long as Sky Chefs is receiving the benefits of any such Acquired Asset,
Sky Chefs will perform CII's obligations in connection therewith;
(b) there shall not be in effect any injunction or order of any
court prohibiting the consummation of the transactions contemplated hereby;
(c) the other Party shall have performed in all material respects
all of its obligations under this Agreement to be performed prior to or at the
Closing; and
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(d) there shall not be in effect any work stoppage, boycott, strike,
disruption or other interference, whether occasioned by any labor organization
or any employee or third party, directed at the operations and/or business of
any of the Kitchens or any other kitchen operated by Sky Chefs or CII, or the
operations and/or business of any customer of Sky Chefs or CII or any customer
of CII or Sky Chefs.
5.2 CONDITIONS TO OBLIGATIONS OF CII.
CII's obligations to consummate the transactions contemplated hereby
are subject to the satisfaction on or prior to the Closing Date of each of the
following conditions (unless expressly waived by CII at the Closing):
(a) Each of the representations and warranties of Sky Chefs in this
Agreement shall be true and correct in all material respects as of the date
hereof and as of the Closing with the same effect as though such representations
and warranties had been made at and as of such time, other than representations
and warranties that speak as of a specific date or time (which need only be true
and correct in all material respects as of such date or time).
(b) Sky Chefs shall have performed in all material respects all
obligations required to be performed or complied with by Sky Chefs under this
Agreement at or prior to Closing.
5.3 CONDITIONS TO OBLIGATIONS OF SKY CHEFS.
Sky Chefs' obligations to consummate the transactions contemplated
hereby are subject to the satisfaction on or prior to the Closing Date of the
following conditions (unless expressly waived by Sky Chefs on the Closing Date):
(a) Each of the representations and warranties of CII in this
Agreement shall be true and correct in all material respects as of the date
hereof and as of the Closing with the same effect as though such representations
and warranties had been made at and as of such time, other than representations
and warranties that speak as of a specific date or time (which need only be true
and correct in all material respects as of such date or time).
(b) CII shall have performed in all material respects all
obligations required to be performed or complied with by CII under this
Agreement at or prior to Closing.
(c) there shall be no material adverse change in the business,
operations, prospects and operations of any of the Kitchens or CII (including,
without limitation, any material change in the terms and conditions of employees
at any of the Kitchens).
ARTICLE VI
EMPLOYEE MATTERS
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6.1 EMPLOYEE MATTERS.
(a) Prior to the Closing, CII shall notify all employees at the Kitchens,
and with respect to any employees represented by any labor organization, the
appropriate representative of such organization, that CII will discontinue
operations at the Kitchens effective as of the Closing Date and that the
employment of any individuals employed by CII shall cease effective as of the
Closing Date.
(b) With respect to its operation of the Kitchens, after the Closing, Sky
Chefs shall be (i) entitled to set such terms and conditions of employment with
respect to the post-Closing operations of the Kitchens as Sky Chefs, in its sole
discretion, deems appropriate and (ii) undertake such recruiting and hiring
measures as it, in its sole discretion, deems appropriate.
6.2 COOPERATION IN LABOR MATTERS.
Prior to the Closing Date, CII shall permit, to the extent requested by
Sky Chefs, reasonable access to the Kitchens and its employees by
representatives of Sky Chefs for purposes of recruitment and/or hiring, and CII
and Sky Chefs shall provide each other with such information regarding labor and
employment matters as each may reasonably request in order to consummate the
transactions contemplated hereby.
ARTICLE VII
CONTINUITY OF CUSTOMER SERVICE
Sky Chefs shall use its reasonable best efforts to ensure that the
airlines and other CII customers being serviced from the Kitchens receive
uninterrupted and high quality catering services on and following the Closing
Date. If necessary to provide such services, Sky Chefs shall provide such
services from another facility for such period of time as may be necessary to
ensure such uninterrupted and high quality services.
ARTICLE VIII
INDEMNIFICATION; SURVIVAL
8.1 SURVIVAL
The representations and warranties of the parties to this Acquisition
Agreement shall survive the closing for a period of one (1) year from the
Closing Date.
8.2 INDEMNIFICATION BY CII
CII shall indemnify and hold harmless Sky Chefs and Sky Chefs' affiliates
from, and shall reimburse Sky Chefs and Sky Chefs' affiliates for all losses,
liabilities, deficiencies, penalties,
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claims, damages or expenses (including, but not limited to, costs of
investigation and defense and reasonable attorneys' fees) (collectively
"DAMAGES") arising out of or in connection with:
(a) any material inaccuracy in any representation or warranty by CII set
forth in this Agreement;
(b) any material failure by CII to perform or comply with any agreement or
covenant contained in this Agreement; and
(c) the Excluded Liabilities.
Notwithstanding anything to the contrary set forth herein, CII shall not
indemnify Sky Chefs for Damages arising out of the gross negligence or willful
misconduct of Sky Chefs. Sky Chefs hereby waives and releases any claims against
CII for consequential or similar damages.
8.3 INDEMNIFICATION BY SKY CHEFS
Sky Chefs shall indemnify and hold harmless CII and CII's affiliates from,
and shall reimburse CII and CII's affiliates for all Damages arising out of or
in connection with:
(a) any material inaccuracy in any representation or warranty by Sky Chefs
set forth in this Agreement;
(b) any material failure by Sky Chefs to perform or comply with any
agreement or covenant contained in this Agreement; and
(c) any Assumed Liabilities and the post-closing operation by Sky Chefs of
the Acquired Assets
Notwithstanding anything to the contrary set forth herein, Sky Chefs shall not
indemnify CII in connection with any Damages arising as a result of the gross
negligence or willful misconduct of CII. CII hereby waives and releases any
claims against Sky Chefs for consequential or similar damages.
8.4 PROCEDURE FOR INDEMNIFICATION
In the event that any claim to be indemnified by the other hereunder is
made by CII or Sky Chefs, the Party seeking indemnification hereunder shall give
prompt written notice thereof to the indemnifying Party and the indemnifying
Party shall assume control of, and all expense with respect to, the defense,
settlement, adjustment or compromise of such claim; provided, that (i) the
indemnified Party may, if it so desires, employ counsel at its own expense to
assist in the handling of such claim and (ii) the indemnifying Party shall
obtain the prior written approval of the indemnified Party, which approval shall
not be unreasonably withheld, before entering into any settlement, adjustment or
compromise of such claim or ceasing to defend against such claim, if pursuant
thereto or as a result thereof there would be imposed injunctive or other relief
against the indemnified Party other than monetary damages fully indemnified by
the indemnifying Party. The
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rights and obligations under this Section will survive the termination or
expiration of this Agreement for any reason.
ARTICLE IX
MISCELLANEOUS
9.1 ENTIRE AGREEMENT; AMENDMENT.
This Agreement (together with the Exhibits and Schedules hereto)
constitutes the entire agreement between the Parties with respect to the subject
matter contained herein, supersedes all prior oral or written agreements,
commitments or understandings between the parties with respect thereto, and
cannot be amended, supplemented or otherwise modified except in a writing
executed by each of the Parties.
9.2 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to principles of conflicts
of laws.
9.3 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
9.4 SUCCESSORS AND ASSIGNS.
This Agreement is intended for the exclusive benefit of the parties hereto
and their respective successors and assigns. Nothing contained in this Agreement
shall be construed as granting any rights or benefits in or to any third party,
and no person shall assert any rights as third-party beneficiary hereunder.
9.5 CAPTIONS.
The captions in this Agreement are for convenience of reference only and
shall not be given any effect in the interpretation of this Agreement.
9.6 FURTHER ASSURANCES.
On or after the date hereof, CII and Sky Chefs hereby agree to promptly
execute, acknowledge and deliver any other assurances, instruments, agreements,
certificates or other documents and take any other action reasonably requested
by the other party hereto to effect the transactions contemplated hereby.
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their officers or other duly authorized representatives as of the date first
above written.
SKY CHEFS, INC.
By: /s/ Patrick W. Tolbert
Name: Patrick W. Tolbert
Title: Executive Vice President and
Chief Financial and Administrative
Officer
CATERAIR INTERNATIONAL,
INC. (II)
By: /s/ Thomas A. Statas
Name: Thomas A. Statas
Title: Vice President
<PAGE> 17
Schedule 1
ACQUIRED ASSETS
[TO COME FROM SCIS]
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Schedule 2
REQUIRED CONSENTS & REQUIRED NOTICES
1. Consent of the Maryland Aviation Administration pursuant to that certain
Lease and Concession Agreement, dated as of February 26, 1987, between
Caterair International Corporation (as successor to Marriott Corporation)
and the State Aviation Administration, Maryland Department of
Transportation.
2. Consent of the City of Oakland pursuant to that certain Lease Agreement,
dated September 3, 1968, between Caterair International Corporation (as
successor to Marriott Corporation) and the City of Oakland.
3. Consent of the Salt Lake City Corporation pursuant to that certain Lease
Agreement, dated as of November 30, 1972, between Salt Lake City
Corporation and Caterair International Corporation (as successor to
Marriott Corporation).
4. Consent of Continental Airlines, pursuant to that certain Catering
Agreement, dated as of January 1, 1985, between Marriott Corporation and
Continental Airlines, Inc. with respect to BWI and Salt Lake City.
5. Prior written notice to Trans World Airlines in which Caterair agrees in
writing to remain liable for and guarantees the full, faithful and
complete performance of the matters to be performed under the Catering
Agreement, dated March 29, 1995, between Trans World Airlines and Caterair
International Corporation with respect to Salt Lake City and BWI.
6. Consent of IcelandAir pursuant to that certain Catering Agreement, dated
as of April 1, 1996, between IcelandAir and Caterair International, Inc.
with respect to BWI.
7. Consent of Alaska Airlines, Inc. pursuant to that certain Global Catering
Agreement, dated as of June 8, 1993, between Alaska Airlines, Inc. and
Caterair International Corporation with respect to Oakland.
8. Consent of United Airlines, Inc. pursuant to that certain Master Catering
Agreement, dated February 10, 1989, between Marriott Inflite Services and
United Airlines, Inc. with respect to Salt Lake City, Oakland and BWI.
9. Consent of USAir, Inc. pursuant to that certain Catering Agreement between
Caterair International, Inc. and USAir, Inc. with respect to BWI.
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Schedule 4.1(f)
SEVERANCE
1. Caterair International, Inc. (II) Severance Policy Applicable to
Management Employees.
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Schedule 4.1(g)
COLLECTIVE BARGAINING AGREEMENTS
1. Agreement between Caterair International, Inc. (Baltimore) and
International Brotherhood of Teamsters Local 355, in effect through June
23, 1999.
2. Agreement between Caterair International, Inc. (Oakland) and International
Brotherhood of Teamsters Local 655, in effect through December 31, 1998.
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Schedule 4.1(h)
LABOR DISPUTES
None.
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Schedule 4.1(i)
UNIONS
1. International Brotherhood of Teamsters Local 355 (Baltimore).
2. International Brotherhood of Teamsters Local 655 (Oakland).
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Schedule 4.1(j)
ORGANIZATIONAL EFFORTS
None.
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Schedule 4.1(k)
CERTAIN PROCEEDINGS
PENDING EEOC CHARGES
1. Frisly Marroquin v. Caterair (Salt Lake city) -- claim of termination
based on national origin.
UNION GRIEVANCES
1. Gwen Hamlin (Baltimore) (grieving discharge)
2. Curtis Smith (Baltimore) (grieving discharge)
24
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EXHIBIT A
FORM OF
ASSIGNMENT OF SUBLEASES
(Attached hereto)
25
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[307 Salt Lake City]
[060 Baltimore]
[304 Oakland]
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT (this "AGREEMENT"), dated as of October __,
1997, is between CATERAIR INTERNATIONAL, INC. (II) ("CII"), a Delaware
corporation, and SKY CHEFS, INC. ("SKY CHEFS"), a Delaware corporation.
WHEREAS, CII and Sky Chefs are a party to that certain Acquisition
Agreement (the "ACQUISITION AGREEMENT"), dated as of August 29, 1997, pursuant
to which CII has agreed to sell all of its business and the related assets at
CII's flight kitchen catering facilities (the "KITCHENS") at
Baltimore/Washington International Airport in Baltimore, Maryland, Oakland
International Airport in Oakland, California and Salt Lake City International
Airport in Salt Lake City, Utah to Sky Chefs, and Sky Chefs has agreed to
acquire all of CII's business and assets at the Kitchens;
WHEREAS, CII is a party to that certain Sublease Agreement (the "CATERAIR
SUBLEASE"), dated as of September 29, 1995, between CII and Caterair
International Corporation ("CATERAIR"), regarding the subleasing of certain
facilities located in ______________, which facilities are leased by Caterair
from _____________ pursuant to a ___________ dated _________ __, 199_;
WHEREAS, CII desires to assign all of its right, title and interest in the
Caterair Sublease to Sky Chefs;
WHEREAS, Sky Chefs will assume all of CII's obligations and liabilities
under the Caterair Sublease; and
WHEREAS, this is an "Assignment of Sublease" contemplated by Sections
3.2(a) and 3.3(a) of the Acquisition Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:
As of the date hereof, CII hereby grants, conveys and assigns to Sky Chefs
all of CII's right, title and interest in and to the Caterair Sublease and Sky
Chefs hereby accepts such assignment and assumes all duties, obligations and
liabilities arising therefrom from the date hereof, as if Sky Chefs were an
original party thereto.
In the event of a conflict between the provisions of this Assignment
Agreement and the provisions of the Acquisition Agreement, the parties hereby
agree that the provisions of the Acquisition Agreement shall control and shall
be dispositive.
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This Assignment Agreement may be executed in one or more counterparts,
each of which shall be considered an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Assignment Agreement
effective as of October ___, 1997.
CATERAIR INTERNATIONAL, INC. (II)
By:_____________________________________
Name:
Title:
SKY CHEFS, INC.
By:_____________________________________
Name:
Title:
Accepted and agreed as of
this ___ day of October, 1997
CATERAIR INTERNATIONAL CORPORATION
By:______________________________
Name:
Title:
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EXHIBIT B
FORM OF RECEIPT
(Attached hereto)
28
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CROSS RECEIPT
Reference is hereby made to that certain Acquisition Agreement (the
"ACQUISITION AGREEMENT"), dated as of August 29, 1997, between Sky Chefs, Inc.
("SKY CHEFS") and Caterair International, Inc. (II) ("CII"). Capitalized terms
used but not defined herein shall have the respective meanings ascribed to them
in the Acquisition Agreement.
Sky Chefs hereby acknowledges receipt, on the date hereof, of the Acquired
Assets referenced in Section 2.1 of the Acquisition Agreement.
CII hereby acknowledges receipt, on the date hereof, of $____________, in
respect of the Purchase Price for Sky Chefs' acquisition of the Acquired Assets,
as referenced in Section 2.1 of the Acquisition Agreement.
Date: October __, 1997
SKY CHEFS, INC.
By:____________________________________
Name:
Title:
CATERAIR INTERNATIONAL, INC. (II)
By:_____________________________________
Name:
Title:
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<PAGE> 30
EXHIBIT C
FORM OF
BILL OF SALE
(Attached hereto)
30
<PAGE> 31
BILL OF SALE
Reference is hereby made to that certain Acquisition Agreement (the
"ACQUISITION AGREEMENT"), dated as of August 29, 1997, between Sky Chefs, Inc.
("SKY CHEFS") and Caterair International, Inc. (II) ("CII"). Capitalized terms
used but not defined herein shall have the respective meanings ascribed to them
in the Acquisition Agreement.
CII, for and in consideration of the representations, warranties and
agreements set forth in the Acquisition Agreement, and the payment by Sky Chefs
of the Purchase Price, as referenced in Section 2.1 of the Acquisition
Agreement, and other good and valuable consideration paid to the CII, the
receipt and sufficiency of which are hereby acknowledged, has bargained and sold
and by these presents do grant and convey, pursuant to the Agreement, unto Sky
Chefs, all of CII's right, title and interest in and to all of the Acquired
Assets.
IN WITNESS WHEREOF, the undersigned have duly executed this Bill of
Sale as of this __ day of October, 1997.
SKY CHEFS, INC.
By:____________________________________
Name:
Title:
CATERAIR INTERNATIONAL, INC. (II)
By:_____________________________________
Name:
Title:
31
<PAGE> 32
EXHIBIT D
FORM OF
ASSIGNMENT OF CONTRACTS
(Attached hereto)
32
<PAGE> 33
ASSIGNMENT AGREEMENT
Assignment Agreement, dated as of October __, 1997, between Caterair
International, Inc. (II), a Delaware corporation ("CII") and Sky Chefs, Inc., a
Delaware corporation.
Reference is hereby made to that certain Acquisition Agreement, dated as
of August 29, 1997 (as amended from time to time, the "ACQUISITION AGREEMENT"),
between Sky Chefs and CII. Capitalized terms used but not otherwise defined
herein shall have the respective meanings ascribed to such terms in the
Acquisition Agreement.
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged and subject to the terms and conditions set forth in the
Acquisition Agreement, CII hereby transfers, assigns, grants, transfers and
otherwise conveys and delivers to Sky Chefs, and Sky Chefs hereby accepts all of
CII's right, title and interest in, to and under the Acquired Agreements.
IN WITNESS WHEREOF, the undersigned have duly executed this Assumption
Agreement as of the date first written above.
SKY CHEFS, INC.
By:______________________________
Name:
Title:
CATERAIR INTERNATIONAL, INC. (II)
By:______________________________
Name:
Title:
33
<PAGE> 34
EXHIBIT E
FORM OF
ASSUMPTION AGREEMENT
(Attached hereto)
34
<PAGE> 35
ASSUMPTION AGREEMENT
Assumption Agreement, dated as of October __, 1997, by Sky Chefs, Inc., a
Delaware corporation ("SKY CHEFS").
Reference is hereby made to that certain Acquisition Agreement, dated as
of September __, 1997 (as amended from time to time, the "ACQUISITION
AGREEMENT"), between Sky Chefs and Caterair International, Inc. (II).
Capitalized terms used but not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Acquisition Agreement.
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Sky Chefs hereby assumes and agrees to pay, perform and
discharge when due all of the Assumed Liabilities (but not any of the Excluded
Liabilities) subject to the terms and conditions set forth in the Acquisition
Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Assumption
Agreement as of the date first written above.
SKY CHEFS, INC.
By:______________________________
Name:
Title:
35
<PAGE> 1
EXHIBIT 12.1
SC International Services, Inc and Subsidiaries
Computation of Ratio of Earnings to Fixed Charges
(Unaudited with respect to the nine months ended September 30, 1996 and 1997)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Year Ended December 31, Nine Months Ended September 30,
---------------------------------------------------------- -------------------------
1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed charges:
Interest expense 8,223 6,703 5,748 N/A N/A N/A 39,589
Implicit interest in rent 11,344 10,629 11,000 N/A N/A N/A 22,125
--------- --------- --------- --------- --------- --------- ---------
Total fixed charges 19,567 17,332 16,748 N/A N/A N/A 61,714
========= ========= ========= ========= ========= ========= =========
Earnings:
Earnings before provision for
income taxes 5,657 20,608 36,590 (22,569) (10,621) (13,445) 14,098
Fixed charges 19,567 17,332 16,748 N/A N/A N/A 61,714
--------- --------- --------- --------- --------- --------- ---------
Earnings, as defined 25,224 37,940 53,338 N/A N/A N/A 75,812
========= ========= ========= ========= ========= ========= =========
Ratio of earnings to fixed charges 1.3 2.2 3.2 N/A N/A N/A 1.2
========= ========= ========= ========= ========= ========= =========
Deficiency of earnings N/A N/A N/A (22,569) (10,621) (13,445) N/A
========= ========= ========= ========= ========= ========= =========
</TABLE>
<PAGE> 1
EXHIBIT 12.2
Caterair International Corporation and Subsidiaries
Computation of Ratio of Earnings to Fixed Charges
(Unaudited with respect to the nine months ended September 30, 1996 and 1997)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Year Ended December 31, Nine Months Ended September 30,
--------------------------------------------------------- ------------------------------
1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed charges:
Interest expense N/A N/A N/A 4,979 18,450 14,308 13,443
Implicit interest in rent N/A N/A N/A 2,239 8,900 7,225 6,603
--------- --------- --------- --------- --------- --------- ---------
Total fixed charges N/A N/A N/A 7,218 27,350 21,533 20,046
========= ========= ========= ========= ========= ========= =========
Earnings:
Earnings from continuing operations
before provision for income taxes -- -- -- 3,064 16,101 9,812 12,937
Fixed charges N/A N/A N/A 7,218 27,350 21,533 20,046
--------- --------- --------- --------- --------- --------- ---------
Earnings, as defined N/A N/A N/A 10,282 43,451 31,345 32,983
========= ========= ========= ========= ========= ========= =========
Ratio of earnings to fixed charges N/A N/A N/A 1.4 1.6 1.5 1.6
========= ========= ========= ========= ========= ========= =========
Deficiency of earnings -- -- -- N/A N/A N/A N/A
========= ========= ========= ========= ========= ========= =========
</TABLE>
<PAGE> 1
EXHIBIT 12.3
SC International Services, Inc and Subsidiaries and
Caterair International Corporation and Subsidiaries
Computation of Combined Pro Forma Ratio of Earnings to Fixed Charges
(Unaudited with respect to the nine months ended September 30, 1996 and
1997)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Twelve
Months
Year Ended Ended
December 31, Nine Months Ended September 30, September 30,
------------ -------------------------- -----------
1996 1996 1997 1997
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Fixed charges:
Interest expense 59,156 44,418 46,185 60,923
Implicit interest in rent 28,329 21,267 21,724 28,786
------------ ----------- ----------- -----------
Total fixed charges 87,485 65,685 67,909 89,709
============ =========== =========== ===========
Earnings:
Earnings before provision for
income taxes 13,470 5,710 30,562 38,322
Fixed charges 87,485 65,685 67,909 89,709
------------ ----------- ----------- -----------
Earnings, as defined 100,955 71,395 98,471 128,031
============ =========== =========== ===========
Ratio of earnings to fixed charges 1.2 1.1 1.5 1.4
============ =========== =========== ===========
Deficiency of earnings N/A N/A N/A N/A
============ =========== =========== ===========
</TABLE>
<PAGE> 1
EXHIBIT 23.1
[COOPERS & LYBRAND LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4 of our
report dated February 28, 1997, on our audits of the consolidated financial
statements of SC International Services, Inc. and Subsidiaries. We also consent
to the references to our firm under the captions "Experts," "Summary Historical
Financial Data" and "Selected Historical Financial Data."
We consent to the inclusion in this registration statement on Form S-4 of our
report dated March 5, 1997, on our audits of the consolidated financial
statements of Caterair International Corporation and Subsidiaries. We also
consent to the references to our firm under the captions "Experts," "Summary
Historical Financial Data" and "Selected Historical Financial Data."
/s/ Coopers & Lybrand L.L.P.
----------------------------
Coopers & Lybrand L.L.P.
Dallas, Texas
November 25, 1997
<PAGE> 1
EXHIBIT 23.4
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
registration statement.
/s/ ARTHUR ANDERSEN LLP
-----------------------
ARTHUR ANDERSEN LLP
Washington, D.C.
November 25, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF SC INTERNATIONAL SERVICES, INC. SET FORTH
IN THE REGISTRATION STATEMENT TO WHICH THIS SCHEDULE IS AN EXHIBIT AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. THE
CO-REGISTRANTS INCLUDE CATERAIR INTERNATIONAL, INC. (II), SKY CHEFS, INC.,
CATERAIR INTERNATIONAL CORPORATION AND EACH OF THE OTHER CO-REGISTRANTS NAMED
IN THE TABLE OF ADDITIONAL REGISTRANTS INCLUDED IN THE REGISTRATION STATEMENT.
THE CONSOLIDATED FINANCIAL STATEMENTS OF SC INTERNATIONAL SERVICES, INC.
INCLUDE THE ACCOUNTS OF SC INTERNATIONAL SERVICES, INC. AND ALL OF THE OTHER
CO-REGISTRANTS OTHER THAN CATERAIR INTERNATIONAL CORPORATION.
</LEGEND>
<CIK> 0000948064
<NAME> SC INTERNATIONAL SERVICES, INC.
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1996 JAN-01-1997 JAN-01-1996
<PERIOD-END> DEC-31-1996 SEP-30-1997 SEP-30-1996
<CASH> 55,658 38,327 0
<SECURITIES> 0 0 0
<RECEIVABLES> 162,723 191,553 0
<ALLOWANCES> 14,314 12,949 0
<INVENTORY> 18,150 19,049 0
<CURRENT-ASSETS> 248,319 261,758 0
<PP&E> 307,238 319,710 0
<DEPRECIATION> 116,632 130,455 0
<TOTAL-ASSETS> 853,456 888,866 0
<CURRENT-LIABILITIES> 276,797 284,462 0
<BONDS> 125,000 300,000 0
0 0 0
0 0 0
<COMMON> 59,579 59,579 0
<OTHER-SE> (12,848) (30,438) 0
<TOTAL-LIABILITY-AND-EQUITY> 853,456 (888,866) 0
<SALES> 1,529,816 1,198,190 1,142,102
<TOTAL-REVENUES> 1,529,816 1,198,190 1,142,102
<CGS> 1,352,359 1,046,467 1,014,782
<TOTAL-COSTS> 1,352,359 1,046,467 1,014,782
<OTHER-EXPENSES> 23,721 12,105 17,251
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 50,431 39,589 38,870
<INCOME-PRETAX> (10,621) 14,098 (13,445)
<INCOME-TAX> 420 11,235 (4,800)
<INCOME-CONTINUING> (11,041) 2,863 (8,645)
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 (20,475) 0
<CHANGES> 0 0 0
<NET-INCOME> (11,041) (17,882) (8,645)
<EPS-PRIMARY> 0 0 0
<EPS-DILUTED> 0 0 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF CATERAIR INTERNATIONAL CORPORATION SET
FORTH IN THE REGISTRATION STATEMENT TO WHICH THIS SCHEDULE IS AN EXHIBIT AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. THE C0-
REGISTRANTS INCLUDE SC INTERNATIONAL SERVICES, INC., SKY CHEFS, INC., CATERAIR
INTERNATIONAL, INC. (II) AND EACH OF THE ADDITIONAL CO-REGISTRANTS NAMED IN THE
TABLE OF ADDITIONAL REGISTRANTS INCLUDED IN THE REGISTRATION STATEMENT.
</LEGEND>
<CIK> 0000855019
<NAME> CATERAIR INTERNATIONAL CORPORATION
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1996 JAN-01-1997 JAN-01-1996
<PERIOD-END> DEC-31-1996 SEP-30-1997 SEP-30-1996
<CASH> 6,847 135 0
<SECURITIES> 0 0 0
<RECEIVABLES> 12,137 11,770 0
<ALLOWANCES> 994 999 0
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 27,857 34,369 0
<PP&E> 180,854 179,335 0
<DEPRECIATION> 101,459 108,206 0
<TOTAL-ASSETS> 173,948 164,217 0
<CURRENT-LIABILITIES> 45,282 23,305 0
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 173,596 173,596 0
<OTHER-SE> (275,586) (269,785) 0
<TOTAL-LIABILITY-AND-EQUITY> 173,948 164,217 0
<SALES> 0 0 0
<TOTAL-REVENUES> 77,958 56,415 58,876
<CGS> 30,416 22,207 24,082
<TOTAL-COSTS> 30,416 22,207 24,082
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 18,450 13,443 14,308
<INCOME-PRETAX> 16,101 12,937 9,812
<INCOME-TAX> 8,044 3,622 3,527
<INCOME-CONTINUING> 8,057 9,315 6,285
<DISCONTINUED> 1,682 (470) 2,837
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 (3,044) 0
<NET-INCOME> 9,739 5,801 9,122
<EPS-PRIMARY> 0 0 0
<EPS-DILUTED> 0 0 0
</TABLE>
