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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D
(Rule 13d-101)
(INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a))
SODEXHO MARRIOTT SERVICES, INC.
(Name of Issuer)
COMMON STOCK
$1.00 PAR VALUE
(Title of Class of Securities)
-----------------------
833793 10 2
(CUSIP Number)
Bernard Carton Copy to: Paul R. Kingsley, Esq.
Sodexho Alliance, S.A. Davis Polk & Wardwell
3, avenue Newton 450 Lexington Avenue
78180 Montigny-le-Bretonneux, France New York, New York 10017
Tel No.: 011-331-3085-7304 Tel No.: (212) 450-4277
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
March 27, 1998
(Date of Event which Requires Filing of this Statement)
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If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this statement because of Rule 13d-1(b)(3) or (4), check the following: [ ]
Check the following box if a fee is being paid with this statement: [ ]
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Page 1 of 12
SCHEDULE 13D
CUSIP No.833793 10 2 Page 2 of 12 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Sodexho Alliance, S.A.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) |_|
(b) |_|
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) |_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Republic of France
7 SOLE VOTING POWER
30,020,673
8 SHARED VOTING POWER
NUMBER OF SHARES
BENEFICIALLY OWNED BY
EACH REPORTING PERSON N/A
WITH
9 SOLE DISPOSITIVE POWER
30,020,673
10 SHARED DISPOSITIVE POWER
N/A
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
30,020,673
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES |_|
CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
48.4%
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Item 1. Security and Issuer.
The class of equity securities to which this statement relates is the
Common Stock, $1.00 par value per share (the "Shares"), of Sodexho Marriott
Services, Inc., a Delaware corporation formerly named "Marriott International,
Inc." (the "Issuer"). The principal executive offices of the Issuer are located
at 10400 Fernwood Road, Bethesda, Maryland 20817.
Item 2. Identity and Background.
The name of the person filing this statement is Sodexho Alliance,
S.A. a societe anonyme organized under the laws of the Republic of France
("Sodexho"). Bellon S.A., a privately held corporation organized under the
laws of the Republic of France is the beneficial owner of approximately 41.6
percent of the Sodexho. Pierre Felix Etienne Bellon ("Mr. Bellon") is an
individual and citizen of the Republic of France who, with members of his
family, owns approximately 68 percent of Bellon S.A.
The address of the principal business and the principal office of Sodexho
is 3, avenue Newton, 78180 Montigny-le-Bretonneux, France. The name, business
address, present principal occupation or employment, and citizenship of each
director and executive officer of Sodexho is set forth on Schedule A. Sodexho,
directly and through its subsidiaries and affiliates, in 62 countries provides
contract food and management services, remote site management services and
leisure services and also engages in the issuance of service vouchers.
The address of the principal business and the principal office of Bellon
S.A. is 5 Place de Joliette, 13002 Marseille, France.
During the last five years, none of Sodexho, any other person controlling
Sodexho, nor, to the best knowledge of Sodexho, any of the persons named on
Schedule A attached hereto, has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or has been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
Pursuant to the Acquisition Agreement described in Item 4, Sodexho (i)
transferred two wholly owned subsidiaries, International Catering Corporation, a
Delaware corporation ("ICC"), and Sodexho Financiere du Canada Inc., a privately
owned legal body incorporated under the Companies Act (Quebec) of Canada
("Sodexho Financiere"), in the United States and Canada, respectively, to the
Issuer and (ii) paid $304 million to the Issuer, in exchange for approximately
48.4 percent of the Shares that were issued and outstanding immediately after
the consummation of the transactions contemplated by the Acquisition Agreement
(the "Transactions"). The payment of $304 million was financed from working
capital of Sodexho.
Item 4. Purpose of Transaction.
On September 30, 1997, the Issuer and New Marriott MI, Inc. (currently
named "Marriott International, Inc.") ("New Marriott") entered into a
Distribution Agreement pursuant to which the Issuer agreed to contribute to New
Marriott all of the assets and liabilities relating to its lodging business, and
then to distribute the shares of New Marriott to its shareholders as a dividend
(the "Spinoff").
On September 30, 1997, the Issuer, Marriott-ICC Merger Corp., a wholly
owned subsidiary of the Issuer ("Merger Sub"), New Marriott, Sodexho and ICC
entered into an Agreement and Plan of Merger, amended by the Amendment Agreement
dated as of January 28, 1998 (the "Amendment Agreement") by and among such
parties (as so amended, the "Acquisition Agreement") pursuant to which,
immediately following the Spinoff, (i) Sodexho would make a cash contribution of
$304 million to the Issuer, (ii) Merger Sub would merge with and into ICC, and
(iii) Sodexho would transfer to the Issuer all of the outstanding capital stock
of Sodexho Financiere, as a result of which Sodexho Financiere and ICC would
become wholly owned subsidiaries of the Issuer. In consideration of the
foregoing transactions, Sodexho would receive approximately 49 percent of the
Shares that were to be issued and outstanding immediately after the consummation
of the Transactions. A copy of the Acquisition Agreement prior to its amendment
is filed herewith as Exhibit 1 to this Schedule 13D and is hereby incorporated
herein by reference. A copy of the Amendment Agreement is filed herewith as
Exhibit 2 to this Schedule 13D and is hereby incorporated herein by reference.
On March 20, 1998, at a special meeting of the stockholders of the Issuer,
the Issuer's stockholders voted to approve the transactions contemplated by the
Acquisition Agreement. On March 27, 1998, the Spinoff and the Transactions were
consummated.
Pursuant to the terms of the Acquisition Agreement, the Issuer and Sodexho
entered into the Stockholder Agreement (the "Stockholder Agreement") dated as of
March 27, 1998, a copy of which is filed herewith as Exhibit 3 to this Schedule
13D and incorporated herein by reference. Pursuant to the Stockholder Agreement,
Sodexho was granted certain rights to nominate members of the Board of Directors
of the Issuer. So long as Sodexho owns at least 20 percent of the outstanding
Shares, Sodexho may nominate three directors. If Sodexho's ownership interest
falls to less than 20 percent (but equals or exceeds 10 percent), or at any time
that the Royalty Agreement by and between the Sodexho and the Issuer dated as of
March 27, 1998 (pursuant to which the Issuer has the right to use the name
"Sodexho" in connection with the Issuer's operations in the United States and
Canada for a period of 10 years, subject to certain termination provisions
described therein) remains in effect, Sodexho may nominate three directors. If
Sodexho's ownership interest decreases to less than 10 percent and the Royalty
Agreement has terminated, Sodexho will cease to have the right to nominate any
members of the Board of Directors. Prior to March 27, 2001, the Board of
Directors will consist of eight members; thereafter, Sodexho's right to nominate
directors will be proportionately adjusted in the event that the Board of
Directors consists of other than eight members. The initial Sodexho designees to
the Board of Directors are Mr. Bellon, Bernard Carton (Senior Vice President and
Chief Financial Officer of Sodexho) and Edouard de Royere (a director of
Sodexho).
The Stockholder Agreement imposes additional restrictions on the
composition of the Board of Directors for the three-year period prior to March
27, 2001. During such period, the Board of Directors will consist of eight
members. At least two (and in certain cases, up to four) of such members must
(i) not be employees of the Issuer, Sodexho or New Marriott, (ii) not be
receiving, directly or indirectly, material compensation for services from the
Issuer, Sodexho or New Marriott, (iii) not be immediate family members of
persons described under clauses (i) and (ii) and (iv) qualify as "outside
directors" for the purposes of the New York Stock Exchange. An additional member
of the Board of Directors will be the chief Executive Officer of the Issuer, who
initially is Charles D. O'Dell. During such three-year period, Sodexho may not
action by written consent to remove without cause any director.
The Stockholder Agreement also grants to Sodexho certain rights to cause
the Issuer to register the Shares held by Sodexho for sale under the Securities
Act of 1933, as amended, both pursuant to registrations initiated by Sodexho and
in connection with registrations initiated by the Issuer or other entities that
have registration rights.
Pursuant to the terms of the Acquisition Agreement, the certificate of
incorporation of the Issuer was amended to contain, among other things, a
restriction on the transfer or issuance of Shares. A copy of the Amended and
Restated Certificate of Incorporation of the Issuer is filed herewith as Exhibit
4 to this Schedule 13D and incorporated herein by reference. Such restriction
provides that, during the three-year period prior to March 27, 2001, any
transfer or issuance of equity securities of the Issuer (including any Shares)
that would result in any person or persons acting pursuant to a plan (or a
series of related transactions) having a beneficial ownership of 50 percent or
more of the outstanding equity securities of the Issuer will be void ab initio.
The purpose of such restriction is to protect the tax-free status of the
Spinoff. Such restriction will not apply to any such transfer or issuance
if the Board of Directors receives a ruling from the Internal Revenue Service
satisfactory to the Board of Directors, or an opinion of counsel satisfactory to
the Board of Directors and New Marriott, that such transfer or issuance will not
adversely effect the tax-free status of the Spinoff.
Pursuant to the terms of the Acquisition Agreement, the Issuer, New
Marriott and Sodexho entered into a Tax Sharing and Indemnification Agreement
(the "Tax Sharing Agreement") dated as of March 27, 1998, a copy of which will
be filed by an amendment to this Schedule 13D. Pursuant to this Tax Sharing
Agreement, the parties have agreed for certain specified periods after the
Spinoff not to take specific actions that could cause the Spinoff not to have
tax-free status. Among other things, for a three-year period prior to March 27,
2001, Sodexho has agreed not to acquire or permit the acquisition of a 50
percent or greater interest in the Issuer.
Sodexho has no plan or intention to acquire any additional Shares.
In connection with the consummation of the Transactions, the Issuer
executed and delivered (i) a Credit Agreement dated as of January 30, 1998 among
Sodexho Marriott Operations, Inc., as the borrower, the Issuer, as the parent
guarantor, the initial lenders named therein, Societe Generale and Morgan
Guaranty Trust Company of New York ("Morgan"), as the initial issuing banks,
Morgan, as the documentation agent and the administrative agent, with Societe
Generale and J.P. Morgan Securities Inc., as arrangers, as amended by Amendment
No. 1 to the Loan Documents dated as of March 19, 1998 (the "Amendment to the
Secured Debt Credit Agreement") among such parties (unless as provided
otherwise, as so amended, the "Secured Debt Credit Agreement") and (ii) a Credit
Agreement dated as of January 30, 1998 among the Issuer, as the borrower, the
initial lenders named therein, Societe Generale, as administrative agent, and
Morgan, as the documentation agent, with Societe Generale and J.P. Morgan
Securities Inc., as arrangers, as amended by Amendment No. 1 to the Credit
Agreement dated as of March 19, 1998 (the "Amendment to the Guaranteed Debt
Credit Agreement") among such parties (unless as provided otherwise, as so
amended, the "Guaranteed Debt Credit Agreement", and together with the Secured
Debt Credit Agreement, the "Credit Agreements"). Copies of the Secured Debt
Credit Agreement and the Guaranteed Debt Credit Agreement prior to their
amendment are filed herewith as Exhibit 5 and 6, respectively, to this Schedule
13D and incorporated herein by reference. Copies of the Amendment to the Secured
Debt Credit Agreement and the Amendment to the Guaranteed Debt Credit Agreement
prior to their amendment are filed herewith as Exhibit 7 and 8, respectively, to
this Schedule 13D and incorporated herein by reference.
Pursuant to the Credit Agreements, an event of default will occur if, among
other things, Sodexho at any time for any reason ceases to be the record and
beneficial owner, directly or indirectly, of at least 40.01% of the Shares.
Item 5. Interest in Securities of the Issuer.
(a) Sodexho has acquired and, for the purpose of Rule 13d-3 promulgated
under the Exchange Act, beneficially owns 30,020,673 Shares, representing
approximately 48.4% of the outstanding Shares of the Issuer. As the majority
stockholder of Sodexho, Bellon S.A. may be deemed to have beneficial ownership
of 30,020,673 Shares, representing approximately 48.4% of the outstanding Shares
of the Issuer. As the majority stockholder of Bellon S.A., Mr. Bellon may be
deemed to have beneficial ownership of 30,020,673 Shares, representing
approximately 48.4% of the outstanding Shares of the Issuer. Except to the
extent of their pecuniary interest in such Shares, Bellon S.A. and Mr. Bellon
disclaim beneficial ownership of such Shares.
Except as set forth in this Item 5(a), none of Sodexho, any other person
controlling Sodexho, nor, to the best knowledge of Sodexho, any of the persons
named in Schedule A attached hereto owns beneficially any Shares.
(b) Except as set forth herein, Sodexho does not have any sole
or shared power to vote or to direct the vote of any Shares nor sole or shared
power to dispose of or direct the disposition of any Shares.
(c) Except as set forth herein, no transactions in the Shares have been
effective during the past 60 days by Sodexho, any other person controlling
Sodexho, or, to the best knowledge of Sodexho, any of the persons named in
Schedule A attached hereto.
(d) Inapplicable.
(e) Inapplicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Pursuant to the Credit Agreements, an event of default will occur if, among
other things, Sodexho at any time for any reason ceases to be the record and
beneficial owner, directly or indirectly, of at least 40.01% of the Shares.
Except as set forth herein, to the best knowledge of Sodexho, there are no
contracts, arrangements, understandings or relationships (legal or otherwise)
between the persons enumerated in Item 2, and any other person, with respect to
any securities of the Issuer, including, but not limited to, transfer or voting
of any of the securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or loss,
or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
Exhibit 99.1 Acquisition Agreement dated as of September 30, 1997 by and
among the Issuer, Merger Sub, New Marriott, Sodexho and ICC.
Exhibit 99.2: Amendment Agreement dated as of January 28, 1998 by and among
the Issuer, Merger Sub, New Marriott, Sodexho and ICC.
Exhibit 99.3: Stockholder Agreement dated as of March 27, 1998 between the
Issuer and Sodexho.
Exhibit 99.4: Amended and Restated Certificate of Incorporation of the
Issuer, filed with the Secretary of State of Delaware on March 27, 1998.
Exhibit 99.5: Secured Debt Credit Agreement dated as of January 30, 1998
among Sodexho Marriott Operations, Inc., as the borrower, the Issuer, as the
parent guarantor, the initial lenders named therein, Societe Generale and
Morgan, as the initial issuing banks, Morgan, as the documentation agent and the
administrative agent, with Societe Generale and J.P. Morgan Securities Inc., as
arrangers.
Exhibit 99.6: Guaranteed Debt Credit Agreement dated as of January 30, 1998
among the Issuer, as the borrower, the initial lenders named therein, Societe
Generale, as administrative agent, and Morgan, as the documentation agent, with
Societe Generale and J.P. Morgan Securities Inc., as arrangers.
Exhibit 99.7: Amendment to the Secured Debt Credit Agreement dated as of
March 19, 1998 among the parties named therein.
Exhibit 99.8: Amendment to the Guaranteed Debt Credit Agreement dated as of
March 19, 1998 among the parties named therein.
SIGNATURES
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: April 6, 1998
SODEXHO ALLIANCE, S.A.
By: /s/ Bernard Carton
-----------------------------------------
Name: Bernard Carton
Title: Senior Vice President and Chief
Financial Officer
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS OF SODEXHO ALLIANCE, S.A.
The name, business address, title, present principal occupation or employment of
each of the directors and executive officers of Sodexho Alliance, S.A.
("Sodexho") are set forth below. All of the persons listed below are citizens of
the Republic of France, except Garry Hawkes who is a citizen of the United
Kingdom and Paul Jeanbart who is a citizen of Canada.
<TABLE>
<CAPTION>
Present Principal Occupation Including
Name Business Address Name and Address of Employer
- ---------------------------- ------------------------------------- --------------------------------------
<S> <C> <C>
Directors
Pierre Felix Etienne Bellon c/o Sodexho Alliance, S.A., 3, avenue Chairman and Chief Executive Officer,
Newton, 78180 Montigny-le- Sodexho
Bretonneux, France
Remi Baudin c/o Sodexho Alliance, S.A., 3, avenue Vice Chairman, Sodexho
Newton, 78180 Montigny-le-
Bretonneux, France
Astrid Bellon c/o Sodexho Alliance, S.A., 3, avenue Director, Sodexho
Newton, 78180 Montigny-le-
Bretonneux, France
Bernard Bellon c/o Sodexho Alliance, S.A., 3, avenue Chairman, Finadvance S.A.
Newton, 78180 Montigny-le-
Bretonneux, France
Francois-Xavier Bellon c/o Sodexho Alliance, S.A., 3, avenue Director, Sodexho
Newton, 78180 Montigny-le-
Bretonneux, France
Sophie Clamens c/o Sodexho Alliance, S.A., 3, avenue Director, Sodexho
Newton, 78180 Montigny-le-
Bretonneux, France
Patrice Douce c/o Sodexho Alliance, S.A., 3, avenue President and Chief Operating Officer,
Newton, 78180 Montigny-le- Sodexho
Bretonneux, France
Garry Hawkes c/o Sodexho Alliance, S.A., 3, avenue Director, Sodexho
Newton, 78180 Montigny-le-
Bretonneux, France
Paul Jeanbart c/o Sodexho Alliance, S.A., 3, avenue Director, Sodexho
Newton, 78180 Montigny-le-
Bretonneux, France
Francois Perigot c/o Sodexho Alliance, S.A., 3, avenue Chairman, Platres Laffarge
Newton, 78180 Montigny-le-
Bretonneux, France
Edouard de Royere c/o Sodexho Alliance, S.A., 3, avenue President Emeritus and Director, L'Air
Newton, 78180 Montigny-le- Liquide
Bretonneux, France
Nathalie Szabo c/o Sodexho Alliance, S.A., 3, avenue Director, Sodexho
Newton, 78180 Montigny-le-
Bretonneux, France
<CAPTION>
Present Principal Occupation Including
Name Business Address Name and Address of Employer
- ---------------------------- ------------------------------------- --------------------------------------
<S> <C> <C>
Executive Officers
(Who Are Not Directors)
Bernard Carton c/o Sodexho Alliance, S.A., 3, avenue Senior Vice President and Chief Financial
Newton, 78180 Montigny-le- Officer, Sodexho
Bretonneux, France
Raphael Dubrule c/o Sodexho Alliance, S.A., 3, avenue Corporate Secretary and General Counsel,
Newton, 78180 Montigny-le- Sodexho
Bretonneux, France
</TABLE>
EXHIBIT INDEX
Page
----
1: Acquisition Agreement dated as of September 30, 1997 by and among the
Issuer, Merger Sub, New Marriott, Sodexho and ICC.
2: Amendment Agreement dated as of January 28, 1998 by and among the
Issuer, Merger Sub, New Marriott, Sodexho and ICC.
3: Stockholder Agreement dated as of March 27, 1998 between the Issuer
and Sodexho.
4: Amended and Restated Certificate of Incorporation of the Issuer, filed
with the Secretary of State of Delaware on March 27, 1998.
5: Secured Debt Credit Agreement dated as of January 30, 1998 among
Sodexho Marriott Operations, Inc., as the borrower, the Issuer, as the
parent guarantor, the initial lenders named therein, Societe Generale
and Morgan, as the initial issuing banks, Morgan, as the documentation
agent and the administrative agent, with Societe Generale and J.P.
Morgan Securities Inc., as arrangers.
6: Guaranteed Debt Credit Agreement dated as of January 30, 1998 among
the Issuer, as the borrower, the initial lenders named therein,
Societe Generale, as administrative agent, and Morgan, as the
documentation agent, with Societe Generale and J.P. Morgan Securities
Inc., as arrangers.
7: Amendment to the Secured Debt Credit Agreement dated as of March 19,
1998 among the parties named therein.
8: Amendment to the Guaranteed Debt Credit Agreement dated as of March
19, 1998 among the parties named therein.
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
dated as of September 30, 1997
by and among
MARRIOTT INTERNATIONAL, INC.
(To Be Renamed "Sodexho Marriott Services, Inc."),
MARRIOTT-ICC MERGER CORP.,
NEW MARRIOTT MI, INC.
(To Be Renamed "Marriott International, Inc."),
SODEXHO ALLIANCE, S.A.
and
INTERNATIONAL CATERING CORPORATION
ARTICLE I
THE DISTRIBUTION; SELLER CONTRIBUTION
Section 1.1. The Distribution........................................... 2
Section 1.2. The Seller Contribution and Canadian Transfer.............. 2
ARTICLE II
THE MERGER
Section 2.1. The Merger................................................. 3
Section 2.2. Effective Time............................................. 3
Section 2.3. Effects of the Merger...................................... 3
Section 2.4. Certificate of Incorporation............................... 3
Section 2.5. By-Laws.................................................... 3
Section 2.6. Directors of Surviving Corporation......................... 3
Section 2.7. Officers................................................... 3
Section 2.8. Conversion of Company Shares and Company Options........... 4
Section 2.9. Conversion of Acquisition Shares........................... 5
Section 2.10. Closing.................................................... 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND COMPANY
Section 3.1. Organization............................................... 6
Section 3.2. Capitalization............................................. 7
Section 3.3. Authority Relative to this Agreement....................... 8
Section 3.4. Consents and Approvals; No Violations...................... 9
Section 3.5. Absence of Certain Changes................................. 10
Section 3.6. No Undisclosed Liabilities................................. 10
Section 3.7. [Reserved]................................................. 10
Section 3.8. Financial Statements; Changes; Contingencies;
Distributions............................................ 10
Section 3.9. Proxy Statement and Form 10................................ 12
Section 3.10. No Default................................................. 12
Section 3.11. Litigation; Compliance with Law............................ 12
Section 3.12. Employee Benefit Plans; ERISA.............................. 13
Section 3.13. Assets; Intellectual Property.............................. 15
Section 3.14. Contracts.................................................. 15
Section 3.15. Taxes...................................................... 17
Section 3.16. Labor Matters.............................................. 18
Section 3.17. Accounting Records; Internal Controls...................... 18
Section 3.18. Insurance.................................................. 19
Section 3.19. Permits.................................................... 19
Section 3.20. Business Relationships..................................... 19
Section 3.21. Environmental Compliance................................... 20
Section 3.22. Accounts Receivable........................................ 21
Section 3.23. Transactions with Certain Persons.......................... 21
Section 3.24. Certain Fees............................................... 21
Section 3.25. Certain Operations......................................... 21
Section 3.26. Investment Representation.................................. 22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
Section 4.1. Organization............................................... 22
Section 4.2. Capitalization............................................. 23
Section 4.3. Authority Relative to this Agreement....................... 24
Section 4.4. Consents and Approvals; No Violations...................... 25
Section 4.5. Absence of Certain Changes................................. 26
Section 4.6. No Undisclosed Liabilities................................. 26
Section 4.7. Reports.................................................... 27
Section 4.8. Financial Statements; Changes; Contingencies;
Distributions............................................ 27
Section 4.9. Proxy Statement and Form 10................................ 29
Section 4.10. No Default................................................. 29
Section 4.11. Litigation; Compliance with Law............................ 29
Section 4.12. Employee Benefit Plans; ERISA.............................. 30
Section 4.13. Assets; Intellectual Property.............................. 32
Section 4.14. Contracts.................................................. 33
Section 4.15. Taxes...................................................... 34
Section 4.16. Labor Matters.............................................. 35
Section 4.17. Accounting Records; Internal Controls...................... 35
Section 4.18. Insurance.................................................. 36
Section 4.19. Permits.................................................... 36
Section 4.20. Business Relationships..................................... 36
Section 4.21. Environmental Compliance................................... 37
Section 4.22. Accounts Receivable........................................ 37
Section 4.23. Transactions with Certain Persons.......................... 37
Section 4.24. Certain Fees............................................... 38
Section 4.25. Parent Rights Plan......................................... 38
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SPINCO
Section 5.1. Organization............................................... 38
Section 5.2. Authority Relative to this Agreement....................... 38
Section 5.3. Consents and Approvals; No Violations...................... 39
ARTICLE VI
COVENANTS
Section 6.1. Conduct of Business of Company............................. 40
Section 6.2. Conduct of Retained Business............................... 42
Section 6.3. Acquisition Proposals...................................... 44
Section 6.4. Access to Information...................................... 46
Section 6.5. Reasonable Efforts......................................... 47
Section 6.6. Consents................................................... 47
Section 6.7. Antitrust Filings.......................................... 47
Section 6.8. Public Announcements....................................... 48
Section 6.9. Financial Statements....................................... 49
Section 6.10. Registration of Spinco Shares.............................. 49
Section 6.11. Stockholders' Approval..................................... 50
Section 6.12. Tax Ruling................................................. 50
Section 6.13. Tax Sharing Agreement...................................... 51
Section 6.14. Notices of Certain Events.................................. 51
Section 6.15. Transaction Documents...................................... 51
Section 6.16. Retention of Auditors...................................... 52
Section 6.17. Termination or Redemption of Parent Rights Plan............ 52
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.1. Conditions to Each Party's Obligation to Effect the
Merger................................................... 52
Section 7.2. Conditions to the Obligation of Seller and Company to
Effect the Merger........................................ 53
Section 7.3. Conditions to Obligations of Parent, Spinco and
Acquisition to Effect the Merger......................... 55
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
Section 8.1. Termination................................................ 56
Section 8.2. Effect of Termination...................................... 58
Section 8.3. Amendment.................................................. 58
Section 8.4. Extension; Waiver.......................................... 58
ARTICLE IX
MISCELLANEOUS
Section 9.1. Survival................................................... 58
Section 9.2. Entire Agreement........................................... 58
Section 9.3. Governing Law.............................................. 59
Section 9.4. Notices.................................................... 59
Section 9.5. Successors and Assigns; No Third Party Beneficiaries....... 60
Section 9.6. Counterparts............................................... 60
Section 9.7. Interpretation............................................. 60
Section 9.8. Schedules.................................................. 61
Section 9.9. Legal Enforceability....................................... 61
Section 9.10. Specific Performance....................................... 61
Section 9.11. Consent to Jurisdiction; Waiver of Jury Trial.............. 61
Section 9.12. Certain Expenses........................................... 62
TABLE OF DEFINED TERMS
Term Section No.
- ---- -----------
Acquired Companies....................................................Recitals
Acquired Company Material Contract.....................................3.14(a)
Acquired Company Financial Statements......................................3.6
Acquisition...........................................................Recitals
Acquisition Proposal....................................................6.3(c)
Acquisition Share.........................................................2.10
Affiliate...............................................................3.2(b)
Agreement.............................................................Recitals
Antitrust Authorities...................................................6.7(a)
Antitrust Law...........................................................6.7(a)
Audit..................................................................3.15(i)
Benefits Allocation Agreement...........................Distribution Agreement
Business Day...............................................................9.4
Canadian GAAP..........................................................3.12(f)
Certificate of Merger......................................................2.2
Closing...................................................................2.10
Closing Date...........................................................2.10(c)
Code.......................................................................2.8
Combined Business Material Adverse Effect...............................7.2(a)
Commission..............................................................3.4(a)
Company...............................................................Recitals
Company Auditors........................................................3.8(a)
Company Business..........................................................3.13
Company Canadian Plans.................................................3.12(f)
Company Material Adverse Effect........................................ 3.1(a)
Company Options.........................................................2.8(c)
Company Plans..........................................................3.12(a)
Company Share...........................................................2.9(a)
Confidentiality Agreement...............................................6.4(c)
Contract................................................................3.4(b)
Corporate Governance Arrangements.........................................6.13
DGCL....................................................................2.1(b)
Distribution..........................................................Recitals
Distribution Agreement................................................Recitals
Effective Time.............................................................2.2
Encumbrance.............................................................3.2(a)
ERISA..................................................................3.12(a)
ERISA Affiliate........................................................3.12(a)
Exchange Act............................................................3.4(a)
Form 10.................................................Distribution Agreement
GAAP....................................................................3.8(a)
Governmental Entity.....................................................3.4(a)
HSR Act.................................................................3.4(a)
Intellectual Property.....................................................3.13
IRS....................................................................3.12(a)
Law.....................................................................3.4(b)
LYONs...................................................Distribution Agreement
Merger.....................................................................2.1
MMS...................................................................Recitals
MMS Canada..............................................Distribution Agreement
MMS UK................................................................Recitals
Multiemployer Plan.....................................................3.12(b)
OFT.....................................................................3.4(a)
Omnibus Agreement.......................................................3.1(a)
Parent................................................................Recitals
Parent Auditors.........................................................4.8(a)
Parent Canadian Plans..................................................4.12(h)
Parent Common Stock.....................................................2.8(a)
Parent Material Adverse Effect.............................................4.1
Parent Plans...........................................................4.12(a)
Parent Rights Plan........................................................4.25
Parent SEC Documents....................................................4.7(a)
Parent Share............................................................2.9(a)
Parent Stock Options.......................................................4.2
Parent Stockholder Approval................................................4.3
PBGC...................................................................4.12(a)
Permit....................................................................3.19
Person..................................................................2.8(a)
Potential Acquiror.........................................................6.3
Proxy Statement.........................................Distribution Agreement
Required Regulatory Approvals...........................................3.4(a)
Retained Business..........................................................4.1
Retained Business Financial Statements.....................................4.6
Retained Employees......................................Distribution Agreement
Retained Subsidiaries......................................................4.1
SEC.....................................................................4.7(a)
Securities Act..........................................................3.4(a)
Seller................................................................Recitals
Seller Contribution.................................................. Recitals
Seller Material Adverse Effect......................................... 3.1(a)
Sodexho Canada........................................................Recitals
Spinco................................................................Recitals
Spinco Assets...........................................Distribution Agreement
Spinco Material Adverse Effect.............................................5.1
Spinco Subsidiaries.....................................Distribution Agreement
Subsidiary..............................................................2.8(a)
Surviving Corporation......................................................2.1
Surviving Corporation Shares..............................................2.10
Taxes..................................................................3.15(i)
Tax Returns............................................................3.15(i)
Tax Sharing Agreement.....................................................6.13
Transaction Documents...................................................3.1(a)
UK Stock Purchase Agreement...........................................Recitals
EXHIBITS
Exhibit A ..............................Net Tangible Assets Adjustment Formula
Exhibit B ...............................................Certificate of Merger
Exhibit C........................................Form of Tax Sharing Agreement
Exhibit D......................................Corporate Governance Term Sheet
Exhibit E-1.......................................Form of Assistance Agreement
Exhibit E-2.......................................Royalty Agreement Term Sheet
SCHEDULES
Schedule 2.6 Directors of Surviving Corporation
Schedule 2.7 Officers of Surviving Corporation
Seller's Disclosure Schedule
Parent's Disclosure Schedule
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of September 30,
1997 (this "Agreement"), is among MARRIOTT INTERNATIONAL, INC., a Delaware
corporation to be renamed "Sodexho Marriott Services, Inc." ("Parent"),
MARRIOTT-ICC MERGER CORP., a Delaware corporation and a direct wholly-owned
subsidiary of Parent ("Acquisition"), NEW MARRIOTT MI, INC., a Delaware
corporation and a wholly-owned subsidiary of Parent to be renamed "Marriott
International, Inc." ("Spinco"), SODEXHO ALLIANCE, S.A., a societe anonyme
organized under the laws of France ("Seller"), and INTERNATIONAL CATERING
CORPORATION, a Delaware corporation and a wholly-owned subsidiary of Seller
("Company").
RECITALS
WHEREAS, the Boards of Directors of Parent, Acquisition,
Seller and Company deem it advisable and in the best interests of their
respective stockholders to combine the businesses of Parent's management
services division and Company on the terms and conditions hereinafter set forth;
WHEREAS, pursuant to the terms of the Distribution Agreement
dated as of the date hereof (the "Distribution Agreement") between Parent and
Spinco, Parent will contribute the assets and certain of the liabilities of all
of its businesses other than Parent's management services division to Spinco;
WHEREAS, as provided in the Distribution Agreement, Parent
will make a distribution (the "Distribution") to its stockholders as of the
Distribution Record Date (as hereinafter defined), on a pro rata basis, of 100%
of the shares of capital stock of Spinco issued and outstanding immediately
prior to such distribution;
WHEREAS, as soon as reasonably possible following the date
hereof Parent will cause its wholly-owned subsidiary, Marriott Management
Services Corp., a New York corporation ("MMS"), to sell to Seller or its
designee the businesses of Parent's management services division conducted in
the United Kingdom through Marriott Management Services (U.K.) Ltd., a limited
company registered in England ("MMS UK"), pursuant to a stock purchase agreement
dated as of the date hereof (the "UK Stock Purchase Agreement");
WHEREAS, as provided herein, Seller will make a cash
contribution to Company prior to the Merger (as defined herein) in an amount
determined in accordance with the terms hereof (the "Seller Contribution"); and
WHEREAS, immediately following the Distribution and the Seller
Contribution, (i) Acquisition will merge with and into Company and Seller will
transfer to Parent all of the outstanding capital stock of Sodexho Financiere du
Canada Inc. ("Sodexho Canada" and, together with Company, "Acquired Companies"),
in each case pursuant to the terms hereof, (ii) all of the issued and
outstanding shares of Company common stock will be converted into common stock
of Parent in such amounts as are determined herein, and (iii) all issued and
outstanding shares of Acquisition will be converted into all the outstanding
capital stock of the Surviving Corporation, as a result of which Company (as the
Surviving Corporation in the merger) will become a wholly-owned subsidiary of
Parent.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, Parent, Acquisition, Spinco, Seller and
Company hereby agree as follows:
ARTICLE I
THE DISTRIBUTION; SELLER CONTRIBUTION
Section 1.1. The Distribution. Upon the terms and subject to
the conditions of the Distribution Agreement, prior to the Effective Time, the
parties thereto shall effect the transactions contemplated by the Distribution
Agreement including, immediately prior to the Effective Time, the Distribution.
Section 1.2. The Seller Contribution and Canadian Transfer.
(a) Immediately prior to the Effective Time, Seller will make
the Seller Contribution to Company in an amount equal to $304,000,000 in
immediately available funds. Following the Effective Time, Seller will pay
Parent, or Parent will pay Seller, as the case may be, any amounts determined in
accordance with Exhibit A based on target Adjusted Net Tangible Assets for the
Acquired Companies, on a combined basis, of $269,000,000.
(b) Seller shall transfer to Parent all of the outstanding
capital stock of Sodexho Canada, which contribution shall be made (and
effective) at the Effective Time, by delivering to Parent the certificates
evidencing such stock, properly endorsed for transfer to or accompanied by a
duly executed stock power in favor of Parent or its nominee and otherwise in a
form acceptable for transfer on the books of Sodexho Canada.
ARTICLE II
THE MERGER
Section 2.1. The Merger. Upon the terms and subject to the
conditions hereof, at the Effective Time in accordance with the Delaware General
Corporation Law (the "DGCL"), Acquisition shall be merged (the "Merger") with
and into Company. From and after the Effective Time, Company shall continue as
the surviving corporation (the "Surviving Corporation") and the separate
corporate existence of Acquisition shall cease.
Section 2.2. Effective Time. The Merger shall become effective
at such time (the "Effective Time") as a certificate of merger in the form set
forth as Exhibit B hereto (the "Certificate of Merger") is filed with the
Delaware Secretary of State. Such filing shall be made simultaneously with or as
soon as practicable after the closing of the transactions contemplated by this
Agreement in accordance with Section 2.10.
Section 2.3. Effects of the Merger. The Merger shall have the
effects set forth in the DGCL. As of the Effective Time, Company shall be a
wholly-owned subsidiary of Parent.
Section 2.4. Certificate of Incorporation. The certificate of
incorporation of Company in effect immediately prior to the Effective Time will
be the certificate of incorporation of the Surviving Corporation after the
Effective Time, and thereafter may be amended in accordance with its terms and
as provided by the DGCL.
Section 2.5. By-Laws. The by-laws of Company as in effect
immediately prior to the Effective Time shall be the by-laws of the Surviving
Corporation after the Effective Time, and thereafter may be amended in
accordance with their terms and as provided by the certificate of incorporation
of the Surviving Corporation and the DGCL.
Section 2.6. Directors of Surviving Corporation. The
individuals identified on Schedule 2.6 hereto shall be the initial directors of
the Surviving Corporation and will hold office from the Effective Time until
their respective successors are duly elected or appointed and qualify in the
manner provided in the certificate of incorporation and by-laws of the Surviving
Corporation, or as otherwise provided by the DGCL.
Section 2.7. Officers. The individuals identified on Schedule
2.7 hereto shall be the initial officers of the Surviving Corporation and will
hold office from the Effective Time until their respective successors are duly
elected or appointed and qualify in the manner provided in the certificate of
incorporation and by-laws of the Surviving Corporation, or as otherwise provided
by the DGCL.
Section 2.8. Conversion of Company Shares and Company Options.
At the Effective Time:
(a) By virtue of the Merger and without any action on the part
of Seller other than the transfer of the stock of Sodexho Canada to Parent, all
shares of common stock, par value $0.001 per share, of Company (each, a "Company
Share") issued and outstanding immediately prior to the Effective Time (all of
which are held by Seller) shall be converted into the right to receive, and
become exchangeable for, a number of shares of validly issued, fully paid and
nonassessable common stock of Parent, par value $1.00 per share (the "Parent
Common Stock") (each such share, a "Parent Share"), upon the surrender of the
certificate(s) formerly representing such Company Shares, such that Seller
shall, in the aggregate, have the right to receive a number of Parent Shares
which, when added to Parent Shares issuable upon exercise of options issued
pursuant to Section 2.8(c), equal 49% of the Parent Shares (other than Parent
Shares held in the treasury of Parent or held by any wholly owned Subsidiary of
Parent) issued and outstanding immediately after the Effective Time. As used in
this Agreement, (x) the term "Subsidiary" means with respect to any Person, (a)
any corporation of which at least a majority in interest of the outstanding
voting stock (having by the terms thereof voting power under ordinary
circumstances to elect a majority of the directors of such corporation,
irrespective of whether or not at the time stock of any other 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, directly or indirectly, owned or
controlled by such Person, by one or more Subsidiaries of such Person, or by
such Person and one or more of its Subsidiaries, or (b) any non-corporate entity
in which such Person, one or more subsidiaries of such Person, or such Person
and one or more Subsidiaries of such Person, directly or indirectly, at the date
of determination thereof, has at least majority ownership interest; and (y) the
term "Person" means any individual, corporation, partnership, association,
trust, estate or other entity or organization, including any governmental entity
or authority.
The Parent Shares issuable under this Agreement (including
upon exercise of options issued pursuant to Section 2.8(c), unless Parent Shares
issuable thereunder are covered by an effective registration statement on Form
S-8 or other appropriate form) shall not be registered or qualified under the
Securities Act or any state securities law, and shall bear the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAW. NO TRANSFER OR SALE OF THESE SECURITIES OR ANY INTEREST
THEREIN MAY BE MADE WITHOUT SUCH REGISTRATION AND QUALIFICATION UNLESS
THE ISSUER RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES REASONABLY SATISFACTORY TO THE ISSUER STATING THAT SUCH
TRANSFER OR SALE DOES NOT REQUIRE REGISTRATION OR QUALIFICATION UNDER
APPLICABLE LAW.
(b) Each Company Share held in the treasury of Company or held
by any Subsidiary of Company immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be cancelled and retired and cease to exist.
(c) Pursuant to Company's 1996 Stock Option Plan, Company has
granted, and there are currently outstanding, 381,300 options, each of which
accords the holder thereof the right to purchase a Company Share (each, a
"Company Option"). Each holder of Company Options outstanding immediately prior
to the Effective Time shall have their Company Options treated as follows: (i)
42% of the Company Options held by such holder shall be settled in cash for
$36.21 each; and (ii) 58% of the Company Options held by such holder shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into the right to receive, and become exchangeable for, options to
purchase Parent Shares on terms determined by the Surviving Corporation's Board
of Directors within two days after the Closing Date (as defined in Section
2.10), the number and exercise price of such options to be determined in
accordance with the methodology set forth in Section 424 of the Internal Revenue
Code of 1986, as amended (the "Code").
Section 2.9. Conversion of Acquisition Shares. Each share of
common stock of Acquisition (each such share, an "Acquisition Share") issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, be converted
into and exchangeable for one share of common stock of the Surviving
Corporation. From and after the Effective Time, Acquisition shall be entitled to
treat outstanding certificates which immediately prior to the Effective Time
represented Acquisition Shares as evidencing ownership of the number of shares
of common stock of the Surviving Corporation (the "Surviving Corporation
Shares") which the holder of the Acquisition Shares represented by such
certificates is entitled to receive pursuant to this Section 2.9, and the holder
of such certificates shall not be required to surrender such certificates for
exchange. Surviving Corporation Shares which the holder of Acquisition Shares is
entitled to receive in the Merger shall be deemed to have been issued at the
Effective Time.
Section 2.10. Closing. The closing (the "Closing") of the
transactions contemplated by this Agreement and the Transaction Documents (as
defined in Section 3.1(a)) shall take place at the offices of O'Melveny & Myers
LLP, 555 13th Street, N.W., Washington, D.C., on the last day of Parent's
accounting period immediately following (a) the vote of stockholders of Parent
approving and adopting the Merger, the Distribution and the transactions
contemplated thereby (assuming each of the other conditions set forth in Article
VII has been satisfied or waived), or (b) such later date on which the last of
the conditions set forth in Article VII hereof is satisfied or waived, or at
such other time and place as Parent, Acquisition, Spinco, Seller and Company
shall agree (the date on which the Closing occurs being the "Closing Date").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND COMPANY
Except as otherwise indicated on Seller's Disclosure Schedule
dated September 30, 1997 previously delivered to Parent and Acquisition
("Seller's Disclosure Schedule"), Seller and Company each represent and warrant
to Parent and Acquisition as follows:
Section 3.1. Organization.
(a) Each of Seller and each Acquired Company is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. Each Acquired Company is duly qualified or licensed and
in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed and in good standing would
not, when taken together with all other such failures, have or reasonably be
expected to have a material adverse effect on (x) the business, operations,
properties, assets, conditions (financial or other) or results of operations of
Seller and its Subsidiaries taken as a whole, or the ability of Seller to
perform its obligations under or to consummate the transactions contemplated by
this Agreement and the Transaction Documents (as defined below) (a "Seller
Material Adverse Effect"), or (y) the business, operations, properties, assets,
conditions (financial or other) or results of operations of the Acquired
Companies and their Subsidiaries taken as a whole, or the ability of either
Acquired Company to perform its obligations under or consummate the transactions
contemplated by this Agreement and the Transaction Documents (a "Company
Material Adverse Effect"). True, accurate and complete copies of the certificate
of incorporation and by-laws (or other organizational documents) of each
Acquired Company, as in effect on the date hereof, including all amendments
thereto, have heretofore been delivered to Parent. For purposes of this
Agreement, "Transaction Documents" means the Omnibus Restructuring Agreement
dated as of the date hereof among the parties hereto (the "Omnibus Agreement"),
the Distribution Agreement, the UK Stock Purchase Agreement, the Certificate of
Merger, the Tax Sharing Agreement (as defined in Section 6.13), the documents to
be entered into consistent with the Corporate Governance Term Sheet attached
hereto as Exhibit D, the Assistance Agreement in the form attached hereto as
Exhibit E-1, the Royalty Agreement to be entered into consistent with the
Royalty Agreement Term Sheet attached hereto as Exhibit E-2 and, to the extent
not included in any of the foregoing, each Related Agreement (as defined in the
Distribution Agreement).
(b) Neither Acquired Company has any Subsidiaries except those
listed in Section 3.1(b) of Seller's Disclosure Schedule. Neither Acquired
Company has any interest, direct or indirect, or any commitment to purchase any
interest, direct or indirect, in any other Person. The business of each Acquired
Company and its Subsidiaries reflected in the Acquired Company Financial
Statements (as defined in Section 3.6) has not been conducted through any other
Subsidiaries or Affiliates (as defined below) of Seller. Except as disclosed in
Section 3.1(b) of Seller's Disclosure Schedule, each direct and indirect
Subsidiary of each Acquired Company is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
Each Subsidiary of each Acquired Company is duly qualified or licensed and in
good standing to do business in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except in such jurisdictions where
the failure to be so duly qualified or licensed and in good standing would not,
when taken together with all other such failures, have or reasonably be expected
to have a Company Material Adverse Effect. Neither Acquired Company nor their
respective Subsidiaries derive any revenue from business outside of the United
States of America and Canada. As used in this Agreement, "Affiliate" means, with
respect to any specified Person, any other Person directly or indirectly
controlling or controlled by, or under direct or indirect common control with,
such specified Person. For purposes of this definition, "control," when used
with respect to any Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing.
Section 3.2. Capitalization.
(a) The authorized capital stock of Company consists of
10,820,000 Company Shares, of which 10,417,000 Company Shares are issued and
outstanding, all of which are owned beneficially and of record by Seller. The
authorized capital stock of Sodexho Canada consists of 90,238 shares of common
stock, all of which are issued, outstanding and owned beneficially and of record
by Seller. All of the issued and outstanding Company Shares and shares of
capital stock of Sodexho Canada are validly issued, fully paid and
non-assessable and free of preemptive rights and are free and clear of any
liens, claims, encumbrances, security interests, equities, charges and options
of any nature whatsoever (collectively, "Encumbrances"). Except as set forth in
Section 3.2(a) of Seller's Disclosure Schedule, there are not now, and at the
Effective Time there will not be, any shares of capital stock of either Acquired
Company issued or outstanding or any outstanding subscriptions, options, calls,
contracts, commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any outstanding
security, instrument or other agreement obligating either Acquired Company or
any Subsidiary of either Acquired Company to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of the capital stock of either
Acquired Company or obligating either Acquired Company or any of their
Subsidiaries to grant, extend or enter into any such agreement or commitment.
Following the Merger, neither Acquired Company will have any obligation to
issue, transfer or sell any shares of its capital stock pursuant to any employee
benefit plan or otherwise.
(b) There are not now, and at the Effective Time there will
not be, any voting trusts, proxies or other agreements or understandings to
which Seller or any Subsidiary of Seller is a party or is bound with respect to
the voting of any shares of capital stock of either Acquired Company or any of
their Subsidiaries.
(c) All of the issued and outstanding shares of capital
stock (or other equity interests) of each Subsidiary of each Acquired
Company are validly issued, fully paid and non-assessable and free of
preemptive rights, and those owned directly or indirectly by each Acquired
Company are owned free and clear of any Encumbrances. Each Acquired
Company owns directly or indirectly all of the issued and outstanding
shares of the capital stock (and other equity interests) of its
Subsidiaries. Except as set forth in Section 3.2(c) of Seller's Disclosure
Schedule, there are not now, and at the Effective Time there will not be,
any shares of capital stock (or other equity interests) of any Subsidiary
of either Acquired Company issued or outstanding or any outstanding
subscriptions, options, calls, contracts, commitments, understandings,
restrictions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument or other
agreement obligating either Acquired Company or any Subsidiary of either
Acquired Company to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of the capital stock (or other equity
interests) of any Subsidiary of such Acquired Company or obligating such
Acquired Company or any of its Subsidiaries to grant, extend or enter into
any such agreement or commitment.
Section 3.3. Authority Relative to this Agreement. Each
of Seller and Company has full corporate power and authority to execute and
deliver this Agreement and each Transaction Document to which it is a
party, as the case may be, and, subject to the Required Regulatory
Approvals (as defined below), to consummate the transactions contemplated
hereby and thereby. The execution and delivery by each of Seller and
Company of this Agreement and each Transaction Document to which it is a
party and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by the Boards of Directors of
Seller and Company, and Seller, as holder of all the outstanding Company
Shares, has approved and adopted this Agreement and the Merger. No other
corporate proceedings on the part of Seller or Company, including any
approval by the stockholders of Seller, are or will be necessary to
authorize this Agreement or any Transaction Document or to consummate the
transactions contemplated hereby or thereby. This Agreement has been duly
and validly executed and delivered by each of Seller and Company and
constitutes a valid and binding agreement of each of Seller and Company,
and each Transaction Document to which Seller or Company will be a party,
when executed and delivered by such party, will be a valid and binding
agreement of each of Seller and Company, enforceable against each of Seller
and Company in accordance with its terms except to the extent that
enforcement thereof may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws,
now or hereafter in effect, relating to the creditors' rights generally and
(b) general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
Section 3.4. Consents and Approvals; No Violations.
(a) Except for any approvals required under the Securities
Exchange Act of 1934, as amended, and all rules and regulations thereunder (the
"Exchange Act"), and the Securities Act of 1933, as amended, and all rules and
regulations thereunder (the "Securities Act"), the expiration of any applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), the confirmation by the Office of Fair Trading of
the United Kingdom (the "OFT") that it is not the intention of the Secretary of
State to refer the transactions contemplated hereby to the Monopolies and
Mergers Commission, the filing and recordation of the Certificate of Merger as
required by the DGCL (such filings and approvals are collectively referred to as
the "Required Regulatory Approvals"), such filings and approvals as may be
required under the "takeover" or "blue sky" laws of various states, and as
disclosed in Section 3.4(a) of Seller's Disclosure Schedule or as contemplated
by this Agreement, no declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any Governmental Entity or any other
Person is necessary for the execution and delivery of this Agreement and the
Transaction Documents by Seller or Company or the consummation by Seller or
Company of the transactions contemplated hereby, other than such declarations,
filings, registrations, notices, authorizations, consents or approvals which, if
not made or obtained, as the case may be, would not, in the aggregate, have or
reasonably be expected to have a Seller Material Adverse Effect or a Company
Material Adverse Effect. For purposes of this Agreement, "Governmental Entity"
means any court, agency, authority, board, bureau, commission, department,
regulatory or administrative body, office or instrumentality of any nature
whatsoever of any governmental or quasi-governmental unit (including the New
York Stock Exchange or any other national stock exchange), whether federal,
state, parish, county, district, municipality, city, political subdivision or
otherwise, domestic or foreign, or any other entity exercising executive,
legislative, judicial regulatory or administrative functions of or pertaining to
government, whether now or hereafter in effect.
(b) Except as set forth in Section 3.4(b) of Seller's
Disclosure Schedule, the execution and delivery by each of Seller and Company of
this Agreement and each Transaction Document to which it is a party do not, and
the consummation by Seller and Company of the transactions contemplated hereby
and thereby will not, in any material respect, violate, conflict with or result
in a breach of any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any Encumbrance upon any of the properties or assets of Seller or
any of its Subsidiaries under any of the terms, conditions or provisions of (i)
the respective charters or by-laws (or other organizational documents) of Seller
or any of its Subsidiaries, (ii) subject to obtaining the Required Regulatory
Approvals, any material Law (as defined below) applicable to Seller or any of
its Subsidiaries or any of their respective properties or assets, (iii) any
Acquired Company Material Contract (as defined in Section 3.14) or (iv) any
material Contract (as defined below) to which Seller or any of its Subsidiaries
is now a party or by which Seller or any of its Subsidiaries or any of their
respective properties or assets may be bound or affected. For purposes of this
Agreement, "Law" means any statute, law, constitutional provision, code,
regulation, ordinance, rule, judgment, order, decree, permit, concession, grant,
franchise, license, agreement, directive, binding guideline or policy or rule of
common law, requirement of, or other governmental restriction of or
determination by, or any interpretation of any of the foregoing by, in each case
whether now or hereafter in existence, any Governmental Entity; and "Contract"
means any agreement, arrangement, note, bond, mortgage, indenture, or other
evidence of indebtedness, commitment, franchise, concession, contract,
indemnity, indenture, instrument, lease (including any real estate lease),
license or understanding, whether or not in writing.
Section 3.5. Absence of Certain Changes. Except (a) as set
forth in Section 3.5 of Seller's Disclosure Schedule or (b) as contemplated by
this Agreement, from August 31, 1996 until the date hereof, neither Acquired
Company nor any of their respective Subsidiaries has (i) taken any actions that,
if taken by an Acquired Company or any of its Subsidiaries during the period
from the date hereof through the Effective Time, would constitute a material
breach of Section 6.1 hereof, (ii) suffered any changes, events or circumstances
that, in the aggregate, would result or reasonably be expected to result in a
Company Material Adverse Effect, or (iii) conducted its business or operations
in any material respect other than in the ordinary and usual course of business,
consistent with past practices.
Section 3.6. No Undisclosed Liabilities. Except in connection
with the Merger and the Distribution or as expressly disclosed and described in
Section 3.6 of Seller's Disclosure Schedule, neither Acquired Company or any of
their respective Subsidiaries had at August 31, 1996, or has incurred since that
date, any liabilities or obligations (whether absolute, accrued, contingent or
otherwise) of any nature except (a) liabilities, obligations or contingencies
(i) which are accrued or reserved against in the financial statements of the
Acquired Companies provided pursuant to Section 3.8 hereof (the "Acquired
Company Financial Statements") or reflected in the notes thereto or (ii) which
were incurred after August 31, 1996 in the ordinary course of business and
consistent with past practices and (b) liabilities, obligations or contingencies
which (x) have not and would not reasonably be expected to have a Seller
Material Adverse Effect or Company Material Adverse Effect or (y) have been
discharged or paid in full prior to the date hereof.
Section 3.7. [Reserved]
Section 3.8. Financial Statements; Changes; Contingencies;
Distributions.
(a) Seller and Company have delivered to Parent (x)
consolidated balance sheets for Company and its Subsidiaries at August 31, 1996
and 1995 and the related consolidated statements of operations, cash flow, and
changes in stockholder's equity for the twelve month periods ended August 31,
1996 and 1995 and (y) consolidated balance sheets for Sodexho Canada and its
Subsidiaries at August 31, 1996 and 1995 and the related consolidated statements
of operations, cash flow and changes in stockholder's equity for the twelve
month periods ended August 31, 1996 and 1995. All such financial statements have
been audited by Price Waterhouse LLP (the "Company Auditors") whose reports
thereon are included with such financial statements. The financial statements
referred to in item (x) above have been prepared in conformity with U.S.
generally accepted accounting principles ("GAAP") applied on a consistent basis
(except for changes, if any, required by GAAP and disclosed therein) and the
financial statements referred to in item (y) above have been prepared in
conformity with Canadian generally accepted accounting principles applied on a
consistent basis (except for changes, if any, required by Canadian generally
accepted accounting principles and disclosed therein). The statements of
operations and cash flow present fairly in all material respects the results of
operations and cash flows of each Acquired Company and its respective
Subsidiaries for the respective periods covered, and the balance sheets present
fairly in all material respects the financial condition of each Acquired Company
and its respective Subsidiaries as of their respective dates. Seller and Company
have made available to Parent and Acquisition copies of each management letter
or other letter delivered to either of them by the Company Auditors (or
management points relating thereto) in connection with such financial statements
or relating to any review by the Company Auditors of the internal controls of
each Acquired Company during the two-year period ended August 31, 1996, and have
made available to the Parent Auditors and/or Parent's management for inspection
all reports and working papers produced or developed by the Company Auditors or
management in connection with their examination of such financial statements,
other than those such reports and working papers prepared by the Company
Auditors relating to (i) assessment of risk of the engagement, (ii) planning for
the engagement, and (iii) other such reports and working papers not customarily
provided by independent auditors to third party purchasers in transactions of
this size and kind. Since August 31, 1994, there has been no change in any of
the significant accounting policies, practices or procedures of either Acquired
Company and/or its Subsidiaries.
(b) Seller and Company have delivered to Parent an unaudited
combined balance sheet for the Acquired Companies and their Subsidiaries at
August 31, 1997, and the related unaudited combined statement of operations for
the year then ended. Such unaudited financial statements have been prepared in
conformity with GAAP applied on a consistent basis except for changes, if any,
required by GAAP and disclosed therein. The statement of operations presents
fairly the results of operations of the Acquired Companies and their
Subsidiaries for such period, and the balance sheet presents fairly in all
material respects the financial condition of the Acquired Companies as of such
date. All such financial statements reflect all adjustments (which, except as
otherwise indicated on such financial statements, consist only of normal
recurring adjustments not material in amount and include estimated provisions
for year-end adjustments) necessary for a fair presentation. At the date of such
balance sheet, neither the Acquired Companies nor any of their Subsidiaries had
any material liability (actual, contingent or accrued) that, in accordance with
GAAP applied on a consistent basis, should have been shown or reflected therein
but was not except for the omission of notes with respect to contingent
liabilities that in the aggregate did not materially exceed those so reported in
the most recent of the audited statements delivered and that were of
substantially the same type as so reported.
(c) Except as set forth in Section 3.8(c) of Seller's
Disclosure Schedule, there has been no dividend or other distribution of assets
or securities whether consisting of money, property or any other thing of value,
declared, issued or paid since the date of the most recent financial statements
described in Section 3.8(a) by either Acquired Company or any of their
Subsidiaries, except for cash dividends paid out in the ordinary course.
Section 3.9. Proxy Statement and Form 10. None of the
information to be provided by Seller or either Acquired Company to Parent or
Acquisition for inclusion in the Proxy Statement or the Form 10 (each as defined
in the Distribution Agreement) (or any registration statement contemplated
pursuant to Article III of the Distribution Agreement) will be false or
misleading with respect to any material fact or will omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
Section 3.10. No Default. Except as set forth in Section 3.10
of Seller's Disclosure Schedule, neither Seller nor any of its Subsidiaries (i)
is in default or violation (and no event has occurred which with notice or the
lapse of time or both would constitute a default or violation) of any term,
condition or provision of its charter or by-laws (or other organizational
documents) or (ii) is in default or violation (and no event has occurred which
with notice or lapse of time or both would constitute a default or violation) in
any material respect of any term, condition or provision of (a) any Acquired
Company Material Contract, or (b) any material order, writ, injunction, decree,
statute, rule or regulation applicable to either Acquired Company or any of
their respective Subsidiaries.
Section 3.11. Litigation; Compliance with Law.
(a) Except as set forth at Section 3.11(a) of Seller's
Disclosure Schedule, as of the date hereof, there are no actions, suits, claims,
proceedings or investigations pending or, to the best knowledge of Seller and
Company, threatened, involving either Acquired Company or any of their
respective Subsidiaries or any of their respective properties or assets (or any
Person whose liability therefrom may have been retained or assumed by either
Acquired Company or any of their respective Subsidiaries either contractually or
by operation of law), by or before any Governmental Entity or by any Person
which have had or would reasonably be expected to result in damages in excess of
$100,000 or have a Company Material Adverse Effect. Neither Acquired Company,
any of their Subsidiaries or any of their respective properties or assets is
subject to any outstanding order, writ, injunction or decree which would
reasonably be expected to have a Seller Material Adverse Effect or a Company
Material Adverse Effect or materially impair or interfere with the operation of
either Acquired Company's business as currently conducted.
(b) Except as set forth in Section 3.11(b) of Seller's
Disclosure Schedule, each Acquired Company and its Subsidiaries are now being
and in the past have been operated in compliance in all material respects with
all Laws.
Section 3.12. Employee Benefit Plans; ERISA.
(a) Except for those matters set forth in Section 3.12(a) of
Seller's Disclosure Schedule, (i) each "employee benefit plan" (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), and all other employee benefit, bonus, incentive, stock option (or
other equity-based), severance, change in control, welfare (including
post-retirement medical and life insurance) and fringe benefit plans (whether or
not subject to ERISA) maintained or sponsored by Company or its Subsidiaries or
any trade or business, whether or not incorporated, that would be deemed under
Section 414 of the Code to be a "single employer" (each, an "ERISA Affiliate")
with Company, for the benefit of any U.S. employee or former U.S. employee of
Company or any of its ERISA Affiliates (the "Company Plans") is, and has been,
operated in all material respects in accordance with its terms and in
substantial compliance (including with respect to the making of governmental
filings) with all applicable Laws, including ERISA and the applicable provisions
of the Code, (ii) each of the Company Plans intended to be "qualified" within
the meaning of Section 401(a) of the Code has been determined by the Internal
Revenue Service (the "IRS") to be so qualified and (iii) there are no material
pending or, to the knowledge of Company, threatened claims (other than routine
claims for benefits) by, on behalf of or against any of the Company Plans or any
trusts related thereto other than routine benefit claim matters. All Company
Plans are listed in Section 3.12(a) of Seller's Disclosure Schedule.
(b) (i) No Company Plan, other than a "multiemployer plan"
(within the meaning of Section 3(37) of ERISA (a "Multiemployer Plan") is
subject to Title IV of ERISA or Section 412 of the Code, (ii) neither Company
nor any of its ERISA Affiliates has incurred any material withdrawal liability
(including any contingent or secondary withdrawal liability) within the meaning
of Sections 4201 and 4204 of ERISA to any Multiemployer Plan which has not been
satisfied in full, and (iii) other than with respect to any Multiemployer Plan,
there has been no act or omission resulting in liability under Chapter 43 of the
Code or Sections 409, 502(c), 502(i), 502(l) or 4071 of ERISA with respect to
any Company Plan.
(c) Neither Company nor any of its ERISA Affiliates has failed
to make any contribution or payment to any Company Plan or Multiemployer Plan
which, in either case has resulted or could result in the imposition of a
material Encumbrance or the posting of a material bond or other material
security under ERISA or the Code.
(d) Except as otherwise set forth on Section 3.12(d) of
Seller's Disclosure Schedule or as expressly provided for in this Agreement, the
consummation of the transactions contemplated by this Agreement will not (i)
entitle any current or former employee or officer of either Acquired Company or
any ERISA Affiliate of Company to severance pay, unemployment compensation or
any other payment, or (ii) accelerate the time of payment or vesting, or
increase the amount of compensation due any such employee or officer.
(e) Except as set forth on Section 3.12(e) of Seller's
Disclosure Schedule, neither Acquired Company nor any of their respective
Subsidiaries have any employment or consulting agreements, written or oral, with
any employees that provide for annual base compensation in excess of $150,000.
Seller has provided to Parent copies of each such employment or consulting
agreement that provides for annual base compensation in excess of $150,000, and
has made all other such agreements available to Parent. Section 3.12(e) of
Seller's Disclosure Schedule sets forth a list of all employees or former
employees of the Acquired Companies or their Subsidiaries to whom any of them
owes severance pay in sums of $150,000 or more as of the date hereof.
(f) Section 3.12(f) of Seller's Disclosure Schedule lists each
employee benefit, bonus, incentive compensation, deferred compensation, pension,
retirement, stock option (or other equity based), severance, change in control,
welfare (including post-retirement medical and life insurance), fringe benefit
plan and any other employment arrangement maintained or sponsored by Sodexho
Canada or any of its Subsidiaries for the benefit of any Canadian employee or
former Canadian employee of Sodexho Canada (the "Company Canadian Plans").
Except as otherwise set forth in Section 3.12(f) of Seller's Disclosure
Schedule, each Company Canadian Plan has been operated in all material respects
in accordance with its terms and in substantial compliance with all applicable
Laws, and there are no material pending or, to the knowledge of either Acquired
Company, threatened claims (other than routine claims for benefits) by, on
behalf of or against any of the Company Canadian Plans or any trusts related
thereto other than routine benefit claim matters. Neither Sodexho Canada nor any
of its Subsidiaries has incurred any material withdrawal liability to any
Company Canadian Plan which would be the equivalent of a Multiemployer Plan, and
neither Sodexho Canada nor any of its Subsidiaries has failed to make any
contribution to any Company Canadian Plan which has resulted or could result in
the imposition of a material Encumbrance. With respect to any Company Canadian
Plan that is a defined benefit plan, (x) Seller has provided Parent with copies
of the most recent actuarial valuation report if an actuarial valuation report
is required by the relevant Canadian Governmental Entity, and (y) except as set
forth in Section 3.12(f) of Seller's Disclosure Schedule, as of the date hereof,
the fair market value of the assets of each such plan (excluding for these
purposes any accrued but unpaid contributions) exceeds the present value of all
benefits accrued under each such plan determined on a basis as required by law
and in accordance with Canadian generally accepted accounting principles applied
on a consistent basis (except for changes, if any, required by Canadian
generally accepted accounting principles and disclosed therein ("Canadian
GAAP")).
Section 3.13. Assets; Intellectual Property.
(a) Except as set forth in Section 3.13(a) of Seller's
Disclosure Schedule, the Acquired Companies and their Subsidiaries collectively
own or have rights to use all material properties and assets (including
Intellectual Property) necessary to permit them to conduct the business of the
Acquired Companies and their Subsidiaries as it is currently being conducted
(the "Company Business"). As used in this Agreement, "Intellectual Property"
means all registered and unregistered trademarks, service marks, service names,
trade styles and trade names (including trade dress and other names, marks and
slogans) and all associated goodwill, all registered and unregistered
copyrights, all patents, all applications for any of the foregoing together with
all rights to use all of the foregoing and all other rights in, to, and under
the foregoing, all know-how, inventions, discoveries, improvements, processes,
formulae (secret or otherwise), specifications, trade secrets, whether
patentable or not, licenses and other similar agreements, confidential
information, and all drawings, records, books or other indicia, however
evidenced, of the foregoing, in each such case, throughout the world.
(b) Neither Acquired Company nor any of their Subsidiaries now
or since January 1, 1995 has used Intellectual Property which conflicts with or
infringes upon any proprietary rights of others except where such conflict or
infringement would not have or reasonably be expected to have a Company Material
Adverse Effect.
(c) Section 3.13(c) of Seller's Disclosure Schedule lists any
and all Intellectual Property that is material to either Acquired Company or any
of their Subsidiaries and in which either Acquired Company or any of their
Subsidiaries has an interest and the nature of such interest therein. Such
assets include all licenses, permits, authorizations or other rights with
respect to any of the foregoing. Except as set forth in Section 3.13(c) of
Seller's Disclosure Schedule, no Acquired Company uses any such Intellectual
Property by consent of any other Person or is required to and does not make any
payments to others with respect thereto. Each Acquired Company and its
Subsidiaries has in all material respects performed all obligations required to
be performed by it and none of such entities is in default in any material
respect under any Material Contract relating to any of the foregoing. Each
Acquired Company and its Subsidiaries have taken reasonable actions necessary to
maintain and protect such Intellectual Property.
Section 3.14. Contracts.
(a) Section 3.14(a) of Seller's Disclosure Schedule lists each
Contract to which either Acquired Company or any of their Subsidiaries is a
party or to which they or any of their properties is subject or by which any
thereof are bound that is an Acquired Company Material Contract (as defined
below). "Acquired Company Material Contracts" are those that (i) after September
1, 1996 obligate either Acquired Company or any of their respective Subsidiaries
to pay an amount of $250,000 or more in any 12 month period, (ii) contain a
covenant not to compete or otherwise significantly restricts business activities
(other than such a covenant that applies only to a particular account covered by
a management agreement or franchise agreement related thereto), (iii) provide
for the extension of credit other than consistent with normal credit terms or in
an aggregate principal amount of more than $15,000,000, or provide for the
mortgage, pledge or grant of a security interest in assets of either Acquired
Company or any of their Subsidiaries or for a guarantee by either Acquired
Company or any of their Subsidiaries of the obligations of any other Person,
(iv) contain a right or obligation of or to any Affiliate of Seller other than
the Acquired Companies and their Subsidiaries, or to any officer or director of
either Acquired Company or any of their Subsidiaries, other than those Contracts
entered into in the ordinary course of business, (v) represent a Contract
contributing unit level profit equal to or exceeding 2% of aggregate unit level
profit measured for the most recently concluded fiscal year, (vi) require either
Acquired Company or any of their Subsidiaries to buy or sell goods or services
with respect to which there will be material losses or will be costs and
expenses materially in excess of expected receipts, (vii) are for the employment
of any officer or employee and provide for annual base compensation in excess of
$150,000, or are "golden parachute" or similar agreements with any officer or
employee, (viii) are with any labor union, (ix) are with any vendor,
manufacturer, or distributor or representative and have an unexpired term as of
August 31, 1997 of one year or more and contain any dollar or volume purchasing
requirements in excess of $250,000, (x) are with the federal government or a
governmental agency or department exceeding $250,000 in annual revenues, (xi)
are a lease to or from either Acquired Company or any of their Subsidiaries of
real or personal property with individual monthly rental amounts of at least
$10,000, (xii) were not made in the ordinary course of business, (xiii) create
any joint ventures, partnerships or other similar arrangements, or (xiv) contain
a "change of control" or similar provision relating to a change of control of
either Acquired Company or any of their Subsidiaries triggered by the
transactions contemplated by this Agreement or any Transaction Document. Unless
so noted in Section 3.14(a) of Seller's Disclosure Schedule, each such Acquired
Company Material Contract was entered into in the ordinary course of business.
True, correct and complete copies of the Acquired Company Material Contracts,
including all amendments and supplements, have been made available to Parent.
Each Acquired Company Material Contract is valid and subsisting; the Acquired
Company party thereto has duly performed in all material respects all its
obligations thereunder to the extent that such obligations to perform have
accrued; and no material breach or default, alleged material breach or default,
or event which would (with the passage of time, notice or both) constitute a
material breach or default thereunder by such Acquired Company, as the case may
be (or, to the best knowledge of Seller, any other party or obligor with respect
thereto), has occurred or as a result of this Agreement or its performance will
occur. Except as set forth in Section 3.14(a)(xv) of Seller's Disclosure
Schedule, consummation of the transactions contemplated by this Agreement will
not (and will not give any Person a right to) terminate or modify any rights of,
or accelerate or augment any obligation of, either Acquired Company under any
Acquired Company Material Contract.
(b) During the twelve months immediately prior to the date
hereof, no contract of either Acquired Company or its Subsidiaries with a
customer that, but for its cancellation or termination, would be deemed an
Acquired Company Material Contract pursuant to clause (v) of Section 3.14(a),
has been cancelled or otherwise terminated and during such time, to the
knowledge of Seller, no such cancellation or termination has been threatened.
(c) Seller has delivered to Parent, pursuant to a letter dated
September 30, 1997, (i) a complete list of client management accounts of the
Acquired Companies and their Subsidiaries, as of August 31, 1997, (ii) each
binding bid of either Acquired Company or their Subsidiaries providing for an
investment of $250,000 or more over the life of the proposed Contract and (iii)
an aging schedule of all accounts receivable of the Company and its Subsidiaries
as of August 31, 1997, and an aging schedule of all accounts receivable of
Sodexho Canada and its Subsidiaries as of August 15, 1997.
Section 3.15. Taxes. Except as otherwise disclosed in Section
3.15 of Seller's Disclosure Schedule:
(a) Each Acquired Company and its Subsidiaries have filed (or
have had filed on their behalf) or will file or cause to be filed, all Tax
Returns (as defined in Section 3.15(i) hereof) required by applicable Law to be
filed by any of them prior to the Effective Time, and all such Tax Returns and
amendments thereto are, or when filed will be, true, complete and correct in all
material respects.
(b) Each Acquired Company and its Subsidiaries have paid (or
have had paid on their behalf) all Taxes (as defined in Section 3.15(i) hereof)
due with respect to any period ending prior to or as of the Effective Time, or
where payment of Taxes is not yet due, have established (or have had established
on their behalf and for their sole benefit and recourse), or will establish or
cause to be established before the consummation of the Effective Time, an
adequate accrual for the payment of all such Taxes which have accrued prior to
the Effective Time. The accrual for Taxes set forth on the balance sheet of each
Acquired Company and its Subsidiaries at August 31, 1996 referenced in Section
3.8 hereof is adequate for the payment of all Taxes accrued as of such date.
(c) There are no Encumbrances for any Taxes upon the
properties or assets of either Acquired Company or any of their Subsidiaries,
other than statutory liens for Taxes not yet due and payable and Encumbrances
for real estate Taxes being contested in good faith.
(d) No Audit (as defined in Section 3.15(i) hereof) is pending
with respect to any Taxes due from either Acquired Company or any of their
Subsidiaries. There are no outstanding waivers extending the statutory period of
limitation relating to the payment of Taxes due from either Acquired Company or
any of their Subsidiaries for any taxable period ending on or prior to the
Effective Time.
(e) Neither Acquired Company nor any of their Subsidiaries is
a party to, is bound by, or has any obligation under, a tax sharing contract or
other agreement or arrangement for the allocation, apportionment, sharing,
indemnification, or payment of Taxes.
(f) Neither Company nor any of its Subsidiaries has made an
election under Section 341(f) of the Code.
(g) The statute of limitations for all Tax Returns of each
Acquired Company and its Subsidiaries for all years through 1993 have expired
for all federal, state, local and foreign tax purposes, or such Tax Returns have
been subject to a final Audit.
(h) Neither Acquired Company nor any of their Subsidiaries has
received any written notice of any material deficiency, assessment or adjustment
from the IRS or any other domestic or foreign governmental taxing authority that
has not been fully paid or finally settled, and any such deficiency, adjustment
or assessment shown on such schedule is being contested in good faith through
appropriate proceedings and adequate reserves have been established under
Acquired Company's financial statements therefor. To the best knowledge of
Seller, there are no material deficiencies, assessments or adjustments
threatened, pending or assessed with respect to either Acquired Company or any
of their Subsidiaries, other than those referred to in the immediately preceding
sentence.
(i) For purposes of this Agreement: "Audit" means any audit,
assessment or other examination of Taxes or Tax Returns by the IRS or any other
domestic or foreign governmental authority responsible for the administration of
any Taxes, proceeding or appeal of such proceeding relating to Taxes; "Taxes"
means all federal, state, local and foreign taxes, and other assessments of a
similar nature (whether imposed directly or through withholding) including, but
not limited to income, excise, withholding, property, sales, use (or any similar
taxes), gains, transfer, franchise, payroll, value-added, Social Security,
business license fees, customs, duties and other taxes, assessments, charges, or
other fees imposed by a governmental authority, including any interest,
additions to tax, or penalties applicable thereto; and "Tax Returns" means all
federal, state, local and foreign tax returns, declarations, statements,
reports, schedules, forms and information returns and any amended Tax Return
relating to Taxes.
Section 3.16. Labor Matters. Except as set forth in Section
3.16 of Seller's Disclosure Schedule, neither Acquired Company nor any of their
Subsidiaries has, since December 31, 1996, (i) been subject to, or, to the
knowledge of Seller, threatened with, any material strike, lockout or other
labor dispute or engaged in any material unfair labor practice, or (ii) received
written notice of any pending petition for certification before the National
Labor Relations Board with respect to any material group of employees of either
Acquired Company or any Subsidiary which is not currently organized.
Section 3.17. Accounting Records; Internal Controls. Each
Acquired Company and its Subsidiaries have records that accurately and validly
reflect its transactions, and accounting controls sufficient to insure that such
transactions are (i) executed in accordance with management's general or
specific authorization and (ii) recorded in conformity with GAAP or Canadian
generally accepted accounting principles, as the case may be, so as to maintain
accountability for assets.
Section 3.18. Insurance. Except as set forth in Section 3.18
of Seller's Disclosure Schedule, each Acquired Company and its Subsidiaries are,
and at all times since their organization have been, insured with reputable
insurers (or self-insured) against all risks normally insured against, and in
such amounts as are customary, by companies in similar lines of business, and
all of the insurance policies and bonds required to be maintained by each
Acquired Company and its Subsidiaries are in full force and effect. Section 3.18
of Seller's Disclosure Schedule lists all insurance policies and bonds that are
material to the Company Business. Amounts reserved for all risks covered by
self-insurance on the combined balance sheet for the Acquired Companies and
their Subsidiaries delivered pursuant to Section 3.8(b) are reasonable and
customary. Neither Acquired Company nor any of their Subsidiaries is in default
in any material respect under any such policy or bond. Each Acquired Company and
each of their Subsidiaries has timely filed claims with insurers with respect to
all material matters and occurrences for which it has coverage. All insurance
policies maintained by each Acquired Company and its Subsidiaries will remain in
full force and effect and may reasonably be expected to be renewed (or replaced
with comparable policies) on reasonably comparable terms in favor of Parent
following consummation of the Merger (subject to such entities' continuing
compliance with the applicable terms thereof and any right of insurers to
terminate without cause), and neither Acquired Company nor any of its
Subsidiaries has received notice or other indication from any insurer or agent
of any intent to cancel or not so renew any of such insurance policies.
Section 3.19. Permits. Each Acquired Company and its
Subsidiaries holds all material Permits (as defined below) that are required by
any Governmental Entity to permit it to conduct the Company Business as now
conducted, and all such Permits are valid and in full force and effect and will
remain in full force and effect upon consummation of the Merger, except for
those Permits identified on Section 3.19 of Seller's Disclosure Schedule. To the
knowledge of Seller and Company, no suspension, cancellation or termination of
any of such Permits is threatened or imminent as a result of the transactions
contemplated by this Agreement or otherwise. As used herein, "Permit" means any
license, permit, franchise, certificate of authority or order, or any extension,
modification or waiver of the foregoing, issued by any Governmental Entity.
Section 3.20. Business Relationships. Section 3.20 of Seller's
Disclosure Schedule lists the names of and describes all Contracts with the
three largest distributors of goods and the ten largest producers of goods
purchased by each Acquired Company and its Subsidiaries (by dollar volume for
the most recently ended fiscal year). To the knowledge of Seller and Company, no
material supplier or distributor is reasonably likely to cease supplying or
distributing, as the case may be, goods or services or substantially reduce its
supplies or distribution services in relation to the Company Business as a
result of the consummation of this Agreement and the transactions contemplated
hereby.
Section 3.21. Environmental Compliance. Except as set forth in
Section 3.21 of Seller's Disclosure Schedule:
(a) The Company Real Property (as defined below) and the
improvements thereon and the soil and groundwater thereunder (i) do not contain
and are not contaminated by any Hazardous Material (as defined below) in
violation of any Environmental Law (as defined below); (ii) do not contain
underground storage tanks in violation of any Environmental Law; (iii) are not
used in violation of any Environmental Law for the generation, treatment,
storage or disposal of any Hazardous Material, or for mining, land filling,
dumping or commercial petroleum product storage purposes, or as a gasoline
station or a dry cleaning establishment; (iv) have not had any release of any
Hazardous Material from, on, in or upon it that would reasonably be expected to
result in a material liability to either Acquired Company; and (v) have never
been the subject of any material remedial action or a lien or encumbrance for an
environmental problem.
(b) Each Acquired Company is in material compliance with all
Environmental Laws and has obtained and is in material compliance with all
permits required pursuant to Environmental Laws, and neither Acquired Company
nor Seller has received any notices, demands, requests for information,
complaints or orders, and no investigation, action, claim, suit or proceeding is
pending or threatened by any Governmental Entity, with respect to any matters
relating to either Acquired Company and relating to or arising out of any
Environmental Laws.
(c) There are no material liabilities of or relating to either
Acquired Company arising under or relating to any Environmental Law, and to the
best knowledge of Seller, there are no facts, conditions, circumstances or
situations which could reasonably be expected to result in or be the basis for
any such liability.
(d) Seller has delivered to Parent the true and complete
copies of all documents, notices, reports, studies, analyses, tests, permits and
other written materials identified in Section 3.21 of Seller's Disclosure
Schedule and any environmental reports or audits in the possession of Seller or
either Acquired Company relating to the Company Real Property.
(e) As used herein, "Company Real Property" means all assets
of either Acquired Company or any of their Subsidiaries consisting of real
property, appurtenances thereto, rights in connection therewith, and any
interest therein, whether owned or leased; "Environmental Laws" means any
applicable federal, state or local law, statute, ordinance, common law, rule,
regulation, permit, directive, license, guidance, order, or other legal
requirement, in each case as in effect on the date hereof, relating to the
protection of human health and safety or the environment, including any
requirement pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of hazardous or toxic materials.
Without limiting the foregoing, each of the following is an Environmental Law:
the Comprehensive Environmental Response, Compensation, and Liability Act (42
U.S.C. ss. 9601 et seq.), the Hazardous Material Transportation Act (49 U.S.C.
ss. 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. ss.
6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. ss. 1251 et
seq.), the Clean Air Act (42 U.S.C. ss. 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. ss. 2601 et seq.), the Safe Drinking Water Act (42
U.S.C. ss. 300f et seq.), the Occupational Safety and Health Act (29 U.S.C.
ss. 651 et seq.), and the Atomic Energy Act (42 U.S.C. ss. 2011 et seq.),
as such laws have been amended or supplemented as of the date hereof, and
each similar applicable federal, state or local statute, and each rule and
regulation promulgated under such federal, state and local laws; "Hazardous
Material" means any substance or material meeting any one or more of the
following criteria: (i) it is or contains a substance designated as a
hazardous waste, hazardous substance, hazardous material, pollutant,
contaminant or toxic substance under any Environmental Law; (ii) it is
toxic, explosive, corrosive, reactive, ignitable, infectious, radioactive,
mutagenic or otherwise hazardous; (iii) its presence at some quantity
requires investigation, notification or remediation under any Environmental
Law or common law; or (iv) it is or contains, without limiting the
foregoing clauses (i)-(iii), asbestos, polychlorinated biphenyls, petroleum
hydrocarbons, petroleum derived substances or waste, crude oil or any
fraction thereof, nuclear fuel or waste, natural gas or synthetic gas.
Section 3.22. Accounts Receivable. The accounts receivable
of the Acquired Companies and their Subsidiaries were incurred in the ordinary
course of business and are not subject in the aggregate to material
counterclaim or set-off.
Section 3.23. Transactions with Certain Persons. Except as set
forth on Section 3.23 of Seller's Disclosure Schedule, during the past three
years neither Acquired Company nor any of their Subsidiaries have purchased or
leased any property or obtained any services from, or sold or leased any
property or furnished any services to (except with respect to remuneration for
services rendered as a director, officer or employee of either Acquired Company
or any of their Subsidiaries), in the ordinary course of business or otherwise,
Seller, any Affiliate of Seller or any of their respective officers, directors
or employees, holders, directly or indirectly, of 10 percent or more of their
outstanding capital stock, or, to the knowledge of Seller, any spouse, child or
parent of any of the foregoing.
Section 3.24. Certain Fees. Neither Acquired Company nor any
of their Subsidiaries has employed any financial advisor or finder or incurred
any liability for any financial advisory or finders' fees in connection with
this Agreement or the transactions contemplated hereby.
Section 3.25. Certain Operations. Except as set forth on
Section 3.25 of Seller's Disclosure Schedule, neither Acquired Company nor any
of their Subsidiaries is or will be engaged at the Effective Time in any
activity or business that either (x) comes within the definition of Host
Business (as defined in the Noncompetition Agreement dated as of October 8,
1993, as amended, among Parent, Host Marriott Corporation and Host Marriott
Services Corporation) or (y) would, if engaged in by Parent, breach the terms of
the Noncompetition Agreement dated as of December 15, 1989 among Parent (as
assignee of Host Marriott Corporation), Host International, Inc., Caterair
Holdings Corporation and Caterair International Corporation.
Section 3.26. Investment Representation. Seller is acquiring
the Parent Shares to be issued in the Merger for its own account, for investment
purposes only and not with a view to or for sale in connection with the
distribution thereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION
Except as otherwise indicated on Parent's Disclosure Schedule
dated September 30, 1997 previously delivered to Seller and Company, Parent and
Acquisition represent and warrant to Seller and Company as follows:
Section 4.1. Organization.
(a) Each of Parent and its Subsidiaries that will be owned,
directly or indirectly, by Parent following the Distribution (the "Retained
Subsidiaries") is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. Each of Parent and the
Retained Subsidiaries is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification or
licensing necessary, except in such jurisdictions where the failure to be so
duly qualified or licensed and in good standing would not, when taken together
with all other such failures, have or reasonably be expected to have a material
adverse effect ("Parent Material Adverse Effect") on (x) the business,
operations, properties, assets, conditions (financial or other) or results of
operations of the Retained Business (as defined below), as a whole or (y) the
ability of Parent or Acquisition to perform their respective obligations under
or consummate the transactions contemplated by this Agreement or, in the case of
Parent, the Distribution Agreement or any other Transaction Document. True,
accurate and complete copies of each of Parent's and Acquisition's certificates
of incorporation and by-laws, in each case as in effect on the date hereof,
including all amendments thereto, have heretofore been delivered to Seller and
Company. For purposes of this Agreement, "Retained Business" has the meaning set
forth in the Distribution Agreement; provided that, for all purposes of this
Agreement (other than the net tangible assets adjustment contemplated by Section
2.8(f) of the Distribution Agreement), (i) the Retained Business will be deemed,
from the date hereof until the consummation of the transactions contemplated by
the UK Stock Purchase Agreement, to include the business and operations of MMS
UK, and (ii) thereafter, the Retained Business will be deemed not to include the
business and operations of MMS UK.
(b) After the Distribution, Parent will have no Subsidiaries
other than the Retained Subsidiaries, all of which are listed in Schedule
4.1(b). At such time, except as set forth in this Agreement or in Section
4.14(a)(xiii) of Parent's Disclosure Schedule, Parent will have no interest,
direct or indirect, and will have no commitment to purchase any interest, direct
or indirect, in any other Person. Except as set forth in Section 4.1(b) of
Parent's Disclosure Schedule, the business of Parent and the Retained
Subsidiaries reflected in the Retained Business Financial Statements (as defined
in Section 4.6) has not been conducted through any other Subsidiaries or
Affiliates of Parent. Each Retained Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
Each Retained Subsidiary is duly qualified or licensed and in good standing to
do business in each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such qualification or
licensing necessary, except in such jurisdictions where the failure to be so
duly qualified or licensed and in good standing would not, when taken together
with all other such failures, have or reasonably be expected to have a Parent
Material Adverse Effect.
Section 4.2. Capitalization.
(a) The authorized capital stock of Parent consists of
301,000,000 shares, consisting of 300,000,000 Parent Shares and 1,000,000 shares
of preferred stock of Parent. At September 26, 1997, 127,503,586 Parent Shares
were issued and outstanding and no shares of preferred stock of Parent were
outstanding. All of the issued and outstanding Parent Shares are validly issued,
fully paid and non-assessable and free of preemptive rights. As of September 26,
1997, 13,800,151 Parent Shares were issuable upon the exercise of outstanding
vested and non-vested options and as of September 12, 1997, 4,434,452 Parent
Shares were issuable upon the vesting of deferred bonus awards and deferred
stock agreements (together, "Parent Stock Options") granted under any stock
option plan, program or similar arrangement of Parent or any of its
Subsidiaries, each as amended (excluding cash balances in Parent's employee
stock purchase plan). Since September 12, 1997, Parent has not granted any
Parent Stock Options or issued any shares of its capital stock except as set
forth on Section 4.2(a) of Parent's Disclosure Schedule or except upon exercise
of Parent Stock Options or pursuant to any existing Parent Plan in accordance
with the current terms of such Parent Plan. Except (i) as set forth in Section
4.2(a) of Parent's Disclosure Schedule, (ii) pursuant to Plans listed on Section
4.12(a) of Parent's Disclosure Schedule, (iii) as provided in the Benefits
Allocation Agreement (as defined in the Distribution Agreement), (iv) pursuant
to the LYONs (as defined in the Distribution Agreement) and any amendments
thereto contemplated by the Distribution Agreement and (v) pursuant to the
Parent Rights Plan (as defined in Section 4.25), there are not now, and at the
Effective Time there will not be, any shares of capital stock of Parent issued
or outstanding or any outstanding subscriptions, options, calls, contracts,
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement obligating Parent or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
Parent Shares or obligating Parent or any of its Subsidiaries to grant, extend
or enter into any such agreement or commitment.
(b) The authorized capital stock of Acquisition consists of
100 Acquisition Shares, of which 100 Acquisition Shares were issued and
outstanding, all of which are owned beneficially and of record by Parent. All of
the issued and outstanding Acquisition Shares are validly issued, fully paid and
non-assessable and free of preemptive rights and are free and clear of any
Encumbrances. Except as set forth in Section 4.2(b) of Parent's Disclosure
Schedule, there are not now, and at the Effective Time there will not be, any
shares of capital stock of Acquisition issued or outstanding or any outstanding
subscriptions, options, calls, contracts, commitments, understandings,
restrictions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument or other
agreement obligating Acquisition to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of the capital stock of Acquisition
or obligating Acquisition to grant, extend or enter into any such agreement or
commitment. Following the Merger, Acquisition will have no obligation to issue,
transfer or sell any shares of its capital stock pursuant to any employee
benefit plan or otherwise.
(c) There are not now, and at the Effective Time there will
not be, any voting trusts, proxies or other agreements or understandings to
which Parent or any Subsidiary of Parent is a party or is bound with respect to
the voting of any shares of capital stock of Parent or any Retained Subsidiary.
(d) All of the issued and outstanding shares of capital stock
(or other equity interests) of each Retained Subsidiary are validly issued,
fully paid and non-assessable and free of preemptive rights, and those owned
directly or indirectly by Parent are owned free and clear of any Encumbrances.
Parent owns directly or indirectly all of the issued and outstanding shares of
the capital stock (and other equity interests) of each Retained Subsidiary.
Except as set forth in Section 4.2(d) of Parent's Disclosure Schedule, there are
not now, and at the Effective Time there will not be, any shares of capital
stock (or other equity interests) of any Retained Subsidiary issued or
outstanding or any outstanding subscriptions, options, calls, contracts,
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement obligating Parent or any Retained Subsidiary to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of the capital stock (or other equity interests) of any Retained
Subsidiary or obligating Parent or any Retained Subsidiary to grant, extend or
enter into any such agreement or commitment.
Section 4.3. Authority Relative to this Agreement. Each of
Parent and Acquisition has full corporate power and authority to execute and
deliver this Agreement, the Distribution Agreement and each other Transaction
Document to which it is a party, as the case may be, and, subject to the
Required Regulatory Approvals, to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement, the
Distribution Agreement and each other Transaction Document by Parent or
Acquisition, and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by the Boards of Directors of
Parent and Acquisition, and no other corporate proceedings on the part of Parent
or Acquisition, are or will be necessary to authorize this Agreement, the
Distribution Agreement or any other Transaction Document or to consummate the
transactions contemplated hereby and thereby other than (x) the approval and
adoption of the Distribution and the Merger and related matters by the
stockholders of Parent (the "Parent Stockholder Approvals") and (y) the
establishment by the Board of Directors of Parent of the date for taking a
record of the holders of Parent's common stock entitled to participate in the
Distribution and the date on which the Distribution shall be effected. This
Agreement and the Distribution Agreement each has been duly and validly executed
and delivered by each of Parent and Acquisition, and constitutes a valid and
binding agreement of each of Parent and Acquisition, as the case may be, and
each other Transaction Document to which Parent or Acquisition will be a party,
when executed and delivered by the parties thereto, will be a valid and binding
agreement of each of Parent and Acquisition, as the case may be, enforceable
against each of Parent and Acquisition, as the case may be, in accordance with
their respective terms except to the extent that enforcement thereof may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws, now or hereafter in effect, relating to the
creditors' rights generally and (b) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
Section 4.4. Consents and Approvals; No Violations.
(a) Except for the Required Regulatory Approvals, Parent
Stockholder Approvals, such filings and approvals as may be required under the
"takeover" or "blue sky" laws of various states, and as disclosed in Section
4.4(a) of Parent's Disclosure Schedule or as contemplated by this Agreement, no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any Governmental Entity or any other Person is necessary
for the execution and delivery of this Agreement, the Distribution Agreement and
each other Transaction Document by Parent or Acquisition as the case may be, or
the consummation by Parent or Acquisition, as the case may be, of the
transactions contemplated hereby and thereby, other than such declarations,
filings, registrations, notices, authorizations, consents or approvals which, if
not made or obtained, as the case may be, would not, in the aggregate, have or
reasonably be expected to have a Parent Material Adverse Effect.
(b) Except as set forth in Section 4.4(b) of Parent's
Disclosure Schedule, the execution and delivery of this Agreement, the
Distribution Agreement and each other Transaction Document by each of Parent and
Acquisition, as the case may be, do not, and the consummation by Parent and
Acquisition, as the case may be, of the transactions contemplated hereby and
thereby will not, in any material respect, violate, conflict with or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or result in the creation of any
Encumbrance upon any of the properties or assets of Parent or any of its
Subsidiaries under any of the terms, conditions or provisions of (i) the
respective charters or by-laws of Parent or Acquisition, (ii) subject to
obtaining the Required Regulatory Approvals and the Parent Stockholder
Approvals, any material Law applicable to Parent or Acquisition or any of their
respective properties or assets, (iii) any Retained Business Material Contract
(as defined in Section 4.14) or (iv) any material Contract to which Parent or
Acquisition is now a party or by which Parent or Acquisition or any of their
respective properties or assets may be bound or affected or (v) any material
Contract to which Parent or any Retained Subsidiary is a party that is intended
to be included in the Spinco Assets (as defined in the Distribution Agreement)
pursuant to the Distribution Agreement and that does not provide for the release
of Parent or such Retained Subsidiary from the obligations thereunder upon the
assignment thereof to Spinco or a Spinco Subsidiary.
Section 4.5. Absence of Certain Changes. Except (a) as set
forth in Section 4.5 of Parent's Disclosure Schedule, (b) as set forth in any
document filed prior to the date hereof pursuant to the Exchange Act, or (c) as
contemplated by this Agreement, the Distribution Agreement and the other
Transaction Documents, from January 3, 1997 until the date hereof, with respect
to the Retained Business, neither Parent nor any of its Subsidiaries has (i)
taken any actions that, if taken by Parent or any of its Subsidiaries during the
period from the date hereof through the Effective Time, would constitute a
breach of Section 6.2 hereof, (ii) has suffered any changes that, in each case,
in the aggregate, would reasonably be expected to result in a Parent Material
Adverse Effect or (iii) conducted its business or operations in any material
respect other than in the ordinary and usual course of business, consistent with
past practices.
Section 4.6. No Undisclosed Liabilities. Except as (x)
disclosed in any document filed prior to the date hereof pursuant to the
Exchange Act, (y) incurred in connection with the Merger and the Distribution or
(z) as expressly disclosed and described in Section 4.6 of Parent's Disclosure
Schedule, neither Parent, with respect to the Retained Business, nor any
Retained Subsidiary had at January 3, 1997, or has incurred since that date, any
liabilities or obligations (whether absolute, accrued, contingent or otherwise)
of any nature except (a) liabilities, obligations or contingencies (i) which are
accrued or reserved against in the financial statements of the Retained Business
delivered pursuant to Section 4.8 (the "Retained Business Financial Statements")
or reflected in the notes thereto or (ii) which were incurred after January 3,
1997, and were incurred in the ordinary course of business and consistent with
past practices and (b) liabilities, obligations or contingencies which (x) have
not and would not reasonably be expected to have a Parent Material Adverse
Effect or (y) have been discharged or paid in full prior to the date hereof.
Section 4.7. Reports.
(a) Since January 1, 1995, Parent and each of its Subsidiaries
required to make filings under the Securities Act or the Exchange Act have filed
with the Securities and Exchange Commission (the "SEC"), all material reports,
forms, statements and other documents (including all exhibits, amendments and
supplements thereto; collectively, including any financial statements or
schedules included or incorporated by reference therein, the "Parent SEC
Documents") required to be filed by them under the Securities Act, the Exchange
Act and the rules and regulations thereunder. Each of the Parent SEC Documents,
as of its filing date and at each time thereafter when the information included
therein was required to be updated pursuant to the rules and regulations of the
SEC, complied in all material respects with all applicable requirements of the
Securities Act and the Exchange Act and the rules and regulations thereunder.
None of the Parent SEC Documents, as of their respective filing dates or any
date thereafter when the information included therein was required to be updated
pursuant to the rules and regulations of the SEC, contained or will contain any
untrue statement of a material fact or omitted or will omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Each of the consolidated balance sheets (including the related
notes) included in the Parent SEC Documents filed prior to or after the date of
this Agreement fairly presents or will fairly present in all material respects
the consolidated financial position of Parent and its Subsidiaries as of the
respective dates thereof, and the other related statements (including the
related notes) included therein fairly present or will fairly present in all
material respects the results of operations and the cash flows of Parent and its
Subsidiaries for the respective periods or as of the respective dates set forth
therein. Each of the financial statements (including the related notes) included
in the Parent SEC Documents filed prior to or after the date of this Agreement
has been prepared or will be prepared in all material respects in accordance
with generally accepted accounting principles consistently applied during the
periods involved, except (i) as otherwise noted therein, (ii) to the extent
required by changes in generally accepted accounting principles or (iii) in the
case of unaudited financial statements, normal recurring year-end audit
adjustments.
(b) Parent has previously delivered to Seller and Company
copies of (i) Annual Reports on Form 10-K for the fiscal year ended January 3,
1997 and for each of the two immediately preceding fiscal years, as filed with
SEC, (ii) proxy and information statements relating to (x) all meetings of its
stockholders (whether annual or special) and (y) actions by written consent in
lieu of a stockholders' meeting from January 1, 1995 until the date hereof and
(iii) all other reports or registration statements filed by Parent with the SEC
since January 1, 1995 (other than Registration Statements on Form S-8).
Section 4.8. Financial Statements; Changes; Contingencies;
Distributions.
(a) Parent has delivered to Seller and Company consolidated
balance sheets for the Retained Business at January 3, 1997 and December 29,
1995 and the related consolidated statements of operations, cash flows and
changes in stockholder's equity for the 52 or 53 week periods ended January 3,
1997 and December 29, 1995. All such financial statements have been audited by
Arthur Andersen, LLP (the "Parent Auditors"), whose reports thereon are included
with such financial statements. All such financial statements have been prepared
in conformity with GAAP applied on a consistent basis (except for changes, if
any, required by GAAP and disclosed therein). The statements of operations and
cash flow present fairly in all material respects the results of operations and
cash flows of the Retained Business for the respective periods covered, and the
balance sheets present fairly in all material respects the financial condition
of the Retained Business as of their respective dates. Parent and Acquisition
have made available to Seller and Company copies of each management letter or
other letter delivered to Parent by the Parent Auditors (or management points
relating thereto) in connection with such financial statements or relating to
any review by the Parent Auditors of the internal controls of Parent during the
two-year period ended January 3, 1997, and have made available to the Company
Auditors for inspection all reports and working papers produced or developed by
Parent Auditors or management in connection with their examination of such
financial statements, including such reports and working papers prepared by the
Parent Auditors relating to assessment of risk of the engagement and planning
for the engagement but excluding the billing analysis prepared by such auditors.
Except as set forth in the Retained Business Financial Statements or the Parent
SEC Documents since December 31, 1994, there has been no change in any of the
significant accounting policies, practices or procedures of Parent and/or its
Subsidiaries.
(b) Parent and Acquisition have delivered to Seller and
Company the unaudited consolidated balance sheet for the Retained Business at
June 20, 1997, and the related unaudited consolidated statements of operations
and cash flows for the period then ended. All such interim unaudited financial
statements have been prepared in conformity with GAAP applied on a consistent
basis except for changes, if any, required by GAAP and disclosed therein. The
statements of operations and cash flows present fairly the results of operations
and cash flows of the Retained Business for the respective periods covered, and
the balance sheets present fairly in all material respects the financial
condition of the Retained Business as of their respective dates. All such
interim financial statements reflect all adjustments (which, except as otherwise
indicated as such financial statements, consist only of normal recurring
adjustments not material in amount and include estimated provisions for year-end
adjustments) necessary for a fair presentation. At the dates of such balance
sheets, the Retained Business had no material liability (actual, contingent or
accrued) that, in accordance with GAAP applied on a consistent basis, should
have been shown or reflected therein but was not except for the omission of
notes with respect to contingent liabilities that in the aggregate did not
materially exceed those so reported in the most recent of the audited statements
delivered and that were of substantially the same type as so reported.
(c) Except as set forth at Section 4.8(c) of Parent's
Disclosure Schedule, there has been no dividend or other distribution of assets
or securities whether consisting of money, property or any other thing of value,
declared, issued or paid subsequent to the date of the most recent financial
statements described in Section 4.8(a) by Parent or any Retained Subsidiary,
except for cash dividends paid in the ordinary course.
Section 4.9. Proxy Statement and Form 10. None of the
information to be included in the Proxy Statement or the Form 10 (each as
defined in the Distribution Agreement) or any registration statement
contemplated pursuant to Article III of the Distribution Agreement will be
false or misleading with respect to any material fact or will omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
are made, not misleading. Except for information provided by Seller or
Company in writing for inclusion therein, the Proxy Statement and the Form
10 (or any registration statement contemplated pursuant to Article III of
the Distribution Agreement), including any amendments thereto, will comply
in all material respects with the Exchange Act and the Securities Act.
Section 4.10. No Default. Except as set forth in Section
4.10 of Parent's Disclosure Schedule, neither Parent nor any of the Retained
Subsidiaries (i) is in default or violation (and no event has occurred which
with notice or the lapse of time or both would constitute a default or
violation) of any term, condition or provision of its charter or its by-
laws, or (ii) is in default or violation (and no event has occurred which
with notice or lapse of time or both would constitute a default or
violation) in any material respect of any term, condition or provision of
(a) any Retained Business Material Contract, or (b) in each case only with
respect to the Retained Business, any material order, writ, injunction,
decree, statute, rule or regulation applicable to Parent or any of the
Retained Subsidiaries.
Section 4.11. Litigation; Compliance with Law.
(a) Except as set forth in Section 4.11(a) of Parent's
Disclosure Schedule, as of the date hereof and only with respect to the
Retained Business, there are no actions, suits, claims, proceedings or
investigations pending or, to the best knowledge of Parent or Acquisition,
threatened, involving Parent or any of the Retained Subsidiaries or any of
their respective properties or assets (or any Person whose liability
therefrom may have been retained or assumed by Parent or any of the
Retained Subsidiaries either contractually or by operation of law), by or
before any Governmental Entity or by any Person which have had or would
reasonably be expected to result in damages in excess of $100,000 or have a
Parent Material Adverse Effect. None of Parent, any of the Retained
Subsidiaries or any of their respective properties or assets is subject to
any outstanding order, writ, injunction or decree relating to the Retained
Business which would reasonably be expected to have a Parent Material
Adverse Effect or materially impair or interfere with the operation of the
Retained Business as currently conducted.
(b) Except as disclosed by Parent in the Parent SEC
Documents filed since January 3, 1997 or in Section 4.11(b) of Parent's
Disclosure Schedule, Parent (with respect to the Retained Business), the
Retained Subsidiaries and Acquisition are now being and in the past have
been operated in compliance in all material respects with all Laws.
Section 4.12. Employee Benefit Plans; ERISA.
(a) Except for those matters set forth in Section 4.12(a) of
Parent's Disclosure Schedule, (i) each "employee benefit plan" (as defined in
Section 3(3) of ERISA, and all other employee benefit, bonus, incentive, stock
option (or other equity-based), severance, change in control, welfare
(including post-retirement medical and life insurance) and fringe benefit
plans (whether or not subject to ERISA) maintained or sponsored by Parent
or its ERISA Affiliates, for the benefit of any U.S. employee or former
U.S. employee of Parent or any of its ERISA Affiliates employed in the
Retained Business (the "Parent Plans") is, and has been, operated in all
material respects in accordance with its terms and in substantial
compliance (including with respect to the making of governmental filings)
with all applicable Laws, including ERISA and the applicable provisions of
the Code, (ii) each of the Parent Plans intended to be "qualified" within
the meaning of Section 401(a) of the Code has been determined by the IRS to
be so qualified, (iii) no "reportable event," as such term is defined in
Section 4043(c) of ERISA (for which the 30-day notice requirement to the
Pension Benefit Guaranty Corporation (the "PBGC") has not been waived), has
occurred with respect to any Parent Plan that is subject to Title IV of
ERISA, and (iv) there are no material pending or, to the knowledge of
Parent, threatened claims (other than routine claims for benefits) by, on
behalf of or against any of the Parent Plans or any trusts related thereto
other than routine benefit claim matters. All Parent Plans are listed in
Section 4.12(a) of Parent's Disclosure Schedule.
(b) (i) No Parent Plan has incurred an "accumulated
funding deficiency" (as defined in Section 302 of ERISA or Section 412 of
the Code), whether or not waived, (ii) neither Parent nor any of its ERISA
Affiliates has incurred any liability under Title IV of ERISA except for
required premium payments to the PBGC, which payments have been made when
due, and no events have occurred which are reasonably likely to give rise
to any liability of Parent or any of its ERISA Affiliates under Title IV of
ERISA or which could reasonably be anticipated to result in any claims
being made against Seller or Company by the PBGC, (iii) neither Parent nor
any of its ERISA Affiliates has incurred any material withdrawal liability
(including any contingent or secondary withdrawal liability) within the
meaning of Sections 4201 and 4204 of ERISA to any Multiemployer Plan which
has not been satisfied in full, and (iv) other than with respect to any
Multiemployer Plan, there has been no act or omission resulting in
liability under Chapter 43 of the Code or Sections 409, 502(c), 502(i),
502(l) or 4071 of ERISA with respect to any Parent Plan.
(c) Except as set forth on Section 4.12(c) of Parent's
Disclosure Schedule, with respect to each Parent Plan that is subject to
Title IV of ERISA, (i) Parent has provided to Seller copies of the most
recent actuarial valuation report prepared for such Parent Plan prior to
the date hereof, (ii) the assets and liabilities in respect of the accrued
benefits as set forth in the most recent actuarial valuation report
prepared by the Parent Plan's actuary fairly present the funded status of
such Parent Plan in all material respects, and (iii) since the date of such
valuation report there has been no material adverse change in the funded
status of any such Parent Plan.
(d) Neither Parent nor any of its ERISA Affiliates has
failed to make any contribution or payment to any Parent Plan or
Multiemployer Plan which, in either case has resulted or could result in
the imposition of a material Encumbrance or the posting of a material bond
or other material security under ERISA or the Code.
(e) Except as otherwise set forth on Section 4.12(e) of
Parent's Disclosure Schedule or as expressly provided for in this Agreement
or in the Benefits Allocation Agreement, the consummation of the
transactions contemplated by this Agreement will not (i) entitle any
current or former employee or officer of Parent or any ERISA Affiliate to
severance pay, unemployment compensation or any other payment, or (ii)
accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee or officer.
(f) Except as set forth on Section 4.12(f) of Parent's
Disclosure Schedule, Parent and its Subsidiaries do not have any employment
or consulting agreements, written or oral, with any employees of the
Retained Business that provide for annual base compensation in excess of
$150,000. Parent has provided to Seller copies of each such employment or
consulting agreement that provides for annual base compensation in excess
of $150,000, and has made all other such agreements available to Seller.
Section 4.12(f) of Parent's Disclosure Schedule sets forth a list of all
employees or former employees associated with the Retained Business to whom
Parent owes severance pay in sums of $150,000 or more as of the date
hereof.
(g) Parent has the right, and will have the right after
the Effective Time, to amend or terminate any Parent Plan and any Parent
Canadian Plan, and specifically to the extent any Parent Plan provides
post-retirement medical and life insurance benefits.
(h) Section 4.12(h) of Parent's Disclosure Schedule
lists each employee benefit, bonus, incentive compensation, deferred
compensation,pension, retirement, stock option (or other equity based),
severance, change in control, welfare (including post-retirement medical
and life insurance), fringe benefit plan and any other employment
arrangement maintained or sponsored by Parent or its Subsidiaries for the
benefit of any Canadian employee or former Canadian employee of Parent or
its Subsidiaries employed in the Retained Business (the "Parent Canadian
Plans"). Except as otherwise set forth in Section 4.12(h) of Parent's
Disclosure Schedule, each Parent Canadian Plan has been operated in all
material respects in accordance with its terms and in substantial
compliance with all applicable Laws, and there are no material pending or,
to the knowledge of Parent, threatened claims (other than routine claims
for benefits) by, on behalf of or against any of the Parent Canadian Plans
or any trusts related thereto other than routine benefit claim matters.
Neither Parent nor any of its Subsidiaries has incurred any material
withdrawal liability to any Company Canadian Plan which would be the
equivalent of a Multiemployer Plan, and neither Parent nor any of its
Subsidiaries has failed to make any contribution to any Parent Canadian
Plan which has resulted or could result in the imposition of a material
Encumbrance. With respect to any Parent Canadian Plan that is a defined
benefit plan, (x) Parent has provided Seller with copies of the most
recent actuarial valuation report if an actuarial valuation report is
required by the relevant Canadian Governmental Entity, and (y) except as
set forth in Section 4.12(h) of Parent's Disclosure Schedule, as of the
date hereof, the fair market value of the assets of each such plan
(excluding for these purposes any accrued but unpaid contributions) exceeds
the present value of all benefits accrued under each such plan determined
on a basis as required by law and in accordance with Canadian GAAP.
(i) Each employee's benefit, bonus, incentive
compensation, deferred compensation, pension, retirement, stock option (or
other equity based), severance, change in control, welfare (including post-
retirement medical and life insurance), fringe benefit plan and any other
employment arrangement maintained or sponsored by MMS UK or its
Subsidiaries for the benefit of their employees has been operated in all
material respects in accordance with its terms and in substantial
compliance with all applicable Laws, and there are no material pending or,
to the knowledge of Parent, threatened claims (other than routine claims
for benefits) by, on behalf of or against any of such plans. All material
plans maintained by MMS UK or its Subsidiaries for the provision of
retirement income to their employees are listed in Section 4.12(i) of
Parent's Disclosure Schedule and all such plans that are funded defined
benefit pension schemes are funded in accordance with the recommendations
of the relevant United Kingdom Government Entity.
Section 4.13. Assets; Intellectual Property.
(a) Except as set forth in Section 4.13(a) of Parent's
Disclosure Schedule, upon consummation of the Distribution, Parent and the
Retained Subsidiaries will own or have rights to use all material
properties and assets (including Intellectual Property) necessary to permit
Parent and the Retained Subsidiaries to conduct the Retained Business as it
is currently being conducted.
(b) Neither Parent nor any of the Retained Subsidiaries
now or since December 31, 1994 has used Intellectual Property which
conflicts with or infringes upon any proprietary rights of others except
where such conflict or infringement would not have or reasonably be
expected to have a Parent Material Adverse Effect.
(c) Section 4.13(c) of Parent's Disclosure Schedule
lists any and all Intellectual Property that is material to the Retained
Business and in which the Parent or any Retained Subsidiary has an interest
and the nature of such interest therein. Such assets include all licenses,
permits, authorizations or other rights with respect to any of the
foregoing. Except as set forth in Section 4.13(c) of Parent's Disclosure
Schedule, Parent does not use any such Intellectual Property by consent of
any other Person and is not required to and does not make any payments to
others with respect thereto. Parent has in all material respects performed
all obligations required to be performed by it, and none of such entities
is in default in any material respect under any material Contract relating
to any of the foregoing. Parent and the Retained Subsidiaries have taken
reasonable actions necessary to maintain and protect such Intellectual
Property.
Section 4.14. Contracts.
(a) Section 4.14(a) of Parent's Disclosure Schedule
lists each Contract in respect of the Retained Business to which Parent or
any Retained Subsidiary is a party or to which they or any of their
properties used primarily in the Retained Business is subject or by which
any thereof are bound that is a Retained Business Material Contract (as
defined below). "Retained Business Material Contracts" are those that (i)
after January 3, 1997 obligate Parent, in respect of the Retained Business,
or any Retained Subsidiary, to pay an amount of $250,000 or more in any 12
month period, (ii) contain a covenant not to compete or otherwise
significantly restrict business activities (other than such a covenant that
applies only to a particular account covered by a management agreement or
franchise agreement related thereto), (iii) provide for the extension of
credit other than consistent with normal credit terms or in an aggregate
principal amount of more than $15,000,000, or provide for the mortgage,
pledge or grant of a security interest in assets of the Retained Business
or for a guarantee by the Parent or any Retained Subsidiary of the
obligations of any other Person in connection with the Retained Business,
(iv) contain a right or obligation of or to any Affiliate of Parent other
than Parent and the Retained Subsidiaries, or to any officer or director of
Parent or any of the Retained Subsidiaries other than those contracts
entered into in the ordinary course of business, (v) represent a Contract
contributing unit level profit equal to or exceeding 2% of aggregate unit
level profit measured for the most recently concluded fiscal year, (vi)
require Parent (in respect of the Retained Business) or any Retained
Subsidiary to buy or sell goods or services with respect to which there
will be material losses or will be costs and expenses materially in excess
of expected receipts, (vii) are for the employment of any Retained Employee
and provide for annual base compensation in excess of $150,000, or are
"golden parachute" or similar agreements with any Retained Employee, (viii)
are with any labor union, (ix) are with any vendor, manufacturer, or
distributor or representative and have an unexpired term as of June 20,
1997 of one year or more and contain any dollar or volume purchasing
requirements in excess of $250,000, (x) are with the federal government or
a governmental agency or department exceeding $250,000 in annual revenues,
(xi) are leases to or from Parent (with respect to the Retained Business)
or one of the Retained Subsidiaries of real or personal property with
individual monthly rental amounts of at least $10,000, (xii) were not made
in the ordinary course of business, (xiii) create any joint ventures,
partnerships or other similar arrangements relating to the Retained
Business, or (xiv) contain a "change of control" or similar provision
relating to a change of control of the Parent or any of its Subsidiaries
triggered by the transactions contemplated by this Agreement or any
Transaction Document. Unless so noted in Section 4.14(a) of Parent's
Disclosure Schedule, each such Retained Business Material Contract was
entered into in the ordinary course of business. True, correct and
complete copies of the Retained Business Material Contracts, including all
amendments and supplements, have been made available to Seller. Each
Retained Business Material Contract is valid and subsisting; each of Parent
and any Retained Subsidiary has duly performed in all material respects all
its obligations thereunder to the extent that such obligations to perform
have accrued; and no material breach or default, alleged material breach or
default, or event which would (with the passage of time, notice or both)
constitute a material breach or default thereunder by Parent or a Retained
Subsidiary, as the case may be (or, to the best knowledge of Parent, any
other party or obligor with respect thereto), has occurred or as a result
of this Agreement or its performance will occur. Except as set forth in
Section 4.14(a) of Parent's Disclosure Schedule, consummation of the
transactions contemplated by this Agreement will not (and will not give any
Person a right to) terminate or modify any rights of, or accelerate or
augment any obligation of, Parent or any Retained Subsidiary under any
Retained Business Material Contract.
(b) During the twelve months immediately prior to the
date hereof, no contract of the Retained Business with a customer that, but
for its cancellation or termination, would be deemed a Retained Business
Material Contract pursuant to clause (v) of Section 4.14(a), has been
cancelled or otherwise terminated and during such time, to the knowledge of
Parent, no such cancellation or termination has been threatened.
(c) Parent has delivered to Seller, pursuant to a letter
dated September 30, 1997, (i) a complete list of client management accounts
of the Retained Business, as of August 22, 1997, (ii) each binding bid of
Parent, with respect to the Retained Business, or any Retained Subsidiary,
providing for an investment of $250,000 or more over the life of the
proposed Contract and (iii) an aging schedule of all accounts receivable of
the Retained Business as of August 15, 1997.
Section 4.15. Taxes. Except as otherwise disclosed in
Section 4.15 of Parent's Disclosure Schedule:
(a) Parent and each of its Subsidiaries have filed (or
have had filed on their behalf) or will file or cause to be filed, all Tax
Returns required by applicable Law to be filed by any of them prior to the
Effective Time, and all such Tax Returns and amendments thereto are, or
when filed will be, true, complete and correct in all material respects.
(b) Parent and each of its Subsidiaries have paid (or
have had paid on their behalf) all Taxes due with respect to any period
ending prior to or as of the Effective Time, or where payment of Taxes is
not yet due, have established (or have had established on their behalf and
for their sole benefit and recourse), or will establish or cause to be
established before the consummation of the Effective Time, an adequate
accrual for the payment of all such Taxes which have accrued prior to the
Effective Time other than Taxes directly attributable to the transactions
contemplated by the Distribution Agreement. The accrual for Taxes set
forth on the balance sheet of Parent at January 3, 1997 referenced in
Section 4.8 hereof is adequate for the payment of all Taxes accrued as of
such date.
(c) There are no Encumbrances for any Taxes upon the
properties or assets of Parent or any of its Subsidiaries which properties
or assets are used primarily in the Retained Business, other than statutory
liens for Taxes not yet due and payable and Encumbrances for real estate
Taxes being contested in good faith.
(d) No Audit is pending with respect to any Taxes due
from Parent or any of its Subsidiaries relating to the Retained Business or
the Retained Subsidiaries. There are no outstanding waivers extending the
statutory period of limitation relating to the payment of Taxes due from
Parent or any Subsidiary for any taxable period ending on or prior to the
Effective Time.
(e) Other than the Tax Sharing Agreement (as defined in
Section 6.13), neither Parent nor any Subsidiary is a party to, is bound
by, or has any obligation under, a tax sharing contract or other agreement
or arrangement for the allocation, apportionment, sharing, indemnification,
or payment of Taxes.
(f) Neither Parent nor any of its Subsidiaries has made
an election under Section 341(f) of the Code.
(g) The statute of limitations for all Tax Returns of
Parent and each of its Subsidiaries for all years through 1991 have expired
for all federal, state, local and foreign tax purposes, or such Tax Returns
have been subject to a final Audit.
(h) Neither Parent nor any of its Subsidiaries has
received any written notice of any material deficiency, assessment or
adjustment from the IRS or any other domestic or foreign governmental
taxing authority relating to the Retained Business or the Retained
Subsidiaries that has not been fully paid or finally settled, and any such
deficiency, adjustment or assessment shown on such schedule is being
contested in good faith through appropriate proceedings and adequate
reserves have been established on Parent's financial statements therefor.
To the best of Parent's knowledge, there are no material deficiencies,
assessments or adjustments threatened, pending or assessed with respect to
Parent or any of its Subsidiaries relating to the Retained Business or the
Retained Subsidiaries, other than those referred to in the immediately
preceding sentence.
Section 4.16. Labor Matters. Except as set forth in
Section 4.16 of Parent's Disclosure Schedule, neither Parent, Acquisition,
nor any Retained Subsidiary has, since December 31, 1996, in each case only
with respect to the Retained Business, (i) been subject to, or, to the
knowledge of Parent, threatened with, any material strike, lockout or other
labor dispute or engaged in any material unfair labor practice, or (ii)
received written notice of any pending petition for certification before
the National Labor Relations Board with respect to any material group of
Retained Employees (as defined in the Distribution Agreement) which is not
currently organized.
Section 4.17. Accounting Records; Internal Controls.
Each of Parent and the Retained Subsidiaries have records that accurately
and validly reflect its transactions in respect of the Retained Business,
and accounting controls sufficient to insure that such transactions are (i)
executed in accordance with management's general or specific authorization
and (ii) recorded in conformity with GAAP or with Canadian or English
generally accepted accounting principles, as the case may be, so as to
maintain accountability for assets.
Section 4.18. Insurance. Except as set forth in Section
4.18 of Parent's Disclosure Schedule, with respect to the Retained Business
only, Parent and each Retained Subsidiary is, and at all times since its
organization has been, insured with reputable insurers (or self-insured)
against all risks normally insured against, and in such amounts as are
customary, by companies in similar lines of business, and all of the
insurance policies and bonds required to be maintained by Parent and each
Retained Subsidiary are in full force and effect. Section 4.18 of Parent's
Disclosure Schedule lists all insurance policies and bonds that are
material to the Retained Business. Amounts reserved for all risks covered
by self-insurance on the Retained Business Balance Sheet as of June 20,
1997 are reasonable and customary. Neither Parent nor any Retained
Subsidiary is in default in any material respect under any such policy or
bond. Each of Parent and each Retained Subsidiary has timely filed claims
with insurers with respect to all material matters and occurrences relating
to the Retained Business for which it has coverage. All insurance policies
maintained by Parent and each Retained Subsidiary relating to the Retained
Business will remain in full force and effect and may reasonably be
expected to be renewed (or replaced with comparable policies) on reasonably
comparable terms in favor of Parent following consummation of the Merger
(subject to such entities' continuing compliance with the applicable terms
thereof and any right of insurers to terminate without cause), and neither
Parent nor any Retained Subsidiary has received notice or other indication
from any insurer or agent of any intent to cancel or not so renew any of
such insurance policies.
Section 4.19. Permits. Each of Parent and the Retained
Subsidiaries holds all material Permits that are required by any
Governmental Entity to permit it to conduct the Retained Business as now
conducted, and all such Permits are valid and in full force and effect and
will remain in full force and effect upon consummation of the Merger,
except for those Permits identified on Section 4.19 of Seller's Disclosure
Schedule. To the knowledge of Parent, no suspension, cancellation or
termination of any of such Permits is threatened or imminent as a result of
the transactions contemplated by this Agreement and the Distribution
Agreement or otherwise.
Section 4.20. Business Relationships. Section 4.20 of
Parent's Disclosure Schedule lists the names of and describes all Contracts
with the three largest distributors of goods and the ten largest producers
of goods purchased by Parent and the Retained Subsidiaries (by dollar
volume for the most recently ended fiscal year) with respect to the
Retained Business. To the knowledge of Parent, no material supplier or
distributor is reasonably likely to cease supplying or distributing, as the
case may be, goods or services or substantially reduce its supplies or
distribution services in relation to the Retained Business as a result of
the consummation of this Agreement and the transactions contemplated
hereby.
Section 4.21. Environmental Compliance. Except as set
forth in Section 4.21 of Parent's Disclosure Schedule:
(a) The Parent Real Property (as defined below) and the
improvements thereon and the soil and groundwater thereunder (i) do not
contain and are not contaminated by any Hazardous Material in violation of
any Environmental Law; (ii) do not contain any underground storage tanks
in violation of any Environmental Law; (iii) are not used in violation of
any Environmental Law for the generation, treatment, storage or disposal of
any Hazardous Material, or for mining, land filling, dumping or commercial
petroleum product storage purposes, or as a gasoline station or a dry
cleaning establishment; (iv) have not had any release of any Hazardous
Material from, on, in or upon it that would reasonably be expected to
result in a material liability to the Retained Business; and (v) have never
been the subject of a remedial action or a lien or encumbrance for an
environmental problem. As used herein, "Parent Real Property" means all
assets of Parent or any Retained Subsidiary used in connection with the
Retained Business consisting of real property, appurtenances thereto,
rights in connection therewith, and any interest therein, whether owned or
leased.
(b) With respect to the Retained Business, Parent is in
material compliance with all Environmental Laws and has obtained and is in
material compliance with all permits required pursuant to Environmental
Laws, and Parent has not received any notices, demands, requests for
information, complaints or orders, and no investigation, action, claim,
suit or proceeding is pending or threatened by any Governmental Entity,
with respect to any matters relating to Parent and relating to or arising
out of any Environmental Laws.
(c) There are no material liabilities of or relating to
Parent with respect to the Retained Business arising under or relating to
any Environmental Law, and to the best knowledge of Parent, there are no
facts, conditions, circumstances or situations which could reasonably be
expected to result in or be the basis for any such liability.
(d) Parent has delivered to the Seller true and complete
copies of all documents, notices, reports, studies, analyses, tests,
permits and other written materials identified in Section 4.21 of Parent's
Disclosure Schedule and any environmental reports or audits in the
possession of Parent relating to the Parent Real Property.
Section 4.22. Accounts Receivable. The accounts
receivable of the Retained Business were incurred in the ordinary course of
business and are not subject in the aggregate to material counterclaim or
set-off.
Section 4.23. Transactions with Certain Persons. Except
as set forth on Section 4.23 of Parent's Disclosure Schedule and the Parent
SEC Documents, during the past three years Parent and the Retained
Subsidiaries have not purchased or leased any property or obtained any
services from, or sold or leased any property or furnished any services to
(except with respect to remuneration for services rendered as a director,
officer or employee of Parent or the Retained Subsidiaries), in the
ordinary course of business or otherwise, any Affiliate of Parent other
than the Retained Subsidiaries, or any of such Affiliates' respective
officers, directors or employees, holders, directly or indirectly, of 10
percent or more of their outstanding capital stock, or, to the knowledge of
Parent, any spouse, child or parent of any of the foregoing.
Section 4.24. Certain Fees. Except as set forth on
Section 4.24 of Parent's Disclosure Schedule, neither Parent nor any of its
Subsidiaries has employed any financial advisor or finder or incurred any
liability for any financial advisory or finders' fees in connection with
this Agreement or the transactions contemplated hereby.
Section 4.25. Parent Rights Plan. The Board of
Directors of Parent has taken all action necessary to render the rights
issued pursuant to the Rights Agreement, dated as of October 8, 1993, as
amended, between Parent and The Bank of New York, as Rights Agent (the
"Parent Rights Plan"), inapplicable to the Merger, this Agreement and the
transactions contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SPINCO
Spinco represents and warrants to Seller and Company as
follows:
Section 5.1. Organization. Spinco is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted. Spinco is duly qualified or licensed and
in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by
it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in
good standing would not, when taken together with all other such failures,
have or reasonably be expected to have a material adverse effect ("Spinco
Material Adverse Effect") on the ability of Spinco to perform its
obligations under or consummate the transactions contemplated by this
Agreement, the Distribution Agreement or any other Transaction Document to
which it is a party.
Section 5.2. Authority Relative to this Agreement.
Spinco has full corporate power and authority to execute and deliver this
Agreement, the Distribution Agreement and the Transaction Documents to
which it is a party and, subject to the Required Regulatory Approvals, to
consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement, the Distribution Agreement and the other
Transaction Documents to which it is a party by Spinco, and the
consummation of the transactions contemplated hereby and thereby have been
duly and validly authorized by the Board of Directors of Spinco and no
other corporate proceedings on the part of Spinco are or will be necessary
to authorize this Agreement, the Distribution Agreement and the other
Transaction Documents to which it is a party or to consummate the
transactions contemplated hereby and thereby. This Agreement and the
Distribution Agreement each has been duly and validly executed and
delivered by Spinco and each constitutes a valid and binding agreement of
Spinco, and each other Transaction Document, when executed and delivered by
the parties thereto, will be a valid and binding agreement of Spinco,
enforceable against Spinco in accordance with their respective terms,
except to the extent that enforcement thereof may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or other similar laws, now or hereafter in effect, relating to the
creditors' rights generally and (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law
or in equity).
Section 5.3. Consents and Approvals; No Violations.
(a) Except for the Required Regulatory Approvals, such
filings and approvals as may be required under the "takeover" or "blue sky"
laws of various states, and as disclosed in Section 4.4(a) of Parent's
Disclosure Schedule or as contemplated by this Agreement, no declaration,
filing or registration with, or notice to, or authorization, consent or
approval of, any Governmental Entity or any other Person is necessary for
the execution and delivery of this Agreement, the Distribution Agreement
and the other Transaction Documents to which it is a party by Spinco or the
consummation by Spinco of the transactions contemplated hereby and thereby,
other than such declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not made or obtained, as
the case may be, would not, in the aggregate, have or reasonably be
expected to have a Spinco Material Adverse Effect.
(b) Except as set forth in Section 4.4(b) of Parent's
Disclosure Schedule, the execution and delivery of this Agreement, the
Distribution Agreement and the other Transaction Documents to which Spinco
is a party by Spinco and the consummation by Spinco of the transactions
contemplated hereby and thereby will not, in any material respect, violate,
conflict with or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate
the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Encumbrance upon any
of the properties or assets of Spinco or any of its Subsidiaries under any
of the terms, conditions or provisions of (i) the charter or by-laws of
Spinco, (ii) subject to obtaining the Required Regulatory Approvals, any
material Law applicable to Spinco or any of its properties or assets or
(iii) any material Contract to which Parent or any Retained Subsidiary is a
party that is intended to be included in the Spinco Assets pursuant to the
Distribution Agreement and that does not provide for the release of Parent
or such Retained Subsidiary from the obligations thereunder upon the
assignment thereof to Spinco or a Spinco Subsidiary.
ARTICLE VI
COVENANTS
Section 6.1. Conduct of Business of Company. Except as
contemplated by this Agreement or as specifically set forth in Schedule 6.1
of Seller's Disclosure Schedule, during the period from the date of this
Agreement to the Effective Time, Seller will cause each Acquired Company
and its Subsidiaries to conduct its operations according to its ordinary
course of business, consistent with past practice, will use its
commercially reasonable efforts to (i) preserve intact its business
organization, (ii) maintain its material rights and franchises, (iii) keep
available the services of its officers and key employees, and (iv) keep in
full force and effect insurance comparable in amount and scope of coverage
to that maintained as of the date hereof. Without limiting the generality
of and in addition to the foregoing, and except as otherwise contemplated
by this Agreement, neither Acquired Company nor any of their Subsidiaries
will, without the prior written consent of Parent;
(a) amend its charter or by-laws (or other organizational
documents);
(b) authorize for issuance, issue, sell, deliver or agree
or commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise) any stock of any class or any other securities or,
except as required by law, amend any of the terms of any such securities or
agreements outstanding on the date hereof, except for (i) the issuance by
Company of Company Shares upon exercise of Company Options outstanding on
the date hereof and (ii) the granting of options upon cancellation of
existing options, so long as the aggregate number of options outstanding at
any time prior to the Effective Time does not exceed the number of options
outstanding on the date hereof;
(c) split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect
of its capital stock or redeem or otherwise acquire any of its securities
or any securities of its Subsidiaries; provided, however, that each
Acquired Company (and its Subsidiaries) may, prior to the Effective Time,
declare and pay cash dividends in respect of their capital stock;
(d) (i) pledge or otherwise encumber shares of capital
stock of either Acquired Company or any of their Subsidiaries; or (ii)
except in the ordinary course of business consistent with past practices,
(A) incur, assume or prepay any long-term debt or incur, assume, or prepay
any obligations with respect to letters of credit or any material short-
term debt, unless after the incurrence or assumption thereof all such debt
for the Acquired Companies and their Subsidiaries does not in the aggregate
exceed $105 million; (B) assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for any
material obligations of any other person except wholly owned Subsidiaries
of each Acquired Company; (C) make any material loans, advances or capital
contributions to, or investments in, any other Person; (D) change the
practices of either Acquired Company or its Subsidiaries with respect to
the timing of payments or collections; or (E) except as contemplated by
existing credit arrangements set forth on Seller's Disclosure Schedule,
mortgage or pledge any properties or assets of either Acquired Company or
any of its Subsidiaries or create or permit to exist any material
Encumbrance thereupon;
(e) except (i) for arrangements entered into in the
ordinary course of business consistent with past practices, (ii) as
contemplated by this Agreement with respect to the Company Options, or
(iii) as required by Law, enter into, adopt or materially amend or change
the funding or accrual practices of any bonus, profit sharing,
compensation, severance, termination, stock option, stock appreciation
right, restricted stock, performance unit, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreements,
trusts, plans, funds or other arrangements of or for the benefit or welfare
of any employee of either Acquired Company or any of its Subsidiaries (or
any other person for whom either Acquired Company or any of its
Subsidiaries will have liability), or (except for normal increases in the
ordinary course of business that are consistent with past practices)
increase in any manner the compensation or fringe benefits of any employee
of either Acquired Company or any of its Subsidiaries (or any other person
for whom either Acquired Company or any of its Subsidiaries will have
liability) or pay any benefit not required by any existing plan and
arrangement (including the granting of stock options, stock appreciation
rights, shares of restricted stock or performance units) or enter into any
contract, agreement, commitment or arrangement to do any of the foregoing;
(f) transfer, sell, lease, license or dispose of any
lines of business, Subsidiaries, divisions, operating units or facilities
(other than facilities currently closed or currently proposed to be closed)
outside the ordinary course of business or enter into any material
commitment or transaction outside the ordinary course of business;
(g) acquire or agree to acquire, by merging or
consolidating with, by purchasing an equity interest in or a portion of the
properties or assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof, or otherwise acquire or agree to acquire any properties
or assets of any other Person (other than the purchase of properties or
assets in the ordinary course of business and consistent with past
practice), in each case where such action would be material to the Acquired
Companies and their Subsidiaries;
(h) except as may be required by Law, take any action to
terminate or materially amend any of its pension plans or retiree medical
plans with respect to or for the benefit of any employee of either Acquired
Company or any of its Subsidiaries (or any other person for whom either
Acquired Company or any of its Subsidiaries will have liability);
(i) materially modify, amend or terminate any Acquired
Company Material Contract or waive any material rights or claims of either
Acquired Company or any of its Subsidiaries thereunder, except in the
ordinary course of business consistent with past practice; provided, that
the provisions of this Section 6.1(i) shall not apply to any arrangement,
agreement or contract proposal previously submitted by either Acquired
Company or a Subsidiary thereof which proposal, upon acceptance thereof,
cannot be revised or withdrawn;
(j) effect any material change in any of its methods of
accounting in effect as of August 31, 1996, except as may be required by
Law or GAAP;
(k) enter into any Acquired Company Material Contract
other than in the ordinary course of business; or
(l) enter into a legally binding commitment with respect
to, or any agreement to take, any of the foregoing actions.
Section 6.2. Conduct of Retained Business. Except as
contemplated by this Agreement, the Distribution Agreement, the UK Stock
Purchase Agreement or the Benefits Allocation Agreement or as specifically
set forth in Schedule 6.2 of Parent's Disclosure Schedule, during the
period from the date of this Agreement to the Effective Time, Parent and
the Retained Subsidiaries will each conduct the Retained Business according
to its ordinary course of business, consistent with past practice, will use
its commercially reasonable efforts to (i) preserve intact the Retained
Business organization, (ii) maintain its material rights and franchises
with respect to the Retained Business, (iii) keep available the services of
officers and key employees of the Retained Business, and (iv) keep in full
force and effect insurance comparable in amount and scope of coverage to
that maintained as of the date hereof. Without limiting the generality of
and in addition to the foregoing, and except as otherwise contemplated by
this Agreement, the Distribution Agreement, the UK Stock Purchase Agreement
or the Benefits Allocation Agreement, neither Parent nor any Retained
Subsidiary will, without the prior written consent of Seller:
(a) amend its charter or by-laws (or other organizational
documents);
(b) authorize for issuance, issue, sell, deliver or agree
or commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise) any stock of any class or any other securities or,
except as required by Law, amend any of the terms of any such securities or
agreements outstanding on the date hereof; except (i) as contemplated by
this Agreement, the Distribution Agreement and the other Transaction
Documents and (ii) pursuant to securities or agreements outstanding on the
date hereof;
(c) split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect
of its capital stock or redeem or otherwise acquire any of its securities
or any securities of any Retained Subsidiary; provided, however, that
Parent and the Retained Subsidiaries may declare cash dividends in respect
of their capital stock;
(d) (i) pledge or otherwise encumber shares of capital
stock of any Retained Subsidiary; or (ii) except in the ordinary course of
business consistent with past practices, permit any Retained Subsidiary to
(A) incur, assume or prepay any long-term debt or incur, assume, or prepay
any obligations with respect to letters of credit or any material short-
term debt; (B) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for any material
obligations of any other person except wholly owned Retained Subsidiaries;
(C) make any material loans, advances or capital contributions to, or
investments in, any other Person; (D) change the practices of the Retained
Business with respect to the timing of payments or collections; or (E)
mortgage or pledge any properties and assets of the Retained Business or
any Retained Subsidiary or create or permit to exist any material
Encumbrance thereupon;
(e) except (i) for arrangements entered into in the
ordinary course of business consistent with past practices, (ii) as
contemplated in the Benefits Allocation Agreement, or (iii) as required by
Law, enter into, adopt or materially amend or change the funding or accrual
practices of any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted stock,
performance unit, pension, retirement, deferred compensation, employment,
severance or other employee benefit agreements, trusts, plans, funds or
other arrangements of or for the benefit or welfare of any Retained
Employee (or any other person for whom the Retained Business will have
liability), or (except for normal increases in the ordinary course of
business that are consistent with past practices) increase in any manner
the compensation or fringe benefits of any Retained Employee (or any other
person for whom the Retained Business will have liability) or pay any
benefit not required by any existing plan and arrangement (including the
granting of stock options, stock appreciation rights, shares of restricted
stock or performance units) or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing;
(f) transfer, sell, lease, license or dispose of any
lines of business, Subsidiaries, divisions, operating units or facilities
(other than facilities currently closed or currently proposed to be closed)
relating to the Retained Business outside the ordinary course of business
or enter into any material commitment or transaction with respect to the
Retained Business outside the ordinary course of business;
(g) acquire or agree to acquire, by merging or
consolidating with, by purchasing an equity interest in or a portion of the
properties and assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof, or otherwise acquire or agree to acquire any properties
and assets of any other Person (other than the purchase of properties and
assets in the ordinary course of business and consistent with past
practice) that would become part of the Retained Business, in each case
where such action would be material to the Retained Business;
(h) except as may be required by Law, take any action to
terminate or materially amend any of its pension plans or retiree medical
plans with respect to or for the benefit of Retained Employees or any other
person for whom the Retained Business will have liability;
(i) materially modify, amend or terminate any Retained
Business Material Contract or waive any material rights or claims of the
Retained Business thereunder, except in the ordinary course of business
consistent with past practice; provided, that the provisions of this
Section 6.2(i) shall not apply to any arrangement, agreement or contract
proposal previously submitted by Parent or a Subsidiary thereof which
proposal, upon acceptance thereof, cannot be revised or withdrawn;
(j) effect any material change in any of its methods of
accounting in effect as of January 3, 1997, except as may be required by
Law or GAAP;
(k) enter into any Retained Business Material Contract
other than in the ordinary course of business; or
(l) enter into a legally binding commitment with respect
to, or any agreement to take, any of the foregoing actions.
Section 6.3. Acquisition Proposals.
(a) After the date hereof and prior to the Effective
Time or earlier termination of this Agreement, unless Seller shall
otherwise agree in writing, Parent shall not, and shall not authorize any
officer, director or employee or any investment banker, attorney,
accountant or other agent, advisor or representative of Parent or any of
its Subsidiaries or Affiliates over which it exercises control to, directly
or indirectly, (i) initiate, solicit, negotiate, encourage, or provide
confidential information to facilitate the making of any Acquisition
Proposal (as defined in Section 6.3(b) hereof), (ii) enter into any
agreement with respect to any Acquisition Proposal or give any approval of
the type referred to in Section 6.3(b) with respect to any Acquisition
Proposal or (iii) participate in any discussions regarding any Acquisition
Proposal; provided, however, that, in response to any unsolicited
Acquisition Proposal, Parent and its Subsidiaries may (at any time prior to
the Parent Stockholder Approvals) furnish information concerning its
business, properties or assets to the Person (a "Potential Acquiror")
making such Acquisition Proposal and participate in negotiations with the
Potential Acquiror if (x) Parent's Board of Directors is advised by one or
more of its independent financial advisors that such Potential Acquiror has
the financial wherewithal to consummate such a potential Acquisition
Proposal, (y) Parent's Board of Directors reasonably determines, after
receiving advice from Parent's financial advisor, that such Acquisition
Proposal would involve consideration to Parent's stockholders and other
terms that taken as a whole are superior to the Distribution and the
Merger, and (z) based upon advice of counsel to such effect, Parent's Board
of Directors determines in good faith that it is necessary to so furnish
information and negotiate in order to comply with its fiduciary duty to
stockholders of Parent; provided, further, that nothing herein shall
prevent Parent's Board of Directors from taking, and disclosing to Parent's
stockholders, a position contemplated by Rules 14D-9 and 14e-2 promulgated
under the Exchange Act with regard to any tender offer. In the event
Parent shall determine to provide any information as described above, or
shall receive any offer of the type referred to in this Section 6.3, it
shall promptly inform Seller orally or in writing as to the fact that
information is to be provided and shall furnish to Seller a description of
the material terms thereof. Parent will keep Seller informed of the status
and material details (including amendments or proposed amendments of any
such proposed Acquisition Proposal).
(b) For purposes of this Agreement, the term
"Acquisition Proposal" means any bona fide proposal, in writing, made by a
Person to acquire beneficial ownership (as defined under Rule 13(d) of the
Exchange Act), pursuant to a merger, consolidation or other business
combination, sale of shares of capital stock, sale of assets, tender offer
or exchange offer or similar transaction, involving Parent, the Retained
Subsidiaries or the Retained Business, including any single or multi-step
transaction or series of related transactions (other than the transactions
contemplated by this Agreement and the Distribution Agreement) which is
structured to permit such Person to acquire beneficial ownership of any
material portion of the assets of, or any material portion of the equity
interest in any of Parent, the Retained Subsidiaries or the Retained
Business; provided, however, that the term "Acquisition Proposal" shall not
include any transaction or series of transactions which relate solely to
the businesses to be owned by Spinco and the Spinco Subsidiaries following
the Distribution so long as the consummation of such transaction or
transactions (x) would not reasonably be anticipated to adversely affect or
delay the consummation of the Merger, the Distribution or the transactions
contemplated hereby and (y) could not cause Spinco to cease to be engaged
in the conduct of the active trade or businesses relied upon for the
purposes of satisfying the requirements of Section 355(b) for purposes of
the ruling request described in Section 6.12.
(c) After the date hereof and prior to the Effective
Time or earlier termination of this Agreement, unless Parent shall
otherwise agree in writing, Seller shall not, and shall not authorize any
officer, director or employee or any investment banker, attorney,
accountant or other agent, advisor or representative of Seller, either
Acquired Company or any of their respective Subsidiaries or Affiliates over
which they exercise control to, directly or indirectly, (i) initiate,
solicit, negotiate, encourage, or provide confidential information to
facilitate any Company Acquisition Proposal (as defined in Section 6.3(d)
hereof), (ii) enter into any agreement with respect to any Company
Acquisition Proposal or give any approval of the type referred to in
Section 6.3(d) with respect to any Company Acquisition Proposal or (iii)
participate in any discussions regarding any Company Acquisition Proposal.
(d) For purposes of this Agreement, the term "Company
Acquisition Proposal" means any bona fide proposal, in writing, made by a
Person to acquire beneficial ownership (as defined under Rule 13(d) of the
Exchange Act), pursuant to a merger, consolidation or other business
combination, sale of shares of capital stock, sale of assets, tender offer
or exchange offer or similar transaction, involving either Acquired Company
or any of their Subsidiaries, including any single or multi-step
transaction or series of related transactions (other than the transactions
contemplated by this Agreement and the Distribution Agreement) which is
structured to permit such Person to acquire beneficial ownership of any
material portion of the assets of, or any material portion of the equity
interest in either Acquired Company or any of their Subsidiaries.
Section 6.4. Access to Information.
(a) Between the date of this Agreement and the Effective
Time, upon reasonable notice and at reasonable times, and subject to any
access, disclosure, copying or other limitations imposed by applicable Law
or any Contract of either Acquired Company or their Subsidiaries, each
Acquired Company will give Parent and/or Acquisition and their authorized
representatives reasonable access to all offices and other facilities of
each Acquired Company and to all books and records of each Acquired Company
and its Subsidiaries, and will permit Parent and Acquisition to make such
inspections as they may reasonably require, and will cause its officers and
those of its Subsidiaries to furnish Parent and Acquisition with such
financial and operating data and other information with respect to such
Acquired Company and its Subsidiaries as Parent or Acquisition may from
time to time reasonably request. Parent, Acquisition and their authorized
representatives will conduct all such inspections in a manner which will
minimize any disruptions of the business and operations of each Acquired
Company and its Subsidiaries.
(b) Between the date of this Agreement and the Effective
Time, upon reasonable notice and at reasonable times, and subject to any
access, disclosure, copying or other limitations imposed by applicable Law
or any of Parent's or the Retained Subsidiaries' contracts, Parent will
give Seller, Company and their authorized representatives reasonable access
to all offices and other facilities of Parent and the Retained Subsidiaries
and to all books and records of Parent and the Retained Subsidiaries that
relate to the Retained Business, and will permit Seller and Company to make
such inspections as they may reasonably require, and will cause its
officers and those of the Retained Subsidiaries to furnish Seller and
Company with such financial and operating data and other information with
respect to Parent and the Retained Subsidiaries as Seller or Company may
from time to time reasonably request, so long as such information and
inspections relate solely to the Retained Business. Seller, Company and
their authorized representatives will conduct all such inspections in a
manner which will minimize any disruptions of the business and operations
of Parent and the Retained Subsidiaries. For purposes of this Section
6.4(b), information that relates to the Retained Business shall be deemed
to include portions of the Tax Returns filed by Parent and its Subsidiaries
relating to the Retained Business and books and records relating thereto
and such other information relating to Taxes and Tax Returns as would be
available to Parent under the terms of the Tax Sharing Agreement if it were
in effect on the date hereof in the form attached hereto as Exhibit C.
(c) Parent, Spinco, Acquisition, Seller and Company
agree that the provisions of the Confidentiality Agreement dated as of July
17, 1997 (the "Confidentiality Agreement") by and between Parent and Seller
shall remain binding and in full force and effect and that the terms of the
Confidentiality Agreement are incorporated herein by reference; provided
that (x) actions taken by Parent, Seller and their Subsidiaries that are
permitted by Section 2.01(a) of the Benefits Allocation Agreement shall be
deemed not to breach the Confidentiality Agreement and (y) the second full
paragraph on page 5 thereof is superseded by the terms hereof (and
therefore is of no further force or effect). Prior to the Effective Time,
Parent will assign its rights and obligations with respect to Spinco and
the Spinco Business under the Confidentiality Agreement to Spinco, which
assignment is hereby consented to by Seller.
Section 6.5. Reasonable Efforts. Subject to the terms
and conditions of this Agreement, each of the parties hereto agrees to use
all commercially reasonable efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things reasonably necessary,
proper or advisable under applicable Laws to consummate and make effective
the transactions contemplated by this Agreement and the Distribution
Agreement (including (i) cooperating in the preparation and filing of the
Proxy Statement, the Form 10 (or any registration statement contemplated
pursuant to Article III of the Distribution Agreement), and any amendments
to any thereof; (ii) taking of all action reasonably necessary, proper or
advisable to secure any necessary consents or waivers from any Governmental
Entity or other Person; (iii) contesting any pending legal proceeding
relating to the Merger or the Distribution; and (iv) executing any
additional instruments necessary to consummate the transactions
contemplated hereby and thereby). In case at any time after the Effective
Time any further action is necessary to carry out the purposes of this
Agreement, the proper officers and directors of each party hereto shall use
all reasonable efforts to take all such necessary action.
Section 6.6. Consents. Each of Parent, Spinco,
Acquisition, Seller and Company shall cooperate and use their respective
reasonable efforts to make all filings and obtain all consents and
approvals of governmental authorities and other third parties, including
collective bargaining representatives, necessary to consummate the
transactions contemplated by this Agreement and the Distribution Agreement.
Each of the parties hereto will furnish to the other party such necessary
information and reasonable assistance as such other persons may reasonably
request in connection with the foregoing.
Section 6.7. Antitrust Filings.
(a) In addition to and without limiting the agreements
contained in Section 6.6 and under the UK Stock Purchase Agreement, Parent,
Spinco, Acquisition, Seller and Company will (i) take promptly all actions
necessary to make the filings required of Parent, Seller or any of their
affiliates under the applicable Antitrust Laws (as defined below), (ii)
comply at the earliest practicable date with any request for additional
information or documentary material received by Parent, Seller or any of
their affiliates from the Federal Trade Commission or the Antitrust
Division of the Department of Justice pursuant to the HSR Act and from the
Commission or other foreign governmental or regulatory authority pursuant
to Antitrust Laws, and (iii) cooperate with the other parties hereto in
connection with any filing under applicable Antitrust Laws and in
connection with resolving any investigation or other inquiry concerning the
transactions contemplated by this Agreement or the Distribution Agreement
commenced by any of the Federal Trade Commission, the Antitrust Division of
the Department of Justice, the OFT, state attorneys general, the Commission
or other foreign governmental or regulatory authorities ("Antitrust
Authorities"). As used herein, "Antitrust Law" means the Sherman Act, as
amended, the Clayton Act, as amended, the HSR Act, the Federal Trade
Commission Act, as amended, and all other federal, state and foreign
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines, and other Laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization
or restraint of trade.
(b) In furtherance and not in limitation of the
covenants contained in Section 6.6 and Section 6.7(a) hereof and under the
UK Stock Purchase Agreement, Parent, Spinco, Acquisition, Seller and
Company shall each use all reasonable efforts to resolve such objections,
if any, as may be asserted with respect to the Distribution, the Merger or
any other transactions contemplated by this Agreement or the Distribution
Agreement under any Antitrust Law. If any administrative, judicial or
legislative action or proceeding is instituted (or threatened to be
instituted) challenging the Distribution, the Merger or any other
transactions contemplated by this Agreement or the Distribution Agreement
as violative of any Antitrust Law, Parent, Acquisition, Seller and Company
shall each take all reasonable action as may be required by the applicable
Antitrust Authority in order to resolve such objections as such Antitrust
Authority may have to such transactions under any Antitrust Law, so long as
such actions would not reasonably be expected to adversely affect in a
substantial way the benefits and opportunities that any party reasonably
expects to receive from the transactions contemplated by this Agreement and
the Distribution Agreement.
(c) Each of Parent, Spinco, Acquisition, Seller and
Company shall promptly (i) inform the other parties of any material
communication received by such party from any Antitrust Authority regarding
any of the transactions or filings contemplated hereby and (ii) advise the
other parties with respect to any understanding, undertaking or agreement
(whether oral or written) which such party proposes to make or enter into
with any of the foregoing parties with regard to any of the transactions
contemplated hereby.
Section 6.8. Public Announcements. Parent, Spinco,
Acquisition, Seller and Company will consult with each other before issuing
any press release or otherwise making any public statements with respect to
the Distribution or the Merger and shall not issue any such press release
or make any such public statement prior to such consultation, except as may
be required by Law or by obligations pursuant to any listing agreement with
any securities exchange. If any party issues a release or public
statement, it shall promptly provide a copy thereof to the other parties.
Section 6.9. Financial Statements.
(a) For the periods following the date hereof, Seller
and Company will make available to Parent and Acquisition as soon as
available unaudited combined balance sheets for the Acquired Companies and
their Subsidiaries for each fiscal quarter and the related unaudited
consolidated statements of operations and cash flows and changes in
stockholder's equity for the periods then ended. All such financial
statements shall be prepared in conformity with GAAP applied on a
consistent basis except for changes, if any, required by GAAP and disclosed
therein. The statements of operations and cash flows shall present fairly
the results of operations and cash flows of the Acquired Companies and
their Subsidiaries for the respective periods covered, and the balance
sheets shall present fairly in all material respects the financial
condition of the Acquired Companies and their Subsidiaries as of their
respective dates. All such interim financial statements shall reflect all
adjustments (which, except as otherwise indicated on such financial
statements, consist only of normal recurring adjustments not material in
amount and include estimated provisions for year-end adjustments) necessary
for a fair presentation.
(b) For the periods following the date hereof, Parent
and Acquisition will make available to Seller and Company as soon as
available unaudited consolidated balance sheets for the Retained Business
for each fiscal quarter and the related unaudited consolidated statements
of operations and cash flows and changes in stockholder's equity for the
periods then ended. All such financial statements shall be prepared in
conformity with GAAP applied on a consistent basis except for changes, if
any, required by GAAP and disclosed therein. The statements of operations
and cash flows shall present fairly the results of operations and cash
flows of the Retained Business for the respective periods covered, and the
balance sheets shall present fairly in all material respects the financial
condition of the Retained Business as of their respective dates. All such
interim financial statements shall reflect all adjustments (which, except
as otherwise indicated on such financial statements, consist only of normal
recurring adjustments not material in amount and include estimated
provisions for year-end adjustments) necessary for a fair presentation.
Section 6.10. Registration of Spinco Shares. If Parent
reasonably determines that the Distribution may not be effected without
registering the shares of common stock of Spinco to be distributed in the
Distribution pursuant to the Securities Act, Parent, as promptly as
practicable, shall use its efforts to cause the shares of Spinco to be
registered pursuant to the Securities Act and thereafter effect the
Distribution in accordance with the terms of the Distribution Agreement
including by preparing and filing on an appropriate form a registration
statement under the Securities Act covering the shares of Spinco and using
commercially reasonable efforts to cause such registration statement to be
declared effective and preparing and making such other filings as may be
required under applicable state securities laws.
Section 6.11. Stockholders' Approval. Parent shall, in
accordance with applicable Law, its Certificate of Incorporation and its
By-laws:
(a) duly call, give notice of, convene and hold a special
meeting of its stockholders for the purpose of considering and taking
action upon this Agreement;
(b) subject to its fiduciary duties under applicable Law,
include in the Proxy Statement prepared for distribution to stockholders of
Parent in advance of the stockholders' meeting in accordance with
Regulation 14C promulgated under the Exchange Act a recommendation of its
Board of Directors that the Merger and the Distribution are in the best
interests of the stockholders of Parent and recommending approval and
adoption of this Agreement and the Merger; and
(c) prepare and file with the SEC the Proxy Statement,
respond promptly to any comments made by the SEC with respect to the Proxy
Statement and any preliminary version thereof, cause the Proxy Statement to
be mailed to its stockholders and, subject to its fiduciary duties under
applicable Law, use its best efforts to obtain the necessary approvals of
this Agreement by its stockholders.
Seller and Company will provide Parent with the information concerning
Seller and each Acquired Company required to be included in the Proxy
Statement.
Section 6.12. Tax Ruling. Parent, Spinco, Acquisition,
Seller and Company shall promptly prepare and submit to the IRS a private
letter ruling request seeking confirmation that the transactions
contemplated by the Distribution Agreement and this Agreement qualify as a
tax-free transaction under Sections 355 and 368 of the Code. The receipt
of such a private letter ruling is a condition to the obligations of the
parties hereunder. Each party agrees and acknowledges that the receipt of
such a private letter ruling may be conditioned on the making of additional
representations to the IRS, on one or more party's acceptance of and
agreement to certain covenants which may restrict such party's future
activities, on changes to certain rights and obligations of the parties
hereunder, or on changes to certain aspects of the structure of the
transactions contemplated by the Distribution Agreement and this Agreement
(including the Corporate Governance Arrangements set forth in Exhibit D
hereto (the "Corporate Governance Arrangements")). Each party agrees to
consider any such proposed representations, covenants or changes in good
faith and to agree thereto unless so agreeing would be reasonably likely
(x) to deprive such party of benefits that are a material portion of the
benefits expected to be derived by such party and its Affiliates following
the Distribution from the transactions contemplated by the Distribution
Agreement and this Agreement or (y) to inflict upon such party burdens or
risks that are material in comparison to the benefits expected to be
derived by such party and its Affiliates following the Distribution from
such transactions; provided that the parties shall have agreed upon any
adjustments to the terms and conditions of the transactions contemplated
hereby that are reasonably necessary in order to reflect, to the extent
practicable, the economic effect of any such proposed representations,
covenants or changes that have a reasonably identifiable economic effect on
the transactions contemplated in this Agreement. The parties agree to
negotiate any such adjustments in good faith.
Section 6.13. Tax Sharing Agreement. Attached hereto as
Exhibit C is a form of Tax Sharing and Indemnification Agreement (the "Tax
Sharing Agreement") to which the parties have agreed and which, subject to
the next two sentences, the parties agree to execute on or prior to the
Closing Date. Such form of Tax Sharing Agreement may require modification
in light of the final representations and warranties made to the IRS in
support of such private letter ruling and of any changes to the transaction
made pursuant to Section 6.12. The parties agree to make such
modifications to the form of Tax Sharing Agreement as are necessary (x) to
reflect such representations and warranties and any such changes, (y) to
include covenants not to cause such representations and warranties to be
untrue and (z) to provide indemnification consistent with the existing form
of Tax Sharing Agreement for breaches of such representations, warranties
and covenants and for any failure of the same to be true or to be
performed.
Section 6.14. Notices of Certain Events. (a) Seller
and Company shall promptly notify Parent and Acquisition of (i) any notice
or other communication from any Person alleging that the consent of such
Person is or may be required in connection with the transactions
contemplated by this Agreement, (ii) any notice or other communication from
any Governmental Entity in connection with the transactions contemplated by
this Agreement and (iii) any actions, suits, claims, investigations or
proceedings commenced or, to the knowledge of Seller and Company,
threatened against, relating to or involving or otherwise affecting either
Acquired Company or any Subsidiary of either Acquired Company that, if
pending on the date of this Agreement, would have been required to have
been disclosed pursuant to Section 3.11 or that relate to the consummation
of the transactions contemplated by this Agreement, and (b) Parent and
Acquisition shall promptly notify Seller and Company of (i) any notice or
other communication from any Person alleging that the consent of such
Person is or may be required in connection with the transactions
contemplated by this Agreement, (ii) any notice or other communication from
any Governmental Entity in connection with the transactions contemplated by
this Agreement and (iii) any actions, suits, claims, investigations or
proceedings commenced or, to the knowledge of Parent and Acquisition,
threatened against, relating to or involving or otherwise affecting Parent
or any Retained Subsidiary that, if pending on the date of this Agreement,
would have been required to have been disclosed pursuant to Section 4.11 or
that relate to the consummation of the transactions contemplated by this
Agreement.
Section 6.15. Transaction Documents. Simultaneously
with the execution hereof, Parent and certain of its Subsidiaries are
entering into the Distribution Agreement, the Omnibus Agreement and certain
other Transaction Documents. The parties acknowledge that other
Transaction Documents are not being entered into on the date hereof but
instead either (i) have been negotiated and are attached as exhibits or
schedules to either this Agreement or the Distribution Agreement or (ii)
have their principal terms set forth in term sheets attached as exhibits or
schedules to either this Agreement or the Distribution Agreement. The
execution and delivery of all such other Transaction Documents are
conditions to the consummation of the transactions contemplated hereby and
by the Transaction Documents. Therefore, the parties shall negotiate in
good faith to finalize definitive documentation for all Transaction
Documents as soon as reasonably practicable and either (x) execute such
Transaction Documents, which would become effective upon consummation of
the Merger, or (y) execute such Transaction Documents immediately prior to
the consummation of the Merger. It is the intent of the parties that all
such Transaction Documents be finalized by November 1, 1997. The failure
of any party to comply with the provisions of this Section 6.15 shall not
excuse such party from its obligations under this Agreement or the Omnibus
Agreement to consummate the transactions contemplated hereby or thereby.
Section 6.16. Retention of Auditors. Prior to the
Effective Time, Parent will cause Price Waterhouse LLP to be appointed as
its auditors, on customary and arms-length terms and conditions, so long as
Price Waterhouse LLP satisfies requirements of applicable law. For the
avoidance of doubt, the provisions of this Section 6.16 shall not impact
the procedures set forth in Exhibit A hereto or in Section 2.8(f) of the
Distribution Agreement.
Section 6.17. Termination or Redemption of Parent Rights
Plan. At Seller's request, Parent shall take all actions necessary to
enter into amendments to the Parent Rights Plan, the effect of which would
be to terminate the Parent Rights Plan or cause the rights issued under the
Parent Rights Plan to be extinguished, canceled, redeemed or otherwise made
inapplicable; provided that any costs incurred in redeeming any such rights
shall be borne by Seller.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.1. Conditions to Each Party's Obligation to
Effect the Merger. The respective obligation of each party to effect the
Merger is subject to the satisfaction at or prior to the Effective Time of
the following conditions:
(a) This Agreement and the Distribution Agreement shall
have been adopted by the affirmative vote of the stockholders of Parent by
the requisite vote in accordance with applicable Law;
(b) No statute, rule, regulation, order, decree or
injunction shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits the consummation of the Distribution,
the Merger or the transactions contemplated hereby;
(c) Any waiting period applicable to the Merger under
the Antitrust Laws shall have terminated or expired and all other Required
Regulatory Approvals shall have been received;
(d) Parent shall have received a favorable IRS ruling on
qualification of the transactions contemplated by the Distribution
Agreement, in form and substance reasonably satisfactory to Parent and
Seller, subject to the provisions of Section 6.12; and
(e) The closing under the UK Stock Purchase Agreement
shall have occurred.
Section 7.2. Conditions to the Obligation of Seller and
Company to Effect the Merger. The obligation of Seller and Company to
effect the Merger is further subject to the satisfaction at or prior to the
Effective Time of the following conditions:
(a) The representations and warranties of Parent,
Acquisition and Spinco contained in this Agreement (without giving effect
in any such representation or warranty to any materiality or Parent
Material Adverse Effect standard, qualification or exception contained
therein) shall be true at and as of the Effective Time with the same effect
as though made at and as of such time (except for representations and
warranties which speak as of a different date, which shall be true as of
such date); provided, however, that the representations and warranties of
Parent, Acquisition and Spinco need not be true, correct and complete at
and as of the Effective Time (or at such different date) so long as such
representations and warranties which are not true, correct or complete at
and as of the Effective Time (taken together but without giving effect to
any materiality or Parent Material Adverse Effect standard, qualification
or exception contained therein) would not, in the aggregate, have a
material adverse effect on the business, operations, properties, assets,
conditions (financial or otherwise) or results of operations of Company and
the Retained Business, taken as a whole (a "Combined Business Material
Adverse Effect"); and provided further that, if the transactions
contemplated by the UK Stock Purchase Agreement are consummated, the
representations and warranties of Parent, Acquisition and Spinco at and as
of the Effective Time will be deemed not to include representations and
warranties concerning MMS UK and its business and operations;
(b) Each of Parent, Spinco and Acquisition shall have
(x) performed in all material respects its obligations under this Agreement
(including Section 6.15 hereof) that are required to be performed by it at
or prior to the Effective Time pursuant to the terms hereof, (y) executed
and delivered any Transaction Document to which it is a party in the form
(or according to the terms) contemplated by this Agreement and the
Distribution Agreement (with only such changes as have been approved by
Seller in its reasonable discretion) and (z) performed in all material
respects its obligations under each such Transaction Document that are
required to be performed by it at or prior to the Effective Time pursuant
to the terms thereof;
(c) Each of Parent, Acquisition and Spinco will furnish
Seller and Company with such certificates and other documents to evidence
the fulfillment of the conditions set forth in this Section 7.2 as Seller
and Company may reasonably request;
(d) Each of Parent, Acquisition and Spinco shall deliver
to Seller and Company the following with respect to Parent, Acquisition or
Spinco, as the case may be, each, unless otherwise noted, dated as of the
Effective Time:
(i) Certified copies of the Certificate of
Incorporation of such Person, together with a good standing
certificate from the Secretary of State of its jurisdiction of
incorporation and each other state in which such Person is
qualified as a foreign corporation to do business and, to the
extent generally available, a certificate or other evidence of
good standing as to payment of any applicable franchise or similar
taxes from the appropriate taxing authority of each of such
jurisdictions, each dated a recent date prior to the Effective
Time;
(ii) Copies of the By-laws of such Person,
certified as of the Effective Time by such Person's corporate
secretary or an assistant secretary;
(iii) Resolutions of the Board of Directors of
such Person approving and authorizing the execution, delivery and
performance of this Agreement and, if applicable, the Transaction
Documents, certified as of the Effective Time by the corporate
secretary or an assistant secretary of such Person as being in
full force and effect without modification or amendment; and
(iv) Signature and incumbency certificates of
the officers of such Person executing the Agreement and the
Transaction Documents;
(e) Other than consents and approvals that relate solely
to the Retained Business, any third party consents and approvals required
to be set forth at Section 4.4(b) of Parent's Disclosure Schedule (whether
or not actually set forth at such Section) that are still required shall
have been received, unless Seller and Spinco shall have entered into
arrangements satisfactory to Seller with respect to any such third party
consents and approvals that have not been received;
(f) All of the capital stock of MMS Canada shall be held
directly by Parent;
(g) The Board of Directors of Parent will have taken all
action necessary to render the rights issued pursuant to the terms of the
Parent Rights Plan inapplicable to the Merger, this Agreement and the
transactions contemplated hereby; and
(h) The Distribution shall have been consummated in
accordance with the terms of the Distribution Agreement (which shall not
have been amended without the consent of Seller, such consent not to be
unreasonably withheld) and each supplemental indenture contemplated by
Section 2.8 of the Distribution Agreement that is required to be entered
into pursuant to such Section shall be in form and substance reasonably
satisfactory to Seller.
Section 7.3. Conditions to Obligations of Parent, Spinco
and Acquisition to Effect the Merger. The obligations of Parent, Spinco
and Acquisition to effect the Merger are further subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) The representations and warranties of Seller and
Company contained in this Agreement (without giving effect in any such
representation or warranty to any materiality or Company Material Adverse
Effect standard, qualification or exception contained therein) shall be
true at and as of the Effective Time with the same effect as though made at
and as of such time (except for representations and warranties which speak
as of a different date, which shall be true as of such date); provided
however, that the representations and warranties of Seller and Company need
not be true at and as of the Effective Time (or at such different date) so
long as such representations and warranties which are not true at and as of
the Effective Time (taken together but without giving effect to any
materiality or Company Material Adverse Effect standard, qualification or
exception contained therein) shall not constitute a Combined Business
Material Adverse Effect;
(b) Each of Seller and Company shall have (x) performed
in all material respects its obligations under this Agreement (including
Section 6.15 hereof) that are required to be performed by it at or prior to
the Effective Time pursuant to the terms hereof, (y) executed and delivered
any Transaction Document to which it is a party in the form (or according
to the terms ) contemplated by this Agreement and the Distribution
Agreement (with only such changes as have been approved by Parent in its
reasonable discretion) and (z) performed in all material respects its
obligations under each such Transaction Document that are required to be
performed by it at or prior to the Effective Time pursuant to the terms
thereof;
(c) Each of Seller and Company will furnish Parent and
Acquisition with such certificates and other documents to evidence the
fulfillment of the conditions set forth in this Section 7.3 as Parent or
Acquisition may reasonably request;
(d) Each of Seller and Company shall deliver to Parent,
Spinco and Acquisition the following with respect to Seller and Company, as
the case may be, each, unless otherwise noted, dated as of the Effective
Time:
(i) Certified copies of the Certificate of Incorporation
of each Acquired Company together with a good standing certificate
from the Secretary of State of its jurisdiction of incorporation
and each other state in which each Acquired Company is qualified
as a foreign corporation to do business and, to the extent
generally available, a certificate or other evidence of good
standing as to payment of any applicable franchise or similar
taxes from the appropriate taxing authority of each of such
jurisdictions, each dated a recent date prior to the Effective
Time;
(ii) Copies of the By-laws of each Acquired Company,
certified as of the Effective Time by such Acquired Company's
corporate secretary or an assistant secretary;
(iii) Resolutions of the Board of Directors of such
Person approving and authorizing the execution, delivery and
performance of the Agreement, and, if applicable, the Transaction
Documents, certified as of the Effective Time by the corporate
secretary or an assistant secretary of such Person as being in
full force and effect without modification or amendment; and
(iv) Signature and incumbency certificates of the
officers of such Person executing the Agreement;
(e) Other than consents and approvals that relate solely
to the Retained Business, any third party consents and approvals required
to be set forth at Section 3.4(b) of Seller's Disclosure Schedule (whether
or not actually set forth at such Section) that are still required shall
have been received;
(f) The Distribution shall have been consummated in
accordance with the terms of the Distribution Agreement; and
(g) Any Contracts between Seller or any of its
Affiliates and any Acquired Company or any of their Affiliates relating to
the matters covered by the Assistance Agreement attached hereto as Exhibit
E-1 and the Royalty Agreement Term Sheet attached hereto as Exhibit E-2
shall have been terminated.
ARTICLE VIII
TERMINATION; AMENDMENT; WAIVER
Section 8.1. Termination. This Agreement may be
terminated and the Merger may be abandoned at any time (notwithstanding
approval of the Merger by the stockholders of Parent, Acquisition or
Company) prior to the Effective Time:
(a) by mutual written consent of Parent, Acquisition,
Spinco, Seller and Company;
(b) by Parent, Acquisition, Spinco, Seller or Company if
any court of competent jurisdiction or other Governmental Entity shall have
issued a final order, decree or ruling or taken any other final action
restraining, enjoining or otherwise prohibiting the consummation of the
Distribution or the Merger and such order, decree, ruling or other action
is or shall have become nonappealable;
(c) by Seller or Company if there shall have been a
breach of any covenant in this Agreement or any Transaction Document on the
part of Parent, Spinco or Acquisition which (x) materially adversely
affects (or materially delays) the consummation of the Merger and the other
transactions contemplated hereby or thereby and (y) has not been cured
prior to 30 days following notice of such breach;
(d) by the Parent, Spinco or Acquisition if there shall
have been a breach of any covenant in this Agreement or any Transaction
Document on the part of Seller or Company which (x) materially adversely
affects (or materially delays) the consummation of the Merger and the other
transactions contemplated hereby or thereby and (y) has not been cured
prior to 30 days following notice of such breach;
(e) by Parent, Spinco, Acquisition, Seller or Company if
stockholders of Parent fail to approve and adopt the Distribution, the
Merger and the other transactions contemplated hereby at the meeting called
for such purpose (or any adjournment thereof);
(f) by Parent, if (i) the Board of Directors of Parent
shall have determined in good faith, based on the advice of outside
counsel, that it is necessary, in order to comply with its fiduciary duties
to Parent's stockholders under applicable law, to terminate this Agreement
to enter into an agreement with respect to or to consummate a transaction
constituting a Superior Proposal (as defined below), (ii) Parent shall
have given notice to Seller advising Seller that Parent has received a
Superior Proposal from a third party, specifying the material terms and
conditions (including the identity of the third party), and that Parent
intends to terminate this Agreement in accordance with this Section 8.1(f)
and (iii) either (A) Seller shall not have revised its Acquisition
Proposal within ten days from the time on which such notice is deemed to
have been given to Seller, or (B) if Seller within such period shall have
revised its Acquisition Proposal, the Board of Directors of Parent, after
receiving advice from Parent's financial advisor, shall have determined in
its good faith reasonable judgment that the third party's Acquisition
Proposal is superior to Seller's revised Acquisition Proposal;
(g) by Parent, Spinco, Acquisition, Seller or Company if
the consummation of the Merger has not occurred by June 30, 1998;
(h) by Parent, Spinco, or Acquisition if a condition to
closing set forth in Section 7.1 or Section 7.3 becomes incapable of being
satisfied; or
(i) by Seller or Company if a condition to closing set
forth in Section 7.1 or Section 7.2 becomes incapable of being satisfied.
As used herein, the term "Superior Proposal" means an
Acquisition Proposal by a Person which the Board of Directors of Parent
determines in its good faith reasonable judgment to be more favorable to
Parent's stockholders than the Distribution and the Merger (based on advice
of Parent's independent financial advisor that the value of the
consideration provided for in such proposal is superior to the value of the
consideration provided for in the Merger and the other transactions
contemplated hereby), for which financing, to the extent required, is then
committed and for which Parent's Board of Directors determines, in its good
faith reasonable judgment, that such proposed transaction is reasonably
likely to be consummated without undue delay.
Section 8.2. Effect of Termination. Except as specified
in Section 9.12, in the event of the termination and abandonment of this
Agreement pursuant to Section 8.1, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party
hereto or its affiliates, directors, officers or shareholders, other than
the provisions of this Section 8.2 and Article IX hereof. Nothing
contained in this Section 8.2 shall relieve any party from liability for
any breach of any agreement or covenant contained in this Agreement or any
Transaction Document.
Section 8.3. Amendment. This Agreement may be amended
by an instrument executed by Parent, Spinco, Acquisition, Seller and
Company at any time before or after adoption of the Merger by the
stockholders of Parent.
Section 8.4. Extension; Waiver. At any time prior to
the Effective Time, the parties may (a) extend the time for the performance
of any of the obligations or other acts of the other parties hereto, (b)
waive any inaccuracies in the representations and warranties of the other
parties contained herein or in any document, certificate or writing
delivered pursuant hereto or (c) waive compliance with any of the
agreements or conditions of the other parties hereto contained herein. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of
such party.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Survival. Except as otherwise expressly
set forth in the Distribution Agreement or another Transaction Document,
the representations, warranties, covenants and agreements made herein shall
not survive beyond the Effective Time; provided that the covenants and
agreements contained in Sections 6.5, 6.6 and 6.10 hereof shall survive
beyond the Effective Time without limitation.
Section 9.2. Entire Agreement. Except for the
provisions of the Confidentiality Agreement which shall continue in full
force and effect as modified hereby, this Agreement and the Transaction
Documents (including the schedules and exhibits referred to herein and
therein) constitute the entire agreement among the parties with respect to
the subject matter hereof and supersedes all other prior negotiations,
commitments, agreements and understandings, both written and oral, between
the parties or any of them with respect to the subject matter hereof.
Section 9.3. Governing Law. This Agreement shall be
governed by and construed in accordance with the Laws of the State of New
York (regardless of the Laws that might otherwise govern under applicable
principles of conflicts Law) as to all matters, including matters of
validity, construction, effect, performance and remedies.
Section 9.4. Notices. All notices and other
communications hereunder shall be in writing and shall be deemed given upon
(a) confirmation of receipt of a facsimile transmission, (b) confirmed
delivery by a standard overnight carrier or when delivered by hand or (c)
the expiration of five Business Days (or seven Business Days if from the
United States to France or vice versa) after the day when mailed by
certified or registered mail, postage prepaid, addressed at the following
addresses (or at such other address for a party as shall be specified by
like notice):
(a) If to Parent, Spinco or Acquisition, to:
Marriott International, Inc.
10400 Fernwood Road
Bethesda, Maryland 20817
Attention: Chief Financial Officer
Telecopy: 301/380-8150
with a copy to:
Marriott International, Inc.
10400 Fernwood Road
Bethesda, Maryland 20817
Attention: General Counsel
Telecopy: 301/380-6727
and a copy to:
O'Melveny & Myers LLP
555 13th Street, N.W.
Washington, D.C. 20004
Attention: Jeffrey J. Rosen
Telecopy: 202/383-5414
(b) If to Seller or Company, to:
Sodexho Alliance, S.A.
3, Avenue Newton
78180 Montigny - le - Bretonneux
France
Attention: Denis Robin
Telecopy: 011-331-3085-5088
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Paul R. Kingsley
Telecopy: 212/450-4800
As used in this Agreement, "Business Day" means any calendar day which is
not a Saturday, Sunday or a public holiday under the laws of New York or
Maryland.
Section 9.5. Successors and Assigns; No Third Party
Beneficiaries. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by either
party (whether by operation of law or otherwise) without the prior written
consent of the other party. Notwithstanding the preceding sentence or
anything in any Transaction Document to the contrary, prior to consummation
of the transactions contemplated hereby, Spinco may assign its rights and
obligations hereunder and under the other Transaction Documents to any
wholly-owned U.S. subsidiary of Parent other than a Retained Subsidiary,
which wholly owned subsidiary shall, following the Distribution, own all of
the assets of Parent and its Subsidiaries (including shares of capital
stock of Subsidiaries and any other ownership interests in any Person)
other than the Retained Business. In the event of such an assignment and
assumption, the assignor shall be released from all of its obligations
under this Agreement and the assignee shall become Spinco for all purposes
under this Agreement and the Transaction Documents. 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 rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement.
Section 9.6. Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be
an original, but all of which shall constitute one and the same instrument.
Section 9.7. Interpretation. The descriptive headings
herein are inserted for convenience of reference only and are not intended
to be part of or to affect the meaning or interpretation of this Agreement.
For all purposes of this Agreement, except as otherwise expressly provided,
(i) the enumeration of one or more items following the term "including"
shall not be interpreted as excluding any items not so enumerated, (ii)
defined terms shall include the plural as well as the singular, (iii) all
references to "Articles," "Sections" or other subdivisions are to
designated Articles, Sections and other subdivisions of the body of this
Agreement, (iv) pronouns of either gender or neuter shall include, as
appropriate, the other pronoun forms, and (v) the words "herein," "hereof"
and "hereunder" and other words of similar import refer to this Agreement
as a whole and not to any particular Article, Section or other subdivision.
References to the "knowledge" or "best knowledge" of Parent, Acquisition or
any Subsidiary of Parent shall mean (and be limited) to the actual
knowledge of the individuals identified in Section 9.7 of Parent's
Disclosure Schedule. References to the "knowledge" or "best knowledge" of
Seller, Company, or any Subsidiary of Seller shall mean (and be limited) to
the actual knowledge of the individuals identified in Section 9.7 of
Seller's Disclosure Schedule.
Section 9.8. Schedules. The Schedules hereto shall be
construed with and as an integral part of this Agreement to the same extent
as if the same had been set forth verbatim herein.
Section 9.9. Legal Enforceability. 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 affecting the validity or
enforceability of the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. If any provision
of this Agreement is so broad as to be unenforceable, the provision shall
be interpreted to be only so broad as is enforceable.
Section 9.10. Specific Performance. Each of the parties
hereto acknowledges and agrees that in the event of any breach of this
Agreement, each non-breaching party would be irreparably and immediately
harmed and could not be made whole by monetary damages. It is accordingly
agreed that the parties hereto (a) will waive, in any action for specific
performance, the defense of adequacy of a remedy at law and (b) shall be
entitled, in addition to any other remedy to which they may be entitled at
law or in equity, to compel specific performance of this Agreement in any
action instituted in any state or federal court sitting in New York. The
parties hereto consent to personal jurisdiction in any such action brought
in any state or federal court sitting in New York and to service of process
upon it in the manner set forth in Section 9.4 hereof.
Section 9.11. Consent to Jurisdiction; Waiver of Jury
Trial. Each party irrevocably agrees that any legal action or proceeding
arising out of or relating to this Agreement shall be instituted in any
State or Federal court sitting in New York City, Borough of Manhattan (and
each party agrees not to commence any legal action or proceeding except in
such courts), and each party irrevocably submits to the jurisdiction of
such courts in any such action or proceeding. Seller hereby agrees that
service of process in any such action or proceeding may be made upon
Company, and the Seller irrevocably appoints Company as its true and lawful
agent to receive on behalf of itself and its properties, service of process
in any such action or proceeding, and Company irrevocably accepts such
appointment. Each party irrevocably consents to service of process in any
such action or proceeding upon it by mail at its address set forth in
Section 9.4 of this Agreement (or, in the case of Seller and Company, upon
Company at its principal U.S. offices, located at 153 Second Avenue,
Waltham, Massachusetts, 02254-1164). Any party serving process upon
Company as agent for Seller shall also provide a copy to Seller at its
notice address in accordance with Section 9.4. The foregoing provisions
shall not limit the right of any party to obtain execution on any judgment
rendered in any such action or proceeding in any other appropriate
jurisdiction or in any other manner. Seller agrees that a final judgment
against it in any legal action or proceeding arising out of or relating to
this Agreement shall be conclusive and may be enforced in any other
jurisdiction within or outside the United States by suit on the judgment, a
certified or exemplified copy of which judgment shall be conclusive
evidence thereof, or by any other means provided by law. EACH PARTY HEREBY
AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT.
Section 9.12. Certain Expenses. (a) If this Agreement
is terminated by Parent pursuant to Section 8.1(f) hereof, Parent shall pay
promptly to Seller an amount equal to the reasonable fees and expenses paid
or payable by or on behalf of Seller and Company to their attorneys,
accountants, consultants and advisors in connection with the negotiation,
execution and delivery of this Agreement; provided that such payment shall
in no event exceed $5,000,000. Such payment shall be made in same day
funds no later than five Business Days after receipt by Parent of a
statement (including invoices) describing in reasonable detail such fees
and expenses.
(b) If following a termination pursuant to Section
8.1(f) hereof, Parent shall, within twelve months following the date of
such termination, consummate an Acquisition Proposal with the Person that
made the Superior Proposal that resulted in this Agreement being
terminated, then Parent shall promptly pay to Seller a fee equal to
$75,000,000. Such payment shall be made in same day funds no later than
five Business Days after the consummation of such transaction.
IN WITNESS WHEREOF, each of the parties has caused this
Agreement and Plan of Merger to be executed on its behalf by its officers
thereunto duly authorized, all as of the day and year first above written.
MARRIOTT INTERNATIONAL, INC. (to be
renamed "Sodexho Marriott Services,
Inc.")
By: /s/ Wiliam J. Shaw
------------------------------------
Name: William J. Shaw
Title: President and Chief Operating
Officer
MARRIOTT-ICC MERGER CORP.
By: /s/ William J. Shaw
------------------------------------
Name: William J. Shaw
Title: President
NEW MARRIOTT MI, INC. (to be renamed
"Marriott International, Inc.")
By: /s/ William J. Shaw
------------------------------------
Name: William J. Shaw
Title: President
SODEXHO ALLIANCE, S.A.
By: /s/ B. Carton
------------------------------------
Name: B. Carton
Title: Vice President, Finance
INTERNATIONAL CATERING CORPORATION
By: /s/ M. Candel
------------------------------------
Name: M. Candel
Title: President
Schedule 2.6
Directors of Surviving Corporation
Charles O'Dell
Michel Landel
Robert Drury
Schedule 2.7
Officers of Surviving Corporation
Michel Landel -- President and Chief Executive Officer
Robert Drury -- Treasurer and Vice President, Finance
David Hayes -- Secretary
Exhibit A
NET TANGIBLE ASSETS ADJUSTMENT FORMULA
1. Definitions. Unless specified below, capitalized
terms have the meaning ascribed to them in the Agreement and Plan of Merger
(the "Agreement") to which this Exhibit A is attached. As used in this
Exhibit A, the following terms shall have the following meanings:
"Adjusted Net Tangible Assets" means, with respect to the
Acquired Companies and their Subsidiaries on a combined basis, the amount
by which "stockholders equity" exceeds "intangible assets" as reflected on
the combined balance sheet of the Acquired Companies prepared in accordance
with the Agreed Accounting Procedures as of immediately prior to and
without giving effect to the consummation of the transactions contemplated
by the Agreement and the Transaction Documents other than the making of the
Seller Contribution contemplated by Section 1.2(a) of the Agreement.
"Agreed Accounting Procedures" means the accounting
methodologies, policies, practices, assumptions and procedures used by
Seller in the preparation of the combined balance sheet for the Acquired
Companies at August 31, 1997, as articulated and/or modified if and to the
extent necessary (and only if and to the extent necessary) (I) to correct
any material discrepancy between such methodologies, policies, practices
and procedures and GAAP and (II) properly to reflect, consistent with GAAP
and with such Agreed Accounting Procedures, events, facts or circumstances
occurring subsequent to August 31, 1996 and not already reflected in such
consolidated balance sheet; provided that (i) any events, facts or
circumstances which occur more than 30 days after the Closing Date will not
be taken into account in connection with the preparation of the
Distribution Date Statement and (ii) no write-downs or write-ups of (or
valuation reserves for) deferred tax assets will be made (or provided)
because of any concern about whether Parent will have sufficient taxable
income to utilize such assets.
2. Adjustment Procedures. (a) Within 60 days after the
Distribution, Seller will prepare and deliver or cause to be delivered to
Parent and Spinco a statement (the "Closing Date Statement") that includes
a combined balance sheet for the Acquired Companies as of the moment
immediately prior to the consummation of the transactions contemplated by
this Agreement and the Transaction Documents (other than the making of the
Seller Contribution contemplated by Section 1.2(a) of the Agreement),
prepared in accordance with the Agreed Accounting Procedures, and a
calculation, set forth in reasonable detail, of the Adjusted Net Tangible
Assets for the Acquired Companies, on a combined basis, as of such time.
The Closing Date Statement shall be accompanied by a report of the Company
Auditors stating, without qualification, that such balance sheet and such
calculation have been prepared in accordance with this Exhibit A. Seller
will afford Parent's and Spinco's representatives reasonable access, upon
reasonable notice and during reasonable hours, to records and information
of the Acquired Companies during the preparation of the Closing Date
Statement and a reasonable opportunity to participate in the preparation
thereof.
(b) Spinco, Parent and Seller acknowledge and agree that
the purpose of the procedures and adjustments contemplated by this Exhibit
A is to ensure that the Adjusted Net Tangible Assets of the Acquired
Companies, on a combined basis, determined as provided herein and in
accordance with the Agreed Accounting Procedures, is equal to the sum of
$269,000,000. For the avoidance of doubt, it is expressly agreed that no
objection may be raised and no adjustment may be proposed to any entry or
item contained in the Closing Date Statement except on grounds that such
item or entry is not in accordance with the provisions of this Exhibit A or
the Agreed Accounting Procedures consistently applied; without prejudice,
however, to a party's right to challenge or propose adjustment to items or
entries on grounds that such items or entries are not so in accordance with
the provisions of this Exhibit A and the Agreed Accounting Procedures,
consistently applied.
(c) Following the delivery of the Closing Date Statement
to Parent and Spinco, Parent and Spinco will have the right to review the
Closing Date Statement to determine whether it was prepared in accordance
with this Exhibit A and the Agreed Accounting Procedures. Seller will
permit Parent and Spinco and their independent public accountants access at
all reasonable times to all of the working papers, analyses and schedules
of Seller and the Acquired Companies utilized or prepared in connection
with the preparation of the Closing Date Statement. Within the 30-day
period after receipt of the Closing Date Statement, Parent and Spinco will,
in a written notice to Seller, either accept the Closing Date Statement or
describe in reasonable detail any proposed adjustments to the Closing Date
Statement and the reasons therefor, in which case the notice from Parent
and Spinco will include a special report of the independent public
accountants of Spinco and Parent stating that such adjustments are required
in accordance with this Exhibit A. If Seller has not received such notice
of proposed adjustments within such 30-day period, Parent and Spinco will
be deemed irrevocably to have accepted the Closing Date Statement.
(d) Parent, Spinco and Seller will negotiate in good
faith to resolve any disputes over any proposed adjustments to the Closing
Date Statement. However, if any such dispute is not resolved within 30
days following the receipt by Seller of the proposed adjustments, Parent,
Spinco and Seller jointly will jointly engage KPMG Peat Marwick to resolve
such disputes in accordance with the standards set forth in this Exhibit A,
which resolution will be final and binding. Each party will bear a portion
of the fees and expenses of that accounting firm equal to the proportion of
the disputed amount determined in favor of the other party.
(e) Upon the acceptance of the Closing Date Statement by
Parent and Spinco or the resolution in writing of any disputes arising out
of any proposed adjustments, (A) if the Adjusted Net Tangible Assets of the
Acquired Companies, on a combined basis, as set forth on the Closing Date
Statement as so accepted or as modified to resolve such disputes is greater
than $269,000,000, Parent will promptly (but in no event more than five
days thereafter) pay to Seller the amount of such excess, together with
interest as computed below, or (B) if the Adjusted Net Tangible Assets of
the Acquired Companies, on a combined basis, as set forth on the Closing
Date Statement as so accepted or as modified to resolve such disputes is
less than $269,000,000, Seller will promptly (but in no event more than
five days thereafter) pay to Parent the amount of such difference, together
with interest as computed below. Interest will be payable on the amounts
set forth above from the Distribution Date through and including the date
of such payment at a rate per annum calculated as 6-month LIBOR (appearing
on the Dow Jones/Telerate Monitor on Telerate Access Service Page 3750
determined at 11:00 AM London time on the Closing Date and, if necessary,
each 6-month anniversary thereof) plus one percent (1.00%), computed based
on a 360-day year and the number of days elapsed. Any such payment under
this Exhibit A will be made by wire transfer of immediately available funds
in U.S. Dollars.
EXHIBIT 2
AMENDMENT AGREEMENT
This AMENDMENT AGREEMENT, dated as of January 28, 1998 (this
"Amendment"), by and among MARRIOTT INTERNATIONAL, INC., a Delaware
corporation to be renamed "Sodexho Marriott Services, Inc." ("Parent"),
MARRIOTT-ICC MERGER CORP., a Delaware corporation and a direct wholly-owned
subsidiary of Parent ("Acquisition"), NEW MARRIOTT MI, INC., a Delaware
corporation and a wholly-owned subsidiary of Parent to be renamed "Marriott
International, Inc." ("Spinco"), SODEXHO ALLIANCE, S.A., a societe anonyme
organized under the laws of the Republic of France ("Seller"), and
INTERNATIONAL CATERING CORPORATION, a Delaware corporation and a wholly-owned
subsidiary of Seller ("Company"), amends (1) the Agreement and Plan of Merger
dated as of September 30, 1997 (the "Merger Agreement") by and among the
parties hereto, (2) the Distribution Agreement dated as of September 30, 1997
(the "Distribution Agreement") by and between Parent and Spinco and (3) the
Omnibus Restructuring Agreement dated as of September 30, 1997 (the "Omnibus
Agreement") by and among the parties hereto (collectively, the "Agreements").
RECITALS
WHEREAS, the parties hereto entered into the Agreements in
order to (i) distribute the shares of Spinco capital stock to the stockholders
of Parent and restructure Parent's existing debt in a series of transactions
that will separate Parent's management services division from Parent's other
businesses and (ii) combine the businesses of Parent's management services
division and Seller's North American management services division;
WHEREAS, the Agreements contemplate that Seller will make a cash
contribution to Company prior to the merger referred to in the Merger
Agreement in an amount equal to $304 million;
WHEREAS, the parties hereto have agreed that, in lieu of the
contribution referred to above, Seller shall make a cash payment to Parent in
the amount of $304 million simultaneously with the consummation of such
merger, as a result of which the Parent Common Stock to be issued to Seller
pursuant to the Merger Agreement will be issued in exchange for (i) the stock
of Company, (ii) the stock of Sodexho Canada and (iii) $304 million in cash;
WHEREAS, the parties hereto have agreed to amend the Agreements
to make certain other changes, including to the form of Tax Sharing Agreement.
NOW, THEREFORE, in consideration of the premises and agreements,
provisions and covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. General. Capitalized terms used but not defined
herein shall have the respective meanings ascribed thereto in the Merger
Agreement.
Section 1.2. Interpretation. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Amendment. For all
purposes of this Amendment, except as otherwise expressly provided, (i) the
enumeration of one or more items following the term "including" shall not be
interpreted as excluding any items not so enumerated, (ii) defined terms shall
include the plural as well as the singular, (iii) all references to
"Articles," "Sections" or other subdivisions are to designated Articles,
Sections and other subdivisions of the body of this Amendment, (iv) pronouns
of either gender or neuter shall include, as appropriate, the other pronoun
forms, and (v) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Amendment as a whole and not to any particular
Article, Section or other subdivision.
ARTICLE II
AMENDMENTS TO MERGER AGREEMENT
From and after the date hereof, the Merger Agreement is hereby
amended as follows:
Section 2.1. Amendments to Recitals to the Merger Agreement.
The Recitals to the Merger Agreement are hereby amended by deleting the fifth
and sixth recitals in their entireties and inserting in lieu thereof the
following:
"WHEREAS, immediately following the Distribution,
(i) Acquisition will merge with and into Company, Seller will
transfer to Parent all of the outstanding capital stock of
Sodexho Financiere du Canada Inc. ("Sodexho Canada" and,
together with Company, "Acquired Companies") and Seller will
make a cash payment to Parent of $304,000,000 (the "Seller
Payment"), in each case pursuant to the terms hereof, (ii) all
of the issued and outstanding shares of Company common stock
will be converted into common stock of Parent in such amounts
as are determined herein and (iii) all issued and outstanding
shares of Acquisition will be converted into all the
outstanding capital stock of the Surviving Corporation, as a
result of which Company (as the Surviving Corporation in the
merger) will become a wholly-owned subsidiary of Parent."
Section 2.2. Amendments to Article I of the Merger Agreement.
(a) The title of Article I of the Merger Agreement is hereby
amended to read "THE DISTRIBUTION; SELLER PAYMENT; CANADIAN TRANSFER."
(b) Section 1.2 of the Merger Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
"Section 1.2. Seller Payment and Canadian
Transfer.
(a) At the Effective Time, Seller will make the
Seller Payment to Parent in an amount equal to $304,000,000 in
immediately available funds. Following the Effective Time,
Seller will pay Parent, or Parent will pay Seller, as the case
may be, any amounts determined in accordance with Exhibit A
based on target Adjusted Net Tangible Assets for the Acquired
Companies, on a combined basis, of negative $35,000,000.
(b) Seller shall transfer to Parent all of the
outstanding capital stock of Sodexho Canada, which contribution
shall be made (and effective) at the Effective Time, by
delivering to Parent the certificates evidencing such stock,
properly endorsed for transfer to or accompanied by a duly
executed stock power in favor of Parent or its nominee and
otherwise in a form acceptable for transfer on the books of
Sodexho Canada."
Section 2.3. Amendment to Section 2.8(a) of the Merger
Agreement. Section 2.8(a) of the Merger Agreement is hereby amended by
deleting the first sentence in its entirety and replacing it with the
following:
"By virtue of the Merger and without any action on the part of
Seller other than the transfer of the stock of Sodexho Canada
to Parent and making of the Seller Payment, all shares of
common stock, par value $0.001 per share, of Company (each, a
"Company Share") issued and outstanding immediately prior to
the Effective Time (all of which are held by Seller) shall be
converted into the right to receive, and become exchangeable
for, a number of shares of validly issued, fully paid and
nonassessable common stock of Parent, par value $1.00 per share
(the "Parent Common Stock") (each such share, a "Parent
Share"), upon the surrender of the certificate(s) formerly
representing such Company Shares, such that Seller shall, in
the aggregate, have the right to receive a number of Parent
Shares which, when added to Parent Shares issuable upon
exercise of options issued pursuant to Section 2.8(c), equal
49% of the Parent Shares (other than Parent Shares held in the
treasury of Parent or held by any wholly owned Subsidiary of
Parent) issued and outstanding immediately after the Effective
Time."
Section 2.4. Amendments to Exhibit A of the Merger Agreement.
(a) Section 1 of Exhibit A of the Merger Agreement is amended
by deleting the words "other than the making of the Seller Contribution
contemplated by Section 1.2(a) of the Agreement" from the definition of
"Adjusted Net Tangible Assets."
(b) Section 2(a) of Exhibit A of the Merger Agreement is
amended by deleting the words "(other than the making of the Seller
Contribution contemplated by Section 1.2(a) of the Agreement)" appearing in
the first sentence.
(c) Section 2(b) of Exhibit A of the Merger Agreement is
amended by deleting the words "to the sum of $269,000,000" and replacing it
with the words "in the aggregate to negative $35,000,000."
(d) Section 2(e) of Exhibit A of the Merger Agreement is
amended by deleting each occurrence of the number "$269,000,000" and replacing
it with the words "negative $35,000,000."
(e) Exhibit C of the Merger Agreement is deleted in its
entirety and replaced with the document attached hereto as Exhibit 1.
ARTICLE III
AMENDMENTS TO DISTRIBUTION AGREEMENT
From and after the date hereof, the Distribution Agreement is
hereby amended as follows:
Section 3.1. Amendment to Recitals to the Distribution
Agreement. The Recitals to the Distribution Agreement are hereby amended by
deleting subparagraph (5) of the fifth recital in its entirety and replacing
it with the following:
"(5) pursuant to the Agreement and Plan of Merger (the
"Merger Agreement") dated as of even date herewith by and among
Parent, Marriott-ICC Merger Corp., a Delaware corporation
("Acquisition"), Spinco, Seller and Company, in exchange for
approximately 49% of the outstanding stock of Parent, Parent
will (a) acquire 100% of the stock of Company (the "Merger"),
(b) acquire 100% of the stock of Sodexho Canada and (c) receive
from Seller a cash payment of $304 million;"
Section 3.2. Amendments to Section 1.1 of the Distribution
Agreement.
(a) The definition of "Retained Liabilities" is hereby
amended by adding the following at the end thereof: "; provided that all
Liabilities arising under the deeds delivered pursuant to Section 2.7(a)(ii)
shall not constitute Retained Liabilities."
(b) The definition of "Spinco Liabilities" is hereby amended
by deleting the word "and" immediately following the phrase "(iv) the Spinco
Self Insurance Liabilities," and adding the following at the end thereof: "and
(vi) all Liabilities arising under the deeds delivered pursuant to Section
2.7(a)(ii)."
Section 3.3. Amendment to Section 2.7(a) of the Distribution
Agreement. Section 2.7(a) is hereby amended by deleting the words "quitclaim
deed" occurring in clause (ii) thereof and replacing it with the words
"special warranty deed."
Section 3.4. Amendment to Section 2.8(e) of the Distribution
Agreement. Section 2.8(e) is hereby amended by deleting the second sentence
thereof in its entirety and replacing it with the following:
"Therefore, Parent shall use its reasonable efforts to borrow
funds in such amounts as are necessary, together with the cash
payment to be made by Seller to Parent as contemplated by the
Merger Agreement, to provide net proceeds to Parent sufficient
to refinance the indebtedness of Parent and pay the other
amounts described above."
Section 3.5. Amendment to Schedule 1.1(b) of the Distribution
Agreement. Schedule 1.1(b) of the Distribution Agreement is deleted in its
entirety and replaced with the document attached hereto as Schedule 1.
ARTICLE IV
AMENDMENT TO OMNIBUS AGREEMENT
From and after the date hereof, the Omnibus Agreement is hereby
amended as follows:
Section 4.1. Amendments to Section 1. of the Omnibus Agreement.
(a) Section 1.f. of the Omnibus Agreement is amended by
deleting the text thereof in its entirety.
(b) Section 1. of the Omnibus Agreement is further amended by
relabeling subsection g. as subsection f., deleting the last sentence thereof
in its entirety and replacing it with the following:
"In consideration thereof and for a $304 million cash payment
to be made simultaneously therewith by Seller to Parent, Parent
will issue new shares of its common stock to Seller which, when
added to common stock issuable upon exercise of options to
purchase common stock of Parent received in the Merger upon
conversion of options to purchase stock of Company, shall equal
49% of the then-outstanding common stock of Parent."
(c) Section 1. of the Omnibus Agreement is further amended by
changing the reference in the last sentence thereof from "(g)" to "(f)."
ARTICLE V
MISCELLANEOUS
Section 5.1. Effect of Amendment. The Amendments made by this
Amendment shall be effective as of the date hereof and for all times
hereafter. Except as amended hereby, the Agreements shall remain in full
force and effect.
Section 5.2. Entire Agreement. Except for the provisions of
the Confidentiality Agreement (as modified by the Merger Agreement) which
shall continue in full force and effect, this Amendment, the Merger Agreement,
the Distribution Agreement, the Omnibus Agreement and the other Transaction
Documents constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all other prior negotiations,
commitments, agreements and understandings, both written and oral, between the
parties or any of them with respect to the subject matter hereof.
Section 5.3. Governing Law. This Amendment shall be governed
by and construed in accordance with the Laws of the State of New York
(regardless of the Laws that might otherwise govern under applicable
principles of conflicts Law) as to all matters, including matters of validity,
construction, effect, performance and remedies.
Section 5.4. Counterparts. This Amendment may be executed in
two or more counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has caused this
Amendment Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the day and year first above written.
MARRIOTT INTERNATIONAL, INC. (to be
renamed "Sodexho Marriott Services,
Inc.")
By: /s/ Raymond G. Murphy
----------------------------------
Name: Raymond G. Murphy
Title: Senior Vice President and
Treasurer
MARRIOTT-ICC MERGER CORP.
By: /s/ Raymond G. Murphy
----------------------------------
Name: Raymond G. Murphy
Title: Senior Vice President and
Treasurer
NEW MARRIOTT MI, INC. (to be renamed
"Marriott International, Inc.")
By: /s/ Raymond G. Murphy
----------------------------------
Name: Raymond G. Murphy
Title: Senior Vice President and
Treasurer
SODEXHO ALLIANCE, S.A.
By: /s/ Bernard Carton
----------------------------------
Name: Bernard Carton
Title: Senior Vice President and
Chief Financial Officer
INTERNATIONAL CATERING CORPORATION
By: /s/ M. Landel
----------------------------------
Name: M. Landel
Title: President
Exhibit 1
Schedule 1
CONFERENCE CENTERS (Managed by MMS)
Unit Unit Name Location
- ---- -------- --------
22-03291 Davis W. Gregg Conference Center Bryn Mawr, PA
22-11720 Des Moines Area Comm College Newton, IA
22-22701 Findlay Inn Conference Center Findlay, OH
22-33495 Holiday Valley Resort Ellicottville, NY
22-39595 Phillips Hotel Bartlesville, OK
22-40142 HP Conference Center Palo Alto, CA
22-56785 Argonne Nat'l Labs Argonne, IL
22-60070 Mutual of Omaha Omaha, NE
22-61873 PG&E Learning Center San Ramon, CA
22-62575 John Hancock Conference Center Boston, MA
22-72518 SBC Center for Learning Irving, TX
22-73984 Sunbrook Conference Center Radnor, PA
22-83317 Westwood Conference Center Wausau, WI
22-56184 Williams Companies Learning Center Tulsa, OK
22-53854 Dresser Houston, TX
Schedule 1
Exhibit 3
STOCKHOLDER AGREEMENT
dated as of
March 27, 1998
between
SODEXHO MARRIOTT SERVICES, INC.
and
SODEXHO ALLIANCE, S.A.
TABLE OF CONTENTS
----------------------
PAGE
----
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions...................................................1
ARTICLE 2
CORPORATE GOVERNANCE; COVENANTS
SECTION 2.01. Composition of the Board......................................4
SECTION 2.02. Vacancies.....................................................5
SECTION 2.03. Removal.......................................................6
SECTION 2.04. Compensation Committee........................................6
SECTION 2.05. Audit Committee...............................................7
SECTION 2.06. Determination as to Breach....................................7
SECTION 2.07. Termination of Article 2......................................7
ARTICLE 3
LEGENDS
SECTION 3.01. Legend on Share Certificates..................................7
ARTICLE 4
REGISTRATION RIGHTS
SECTION 4.01. Demand Registration...........................................8
SECTION 4.02. Incidental Registration......................................10
SECTION 4.03. Holdback Agreements..........................................11
SECTION 4.04. Registration Procedures......................................12
SECTION 4.05. Indemnification by SMS.......................................15
SECTION 4.06. Indemnification by Sodexho of Registrable Securities.........15
SECTION 4.07. Conduct of Indemnification Proceedings.......................16
SECTION 4.08. Contribution.................................................17
SECTION 4.09. Participation in Public Offering.............................18
SECTION 4.10. Termination of Registration Rights...........................18
ARTICLE 5
MISCELLANEOUS
SECTION 5.01. Headings.....................................................19
SECTION 5.02. No Inconsistent Agreements...................................19
SECTION 5.03. Entire Agreement.............................................19
SECTION 5.04. Notices......................................................19
SECTION 5.05. Applicable Law; Submission to Jurisdiction...................20
SECTION 5.06. Severability.................................................21
SECTION 5.07. Termination..................................................21
SECTION 5.08. Successors; Assigns; Transferees.............................21
SECTION 5.09. Amendments; Waivers..........................................21
SECTION 5.10. Counterparts.................................................22
SECTION 5.11. Recapitalization, Etc........................................22
SECTION 5.12. Remedies.....................................................22
SECTION 5.13. Confidentiality..............................................22
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT dated as of March 27, 1998 between Sodexho
Marriott Services, Inc., a Delaware corporation ("SMS"), and Sodexho Alliance,
S.A., a societe anonyme organized under the laws of France ("Sodexho").
WHEREAS, pursuant to the Agreement and Plan of Merger dated as of
September 30, 1997, as amended (the "Merger Agreement"), by and among SMS,
Marriott -- ICC Merger Corp., New Marriott MI, Inc. ("New Marriott"), Sodexho
and International Catering Corporation ("ICC"), the parties thereto agreed that
SMS would acquire ICC and Sodexho Financiere du Canada, Inc. from Sodexho and
Sodexho would pay $304 million to SMS, and in consideration therefor Sodexho
would receive approximately 49% of the outstanding common stock of SMS; and
WHEREAS, the parties hereto wish to enter into this Agreement to govern
certain of their rights and obligations after consummation of the transactions
contemplated by the Merger Agreement and certain related agreements.
NOW THEREFORE, in consideration of the mutual promises set forth below
(the mutuality, adequacy and sufficiency of which are hereby acknowledged), the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. (a) The following terms, as used herein,
have the following meanings:
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person. For the purposes of this definition, the term "control", as used
with respect to any Person, means the power to direct or cause the direction of
the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" shall have meanings correlative to the
foregoing.
"Board" means the Board of Directors of SMS.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the City of New York are authorized by law to close.
"Common Stock" means the common stock, par value $1.00 per share, of
SMS.
"Commission" means the Securities and Exchange Commission and any
successor commission or agency having similar powers.
"Controlled Entity" means, with respect to any Person, any entity of
which more than 50% of the capital stock or other equity interest is owned,
directly or indirectly, by such Person. For the avoidance of doubt, neither the
Universal Services Partnership nor the Universal/Doyon Joint Venture shall
constitute a "Controlled Entity" of Sodexho.
"Distribution Agreement" means the Distribution Agreement dated as of
September 30, 1997 between SMS and New Marriott, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
"Public Offering" means any public offering of equity securities (or
securities convertible into equity securities) of SMS pursuant to an effective
registration statement under the Securities Act other than pursuant to a
registration statement on Form S-4 or Form S-8 or any successor or similar form.
"Registrable Securities" means any shares of Common Stock held by
Sodexho at any time; provided that such shares shall cease to be Registrable
Securities if and when (i) a registration statement with respect to the
disposition of such shares shall have become effective under the Securities Act
and such shares shall have been disposed of pursuant to such effective
registration statement, (ii) such shares are sold under circumstances in which
all of the applicable provisions of Rule 144 (or any similar provisions then in
force) are met, or (iii) such shares are otherwise transferred, if (x) SMS has
delivered a new certificate or other evidence of ownership for such shares not
bearing the legend required pursuant to this Agreement and (y) such shares may
be resold without subsequent registration under the Securities Act.
"Registration Expenses" means all (i) registration and filing fees,
(ii) fees and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of a qualified independent underwriter, if
any, and counsel in connection therewith and the reasonable fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities), (iii) printing expenses, (iv) internal expenses of SMS
(including without limitation all salaries and expenses of officers and
employees performing legal or accounting duties), (v) fees and disbursements of
counsel for SMS, (vi) customary fees and expenses for independent certified
public accountants retained by SMS (including without limitation the expenses of
any comfort letters or costs associated with the delivery by independent
certified public accountants of a comfort letter or comfort letters), (vii) fees
and expenses of any special experts retained by SMS in connection with such
registration and (viii) fees and expenses of listing the Registrable Securities
on a securities exchange; but shall not include (a) any underwriting fees or
discounts or commissions attributable to the sale of Registrable Securities, (b)
any fees and disbursements of special counsel designated to represent Sodexho in
connection with such registration, (c) out-of-pocket expenses of Sodexho or (d)
any transfer taxes.
"Royalty Agreement" means the Royalty Agreement dated as of the date
hereof between SMS and Sodexho.
"Rule 144" means Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any other similar rule or regulation hereafter
adopted by the Commission.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Subsidiary" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by such Person.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
- ------------------------------------ -----------------------------
Cause 2.03
Disadvantageous Condition 4.01(a)(ii)
ICC recitals
Indemnified Party 4.07
Indemnifying Party 4.07
Independent Director 2.01(c)
Inspectors 4.04(g)
Maximum Offering Size 4.01(e)
Merger Agreement recitals
New Marriott recitals
New Marriot Directors 2.01(d)
Priority Securities 4.02(a)
Records 4.04(g)
Representatives 5.13
SMS preamble
Sodexho preamble
Sodexho Designees 2.01(b)
ARTICLE 2
CORPORATE GOVERNANCE; COVENANTS
SECTION 2.01. Composition of the Board. (a) The Board shall
consist of eight members as follows: three Sodexho Designees (as defined
below), two Independent Directors (as defined below), the person who is
then serving as the Chief Executive Officer of SMS (subject to Section
2.01(g)) and two New Marriott Directors (as defined below).
(b) So long as Sodexho and its Affiliates own at least 20% of
the outstanding Common Stock, Sodexho shall be entitled to designate three
members of the Board. At such time as Sodexho and its Affiliates own less
than 20% of the outstanding Common Stock, Sodexho shall be entitled to
designate two members of the Board so long as either (i) Sodexho and its
Affiliates own at least 10% of the outstanding Common Stock or (ii) the
Royalty Agreement remains in full force and effect. At such time as
Sodexho and its Affiliates own less than 10% of the outstanding Common
Stock and the Royalty Agreement has terminated, Sodexho's right to
designate members of the Board pursuant to this Section 2.01(b) shall
terminate. Members of the Board that Sodexho is entitled to designate
pursuant to this Section 2.01(b) shall constitute "Sodexho Designees". In the
event that after the third anniversary of the date hereof the total Board
does not consist of eight members, the number of Board members that Sodexho
shall have the right to designate shall be adjusted as follows: (i) in
lieu of three members, the lowest number of members that would result
Sodexho Designees representing at least 37.5% of the total Board and (ii)
in lieu of two members, the lowest number of members that would result in
Sodexho Designees representing at least 25% of the Board. Initially the
Sodexho Designees shall be Pierre Bellon, Bernard Carton and Edouard de
Royere.
(c) A person will qualify as an "Independent Director" if he
or she (i) is not an employee of SMS, Sodexho, New Marriott or any of their
Subsidiaries, (ii) is not otherwise receiving, directly or indirectly,
compensation for services that is material to such person from SMS, Sodexho,
New Marriott or any of their Subsidiaries and (iii) is not a member of the
immediate family (as defined in Item 404(a) of Regulation S-K under the
Securities Act) of any person described in clauses (i) and (ii) above.
Initially, the Independent Directors shall be Doctor R. Crants and Daniel
J. Altobello.
(d) "New Marriott Directors" shall mean (i) initially, William
J. Shaw and John W. Marriott III and (ii) thereafter, any Board members
who fill the Board positions initially filled by such persons.
(e) SMS and Sodexho shall use their best efforts (including
using their best efforts to cause SMS to call a special meeting of
stockholders) in order to ensure that the composition of the Board is as
set forth in any provisions of Sections 2.01 and 2.02 then in force.
(f) Sodexho may at any time revoke the designation as to a
particular individual who is a Sodexho Designee, in which case Sodexho and SMS
will take all actions reasonably necessary to effect the removal of such
individual from the Board as promptly as practicable.
(g) In the event that the Chief Executive Officer of SMS is
(x) an employee of Sodexho or any of its Subsidiaries, (y) otherwise
receiving, directly or indirectly, compensation for services that is
material to such person from Sodexho or any of its Subsidiaries or (z) a
member of the immediate family (as defined in Item 404(a) of Regulation S-K
of the Securities Act) of any person described in clauses (x) or (y) above:
(i) such Chief Executive Officer shall not be eligible to
serve as a director in the Board seat otherwise intended for
the Chief Executive Officer pursuant to Section 2.01(a)
hereof; and
(ii) the individual that fills the vacancy on the Board
created thereby shall be chosen according to SMS's Bylaws
and shall be a person who qualifies as an Independent
Director.
For the avoidance of doubt, this Section 2.01(g) shall not prohibit Sodexho
from designating such Chief Executive Officer to the Board as a Sodexho
Designee.
SECTION 2.02. Vacancies. In the event that, as a result of
death, disability, retirement, resignation, removal (with or without cause) or
otherwise, there shall exist or occur any vacancy of the Board, the provisions
of Section 2.01(g)(ii) and this Section 2.02 shall apply.
(a) If the director whose death, disability, retirement,
resignation or removal resulted in such vacancy was a Sodexho Designee,
Sodexho may designate another individual to fill such position and serve as
a director of SMS.
(b) If the director whose death, disability, retirement,
resignation or removal resulted in such vacancy was an Independent
Director, the individual that fills such position and serves as a director
of SMS shall be chosen according to SMS's Bylaws and shall be a person who
qualifies as an Independent Director.
(c) If the director whose death, disability, retirement,
resignation or removal resulted in such vacancy was a New Marriott
Director, the remaining New Marriott Director (or the departing New
Marriott Director causing such vacancy, if each New Marriott Director
resigns or otherwise no longer serves effective on or about the same date)
may designate another individual to fill such position and serve as a
director of SMS. If such designation is not made within 15 days after the
vacancy occurs, the individual that fills such position and serves as a
director of SMS shall be chosen according to SMS's Bylaws and shall be a
person who qualifies as an Independent Director.
SECTION 2.03. Removal. Sodexho agrees that if, at any time, it
is then entitled to vote for the removal of directors of SMS, it will not
take such action by written consent unless such removal shall be for Cause.
Removal for "Cause" shall mean removal of a director because of such
director's (a) willful and continued failure to substantially perform his
or her duties as a director of SMS, (b) willful and continued conduct
inconsistent with the good faith exercise of his or her fiduciary
obligations and which is significantly injurious to SMS, monetarily or
otherwise, or (c) conviction for, or guilty plea to, a felony.
Notwithstanding the foregoing, if the person serving as Chief Executive
Officer of SMS is removed from such position in accordance with SMS's
Bylaws, Sodexho shall be permitted to take action by written consent to
remove such person as a director of SMS.
SECTION 2.04. Compensation Committee. The Board will create a
three-member Compensation Committee which shall have the duties specified
in SMS's Bylaws. The Compensation Committee shall consist of one
Independent Director who will serve as the Chairman of the committee, one
Sodexho Designee and one New Marriott Director. The initial members of the
Compensation Committee shall be Doctor R. Crants (Chairman), Bernard
Carton and William J. Shaw.
SECTION 2.05. Audit Committee. The Board will create a
three-member Audit Committee which shall have the duties specified in SMS's
Bylaws. The initial members of the Audit Committee shall be Daniel J.
Altobello (Chairman), Doctor R. Crants and Edouard de Royere.
SECTION 2.06. Determination as to Breach. Any determination as
to whether Sodexho is in breach of this Article 2, and whether SMS should
as a result thereof pursue any remedies available to it under this
Agreement or otherwise, shall be made on behalf of SMS solely by the
Independent Directors.
SECTION 2.07. Termination of Article 2. Except for Sections
2.01(b), 2.01(e), 2.01(f) and 2.02(a), the provisions of this Article 2 shall
terminate and have no further force or effect on the third anniversary of
the date hereof.
ARTICLE 3
LEGENDS
SECTION 3.01. Legend on Share Certificates. (a) In addition to
any other legend that may be required, each certificate for Registrable
Securities that is issued to Sodexho shall bear a legend in substantially
the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAW. NO TRANSFER OR SALE OF
THESE SECURITIES OR ANY INTEREST THEREIN MAY BE MADE WITHOUT SUCH
REGISTRATION AND QUALIFICATION UNLESS THE ISSUER RECEIVES AN
OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY
SATISFACTORY TO THE ISSUER STATING THAT SUCH TRANSFER OR SALE DOES
NOT REQUIRE REGISTRATION OR QUALIFICATION UNDER APPLICABLE LAW.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
RESTRICTIONS AS SET FORTH IN THE STOCKHOLDER AGREEMENT DATED AS OF
MARCH 27, 1998, COPIES OF WHICH MAY BE OBTAINED UPON REQUEST FROM
SODEXHO MARRIOTT SERVICES, INC. AND ANY SUCCESSOR THERETO."
(b) If any shares of Common Stock shall cease to be Registrable
Securities, SMS shall, upon the written request of the holder thereof,
issue to such holder a new certificate evidencing such shares without the
first two sentences of the legend required by Section 3.01(a) endorsed
thereon.
ARTICLE 4
REGISTRATION RIGHTS
SECTION 4.01. Demand Registration. (a) Registration on Request
of Sodexho. Upon the written request of Sodexho that SMS effect the
registration under the Securities Act of Registrable Securities having a
fair market value of not less than $50 million and specifying the intended
method of disposition thereof, SMS will thereupon will use its best efforts
to effect, as promptly as practicable, the registration under the
Securities Act of such Registrable Securities to the extent necessary to
permit the disposition (in accordance with the intended methods for such
disposal) of such Registrable Securities; provided that:
(i) SMS shall not be obligated to file a registration
statement relating to a registration request pursuant to
this Section 4.01 at any time during the one-year period
immediately following the effective date of another
registration statement filed pursuant to this Section
4.01(a); and
(ii) with respect to any registration statement filed or
to be filed pursuant to this Section 4.01 and not yet
effective, if the Board (which for this purpose shall not
include the Sodexho Designees) shall determine, in its good
faith judgment, that to permit such registration statement
to become effective (or, if no registration statement has
yet been filed, to file such a registration statement) would
be significantly disadvantageous (a "Disadvantageous
Condition") to SMS or its stockholders in light of the
existence, or in anticipation, of any acquisition or
financing activity involving SMS or the unavailability for
reasons beyond SMS's control of any required financial
statements, SMS may, for the shortest possible period (but
in no event to exceed 180 days from the date of the Board's
determination), cause such registration statement to be
withdrawn or, if no registration statement has yet been
filed, to delay the filing of such registration statement.
Unless Sodexho shall consent in writing, no other party,
including SMS, shall be permitted to offer securities under any
registration pursuant to this Section 4.01(a). Sodexho may, at any time
prior to the effective date of the registration statement relating to such
registration, revoke such request, without liability (except as set forth
in Section 4.01(c)) by providing a written notice to SMS revoking such
request. If SMS determines to take any action pursuant to clause (ii)
above, SMS shall deliver a notice to Sodexho to such effect, and furnish to
Sodexho a certified copy of the resolution of the Board authorizing such
action, together with a general description of the applicable
Disadvantageous Condition. If any Disadvantageous Condition shall cease to
exist SMS shall promptly notify Sodexho to such effect. SMS shall, if any
registration statement shall have been withdrawn, at the end of the period
(not to exceed 180 days) referred to in clause (ii) above (or, if earlier,
at such time as it in good faith deems appropriate) file a new registration
statement covering the Registrable Securities that were covered by such
withdrawn registration statement, and the effectiveness of such
registration statement shall be maintained for such time as may be
necessary so that the period of effectiveness of such new registration
statement, when aggregated with the period during which such withdrawn
registration statement was effective, shall be such time as may be
otherwise required by this Agreement.
(b) Registration Statement Form. Registrations under this
Section 4.01 shall be on such appropriate registration form of the
Commission (i) as shall be selected by SMS and as shall be reasonably
acceptable to Sodexho and (ii) as shall permit the disposition of such
Registrable Securities in accordance with the method or methods of
disposition intended on the part of Sodexho. Notwithstanding anything
herein to the contrary, if, pursuant to a registration request under this
Section 4.01, (x) SMS proposes to effect registration by filing a
registration statement on Form S-3 (or any successor or similar short-form
registration statement), (y) such registration is in connection with an
underwritten Public Offering and (z) the managing underwriter shall advise
SMS in writing that, in its opinion, the use of another form of
registration statement is of material importance to the success of such
proposed offering, then such registration shall be effected on such other
form.
(c) Expenses. SMS shall pay all Registration Expenses in
connection with the registrations which are requested and become effective
pursuant to this Section 4.01, provided that after four such registrations
have been requested and become effective, Sodexho shall pay all
Registration Expenses in connection with subsequent registrations pursuant
to this Section 4.01. Sodexho shall pay all underwriting discounts and
commissions, the fees and disbursements of special counsel designated to
represent Sodexho, its out-of-pocket expenses and transfer taxes, if any,
relating to the sale or disposition of Sodexho's Registrable Securities
pursuant to a registration statement requested pursuant to this Section
4.01. SMS shall not be liable for Registration Expenses in connection with
a registration that shall not have become effective due to a revocation by
Sodexho requesting such registration under this Section 4.01, and such
Registration Expenses shall be borne by Sodexho.
(d) Effective Registration Statement. A registration requested
pursuant to this Section 4.01 shall not be deemed to have been effected
unless the registration statement relating thereto has been effective (and
not subject to any stop order, injunction or other order or requirement of
the Commission or other governmental agency or court for any reason) for a
period of 180 days following the date on which such registration statement
was declared effective or such shorter period which will terminate when all
Registrable Securities covered by such registration statement have been
sold.
(e) Priority Participation in Requested Registrations. If a
registration pursuant to this Section 4.01 involves an underwritten Public
Offering and the managing underwriter shall advise SMS that, in its view, the
number or proposed mix of equity securities requested to be included in such
registration (including securities which SMS requests to be included which are
not Registrable Securities) exceeds the largest number or appropriate mix of
securities which can be sold without having an adverse effect on such offering
(the "Maximum Offering Size"), including the price at which such securities can
be sold, SMS will include in such registration, in the priority listed below,
securities up to the Maximum Offering Size:
(i) first, the Registrable Securities requested to be
included in such registration pursuant to Sections 4.01(a)(i)
by Sodexho; and
(ii) second, securities to be sold for the account of
other Persons (including SMS), with such priorities among
them as the SMS shall determine.
SECTION 4.02. Incidental Registration. (a) If SMS at any time
proposes to register any of its equity securities (the "Priority
Securities") under the Securities Act (other than a registration (i) on
Form S-8 or S-4 or any successor or similar forms, (ii) relating to Common
Stock issuable upon exercise of employee stock options or in connection
with any employee benefit or similar plan of SMS, (iii) in connection with
a direct or indirect acquisition by SMS of another Person or (iv) pursuant
to a shelf registration of securities pursuant to Rule 415 under the
Securities Act), whether or not for sale for its own account, in a manner
which would permit registration of Registrable Securities for sale to the
public under the Securities Act, it will each such time, subject to the
provisions of Section 4.02(b), give prompt written notice to Sodexho of its
intention to do so at least 30 days prior to the anticipated filing date of
the registration statement relating to such registration. Any such notice
shall offer Sodexho the opportunity to include in such registration such
number of Registrable Securities as Sodexho may request. Upon the written
request of Sodexho within 15 days after the receipt of notice from SMS
(which request shall specify the number of Registrable Securities intended
to be disposed of and the intended method of disposition thereof), SMS will
use its best efforts to effect the registration under the Securities Act of
all Registrable Securities which SMS has been so requested to register by
Sodexho, to the extent required to permit the disposition (in accordance
with such intended methods thereof) of the Registrable Securities so to be
registered; provided that (i) if such registration involves an underwritten
Public Offering, Sodexho must sell its Registrable Securities to the
underwriters selected by SMS on the same terms and conditions as apply to
SMS and (ii) if, at any time after giving written notice of its intention
to register any securities pursuant to this Section 4.02(a) and prior to
the effective date of the registration statement filed in connection with
such registration, SMS shall determine for any reason not to register such
securities, SMS shall give written notice to Sodexho and shall be relieved
of its obligation to register any Registrable Securities in connection with
such registration. If a registration pursuant to this Section 4.02(a)
involves an underwritten Public Offering, Sodexho may elect, in writing not
less than 5 Business Days prior to the effective date of the registration
statement filed in connection with such registration, not to register such
securities in connection with such registration. No registration effected
under this Section 4.02 shall relieve SMS of its obligations to effect
registrations upon request under Section 4.01. SMS will pay all
Registration Expenses in connection with each registration of Registrable
Securities requested pursuant to this Section 4.02, and Sodexho shall pay
all underwriting discounts and commissions, the fees and disbursements of
special counsel designated to represent Sodexho, its out-of-pocket expenses
and transfer taxes, if any, relating to the sale or disposition of
Sodexho's Registrable Securities pursuant to a registration statement
effected pursuant to this Section 4.02.
(b) Priority in Incidental Registrations. If a registration
pursuant to this Section 4.02 involves an underwritten Public Offering and the
managing underwriter shall advise SMS that, in its view, the number or
proposed mix of equity securities (including all Registrable Securities)
which SMS, Sodexho and any other Persons, intend to include in such
registration exceeds the Maximum Offering Size, SMS will include in such
registration, in the priority listed below, securities up to the Maximum
Offering Size:
(i) first, securities to be sold for SMS's own account;
(ii) second, Registrable Securities requested to be
included in such registration by Sodexho pursuant to
Section 4.02(a).
SECTION 4.03. Holdback Agreements. (a) If any registration of
Registrable Securities shall be in connection with an underwritten Public
Offering, Sodexho agrees not to effect any public sale or distribution,
including any sale pursuant to Rule 144, of any Registrable Securities,
(other than as part of such Public Offering) during the 14 days prior to,
and during the 90 day period beginning on, the effective date of such
registration statement (except as part of such registration); provided that
Sodexho has received written notice of such registration at least 2
Business Days prior to the anticipated beginning of the 14 day period
referred to above.
(b) If any registration of Registrable Securities shall be in
connection with an underwritten Public Offering, SMS agrees (i) not to effect
any public sale or distribution of any of its securities during the 14 days
prior to, and during the 90 day period beginning on, the effective date of
such registration statement (except as part of such registration) and (ii)
that any agreement entered into after the date of this Agreement pursuant
to which SMS issues or agrees to issue any privately placed securities
shall contain a provision under which holders of such securities agree not
to effect any public sale or distribution of any such securities during the
periods described in (i) above, in each case including a sale pursuant to
Rule 144 (except as part of any such registration, if permitted); provided
that the provisions of this paragraph (b) shall not prevent the conversion or
exchange of any securities pursuant to their terms into or for other
securities.
SECTION 4.04. Registration Procedures. Whenever Sodexho
requests that any Registrable Securities be registered pursuant to Section
4.01 or 4.02, SMS shall, subject to the provisions of such Sections, use
its best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of
disposition thereof as quickly as practicable, and in connection with any
such request:
(a) SMS will as expeditiously as possible prepare and file
with the Commission a registration statement on the requisite form, subject
to Section 4.01(b), and use its best efforts to cause such filed registration
statement to become and remain effective for the period set forth in
Section 4.01(d).
(b) SMS will, if requested, prior to filing a registration
statement or prospectus or any amendment or supplement thereto, furnish to
Sodexho and each underwriter, if any, of the Registrable Securities covered
by such registration statement copies of such registration statement as
proposed to be filed, and thereafter SMS will furnish to Sodexho and such
underwriter, if any, such number of copies of such registration statement,
each amendment and supplement thereto (in each case including all exhibits
thereto and documents incorporated by reference therein), the prospectus
included in such registration statement (including each preliminary
prospectus) and such other documents as Sodexho or such underwriter may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by Sodexho. Sodexho shall have the right to
request that SMS modify any information contained in such registration
statement, amendment and supplement thereto pertaining to Sodexho and SMS
shall use all reasonable efforts to comply with such request; provided that
SMS shall not have any obligation to so modify any information if so doing
would cause the prospectus to contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(c) After the filing of the registration statement, SMS will
promptly notify Sodexho of any stop order issued or threatened by the
Commission and take all reasonable actions required to prevent the entry of
such stop order or to remove it if entered.
(d) SMS will use its best efforts (i) to register or qualify
the Registrable Securities under such other securities or blue sky laws of
such jurisdictions in the United States as Sodexho (in light of its
intended plan of distribution) requests and (ii) to cause such Registrable
Securities to be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the business and
operations of SMS and do any and all other acts and things that may be
reasonably necessary or advisable to enable Sodexho to consummate the
disposition of its Registrable Securities; provided that SMS will not be
required (x) to qualify generally to do business in any jurisdiction where
it would not otherwise be required to qualify but for this paragraph (d),
(y) to subject itself to taxation in any such jurisdiction or (z) to
consent to general service of process in any such jurisdiction.
(e) SMS will immediately notify Sodexho, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the occurrence of an event requiring the preparation of a
supplement or amendment to such prospectus so that, as thereafter delivered
to the purchasers of such Registrable Securities, such prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading and promptly make available to Sodexho
and file with the Commission any such supplement or amendment.
(f) SMS will enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities.
(g) Upon execution of confidentiality agreements in form and
substance reasonably satisfactory to SMS, SMS will make available for
inspection by Sodexho, any underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant or
other professional retained by Sodexho or such underwriter (collectively,
the "Inspectors"), all financial and other records, pertinent corporate
documents and properties of SMS (collectively, the "Records") as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause SMS's officers, directors and employees to supply
all information reasonably requested by any Inspectors in connection with
such registration statement.
(h) SMS will furnish to Sodexho and to each underwriter, if
any, a signed counterpart of a comfort letter or comfort letters from SMS's
independent public accountants, each in customary form and covering such
matters of the type customarily covered by comfort letters as Sodexho or
the managing underwriter therefor reasonably requests.
(i) SMS will otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to
Sodexho, as soon as reasonably practicable, an earnings statement covering a
period of 12 months, beginning within three months after the effective date
of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act.
(j) SMS will use its best efforts to cause all such Registrable
Securities to be listed on each securities exchange on which similar
securities issued by SMS are then listed.
SMS may require Sodexho promptly to furnish in writing to
SMS such information regarding the distribution of the Registrable
Securities as SMS may from time to time reasonably request and such other
information as may be legally required in connection with such
registration.
Sodexho agrees that, upon receipt of any notice from SMS of
the happening of any event of the kind described in Section 4.04(e), Sodexho
will forthwith discontinue disposition of Registrable Securities pursuant
to the registration statement covering such Registrable Securities until
Sodexho's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 4.04(e), and, if so directed by SMS, Sodexho will
deliver to SMS all copies of the most recent prospectus covering such
Registrable Securities at the time of receipt of such notice. In the event
SMS shall give such notice, SMS shall extend the period during which the
effectiveness of such registration statement shall be maintained (including
the period referred to in Section 4.04(a) hereof) by the number of days
during the period from and including the date of the giving of notice
pursuant to Section 4.04(e) to the date when SMS shall make available to
Sodexho a prospectus supplemented or amended to conform with the
requirements of Section 4.04(e).
SMS shall not be liable for the failure of any such
registration to become effective provided that SMS complies with its
obligations hereunder.
SECTION 4.05. Indemnification by SMS. SMS agrees to
indemnify and hold harmless Sodexho, its officers, directors and agents,
and each Person, if any, who controls Sodexho within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act from and against
any and all losses, claims, damages, liabilities and expenses caused by any
untrue statement or alleged untrue statement of a material fact contained
in any registration statement or prospectus relating to the Registrable
Securities (as amended or supplemented if SMS shall have furnished any
amendments or supplements thereto) or any preliminary prospectus, or caused
by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, except insofar as such losses, claims, damages, liabilities
or expenses are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information furnished in writing
to SMS by Sodexho or on Sodexho's behalf expressly for use therein; provided
that with respect to any untrue statement or omission or alleged untrue
statement or omission made in any preliminary prospectus, or in any
prospectus, as the case may be, the indemnity agreement contained in this
Section 4.05 shall not apply to the extent that any such loss, claim, damage,
liability or expense results from the fact that a current copy of the
prospectus (or, in the case of a prospectus, the prospectus as amended or
supplemented) was not sent or given to the Person asserting any such loss,
claim, damage, liability or expense at or prior to the written confirmation
of the sale of the Registrable Securities concerned to such Person if it is
determined that SMS has provided such prospectus to Sodexho and it was the
responsibility of Sodexho to provide such Person with a current copy of the
prospectus (or such amended or supplemented prospectus, as the case may be)
and such current copy of the prospectus (or such amended or supplemented
prospectus, as the case may be) would have cured the defect giving rise to
such loss, claim, damage, liability or expense. SMS also agrees to
indemnify any underwriters of the Registrable Securities, their officers
and directors and each Person who controls such underwriters on
substantially the same basis as that of the indemnification of Sodexho
provided in this Section 4.05, or on any other basis agreed to by such
underwriters.
SECTION 4.06. Indemnification by Sodexho of Registrable
Securities. Sodexho agrees to indemnify and hold harmless SMS, its
officers, directors and agents and each Person, if any, who controls SMS
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from SMS to
Sodexho, but only (i) with respect to information furnished in writing by
Sodexho or on Sodexho's behalf expressly for use in any registration
statement or prospectus relating to the Registrable Securities, or any
amendment or supplement thereto, or any preliminary prospectus or (ii) to
the extent that any loss, claim, damage, liability or expense described in
Section 4.05 results from the fact that a current copy of the prospectus (or,
in the case of a prospectus, the prospectus as amended or supplemented) was
not sent or given to the Person asserting any such loss, claim, damage,
liability or expense at or prior to the written confirmation of the sale of
the Registrable Securities concerned to such Person if it is determined
that it was the responsibility of Sodexho to provide such Person with a
current copy of the prospectus (or such amended or supplemented prospectus,
as the case may be) and such current copy of the prospectus (or such
amended or supplemented prospectus, as the case may be) would have cured
the defect giving rise to such loss, claim, damage, liability or expense.
Sodexho also agrees to indemnify and hold harmless underwriters of the
Registrable Securities, their officers and directors and each Person who
controls such underwriters on substantially the same basis as that of the
indemnification of SMS provided in this Section 4.06. Notwithstanding
anything herein to the contrary, in no event shall Sodexho be liable under the
provisions of this Section 4.06 for an amount in excess of the aggregate net
proceeds of the sale of its Registrable Securities received by it.
SECTION 4.07. Conduct of Indemnification Proceedings. In case
any proceeding (including any governmental investigation) shall be instituted
involving any Person in respect of which indemnity may be sought pursuant to
Section 4.05 or 4.06, such Person (an "Indemnified Party") shall promptly
notify the Person against whom such indemnity may be sought (the
"Indemnifying Party") in writing and the Indemnifying Party shall assume
the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Party, and shall assume the payment of all
fees and expenses. In any such proceeding, any Indemnified Party shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party unless (i) the
Indemnifying Party and the Indemnified Party shall have mutually agreed to
the retention of such counsel or (ii) representation of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying Party shall
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) at any
time for all such Indemnified Parties, and that all such fees and expenses
shall be reimbursed as they are incurred. In the case of any such separate
firm for the Indemnified Parties, such firm shall be designated in writing
by the Indemnified Parties. The Indemnifying Party shall not be liable for
any settlement of any proceeding effected without its written consent, but
if settled with such consent, or if there be a final judgment for the
plaintiff, the Indemnifying Party shall indemnify and hold harmless such
Indemnified Parties from and against any loss or liability (to the extent
stated above) by reason of such settlement or judgment. No Indemnifying
Party shall, without the prior written consent of the Indemnified Party,
effect any settlement of any pending or threatened proceeding in respect of
which any Indemnified Party is or could have been a party and indemnity
could have been sought hereunder by such Indemnified Party, unless such
settlement includes an unconditional release of such Indemnified Party from
all liability arising out of such proceeding.
SECTION 4.08. Contribution. If the indemnification provided
for in this Article is unavailable to the Indemnified Parties in respect of
any losses, claims, damages or liabilities referred to herein, then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a
result of such losses, claims, damages or liabilities (i) as between SMS
and Sodexho on the one hand and the underwriters on the other, in such
proportion as is appropriate to reflect the relative benefits received by
SMS and Sodexho on the one hand and the underwriters on the other from the
offering of the Registrable Securities, or if such allocation is not permitted
by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits but also the relative fault of SMS and Sodexho
on the one hand and of the underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations and
(ii) as between SMS on the one hand and Sodexho, in such proportion as is
appropriate to reflect the relative fault of SMS and Sodexho in connection
with such statements or omissions, as well as any other relevant equitable
considerations. The relative benefits received by SMS and Sodexho on the
one hand and the underwriters on the other shall be deemed to be in the
same proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses)
received by SMS and Sodexho bear to the total underwriting discounts and
commissions received by the underwriters, in each case as set forth in the
table on the cover page of the prospectus. The relative fault of SMS and
Sodexho on the one hand and of the underwriters on the other shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by SMS
and Sodexho or by the underwriters. The relative fault of SMS on the one
hand and Sodexho on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates
to information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
SMS and Sodexho agree that it would not be just and equitable
if contribution pursuant to this Section 4.08 were determined by pro rata
allocation (even if the underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result
of the losses, claims, damages or liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably
incurred by such Indemnified Party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 4.08, no underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission, and Sodexho shall not be
required to contribute any amount in excess of the amount by which the
total price at which its Registrable Securities were offered to the public
exceeds the amount of any damages which Sodexho has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
SECTION 4.09. Participation in Public Offering. Sodexho
may not participate in any underwritten Public Offering hereunder unless
Sodexho (i) agrees to sell its Registrable Securities on the basis provided
in any underwriting arrangements approved by the Persons entitled hereunder
to approve such arrangements and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents reasonably required under the terms of such
underwriting arrangements and this Article 4.
SECTION 4.10. Termination of Registration Rights. The
registration rights for the Registrable Securities pursuant to this Article 4
shall terminate when Sodexho shall be able to sell its shares of Common Stock
under section (k) of Rule 144 (or any similar provision then in force
permitting the sale of restricted securities without limitation on the amount
of securities sold or the manner of sale, and without requirements as to
current public information about the issuer thereof or notice of the proposed
sale).
ARTICLE 5
MISCELLANEOUS
SECTION 5.01. Headings. The headings in this Agreement are
for convenience of reference only and shall not control or affect the
meaning or construction of any provisions hereof.
SECTION 5.02. No Inconsistent Agreements. SMS will not
hereafter enter into any agreement with respect to its securities which is
inconsistent with, or grant rights superior to the rights granted to
Sodexho pursuant to, this Agreement.
SECTION 5.03. Entire Agreement. This Agreement, the Merger
Agreement, the Distribution Agreement and the other Transaction Documents
(as defined in the Merger Agreement) to which SMS and Sodexho are party
constitute the entire agreement and understanding of the parties hereto or
thereto in respect of the subject matter contained herein, and there are no
restrictions, promises, representations, warranties, covenants, or
undertakings with respect to the subject matter hereof or thereof, other
than those expressly set forth or referred to herein. This Agreement, the
Merger Agreement, the Distribution Agreement and the other Transaction
Documents to which SMS and Sodexho are party supersede all prior agreements
and understandings between the parties hereto with respect to the subject
matter hereof.
SECTION 5.04. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including
facsimile) and shall be deemed to have been duly given or made if sent by
facsimile (with confirmation in writing), delivered personally or sent by
registered or certified mail (postage prepaid, return receipt requested) to
such party at its address or telecopier number set forth below or such
other address or telecopier number as such party may hereinafter specify
for the purpose to the party giving such notice:
If to SMS, to:
Sodexho Marriott Services, Inc.
10400 Fernwood Road
Bethesda, Maryland 20817
Attention: Chief Financial Officer
Telecopy: 301-380-8150
with a copy to:
Sodexho Marriott Services, Inc.
10400 Fernwood Road
Bethesda, Maryland 20817
Attention: General Counsel
Telecopy: 301-380-6727
If to Sodexho, to:
Sodexho Alliance, S.A.
3, Avenue Newton
78180 Montigny - le - Bretonneux
France
Attention: Denis Robin
Telecopy: 011-331-3085-5088
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Paul R. Kingsley
Telecopy: 212-450-4800
All such notices, requests and other communications shall be deemed
received on the date of receipt by the recipient thereof if received prior
to 5 p.m. in the place of receipt and such day is a Business Day in the
place of receipt. Otherwise, any such notice, request or communication
shall be deemed not to have been received until the next succeeding
Business Day in the place of receipt.
SECTION 5.06. Applicable Law; Submission to Jurisdiction. This
Agreement shall be construed in accordance with and governed by the laws of
the State of New York, without regard to the conflicts of law rules of such
state. Each party hereto agrees that any legal action or proceeding
arising out of or relating to this Agreement shall be instituted in any
State or Federal court sitting in New York City, Borough of Manhattan (and
each party agrees not to commence any legal action or proceeding except in
such courts) and each party irrevocably submits to jurisdiction of such
courts in such action or proceeding. Subject to applicable law, process in
any such action or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court.
Without limiting the foregoing and subject to applicable law, each party
agrees that service of process on such party as provided in Section 5.04 shall
be deemed effective service of process on such party. Nothing herein shall
affect the right of any party to serve legal process in any other manner
permitted by law or at equity or to enforce in any lawful manner a judgment
obtained in one jurisdiction in any other jurisdiction. WITH RESPECT TO A
PROCEEDING IN ANY SUCH COURT, EACH PARTY IRREVOCABLY WAIVES AND RELEASES TO
THE OTHER PARTIES ITS RIGHT TO A TRIAL BY JURY, AND AGREES THAT IT WILL NOT
SEEK A TRIAL BY JURY IN ANY SUCH PROCEEDING.
SECTION 5.06. Severability. The invalidity or
unenforceability of any provisions of this Agreement in any jurisdiction
shall not affect the validity, legality or enforceability of the remainder
of this Agreement in such jurisdiction or the validity, legality or
enforceability of this Agreement, including any such provision, in any
other jurisdiction, it being intended that all rights and obligations of
the parties hereunder shall be enforceable to the fullest extent permitted
by law.
SECTION 5.07. Termination. Subject to Sections 2.07 and 4.10,
this Agreement shall terminate and be of no further force or effect with
respect to Sodexho when Sodexho ceases to hold any shares of Common Stock;
provided that the provisions of Sections 5.05 and 5.12 shall survive any
termination hereof.
SECTION 5.08. Successors; Assigns; Transferees. The provisions
of this Agreement shall be binding upon and accrue to the benefit of the
parties hereto and their respective successors and permitted assigns. If
Sodexho shall transfer the Registrable Securities (other than pursuant to a
public sale), (i) it may assign to the acquiror of such securities any of its
rights under this Agreement and (ii) the acquiror shall agree in writing to be
bound by the terms and conditions of this Agreement. Except as set forth in
the preceding sentence, neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by either party. Nothing in this Agreement, expressed or implied,
is intended to confer on any Person other than the parties hereto, and their
respective successors and permitted assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
SECTION 5.09. Amendments; Waivers. No failure or delay on
the part of either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. No provision of this
Agreement may be waived except by an instrument in writing executed by the
party or parties against whom the waiver is to be effective. No provision
of this Agreement may be amended or otherwise modified except (i) by an
instrument in writing executed by each party hereto and (ii) during the
period from the date hereof until the third anniversary of the date hereof,
with the approval of a majority of the directors of SMS who are not Sodexho
Designees or employees of SMS.
SECTION 5.10. Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be an original with the
same effect as if the signatures thereto and hereto were upon the same
instrument.
SECTION 5.11. Recapitalization, Etc. In the event that any
capital stock or other securities are issued in respect of, in exchange
for, or in substitution of, any shares of Common Stock by reason of any
reorganization, recapitalization, reclassification, merger, consolidation,
spin-off, partial or complete liquidation, stock dividend, split-up, sale
of assets, distribution to stockholders or combination of shares of Common
Stock or any other change in capital structure of SMS, appropriate
adjustments shall be made with respect to the relevant provisions of this
Agreement so as to fairly and equitably preserve, as far as practicable,
the original rights and obligations of the parties hereto under this
Agreement.
SECTION 5.12. Remedies. Each party hereto acknowledges that
the remedies at law of the other parties for a breach or threatened breach of
this Agreement would be inadequate and, in recognition of this fact, any
party to this Agreement, without posting any bond, and in addition to all
other remedies which may be available, shall be entitled to obtain
equitable relief in the form of specific performance, a temporary
restraining order, a temporary or permanent injunction or any other
equitable remedy which may then be available.
SECTION 5.13. Confidentiality. Sodexho will hold, and will
use its best efforts to cause its officers, directors, employees, accountants,
counsel, consultants, advisors and agents (all such persons being
collectively referred to as "Representatives"), to hold, in confidence,
unless compelled to disclose by judicial or administrative process or by
other requirements of law, all confidential information concerning SMS and
its Subsidiaries, except to the extent that such information can be shown
to have been (i) previously known on a nonconfidential basis by Sodexho,
(ii) in the public domain through no fault of Sodexho or (iii) later
lawfully acquired by Sodexho from sources other than SMS who, to the actual
knowledge of the recipient, are not subject to a confidentiality agreement;
provided that Sodexho and its Representatives may disclose such information
(x) to any Controlled Entity of Sodexho or (y) to any other Person (other
than the Universal Services Partnership and any of its Subsidiaries or
Affiliates, including the Universal/Doyon Joint Venture) so long as such
Person is advised of the confidential nature of the information and agrees
to keep such information confidential on a basis consistent with the
provisions hereof. The obligation of Sodexho to hold any such information
in confidence shall be satisfied if it exercises the same care with respect
to such information as it would take to preserve the confidentiality of its
own similar information.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SODEXHO MARRIOTT SERVICES, INC.
By /s/ Lawrence E. Hyatt
--------------------------------
Name: Lawrence E. Hyatt
Title: Senior Vice President and
Chief Financial Officer
SODEXHO ALLIANCE, S.A.
By /s/ Bernard Carton
--------------------------------
Name: Bernard Carton
Title: Senior Vice President and
Chief Financial Officer
EXHIBIT 4
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
MARRIOTT INTERNATIONAL, INC.
Marriott International, Inc., a corporation organized and
existing under the laws of the State of Delaware (the "Corporation"), hereby
certifies as follows:
1. The present name of the Corporation is "Marriott
International, Inc." The name under which the Corporation was originally
incorporated is "Marriott Hotel Productions, Inc." The original Certificate
of Incorporation was filed with the Secretary of State of the State of
Delaware on July 2, 1971.
2. This Amended and Restated Certificate of Incorporation has
been duly adopted and proposed to the stockholders of the Corporation by the
Board of Directors of the Corporation, and has been approved and adopted by
the stockholders of the Corporation, in accordance with Sections 242 and
245 of the General Corporation Law of the State of Delaware.
3. Pursuant to Sections 242 and 245 of the General Corporation
Law of the State of Delaware, this Amended and Restated Certificate of
Incorporation restates and integrates and further amends the provisions of the
Certificate of Incorporation of the Corporation.
4. The text of the Certificate of Incorporation as heretofore
amended is hereby restated and further amended to read in its entirety as
hereinafter set forth:
ARTICLE 1
Name
The name of the Corporation is Sodexho Marriott Services, Inc.
ARTICLE 2
Registered Office
The address of the Corporation's registered office in the State
of Delaware is Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle, Delaware 19801. The name of the
Corporation's registered agent at such address is The Corporation Trust
Company.
ARTICLE 3
Purpose
The purpose of the Corporation shall be to engage in any lawful
act or activity for which corporations may be organized and incorporated under
the General Corporation Law of the State of Delaware.
ARTICLE 4
Capitalization
The total number of shares of stock which the Corporation shall
have authority to issue is 301,000,000, consisting of 1,000,000 shares of
Preferred Stock, without par value (hereinafter referred to as "Preferred
Stock"), and 300,000,000 shares of Common Stock, par value $1.00 per share
(hereinafter referred to as "Common Stock"). Of the Preferred Stock shares,
300,000 shall be designated as Series A Junior Participating Preferred Stock,
without par value, having the designations, powers, preferences and rights,
and subject to the qualifications, limitations and restrictions, set forth in
Appendix A hereto.
Effective as of the time of filing of this Certificate of
Incorporation (the "Effective Time"), each four issued and outstanding shares
of Common Stock shall be combined into one share of validly issued, fully paid
and nonassessable Common Stock. The number of authorized shares, the number
of shares of treasury stock and the par value of the Common Stock shall not be
affected by the foregoing combination of shares. Each stock certificate that
prior to the Effective Time represented shares of Common Stock shall,
following the Effective Time, represent the number of shares of Common Stock
into which the shares of Common Stock represented by such certificate shall be
combined. The Corporation shall not issue fractional shares or scrip as a
result of the combination of shares, but shall arrange for the disposition of
fractional shares on behalf of those record holders of Common Stock at the
Effective Time who would otherwise be entitled to fractional shares as a
result of the combination of shares.
The Preferred Stock may be issued from time to time in one or
more series. The Board of Directors is hereby authorized to provide for the
issuance of shares of Preferred Stock in series and, by filing a certificate
pursuant to the applicable law of the State of Delaware (hereinafter referred
to as a "Preferred Stock Designation"), to establish from time to time the
number of shares to be included in each such series, and to fix the
designations, powers, preferences and rights of the shares of each such series
and the qualifications, limitations and restrictions thereof. The authority
of the Board of Directors with respect to each series shall include, but not
be limited to, determination of the following:
(1) The designation of the series, which may be by
distinguishing number, letter or title.
(2) The number of shares of the series, which number the
Board of Directors may thereafter (except where otherwise
provided in the Preferred Stock Designation) increase or
decrease (but not below the number of shares thereof then
outstanding).
(3) The amounts payable on, and the preferences, if any,
of shares of the series in respect of dividends, and whether
such dividends, if any, shall be cumulative or noncumulative.
(4) Dates at which dividends, if any, shall be payable.
(5) The redemption rights and price or prices, if any,
for shares of series.
(6) The terms and amount of any sinking fund provided for
the purchase or redemption of shares of the series.
(7) The amounts payable on, and the preferences, if any,
of shares of the series in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
affairs of the Corporation.
(8) Whether the shares of the series shall be convertible
into or exchangeable for shares of any other class or series, or
any other security, of the Corporation or any other corporation,
and, if so, the specification of such other class or series of
such other security, the conversion or exchange price or prices
or rate or rates, any adjustments thereof, the date or dates at
which such shares shall be convertible or exchangeable and all
other terms and conditions upon which such conversion or
exchange may be made.
(9) Restrictions on the issuance of shares of the same
series or of any other class or series.
(10) The voting rights, if any, of the holders of shares
of the series.
The Common Stock shall be subject to the express terms of the
Preferred Stock and any series thereof. Except as may be provided in this
Certificate of Incorporation or in a Preferred Stock Designation or by
applicable law, the holders of shares of Common Stock shall be entitled to one
vote for each such share upon all questions presented to the stockholders, the
Common Stock shall have the exclusive right to vote for the election of
directors and for all other purposes, and holders of Preferred Stock shall not
be entitled to receive notice of any meeting of stockholders at which they are
not entitled to vote. The holders of shares of Common Stock shall at all
times, except as otherwise provided in this Certificate of Incorporation or as
required by law, vote as one class, together with the holders of any other
class or series of stock of the Corporation accorded such general voting
rights.
The Corporation shall be entitled to treat the person in whose
name any share of its stock is registered as the owner thereof for all
purposes and shall not be bound to recognize any equitable or other claim to,
or interest in, such share on the part of any other person, whether or not the
Corporation shall have notice thereof, except as expressly provided by
applicable law.
ARTICLE 5
By-Laws
In furtherance of, and not in limitation of, the powers
conferred by law, the Board of Directors is expressly authorized and
empowered:
(1) to adopt, amend or repeal the Bylaws of the
Corporation; provided, that the Bylaws adopted by the Board
of Directors under the powers hereby conferred may be
amended or repealed by the Board of Directors or by the
stockholders having voting power with respect thereto; and
(2) from time to time to determine whether and to what
extent, and at what times and places, and under what
conditions and regulations, the accounts and books of the
Corporation, or any of them, shall be open to inspection of
stockholders; and, except as so determined or as expressly
provided in this Certificate of Incorporation or in any
Preferred Stock Designation, no stockholder shall have any
right to inspect any account, book or document of the
Corporation other than such rights as may be conferred by
applicable law.
The Corporation may in its Bylaws confer powers upon the Board
of Directors in addition to the foregoing and in addition to the powers and
authorities expressly conferred upon the Board of Directors by applicable law.
ARTICLE 6
Board of Directors
Subject to the rights of the holders of any series of Preferred
Stock, or any other series or class of stock as set forth in this Certificate
of Incorporation, to elect additional directors under specified circumstances,
the number of directors of the Corporation shall be fixed in such manner as
prescribed by the Bylaws of the Corporation and may be increased or decreased
from time to time in such manner as prescribed by the Bylaws.
Unless and except to the extent that the Bylaws of the
Corporation shall so require, the election of directors of the Corporation
need not be by written ballot.
ARTICLE 7
Restrictions on Transfer
(1) Restrictions on Transfer. (a) Except as provided in
Section 6 of this Article 7, during the Restricted Period no Transfer of any
Equity Securities shall be made by any Person if such Transfer would result in
any Person or Persons acting pursuant to a plan (or a series of related
transactions) having a Fifty Percent or Greater Interest. Except as provided
in Section 6 of this Article 7, any attempted or purported Transfer of shares
of Equity Securities during the Restricted Period that, if effective, would
result in any Person or Persons acting pursuant to a plan (or a series of
related transactions) having a Fifty Percent or Greater Interest shall be void
ab initio, and the intended transferee shall acquire no rights or interest in
such shares of Equity Securities.
(b) Except as otherwise provided in this Certificate of
Incorporation, the Equity Securities shall be freely transferable.
(2) Remedies for Breach. If the Board of Directors of the
Corporation shall determine in good faith that a Person has attempted to
acquire, may acquire or intends to acquire Beneficial Ownership of any shares
of Equity Securities or any interest therein in a Transfer that is or would be
void pursuant to Section 1(a) of this Article 7, the Board of Directors shall
be empowered to take any action it deems advisable to refuse to give effect to
or to prevent such purported Transfer, including, but not limited to, refusing
to give effect to such attempted or purported Transfer on the books of the
Corporation, demanding the repayment of any distributions received in respect
of shares of Equity Securities acquired in violation of Section 1(a) of this
Article 7 or instituting proceedings to enjoin or rescind such attempted or
purported Transfer.
(3) Notice of Restricted Transfer. Any Person who acquires or
attempts to acquire Equity Securities in a Transfer which may result in a
violation of Section 1(a) of this Article 7 shall immediately give written
notice thereof to the Corporation and shall provide to the Corporation such
other information as the Corporation may request in order to determine the
effect, if any, of such purported Transfer or attempted Transfer on the Tax
Free Status of the Distribution. Failure to give such notice shall not
otherwise limit the rights and remedies of the Board of Directors provided
herein in any way.
(4) Remedies Not Limited. Nothing contained in this Article 7
shall limit the authority of the Board of Directors to take such other action
as it deems necessary or advisable to protect the Tax Free Status of the
Distribution.
(5) Ambiguity. In the case of any ambiguity in the
application of any of the provisions of this Article 7, including any
definition contained in Section 10 of this Article 7, the Board of Directors
shall have the power to determine the application of the provisions of this
Article 7 with respect to any situation based upon its reasonable belief,
understanding or knowledge of the circumstances.
(6) Exceptions. Notwithstanding any other provision of this
Article 7, the restrictions contained in Section 1(a) of this Article 7 shall
not apply to any Transfer of any Equity Securities if there is provided to the
Board of Directors a ruling from the Internal Revenue Service satisfactory to
the Board of Directors in its reasonable discretion, or an opinion of counsel
satisfactory to each of the Board of Directors and New Marriott in its
reasonable discretion, to the effect that such Transfer will not adversely
affect the Tax Free Status of the Distribution. In determining the effect, if
any, of a proposed Transfer on the Tax Free Status of the Distribution, the
Board of Directors may require such representations and undertakings from such
Persons and may impose such other conditions on the effectiveness of the
Transfer as the Board deems necessary in its reasonable discretion.
(7) Severability. If any provision of this Article 7 or any
application of any such provision is determined in a final and nonappealable
judgment of a court of competent jurisdiction to be void, invalid or
unenforceable, the validity of the remaining provisions shall not be affected
and other applications of the provision so determined to be void, invalid or
unenforceable shall be affected only to the extent necessary to comply with
the determination of such court.
(8) New York Stock Exchange Transactions. Nothing in this
Article 7 shall preclude the settlement of any transaction entered into
through the facilities of the New York Stock Exchange, Inc.
(9) Amendment. During the Restricted Period, the provisions
set forth in this Article 7 may not be amended, altered, changed or repealed
in any respect, and no other provision may be adopted, amended, altered,
changed or repealed which would have the effect of modifying or permitting the
circumvention of the provisions set forth in this Article 7, unless such
action is (i) proposed to the stockholders of the Corporation with the
approval of not less than two-thirds (66 2/3%) of the total number of
directors of the Corporation and (ii) approved by the affirmative vote of the
holders of not less than two-thirds (66 2/3%) of the total voting power of all
outstanding securities of the Corporation then entitled to vote generally in
the election of directors, voting together as a single class.
(10) Definitions. For purposes of this Article 7, the
following terms shall have the following meanings:
"Beneficial Ownership" means, with respect to any Person,
ownership of Equity Securities equal to the sum (without duplication) of (i)
the amount of Equity Securities directly owned by such Person, (ii) the amount
of Equity Securities held by all Persons related to such Person (within the
meaning of Sections 267(b) or 707(b)(1) of the Code) and (iii) the amount of
Equity Securities which are attributable to such Person taking into account
constructive ownership rules of Section 318(a)(2) of the Code, as modified by
Section 355(e)(4)(c)(ii) of the Code. The terms "Beneficial Owner",
"Beneficially Own", "Beneficially Owns" and "Beneficially Owned" shall have
correlative meanings.
"Code" means the Internal Revenue Code of 1986, as amended.
"Distribution" means the distribution of 100% of the capital
stock of New Marriott by the Corporation to the Corporation's stockholders
pursuant to the Distribution Agreement dated as of September 30, 1997, as
amended, between the Corporation and New Marriott.
"Equity Securities" means any stock of the Corporation or other
equity securities treated as stock for tax purposes, or options, warrants,
rights, convertible debt, or any other instrument or security that affords any
Person the right, whether conditional or otherwise, to acquire stock of the
Corporation.
"Fifty Percent or Greater Interest" means Beneficial Ownership
of 50% or more (by value or by voting power) of the Equity Securities of the
Corporation.
"Governmental Entity" means any court, agency, authority, board,
bureau, commission, department, regulatory or administrative body, office or
instrumentality of any nature whatsoever of any governmental or
quasi-governmental unit (including the New York Stock Exchange or any other
national stock exchange), whether federal, state, parish, county, district,
municipality, city, political subdivision or otherwise, domestic or foreign, or
an other entity exercising executive, legislative, judicial regulatory or
administrative functions of or pertaining to government, whether now or
hereafter in effect.
"Person" means an individual, corporation, limited liability
company, partnership, estate, trust, association, private foundation within
the meaning of Section 509(a) of the Code, joint stock company or other entity
or organization, including any Governmental Entity or authority.
"New Marriott" means New Marriott MI, Inc. (to be renamed
Marriott International, Inc. upon the consummation of the Distribution).
"Restricted Period" means the period ending on March 27, 2001.
"Tax Free Status" shall mean the qualification of the
Distribution (i) as a transaction described in Section 368(a)(1)(D) and
Section 355(a)(1) of the Code, (ii) as a transaction in which the stock
distributed thereby is qualified property for purposes of Section 355(c)(2) of
the Code, and (iii) as a transaction in which the Corporation recognizes no
income or gain other than intercompany items or excess loss accounts taken
into account pursuant to the Treasury Regulations promulgated pursuant to
Section 1502 of the Code.
"Transfer" means any sale, transfer, gift, assignment, devise
or other disposition of a share of Equity Securities, or any interest therein
(including the granting of any option (including, but not limited to, an
option to acquire an option or any series of such options)), whether voluntary
or involuntary, whether of record or of Beneficial Ownership, and whether by
operation of law or otherwise (including, but not limited to, any transfer of
an interest in other entities which results in a change in the Beneficial
Ownership of shares of Equity Securities). The terms "Transfers" and
"Transferred" shall have correlative meanings.
ARTICLE 8
Indemnification
Each person who was or is a party or is threatened to be made a
party to, or is involved in any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that he or she or a person of whom he or
she is the legal representative, is or was a director or officer of the
Corporation, shall be indemnified and held harmless by the Corporation to the
fullest extent permitted from time to time by the General Corporation Law of
the State of Delaware as the same exists or may hereafter be amended (but, if
permitted by applicable law, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide
prior to such amendment) or any other applicable laws as presently or
hereafter in effect. The Corporation may, by action of the Board of
Directors, provide indemnification to employees and agents (other than a
director or officer) of the Corporation, to directors, officers, employees or
agents of any subsidiary of the Corporation, and to each person serving at the
request of the Corporation or any of its subsidiaries as a director, officer,
partner, member, employee or agent of another corporation, partnership,
limited liability company, joint venture, trust or other enterprise, with the
same scope and effect as the foregoing indemnification of directors and
officers of the Corporation. The Corporation shall be required to indemnify
any person seeking indemnification in connection with a Proceeding (or part
thereof) initiated by such person only if such Proceeding (or part thereof)
was authorized by the Board of Directors or is a Proceeding to enforce such
person's claim to indemnification pursuant to the rights granted by this
Certificate of Incorporation or otherwise by the Corporation. Without
limiting the generality or the effect of the foregoing, the Corporation may
enter into one or more agreements with any person which provide for
indemnification greater or different than that provided in this Article 8. Any
amendment or repeal of this Article 8 shall not adversely affect any right or
protection existing hereunder in respect of any act or omission occurring
prior to such amendment or repeal.
ARTICLE 9
Directors' Liability
A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (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 General Corporation
Law of the State of Delaware, or (iv) for any transaction from which the
director derived an improper personal benefit. Any amendment or repeal of
this Article 9 shall not adversely affect any right or protection of a
director of the Corporation existing hereunder in respect of any act or
omission occurring prior to such amendment or repeal.
If the General Corporation Law of the State of Delaware shall
be amended to authorize corporate action further eliminating or limiting the
liability of directors, then a director of the Corporation, in addition to the
circumstances in which such director is not liable immediately prior to such
amendment, shall be free of liability to the fullest extent permitted by the
General Corporation Law of the State of Delaware, as so amended.
ARTICLE 10
Amendments
Except as may be expressly provided in this Certificate of
Incorporation, the Corporation reserves the right at any time and from time to
time to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation or a Preferred Stock Designation, and any other
provisions authorized by the laws of the State of Delaware at the time in force
may be added or inserted, in the manner now or hereafter prescribed herein or
by applicable law, and all rights, preferences and privileges of whatsoever
nature conferred upon stockholders, directors or any other persons whomsoever
by and pursuant to this Certificate of Incorporation in its present form or as
hereafter amended are granted subject to the right reserved in this Article 10;
provided that (i) any amendment or repeal of Article 8 or Article 9 of this
Certificate of Incorporation shall not adversely affect any right or protection
existing thereunder in respect of any act or omission occurring prior to such
amendment or repeal; and (ii) no Preferred Stock Designation shall be amended
after the issuance of any shares of the series of Preferred Stock created
thereby, except in accordance with the terms of such Preferred Stock
Designation and the requirements of applicable law.
IN WITNESS WHEREOF, Marriott International, Inc. has caused this
Amended and Restated Certificate of Incorporation to be signed by its
Vice President and attested to by its Secretary as of March 27, 1998.
MARRIOTT INTERNATIONAL, INC.
By: /s/ Lawrence E. Hyatt
-----------------------------
Name: Lawrence E. Hyatt
Title: Vice President
ATTEST: /s/ W. David Mann
----------------------------
Name: W. David Mann
Title: Secretary
Appendix A
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
SECTION 1. Designation and Amount. The shares of such series shall
be designated as "Series A Junior Participating Preferred Stock" and the
number of shares constituting such series shall be 300,000.
SECTION 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Junior Participating Preferred Stock with respect to
dividends, the holders of shares of Series A Junior Participating Preferred
Stock shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the last day of March, June, September and December in
each year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A Junior
Participating Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $10 or (b) subject to the provision for
adjustment hereinafter set forth, 1000 times the aggregate per share amount
of all cash dividends, and 1000 times the aggregate per share amount (payable
in kind) of all non-cash dividends or other distributions other than a
dividend payable in shares of common stock, par value $1 per share, of the
Corporation (the "Common Stock") or a subdivision of the outstanding shares
of Common Stock (by reclassification or otherwise), declared on the Common
Stock, since the immediately preceding Quarterly Dividend Payment Date, or,
with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Junior Participating
Preferred Stock. In the event the Corporation shall at any time after
September 27, 1993 (the "Rights Declaration Date") (i) declare any dividend
on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into
a smaller number of shares, then in each such case the amount to which
holders of shares of Series A Junior Participating Preferred Stock were
entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such
shares of Series A Junior Participating Preferred Stock, unless the date of
issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares shall begin to
accrue from the date of issue of such shares, or unless the date of issue is
a Quarterly Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Junior Participating Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin
to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Junior Participating Preferred Stock in an amount less
than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all
such shares at the time outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of Series A Junior
Participating Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30
days prior to the date fixed for the payment thereof.
SECTION 3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Junior Participating Preferred Stock shall entitle the
holder thereof to 1000 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock in a smaller
number of shares, then in each such case the number of votes per share to
which holders of shares of Series A Junior Participating Preferred Stock were
entitled immediately prior to such event shall be adjusted by multiplying
such number by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(C)(i) If at any time dividends on any Series A Junior Participating
Preferred Stock shall be in arrears in an amount equal to six (6)
quarterly dividends thereon, the occurrence of such contingency
shall mark the beginning of a period (herein called a "default
period") which shall extend until such time when all accrued and
unpaid dividends for all previous quarterly dividend periods and for
the current quarterly dividend period on all shares of Series A
Junior Participating Preferred Stock then outstanding shall have
been declared and paid or set apart for payment. During each default
period, all holders of Preferred Stock (including holders of the
Series A Junior Participating Preferred Stock) with dividends in
arrears in an amount equal to six (6) quarterly dividends thereon,
voting as a class, irrespective of series, shall have the right to
elect two (2) Directors.
(ii) During any default period, such voting rights of the holders of
Series A Junior Participating Preferred Stock may be exercised
initially at a special meeting called pursuant to subparagraph (iii)
of this Section 3(C) or at any annual meeting of stockholders, and
thereafter at annual meetings of stockholders, provided that neither
such voting right nor the right of the holders of any other series
of Preferred Stock, if any, to increase, in certain cases, the
authorized number of Directors shall be exercised unless the holders
of one-third in number of shares of Preferred Stock outstanding
shall be present in person or by proxy. The absence of a quorum of
the holders of Common Stock shall not affect the exercise by the
holders of Preferred Stock of such voting right. At any meeting at
which the holders of Preferred Stock shall exercise such voting
right initially during an existing default period, they shall have
the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to
two (2) Directors or, if such right is exercised at an annual
meeting, to elect two (2) Directors. If the number which may be so
elected at any special meeting does not amount to the required
number, the holders of the Preferred Stock shall have the right to
make such increase in the number of Directors as shall be necessary
to permit the election by them of the required number. After the
holders of the Preferred Stock shall have exercised their right to
elect Directors in any default period and during the continuance of
such period, the number of Directors shall not be increased or
decreased except by vote of the holders of Preferred Stock as herein
provided or pursuant to the rights of any equity securities ranking
senior to or pari passu with the Series A Junior Participating
Preferred Stock.
(iii) Unless the holders of Preferred Stock shall, during an existing
default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than ten percent (10%)
of the total number of shares of Preferred Stock outstanding,
irrespective of series, may request, the calling of special meeting
of the holders of Preferred Stock, which meeting shall thereupon be
called by the President, a Vice President or the Secretary of the
Corporation. Notice of such meeting and of any annual meeting at
which holders of Preferred Stock are entitled to vote pursuant to
this paragraph (C)(iii) shall be given to each holder of record of
Preferred Stock by mailing a copy of such notice to him at his last
address as the same appears on the books of the Corporation. Such
meeting shall be called for a time not earlier than 20 days and not
later than 60 days after such order or request or in default of the
calling of such meeting within 60 days after such order or request,
such meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than ten percent (10%)
of the total number of shares of Preferred Stock outstanding.
Notwithstanding the provisions of this paragraph (C)(iii), no such
special meeting shall be called during the period within 60 days
immediately preceding the date fixed for the next annual meeting of
the stockholders.
(iv) In any default period, the holders of Common Stock, and other
classes of stock of the Corporation if applicable, shall continue to
be entitled to elect the whole number of Directors until the holders
of Preferred Stock shall have exercised their right to elect two (2)
Directors voting as a class, after the exercise of which right (x)
the directors so elected by the holders of Preferred Stock shall
continue in office until the successors shall have been elected by
such holders or until the expiration of the default period, and (y)
any vacancy in the Board of Directors may (except as provided in
paragraph (C)(ii) of this Section 3) be filled by vote of a majority
of the remaining Directors theretofore elected by the holders of the
class of stock which elected the Director whose office shall have
become vacant. References in this paragraph (C) to Directors elected
by the holders of a particular class of stock shall include
Directors elected by such Directors to fill vacancies as provided in
clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Preferred Stock as a class to elect
Directors shall cease, (y) the term of any Directors elected by the
holders of Preferred Stock as a class shall terminate, and (z) the
number of Directors shall be such number as may be provided for in
the certificate of incorporation or by-laws irrespective of any
increase made pursuant to the provisions of paragraph (C)(ii) of
this Section 3 (such number being subject, however, to change
thereafter in any manner provided by law or in the certificate of
incorporation or by-laws). Any vacancies in the Board of Directors
effected by the provisions of clauses (y) and (z) in the preceding
sentence may be filled by a majority of the remaining Directors.
(D) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
SECTION 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of
Series A Junior Participating Preferred Stock outstanding shall have been
paid in full, the Corporation shall not
(i) declare or pay dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Junior Participating Preferred Stock, except dividends paid ratably
on the Series A Junior Participating Preferred Stock and all such
parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Junior Participating Preferred Stock, provided that the Corporation
may at any time redeem, purchase or otherwise acquire shares of any
such parity stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Junior Participating
Preferred Stock;
(iv) purchase or otherwise acquire for consideration any shares of
Series A Junior Participating Preferred Stock, or any share of stock
ranking on a parity with the Series A Junior Participating Preferred
Stock, except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
SECTION 5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and cancelled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be reissued
as part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
SECTION 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders
of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior Participating
Preferred Stock unless, prior thereto, the holders of shares of Series A
Junior Participating Preferred Stock shall have received $1000 per share,
plus an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment (the "Series A
Liquidation Preference"). Following the payment of the full amount of the
Series A Liquidation Preference, no additional distributions shall be made to
the holders of shares of Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Common Stock shall have
received an amount per share (the "Common Adjustment") equal to the quotient
obtained by dividing (i) the Series A Liquidation Preference by (ii) 1000 (as
appropriately adjusted as set forth in subparagraph C below to reflect such
events as stock splits, stock dividends and recapitalizations with respect to
the Common Stock) (such number in clause (ii) immediately above being
referred to as the "Adjustment Number"). Following the payment of the full
amount of the Series A Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series A Junior Participating Preferred
Stock and Common Stock, respectively, holders of Series A Junior
Participating Preferred Stock and holders of shares of Common Stock shall
receive their ratable and proportionate share of the remaining assets to be
distributed in the ratio of the Adjustment Number to one (1) with respect to
such Preferred Stock and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference
and the liquidation preferences of all other series of Preferred Stock, if
any, which rank on a parity with the Series A Junior Participating Preferred
Stock, then such remaining assets shall be distributed ratably to the holders
of such parity shares in proportion to their respective liquidation
preferences. In the event, however, that there are not sufficient assets
available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment Number by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding prior to such event.
SECTION 7. Consolidation, Merger, Etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction
in which the shares of Common Stock are exchange for or changed into other
stock or securities, cash and/or any other property, then in any such case
the shares of Series A Junior Participating Preferred Stock shall at the same
time be similarly exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 1000 times the
aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the Corporation shall at
any time after the Rights Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series
A Junior Participating Preferred Stock shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding immediately
prior to such event.
SECTION 8. No Redemption. The shares of Series A Junior Participating
Preferred Stock shall not be redeemable.
SECTION 9. Ranking. The Series A Junior Participating Preferred
Stock shall rank junior to all other series of the Corporation's Preferred
Stock as to the payment of dividends and the distribution of assets, unless
the terms of any such series shall provide otherwise.
SECTION 10. Amendment. The Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A
Junior Participating Preferred Stock so as to affect them adversely without
the affirmative vote of the holders of a majority or more of the outstanding
shares of Series A Junior Participating Preferred Stock, voting separately as
a class.
SECTION 11. Fractional Shares. Series A Junior Participating
Preferred Stock may be issued in fractions of a share but no such fraction
shall be less than one one-thousandth of a share which shall entitle the
holder, in proportion to such holders fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the
benefit of all other rights of holders of Series A Junior Participating
Preferred Stock.
EXHIBIT 5
$735,000,000
(consisting of a $235,000,000 Revolving Credit Facility
and a $500,000,000 Term Loan Facility)
CREDIT AGREEMENT
Dated as of January 30, 1998
Among
SODEXHO MARRIOTT OPERATIONS, INC.
as Borrower
SODEXHO MARRIOTT SERVICES, INC.
(currently called MARRIOTT INTERNATIONAL, INC.)
as Parent Guarantor
and
THE INITIAL LENDERS NAMED HEREIN
as Initial Lenders
and
SOCIETE GENERALE and J.P. MORGAN SECURITIES INC.
as Arrangers
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
as Administrative Agent and Documentation Agent
T A B L E O F C O N T E N T S
Section Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Defined Terms........................................... 2
1.02. Computation of Time Periods..................................... 21
1.03. Accounting Terms and Determinations............................. 21
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
2.01. The Advances.................................................... 21
2.02. Making the Advances............................................. 22
2.03. Issuance of and Drawings and Reimbursement Under
Letters of Credit............................................ 23
2.04. Repayment of Advances........................................... 25
2.05. Termination or Reduction of the Commitments..................... 26
2.06. Prepayments..................................................... 26
2.07. Interest........................................................ 28
2.08. Fees .......................................................... 29
2.09. Conversion and Continuation of Advances......................... 30
2.10. Increased Costs, Etc............................................ 30
2.11. Payments and Computations....................................... 31
2.12. Taxes .......................................................... 32
2.13. Sharing of Payments, Etc........................................ 35
2.14. Use of Proceeds................................................. 35
2.15. Defaulting Lenders.............................................. 36
2.16. Regulation D Compensation....................................... 37
2.17. Base Rate Advances Substituted for Affected
Eurodollar Rate Advances..................................... 38
2.18. Replacement of Certain Lenders.................................. 38
ARTICLE III
CONDITIONS OF LENDING
3.01. Conditions Precedent to Closing................................. 39
3.02. Conditions Precedent to Initial Extension of Credit............. 39
3.03. Conditions Precedent to Each Borrowing.......................... 44
3.04. Determinations Under Section 3.02............................... 44
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties of the
Borrower and Parent Guarantor................................ 45
ARTICLE V
COVENANTS OF THE BORROWER AND THE PARENT GUARANTOR
5.01. Affirmative Covenants........................................... 49
5.02. Negative Covenants.............................................. 52
5.03. Reporting Requirements.......................................... 59
5.04. Financial Covenants............................................. 61
5.05. Maintenance of Separate Corporate Existence..................... 63
ARTICLE VI
PARENT GUARANTY
6.01. Parent Guaranty................................................. 64
6.02. Parent Guaranty Absolute........................................ 64
6.03. Waivers and Acknowledgments..................................... 65
6.04. Subrogation..................................................... 65
6.05. Continuing Guaranty; Assignments................................ 66
6.06. Scope of Limited Recourse Liability............................. 66
6.07. Replacement of Guaranteed Senior Debt........................... 66
ARTICLE VII
EVENTS OF DEFAULT
7.01. Events of Default............................................... 67
7.02. Actions in Respect of the Letters of Credit upon Default........ 69
ARTICLE VIII
THE ADMINISTRATIVE AGENT
8.01. Authorization and Action........................................ 70
8.02. Administrative Agent's Reliance, Etc............................ 70
8.03. Morgan and Affiliates........................................... 70
8.04. Lender Party Credit Decision.................................... 71
8.05. Indemnification................................................. 71
8.06. Successor Agents................................................ 72
ARTICLE IX
MISCELLANEOUS
9.01. Amendments, Etc................................................. 73
9.02. Notices, Etc.................................................... 73
9.03. No Waiver; Remedies............................................. 74
9.04. Costs and Expenses.............................................. 74
9.05. Right of Set-off................................................ 76
9.06. Binding Effect.................................................. 76
9.07. Assignments and Participations.................................. 76
9.08. Execution in Counterparts....................................... 78
9.09. No Liability of the Issuing Banks............................... 79
9.10. Confidentiality................................................. 79
9.11. No Reliance on Margin Stock..................................... 79
9.12. Collateral Agent................................................ 80
9.13. Jurisdiction, Etc............................................... 80
9.14. Governing Law................................................... 80
9.15. Waiver of Jury Trial............................................ 80
SCHEDULES
Schedule I - Commitments and Applicable Lending Offices
Schedule 3.02(b) - Description of Reorganization
Schedule 4.01(a) - Capitalization of Borrower
Schedule 4.01(b) - Subsidiaries
Schedule 4.01(d) - Governmental Authorizations; Approvals
Schedule 4.01(i) - Disclosed Litigation
Schedule 4.01(y) - Existing Debt
Schedule 4.01(aa) - Sodexho Contracts
Schedule 5.02(a) - Existing Liens
Schedule 5.02(h) - Agreements Requiring Payment by the Borrower
EXHIBITS
Exhibit A-1 - Form of Term Note
Exhibit A-2 - Form of Revolving Credit Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Security Agreement
Exhibit E - Form of Subsidiary Guaranty
Exhibit F - Form of Pledge Agreement
Exhibit G-1 - Form of Opinion of Counsel to the Loan Parties
Exhibit G-2 - Form of Opinion of General Counsel to the Loan Parties
Exhibit G-3 - Form of Opinion of Maryland Counsel to the Loan Parties
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of January 30, 1998 among SODEXHO
MARRIOTT OPERATIONS, INC., a Delaware corporation (the "Borrower"), MARRIOTT
INTERNATIONAL, INC., a Delaware corporation, to be renamed SODEXHO MARRIOTT
SERVICES, INC. (the "Parent Guarantor"), the banks, financial institutions and
other institutional lenders listed on the signature pages hereof as the Initial
Lenders (the "Initial Lenders"), SOCIETE GENERALE and MORGAN GUARANTY TRUST
COMPANY OF NEW YORK ("Morgan"), as the initial issuing banks (the "Initial
Issuing Banks"), and MORGAN, as documentation agent and as administrative agent
(together with any successor appointed pursuant to Article VIII, the
"Administrative Agent") for the Lender Parties (as hereinafter defined), with
SOCIETE GENERALE and J.P. MORGAN SECURITIES INC., as arrangers (the
"Arrangers").
PRELIMINARY STATEMENTS:
(1) Pursuant to the Transaction Documents (as hereinafter
defined), the Parent Guarantor will (i) distribute (the "Spinoff") to its
shareholders all of its, and its Subsidiaries' (as hereinafter defined),
businesses other than the Foodservice Business, (ii) Sodexho (as hereinafter
defined) will transfer (the "Canadian Subsidiary Transfer") the shares of
Sodexho Financiere du Canada, Inc. ("Sodexho Canada"), its Canadian Subsidiary
engaged in the food service and facilities management business, to the Parent
Guarantor, (iii) Sodexho will pay (the "Cash Payment") $304,000,000 to the
Parent Guarantor, (iv) International Catering Corporation, a Delaware
corporation and a wholly owned indirect Subsidiary of Sodexho ("ICC"), will
merge (the "Merger") with Merger Corp. (as hereinafter defined), a newly-formed,
wholly owned Subsidiary of the Parent Guarantor, with ICC being the surviving
corporation and (v) Sodexho will receive, as consideration in respect of the
Cash Payment, the Merger and the Canadian Subsidiary Contribution, not less than
40.1% and not more than 49.9% of the common stock of the Parent Guarantor.
(2) The Borrower has been organized as a wholly owned
Subsidiary of the Parent Guarantor in order to facilitate the transactions
contemplated by the Transaction Documents and to obtain the financing
contemplated herein. At the time of the Merger, the Parent Guarantor will
contribute (the "Subsidiary Contribution") all of the capital stock and other
Investments (as hereinafter defined) held by the Parent Guarantor in its
Subsidiaries (other than Sodexho Canada, Marriott Corporation of Canada, Ltd.
("MMS Canada"), New Marriott and Subsidiaries of New Marriott) to the Borrower.
The Spinoff, the Canadian Subsidiary Contribution, the Cash Payment, the Merger
and the Subsidiary Contribution are herein referred to, collectively, as the
"Transaction".
(3) The Borrower has requested that, in connection with the
Transaction, the Lender Parties lend to it up to $735,000,000 to refinance
certain Existing Debt (as hereinafter defined) of the Parent Guarantor and ICC
and their respective Subsidiaries and to pay transaction fees and expenses and
that, from time to time, the Lender Parties lend to the Borrower and issue
Letters of Credit for the benefit of the Borrower and its Subsidiaries for
general corporate purposes of the Borrower, the Parent Guarantor and their
respective Subsidiaries. The Lender Parties have indicated their willingness to
agree to lend such amounts, and issue letters of credit in such amounts, on the
terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto hereby
agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain 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):
"Administrative Agent" has the meaning specified in the
recital of parties to this Agreement.
"Administrative Agent's Account" means the account of the
Administrative Agent maintained by the Administrative Agent with Morgan
at its office at 60 Wall Street, New York, New York 10260-0060, ABA No.
021-000-238, Account No. 999-99-090, Attention: Global Credit Support,
Reference: Sodexho Marriott.
"Advance" means a Term Advance, a Revolving Credit Advance or
a Letter of Credit Advance.
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common
control with such Person or is a director or officer of such Person.
For purposes of this definition, the term "control" (including the
terms "controlling," "controlled by" and "under common control with")
of a Person means the possession, direct or indirect, of the power to
vote 10% or more of the Voting Stock of such Person or to direct or
cause the direction of the management and policies of such Person,
whether through the ownership of Voting Stock, by contract or
otherwise; provided that, from and after the consummation of the
Transaction, none of the Borrower, the Parent Guarantor or any of their
respective Subsidiaries shall be an Affiliate of New Marriott or any of
its Subsidiaries or Affiliates unless New Marriott or any of its
Subsidiaries or Affiliates purchases or otherwise acquires more than
10% of the Voting Stock of the Parent Guarantor or any of its
Subsidiaries after the date hereof.
"Amendment Agreement" means the Amendment Agreement dated as
of January 28, 1998 among the Borrower, Sodexho, Merger Corp., New
Marriott and ICC.
"Applicable Lending Office" means, with respect to each Lender
Party, such Lender Party's Domestic Lending Office in the case of a
Base Rate Advance and such Lender Party's Eurodollar Lending Office in
the case of a Eurodollar Rate Advance.
"Applicable Margin" means, with respect to Eurodollar Rate
Advances (i) at any time during the 12-month period commencing on the
Funding Date (as hereinafter defined) 1.125% per annum, and (ii) at any
time and from time to time thereafter, a percentage per annum
determined by reference to the Leverage Ratio as set forth below:
Leverage Ratio Percentage
-------------- ----------
Level 6
-------
greater than 4.5:1.0 1.125%
Level 5
-------
greater than 4.0:1.0
but not greater than 4.5:1.0 0.875%
Level 4
-------
greater than 3.5:1.0
but not greater than 4.0:1.0 0.75%
Level 3
-------
greater than 3.0:1.0
but not greater than 3.5:1.0 0.625%
Level 2
-------
greater than 2.5:1.0
but not greater than 3.0:1.0 0.50%
Level 1
-------
2.5:1.0 or less 0.375%
Subject to the effectiveness provisions of Section 9.02, the Applicable
Margin for any day shall be determined by reference to the ratio set
forth in the schedule most recently delivered by the Borrower to the
Administrative Agent on or prior to such day pursuant to subsection
5.03(b)(ii)(B) or 5.03(c)(ii)(B); provided that if the Borrower has not
submitted any such schedule to the Administrative Agent as and when
required under such Section 5.03(b)(ii)(B) or 5.03(c)(ii)(B), as the
case may be, the Applicable Margin shall be at Level 6 until a schedule
complying with such Section has been so delivered.
"Appropriate Lender" means, at any time, with respect to (a)
any of the Term or Revolving Credit Facilities, a Lender that has a
Commitment with respect to such Facility at such time and (b) the
Letter of Credit Facility, (i) any Issuing Bank and (ii) if the other
Revolving Credit Lenders have made Letter of Credit Advances pursuant
to Section 2.03(c) that are outstanding at such time, such other
Revolving Credit Lenders.
"Arrangers" has the meaning specified in the recital of
parties to this Agreement.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the
Administrative Agent, in accordance with Section 9.07 and in
substantially the form of Exhibit C hereto.
"Available Amount" of any Letter of Credit means, at any time,
the maximum amount available to be drawn under such Letter of Credit at
such time (whether or not any conditions to drawing can then be met).
"Base Rate" means a fluctuating interest rate per annum in
effect from time to time, which rate per annum shall at all times be
equal to the higher of:
(a) the rate of interest announced publicly by Morgan
in New York, New York, from time to time, as Morgan's prime
rate; and
(b) 1/2 of one percent per annum above the Federal
Funds Rate.
"Base Rate Advance" means an Advance that bears interest at
the Base Rate pursuant to the applicable Notice of Borrowing, the
applicable Notice of Interest Rate Election, Section 2.03(c), Section
2.10(c) or Section 2.17.
"Base Transaction Documents" has the meaning specified in
Section 3.02(a).
"Borrower" has the meaning specified in the recital of parties
to this Agreement.
"Borrowing" means a Term Borrowing or a Revolving Credit
Borrowing.
"Business Day" means a day of the year on which banks are not
required or authorized by law to close in New York City and, if the
applicable Business Day relates to any Eurodollar Rate Advances, on
which dealings in U.S. dollar deposits are carried on in the London
interbank market.
"Canadian Subsidiary Transfer" has the meaning specified in
Preliminary Statement (1).
"Capital Expenditures" means, for any Person for any period,
all expenditures made, directly or indirectly, by such Person or any of
its Subsidiaries during such period for equipment, fixed assets, real
property or improvements, or for replacements or substitutions therefor
or additions thereto, that have been or should be, in accordance with
GAAP, reflected as capital expenditures or increases in other long-term
tangible assets related to client investments on a Consolidated cash
flow statement of such Person. For purposes of this definition, the
purchase price of equipment that is purchased simultaneously with the
trade-in of existing equipment or with insurance proceeds shall be
included in Capital Expenditures only to the extent of the gross amount
of such purchase price less the credit granted by the seller of such
equipment for the equipment being traded in at such time or the amount
of such proceeds, as the case may be.
"Capitalized Leases" means all leases that have been or should
be, in accordance with GAAP, recorded as capitalized leases.
"Cash Payment" has the meaning specified in Preliminary
Statement (1).
"Cash Equivalents" means any of the following, to the extent
having a maturity of not greater than one year from the date of
acquisition thereof: (a) direct obligations of the Government of the
United States or any agency or instrumentality thereof or obligations
unconditionally guaranteed by the full faith and credit of the
Government of the United States or any agency or instrumentality
thereof, (b) certificates of deposit of or time deposits with (i) any
Lender Party, (ii) a bank or trust company which is organized or
licensed under the laws of the United States or any State thereof and
has capital, surplus and undivided profits of at least $1,000,000,000
or (iii) any other financial institution whose unsecured senior
long-term debt is rated at least A- (or the then equivalent) by Moody's
or A3 (or the then equivalent) by S&P, or (c) commercial paper rated at
least "Prime-1" (or the then equivalent) by Moody's or "A-1" (or the
then equivalent) by S&P or which is issued by an entity whose senior
unsecured long-term debt securities are rated at least A- (or the then
equivalent) by Moody's or A3 (or the then equivalent) by S&P, (d)
repurchase agreements with respect to securities described in clause
(a) above entered into with an office of a bank, trust company or other
financial institution specified in clause (b) above, (e) mutual funds
at least 90% of whose assets are held in Investments referred to in
clauses (a) through (d) above (except that the maturities of certain
investments held by such mutual funds may exceed one year so long as
the dollar-weighted average life of the Investments of such mutual fund
is less than one year), and (f) in the case of any non-United States
Subsidiary of the Parent Guarantor, corresponding Investments in the
local currency of the jurisdiction in which such Subsidiary is located.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time.
"CERCLIS" means the Comprehensive Environmental Response,
Compensation and Liability Information System maintained by the U.S.
Environmental Protection Agency.
"Closing Date" means the date on which all conditions
precedent set forth in Section 3.01 shall have been satisfied, but in
no event later than January 30, 1998.
"Collateral" means all "Collateral" referred to in the
Collateral Documents and all other property that is or is intended to
be subject to any Lien in favor of the Administrative Agent for the
benefit of the Secured Parties.
"Collateral Documents" means the Security Agreement, the
Pledge Agreement and any other agreement that creates or purports to
create a Lien in favor of the Administrative Agent for the benefit of
the Secured Parties.
"Collateral Grantor" means each of the Borrower and the
Guarantors.
"Commitment" means a Term Commitment, a Revolving Credit
Commitment or a Letter of Credit Commitment.
"Confidential Information" means any information that Sodexho,
the Parent Guarantor, the Borrower or any of their respective
Subsidiaries, Affiliates, advisors or agents furnishes to the
Administrative Agent or any Lender Party other than any such
information that is or becomes generally available to the public or
that is or becomes available to the Administrative Agent or such Lender
Party from a source other than Sodexho, the Parent Guarantor, the
Borrower or any of their respective Subsidiaries, Affiliates, advisors
or agents that is not, to the best of the Administrative Agent's or
such Lender Party's knowledge, acting in violation of a confidentiality
agreement with Sodexho, the Parent Guarantor, the Borrower or any of
their respective Subsidiaries, Affiliates, advisors or agents.
"Consents Side Letter" means the letter dated as of October 2,
1997 among the Parent Guarantor, Merger Corp., New Marriott, Sodexho
and ICC.
"Consolidated" refers to the consolidation of accounts in
accordance with GAAP.
"Consolidated Debt" means, on any date, Debt of the Parent
Guarantor and its Subsidiaries on such date (other than Debt referred
to in clause (i) of the definition of "Debt"), determined on a
Consolidated basis.
"Consolidated Interest Expense" means, for any period,
Consolidated interest expense of the Parent Guarantor and its
Subsidiaries for such period (excluding any such amounts not payable on
a current basis in cash and any amounts attributable to the
amortization of deferred financing costs or other capitalized fees or
expenses paid prior to the Funding Date or incurred in connection with
the Transaction, the prepayment of any Marriott Bonds or the incurrence
of the Guaranteed Senior Debt or any Debt hereunder), net of
Consolidated interest income of the Parent Guarantor and its
Subsidiaries for such period.
"Contingent Obligation" of any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly
guaranteeing any Debt of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt
(whether arising by virtue of partnership arrangements, by virtue of an
agreement to keep-well, to purchase assets, goods, securities or
services, to take-or-pay, or to maintain financial statement conditions
or otherwise), (ii) to reimburse a bank for amounts drawn under a
letter of credit for the purpose of paying such Debt or (iii) entered
into for the purpose of assuring in any other manner the holder of such
Debt of the payment thereof or to protect such holder against loss in
respect thereof (in whole or in part), provided that the term
"Contingent Obligation" shall not include endorsements for collection
or deposit in the ordinary course of business.
"Conversion", "Convert" and "Converted" each refer to a
conversion of Advances of one Type into Advances of the other Type
pursuant to Section 2.09 or 2.10.
"Current Assets" of any Person means all assets of such Person
that would, in accordance with GAAP, be classified as current assets of
a company conducting a business the same as or similar to that of such
Person.
"Current Liabilities" of any Person means all items that in
accordance with GAAP would be classified as current liabilities of such
Person other than Debt for borrowed money.
"Debt" of any Person means, at any date, without duplication,
(a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (c) 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, (d) all
obligations of such Person as lessee which are capitalized in
accordance with GAAP, (e) all obligations, contingent or otherwise, of
such Person to reimburse any bank or other Person in respect of a
letter of credit or similar instrument, (f) all Debt secured by a Lien
on any asset of such Person, whether or not such Debt is otherwise an
obligation of such Person, (g) all Contingent Obligations of such
Person in respect of Debt of another Person (each such Contingent
Obligation to constitute Debt in an amount equal to the lesser of the
amount of such other Person's Debt subject to such Contingent
Obligation and the maximum amount payable under such Contingent
Obligation), (h) all obligations of such Person to purchase, redeem,
retire, defease or otherwise make any payment in respect of any Hybrid
Capital Stock of such Person or any other Person, valued, in the case
of Redeemable Hybrid Capital Stock, at the greater of its voluntary or
involuntary liquidation preference, and (i) all obligations in respect
of Hedge Agreements.
"Default" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
"Defaulted Advance" means, with respect to any Lender Party at
any time, the portion of any Advance required to be made by such Lender
Party to the Borrower pursuant to Section 2.01 or 2.02 at or prior to
such time which has not been made by such Lender Party or by the
Administrative Agent for the account of such Lender Party pursuant to
Section 2.02(d) as of such time. In the event that a portion of a
Defaulted Advance shall be deemed made pursuant to Section 2.15(a), the
remaining portion of such Defaulted Advance shall continue to be
considered a Defaulted Advance.
"Defaulted Amount" means, with respect to any Lender Party at
any time, any amount required to be paid by such Lender Party to the
Administrative Agent or any other Lender Party hereunder or under any
other Loan Document at or prior to such time which has not been so paid
as of such time, including, without limitation, any amount required to
be paid by such Lender Party to (a) any Issuing Bank pursuant to
Section 2.03(c) to purchase a portion of a Letter of Credit Advance
made by such Issuing Bank, (b) the Administrative Agent pursuant to
Section 2.02(d) to reimburse the Administrative Agent for the amount of
any Advance made by the Administrative Agent for the account of such
Lender Party, (c) any other Lender Party pursuant to Section 2.13 to
purchase any participation in Advances owing to such other Lender Party
and (d) the Administrative Agent or any Issuing Bank pursuant to
Section 8.05 to reimburse the Administrative Agent or such Issuing Bank
for such Lender Party's ratable share of any amount required to be paid
by the Lender Parties to the Administrative Agent or such Issuing Bank
as provided therein. In the event that a portion of a Defaulted Amount
shall be deemed paid pursuant to Section 2.15(b), the remaining portion
of such Defaulted Amount shall continue to be considered a Defaulted
Amount.
"Defaulting Lender" means, at any time, any Lender Party that,
at such time, (a) owes a Defaulted Advance or a Defaulted Amount or (b)
shall take any action or be the subject of any action or proceeding of
a type described in Section 7.01(f).
"Disclosed Litigation" has the meaning specified in Section
3.02(j).
"Distribution Agreement" means the Distribution Agreement
dated as of September 30, 1997 between the Parent Guarantor and New
Marriott, as amended by the Amendment Agreement.
"Domestic Lending Office" means, with respect to any Lender
Party, the office of such Lender Party specified as its "Domestic
Lending Office" opposite its name on Schedule I hereto or in the
Assignment and Acceptance pursuant to which it became a Lender Party,
as the case may be, or such other office of such Lender Party as such
Lender Party may from time to time specify to the Borrower and the
Administrative Agent.
"EBITDA" means, for any period, (a) Consolidated net income
(or net loss) of the Parent Guarantor and its Subsidiaries for such
period (after eliminating the effect of any non-Foodservice Business
discontinued operations incurred during the period prior to the Funding
Date or to be allocated to New Marriott as contemplated by the
Distribution Agreement) plus (b) the sum of each of the following items
to the extent deducted in determining such Consolidated net income: (i)
interest expense for such period less interest income for such period,
(ii) net income tax expense for such period, (iii) depreciation expense
for such period, (iv) amortization expense for such period, (v)
Integration Costs deducted for such period in an amount not to exceed,
in aggregate for all such deductions taken over the term of the
Facilities, $45,000,000 less the amount of such costs classified by the
Parent Guarantor's independent public accountants, and recorded, as
capitalized expenses, (vi) the net amount of (A) extraordinary non-cash
losses for such period less (B) extraordinary non-cash gains for such
period, (vii) non-cash non-recurring items for such period, and (viii)
other non-cash items for such period, in each case determined on a
Consolidated basis and in accordance with GAAP for such period.
"Eligible Assignee" means (a) with respect to any Facility
(other than the Letter of Credit Facility), (i) a Lender; (ii) a
financial institution or other entity engaged in the financing of loans
and accounts which is an Affiliate of a Lender; and (iii) any other
Person approved by the Administrative Agent and, unless an Event of
Default shall have occurred and be continuing, the Borrower, such
approval not to be unreasonably withheld or delayed, and (b) with
respect to the Letter of Credit Facility, a Lender that is a commercial
bank and is approved by the Administrative Agent and, unless an Event
of Default shall have occurred and be continuing, the Borrower, such
approval not to be unreasonably withheld or delayed; provided, however,
that neither any Loan Party nor any Affiliate of a Loan Party shall
qualify as an Eligible Assignee under this definition.
"Environmental Action" means any action, suit, demand, demand
letter, claim, notice of non-compliance or violation, notice of
liability or potential liability, investigation, proceeding, consent
order or consent agreement relating in any way to any Environmental
Law, any Environmental Permit or Hazardous Material or arising from
alleged injury to the environment, including, without limitation, (a)
by any governmental or regulatory authority for enforcement, cleanup,
removal, response, remedial or other actions or damages and (b) by any
governmental or regulatory authority or third party for damages,
contribution, indemnification, cost recovery, compensation or
injunctive relief.
"Environmental Law" means any applicable federal, state, local
or foreign statute, law, ordinance, rule, regulation, code, order,
writ, judgment, injunction, decree or judicial or agency
interpretation, policy or guidance relating to pollution or protection
of the environment, or the effect of the environment on human health or
safety, including, without limitation, those relating to the use,
handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Materials.
"Environmental Permit" means any permit, approval,
identification number, license or other authorization required under
any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" means any Person that for purposes of Title
IV of ERISA is a member of the controlled group of any Loan Party, or
under common control with any Loan Party, within the meaning of Section
414 of the Internal Revenue Code.
"ERISA Event" means (a) (i) the occurrence of a reportable
event, within the meaning of Section 4043 of ERISA, with respect to any
Plan unless the 30-day notice requirement with respect to such event
has been waived by the PBGC, or (ii) the requirements of subsection (1)
of Section 4043(b) of ERISA (taking into account subsection (2) of such
Section) are met with respect to a contributing sponsor, as defined in
Section 4001(a)(13) of ERISA, of a Plan, and an event described in
paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is
reasonably expected to occur with respect to such Plan within the
following 30 days; (b) the application for a minimum funding waiver
with respect to a Plan; (c) the provision by the administrator of any
Plan of a notice of intent to terminate such Plan, pursuant to Section
4041(a)(2) of ERISA in a distress termination pursuant to ERISA Section
4041(c) (including any such notice with respect to a plan amendment
referred to in Section 4041(e) of ERISA); (d) the cessation of
operations at a facility of any Loan Party or any ERISA Affiliate in
the circumstances described in Section 4062(e) of ERISA; (e) the
withdrawal by any Loan Party or any ERISA Affiliate from a Multiple
Employer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions
for imposition of a lien under Section 302(f) of ERISA shall have been
met with respect to any Plan; (g) the adoption of an amendment to a
Plan requiring the provision of security to such Plan pursuant to
Section 307 of ERISA; or (h) the institution by the PBGC of proceedings
to terminate a Plan pursuant to Section 4042 of ERISA, or the
occurrence of any event or condition described in Section 4042 of ERISA
that constitutes grounds for the termination of, or the appointment of
a trustee to administer, such Plan.
"Eurocurrency Liabilities" has the meaning specified in
Regulation D of the Board of Governors of the Federal Reserve System,
as in effect from time to time.
"Eurodollar Lending Office" means, with respect to any Lender
Party, the office of such Lender Party specified as its "Eurodollar
Lending Office" opposite its name on Schedule I hereto or in the
Assignment and Acceptance pursuant to which it became a Lender Party
(or, if no such office is specified, its Domestic Lending Office), or
such other office of such Lender Party as such Lender Party may from
time to time specify to the Borrower and the Administrative Agent.
"Eurodollar Rate" means, for any Interest Period, an interest
rate per annum equal to the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750
(or any successor page) as the London interbank offered rate for
deposits in U.S. dollars at 11:00 A.M. (London time) two Business Days
before the first day of such Interest Period in an amount substantially
equal to Morgan's Eurodollar Rate Advance to which such Interest Period
is to apply (or, if Morgan shall not have such a Eurodollar Rate
Advance, $1,000,000) and for a period equal to such Interest Period
(provided that if for any reason such rate is not available, the term
"Eurodollar Rate" shall mean, for any Interest Period, the rate per
annum (rounded upward, if necessary, to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered
rate for deposits in U.S. dollars at approximately 11:00 A.M. (London
time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided, however, if
more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates;
provided further that, in the case of the initial Interest Period with
respect to any Term Advance, if such period is not an exact period of
1, 2 ,3, 6, 9 or 12 months, the Eurodollar Rate shall mean the interest
rate per annum determined by the Administrative Agent to be the
arithmetic mean (rounded upwards, if necessary, to the nearest 1/16 of
1%) of the rates at which deposits in U.S. dollars approximately equal
in principal amount to the Term Advances of the Eurodollar Reference
Banks, in their capacities as Lenders, included in such initial Term
Advance and for a maturity comparable to such Interest Period are
offered to the principal London offices of each of the Eurodollar
Reference Banks in immediately available funds in the London interbank
market as of 11:00 A.M. (London time) on the day that is two Business
Days prior to the first day of such Interest Period.
"Eurodollar Rate Advance" means an Advance that bears interest
at a rate based on a Eurodollar Rate pursuant to the applicable Notice
of Borrowing or Notice of Interest Period Election.
"Eurodollar Rate Reserve Percentage" means for any day, the
percentage which is in effect on such day under regulations issued from
time to time by the Board of Governors of the Federal Reserve System
(or any successor) for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for a member bank of the Federal Reserve
System in New York City with respect to liabilities consisting of or
including Eurocurrency Liabilities (or with respect to any other
category of liabilities that includes deposits by reference to which
the interest rate on Eurodollar Rate Advances is determined).
"Eurodollar Reference Banks" means the principal London office
of each of Morgan Guaranty Trust Company of New York, Societe Generale,
Citibank, N.A., or such other Lender or Lenders as from time to time
may be agreed upon between the Borrower and the Administrative Agent.
"Events of Default" has the meaning specified in Section 7.01.
"Excess Cash Flow" means, for any period, an amount equal to
(i) Consolidated net income (or loss) of the Parent Guarantor and its
Subsidiaries for such period plus (ii) the aggregate amount of all
non-cash charges deducted in arriving at such Consolidated net income
(or loss) plus (iii) if there was a net increase in Consolidated
Current Liabilities of the Parent Guarantor and its Subsidiaries during
such period, the amount of such net increase plus (iv) if there was a
net decrease in Consolidated Current Assets (excluding cash and Cash
Equivalents) of the Parent Guarantor and its Subsidiaries during such
period, the amount of such net decrease less (v) the aggregate amount
of all non-cash credits included in arriving at such Consolidated net
income (or loss) less (vi) if there was a net decrease in Consolidated
Current Liabilities of the Parent Guarantor and its Subsidiaries during
such period since the date of the initial Borrowing, the amount of such
net decrease less (vii) if there was a net increase in Consolidated
Current Assets (excluding cash and Cash Equivalents) of the Parent
Guarantor and its Subsidiaries during such period, the amount of such
net increase less (viii) the aggregate amount of cash Capital
Expenditures made by the Parent Guarantor and its Subsidiaries during
such period, less (ix) dividends and other restricted payments
contemplated by Section 5.02(h)(i)(A) paid by the Parent Guarantor
during such period, less (x) the aggregate amount of payments of
principal made by the Parent Guarantor and its Subsidiaries on Debt
(excluding payments on revolving credit or similar arrangements for
which the commitment is not reduced as a result of such payment) during
such period, less (xi) taxes paid on account of deferred taxes accrued
in a previous period to the extent not included in Current Assets or
Current Liabilities in such period, less (xii) the net cash effect of
changes in long-term assets and long-term liabilities for such period.
"Existing Debt" has the meaning specified in Section 4.01(y).
"Extraordinary Receipt" means any cash received by or paid to
or for the account of any Person in the form of proceeds of insurance
(other than proceeds of business interruption insurance to the extent
such proceeds constitute compensation for lost earnings or proceeds of
liability insurance), condemnation awards (and payments in lieu
thereof), and litigation settlements, other recoveries and indemnity
payments in respect of any loss or damage to equipment, fixed assets or
property, in each case, in excess of $10,000,000 for each such
Extraordinary Receipt or $30,000,000 in the aggregate for all such
Extraordinary Receipts received during the term of the Facilities;
provided, however, that an Extraordinary Receipt shall not include cash
receipts received from proceeds of insurance, condemnation awards (or
payments in lieu thereof), litigation settlements, other recoveries or
indemnity payments to the extent that such proceeds, awards or payments
(A) in respect of loss or damage to equipment, fixed assets or real
property are applied (or in respect of which expenditures were
previously incurred) to replace or repair the equipment, fixed assets
or real property in respect of which such proceeds were received, so
long as such application is made within 12 months after the occurrence
of such damage or loss, (B) are received by any Person in respect of
any third party claim against such Person and applied to pay (or to
reimburse such Person for its prior payment of) such claim and the
costs and expenses of such Person with respect thereto or (C) are
received by such Person in respect of any litigation settlements or
other receivables or awards in respect of collection by such Person of
accounts receivables due under service or management contracts.
"Facility" means the Term Facility, the Revolving Credit
Facility or the Letter of Credit Facility.
"Federal Funds Rate" means, for any day, the rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published 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 that is a Business Day, the average of the
quotations for such day for such transactions received by the
Administrative Agent from three Federal funds brokers of recognized
standing selected by it.
"Fiscal Quarter" has the meaning specified in Section 1.03(b).
"Fiscal Year" means the fiscal accounting period of 52 or 53
weeks of the Parent Guarantor and its Consolidated Subsidiaries ending
closest to December 31 or, if the Parent Guarantor changes its fiscal
year to "August 31", closest to August 31 in any calendar year.
"Foodservice Business" means the businesses conducted by the
Parent Guarantor and its Affiliates which consist of (i) providing food
and facilities management services to businesses and industrial
operations, health care facilities, schools and universities, (ii)
providing commercial laundry services, (iii) managing the Retained
Conference Centers (as defined in the Distribution Agreement) and
(iv) business undertaken pursuant to the NANA Joint Ventures (as
defined in the Distribution Agreement), each of the foregoing as and to
the extent conducted through the Parent Guarantor's Marriott Management
Services strategic business unit (referred to in the Distribution
Agreement).
"Funding Date" means the date on which the Initial Extension
of Credit occurs following satisfaction of all of the conditions
precedent set forth in Section 3.02 but in no event later than June 30,
1998.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, applied on a basis
consistent (except for changes concurred in by the Parent Guarantor's
independent public accountants) with the most recent audited
consolidated financial statements of the Parent Guarantor and its
Consolidated Subsidiaries delivered to the Lenders.
"Group of Advances" means, at any time, a group of Advances
consisting of (i) all Advances under the same Facility which are Base
Rate Advances at such time, (ii) all Eurodollar Rate Advances under the
same Facility and having the same Interest Period at such time,
provided that, if an Advance of any particular Lender is Converted to
or made as a Base Rate Advance pursuant to Section 2.10 or 2.17, such
Advance shall be included in the same Group or Groups of Advances from
time to time as it would have been in if it had not been so Converted
or made.
"Guaranteed Senior Debt" means the Debt under the Guaranteed
Senior Debt Credit Agreement or any replacement thereof (including,
without limitation, Debt incurred on the Funding Date in place of the
incurrence of Debt under the Guaranteed Senior Debt Credit Agreement)
as permitted by Section 6.07.
"Guaranteed Senior Debt Credit Agreement" means the
$620,000,000 Credit Agreement dated as of the date hereof among the
Parent Guarantor, the lenders party thereto, Morgan, as Documentation
Agent, and Societe Generale, as Administrative Agent (as the same may
be amended, supplemented or otherwise modified from time to time in
accordance with its terms).
"Guaranteed Senior Debt Documents" means the Guaranteed Senior
Debt Credit Agreement, together with the Note and the Guaranty (each as
defined therein) executed in connection therewith.
"Guarantees" means the Subsidiary Guaranty specified in
Section 3.02(k)(xiii) and the Parent Guaranty contained in Section
6.01.
"Guarantors" means the Parent Guarantor and the Subsidiary
Guarantors.
"Hazardous Materials" means (a) petroleum or petroleum
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials, polychlorinated biphenyls and radon gas
and (b) any other chemicals, materials or substances designated,
classified or regulated as hazardous or toxic or as a pollutant or
contaminant under any Environmental Law.
"Hedge Agreements" means interest rate swap, cap or collar
agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts and other similar
agreements.
"Hybrid Capital Stock" means, with respect to any Person,
capital stock of such Person, the dividends in respect of which are
deductible by such Person for United States federal income tax
purposes.
"ICC" has the meaning specified in Preliminary Statement (1).
"Indemnified Consent Exposure" means the exposure resulting
from the absence of certain third-party consents and approvals required
with respect to the Transaction that is indemnified by New Marriott
pursuant to the Distribution Agreement.
"Indemnified Party" has the meaning specified in Section
9.04(b).
"Indemnity Support Agreement" means the Indemnity Support
Agreement referred to in the Consents Side Letter, between the Parent
Guarantor and New Marriott in connection with the indemnification of
the Parent Guarantor for the Indemnified Consent Exposure.
"Information Memorandum" means the information memorandum
dated December, 1997 used by the Arrangers in connection with the
syndication of the Commitments.
"Initial Extension of Credit" means the earlier to occur of
the initial Borrowing and the initial issuance of a Letter of Credit
hereunder.
"Initial Issuing Banks" has the meaning specified in the
recital of parties to this Agreement.
"Initial Lenders" has the meaning specified in the recital of
parties to this Agreement.
"Insufficiency" means, with respect to any Plan, the amount,
if any, of its unfunded benefit liabilities, as defined in Section
4001(a)(18) of ERISA.
"Integration Costs" means costs incurred in connection with
the combination of the businesses of MMS, ICC, Sodexho Canada, MMS
Canada and their respective Subsidiaries and Affiliates.
"Interest Period" means, for each Eurodollar Rate Advance, the
period commencing on the date of borrowing specified in the applicable
Notice of Borrowing or the date specified in the applicable Notice of
Interest Rate Election and ending one, two, three, six, or, to the
extent available to each Lender, nine or twelve months thereafter, as
the Borrower may elect in such Notice; provided, however, that:
(a) the first Interest Period in respect of any Term
Advances that are Eurodollar Rate Advances shall end on the
last Business Day of the first, second, third, sixth or, to
the extent available to each Lender, ninth or twelfth,
calendar month after the month in which such Term Advance was
made, as elected by the Borrower in the applicable Notice of
Borrowing;
(b) whenever the last day of any Interest Period
would otherwise occur on a day other than a Business Day, the
last day of such Interest Period shall be extended to occur on
the next succeeding Business Day, provided, however, that, if
such extension would cause the last day of such Interest
Period to occur in the next following calendar month, the last
day of such Interest Period shall occur on the next preceding
Business Day; and
(c) whenever the first day of any Interest Period
occurs on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the
calendar month that succeeds such initial calendar month by
the number of months equal to the number of months in such
Interest Period), such Interest Period shall end on the last
Business Day of such succeeding calendar month.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"Inventory" means all Inventory referred to in Section 1 of
the Security Agreement.
"Investment" in any Person means any loan or advance to such
Person, any purchase or other acquisition of any capital stock or other
ownership or profit interest, warrants, rights, options, obligations or
other securities of such Person, any capital contribution to such
Person or any other investment in such Person, including, without
limitation, any arrangement pursuant to which the investor incurs Debt
of the types referred to in clause (f) or (g) of the definition of
"Debt" in respect of such Person, but excluding any demand deposit
maintained with any Person.
"Issuing Bank" means any Initial Issuing Bank, each Eligible
Assignee to which a Letter of Credit Commitment hereunder has been
assigned pursuant to Section 9.07 and any other Lender that shall, at
the request of the Borrower, agree to become an Issuing Bank hereunder,
with the consent of the Administrative Agent, which consent shall not
be unreasonably withheld or delayed.
"L/C Related Documents" has the meaning specified in Section
2.04(c)(ii).
"Lender Party" means any Lender or any Issuing Bank.
"Lenders" means the Initial Lenders and each Person that shall
become a Lender hereunder pursuant to Section 9.07.
"Letter of Credit" has the meaning specified in Section
2.01(c).
"Letter of Credit Advance" means an advance made by any
Issuing Bank pursuant to Section 2.03(c).
"Letter of Credit Agreement" has the meaning specified in
Section 2.03(a).
"Letter of Credit Commitment" means, with respect to any
Issuing Bank at any time, such Issuing Bank's commitment to issue
Letters of Credit pursuant to Section 2.01(c).
"Letter of Credit Facility" means the facility provided by the
Issuing Banks hereunder for the issuance of Letters of Credit for the
account of the Parent Guarantor and its Subsidiaries, as provided
herein.
"Letter of Credit Facility Amount" means, at any time, the
lesser of (a) $100,000,000 and (b) the aggregate Revolving Credit
Commitments of all Revolving Credit Lenders at such time.
"Leverage Ratio" means, as of the last day of any Fiscal
Quarter of the Parent Guarantor, the ratio of Consolidated Debt as at
such day to Consolidated EBITDA for the period of four consecutive
Fiscal Quarters of the Parent Guarantor ending on such day.
"Lien" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance
on title to real property.
"Loan Documents" means this Agreement, the Notes, the
Guarantees, the Collateral Documents, each Letter of Credit Agreement
and the agreement related to the fees referred to in Section 2.08, in
each case as amended or otherwise modified from time to time.
"Loan Parties" means the Borrower and the Guarantors.
"LYONs" means the Liquid Yield Option Notes due 2011 of the
Parent Guarantor issued pursuant to the Indenture dated as of March 25,
1996 between the Parent Guarantor and The Bank of New York, as
indenture trustee, together with all supplemental indentures executed
thereunder.
"LYONs Allocation Agreement" means the LYONs Allocation
Agreement to be entered into by the Parent Guarantor, New Marriott and
Sodexho substantially in the form of the draft dated December 8, 1997.
"Margin Stock" has the meaning specified in Regulation U.
"Marriott Bond Tender Period" has the meaning specified in
Section 2.01(a).
"Marriott Bonds" means (i) the notes in the principal amount
of $600,000,000 issued pursuant to the Indenture dated as of December
1, 1993 between the Parent Guarantor and Chemical Bank, as trustee, and
(ii) the notes in the principal amount of $120,000,000 issued pursuant
to the Indenture dated as of October 1, 1995 among RHG Finance, as
issuer, Renaissance Hotel Group N.V., as guarantor, the Parent
Guarantor, as additional guarantor, and the First National Bank of
Chicago, as indenture trustee, in each case, as amended from time to
time.
"Material Adverse Change" means any material adverse change in
the business, financial condition, results of operations or prospects
of the Borrower and its Subsidiaries taken as a whole or the Parent
Guarantor and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on
(a) the business, financial condition, results of operations or
prospects of the Borrower and its Subsidiaries taken as a whole or the
Parent Guarantor and its Subsidiaries taken as a whole, (b) the rights
and remedies of the Administrative Agent and the Lenders under any Loan
Document or (c) the ability of any Loan Party to perform its
Obligations under any Loan Document to which it is or is to be a party.
"Material Contract" means, with respect to any Person, each
contract to which such Person is a party involving aggregate
consideration payable to or by such Person of an amount equal to not
less than 2% of Consolidated sales of the Parent Guarantor and its
Subsidiaries in any year or otherwise material to the business,
financial condition or results of operations of such Person.
"Merger" has the meaning specified in Preliminary Statement
(1).
"Merger Agreement" means the Agreement and Plan of Merger
dated as of September 30, 1997 among the Parent Guarantor, Merger
Corp., New Marriott, ICC and Sodexho, as amended by the Amendment
Agreement.
"Merger Corp." means Marriott-ICC Merger Corp., a Delaware
corporation.
"MMS" means Marriott Management Services Corp., a New York
corporation.
"MMS Canada" has the meaning specified in Preliminary
Statement (2).
"Moody's" means Moody's Investors Service, Inc.
"Morgan" has the meaning specified in the recital of parties
to this Agreement.
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA which is a defined benefit plan within the
meaning of Section 3(35) of ERISA, to which any Loan Party or any ERISA
Affiliate is making or accruing an obligation to make contributions, or
has within any of the preceding five plan years made or accrued an
obligation to make contributions.
"Multiple Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
employees of any Loan Party or any ERISA Affiliate and at least one
Person other than the Loan Parties and the ERISA Affiliates or (b) was
so maintained and in respect of which any Loan Party or any ERISA
Affiliate could have liability under Section 4064 or 4069 of ERISA in
the event such plan has been or were to be terminated.
"Net Cash Proceeds" means, with respect to any sale, lease,
transfer or other disposition of any business or fixed or capital asset
or the sale or issuance of any capital stock or other ownership or
profit interest, or any warrants, rights, options or other securities
to acquire capital stock or other ownership or profit interest by any
Person, or any Extraordinary Receipt received by or paid to or for the
account of any Person, the aggregate amount of cash received from time
to time (whether as initial consideration or through payment or
disposition of deferred consideration) by or on behalf of such Person
in connection with such transaction after deducting therefrom (without
duplication) (a) brokerage commissions, underwriting fees and
discounts, legal fees, finder's fees and other similar fees and
commissions and (b) the amount of taxes payable in connection with or
as a result of such transaction and (c) the amount of any Debt secured
by a Lien on such asset that, by the terms of such transaction or Debt,
is required to be repaid upon such disposition, in each case under this
clause (c) to the extent, but only to the extent, that the amounts so
deducted are actually paid to a Person that is not a Loan Party and are
properly attributable to such transaction or to the asset that is the
subject thereof, provided that any such payment made to an Affiliate of
any Loan Party shall be reasonable and customary.
"New Marriott" means New Marriott MI, Inc., a Delaware
corporation (to be renamed Marriott International, Inc. after the
Spinoff).
"Note" means a Term Note or a Revolving Credit Note.
"Notice of Borrowing" has the meaning specified in Section
2.02(a).
"Notice of Interest Rate Election" has the meaning specified
in Section 2.09.
"NPL" means the National Priorities List under CERCLA.
"Obligation" means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind, including,
without limitation, any liability of such Person on any claim, whether
or not the right of any creditor to payment in respect of such claim is
reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, disputed, undisputed, legal, equitable, secured or unsecured,
and whether or not such claim is discharged, stayed or otherwise
affected by any proceeding referred to in Section 7.01(f). Without
limiting the generality of the foregoing, the Obligations of the Loan
Parties under the Loan Documents include (a) the obligation to pay
principal, interest, Letter of Credit commissions, charges, expenses,
fees, attorneys' fees and disbursements, indemnities and other amounts
payable by any Loan Party under any Loan Document and (b) the
obligation of any Loan Party to reimburse any amount in respect of any
of the foregoing that any Lender Party, in its sole discretion, may
elect to pay or advance on behalf of such Loan Party.
"Omnibus Restructuring Agreement" means the Omnibus
Restructuring Agreement dated as of September 30, 1997 among the Parent
Guarantor, Merger Corp., New Marriott, ICC and Sodexho, as amended by
the Amendment Agreement.
"Other Taxes" has the meaning specified in Section 2.12(b).
"Parent Guarantor" has the meaning specified in Preliminary
Statement (1).
"Parent Guaranty" has the meaning specified in Section 6.01.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor).
"Permitted Liens" means each of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding
shall have been commenced: (a) Liens for taxes, assessments and
governmental charges or levies to the extent not required to be paid
under Section 5.01(b) hereof; (b) Liens imposed by law, such as
materialmen's, mechanics', carriers', workmen's and repairmen's Liens
and other similar Liens arising in the ordinary course of business
securing obligations that are not overdue for a period of more than 30
days; (c) pledges or deposits to secure obligations under workers'
compensation laws or similar legislation or to secure public or
statutory obligations; (d) easements, rights of way and other
encumbrances on title to real property that do not render title to the
property encumbered thereby unmarketable or materially adversely affect
the use of such property for its present purposes; (e) Liens in respect
of judgments not constituting an Event of Default under Section
7.01(g); and (f) Liens on inventory or equipment arising under Article
2 of the Uniform Commercial Code or any similar provision of applicable
law securing payment of the purchase price of such inventory or
equipment, provided that such Lien does not extend to any asset other
than such inventory and equipment and the obligation to pay such
purchase price does not constitute Debt and, provided further that no
Loan Party shall have executed a Uniform Commercial Code financing
statement (Form UCC-1 or a comparable form) in connection with any such
Lien on inventory.
"Person" means an individual, partnership, corporation
(including a business trust), limited liability company, joint stock
company, trust, unincorporated association, joint venture or other
entity, or a government or any political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer
Plan.
"Pledge Agreement" has the meaning specified in Section
3.02(k)(xiv).
"Procurement Contracts" means procurement agreements related
to inventory, equipment, supplies and information systems between the
Parent Guarantor and parties that are not Affiliates of the Borrower.
"Procurement Contracts Agreement" means the agreement to be
entered into by the Borrower and the Parent Guarantor in respect of
payments to be made by the Borrower on behalf of the Parent Guarantor
under, or to reimburse the Parent Guarantor for payments made by it
under, the Procurement Contracts.
"Pro Rata Share" of any amount means, with respect to any
Revolving Credit Lender at any time, the product of such amount times a
fraction the numerator of which is the amount of such Lender's
Revolving Credit Commitment at such time and the denominator of which
is the Revolving Credit Facility at such time.
"Proxy Statement" means the Notice of Special Meeting of
Stockholders and related Preliminary Proxy Statement filed with the
Securities and Exchange Commission on January 12, 1998 by the Parent
Guarantor and all related documents, schedules, annexes and attachments
filed therewith.
"Redeemable" means, with respect to any capital stock or other
ownership or profit interest, Debt or other right or Obligation, any
such right or Obligation that (a) the issuer has undertaken to redeem
at a fixed or determinable date or dates, whether by operation of a
sinking fund or otherwise, or upon the occurrence of a condition not
solely within the control of the issuer or (b) is redeemable at the
option of the holder.
"Register" has the meaning specified in Section 9.07(d).
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Related Documents" means the Transaction Documents, the
Guaranteed Senior Debt Documents and the Tax Agreement.
"Required Lenders" means at any time Lenders owed or holding
at least 51% of the sum of (a) the aggregate principal amount of the
Advances outstanding at such time, (b) the aggregate Available Amount
of all Letters of Credit outstanding at such time, (c) the aggregate
unused Commitments under the Term Facilities at such time and (d) the
aggregate Unused Revolving Credit Commitments at such time; provided,
however, that if any Lender shall be a Defaulting Lender at such time,
there shall be excluded from the determination of Required Lenders at
such time (A) the aggregate principal amount of the Advances owing to
such Lender (in its capacity as a Lender) and outstanding at such time,
(B) such Lender's Pro Rata Share of the aggregate Available Amount of
all Letters of Credit outstanding at such time, (C) the aggregate
unused Term Commitments of such Lender at such time and (D) the Unused
Revolving Credit Commitment of such Lender at such time. For purposes
of this definition, each Revolving Credit Lender shall be deemed to
hold its Pro Rata Share of the aggregate principal amount of Letter of
Credit Advances owing to any Issuing Bank and the Available Amount of
each Letter of Credit.
"Requisite Lenders" means at any time Lenders owed or holding
at least 66-2/3% of the sum of (a) the aggregate principal amount of
the Advances outstanding at such time, (b) the aggregate Available
Amount of all Letters of Credit outstanding at such time, (c) the
aggregate unused Commitments under the Term Facilities at such time and
(d) the aggregate Unused Revolving Credit Commitments at such time;
provided, however, that if any Lender shall be a Defaulting Lender at
such time, there shall be excluded from the determination of Requisite
Lenders at such time (A) the aggregate principal amount of the Advances
owing to such Lender (in its capacity as a Lender) and outstanding at
such time, (B) such Lender's Pro Rata Share of the aggregate Available
Amount of all Letters of Credit outstanding at such time, (C) the
aggregate unused Term Commitments of such Lender at such time and (D)
the Unused Revolving Credit Commitment of such Lender at such time. For
purposes of this definition, each Revolving Credit Lender shall be
deemed to hold its Pro Rata Share of the aggregate principal amount of
Letter of Credit Advances owing to any Issuing Bank and the Available
Amount of each Letter of Credit.
"Responsible Officer" means, with respect to any Loan Party,
any executive officer of such Loan Party.
"Retained Marriott Bonds" means any Marriott Bonds that, on
the last day of the Marriott Bond Tender Period, shall not have been
tendered and that are retained as obligations of the Parent Guarantor.
"Revolving Credit Advance" has the meaning specified in
Section 2.01(b).
"Revolving Credit Borrowing" means a borrowing consisting of
simultaneous Revolving Credit Advances of the same Type made by the
Revolving Credit Lenders.
"Revolving Credit Commitment" means, with respect to any
Revolving Credit Lender at any time, the amount set forth opposite such
Revolving Credit Lender's name on Schedule I hereto under the caption
"Revolving Credit Commitment" or, if such Revolving Credit Lender has
entered into one or more Assignments and Acceptances, set forth for
such Revolving Credit Lender in the Register maintained by the
Administrative Agent pursuant to Section 9.07(d) as such Revolving
Credit Lender's "Revolving Credit Commitment," as such amount may be
reduced at or prior to such time pursuant to Section 2.05.
"Revolving Credit Facility" means the facility provided by the
Revolving Credit Lenders and the Issuing Banks hereunder for the making
of Revolving Credit Advances to the Borrower, and the issuance of
Letters of Credit for the account of the Parent Guarantor and its
Subsidiaries, as provided herein.
"Revolving Credit Lender" means any Lender that has a
Revolving Credit Commitment.
"Revolving Credit Note" means a promissory note of the
Borrower payable to the order of any Revolving Credit Lender, in
substantially the form of Exhibit A-2 hereto, evidencing the aggregate
indebtedness of the Borrower to such Revolving Credit Lender resulting
from the Revolving Credit Advances made by such Revolving Credit
Lender.
"S&P" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc.
"Scheduled Amortization Payments" means, for any period, all
scheduled payments of principal made or required to be made in cash by
the Parent Guarantor and its Subsidiaries during such period,
determined on a Consolidated basis in accordance with GAAP.
"Secured Obligations" has the meaning specified in the
Security Agreement.
"Secured Parties" means the Administrative Agent, the
Arrangers, the Lender Parties and the other Persons the Obligations
owing to which are or are purported to be secured by the Collateral
under the terms of the Collateral Documents.
"Security Agreement" has the meaning specified in Section
3.02(k)(viii).
"Shareholders' Equity" means common stock, additional paid-in
capital, retained earnings and treasury stock of the Parent Guarantor
and its Subsidiaries on a Consolidated basis.
"Single Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
employees of any Loan Party or any ERISA Affiliate and no Person other
than the Loan Parties and the ERISA Affiliates or (b) was so maintained
and in respect of which any Loan Party or any ERISA Affiliate could
have liability under Section 4069 of ERISA in the event such plan has
been or were to be terminated.
"Societe Generale" has the meaning specified in the recital of
parties to this Agreement.
"Sodexho" means Sodexho Alliance, S.A., a societe anonyme
organized under the laws of France, and its successors.
"Sodexho Canada" has the meaning specified in Preliminary
Statement (1).
"Solvent" and "Solvency" mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property
of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person,
(b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that
it will, incur debts or liabilities beyond such Person's ability to pay
such debts and liabilities as they mature and (d) such Person is not
engaged in business or a transaction, and is not about to engage in
business or a transaction, for which such Person's property would
constitute an unreasonably small capital. The amount of contingent
liabilities at any time shall be computed as the amount that, in the
light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an
actual or matured liability.
"Spinoff" has the meaning specified in Preliminary Statement
(1).
"Subsidiary" of any Person means any corporation, partnership,
joint venture, limited liability company, trust or estate of which (or
in which) more than 50% of the issued and outstanding capital stock or
other ownership interests having ordinary voting power to elect a
majority of the Board of Directors or other persons performing similar
functions (irrespective of whether at the time capital stock or other
ownership interests of any other class or classes shall or might have
voting power upon the occurrence of any contingency) is at the time
directly or indirectly owned or controlled by such Person, by such
Person and one or more of its other Subsidiaries or by one or more of
such Person's other Subsidiaries. Except as otherwise expressly
provided herein, neither New Marriott nor any Person that is, will be
or will become a Subsidiary of New Marriott upon the consummation of
the Transaction shall be a Subsidiary of the Borrower or Parent
Guarantor for any purpose under this Agreement.
"Subsidiary Contribution" has the meaning specified in
Preliminary Statement (2).
"Subsidiary Guarantors" means each of ICC, MMS, Gardner
Merchant Holdings, Inc., a Delaware corporation, Sodexho Services,
Inc., a Connecticut corporation, Sodexho USA, Inc., a Massachusetts
corporation, Marriott Laundry Services, Inc., a Delaware corporation,
and at any time and from time to time each other Subsidiary of the
Borrower that becomes a Subsidiary Guarantor pursuant to Section
5.01(l) of this Agreement.
"Subsidiary Guaranty" has the meaning specified in Section
3.02(k)(xiii).
"Substantial Subsidiary" means, on any date, each Subsidiary
Guarantor and any other Subsidiary of the Borrower (i) whose revenues
for the four Fiscal Quarters of the Borrower most recently ended on or
prior to such date equaled or exceeded 2% of the Consolidated revenues
of the Parent Guarantor and its Subsidiaries for such period or (ii)
whose assets as of such date equaled or exceeded 2% of the Consolidated
assets of the Parent Guarantor and its Subsidiaries as of such date.
"Tax Agreement" means the Tax Sharing and Indemnification
Agreement to be entered into by the Parent Guarantor, New Marriott and
Sodexho in respect of certain tax matters in connection with the
Transaction.
"Taxes" has the meaning specified in Section 2.12(a).
"Term Advance" has the meaning specified in Section 2.01(a).
"Term Borrowing" means a borrowing consisting of simultaneous
Term Advances of the same Type made by the Term Lenders.
"Term Commitment" means, with respect to any Term Lender at
any time, the amount set forth opposite such Term Lender's name on
Schedule I hereto under the caption "Term Commitment" or, if such Term
Lender has entered into one or more Assignments and Acceptances, set
forth for such Term Lender in the Register maintained by the
Administrative Agent pursuant to Section 9.07(d) as such Term Lender's
"Term Commitment," as such amount may be reduced at or prior to such
time pursuant to Section 2.05.
"Term Facility" means the facility provided by the Term
Lenders hereunder for the making of Term Advances to the Borrower as
provided herein.
"Term Lender" means any Lender that has a Term Commitment.
"Term Note" means a promissory note of the Borrower payable to
the order of any Term Lender, in substantially the form of Exhibit A-1
hereto, evidencing the indebtedness of the Borrower to such Term Lender
resulting from the Term Advance made by such Term Lender.
"Termination Date" means the earlier of (i) the sixth
anniversary of the Funding Date and (ii) the date of termination in
whole of the Term Commitments, the Revolving Credit Commitments and the
Letter of Credit Commitments pursuant to Section 2.05 or 7.01.
"Transaction" has the meaning specified in Preliminary
Statement (2).
"Transaction Documents" means the Merger Agreement, the
Distribution Agreement, the Omnibus Restructuring Agreement, the
Consents Side Letter and the Indemnity Support Agreement (but only if
and to the extent required to be entered into pursuant to the Consents
Side Letter).
"Type" refers to the distinction between Advances bearing
interest at the Base Rate and Advances bearing interest at a Eurodollar
Rate.
"Unused Letter of Credit Facility Amount" means, at any time,
the Letter of Credit Facility Amount at such time minus the sum of the
aggregate Available Amount of all Letters of Credit outstanding at such
time and the aggregate principal amount of all Letter of Credit
Advances outstanding at such time.
"Unused Revolving Credit Commitment" means, with respect to
any Revolving Credit Lender at any time, such Lender's Revolving Credit
Commitment at such time minus the sum of (i) the aggregate principal
amount of all Revolving Credit Advances and Letter of Credit Advances
made by such Lender (in its capacity as a Lender) and outstanding at
such time plus (ii) such Lender's Pro Rata Share of (A) the aggregate
Available Amount of all Letters of Credit outstanding at such time and
(B) the aggregate principal amount of all Letter of Credit Advances
made by the Issuing Banks and outstanding at such time.
"Unused Term Commitment" means, with respect to any Term
Lender at any time, such Term Lender's Term Commitment at such time
minus the aggregate principal amount of all Term Advances made by such
Term Lender at or prior to such time, whether or not any such Term
Advance remains outstanding at such time.
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the
happening of such a contingency.
"Welfare Plan" means a welfare plan, as defined in Section
3(1) of ERISA, that is maintained for employees of any Loan Party or in
respect of which any Loan Party could have liability.
"Withdrawal Liability" has the meaning specified in Part I of
Subtitle E of Title IV of ERISA.
SECTION 1.02. Computation of Time Periods. In this Agreement
in the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each mean "to but excluding."
SECTION 1.03. Accounting Terms and Determinations. (a) Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP; provided that, if the Borrower notifies the Administrative
Agent that the Borrower wishes to amend any provision hereof to eliminate the
effect of any change in GAAP (or if the Administrative Agent notifies the
Borrower that the Required Lenders wish to amend any provision hereof for such
purpose), then such provision shall be applied on the basis of GAAP in effect
immediately before the relevant change in GAAP became effective, until either
such notice is withdrawn or such provision is amended in a manner satisfactory
to the Borrower and the Required Lenders.
(b) For all purposes of this Agreement, including the
computation of the financial covenants set forth in Section 5.04, the term
"Fiscal Quarter" with respect to any Loan Party shall mean the three-month
fiscal period of such Loan Party ending nearest to the last day of each
November, February, May and August.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
SECTION 2.01. The Advances. (a) The Term Advances. Each Term
Lender severally agrees, on the terms and conditions hereinafter set forth, to
make one or more advances (each a "Term Advance") to the Borrower from time to
time on any Business Day during the period from the Funding Date until December
31, 1998 (the "Marriott Bond Tender Period") in an amount for each such Advance
not to exceed such Lender's Unused Term Commitment at such time. Each Term
Borrowing shall be in an aggregate amount of at least $5,000,000 and shall
consist of Term Advances made simultaneously by the Term Lenders ratably
according to their Term Commitments. Amounts borrowed under this Section 2.01(a)
and repaid or prepaid may not be reborrowed.
(b) The Revolving Credit Advances. Each Revolving Credit
Lender severally agrees, on the terms and conditions hereinafter set forth, to
make advances (each a "Revolving Credit Advance") to the Borrower from time to
time on any Business Day during the period from the Funding Date until the
Termination Date in an amount for each such Advance not to exceed such Lender's
Unused Revolving Credit Commitment at such time. Each Revolving Credit Borrowing
shall be in an aggregate amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof (other than a Borrowing the proceeds of which shall
be used solely to repay or prepay in full outstanding Letter of Credit Advances)
and shall consist of Revolving Credit Advances made simultaneously by the
Revolving Credit Lenders ratably according to their Revolving Credit
Commitments. Within the limits of each Revolving Credit Lender's Unused
Revolving Credit Commitment in effect from time to time, the Borrower may borrow
under this Section 2.01(b), prepay pursuant to Section 2.06(a) and reborrow
under this Section 2.01(b).
(c) Letters of Credit. Each Issuing Bank severally agrees, on
the terms and conditions hereinafter set forth, to issue letters of credit (the
"Letters of Credit") for the account of the Borrower and in the name of the
Parent Guarantor or any of its Subsidiaries from time to time on any Business
Day during the period from the Funding Date until 5 days before the Termination
Date in an Available Amount for each such Letter of Credit not to exceed the
lesser of (x) the Unused Letter of Credit Facility Amount at such time and (y)
the Unused Revolving Credit Commitments of the Revolving Credit Lenders at such
time. No Letter of Credit shall have an expiration date (including all rights of
the Borrower or the beneficiary to require renewal) later than the earlier of
the Termination Date and one year after the date of issuance thereof, but may by
its terms be renewable annually either (i) upon notice (a "Notice of Renewal")
given to the Issuing Bank that issued such Letter of Credit and the
Administrative Agent on or prior to any date for notice of renewal set forth in
such Letter of Credit but in any event at least three Business Days prior to the
date of the proposed renewal of such Letter of Credit and upon fulfillment of
the applicable conditions set forth in Article III or (ii) automatically unless
such Issuing Bank has notified the beneficiary of such Letter of Credit (with a
copy to the Borrower and the Administrative Agent) on or prior to the date for
notice of termination set forth in such Letter of Credit but in any event at
least 30 Business Days prior to the date of automatic renewal of its election
not to renew such Letter of Credit (a "Notice of Termination"); provided that
(i) the applicable Issuing Bank shall not give a Notice of Termination unless
(x) such Issuing Bank has assigned its entire Letter of Credit Commitment to an
Eligible Assignee pursuant to Section 9.07(f) or (y) the applicable conditions
set forth in Article III are not satisfied at such time and (ii) the terms of
each Letter of Credit that is automatically renewable annually shall (x) require
the Issuing Bank that issued such Letter of Credit to give the beneficiary named
in such Letter of Credit notice of any Notice of Termination, (y) permit such
beneficiary, upon receipt of such notice, to draw under such Letter of Credit
prior to the date such Letter of Credit otherwise would have been automatically
renewed or terminated and (z) not permit the expiration date (after giving
effect to any renewal) of such Letter of Credit in any event to be extended to a
date later than the Termination Date. If either a Notice of Renewal is not given
by the Borrower or a Notice of Termination is given by the relevant Issuing Bank
pursuant to the immediately preceding sentence, such Letter of Credit shall
expire on the date on which it otherwise would have been automatically renewed;
provided, however, that even in the absence of receipt of a Notice of Renewal
the relevant Issuing Bank may in its discretion, unless instructed to the
contrary by the Administrative Agent or the Borrower, deem that a Notice of
Renewal had been timely delivered and in such case, a Notice of Renewal shall be
deemed to have been so delivered for all purposes under this Agreement. Within
the limits of the Letter of Credit Facility, and subject to the limits referred
to above, the Borrower may request the issuance of Letters of Credit under this
Section 2.01(c), repay any Letter of Credit Advances resulting from drawings
thereunder pursuant to Section 2.03(c) and request the issuance of additional
Letters of Credit under this Section 2.01(c).
SECTION 2.02. Making the Advances. (a) Each Borrowing shall be
made on notice, given not later than 11:00 A.M. (New York City time) on the
third Business Day prior to the date of the proposed Borrowing in the case of a
Borrowing consisting of Eurodollar Rate Advances, or 10:30 A.M. (New York City
time) on the date of the proposed Borrowing in the case of a Borrowing
consisting of Base Rate Advances, by the Borrower to the Administrative Agent,
which shall give to each Appropriate Lender prompt notice thereof by telephone,
confirmed immediately in writing, or by telecopier. Each such notice of a
Borrowing (a "Notice of Borrowing") shall be by telephone, confirmed immediately
in writing, or telecopier, in substantially the form of Exhibit B hereto,
specifying therein the requested (i) date of such Borrowing, (ii) Facility under
which such Borrowing is to be made, (iii) Type of Advances comprising such
Borrowing, (iv) aggregate amount of such Borrowing and (v) in the case of a
Borrowing consisting of Eurodollar Rate Advances, initial Interest Period for
each such Advance. Each Appropriate Lender shall, before 11:00 A.M. (New York
City time) on the date of such Borrowing, make available for the account of its
Applicable Lending Office to the Administrative Agent at the Administrative
Agent's Account, in same day funds, such Lender's ratable portion of such
Borrowing in accordance with the respective Commitments under the applicable
Facility of such Lender and the other Appropriate Lenders. After the
Administrative Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Administrative Agent will
make such funds available to the Borrower by crediting such account or accounts
as the Borrower shall direct.
(b) Anything in subsection (a) above to the contrary
notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for
any Borrowing if the aggregate amount of such Borrowing is less than $5,000,000
or if the obligation of the Appropriate Lenders to make Eurodollar Rate Advances
shall then be suspended pursuant to Section 2.10(c) and (ii) the Term Advances
may not be outstanding as part of more than four separate Groups of Advances and
the Revolving Credit Advances may not be outstanding as part of more than
fifteen separate Groups of Advances.
(c) Each Notice of Borrowing shall be irrevocable and binding
on the Borrower. In the case of any Borrowing that the related Notice of
Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower
shall, within 15 days after demand, indemnify each Appropriate Lender against
any loss, cost or expense (but excluding loss of margin for any day after the
date specified in the Notice of Borrowing for such Borrowing) incurred by such
Lender as a result of any failure to fulfill on or before the date specified in
such Notice of Borrowing for such Borrowing the applicable conditions set forth
in Article III, including, without limitation, any loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund the Advance to be made by such Lender as part of
such Borrowing when such Advance, as a result of such failure, is not made on
such date, provided that such Lender shall have delivered to the Borrower a
certificate setting forth in reasonable detail the amount of, the basis for and
the calculation of, such loss, cost or expense, which certificate shall be
conclusive in the absence of manifest error.
(d) Unless the Administrative Agent shall have received notice
from an Appropriate Lender prior to the date of any Borrowing under a Facility
under which such Lender has a Commitment that such Lender will not make
available to the Administrative Agent such Lender's ratable portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such Borrowing in
accordance with subsection (a) of this Section 2.02 and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent that such Lender shall not
have so made such ratable portion available to the Administrative Agent, such
Lender and the Borrower severally agree to repay or pay to the Administrative
Agent forthwith on demand such corresponding amount and to pay interest thereon,
for each day from the date such amount is made available to the Borrower until
the date such amount is repaid or paid to the Administrative Agent, at (i) in
the case of the Borrower, the interest rate applicable at such time under
Section 2.07 to Advances comprising such Borrowing and (ii) in the case of such
Lender, the Federal Funds Rate. If such Lender shall pay to the Administrative
Agent such corresponding amount, such amount so paid shall constitute such
Lender's Advance as part of such Borrowing for all purposes.
(e) The failure of any Lender to make the Advance to be made
by it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Advance on the date of such Borrowing,
but no Lender shall be responsible for the failure of any other Lender to make
the Advance to be made by such other Lender on the date of any Borrowing.
SECTION 2.03. Issuance of and Drawings and Reimbursement Under
Letters of Credit. (a) Request for Issuance. Each Letter of Credit shall be
issued upon notice, given not later than 11:00 A.M. (New York City time) on the
fifth Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to any Issuing Bank, which shall give to the
Administrative Agent and each Revolving Credit Lender prompt notice thereof by
telecopier. Each such notice of issuance of a Letter of Credit (a "Notice of
Issuance") shall be by telephone, confirmed immediately in writing, or
telecopier, specifying therein the requested (A) date of such issuance (which
shall be a Business Day), (B) Available Amount of such Letter of Credit, (C)
expiration date of such Letter of Credit, (D) name and address of the
beneficiary of such Letter of Credit and (E) form of such Letter of Credit, and
shall be accompanied by such application and agreement for letter of credit as
such Issuing Bank may specify to the Borrower for use in connection with such
requested Letter of Credit (a "Letter of Credit Agreement"). If the requested
form of such Letter of Credit is acceptable to such Issuing Bank in its sole
discretion including, without limitation, the expiration and renewal provisions
thereof, such Issuing Bank will, upon fulfillment of the applicable conditions
set forth in Article III, make such Letter of Credit available to the Borrower
at its office referred to in Section 9.02 or as otherwise agreed with the
Borrower in connection with such issuance. In the event and to the extent that
the provisions of any Letter of Credit Agreement shall conflict with this
Agreement, the provisions of this Agreement shall govern.
(b) Letter of Credit Reports. Each Issuing Bank shall furnish
(A) to the Administrative Agent on the first Business Day of each week a written
report summarizing issuance and expiration dates of Letters of Credit issued by
such Issuing Bank during the previous week and drawings during such week under
all Letters of Credit issued by such Issuing Bank, (B) to each Revolving Credit
Lender on the first Business Day of each month a written report summarizing
issuance and expiration dates of Letters of Credit issued by such Issuing Bank
during the preceding month and drawings during such month under all Letters of
Credit issued by such Issuing Bank and (C) to the Administrative Agent and each
Revolving Credit Lender on the first Business Day of each calendar quarter a
written report setting forth the average daily aggregate Available Amount during
the preceding calendar quarter of all Letters of Credit issued by such Issuing
Bank.
(c) Drawing and Reimbursement. The payment by any Issuing Bank
of a draft drawn under any Letter of Credit shall constitute for all purposes of
this Agreement the making by such Issuing Bank of a Letter of Credit Advance,
which shall be a Base Rate Advance, in the amount of such draft. Upon written
demand by any Issuing Bank with an outstanding Letter of Credit Advance, with a
copy of such demand to the Administrative Agent, each Revolving Credit Lender
shall purchase from such Issuing Bank, and such Issuing Bank shall sell and
assign to each such Revolving Credit Lender, such Lender's Pro Rata Share of
such outstanding Letter of Credit Advance as of the date of such purchase, by
making available for the account of its Applicable Lending Office to the
Administrative Agent for the account of such Issuing Bank, by deposit to the
Administrative Agent's Account, in same day funds, an amount equal to the
portion of the outstanding principal amount of such Letter of Credit Advance to
be purchased by such Lender. Promptly after receipt thereof, the Administrative
Agent shall transfer such funds to such Issuing Bank. The Borrower hereby agrees
to each such sale and assignment. Each Revolving Credit Lender agrees to
purchase its Pro Rata Share of an outstanding Letter of Credit Advance on (i)
the Business Day on which demand therefor is made by the Issuing Bank which made
such Advance, provided notice of such demand is given not later than 11:00 A.M.
(New York City time) on such Business Day or (ii) the first Business Day next
succeeding such demand if notice of such demand is given after such time. Upon
any such assignment by an Issuing Bank to any other Revolving Credit Lender of a
portion of a Letter of Credit Advance, such Issuing Bank represents and warrants
to such other Lender that such Issuing Bank is the legal and beneficial owner of
such interest being assigned by it, free and clear of any Liens, but makes no
other representation or warranty and assumes no responsibility with respect to
such Letter of Credit Advance, the Loan Documents or any Loan Party. If and to
the extent that any Revolving Credit Lender shall not have so made the amount of
its Pro Rata Share of any such Letter of Credit Advance available to the
Administrative Agent, such Revolving Credit Lender and the Borrower severally
agree to pay to the Administrative Agent for its account or the account of such
Issuing Bank, as applicable, forthwith on demand such amount together with
interest thereon, for each day from the date of demand by such Issuing Bank
until the date such amount is paid to the Administrative Agent, at (i) in the
case of the Borrower, the interest rate applicable at such time to Base Rate
Advances and (ii) in the case of such Lender, the Federal Funds Rate. If such
Lender shall pay to the Administrative Agent such amount for the account of such
Issuing Bank on any Business Day, such amount so paid in respect of principal
shall constitute a Letter of Credit Advance that is a Base Rate Advance made by
such Lender on such Business Day for purposes of this Agreement, and the
outstanding principal amount of the Letter of Credit Advance made by such
Issuing Bank shall be reduced by such amount on such Business Day.
(d) Failure to Make Letter of Credit Advances. The failure of
any Lender to make the Letter of Credit Advance to be made by it on the date
specified in Section 2.03(c) shall not relieve any other Lender of its
obligation hereunder to make its Letter of Credit Advance on such date, but no
Lender shall be responsible for the failure of any other Lender to make the
Letter of Credit Advance to be made by such other Lender on such date.
SECTION 2.04. Repayment of Advances. (a) Term Advances. The
Borrower shall repay to the Administrative Agent for the ratable account of the
Term Lenders the aggregate outstanding principal amount of the Term Advances on
the following dates and in the amounts indicated (which amounts shall be reduced
as a result of the application of prepayments in accordance with the order of
priority set forth in Section 2.06 and as otherwise set forth in this Section
2.04(a)):
Payment Payment
Date Amount Date Amount
---- ------ ---- ------
November 30, 1998 $17,500,000 August 31, 2001 $20,000,000
February 28, 1999 $17,500,000 November 30, 2001 $20,000,000
May 31, 1999 $17,500,000 February 28, 2002 $20,000,000
August 31, 1999 $17,500,000 May 31, 2002 $25,000,000
November 30, 1999 $20,000,000 August 31, 2002 $25,000,000
February 29, 2000 $20,000,000 November 30, 2002 $25,000,000
May 31, 2000 $20,000,000 February 28, 2003 $25,000,000
August 31, 2000 $20,000,000 May 31, 2003 $32,500,000
November 30, 2000 $20,000,000 August 31, 2003 $32,500,000
February 28, 2001 $20,000,000 November 30, 2003 $32,500,000
May 31, 2001 $20,000,000 February 29, 2004 $32,500,000
provided, however, that the final principal installment shall be repaid on the
Termination Date and in any event shall be in an amount equal to the aggregate
principal amount of the Term Advances outstanding on such date, and provided
further that on the last day of the Marriott Bond Tender Period (i) the
principal installments shall be reduced pro rata by the face amount of any
Retained Marriott Bonds Series B, C and D and (ii) the final four scheduled
principal installments shall be reduced pro rata by the face amount of any
Retained Marriott Bonds Series A.
(b) Revolving Credit Advances. The Borrower shall repay to the
Administrative Agent for the ratable account of the Revolving Credit Lenders on
the Termination Date the aggregate outstanding principal amount of the Revolving
Credit Advances then outstanding.
(c) Letter of Credit Advances. (i) The Borrower shall repay to
the Administrative Agent for the account of each Issuing Bank or Revolving
Credit Lender, as the case may be, on the earlier of demand (provided that if
demand is made by any Issuing Bank or Revolving Credit Lender later than 10:00
A.M. (New York City time) on any day, such repayment shall be due on the next
succeeding Business Day) and the Termination Date the outstanding principal
amount of each Letter of Credit Advance made by each of them.
(ii) The Obligations of the Borrower under this Agreement, any
Letter of Credit Agreement and any other agreement or instrument relating to any
Letter of Credit to repay outstanding Letter of Credit Advances shall, to the
fullest extent permitted under applicable law, be unconditional and irrevocable,
and shall be paid strictly in accordance with the terms of this Agreement, such
Letter of Credit Agreement and such other agreement or instrument under all
circumstances, including, without limitation, the following circumstances (it
being understood that any such payment by the Borrower is without prejudice to,
and does not constitute a waiver of, any rights the Borrower might have or might
acquire as a result of the payment by any Issuing Bank of any draft or the
reimbursement by the Borrower thereof):
(A) any lack of validity or enforceability of any Loan
Document, any Letter of Credit Agreement, any Letter of Credit or any
other agreement or instrument relating thereto (all of the foregoing
being, collectively, the "L/C Related Documents");
(B) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations of the Borrower in
respect of any L/C Related Document or any other amendment or waiver of
or any consent to departure from all or any of the L/C Related
Documents;
(C) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary or
any transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), any Issuing Bank or
any other Person, whether in connection with the transactions
contemplated by the L/C Related Documents or any unrelated transaction,
provided that any such claim may be asserted by separate suit or
compulsory counterclaim;
(D) any statement or any other document presented under a
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;
(E) payment by any Issuing Bank under a Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of such Letter of Credit;
(F) any exchange, release or non-perfection of any Collateral
or other collateral, or any release or amendment or waiver of or
consent to departure from the Guarantees or any other guarantee, for
all or any of the Obligations of the Borrower in respect of the L/C
Related Documents; or
(G) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including, without limitation, any
other circumstance that might otherwise constitute a defense available
to, or a discharge of, the Borrower or a guarantor.
SECTION 2.05. Termination or Reduction of the Commitments. (a)
Optional. The Borrower may, upon at least three Business Days' notice to the
Administrative Agent, terminate in whole or reduce in part the unused portions
of the Term Commitments, the Letter of Credit Facility and the Unused Revolving
Credit Commitments; provided, however, that each partial reduction of a Facility
(i) shall be in an aggregate amount of $10,000,000 or an integral multiple of
$5,000,000 in excess thereof and (ii) shall be made ratably among the
Appropriate Lenders in accordance with their Commitments with respect to such
Facility.
(b) Mandatory. (i) The Revolving Credit Commitments shall be
automatically and permanently reduced to zero at the close of business on the
Termination Date.
(ii) At the close of business on the last day of the Marriott
Bond Tender Period, the Term Commitments shall be automatically and permanently
reduced to zero.
(iii) The Letter of Credit Facility Amount shall be
permanently reduced from time to time on the date of each reduction in the
Revolving Credit Commitments by the amount, if any, by which the Letter of
Credit Facility Amount exceeds the aggregate amount of the Revolving Credit
Commitments after giving effect to such reduction of the Revolving Credit
Commitments.
SECTION 2.06. Prepayments. (a) Optional. The Borrower may,
upon same Business Day's notice in the case of Base Rate Advances and three
Business Days' notice in the case of Eurodollar Rate Advances, in each case
given to the Administrative Agent not later than 11:00 A.M. (New York City time)
stating the proposed date and aggregate principal amount of the prepayment, and
if such notice is given the Borrower shall, prepay the outstanding aggregate
principal amount of any Group of Advances in whole or ratably in part, together
with accrued interest to the date of such prepayment on the aggregate principal
amount prepaid; provided, however, that (x) each partial prepayment shall be in
an aggregate principal amount of $10,000,000 or an integral multiple of
$5,000,000 in excess thereof and (y) if any prepayment of a Eurodollar Rate
Advance is made on a date other than the last day of an Interest Period for such
Advance the Borrower shall also pay any amounts owing pursuant to Section
9.04(c). Each such prepayment of any Term Advances shall be applied to the
installments thereof in direct order of maturity.
(b) Mandatory. (i) The Borrower shall, on the last day of the
Marriott Bond Tender Period, prepay one or more Groups of Term Advances in an
aggregate principal amount equal to the excess, if any, of the aggregate
principal amount of all Term Advances then outstanding over an amount equal to
the aggregate Term Commitments on the Closing Date (without regard to any later
reduction or termination thereof) less the aggregate principal amount of
Retained Marriott Bonds then outstanding.
(ii) The Borrower shall, subject to clause (vii) of this
Section 2.06(b), on the date of receipt by any Loan Party of the Net Cash
Proceeds from:
(A) the sale, lease, transfer or other disposition of any
business or fixed or capital assets of the Borrower or any of its
Subsidiaries (other than (i) any sale, lease, transfer or other
disposition of assets pursuant to clauses (i) through (vii) of Section
5.02(e), (ii) any sale, transfer or other disposition of synergy
related assets to the extent such proceeds are reinvested in similar
assets for the purpose of achieving the planned synergy cost savings
and (iii) other sales in an aggregate amount not to exceed $10,000,000
in Net Cash Proceeds in any Fiscal Year of the Borrower and $30,000,000
in Net Cash Proceeds over the term of the Facilities),
(B) the sale or issuance by the Parent Guarantor of any
capital stock or other ownership or profit interest, or any warrants,
rights or options to acquire capital stock or other ownership or profit
interest (other than equity contributions hereafter made by Sodexho to
the Parent Guarantor and stock options or warrants currently
outstanding or hereafter issued pursuant to any stock option, plan or
other compensation arrangement approved by the Borrower's or the Parent
Guarantor's Board of Directors),
(C) any Extraordinary Receipt received by or paid to or for
the account of the Borrower or any of its Subsidiaries and not
otherwise included in clause (A) or (B) above,
prepay, ratably, the Advances in a Group or Groups of Term Advances in an
aggregate principal amount equal to (x) in the case of clause (A) above, 100%,
(y) in the case of clause (B) above, 50% and (z) in the case of clause (C)
above, 70% of the amount of such Net Cash Proceeds. Each such prepayment shall
be applied pro rata to the Term Advances of the several Lenders included in such
Group or Groups and shall reduce pro rata the remaining installments set forth
in Section 2.04(a); provided that, in the case of clause (B) only, no such
prepayment shall be required if the Leverage Ratio is less than 3.0:1.0 as at
the end of each of the immediately preceding two consecutive Fiscal Quarters of
the Borrower or in the event that the senior unsecured non-credit-enhanced Debt
of the Parent Guarantor or the Borrower obtains a rating of Baa3 or higher by
Moody's or BBB- or higher by S&P.
(iii) The Borrower shall, subject to clause (vii) of this
Section 2.06(b), on the tenth day following the date of delivery of the audited
financial statements contemplated by Section 5.03(c), commencing with the four
Fiscal Quarters ended August 1999, prepay ratably, the Advances in a Group or
Groups of Term Advances in an aggregate principal amount equal to fifty percent
(50%) of the Excess Cash Flow in excess of $5,000,000 for such Fiscal Year. Each
such prepayment shall be applied pro rata to the Term Advances of the several
Lenders included in such Group or Groups and shall reduce the remaining
installments set forth in Section 2.04(a) in direct order of maturity; provided
that such prepayment shall not be required if the Leverage Ratio is less than
3.0:1.0 as at the end of each of the immediately preceding two consecutive
Fiscal Quarters of the Borrower or in the event that the senior unsecured
non-credit-enhanced Debt of the Parent Guarantor or the Borrower obtains a
rating of Baa3 or higher by Moody's or BBB- or higher by S&P.
(iv) The Borrower shall, on each Business Day, prepay ratably
the Advances in a Group or Groups of Revolving Credit Advances and/or prepay
Letter of Credit Advances in an aggregate principal amount equal to the amount
by which the sum of the aggregate principal amount of the Revolving Credit
Advances and the Letter of Credit Advances then outstanding plus the aggregate
Available Amount of all Letters of Credit then outstanding exceeds the aggregate
Revolving Credit Facility Commitments on such Business Day.
(v) Prepayments of the Revolving Credit Facility made pursuant
to clause (iv) above shall be first applied to prepay Letter of Credit Advances
then outstanding until such Advances are paid in full and second applied to
prepay Groups of Revolving Credit Advances then outstanding until such Advances
are paid in full.
(vi) All prepayments under this subsection (b) shall be made
together with accrued interest to the date of such prepayment on the principal
amount prepaid.
(vii) If any prepayment pursuant to clause (i) or (ii) above
would otherwise be required to be made on a day on which the aggregate principal
amount of Term Advances that are Base Rate Advances and the aggregate principal
amount of Term Advances that are Eurodollar Rate Advances with Interest Periods
ending on such day is less than the amount of such prepayment, such prepayment
may, at the election of the Borrower, be deferred, but only to the extent of
such shortfall, until the last day of the next ending Interest Period in respect
of Term Advances.
SECTION 2.07. Interest. (a) Scheduled Interest. The Borrower
shall pay interest on the unpaid principal amount of each Advance owing to each
Lender from the date of such Advance until such principal amount shall be paid
in full, at the following rates per annum:
(i) Base Rate Advances. For each day on which such Advance is
a Base Rate Advance, a rate per annum equal to the Base Rate for such
day, payable in arrears quarterly on the last day of each February,
May, August and November during such periods and on the date such Base
Rate Advance shall be Converted or paid in full.
(ii) Eurodollar Rate Advances. During such periods as such
Advance is a Eurodollar Rate Advance, for each day during each Interest
Period applicable thereto a rate per annum equal to the sum of (A) the
Eurodollar Rate for such Interest Period plus (B) the Applicable Margin
for such day, payable in arrears on the last day of such Interest
Period and, if such Interest Period has a duration of more than three
months, on each day that occurs during such Interest Period every three
months from the first day of such Interest Period and on the date such
Eurodollar Rate Advance shall be Converted or paid in full.
(b) Default Interest. The Borrower shall pay interest on (i)
the unpaid principal amount of each Advance owing to each Lender that is not
paid when due and (ii) to the fullest extent permitted by law, the amount of any
interest, fee or other amount payable hereunder that is not paid when due, in
each case, from the date such amount shall be due until such amount shall be
paid in full, payable in arrears on the date such amount shall be paid in full
and on demand, at a rate per annum equal at all times to 2% per annum above the
rate per annum required to be paid, in the case of interest, on the Type of
Advance on which such interest has accrued pursuant to clause (a)(i) or (a)(ii)
above, and, in all other cases, on Base Rate Advances pursuant to clause (a)(i)
above.
(c) Notice of Interest Rate. Promptly after receipt of a
Notice of Borrowing or Notice of Interest Rate Election pursuant to Section
2.02(a) or 2.09(a), the Administrative Agent shall give notice to the
Borrower and each Appropriate Lender of the applicable interest rate determined
by the Administrative Agent for purposes of clause (a)(i) or (a)(ii).
SECTION 2.08. Fees. (a) Commitment Fee. The Borrower shall pay
to the Administrative Agent for the account of the Lenders a commitment fee,
from the Funding Date in the case of each Initial Lender and from the effective
date specified in the Assignment and Acceptance pursuant to which it became a
Lender in the case of each other Lender until the Termination Date, payable in
arrears quarterly on the last Business Day of each February, May, August and
November, commencing on the first such Business Day following the Funding Date,
and on the Termination Date, at the rate of 37.5 basis points per annum
(calculated on the basis of a 360- day year) for each Fiscal Quarter in which
the Leverage Ratio as at the end of the immediately preceding Fiscal Quarter
equals or exceeds 3.0:1.0, and 25 basis points per annum for each Fiscal Quarter
in which the Leverage Ratio as at the end of the immediately preceding Fiscal
Quarter is less than 3.0:1.0, on the sum of the average daily Unused Revolving
Credit Commitment and Unused Term Commitment of each Appropriate Lender;
provided, however, that any commitment fee accrued with respect to any of the
Commitments of a Defaulting Lender during the period prior to the time such
Lender became a Defaulting Lender and unpaid at such time shall not be payable
by the Borrower so long as such Lender shall be a Defaulting Lender except to
the extent that such commitment fee shall otherwise have been due and payable by
the Borrower prior to such time; and provided further that no commitment fee
shall accrue on any of the Commitments of a Defaulting Lender so long as such
Lender shall be a Defaulting Lender.
(b) Ticking Fee. The Borrower shall pay to the Administrative
Agent for the account of the Lenders a ticking fee payable in arrears on the
earlier of the Funding Date and the Termination Date and, in addition, if
neither the Funding Date nor the Termination Date has occurred prior to such
date, on April 30, 1998, (A) for the period commencing February 27, 1998 until
the earliest of (i) the Funding Date, (ii) April 30, 1998 and (iii) the
Termination Date, at the rate of 25 basis points per annum (calculated on the
basis of a 360-day year) on the sum of the aggregate Commitments of each Lender
hereunder and (B) for the period commencing May 1, 1998 until the earlier of (i)
the Funding Date and (ii) the Termination Date, at the rate of 37.5 basis points
per annum (calculated on the basis of a 360-day year) on the sum of the
aggregate Commitments of each Lender hereunder; provided, however, that any
ticking fee accrued with respect to any of the Commitments of a Defaulting
Lender during the period prior to the time such Lender became a Defaulting
Lender and unpaid at such time shall not be payable by the Borrower to such
Defaulting Lender so long as such Lender shall be a Defaulting Lender except to
the extent that such ticking fee shall otherwise have been due and payable by
the Borrower prior to such time; and provided further that no ticking fee shall
accrue on any of the Commitments of a Defaulting Lender so long as such Lender
shall be a Defaulting Lender.
(c) Administrative Agent's Fees. The Borrower shall pay to the
Administrative Agent for its own account such fees as may from time to time be
agreed between the Borrower and the Administrative Agent.
(d) Letter of Credit Fees, Etc. (i) The Borrower shall pay to
the Administrative Agent for the account of each Revolving Credit Lender a
commission, payable quarterly in arrears on the last Business Day of each
February, May, August and November, commencing on the first such Business Day
following the Funding Date and on the Termination Date, on such Lender's Pro
Rata Share of the Available Amount of all Letters of Credit outstanding on each
day in each such period at a per annum rate equal to the Applicable Margin for
Eurodollar Advances in effect for such day.
(ii) The Borrower shall pay to each Issuing Bank, for its own
account, such commissions, issuance fees, fronting fees, transfer fees and other
fees and charges in connection with the issuance or administration of each
Letter of Credit as the Borrower and such Issuing Bank shall agree.
SECTION 2.09. Conversion and Continuation of Advances. (a)
Optional. The Borrower may on any Business Day, upon notice (a "Notice of
Interest Rate Election") given to the Administrative Agent not later than 11:00
A.M. (New York City time) on the third Business Day prior to the date of the
proposed Conversion or continuation and subject to the provisions of Sections
2.07 and 2.10, Convert all or any portion of a Group of Advances into Advances
of the other Type or, in the case of a Group of Eurodollar Rate Advances,
continue such Advances as Eurodollar Rate Advances for an additional Interest
Period; provided, however, that any Conversion of Base Rate Advances into
Eurodollar Rate Advances, and any continuation of Eurodollar Rate Advances for
an additional Interest Period, shall be in an aggregate amount not less than the
minimum amount specified in Section 2.02(b), no Conversion of any Advances shall
result in more separate Groups of Advances than permitted under Section 2.02(b)
and each Conversion or continuation of less than all of the Advances in any
Group of Advances shall apply ratably to the Advances of the respective
Appropriate Lenders included in such Group. Each such Notice of Interest Rate
Election shall, within the restrictions specified above, specify (i) the date of
such Conversion or continuation, (ii) the Advances to be Converted or continued
and (iii) in the case of any such continuation of or Conversion into Eurodollar
Rate Advances, the duration of the initial or next Interest Period for such
Advances. Each Notice of Interest Rate Election shall be irrevocable and binding
on the Borrower.
(b) Mandatory. (i) On the date on which the aggregate unpaid
principal amount of Eurodollar Rate Advances comprising any Group of Eurodollar
Rate Advances shall be reduced, by payment or prepayment or otherwise, to less
than $5,000,000, such Advances shall automatically Convert into Base Rate
Advances.
(ii) If the Borrower shall fail to select the duration of any
Interest Period for any Group of Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Administrative Agent will forthwith so notify the Borrower and the Appropriate
Lenders, whereupon each such Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base Rate
Advance.
SECTION 2.10. Increased Costs, Etc. (a) If, due to either (i)
the introduction, after the date hereof, of or any change in or in the
interpretation of any law or regulation or (ii) the compliance with any
guideline or request issued after the date hereof from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost to any Lender Party of agreeing to make or of making,
funding or maintaining Eurodollar Rate Advances or of agreeing to issue or of
issuing or maintaining Letters of Credit or of agreeing to make or of making or
maintaining Letter of Credit Advances (excluding for purposes of this Section
2.10 any such increased costs resulting from (i) Taxes, Other Taxes or taxes
expressly excluded from the definition of Taxes and Other Taxes (as to which
Section 2.12 shall govern), (ii) changes in the basis of taxation of overall net
income or overall gross income by the United States or by the foreign
jurisdiction or state under the laws of which such Lender Party is organized or
has its Applicable Lending Office or any political subdivision thereof and (iii)
any requirement as to which such Lender is entitled to compensation under
Section 2.16), then the Borrower shall from time to time, within 15 days after
demand by such Lender Party (with a copy of such demand to the Administrative
Agent), accompanied by a certificate of such Lender Party setting forth in
reasonable detail the amount of, the basis for and the calculation of such
additional amounts, pay to the Administrative Agent for the account of such
Lender Party additional amounts sufficient to compensate such Lender Party for
such increased cost; provided, however, that a Lender Party claiming additional
amounts under this Section 2.10(a) agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to designate a
different Applicable Lending Office if the making of such a designation would
avoid the need for, or reduce the amount of, such increased cost that may
thereafter accrue and would not, in the reasonable judgment of such Lender
Party, be otherwise disadvantageous to such Lender Party. A certificate as to
the amount of such increased cost, submitted to the Borrower by such Lender
Party, shall be conclusive and binding for all purposes, absent manifest error.
(b) If any Lender Party determines that the adoption, after
the date hereof, of any law or regulation or compliance with any guideline or
request issued after the date hereof from any central bank or other governmental
authority (whether or not having the force of law) regarding capital adequacy
affects or would affect the amount of capital required or expected to be
maintained by such Lender Party or any corporation controlling such Lender Party
and that the amount of such capital is increased by or based upon the existence
of such Lender Party's commitment to lend or to issue Letters of Credit
hereunder and other commitments of such type or the issuance or maintenance of
the Letters of Credit (or similar contingent obligations), then, upon demand by
such Lender Party (with a copy of such demand to the Administrative Agent),
accompanied by a certificate of such Lender Party setting forth in reasonable
detail the amount of, the basis for and the calculation of such additional
amounts, the Borrower shall pay to the Administrative Agent for the account of
such Lender Party, from time to time within 30 days after demand by such Lender
Party, additional amounts sufficient to compensate such Lender Party in the
light of such circumstances, for any reduction in the rate of return on capital
of such Lender or corporation controlling such Lender below the level that such
Lender or controlling corporation could have achieved but for such adoption or
issuance (taking into consideration its policies with respect to capital
adequacy) to the extent that such Lender Party reasonably determines such
increase in capital to be allocable to the existence of such Lender Party's
commitment to lend or to issue Letters of Credit hereunder or to the issuance or
maintenance of any Letters of Credit. A certificate as to such amounts submitted
to the Borrower by such Lender Party shall be conclusive and binding for all
purposes, absent manifest error.
(c) If, with respect to any Eurodollar Rate Advances under any
Facility, the Required Lenders notify the Administrative Agent that the
Eurodollar Rate for any Interest Period for such Advances will not adequately
reflect the cost to such Lenders of making, funding or maintaining their
Eurodollar Rate Advances for such Interest Period, the Administrative Agent
shall forthwith so notify the Borrower and the Appropriate Lenders, whereupon
(i) each such Eurodollar Rate Advance under any Facility will automatically, on
the last day of the then existing Interest Period therefor, Convert into a Base
Rate Advance and (ii) the obligation of the Appropriate Lenders to make, or to
Convert Advances into, Eurodollar Rate Advances shall be suspended until the
Administrative Agent shall notify the Borrower that such Lenders have determined
that the circumstances causing such suspension no longer exist.
(d) Notwithstanding any other provision of this Agreement, if
the introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Lender or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the Borrower
through the Administrative Agent, (i) each Eurodollar Rate Advance under each
Facility under which such Lender has a Commitment will automatically, upon such
demand, Convert into a Base Rate Advance and (ii) the obligation of the
Appropriate Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended until the Administrative Agent shall notify the
Borrower that such Lender has determined that the circumstances causing such
suspension no longer exist; provided, however, that, before making any such
demand, such Lender agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to designate a different
Eurodollar Lending Office if the making of such a designation would allow such
Lender or its Eurodollar Lending Office to continue to perform its obligations
to make Eurodollar Rate Advances or to continue to fund or maintain Eurodollar
Rate Advances and would not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender.
SECTION 2.11. Payments and Computations. (a) The Borrower
shall make each payment hereunder and under the Notes, irrespective of any right
of counterclaim or set-off (except as otherwise provided in Section 2.15), not
later than 12:00 noon (New York City time) on the day when due in U.S. dollars
to the Administrative Agent at the Administrative Agent's Account in same day
funds. The Administrative Agent will promptly thereafter cause like funds to be
distributed (i) if such payment by the Borrower is in respect of principal,
interest, commitment fees or any other Obligation then payable hereunder and
under the Notes to more than one Lender Party, to such Lender Parties for the
account of their respective Applicable Lending Offices ratably in accordance
with the amounts of such respective Obligations then payable to such Lender
Parties and (ii) if such payment by the Borrower is in respect of any Obligation
then payable hereunder to one Lender Party, to such Lender Party for the account
of its Applicable Lending Office, in each case to be applied in accordance with
the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance
and recording of the information contained therein in the Register pursuant to
Section 9.07(d), from and after the effective date of such Assignment and
Acceptance, the Administrative Agent shall make all payments hereunder and under
the Notes in respect of the interest assigned thereby to the Lender Party
assignee thereunder, and the parties to such Assignment and Acceptance shall
make all appropriate adjustments in such payments for periods prior to such
effective date directly between themselves.
(b) If the Administrative Agent receives funds for application
to the Obligations under the Loan Documents under circumstances in which neither
the Borrower nor the Loan Documents specify the Advances or the Facility to
which, or the manner in which, such funds are to be applied, the Administrative
Agent may, but shall not be obligated to, elect to distribute such funds to each
Lender Party ratably in accordance with such Lender Party's proportionate share
of the principal amount of all outstanding Advances and the Available Amount of
all Letters of Credit then outstanding, in repayment or prepayment of such of
the outstanding Advances or other Obligations owed to such Lender Party, and for
application to such principal installments, as the Administrative Agent shall
direct.
(c) All computations of interest based on the Base Rate shall
be made by the Administrative Agent on the basis of a year of 365 or 366 days,
as the case may be, and all computations of interest based on the Eurodollar
Rate and all computations of fees and Letter of Credit commissions (including,
without limitation, fees payable under Section 2.08) shall be made by the
Administrative Agent on the basis of a year of 360 days, in each case for the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest or fees are payable. Each
determination by the Administrative Agent of an interest rate or fee hereunder
shall be conclusive and binding for all purposes, absent manifest error.
(d) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest, fees or commissions,
as the case may be; provided, however, that, if such extension would cause
payment of interest on or principal of Eurodollar Rate Advances to be made in
the next following calendar month, such payment shall be made on the next
preceding Business Day.
(e) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to any Lender
Party hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each such Lender Party
on such due date an amount equal to the amount then due such Lender Party. If
and to the extent the Borrower shall not have so made such payment in full to
the Administrative Agent, each such Lender Party shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Lender
Party together with interest thereon, for each day from the date such amount is
distributed to such Lender Party until the date such Lender Party repays such
amount to the Administrative Agent, at the Federal Funds Rate.
SECTION 2.12. Taxes. (a) Any and all payments by the Borrower
and the Parent Guarantor hereunder or under the Notes shall be made, in
accordance with Section 2.11, free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Lender Party and the Administrative Agent, taxes that are imposed on its
overall net income by the United States and taxes that are imposed on its
overall net income (and franchise and similar taxes imposed in lieu thereof) by
the state or foreign jurisdiction under the laws of which such Lender Party or
the Administrative Agent (as the case may be) is organized or in which it is
resident or any political subdivision thereof and, in the case of each Lender
Party, taxes that are imposed on its overall net income (and franchise and
similar taxes imposed in lieu thereof) by the state or foreign jurisdiction of
such Lender Party's Applicable Lending Office or any political subdivision
thereof and in the case of each Lender Party and the Administrative Agent,
overall net income taxes imposed solely by reason of such Lender Party or the
Administrative Agent (as the case may be) doing business in the jurisdiction
imposing such tax, other than taxes arising solely as a result of such Lender
Party or the Administrative Agent entering into this Agreement or holding any
Note or performing any activity contemplated herein (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities in
respect of payments hereunder or under the Notes being hereinafter referred to
as "Taxes"). If the Borrower or the Parent Guarantor (as the case may be) shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note to any Lender Party or the Administrative Agent, (i)
the sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.12) such Lender Party or the Administrative Agent (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Borrower or the Parent Guarantor (as the
case may be) shall make such deductions and (iii) the Borrower or the Parent
Guarantor (as the case may be) shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(b) In addition, subject to the limitations set forth in
Section 6.06, the Borrower and the Parent Guarantor shall pay any present or
future stamp, documentary, excise, property or similar taxes, charges or levies
that arise from any payment made hereunder or under the Notes or from the
execution, delivery or registration of, performing under, or otherwise with
respect to, this Agreement or the Notes (hereinafter referred to as "Other
Taxes").
(c) Subject to the limitations set forth in Section 6.06, the
Borrower and the Parent Guarantor shall indemnify each Lender Party and the
Administrative Agent for and hold it harmless against the full amount of Taxes
and Other Taxes, and for the full amount of Taxes and Other Taxes on amounts
payable under this Section 2.12, imposed on or paid by such Lender Party or the
Administrative Agent (as the case may be) and any liability (including
penalties, additions to tax, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within 30 days from the date
such Lender Party or the Administrative Agent (as the case may be) makes written
demand therefor, accompanied by a certificate of such Lender Party setting forth
the amount thereof, the basis therefor and the calculation thereof provided,
however, that neither the Borrower nor the Parent Guarantor shall be obligated
to make payment to the Lender Party or the Administrative Agent (as the case may
be) pursuant to this Section in respect of penalties, additions to tax,
interest, expenses and other liabilities attributable to any Taxes or Other
Taxes, if (i) written demand therefor has not been made by such Lender Party or
the Administrative Agent within 30 Business Days from the date on which such
Lender Party or the Administrative Agent received written notice of an
imposition of Taxes or Other Taxes by the relevant taxing or governmental
authority (but only to the extent that the Borrower or the Parent Guarantor (as
the case may be) is materially damaged as a result of such failure), (ii) such
penalties, additions to tax, interest, expenses and other liabilities have
accrued as a result of the failure of such Lender Party to remit the amount of
any indemnity payment it receives from the Borrower or the Parent Guarantor (as
the case may be) pursuant to this Section to a taxing authority or (iii) such
penalties, additions to tax, interest, expenses and other liabilities are
attributable to the gross negligence or willful misconduct of such Lender Party
or the Administrative Agent. After a Lender Party or the Administrative Agent
(as the case may be) receives notice of an assessment of Taxes or Other Taxes,
such Lender Party or Administrative Agent will act in good faith to promptly
notify the Borrower or a Parent Guarantor (as the case may be) of its
obligations hereunder.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower or the Parent Guarantor (as the case may be) shall furnish to the
Administrative Agent, at its address referred to in Section 9.02, the original
or a certified copy of a receipt evidencing such payment except to the extent
such receipt or other document is not legally available, in which case the
Borrower or the Parent Guarantor (as the case may be) will furnish other
satisfactory evidence of such payment.
(e) Each Lender Party organized under the laws of a
jurisdiction outside the United States shall, on or prior to the date of its
execution and delivery of this Agreement in the case of each Initial Lender or
Initial Issuing Bank (as the case may be) and on the date of the Assignment and
Acceptance pursuant to which it becomes a Lender Party in the case of each other
Lender Party, and from time to time thereafter as requested in writing by the
Borrower (but only so long thereafter as such Lender Party remains lawfully able
to do so), provide each of the Administrative Agent and the Borrower with two
original Internal Revenue Service forms 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying that such
Lender Party is exempt from or entitled to a reduced rate of United States
withholding tax on payments pursuant to this Agreement or the Notes. If the
forms provided by a Lender Party at the time such Lender Party first becomes a
party to this Agreement indicates a United States interest withholding tax rate
in excess of zero, withholding tax at such rate shall be considered excluded
from Taxes unless and until such Lender Party provides the appropriate form
certifying that a lesser rate applies, whereupon withholding tax at such lesser
rate only shall be considered excluded from Taxes for periods governed by such
form; provided, however, that, if at the date of the Assignment and Acceptance
pursuant to which a Lender Party assignee becomes a party to this Agreement, the
Lender Party assignor was entitled to payments under subsection (a) in respect
of United States withholding tax with respect to interest paid at such date,
then, to such extent, the term Taxes shall include (in addition to withholding
taxes that may be imposed in the future or other amounts otherwise includable in
Taxes) United States withholding tax, if any, applicable with respect to the
Lender Party assignee on such date.
(f) For any period with respect to which a Lender Party has
failed to provide the Borrower with the appropriate form described in subsection
(e) above (other than if such failure is due to a change in law occurring after
the date on which a form originally was required to be provided or if such form
otherwise is not required under subsection (e) above), such Lender Party shall
not be entitled to indemnification under subsection (a) or (c) with respect to
Taxes imposed by the United States by reason of such failure; provided, however,
that should a Lender Party become subject to Taxes because of its failure to
deliver a form required hereunder, the Borrower shall take such steps as such
Lender Party shall reasonably request to assist such Lender Party to recover
such Taxes at such Lender Party's expense.
(g) If a Lender Party shall become aware that it is entitled
to receive a refund from a relevant taxing or governmental authority in respect
of Taxes or Other Taxes as to which it has been indemnified by the Borrower or
the Parent Guarantor (as the case may be) pursuant to this Section, it shall
promptly notify the Borrower or the Parent Guarantor (as the case may be) of the
availability of such refund and shall, within 30 days after receipt of a request
by the Borrower or the Parent Guarantor (as the case may be) (whether as a
result of notification that it has made to the Borrower or the Parent Guarantor
(as the case may be) or otherwise) make a claim to such taxing or governmental
authority for such refund at the Borrower's or the Parent Guarantor's (as the
case may be) expense; provided that the Borrower or the Parent Guarantor (as the
case may be) agrees to indemnify the Lender Party for any adverse tax
consequences resulting from the making of such claim for refund. If such Lender
Party finally and irrevocably receives a refund of any Taxes or Other Taxes
(including penalties, additions to tax and interest) for which it has been
indemnified by the Borrower or the Parent Guarantor (as the case may be)
pursuant to this Section, or which the Borrower or the Parent Guarantor (as the
case may be) has paid pursuant to this Section, then, to the extent such Lender
Party may do so without jeopardizing the right to such refund or the right to
benefit from any other refunds, credits, reliefs, remissions or repayments to
which it may be entitled, it shall promptly notify the Borrower or the Parent
Guarantor (as the case may be) of such refund and shall within 30 days from the
date of receipt of such refund pay to the Borrower or the Parent Guarantor (as
the case may be) the portion of such refund (including the after-tax amount of
any interest paid by the relevant taxing or governmental authority with respect
to such refund) that the Lender Party determines would leave such Lender Party
in no worse position than if no Taxes or Other Taxes had been imposed (but in no
case shall such portion exceed the amount of the indemnity payments made, or
Taxes or Other Taxes (including penalties, additions to tax, and interest) paid,
by the Borrower or the Parent Guarantor (as the case may be) under this Section
that gave rise to such refund), net of all out-of-pocket expenses of such Lender
Party and without interest, provided, however, that the Borrower or the Parent
Guarantor (as the case may be), upon the request of such Lender Party agrees to
repay the amount paid over to the Borrower or the Parent Guarantor (as the case
may be) (plus penalties, interest or other charges due to the appropriate
authorities in connection therewith) to such Lender Party in the event such
Lender Party is required to repay such refund to such relevant authority.
(h) Any Lender Party claiming any additional amounts payable
pursuant to this Section 2.12 agrees to use reasonable efforts (consistent with
its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Applicable Lending Office or take such other actions as may
be reasonably requested by the Borrower, if the making of such a change or the
taking of such an action would avoid the need for, or reduce the amount of, any
such additional amounts that may thereafter accrue and would not, in the
reasonable judgment of such Lender Party, be otherwise disadvantageous to such
Lender Party; provided that the mere existence of quantifiable fees, charges,
costs and expenses that the Borrower has offered and agreed to pay on behalf of
such Lender Party shall not be deemed to be disadvantageous to such Lender
Party.
SECTION 2.13. Sharing of Payments, Etc. If any Lender Party
shall obtain at any time any payment (whether voluntary, involuntary, through
the exercise of any right of set-off, or otherwise) (a) on account of
Obligations due and payable to such Lender Party hereunder and under the Notes
at such time in excess of its ratable share (according to the proportion of (i)
the amount of such Obligations due and payable to such Lender Party at such time
to (ii) the aggregate amount of the Obligations due and payable to all Lender
Parties hereunder and under the Notes at such time) of payments on account of
the Obligations due and payable to all Lender Parties hereunder and under the
Notes at such time obtained by all the Lender Parties at such time or (b) on
account of Obligations owing (but not due and payable) to such Lender Party
hereunder and under the Notes at such time in excess of its ratable share
(according to the proportion of (i) the amount of such Obligations owing to such
Lender Party hereunder and under the Notes at such time to (ii) the aggregate
amount of the Obligations owing (but not due and payable) to all Lender Parties
hereunder and under the Notes at such time) of payments on account of the
Obligations owing (but not due and payable) to all Lender Parties hereunder and
under the Notes at such time obtained by all of the Lender Parties at such time,
such Lender Party shall forthwith purchase from the other Lender Parties such
participations in the Obligations due and payable or owing to them, as the case
may be, as shall be necessary to cause such purchasing Lender Party to share the
excess payment ratably with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender Party, such purchase from each other Lender Party shall be rescinded and
such other Lender Party shall repay to the purchasing Lender Party the purchase
price to the extent of such Lender Party's ratable share (according to the
proportion of (i) the purchase price paid to such Lender Party to (ii) the
aggregate purchase price paid to all Lender Parties) of such recovery together
with an amount equal to such Lender Party's ratable share (according to the
proportion of (i) the amount of such other Lender Party's required repayment to
(ii) the total amount so recovered from the purchasing Lender Party) of any
interest or other amount paid or payable by the purchasing Lender Party in
respect of the total amount so recovered. The Borrower agrees that any Lender
Party so purchasing a participation from another Lender Party pursuant to this
Section 2.13 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender Party were the direct creditor of the
Borrower in the amount of such participation.
SECTION 2.14. Use of Proceeds. The proceeds of the Advances
and issuances of Letters of Credit shall be available (and the Borrower agrees
that it shall use such proceeds and Letters of Credit) solely to refinance
certain Existing Debt of ICC, the Parent Guarantor, and their respective
Subsidiaries, to make any required payment to New Marriott, to pay transaction
fees and expenses and, from time to time, to finance working capital needs and
for general corporate purposes of the Borrower and its Subsidiaries.
SECTION 2.15. Defaulting Lenders. (a) In the event that, at
any time, (i) any Lender Party shall be a Defaulting Lender, (ii) such
Defaulting Lender shall owe a Defaulted Advance to the Borrower and (iii) the
Borrower shall be required to make any payment hereunder or under any other Loan
Document to or for the account of such Defaulting Lender, then the Borrower may,
so long as no Event of Default shall have occurred and be continuing at such
time and to the fullest extent permitted by applicable law, set off and
otherwise apply the Obligation of the Borrower to make such payment to or for
the account of such Defaulting Lender against the obligation of such Defaulting
Lender to make such Defaulted Advance. In the event that, on any date, the
Borrower shall so set off and otherwise apply its obligation to make any such
payment against the obligation of such Defaulting Lender to make any such
Defaulted Advance on or prior to such date, the amount so set off and otherwise
applied by the Borrower shall constitute for all purposes of this Agreement and
the other Loan Documents an Advance by such Defaulting Lender made on the date
of such set off under the Facility pursuant to which such Defaulted Advance was
originally required to have been made pursuant to Section 2.01. Such Advance
shall be considered, for all purposes of this Agreement, (i) to comprise part of
the Borrowing in connection with which such Defaulted Advance was originally
required to have been made pursuant to Section 2.01 and (ii) to be of the same
Type as, and to bear interest at the rate applicable to, the Advances of the
other Applicable Lenders included in such Borrowing, which interest shall be
payable on the dates upon which interest is payable on such other Advances. The
Borrower shall notify the Administrative Agent at any time the Borrower
exercises its right of set-off pursuant to this subsection (a) and shall set
forth in such notice (A) the name of the Defaulting Lender and the Defaulted
Advance required to be made by such Defaulting Lender and (B) the amount set off
and otherwise applied in respect of such Defaulted Advance pursuant to this
subsection (a). Any portion of such payment otherwise required to be made by the
Borrower to or for the account of such Defaulting Lender which is paid by the
Borrower, after giving effect to the amount set off and otherwise applied by the
Borrower pursuant to this subsection (a), shall be applied by the Administrative
Agent as specified in subsection (b) or (c) of this Section 2.15.
(b) In the event that, at any time, (i) any Lender Party shall
be a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted Amount
to the Administrative Agent or any of the other Lender Parties and (iii) the
Borrower shall make any payment hereunder or under any other Loan Document to
the Administrative Agent for the account of such Defaulting Lender, then the
Administrative Agent may, on its behalf or on behalf of such other Lender
Parties and to the fullest extent permitted by applicable law, apply at such
time the amount so paid by the Borrower to or for the account of such Defaulting
Lender to the payment of each such Defaulted Amount to the extent required to
pay such Defaulted Amount. In the event that the Administrative Agent shall so
apply any such amount to the payment of any such Defaulted Amount on any date,
the amount so applied by the Administrative Agent shall constitute for all
purposes of this Agreement and the other Loan Documents payment, to such extent,
of such Defaulted Amount on such date. Any such amount so applied by the
Administrative Agent shall be retained by the Administrative Agent or
distributed by the Administrative Agent to such other Lender Parties, ratably in
accordance with the respective portions of such Defaulted Amounts payable at
such time to the Administrative Agent and such other Lender Parties and, if the
amount of such payment made by the Borrower shall at such time be insufficient
to pay all Defaulted Amounts owing at such time to the Administrative Agent and
the other Lender Parties, in the following order of priority:
(i) first, to the Administrative Agent for any Defaulted
Amount then owing to the Administrative Agent; and
(ii) second, to any other Lender Parties for any Defaulted
Amounts then owing to such other Lender Parties, ratably in accordance
with such respective Defaulted Amounts then owing to such other Lender
Parties.
Any portion of such amount paid by the Borrower for the account of such
Defaulting Lender remaining, after giving effect to the amount applied by the
Administrative Agent pursuant to this subsection (b), shall be applied by the
Administrative Agent as specified in subsection (c) of this Section 2.15.
(c) In the event that, at any time, (i) any Lender Party shall
be a Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted
Advance or a Defaulted Amount and (iii) the Borrower, the Administrative Agent
or any other Lender Party shall be required to pay or distribute any amount
hereunder or under any other Loan Document to or for the account of such
Defaulting Lender, then the Borrower or such other Lender Party shall pay such
amount to the Administrative Agent to be held by the Administrative Agent, to
the fullest extent permitted by applicable law, in escrow or the Administrative
Agent shall, to the fullest extent permitted by applicable law, hold in escrow
such amount otherwise held by it. Any funds held by the Administrative Agent in
escrow under this subsection (c) shall be deposited by the Administrative Agent
in an account with Morgan, in the name and under the control of the
Administrative Agent, but subject to the provisions of this subsection (c). The
terms applicable to such account, including the rate of interest payable with
respect to the credit balance of such account from time to time, shall be
Morgan's standard terms applicable to escrow accounts maintained with it. Any
interest credited to such account from time to time shall be held by the
Administrative Agent in escrow under, and applied by the Administrative Agent
from time to time in accordance with the provisions of, this subsection (c). The
Administrative Agent shall, to the fullest extent permitted by applicable law,
apply all funds so held in escrow from time to time to the extent necessary to
make any Advances required to be made by such Defaulting Lender and to pay any
amount payable by such Defaulting Lender hereunder and under the other Loan
Documents to the Administrative Agent or any other Lender Party, as and when
such Advances or amounts are required to be made or paid and, if the amount so
held in escrow shall at any time be insufficient to make and pay all such
Advances and amounts required to be made or paid at such time, in the following
order of priority:
(i) first, to the Administrative Agent for any amount then due
and payable by such Defaulting Lender to the Administrative Agent
hereunder;
(ii) second, to any other Lender Parties for any amount then
due and payable by such Defaulting Lender to such other Lender Parties
hereunder, ratably in accordance with such respective amounts then due
and payable to such other Lender Parties; and
(iii) third, to the Borrower for any Advance then required to
be made by such Defaulting Lender pursuant to a Commitment of such
Defaulting Lender.
In the event that any Lender Party that is a Defaulting Lender shall, at any
time, cease to be a Defaulting Lender, any funds held by the Administrative
Agent in escrow at such time with respect to such Lender Party shall be
distributed by the Administrative Agent to such Lender Party and applied by such
Lender Party to the Obligations owing to such Lender Party at such time under
this Agreement and the other Loan Documents ratably in accordance with the
respective amounts of such obligations outstanding at such time.
(d) The rights and remedies against a Defaulting Lender under
this Section 2.15 are in addition to other rights and remedies that the Borrower
may have against such Defaulting Lender with respect to any Defaulted Advance
and that the Administrative Agent or any Lender Party may have against such
Defaulting Lender with respect to any Defaulted Amount.
SECTION 2.16. Regulation D Compensation. If and so long as a
reserve requirement of the type described in the definition of "Eurodollar Rate
Reserve Percentage" is prescribed by the Board of Governors of the Federal
Reserve System (or any successor), each Lender subject to such requirement may
require the Borrower to pay, contemporaneously with each payment of interest on
each of such Lender's Eurodollar Rate Advances, additional interest on such
Eurodollar Rate Advance at a rate per annum determined by such Lender up to but
not exceeding the excess of (i) (A) the applicable Eurodollar Rate divided by
(B) one minus the Eurodollar Rate Reserve Percentage over (ii) the applicable
Eurodollar Rate. Any Lender wishing to require payment of such additional
interest (x) shall so notify the Borrower and the Administrative Agent, in which
case such additional interest on the Eurodollar Rate Advances of such Lender
shall be payable to such Lender at the place indicated in such notice with
respect to each Interest Period commencing at least three Business Days after
such Lender gives such notice and (y) shall notify the Borrower at least five
Business Days before each date on which interest is payable on the Eurodollar
Rate Advances of the amount then due it under this Section.
SECTION 2.17. Base Rate Advances Substituted for Affected
Eurodollar Rate Advances. If (i) the obligation of any Lender to make, or to
continue or Convert outstanding Advances as or to, Eurodollar Rate Advances has
been suspended pursuant to Section 2.10(d) or (ii) any Lender has demanded
compensation under Section 2.10(a) or (b) or Section 2.12 with respect to its
Eurodollar Rate Advances, and in any such case the Borrower shall, by at least
five Business Days' prior notice to such Lender through the Administrative
Agent, have elected that the provisions of this Section shall apply to such
Lender, then, unless and until such Lender notifies the Borrower that the
circumstances giving rise to such suspension or demand for compensation no
longer exist, all Advances which would otherwise be made by such Lender as (or
continued as or Converted to) Eurodollar Rate Advances, shall instead be Base
Rate Advances on which interest and principal shall be payable contemporaneously
with the related Eurodollar Rate Advances of the other Lenders. If such Lender
notifies the Borrower that the circumstances giving rise to such suspension or
demand for compensation no longer exist, the principal amount of each such Base
Rate Advance shall be converted into a Eurodollar Rate Advance on the first day
of the next succeeding Interest Period applicable to the related Eurodollar Rate
Advances of the other Lenders.
SECTION 2.18. Replacement of Certain Lenders. If any Lender (a
"Subject Lender") (i) is a Defaulting Lender that owes a Defaulted Advance to
the Borrower, (ii) makes demand upon the Borrower for (or if the Borrower is
otherwise required to pay) amounts pursuant to Section 2.10(a) or (b) or Section
2.12 or (iii) gives notice pursuant to Section 2.10(d) requiring a conversion of
such Subject Lender's Eurodollar Rate Advances to Base Rate Advances or
suspending such Lender's obligation to make Advances as, or to Convert or
continue Advances into or as, Eurodollar Rate Advances, the Borrower may, within
90 days of receipt by the Borrower of such demand or notice (or the occurrence
of such other event causing the Borrower to be required to pay such
compensation), as the case may be, give notice (a "Replacement Notice") in
writing to the Administrative Agent and such Subject Lender of its intention to
replace such Subject Lender with a financial institution (a "Replacement
Lender") designated in such Replacement Notice. Unless the Administrative Agent
shall, in the exercise of its reasonable discretion and within 30 days of its
receipt of such Replacement Notice, notify the Borrower and such Subject Lender
in writing that the designated financial institution is unsatisfactory to the
Administrative Agent (such denial not being available to the Administrative
Agent where the Replacement Lender is already a Lender), then such Subject
Lender shall, subject to the payment of any amounts due pursuant to Sections
2.10(a) and (b) and Section 2.12, assign, in accordance with Section 9.07, all
of its Commitments, Advances, Notes and other rights and obligations under this
Agreement and all other Loan Documents to such designated financial institution;
provided, however, that (i) such assignment shall be without recourse,
representation or warranty and (ii) the purchase price paid by such designated
financial institution shall be in at least the amount of such Subject Lender's
Advances, together with all accrued and unpaid interest and fees in respect
thereof, plus all other amounts (including the amounts demanded and unreimbursed
under Sections 2.10(a) and (b) and Section 2.12) owing to such Subject Lender
hereunder. Upon the effective date of an assignment described above, the
Borrower shall issue a replacement Note or Notes, as the case may be, to such
designated financial institution or Replacement Lender, as applicable, and such
institution shall become a "Lender" for all purposes under this Agreement and
the other Loan Documents.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Closing. This Agreement
shall become effective on the date (the "Closing Date") that the following
conditions precedent are satisfied:
(a) The Administrative Agent shall have received, dated the
Closing Date, in form and substance satisfactory to the Arrangers and
their legal counsel, a copy of this Agreement duly executed by each
party hereto, with definitive forms of all exhibits hereto mutually
satisfactory to the Borrower and the Arrangers and their legal counsel;
(b) The Borrower shall have paid all accrued fees and
reimbursable expenses of the Arrangers (including the accrued
reasonable fees and expenses of counsel to the Arrangers) due on or
before the Closing Date, to the extent invoiced at least two Business
Days prior to the Closing Date; and
(c) The Guaranteed Senior Debt Credit Agreement shall have
been duly executed by each party thereto and delivered to the
Administrative Agent.
SECTION 3.02. Conditions Precedent to Initial Extension of
Credit. The obligation of each Lender to make an Advance or of any Issuing Bank
to issue a Letter of Credit on the Funding Date is subject to the satisfaction
of the following conditions precedent before or concurrently therewith:
(a) The Spinoff, the Canadian Subsidiary Transfer, the Cash
Payment and the Merger shall have been consummated in accordance with
the terms of the Transaction Documents, without any written waiver or
amendment not consented to by the Requisite Lenders of any term,
provision or condition set forth therein, and in compliance with all
applicable laws (it being understood that the Consents Side Letter, the
Distribution Agreement, the Merger Agreement, the Omnibus Restructuring
Agreement and related documents delivered to the Arrangers prior to
November 27, 1997, and as amended through the date hereof pursuant to
amendments provided to the Lenders prior to the date hereof (the "Base
Transaction Documents"), are satisfactory to the Lender Parties and
their legal counsel), and, if the Hypothetical Consent Exposure Amount
(as defined in the Consents Side Letter) on the Funding Date exceeds
$25,000,000, the arrangements as contemplated by Section 1 of the
Consents Side Letter and Exhibit B thereto shall have been fully
satisfied or other arrangements acceptable to the Requisite Lenders
shall have been put in place.
(b) The Subsidiary Contribution shall have been consummated in
accordance with the terms described on Schedule 3.02(b).
(c) The Transaction Documents shall be in full force and
effect.
(d) The Lender Parties shall be reasonably satisfied with the
corporate and legal structure and capitalization of each Loan Party,
including the terms and conditions of the charter and bylaws (or other
similar organizational documents) and each class of capital stock of
each Loan Party and of each agreement or instrument relating to such
structure or capitalization, provided that the corporate and legal
structure and capitalization of the Loan Parties, to the extent
specified in the Information Memorandum or the Base Transaction
Documents, are satisfactory to the Lender Parties.
(e) The Parent Guarantor shall have received $620,000,000 in
gross cash proceeds of the Guaranteed Senior Debt.
(f) All Existing Debt identified as "To Be Refinanced" on
Schedule 4.01(y) (other than any Retained Marriott Bonds) shall have
been prepaid, redeemed or defeased in full or otherwise satisfied and
extinguished or arrangements therefor satisfactory to the
Administrative Agent shall have been made (or, in the case of certain
Marriott Bonds, assumed by New Marriott).
(g) There shall have occurred no Material Adverse Change since
September 12, 1997.
(h) The Borrower shall have paid all accrued fees and expenses
of the Administrative Agent and the Lender Parties (including the fees
and expenses of counsel to the Administrative Agent) due on or before
the Funding Date, to the extent invoiced at least two Business Days
prior to the Funding Date.
(i) All governmental authorizations, and material consents,
approvals and authorizations of, and notices and filings to or with,
and other actions by, any other Person necessary in connection with the
Transaction, any of the Loan Documents or the Related Documents or any
transactions contemplated thereby, other than (i) filings and
recordings under, or with respect to the Collateral under, the Loan
Documents, (ii) governmental authorizations, and consents, approvals,
authorizations, notices, filings and other actions, described on
Schedule 4.01(d) hereto, (iii) third party consents and approvals that
have not been obtained that relate to Indemnified Consent Exposure and
(iv) consents, approvals, authorizations, notices, filings and other
actions the absence of which would not reasonably be expected to have a
Material Adverse Effect, shall have been obtained (without the
imposition of any conditions that are not reasonably acceptable to the
Lender Parties) and shall remain in full force and effect; and all
applicable waiting periods shall have expired without any action being
taken by any competent authority.
(j) There shall exist no action, suit, investigation,
litigation or proceeding affecting any Loan Party or any of its
Subsidiaries pending or threatened before any court, governmental
agency or arbitrator that could reasonably be expected to have a
Material Adverse Effect other than the matters described on Schedule
4.01(i) (the "Disclosed Litigation").
(k) The Administrative Agent shall have received on or before
the Funding Date the following, each dated such day (unless otherwise
specified), in form and substance satisfactory to the Administrative
Agent (unless otherwise specified) and (except for the Notes) in
sufficient copies for each Lender Party:
(i) The Notes payable to the order of the Lenders.
(ii) Certified copies of the resolutions of the Board of
Directors of the Borrower, the Parent Guarantor and each other Loan
Party approving the Transaction, this Agreement, the Notes and each
other Loan Document to which it is or is to be a party, and of all
documents evidencing other necessary corporate action (including
shareholder approval) and governmental approvals and consents, if
any, with respect to the Transaction, this Agreement, the Notes,
each other Loan Document and each Related Document.
(iii) A copy of the charter (or similar organizational
document) of the Borrower, the Parent Guarantor and each other Loan
Party and each amendment thereto, certified (as of a date reasonably
near the Funding Date) by the Secretary of State of the jurisdiction
of its incorporation (or similar governmental authority) as being a
true and correct copy thereof.
(iv) A copy of a certificate of the Secretary of State (or
similar governmental authority) of the jurisdiction of its
incorporation, dated reasonably near the Funding Date, listing the
charter (or similar organizational document) of the Borrower, the
Parent Guarantor and each other Loan Party and each amendment
thereto on file in his office and certifying that (A) such
amendments are the only amendments to the Borrower's, the Parent
Guarantor's or such other Loan Party's charter (or similar
organizational document) on file in the office of such Secretary of
State, (B) the Borrower, the Parent Guarantor and each other Loan
Party have paid all franchise taxes (or the equivalent thereof) to
the date of such certificate and (C) the Borrower, the Parent
Guarantor and each other Loan Party are duly incorporated and in
good standing under the laws of the jurisdiction of its
incorporation.
(v) A copy of a certificate of the Secretary of State of the
State of Delaware certifying as to the filing and acceptance of the
certificate of merger in respect of the Merger, or other
confirmation of such filing satisfactory to the Arrangers.
(vi) A certificate of the Borrower, the Parent Guarantor and
each other Loan Party, signed on behalf of the Borrower, the Parent
Guarantor and such other Loan Party by any two of its chief
executive officer, chief financial officer, chief accounting
officer, president, secretary, any vice president or any assistant
secretary, dated the Funding Date, certifying as to (A) the absence
of any amendments to the charter (or similar organizational
document) of the Borrower, the Parent Guarantor or such other Loan
Party since the date of the Secretary of State's (or similar
governmental authority's) certificate referred to in Section
3.02(k)(iv), other than, to the extent applicable, (x) the filing of
the certificate of merger referred to in Section 3.02(k)(v) and (y)
the filing of an amendment to the certificate of incorporation of
the Parent Guarantor, in the form attached thereto, on the Funding
Date, (B) a true and correct copy of the bylaws (or similar
organizational document) of the Borrower, the Parent Guarantor and
such other Loan Party as in effect on the Funding Date, (C) the due
incorporation and good standing of the Borrower, the Parent
Guarantor and such other Loan Party as a corporation organized under
the laws of the jurisdiction of its incorporation and the absence of
any proceeding for the dissolution or liquidation of the Borrower,
the Parent Guarantor or such other Loan Party, (D) the truth of the
representations and warranties contained in the Loan Documents as
though made on and as of the Funding Date (other than any such
representation or warranty that is limited to a particular date or
dates, as to which the truth of such representation or warranty is
as of such date or dates) and (E) the absence of any Default at the
time of, or immediately after giving effect to, the Initial
Extension of Credit.
(vii) A certificate of the Secretary or an Assistant
Secretary of the Borrower, the Parent Guarantor and each other Loan
Party certifying the names and true signatures of the officers of
the Borrower, the Parent Guarantor and such other Loan Party
authorized to sign this Agreement, the Notes and each other Loan
Document to which they are or are to be parties and the other
documents to be delivered hereunder and thereunder.
(viii) A security agreement in substantially the form of
Exhibit D (as amended, supplemented or otherwise modified from time
to time in accordance with its terms, the "Security Agreement"),
duly executed by the Borrower and each Subsidiary Guarantor,
together with:
(A) certificates representing the Pledged Shares referred
to therein accompanied by undated stock powers executed in
blank,
(B) duly executed financing statements (Form UCC-1 or a
comparable form), in suitable form for filing under the Uniform
Commercial Code of all jurisdictions that the Administrative
Agent may deem necessary or desirable in order to perfect the
liens and security interests created under the Security
Agreement and the priority thereof,
(C) completed requests for information, dated on or before
the Funding Date, listing all effective financing statements
filed in the jurisdictions referred to in clause (B) above that
name the Borrower or any other Loan Party as debtor, together
with copies of such other financing statements,
(D) duly executed termination statements (Form UCC-3 or a
comparable form) or the equivalent thereof in suitable form for
filing under the Uniform Commercial Code of all jurisdictions
that may be necessary or that the Administrative Agent may
reasonably deem desirable in order to terminate or amend
existing liens on and security interests in the Collateral
described in the Security Agreement (other than liens and
security interests permitted to continue under the terms of the
Security Agreement), duly executed by the appropriate secured
party, and
(E) evidence that all other action that the Administrative
Agent may reasonably deem necessary or desirable in order to
perfect the liens and security interests created under the
Security Agreement and the priority thereof has been taken or
arrangements reasonably satisfactory to the Administrative Agent
for the taking thereof have been made.
(ix) A copy of a ruling issued by the Internal Revenue
Service to the effect that the Spinoff will qualify as a tax-free
reorganization under Section 368(a)(1)(D) of the Internal Revenue
Code and a tax-free distribution under Section 355 of the Internal
Revenue Code to the holders of the stock of the Parent Guarantor.
(x) Satisfaction of the Lender Parties and counsel for the
Administrative Agent with respect to the tax treatment of the
Borrower's debt as debt and not equity and the deductibility of
interest thereunder.
(xi) Evidence that Sodexho owns, directly or indirectly, not
less than 40.01% of the voting stock of the Parent Guarantor.
(xii) A copy of the fairness opinion with respect to the
Transaction issued to the Board of Directors of the Parent Guarantor
by Merrill Lynch, Pierce, Fenner & Smith Incorporated.
(xiii) A guaranty in substantially the form of Exhibit E (as
amended, supplemented or otherwise modified from time to time in
accordance with its terms, the "Subsidiary Guaranty"), duly executed
by each Subsidiary Guarantor.
(xiv) A pledge agreement in substantially the form of
Exhibit F (as amended, supplemented or otherwise modified from time
to time in accordance with its terms, the "Pledge Agreement"), duly
executed by the Parent Guarantor together with:
(A) certificates representing the Pledged Shares referred
to therein, accompanied by undated stock powers, duly executed
in blank,
(B) duly executed financing statements (Form UCC-1 or a
comparable form), in suitable form for filing under the Uniform
Commercial Code of all jurisdictions that the Administrative
Agent may deem necessary or desirable in order to perfect the
liens and security interests created under the Pledge Agreement
and the priority thereof,
(C) completed requests for information, dated on or before
the Funding Date, listing all effective financing statements
filed in the jurisdictions referred to in clause (B) above that
name the Parent Guarantor as debtor, together with copies of
such other financing statements, and
(D) duly executed termination statements (Form UCC-3 or a
comparable form) or the equivalent thereof in suitable form for
filing under the Uniform Commercial Code of all jurisdictions
that may be necessary or that the Administrative Agent may
reasonably deem desirable in order to terminate or amend
existing liens on and security interests in the Collateral
described in the Pledge Agreement (other than liens and security
interests permitted to continue under the terms of the Pledge
Agreement), duly executed by the appropriate secured party.
(xv) Certified copies of each of the Related Documents, duly
executed by the parties thereto and in form and substance
satisfactory to the Lender Parties (it being understood that the
Base Transaction Documents are satisfactory to the Lender Parties
and their legal counsel), together with all agreements, instruments
and other documents delivered in connection therewith.
(xvi) Certified copies of each contract with Sodexho listed
on Schedule 4.01(aa), duly executed by the parties thereto.
(xvii) A copy of the solvency opinion with respect to the
Parent Guarantor after giving effect to the Transaction and the
other transactions contemplated hereby, from American Appraisal
Associates, Inc.
(xviii) Evidence of insurance complying with the provisions
of Section 5.01(d).
(xix) A duly completed and executed Notice of Borrowing for
each Advance to be made on the Funding Date.
(xx) An opinion of Davis Polk & Wardwell, counsel for the
Borrower, the Parent Guarantor and each other Loan Party in
substantially the form of Exhibit G-1 hereto and as to such other
matters as the Required Lenders through the Administrative Agent may
reasonably request.
(xxi) An opinion of Robert A. Stern, Esq., General Counsel
for the Borrower, the Parent Guarantor and each other Loan Party, in
substantially the form of Exhibit G-2 hereto and as to such other
matters as the Required Lenders through the Administrative Agent may
reasonably request.
(xxii) An opinion of Ober, Kaler, Grimes & Shriver, a
Professional Corporation, Maryland counsel to the Loan Parties, in
substantially the form of Exhibit G-3 hereto and as to such other
matters as the Required Lenders through the Administrative Agent may
reasonably request.
(xxiii) A favorable opinion of Shearman & Sterling, counsel
for the Administrative Agent, in form and substance satisfactory to
the Administrative Agent.
SECTION 3.03. Conditions Precedent to Each Borrowing. The
obligation of each Lender to make an Advance (other than a Letter of Credit
Advance made by an Issuing Bank or a Revolving Credit Lender pursuant to Section
2.03(c)) on the occasion of each Borrowing (including the Initial Extension of
Credit), and the obligation of the Issuing Banks to issue Letters of Credit
(including the initial issuance) or renew a Letter of Credit, shall be subject
to the conditions precedent that,
(a) on the date of such Borrowing or issuance or renewal, the
following statements shall be true (and each of the giving of the
applicable Notice of Borrowing, Notice of Issuance or Notice of Renewal
and the acceptance by the Borrower of the proceeds of such Borrowing or
of such Letter of Credit or the renewal of such Letter of Credit, shall
constitute a representation and warranty by the Borrower that both on
the date of such notice and on the date of such Borrowing or issuance
or renewal such statements are true):
(i) the representations and warranties contained in each
Loan Document are correct in all material respects on and as of such
date, before and after giving effect to such Borrowing and the
application of the proceeds therefrom, as though made on and as of
such date, except to the extent that any such representation or
warranty is limited to a particular date or dates, in which case
such representation or warranty was true on and as of such date or
dates;
(ii) no event has occurred and is continuing, or would
result from such Borrowing or from the application of the proceeds
therefrom, that constitutes a Default, and
(b) the Administrative Agent shall have received a Notice of
Borrowing in accordance with Section 2.02(a), a Notice of Issuance in
accordance with Section 2.03(a) or, except in the case of an automatic
renewal pursuant to a Letter of Credit referred to in Section
2.01(c)(ii), a Notice of Renewal in accordance with Section 2.01(c).
SECTION 3.04. Determinations Under Section 3.02. For purposes
of determining compliance with the conditions specified in Section 3.02, each
Lender Party shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lender Parties unless an
officer of the Administrative Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from such Lender
Party prior to the Initial Extension of Credit specifying its objection thereto
and if the Initial Extension of Credit consists of a Borrowing, such Lender
Party shall not have made available to the Administrative Agent such Lender
Party's ratable portion of such Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower
and the Parent Guarantor. Each of the Borrower and the Parent Guarantor hereby
represents and warrants (i) in the case of clauses (a), (c)(i), (c)(ii)(w),
(c)(ii)(x), (d) (but only insofar as clauses (c)(ii)(x) and (d) relate to the
execution and delivery, but not the performance, of this Agreement) and (e) to
the extent that such clauses relate to the Borrower and the Parent Guarantor
(but not to any other Loan Party) and to this Agreement (but not to any other
Loan Document) and are not expressly limited to another particular date or
dates, on the date hereof and, except to the extent expressly limited to a
particular date or dates, on each date thereafter on which such representation
or warranty is made or deemed made hereunder and (ii) in the case of such
clauses and all other clauses of this Section 4.01, except to the extent
expressly limited to another particular date or dates, on the Funding Date
(after giving effect to the Transaction) and on each date thereafter on which
such representation or warranty is made or deemed made hereunder, as follows:
(a) Each Loan Party (i) is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) is duly qualified and in good
standing as a foreign corporation in each other jurisdiction in which
it owns or leases property or in which the conduct of its business
requires it to so qualify or be licensed except where the failure to so
qualify, be in good standing or be licensed, either individually or in
the aggregate, would not reasonably be expected to have a Material
Adverse Effect and (iii) has all requisite corporate power and
authority, and all governmental licenses, permits and other approvals
(except for the absence of certain third-party consents and approvals
that result in Indemnified Consent Exposure), necessary to own or lease
and operate its properties and to carry on its business as now
conducted, and as proposed to be conducted except any such power,
authority, license, permit or approval the failure to have which would
not reasonably be capital stock of the Borrower has been validly
issued, is fully paid and non-assessable and is owned by the Persons
and in the amounts specified on Schedule 4.01(a) free and clear of all
Liens, except those created under the Collateral Documents.
(b) Set forth on Schedule 4.01(b) hereto is a complete and
accurate list, as of the Funding Date (after giving effect to the
Transaction), of all Subsidiaries, including all Substantial
Subsidiaries, showing, as of the Funding Date (after giving effect to
the Transaction), as to each such Substantial Subsidiary, the correct
legal name thereof, the jurisdiction of its incorporation, the number
of shares of each class of capital stock authorized, and the number
outstanding, on the Funding Date and the percentage of the outstanding
shares of each such class owned (directly or indirectly) by each Loan
Party on the Funding Date and the number of shares covered by all
outstanding options, warrants, rights of conversion or purchase and
similar rights on the Funding Date. As of the Funding Date, all of the
outstanding capital stock of all of such Substantial Subsidiaries has
been validly issued, is fully paid and non-assessable and is owned by
the person indicated on such Schedule 4.01(b), free and clear of all
Liens, except those created under the Loan Documents and those
permitted under Section 5.02(a). Each such Substantial Subsidiary (i)
is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, (ii) is duly
qualified and in good standing as a foreign corporation in each other
jurisdiction in which it owns or leases property or in which the
conduct of its business requires it to so qualify or be licensed except
where the failure to so qualify, be in good standing or be licensed
would not reasonably be expected to have a Material Adverse Effect and
(iii) has all requisite corporate power and authority, and all
governmental licenses, permits and other approvals necessary to own or
lease and operate its properties and to carry on its business as now
conducted and as proposed to be conducted except any such power,
authority, license, permit or approval the failure to have which would
not reasonably be expected to have a Material Adverse Effect.
(c) The execution, delivery and performance by each Loan Party
of each of this Agreement, the Notes, each other Loan Document to which
it is or is to be a party, and the consummation of the Transaction, (i)
are within such Loan Party's corporate powers and have been duly
authorized by all necessary corporate action, and (ii) do not (w)
contravene such Loan Party's charter or bylaws (or other similar
organizational documents), (x) violate any law, rule, regulation
(including, without limitation, Regulation X of the Board of Governors
of the Federal Reserve System), order, writ, judgment, injunction,
decree, determination or award applicable to it the violation of which
would reasonably be expected to have a Material Adverse Effect, (y)
except for the absence of certain third-party consents and approvals
that result in Indemnified Consent Exposure, conflict with or result in
the breach of, or constitute a default under, any contract, loan
agreement, indenture, mortgage, deed of trust, lease or other
instrument binding on or affecting any Loan Party, any of its
Subsidiaries or any of their properties, which conflict, default or
breach would reasonably be expected to have a Material Adverse Effect,
or (z) except for the Liens created under the Loan Documents, result in
or require the creation or imposition of any Lien upon or with respect
to any of the properties of any Loan Party or any of its Subsidiaries.
No Loan Party or any of its Subsidiaries is in violation of any such
law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award or, except as set forth in clause (y) above, in
breach of any such contract, loan agreement, indenture, mortgage, deed
of trust, lease or either instrument, the violation or breach of which
would reasonably be expected to have a Material Adverse Effect.
(d) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
or any other third party is required for (i) the due execution,
delivery or performance by any Loan Party of this Agreement, the Notes
or any other Loan Document to which it is or is to be a party, or for
the consummation of the Transaction, (ii) the grant by any Loan Party
of the Liens granted by it pursuant to the Collateral Documents, (iii)
the perfection or maintenance of the Liens created by the Collateral
Documents (including the required priority thereof) or (iv) the
exercise by the Administrative Agent or any Lender Party of its rights
under the Loan Documents or the remedies in respect of the Collateral
pursuant to the Collateral Documents, except for (w) the
authorizations, approvals, actions, notices and filings listed on Part
A of Schedule 4.01(d), all of which have been duly obtained, taken,
given or made as of the Closing Date and are, as of the Closing Date,
in full force and effect (x) the authorizations, approvals, actions,
notices and filings listed on Part B of Schedule 4.01(d), all of which
will have been (except to the extent indicated on Schedule 4.01(d))
duly obtained, taken, given or made as of the Funding Date and, as of
the Funding Date, will be in full force and effect, (y) third-party
consents and approvals that have not been obtained that result in
Indemnified Consent Exposure and (z) authorizations, approvals,
actions, notices and filings the absence of which would not reasonably
be expected to have a Material Adverse Effect. As of the Funding Date,
all applicable waiting periods in connection with the Transaction have
expired without any action having been taken by any competent authority
restraining, preventing or imposing materially adverse conditions upon
the Transaction or the rights of the Loan Parties or their Subsidiaries
freely to transfer or otherwise dispose of, or to create any Lien on,
any properties now owned or hereafter acquired by any of them.
(e) This Agreement has been, and each of the Notes and each
other Loan Document, when executed and delivered hereunder by each Loan
Party party thereto, will be, duly executed and delivered by each Loan
Party party thereto. This Agreement is, and each of the Notes and each
other Loan Document when executed and delivered hereunder by each Loan
Party party thereto will be, a valid and binding obligation of each
Loan Party party thereto, enforceable against such Loan Party in
accordance with its terms, subject to applicable bankruptcy, insolvency
and other similar laws affecting creditors' rights generally and to
general equitable principles.
(f) The unaudited pro forma combined balance sheet of the
Parent Guarantor and its Subsidiaries as of September 12, 1997, and the
related unaudited pro forma combined statement of income of the Parent
Guarantor and its Subsidiaries for the 36 weeks then ended included in
the Proxy Statement, fairly present, subject to the provisions of
Regulation S-X of the Securities and Exchange Commission, the pro forma
combined financial condition of the Parent Guarantor and its
Subsidiaries as at such date and the pro forma combined results of
operations of the Parent Guarantor and its Subsidiaries for the period
ended on such date, in each case giving effect to the Transaction and
the other transactions contemplated hereby as if the Transaction and
such other transactions had been consummated on such date or at the
beginning of such period, respectively, and since September 12, 1997,
there has been no Material Adverse Change.
(g) The Consolidated forecasted balance sheets and income and
cash flow statements of the Parent Guarantor and its Subsidiaries
included in the Information Memorandum were prepared in good faith on
the basis of the assumptions stated therein, which assumptions were
reasonable in the light of conditions existing at the time of delivery
of such forecasts, and represented, at the time of delivery, the Parent
Guarantor's reasonable estimate of its future financial performance.
(h) The information concerning the Loan Parties contained in
the Information Memorandum and the information concerning the Loan
Parties contained in the other information, exhibits and reports
furnished by the Loan Parties to the Administrative Agent or any Lender
Party in connection with the negotiation of the Loan Documents or
pursuant to the terms of the Loan Documents (other than information
relating to the non-Foodservice Business), taken as a whole, did not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made therein not
misleading.
(i) Except as set forth on Schedule 4.01(i), there is no
action, suit, investigation, litigation or proceeding affecting any
Loan Party or any of its Subsidiaries, including any Environmental
Action, pending or threatened before any court, governmental agency or
arbitrator that would reasonably be expected to have a Material Adverse
Effect.
(j) No proceeds of any Advance or drawings under any Letter of
Credit will be used in violation of Regulation G, U or X of the Board
of Governors of the Federal Reserve System.
(k) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Plan that has resulted in or is reasonably
expected to result in a liability of any Loan Party or any ERISA
Affiliate that would reasonably be expected to have a Material Adverse
Effect.
(l) As of the last annual actuarial valuation date, except as
would not reasonably be expected to have a Material Adverse Effect, the
funded current liability percentage, as defined in Section 302(d)(8) of
ERISA, of each Plan exceeds 90% and there has been no adverse change in
the funding status of any such Plan since such date.
(m) Neither any Loan Party nor any ERISA Affiliate has
incurred or is reasonably expected to incur any Withdrawal Liability to
any Multiemployer Plan that would reasonably be expected to have a
Material Adverse Effect.
(n) Neither any Loan Party nor any ERISA Affiliate has been
notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or has been terminated, within the meaning of
Title IV of ERISA, and no such Multiemployer Plan is reasonably
expected to be in reorganization or to be terminated, within the
meaning of Title IV of ERISA, in any such case, in a manner or to an
extent that would reasonably be expected to have a Material Adverse
Effect.
(o) Except as set forth in the financial statements referred
to in this Section 4.01 and in Section 5.03, the Loan Parties and their
respective Subsidiaries have no material liability with respect to
"expected post retirement benefit obligations" within the meaning of
Statement of Financial Accounting Standards No. 106 that would
reasonably be expected to have a Material Adverse Effect.
(p) Neither the business nor the properties of any Loan Party
or any of its Subsidiaries are affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance) that could reasonably be
expected to have a Material Adverse Effect.
(q) Except to the extent that the same would not reasonably be
expected to have a Material Adverse Effect, the operations and
properties of each Loan Party and each of its Subsidiaries comply in
all material respects with all applicable Environmental Laws and
Environmental Permits, all past non-compliance with such Environmental
Laws and Environmental Permits has been resolved without ongoing
obligations or costs, and no circumstances exist that could reasonably
be expected to (i) form the basis of an Environmental Action against
any Loan Party or any of its Subsidiaries or any of their properties or
(ii) cause any such property to be subject to any restrictions on
ownership, occupancy, use or transferability under any Environmental
Law.
(r) Except to the extent that the same would not reasonably be
expected to have a Material Adverse Effect, (i) none of the properties
currently or formerly owned or operated by any Loan Party or any of its
Subsidiaries is listed or proposed for listing on the NPL or on the
CERCLIS or any analogous foreign, state or local list or is adjacent to
any such property; (ii) there are no and never have been any
underground or aboveground storage tanks or any surface impoundments,
septic tanks, pits, slumps or lagoons in which Hazardous Materials are
being or have been treated, stored or disposed on any property
currently owned or operated by any Loan Party or any of its
Subsidiaries or, to the best of its knowledge, on any property formerly
owned or operated by any Loan Party or any of its Subsidiaries; (iii)
there is no asbestos or asbestos-containing material on any property
currently owned or operated by any Loan Party or any of its
Subsidiaries; and (iv) Hazardous Materials have not been released,
discharged or disposed of on any property currently or formerly owned
or operated by any Loan Party or any of its Subsidiaries.
(s) Except to the extent that any such disposal would not
reasonably be expected to have a Material Adverse Effect, all Hazardous
Materials generated, used, treated, handled or stored at, or
transported to or from, any property currently or formerly owned or
operated by any Loan Party or any of its Subsidiaries have been
disposed of in a manner not reasonably expected to result in material
liability to any Loan Party or any of its Subsidiaries.
(t) The Collateral Documents create a valid and perfected
security interest in the Collateral, securing the payment of the
Secured Obligations, subject to no prior Liens other than as permitted
hereunder, and all filings and other actions necessary or desirable to
perfect such security interest have been duly taken. The Loan Parties
are the legal and beneficial owners of the Collateral free and clear of
any Lien, except for the liens and security interests created or
permitted under the Loan Documents.
(u) Each Loan Party and each of its Subsidiaries has filed,
has caused to be filed or has been included in all material tax returns
(federal, state, local or foreign) required to be filed and has paid
(or there has been paid by others) all material taxes shown thereon to
be due, together with applicable interest and penalties, other that any
such taxes or tax returns in respect of which any Loan Party or any
such Subsidiary shall have been indemnified by New Marriott.
(v) Neither the Merger nor the Subsidiary Contribution will be
taxable to the Parent Guarantor or any of its Subsidiaries.
(w) No Loan Party is an "investment company", as such term is
defined in the Investment Company Act of 1940, as amended.
(x) As of the Funding Date, each Loan Party is, individually
and together with its Subsidiaries, Solvent.
(y) Set forth on Schedule 4.01(y) hereto is a complete and
accurate list, as of the Closing Date, of all items of Existing Debt
with a principal amount in excess of $5,000,000 (other than Debt that,
following the consummation of the Transaction but without giving effect
to the redemption of any Marriott Bonds, will be Debt of New Marriott
or any Subsidiary of New Marriott and not Debt of the Parent Guarantor
or any of its Subsidiaries) showing as of the date hereof the principal
amount outstanding thereunder and showing the aggregate principal
amount of all items of such Existing Debt with an outstanding principal
amount not in excess of $5,000,000 as of the Closing Date.
(z) On the Funding Date, the Borrower and its Subsidiaries own
or have the legal right to use the "Sodexho" trade name for a period of
ten years following the Funding Date and the "Marriott" trade name for
a period of four years following the Funding Date, in each case,
subject to the terms and conditions of applicable license agreements,
without known conflict with the rights of any other Person.
(aa) Set forth on Schedule 4.01(aa) hereto is a complete and
accurate list, as of the date of this Agreement and as of the Funding
Date, of all contracts entered or to be entered into with Sodexho for
the providing of business-related support services, expertise or other
assistance to the Borrower or any of its Subsidiaries, under which the
annual compensation payable to Sodexho, or the fair market value of the
annual services to be provided by Sodexho, exceeds $2,000,000, showing
as of the date of this Agreement the parties, subject matter and term
thereof. Each such contract has been duly authorized, executed and
delivered by all parties thereto, has not been amended or otherwise
modified except as permitted under Section 5.02(k), and, except to the
extent that any such failure to be in full force and effect, binding or
enforceable or any such default would not reasonably be expected to
have a Material Adverse Effect, is in full force and effect and is
binding upon and enforceable against all parties thereto in accordance
with its terms, and there exists no default under any such contract by
any party thereto.
ARTICLE V
COVENANTS OF THE BORROWER AND THE PARENT GUARANTOR
SECTION 5.01. Affirmative Covenants. From and after the
Funding Date (after giving effect to the Transaction), so long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
Party shall have any Commitment hereunder, each of the Borrower and the Parent
Guarantor will:
(a) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects, with all applicable
laws, rules, regulations and orders, such compliance to include,
without limitation, compliance with ERISA, except to the extent that
such failure would not reasonably be expected to have a Material
Adverse Effect.
(b) Payment of Taxes, Etc. Pay and discharge, and cause each
of its Subsidiaries to pay and discharge, before the same shall become
delinquent, all material taxes, assessments and governmental charges or
levies imposed upon it or upon its property; provided, however, that
neither the Borrower nor any of its Subsidiaries shall be required to
pay or discharge any such tax, assessment, charge or claim that is
being contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained.
(c) Compliance with Environmental Laws. Except to the extent
that the failure to do so would not reasonably be expected to have a
Material Adverse Effect, (i) comply, and cause each of its Subsidiaries
and all lessees and other Persons operating or occupying its properties
to comply, in all material respects, with all applicable Environmental
Laws and Environmental Permits; (ii) obtain and renew and cause each of
its Subsidiaries to obtain and renew all Environmental Permits
necessary for its operations and properties; and (iii) conduct, and
cause each of its Subsidiaries to conduct, if required under
Environmental Laws, any investigation, study, sampling and testing, and
undertake any cleanup, removal, remedial or other action necessary to
remove and clean up all Hazardous Materials from any of its properties,
in accordance with the requirements of all Environmental Laws;
provided, however, that neither the Borrower nor any of its
Subsidiaries shall be required to undertake any such cleanup, removal,
remedial or other action to the extent that its obligation to do so is
being contested in good faith and by proper proceedings and appropriate
reserves are being maintained with respect to such circumstances.
(d) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such
risks as is usually carried by companies engaged in similar businesses
and owning similar properties in the same general areas in which the
Borrower or such Subsidiary operates.
(e) Preservation of Corporate Existence, Etc. Preserve and
maintain, and cause each of its Subsidiaries to preserve and maintain,
its existence, legal structure, legal name, rights (charter and
statutory), permits, licenses, approvals, privileges and franchises,
including, without limitation, on the Funding Date only, the right to
use the "Sodexho" trade name for a period of ten years following the
Funding Date and the "Marriott" trade name for a period of four years
following the Funding Date (subject, in each case, to the terms and
conditions of applicable license agreements); provided, however, that
the Borrower and its Subsidiaries may consummate the Transaction and
any other merger or consolidation permitted under Section 5.02(d) and
provided further that neither the Borrower nor any of its Subsidiaries
shall be required to preserve any right, permit, license, approval,
privilege or franchise if the Borrower or such Subsidiary shall
determine that the preservation thereof is no longer desirable in the
conduct of the business of the Borrower or such Subsidiary, as the case
may be, and that the loss thereof would not reasonably be expected to
have a Material Adverse Effect.
(f) Visitation Rights. At any reasonable time and from time to
time, upon reasonable prior notice and at the expense of the
Administrative Agent or such Lender Party, permit the Administrative
Agent or any of the Lender Parties or any agents or representatives
thereof, to examine and make copies of and abstracts from the records
and books of account of, and visit the properties of, the Borrower and
any of its Subsidiaries, and to discuss the affairs, finances and
accounts of the Borrower and any of its Subsidiaries with any of their
officers or directors and, subject to prior notice to the Borrower and
affording a reasonable opportunity for the Borrower to have its
representatives participate therein, with their independent certified
public accountants.
(g) Keeping of Books. Keep, and cause each of its Subsidiaries
to keep, proper books of record and account, in which full and correct
entries shall be made of all financial transactions and the assets and
business of the Borrower and each such Subsidiary in accordance with
GAAP.
(h) Maintenance of Properties, Etc. Maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, all of its
properties that are used or useful in the conduct of its business in
good working order and condition, ordinary wear and tear excepted.
(i) Performance of Certain Documents. Perform and observe all
of the material terms and provisions of the Tax Agreement, the
Indemnity Support Agreement (if the Indemnity Support Agreement has
been entered into) and the Consents Side Letter to be performed or
observed by it, maintain each such document in full force and effect,
enforce each such document in accordance with its terms, take all such
action to such end as may be from time to time requested by the
Administrative Agent and, upon request of the Administrative Agent,
make to each other party to each such document such demands and
requests for information and reports or for action as the Parent
Guarantor or any of its Subsidiaries is entitled to make under such
document; provided that this subsection (i) shall only apply to the
Consents Side Letter and the Indemnity Support Agreement (if the
Indemnity Support Agreement is entered into) for so long as third-party
consents as set forth in Exhibit A to the Consents Side Letter with
potential liability in excess of $25,000,000 have not been obtained.
(j) Performance of Material Contracts. Perform and observe all
the terms and provisions of each Material Contract to be performed or
observed by it (except for the absence of certain third-party consents
and approvals for which the potential liability exposure is indemnified
pursuant to the Consents Side Letter and the Indemnity Support
Agreement), maintain each such Material Contract in full force and
effect (other than such Material Contracts that may be terminated by
either party thereto without cause or by the Borrower or the Parent
Guarantor with cause), enforce each such Material Contract in
accordance with its terms, and cause each of its Subsidiaries to do so
except in any case where the failure to do so, either individually or
in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.
(k) Transactions with Affiliates. Conduct, and cause each of
its Subsidiaries to conduct, all transactions otherwise permitted under
the Loan Documents with any of their Affiliates (other than (i) the
Borrower and its Subsidiaries, and (ii) up to an aggregate value of the
consideration that would be paid in an arm's-length transaction with a
Person not an Affiliate not to exceed $5,000,000 in any Fiscal Year of
the Borrower, the Parent Guarantor and its Subsidiaries (other than the
Borrower and its Subsidiaries)) on terms that are fair and reasonable
and no less favorable to the Borrower or such Subsidiary than it would
obtain in a comparable arm's-length transaction with a Person not an
Affiliate; provided that (i) the Loan Parties may enter into and
perform contracts with Sodexho existing on the Funding Date and any
amendments thereof not prohibited by Section 5.02(k), (ii) the Borrower
and the Parent Guarantor may make payments, distributions and other
transfers, and enter into transactions, permitted under Section
5.02(h), (iii) the Borrower and its Subsidiaries may make payments
under the Procurement Contracts Agreement so long as payments made to
the Parent Guarantor thereunder do not exceed amounts paid by the
Parent Guarantor to parties to the Procurement Contracts and (iv) the
Borrower and its Subsidiaries may assume the liabilities of the Parent
Guarantor under the Procurement Contracts.
(l) Additional Subsidiary Guarantors. The Borrower will cause
sufficient of its Subsidiaries to become Subsidiary Guarantors so that,
at all times, (i) at least ninety percent (90%) of the Consolidated
domestic assets of the Parent Guarantor and its Subsidiaries and ninety
percent (90%) of the Consolidated domestic sales of the Parent
Guarantor and its Subsidiaries are held by or generated by Subsidiary
Guarantors, and (ii) each Subsidiary generating five percent (5%) or
more of the total Consolidated domestic sales of the Parent Guarantor
and its Subsidiaries or holding five percent (5%) or more of the
Consolidated domestic assets of the Parent Guarantor and its
Subsidiaries, is a Subsidiary Guarantor; and each Subsidiary that
becomes a Subsidiary Guarantor pursuant to this Section 5.01(1) shall
become an additional Subsidiary Guarantor pursuant to the terms of the
Subsidiary Guaranty and an additional Grantor pursuant to the terms of
the Security Agreement, and shall, within 30 days of becoming a
Subsidiary Guarantor hereunder, execute and deliver to the
Administrative Agent a Subsidiary Guaranty Supplement, a Security
Agreement Supplement and such other documents as the Administrative
Agent may reasonably deem desirable in order to perfect and protect any
Liens granted under the Collateral Documents and the Security Agreement
Supplement and to enable the Administrative Agent and the Lenders to
exercise and enforce their rights and their remedies under the Loan
Documents, in each case, in form reasonably satisfactory to the
Administrative Agent.
(m) Interest Rate Hedging. Enter into, within 6 months
following the Funding Date, and maintain thereafter, interest rate
Hedge Agreements with Persons acceptable to the Administrative Agent or
other fixed rate arrangements (including a fixed rate facility covering
the Guaranteed Senior Debt) acceptable to the Administrative Agent (i)
covering a notional amount of not less than 45% of the sum of the
aggregate outstanding principal balance of each of the Term Facility
and the Guaranteed Senior Debt plus $100,000,000, and (ii) having an
average life of not less than three years from the date of
commencement.
SECTION 5.02. Negative Covenants. From and after the Funding
Date (after giving effect to the Transaction), so long as any Advance shall
remain unpaid, any Letter of Credit shall be outstanding or any Lender Party
shall have any Commitment hereunder, each of the Borrower and the Parent
Guarantor will not, at any time:
(a) Liens, Etc. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to
exist, any Lien on or with respect to any of its properties of any
character (including, without limitation, accounts) whether now owned
or hereafter acquired, or sign or file or suffer to exist, or permit
any of its Subsidiaries to sign or file or suffer to exist, under the
Uniform Commercial Code of any jurisdiction, a financing statement that
names the Parent Guarantor or any of its Subsidiaries as debtor, or
sign or suffer to exist, or permit any of its Subsidiaries to sign or
suffer to exist, any security agreement authorizing any secured party
thereunder to file such financing statement, or assign, or permit any
of its Subsidiaries to assign, any accounts or other right to receive
income, excluding, however, from the operation of the foregoing
restrictions the following:
(i) Liens created under the Loan Documents;
(ii) Permitted Liens;
(iii) Liens existing on the date hereof and, in the case of
any such Lien securing any amount in excess of $3,000,000, described
on Schedule 5.02(a) hereto;
(iv) Liens arising in connection with Capitalized Leases and
other Debt permitted under Section 5.02(b)(v); provided that no such
Lien shall extend to or cover any Collateral or assets other than
the assets subject to such Capitalized Leases or the purchase of
which was financed with such Debt;
(v) any Lien existing on any asset of any corporation at the
time such corporation becomes a Subsidiary of the Parent Guarantor
and not created in contemplation of such event;
(vi) any Lien on any asset of any corporation existing at
the time such corporation is merged or consolidated with or into the
Parent Guarantor or a Subsidiary of the Parent Guarantor and not
created in contemplation of such event;
(vii) any Lien existing on any asset prior to the
acquisition thereof by the Parent Guarantor or a Subsidiary of the
Parent Guarantor and not created in contemplation of such
acquisition;
(viii) Liens on contract rights, accounts receivable arising
thereunder and fixed and capital assets used or to be used in
connection with the performance thereof securing obligations
incurred to finance such fixed or capital assets or investments
required under such contracts or obligations to subcontractors,
partners or other participants in respect of such contracts,
provided that accounts receivable subject to such Liens do not
exceed $30,000,000 in aggregate at any one time;
(ix) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt or other obligation secured by any
Lien permitted by any of the foregoing clauses of this Section,
provided that such Debt or other obligation is not increased and is
not secured by any additional assets;
(x) Liens not otherwise permitted by the foregoing clauses
of this Section securing Debt and other obligations in an aggregate
principal or face amount at any date not to exceed $15,000,000; and
(xi) Uniform Commercial Code financing statements (Form
UCC-1 or other comparable form) signed in connection with operating
leases.
(b) Debt. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist,
any Debt other than:
(i) Debt owed to the Parent Guarantor or to a Subsidiary of
the Parent Guarantor incurred in connection with cash management
operations in the ordinary course of business;
(ii) Debt outstanding on the date hereof and identified as
"Not To Be Refinanced" on Schedule 4.01(y);
(iii) Debt owed to the Borrower or to a wholly owned
Subsidiary of the Borrower;
(iv) Debt under the Loan Documents;
(v) Capitalized Leases and Debt incurred or assumed for the
purpose of financing all or a part of the cost of acquiring or
constructing any fixed or capital asset, not to exceed in the
aggregate $50,000,000 at any time outstanding;
(vi) in the case of the Parent Guarantor, Debt in respect of
the Guaranteed Senior Debt, the Retained Marriott Bonds, the LYONs,
the indenture in respect of the LYONs, as the same may be amended
from time to time, and the LYONs Allocation Agreement;
(vii) Debt incurred to finance capital assets for specific
clients in the ordinary course of business in connection with
management contracts with such clients;
(viii) Debt in respect of obligations secured by Liens
permitted under Section 5.02(a)(viii);
(ix) Debt in respect of Hedge Agreements entered into to
hedge against currency, interest rate and commodity price risks of
the Parent Guarantor and its Subsidiaries arising from the
operations and financing of the Parent Guarantor and its
Subsidiaries and not for speculative purposes; and
(x) other Debt not permitted under clauses (i) through (ix)
above in an aggregate principal amount outstanding at any time not
to exceed $15,000,000.
(c) Lease Obligations. Create, incur, assume or suffer to
exist, or permit any of its Subsidiaries to create, incur, assume or
suffer to exist, any obligations as lessee for the rental or hire of
real or personal property of any kind under leases or agreements to
lease (other than Capitalized Leases) having an original term of one
year or more other than (i) leases and agreements that would not, in
the aggregate, cause the rental obligations (excluding obligations for
rent determined on the basis of a percentage of profits, revenues or
other similar measures or representing the cost of utilities, taxes,
insurance or other similar items under a "net lease" or similar
arrangement) of the Borrower and its Subsidiaries, on a Consolidated
basis, in respect of all such leases and agreements to exceed
$15,000,000 payable in any period of 12 consecutive months, (ii)
operating leases entered into in the ordinary course of business and
(iii) other operating leases with respect to real and personal property
for use in connection with, and directly attributable to, particular
food services or facilities management contracts of the Borrower and
its Subsidiaries.
(d) Mergers, Etc. Merge into or consolidate with any Person or
permit any Person to merge into it, or permit any of its Subsidiaries
to do so, except that (i) the Parent Guarantor and its Subsidiaries may
consummate the Transaction and (ii) any Subsidiary of the Borrower may
merge into or consolidate with any other Subsidiary of the Borrower
provided that the Person formed by such merger or consolidation shall
be a Subsidiary of the Borrower in which the Borrower's direct or
indirect percentage equity interest is at least as high as the higher,
immediately prior to such merger or consolidation, of its percentage
equity interests in the two Subsidiaries of the Borrower party to such
merger or consolidation and (iii) a Subsidiary of the Borrower may
merge with and into the Borrower so long as the Borrower is the
surviving entity of such merger.
(e) Sales, Etc., of Assets. Sell, lease, transfer or otherwise
dispose of, or permit any of its Subsidiaries to sell, lease, transfer
or otherwise dispose of, any Collateral, any fixed or capital assets
other than Collateral, or substantially all assets constituting the
business of a division, branch or other unit operation, except:
(i) sales in the ordinary course of its business;
(ii) leases of equipment in the ordinary course of its
business;
(iii) sales of worn out or obsolete machinery, fixtures,
equipment and materials;
(iv) sales, leases, transfer or other dispositions by the
Parent Guarantor or any of its Subsidiaries to the Parent Guarantor
or any Subsidiaries provided that any such sale, lease, transfer or
other disposition by the Borrower or any of its Subsidiaries to the
Parent Guarantor or any of its Subsidiaries that is not the Borrower
or a Subsidiary of the Borrower shall be subject to Section 5.01(k);
(v) in a transaction authorized by subsection (h) of this
Section;
(vi) dispositions of contracts, and associated inventory,
equipment and accounts receivable, in the ordinary course of
business;
(vii) in a transaction authorized by subsection (d) of this
Section;
(viii) sales of substantially all assets constituting a
non-material business line for fair value and for not less than 75%
cash provided that such sales are limited to business lines
generating no more than $100,000,000 in annual revenues individually
for any such business line or $200,000,000 in aggregate annual
revenues for all such business lines sold over the term of the
Facilities; and
(ix) sales of any other capital or fixed assets by the
Parent Guarantor or any of its Subsidiaries so long as (A) the
purchase price paid to the Parent Guarantor or such Subsidiary for
each such asset shall be no less than the fair market value of such
asset at the time of such sale and (B) not less than 75% of the
purchase price for such asset shall be paid to the Parent Guarantor
or such Subsidiary solely in cash, provided that the book value of
each such asset sold pursuant to this clause (ix) shall not exceed
$10,000,000 and the book value of all such assets sold by the Parent
Guarantor and its Subsidiaries during the term of the Facilities
pursuant to this clause (ix) shall not exceed $30,000,000.
(f) Investments in Other Persons. Make or hold, or permit any
of its Subsidiaries to make or hold, any Investment in any Person other
than:
(i) Investments by the Parent Guarantor and its Subsidiaries
in the Parent Guarantor and its Subsidiaries, provided that any
Investment by the Borrower or any of its Subsidiaries in the Parent
Guarantor or any of its Subsidiaries that is not the Borrower or a
Subsidiary of the Borrower shall be subject to Section 5.01(k);
(ii) (A) loans and advances to employees in connection with
employee relocation expenses and (B) other loans and advances to
employees in the ordinary course of the business of the Parent
Guarantor and its Subsidiaries in an aggregate principal amount for
all such loans and advances under this subclause (B) not to exceed
$3,000,000 at any time outstanding;
(iii) Investments by the Parent Guarantor and its
Subsidiaries in Cash Equivalents;
(iv) Investments by the Parent Guarantor and its
Subsidiaries in Hedge Agreements entered into to hedge against
currency, interest rate and commodity price risks of the Parent
Guarantor and its Subsidiaries arising from the operations and
financing of the Parent Guarantor and its Subsidiaries and not for
speculative purposes;
(v) Investments consisting of intercompany Debt permitted
under Section 5.02(b)(iii);
(vi) Investments in customers of the Parent Guarantor and
its Subsidiaries consisting of the acquisition or construction of
capital or fixed assets to be used under a contract with such
customer for the provision of food services or facilities management
services, or the financing thereof;
(vii) prepaid commissions, advances, guarantees and other
contractually obligated payments made to customers in connection
with obtaining or performing contracts with such customers in the
ordinary course of business;
(viii) Investments in joint ventures or partnerships in an
aggregate principal amount not to exceed $25,000,000 at any time
outstanding; and
(ix) Investments not otherwise permitted by the foregoing
clauses of this Section in an aggregate principal amount not to
exceed $15,000,000 at any time outstanding.
(g) New Subsidiaries. Create, organize, incorporate or acquire
any Subsidiary (any such newly created, organized, incorporated or
acquired Subsidiary being a "New Subsidiary"), or permit any of its
Subsidiaries to create, organize, incorporate or acquire any New
Subsidiary, unless:
(i) the conditions of Section 5.01(l) are fully satisfied;
and
(ii) if such New Subsidiary is required under Section
5.01(l) to become a Subsidiary Guarantor, the capital stock or other
ownership interest in such New Subsidiary shall be pledged to the
Administrative Agent for the benefit of the Secured Parties,
pursuant to the terms and conditions of the Collateral Documents
and/or one or more additional pledge agreements (or other similar
documents), in form and substance reasonably acceptable to the
Lenders.
(h) Dividends, Etc. Declare or pay any dividends, purchase,
redeem, retire, defease or otherwise acquire for value any of its
capital stock or any warrants, rights or options to acquire such
capital stock, now or hereafter outstanding, return any capital to its
stockholders as such, make any distribution of assets, capital stock,
warrants, rights, options, obligations or securities to its
stockholders as such, or permit any of its Subsidiaries to do any of
the foregoing or permit any of its Subsidiaries to purchase, redeem,
retire, defease or otherwise acquire for value any capital stock of the
Borrower or any warrants, rights or options to acquire such capital
stock or to issue or sell any capital stock or any warrants, rights or
options to acquire such capital stock, except that, so long as no
Default under Section 7.01(a) or Section 7.01(f), in each case, without
giving effect to any grace periods therein, or any Event of Default
shall have occurred and be continuing at the time of any action
described in clauses (i), (ii), (iii) and (iv) below or would result
therefrom:
(i) the Parent Guarantor may:
(A) up to the amounts calculated pursuant to clauses
(ii)(B)(5) and (7), declare and pay dividends or purchase,
redeem or retire capital stock with any amounts received from
the Borrower pursuant to clauses (ii)(B)(5) and (7), or from any
other Subsidiary of the Parent Guarantor pursuant to clause
(iv); and
(B) make payments in respect of the SMS Allocable Payment
Obligation (as defined in the LYONs Allocation Agreement);
(ii) the Borrower may:
(A) declare and pay dividends and distributions payable
only in common stock of the Borrower; and
(B) declare and pay cash dividends to its shareholders in
an amount equal to the sum of:
(1) regularly scheduled payments of interest due and
payable on the Guaranteed Senior Debt and the Retained
Marriott Bonds,
(2) to the extent reasonably allocable to the Borrower
and its Subsidiaries, payments of current local, state and
Federal taxes due and payable by the Parent Guarantor,
(3) to the extent reasonably allocable to the Borrower
and its Subsidiaries, corporate overhead charges payable by
the Parent Guarantor, including, without limitation, legal,
accounting and other professional costs, and salary and other
compensation expenses for its officers, directors and
employees,
(4) payments required to be made by the Parent
Guarantor under the Transaction Documents and the other
agreements listed on Schedule 5.02(h),
(5) up to $5,000,000 per year to permit the Parent
Guarantor to repurchase, redeem or retire capital stock of
the Parent Guarantor or options, warrants or rights in
respect thereof acquired pursuant to a stock option or other
similar plan or other compensation arrangement from officers,
directors and employees of the Parent Guarantor and its
Subsidiaries (other than officers, directors or employees of
Subsidiaries that are not officers, directors or employees of
the Parent Guarantor, the Borrower or any Subsidiary of the
Borrower) upon the death, disability, retirement or other
termination of such Person as such an officer, director or
employee,
(6) payments of principal, interest and premium
necessary to repay or redeem the Existing Debt (including,
without limitation, payments to New Marriott in respect of
Marriott Bonds assumed by New Marriott, if any, and payments
in respect of the SMS Allocable Payment Obligation (as
defined in the LYONs Allocation Agreement)) and fees and
expenses in respect thereof, and
(7) to the extent the Parent Guarantor has declared
dividends in such amount, an amount equal to
(x) up to $7,100,000 in the Fiscal Quarter ending
on or about November 30, 1998; and
(y) for each Fiscal Quarter thereafter, up to 40%
(or, if the Leverage Ratio as of the end of the Fiscal
Quarter immediately preceding the Fiscal Quarter in which
the dividend is paid is less than 4.0:1.0 but not less
than 3.0:1.0, 45%) of net income of the Parent Guarantor
for the completed Fiscal Quarters of the Fiscal Year in
which such dividend is to be paid (or, in the case of a
dividend to be paid in the first Fiscal Quarter of any
Fiscal Year, of the Fiscal Year prior to the Fiscal Year
in which such dividend is to be paid) less such dividends
paid during the previous Fiscal Quarters of such Fiscal
Year (or, in the case of a dividend to be paid in the
first Fiscal Quarter of any Fiscal Year, the prior Fiscal
Year), other than, in any such case, the first Fiscal
Quarter of the Fiscal Year with respect to which such
computation is made, provided that the Borrower may
declare and pay dividends to its shareholders without
limitation if the Leverage Ratio as of the end of the
Fiscal Quarter immediately preceding the Fiscal Quarter
in which the dividend is paid is less than 3.0:1.0;
provided, however, that dividends declared and
paid by the Borrower during the immediately preceding
four Fiscal Quarters ending on or about August 31, 1999
pursuant to this clause (7) shall not exceed 40% of the
net income of the Parent Guarantor for such four Fiscal
Quarters;
(iii) any Subsidiary of the Borrower may declare and
pay cash dividends to the Borrower or pro rata to the holders
of its capital stock; and
(iv) any Subsidiary of the Parent Guarantor (other
than the Borrower and its Subsidiaries) may declare and pay
dividends to the Parent Guarantor or pro rata to the holders
of its capital stock.
(i) Change in Nature of Business. Make, or permit any of its
Subsidiaries to make, any material change in the nature of its business
from that described in the Proxy Statement for the Parent Guarantor and
its Subsidiaries and extensions thereof into new markets, services and
product areas in related businesses.
(j) Fiscal Year Changes. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in its Fiscal Year (other
than changing its Fiscal Year end to August 31).
(k) Amendment of Certain Sodexho Contracts. Cancel or
terminate any material contracts entered into with Sodexho for the
providing of business related support services, expertise or other
assistance to the Borrower or any of its Subsidiaries or consent to or
accept any cancellation or termination thereof, amend or otherwise
modify any such contract or give any consent, waiver or approval
thereunder, waive any default under or breach of any such contract,
agree in any manner to any other amendment, modification or change of
any term or condition of any such contract or take any other action in
connection with any such contract that would materially impair the
value of the interest or rights of the Borrower thereunder or that
would materially impair the interest or rights of the Administrative
Agent or any Lender Party, or permit any of its Subsidiaries to do any
of the foregoing, except that such contracts may be amended, waived or
modified with the consent of the independent directors of the Parent
Guarantor; provided that the fees payable to Sodexho under such
contracts (excluding guarantee fees) do not exceed 0.3% of gross annual
revenues of the Parent Guarantor and its Consolidated Subsidiaries in
any Fiscal Year.
(l) Negative Pledge. Enter into or suffer to exist, or permit
any of its Subsidiaries to enter into or suffer to exist, any agreement
prohibiting or conditioning the creation or assumption of any Lien upon
any of its property or assets other than in favor of the Secured
Parties except for (i) any such restrictions imposed in the Guaranteed
Senior Debt Credit Agreement, (ii) any such restrictions imposed in
lease agreements with respect to the property or equipment leased
thereunder and (iii) any such restrictions imposed in purchase money
financing agreements with respect to property financed thereunder;
provided in each case that such restrictions do not extend to any asset
other than the asset leased or financed under such agreement.
(m) Capital Expenditures. Make, or commit to make, or permit
any of its Subsidiaries to make, or commit to make, any Capital
Expenditures that would cause the aggregate of all such Capital
Expenditures and commitments therefor made by the Borrower and its
Subsidiaries in any period set forth below to exceed the amount set
forth below for such period; provided that the limitations on Capital
Expenditures set forth in this subsection (n) shall not apply at any
time after the Leverage Ratio is less than 3.0:1.0.
Period Ending August 31, Amount
------------------------ ------
1998 (stub period) $60,000,000
1999 and thereafter (12-month period) $100,000,000
SECTION 5.03. Reporting Requirements. From and after the
Funding Date, so long as any Advance shall remain unpaid, any Letter of Credit
shall be outstanding or any Lender Party shall have any Commitment hereunder,
each of the Borrower and the Parent Guarantor (as the case may be) will furnish
to the Lender Parties:
(a) Default Notice. As soon as possible and in any event
within five Business Days after a Responsible Officer of the Borrower
or the Parent Guarantor has knowledge of the occurrence of a Default
continuing on the date of such statement, a statement of a Responsible
Officer of the Borrower setting forth details of such Default and the
action that the Borrower has taken and proposes to take with respect
thereto.
(b) Quarterly Financials. As soon as available and in any
event within 45 days after the end of each of the first three quarters
of each Fiscal Year (except that the first quarterly statements may be
delivered within 90 days after the end of the relevant quarter), (i) a
Consolidated balance sheet of the Parent Guarantor and its Subsidiaries
as of the end of such quarter, a Consolidated statement of income of
the Parent Guarantor and its Subsidiaries for such Fiscal Quarter and
for the portion of the Parent Guarantor's Fiscal Year ending at the end
of such quarter and a Consolidated statement of cash flows of
the Parent Guarantor and its Subsidiaries for the portion of the Parent
Guarantor's Fiscal Year ending at the end of such quarter, and (ii) an
unconsolidated balance sheet of the Borrower as of the end of such
quarter, an unconsolidated statement of income of the Borrower for such
Fiscal Quarter and the portion of the Borrower's Fiscal Year ending at
the end of such quarter and a Consolidated statement of cash flows of
the Borrower for the portion of the Borrower's Fiscal Year ending at
the end of such quarter, setting forth, in each case, in comparative
form the corresponding figures for the corresponding period of the
preceding Fiscal Year, all in reasonable detail and duly certified
(subject to year-end adjustments) by the chief financial officer of the
Parent Guarantor or the Borrower (as the case may be) as having been
prepared in accordance with GAAP, together, in the case of such
financial statements of the Parent Guarantor, with (A) a certificate of
said officer stating that no Default has occurred and is continuing or,
if a Default has occurred and is continuing, a statement as to the
nature thereof and the action that the Parent Guarantor has taken and
proposes to take with respect thereto and (B) a schedule in form
satisfactory to the Administrative Agent of the computations used by
the Parent Guarantor in determining compliance with the covenants
contained in Sections 5.02(h)(ii)(B)(7) and (m) and Sections 5.04(a)
through (d).
(c) Annual Financials. As soon as available and in any event
within 90 days after the end of each Fiscal Year, (i) a copy of the
annual report for such Fiscal Year for the Parent Guarantor and its
Subsidiaries, including therein the Consolidated balance sheet of the
Parent Guarantor and its Subsidiaries as of the end of such Fiscal Year
and Consolidated statements of income and cash flows of the Parent
Guarantor and its Subsidiaries for such Fiscal Year, reported on by
independent public accountants of internationally and nationally
recognized standing in a manner acceptable to the Securities and
Exchange Commission, and (ii) an unconsolidated balance sheet of the
Borrower as of the end of such Fiscal Year and unconsolidated
statements of income and cash flows of the Borrower for such fiscal
year, together, in the case of such financial statements of the Parent
Guarantor, with (A) a certificate of the chief financial officer of the
Parent Guarantor stating that no Default has occurred and is continuing
or, if a default has occurred and is continuing, a statement as to the
nature thereof and the action that the Parent Guarantor has taken and
proposes to take with respect thereto and (B) a schedule in form
satisfactory to the Administrative Agent of the computations used by
the Parent Guarantor in determining, as of the end of such Fiscal Year,
compliance with the covenants contained in Sections 5.02(h)(ii)(B)(7)
and (m) and Sections 5.04(a) through (d).
(d) Annual Forecasts. As soon as available and in any event
within five months after the beginning of each Fiscal Year of the
Parent Guarantor, forecasts prepared by management of the Parent
Guarantor, in form satisfactory to the Administrative Agent, of
Consolidated balance sheets, statements of income and cash flows of the
Parent Guarantor and its Subsidiaries on an annual basis for the Fiscal
Year following such Fiscal Year then ended and for each Fiscal Year
thereafter until the Termination Date, setting forth in comparative
form the corresponding figures for the immediately preceding Fiscal
Year, all in reasonable detail and form satisfactory to the
Administrative Agent, together with management's strategic discussion
and analysis thereof. Any forecasts or other information provided
pursuant to this Section to any Lender Party shall be Confidential
Information subject to the provisions of Section 9.10.
(e) ERISA Events and ERISA Reports. (i) Promptly and in any
event within 10 days after any Loan Party or any ERISA Affiliate knows
or has reason to know that any ERISA Event has occurred that would
reasonably be expected to have a Material Adverse Effect, a statement
of the chief financial officer of the Borrower describing such ERISA
Event and the action, if any, that such Loan Party or such ERISA
Affiliate has taken and proposes to take with respect thereto and (ii)
on the date any records, documents or other information must be
furnished to the PBGC with respect to any Plan pursuant to Section 4010
of ERISA in connection with a related event or condition that would
reasonably be expected to have a Material Adverse Effect, a copy of
such records, documents and information.
(f) Plan Terminations. Promptly and in any event within two
Business Days after receipt thereof by any Loan Party or any ERISA
Affiliate, copies of each notice from the PBGC stating its
intention to terminate any Plan or to have a trustee appointed to
administer any Plan that would reasonably be expected to have a
Material Adverse Effect.
(g) Plan Annual Reports. Promptly and in any event within 10
days after request of the Administrative Agent therefor, copies of each
Schedule B (Actuarial Information) to the most recently filed annual
report (Form 5500 Series) with respect to each Plan.
(h) Multiemployer Plan Notices. Promptly and in any event
within five Business Days after receipt thereof by any Loan Party or
any ERISA Affiliate from the sponsor of a Multiemployer Plan, copies of
each notice concerning (i) the imposition of Withdrawal Liability by
any such Multiemployer Plan that would reasonably be expected to have a
Material Adverse Effect, (ii) the reorganization or termination, within
the meaning of Title IV of ERISA, of any such Multiemployer Plan that
would reasonably be expected to have a Material Adverse Effect or (iii)
the amount of liability incurred, or that may be incurred, by such Loan
Party or any ERISA Affiliate in connection with any event described in
clause (i) or (ii).
(i) Litigation. Promptly after the commencement thereof,
notice of all actions, suits, investigations, litigation and
proceedings before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign,
affecting any Loan Party or any of its Subsidiaries of the type
described in Section 4.01(i), and promptly after the occurrence
thereof, notice of any adverse change in the status or the financial
effect on any Loan Party or any of its Subsidiaries of the Disclosed
Litigation from that described on Schedule 4.01(i).
(j) Securities Reports. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and
reports that the Parent Guarantor sends to its stockholders generally,
and copies of all regular, periodic and special reports, and all
registration statements, that any Loan Party or any of its Subsidiaries
files with the Securities and Exchange Commission or any governmental
authority that may be substituted therefor, or with any national
securities exchange.
(k) Environmental Conditions. Promptly after the assertion or
occurrence thereof, notice of any Environmental Action against or of
any noncompliance by any Loan Party or any of its Subsidiaries with any
Environmental Law or Environmental Permit that would reasonably be
expected to have a Material Adverse Effect.
(l) Other Information. Such other information respecting the
business, financial condition, results of operations, or prospects of
the Borrower and its Subsidiaries as any Lender Party (through the
Administrative Agent) may from time to time reasonably request.
SECTION 5.04. Financial Covenants. On and after the Funding
Date, so long as any Advance shall remain unpaid, any Letter of Credit shall be
outstanding or any Lender Party shall have any Commitment hereunder, the Parent
Guarantor will:
(a) Net Worth. Maintain, at the end of each three-month fiscal
period of the Parent Guarantor ending nearest to the last day of each
of the months set forth below, an excess of Consolidated Shareholders'
Equity plus the outstanding principal balance of the Guaranteed Senior
Debt of not less than the amount set forth below, for such month (plus
or minus, as the case may be, for each such amount set forth below, the
amount by which Consolidated goodwill and intangible assets of the
Parent Guarantor resulting from the consummation of the Transaction is
greater or less than $352,100,000) (provided that this Section 5.04(a)
shall not apply in respect of any month set forth below the last day of
which occurs prior to the Funding Date):
Fiscal Fiscal
Quarter End Amount Quarter End Amount
- ----------- ------ ----------- ------
May, 1998 $ 25,000,000 May, 2001 $125,000,000
August, 1998 $ 25,000,000 August, 2001 $200,000,000
November, 1998 $ 25,000,000 November, 2001 $200,000,000
February, 1999 $ 25,000,000 February, 2002 $200,000,000
May, 1999 $ 25,000,000 May, 2002 $200,000,000
August, 1999 $ 75,000,000 August, 2002 $275,000,000
November, 1999 $ 75,000,000 November, 2002 $275,000,000
February, 2000 $ 75,000,000 February, 2003 $275,000,000
May, 2000 $ 75,000,000 May, 2003 $275,000,000
August, 2000 $125,000,000 August, 2003 $375,000,000
November, 2000 $125,000,000 November, 2003 $375,000,000
February, 2001 $125,000,000 February, 2004 $375,000,000
(b) Interest Expense Coverage Ratio. Maintain, at the end of
each three-month fiscal period of the Parent Guarantor ending nearest
to the last day of each of the months set forth below, a ratio of
Consolidated EBITDA to Consolidated Interest Expense for the
immediately preceding four Fiscal Quarters (or, in the case of any
Fiscal Quarter ending less than 12 months after the Funding Date, such
number of full Fiscal Quarters commencing on or after the Funding Date
as shall have ended on such date), in each case, of the Parent
Guarantor and its Subsidiaries, of at least the ratio set forth below
for such month (provided that this Section 5.04(b) shall not apply in
respect of any month set forth below the last day of which occurs less
than one full Fiscal Quarter after the Funding Date);
Fiscal Fiscal
Quarter End Ratio Quarter End Ratio
- ----------- ----- ----------- -----
May, 1998 2.00:1.0 May, 2001 3.25:1.0
August, 1998 2.00:1.0 August, 2001 3.75:1.0
November, 1998 2.50:1.0 November, 2001 3.75:1.0
February, 1999 2.50:1.0 February, 2002 3.75:1.0
May, 1999 2.50:1.0 May, 2002 3.75:1.0
August, 1999 2.75:1.0 August, 2002 4.00:1.0
November, 1999 2.75:1.0 November, 2002 4.00:1.0
February, 2000 2.75:1.0 February, 2003 4.00:1.0
May, 2000 2.75:1.0 May, 2003 4.00:1.0
August, 2000 3.25:1.0 August, 2003 4.00:1.0
November, 2000 3.25:1.0 November, 2003 4.00:1.0
February, 2001 3.25:1.0 February, 2004 4.00:1.0
(c) Fixed Charge Coverage Ratio. Maintain, at the end of each
three-month fiscal period of the Parent Guarantor ending nearest to the
last day of each month set forth below, a ratio of Consolidated EBITDA
for the immediately preceding four Fiscal Quarters less (i) Capital
Expenditures made during the immediately preceding four Fiscal Quarters
less (ii) dividends paid by the Parent Guarantor during the immediately
preceding four Fiscal Quarters, to the sum of (i) Consolidated Interest
Expense for the immediately preceding four Fiscal Quarters plus (ii)
Scheduled Amortization Payments for the immediately preceding four
Fiscal Quarters, of not less than the ratio set forth below for such
month (provided that this Section 5.04(c) shall not apply in respect of
any month set forth below the last day of which occurs less than one
year after the Funding Date):
Fiscal Fiscal
Quarter End Ratio Quarter End Ratio
- ----------- ----- ----------- -----
February, 1999 1.00:1.0 November, 2001 1.25:1.0
May, 1999 1.10:1.0 February, 2002 1.25:1.0
August, 1999 1.15:1.0 May, 2002 1.25:1.0
November, 1999 1.25:1.0 August, 2002 1.25:1.0
February, 2000 1.25:1.0 November, 2002 1.25:1.0
May, 2000 1.25:1.0 February, 2003 1.25:1.0
August, 2000 1.25:1.0 May, 2003 1.25:1.0
November, 2000 1.25:1.0 August, 2003 1.25:1.0
February, 2001 1.25:1.0 November, 2003 1.25:1.0
May, 2001 1.25:1.0 February, 2004 1.25:1.0
August, 2001 1.25:1.0
(d) Cash Flow Leverage Ratio. Maintain, at the end of each
three month fiscal period of the Parent Guarantor ending nearest the
last day of each month set forth below, a Leverage Ratio of not more
than the ratio set forth below for such month (provided that this
Section 5.04(d) shall not apply in respect of any month set forth below
the last day of which occurs less than one year after the Funding
Date):
Fiscal Fiscal
Quarter End Ratio Quarter End Ratio
- ----------- ----- ----------- -----
February, 1999 5.25:1.0 November, 2001 3.25:1.0
May, 1999 5.25:1.0 February, 2002 3.25:1.0
August, 1999 4.50:1.0 May, 2002 3.25:1.0
November, 1999 4.50:1.0 August, 2002 2.75:1.0
February, 2000 4.50:1.0 November, 2002 2.75:1.0
May, 2000 4.50:1.0 February, 2003 2.75:1.0
August, 2000 3.75:1.0 May, 2003 2.75:1.0
November, 2000 3.75:1.0 August, 2003 2.50:1.0
February, 2001 3.75:1.0 November, 2003 2.50:1.0
May, 2001 3.75:1.0 February, 2004 2.50:1.0
August, 2001 3.25:1.0
SECTION 5.05. Maintenance of Separate Corporate Existence. On
and after the Funding Date, so long as any Advance shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have any
Commitment hereunder, each of the Borrower and the Parent Guarantor will comply
with the following covenants, as applicable:
(a) The Borrower shall maintain, and shall cause each of its
Subsidiaries to maintain, books, records and accounts that are separate
from the books, records and accounts of the Parent Guarantor such that:
(i) the revenues of the Borrower and its Subsidiaries will be credited
to the accounts of the Borrower and its Subsidiaries only; (ii) all
expenses incurred by the Borrower and its Subsidiaries shall be borne
by the Borrower and its Subsidiaries; (iii) only officers and employees
of the Borrower and its Subsidiaries shall have the authority to make
disbursements with respect to the accounts of the Borrower and its
Subsidiaries; and (iv) there shall occur no material sharing of
accounts or funds between the Borrower and its Subsidiaries, on the one
hand, and the Parent Guarantor, on the other hand.
(b) The Borrower will issue separate unaudited financial
statements from the financial statements of the Parent Guarantor,
prepared not less frequently than quarterly and prepared in accordance
with GAAP.
(c) The Borrower will conduct its affairs strictly in
accordance with its certificate of incorporation and its bylaws and
observe all necessary, appropriate and customary corporate formalities,
including, but not limited to, holding all regular and special
stockholders' and directors' meetings appropriate to authorize all
corporate action, keeping separate and accurate minutes of its
meetings, passing all resolutions or consents necessary to authorize
actions taken or to be taken, and maintaining accurate and separate
books, records and accounts, including, but not limited to, payroll and
intercompany transaction accounts.
(d) The Borrower will not assume or guarantee any of the
liabilities of the Parent Guarantor except (i) liabilities under the
Procurement Contracts or (ii) as contemplated by the Procurement
Contracts Agreement.
(e) All financial statements of the Parent Guarantor that are
filed with the Securities and Exchange Commission or any other
governmental department, authority, instrumentality, office, agency or
official, distributed on an annual or quarterly basis to any
shareholders or creditors of any of them, or of any of their
Subsidiaries or affiliates, or otherwise publicly distributed,
disseminated or released, shall include a note clearly stating that the
Borrower is a separate corporate entity with separate assets and
creditors.
ARTICLE VI
PARENT GUARANTY
SECTION 6.01. Parent Guaranty. The Parent Guarantor hereby
unconditionally and irrevocably guarantees (the undertaking by the Parent
Guarantor under this Article VI being the "Parent Guaranty") the punctual
payment when due, whether at stated maturity, by acceleration or otherwise, of
all Obligations of the Borrower now or hereafter existing under the Loan
Documents, whether for principal, interest, fees, expenses or otherwise (such
Obligations being the "Guaranteed Obligations"), and agrees to pay any and all
expenses (including counsel fees and expenses) incurred by the Administrative
Agent or any other Secured Party in enforcing any rights under this Parent
Guaranty. Without limiting the generality of the foregoing, the Parent
Guarantor's liability shall extend to all amounts that constitute part of the
Guaranteed Obligations and would be owed by the Borrower to the Administrative
Agent or any other Secured Party under the Loan Documents but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Borrower.
SECTION 6.02. Parent Guaranty Absolute. The Parent Guarantor
guarantees, to the fullest extent permitted under applicable law, that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Loan Documents, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Administrative Agent or any other Secured Party with respect thereto. The
Obligations of the Parent Guarantor under this Parent Guaranty are independent
of the Guaranteed Obligations or any other Obligations of any other Loan Party
under the Loan Documents, and a separate action or actions may be brought and
prosecuted against the Parent Guarantor to enforce this Parent Guaranty,
irrespective of whether any action is brought against the Borrower or any other
Loan Party or whether the Borrower or any other Loan Party is joined in any such
action or actions. The liability of the Parent Guarantor under this Parent
Guaranty shall be irrevocable, absolute and unconditional irrespective of, and
the Parent Guarantor hereby irrevocably waives any defenses it may now or
hereafter have in any way relating to, any or all of the following:
(a) any lack of validity or enforceability of any Loan
Document or any agreement or instrument relating thereto as against any
other Loan Party;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations or any
other Obligations of any other Loan Party under the Loan Documents, or
any other amendment or waiver of or any consent to departure from any
Loan Document, including, without limitation, any increase in the
Guaranteed Obligations resulting from the extension of additional
credit to the Borrower or any of its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any
Collateral, or any taking, release or amendment or waiver of or consent
to departure from any other guaranty, for all or any of the Guaranteed
Obligations;
(d) any manner of application of any Collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of
sale or other disposition of any Collateral for all or any of the
Guaranteed Obligations or any other Obligations of any other Loan Party
under the Loan Documents or any other assets of the Borrower or any of
its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any of its Subsidiaries;
(f) any failure of any Secured Party to disclose to the
Borrower or the Parent Guarantor any information relating to the
business, financial condition, results of operations or prospects of
any other Loan Party now or in the future known to any Secured Party
(the Parent Guarantor waiving any duty on the part of the Secured
Parties to disclose such information); or
(g) any other circumstance (including, without limitation, to
the extent permitted under applicable law, any statute of limitations)
or any existence of or reliance on any representation by the
Administrative Agent or any other Secured Party that might otherwise
constitute a defense available to, or a discharge of, the Borrower, the
Parent Guarantor or any other guarantor or surety.
This Parent Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by any Secured Party or any other Person
upon the insolvency, bankruptcy or reorganization of the Borrower or any other
Loan Party or otherwise, all as though such payment had not been made.
SECTION 6.03. Waivers and Acknowledgments. (a) The Parent
Guarantor hereby waives promptness, diligence, notice of acceptance and any
other notice with respect to any of the Guaranteed Obligations and this Parent
Guaranty and any requirement that the Administrative Agent or any other Secured
Party protect, secure, perfect or insure any Lien or any property subject
thereto or exhaust any right or take any action against the Borrower or any
other Person or any Collateral.
(b) The Parent Guarantor hereby waives any right to revoke
this Parent Guaranty, and acknowledges that this Parent Guaranty is continuing
in nature and applies to all Guaranteed Obligations, whether existing now or in
the future.
(c) The Parent Guarantor acknowledges that it will receive
substantial direct and indirect benefits from the financing arrangements
contemplated by the Loan Documents and that the waivers set forth in this
Section 6.03 are knowingly made in contemplation of such benefits.
(d) The Parent Guarantor has, independently and without
reliance upon the Administrative Agent, the Arrangers or any other Secured Party
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into the Parent Guaranty, and the
Parent Guarantor has established adequate means of obtaining from any other Loan
Parties on a continuing basis information pertaining to, and is now and on a
continuing basis will be completely familiar with, the business, financial
condition, results of operations and prospects of such other Loan Parties.
SECTION 6.04. Subrogation. The Parent Guarantor will not
exercise any rights that it may now or hereafter acquire against the Borrower or
any other insider guarantor that arise from the existence, payment, performance
or enforcement of the Guarantor's Obligations under this Parent Guaranty or any
other Loan Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Administrative Agent or any other
Secured Party against the Borrower or any other insider guarantor or any
Collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from the Borrower or any other insider guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim, remedy or right, unless and until
all of the Obligations and all other amounts payable under this Parent Guaranty
shall have been paid in full in cash and the Commitments shall have expired or
terminated. If any amount shall be paid to the Parent Guarantor in violation of
the preceding sentence at any time prior to the later of the payment in full in
cash of the Guaranteed Obligations and all other amounts payable under this
Parent Guaranty and the Termination Date, such amount shall be held in trust for
the benefit of the Administrative Agent and the other Secured Parties and shall
forthwith be paid to the Administrative Agent to be credited and applied to the
Guaranteed Obligations and all other amounts payable under this Parent Guaranty,
whether matured or unmatured, in accordance with the terms of the Loan
Documents, or to be held as Collateral for any Guaranteed Obligations or other
amounts payable under this Parent Guaranty thereafter arising. If (i) the Parent
Guarantor shall make payment to the Administrative Agent or any other Secured
Party of all or any part of the Guaranteed Obligations, (ii) all of the
Guaranteed Obligations and all other amounts payable under this Parent Guaranty
shall be paid in full in cash and (iii) the Termination Date shall have
occurred, the Administrative Agent and the other Secured Parties will, at the
Parent Guarantor's request and expense, execute and deliver to the Parent
Guarantor appropriate documents, without recourse and without representation or
warranty, necessary to evidence the transfer by subrogation to the Parent
Guarantor of an interest in the Guaranteed Obligations resulting from such
payment by the Parent Guarantor.
SECTION 6.05. Continuing Guaranty; Assignments. This Parent
Guaranty is a continuing guaranty and shall (a) remain in full force and effect
until the later of the payment in full in cash of the Guaranteed Obligations and
all other amounts payable under this Parent Guaranty and the Termination Date,
(b) be binding upon the Parent Guarantor, its successors and assigns and (c)
inure to the benefit of and be enforceable by the Administrative Agent and the
other Secured Parties and their successors, transferees and assigns. Without
limiting the generality of the foregoing clause (c), any Secured Party may
assign or otherwise transfer all or any portion of its rights and obligations
under this Agreement (including, without limitation, all or any portion of its
Commitment, the Advances owing to it and the Note or Notes held by it) to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Secured Party herein or otherwise,
in each case as and to the extent provided in Section 9.07.
SECTION 6.06. Scope of Limited Recourse Liability. All claims
of the Administrative Agent or any of the other Secured Parties for any of the
Guaranteed Obligations or any of the representations, covenants or other
agreements of the Parent Guarantor contained in this Agreement or any of the
other Loan Documents to which the Parent Guarantor is or is to be a party,
except as otherwise provided in Section 6.04 above, shall be limited to the
Collateral (as defined in Section 1 of the Pledge Agreement) of the Parent
Guarantor; provided, however, that nothing contained in this Section 6.06 shall
impair in any way the validity of the Indebtedness evidenced by this Agreement,
the Notes or any of the other Loan Documents or shall affect or impair in any
way the ability of the Administrative Agent or any of the other Secured Parties
to exercise or enforce any of their respective rights and remedies in and to the
Collateral (as defined in Section 1 of the Pledge Agreement) or in and to any
other collateral that may secure the Obligations of any of the Loan Parties
under or in respect of the Loan Documents. The Administrative Agent and each
Secured Party hereby agrees, to the fullest extent permitted under applicable
law, that in any proceeding under the Bankruptcy Code in respect of the Parent
Guarantor it will, to the extent available, make an election under Section
1111(b) of the Bankruptcy Code to be treated as fully secured by the Collateral
(as defined in Section 1 of the Pledge Agreement).
SECTION 6.07. Replacement of Guaranteed Senior Debt. The
Parent Guarantor hereby agrees not to refinance or replace the Guaranteed Senior
Debt with other Debt, except Debt (i) in an aggregate principal amount not to
exceed $650,000,000 and (ii) containing terms at least as favorable to the
Parent Guarantor (taken as a whole), including maturity date, interest rate, and
restrictive covenants, as those of the Guaranteed Senior Debt Credit Agreement,
provided that the net proceeds received from such replacement Debt in excess of
(A) in the case of replacement Debt other than Debt incurred on the Funding Date
in place of the incurrence of Debt under the Guaranteed Senior Debt Credit
Agreement ("Alternate Guaranteed Senior Debt"), the outstanding principal amount
of the Guaranteed Senior Debt, accrued interest thereon and fees and expenses
payable in connection with the incurrence of such replacement Debt or (B) in the
case of Alternate Guaranteed Senior Debt, $620,000,000 shall be applied to
prepay the Term Advances in a Group or Groups of Term Advances. Each such
prepayment shall be applied pro rata to the Term Advances of the several Lenders
included in such Group or Groups and shall reduce pro rata the remaining
principal installments set forth in Section 2.04(a).
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.01. Events of Default. If any of the following
events ("Events of Default") shall occur and be continuing (i) from and after
the date of this Agreement, in the case of clauses (a) and (f) below and (ii)
from and after the Funding Date, for all clauses of this Section 7.01:
(a) (i) the Borrower shall fail to pay any principal of any
Advance when the same shall become due and payable or (ii) the Borrower
shall fail to pay any interest on any Advance, or any Loan Party shall
fail to make any other payment under any Loan Document, in each case
under this clause (ii) within three Business Days after the same
becomes due and payable; or
(b) any representation or warranty made by any Loan Party (or
any of its officers) under or in connection with any Loan Document
shall prove to have been incorrect in any material respect when made;
or
(c) the Borrower shall fail to perform or observe any term,
covenant or agreement (i) contained in Section 2.14, 5.01(e) (in
respect of maintaining the existence of the Borrower only), 5.01(k) or
(l), 5.02, 5.03(a) or 5.04 or (ii) contained in Section 5.01(f) or
5.03(b) through (1) if such failure shall remain unremedied for 5
Business Days after written notice thereof shall have been given to the
Borrower by the Administrative Agent or any Lender Party; or
(d) any Loan Party shall fail to perform any other term,
covenant or agreement contained in any Loan Document on its part to be
performed or observed if such failure shall remain unremedied for 15
days after written notice thereof shall have been given to the Borrower
by the Administrative Agent or any Lender Party; or
(e) any Loan Party or any Substantial Subsidiary shall fail to
pay any principal of, premium or interest on or any other amount
payable in respect of any Debt that is outstanding in a principal
amount of at least $25,000,000 either individually or in the aggregate
(but excluding Debt outstanding hereunder) of such Loan Party or such
Substantial Subsidiary (as the case may be), when the same becomes due
and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement
or instrument relating to such Debt; or any other event shall occur or
condition shall exist under any agreement or instrument relating to any
such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event
or condition is to accelerate, or to permit the acceleration of, the
maturity of such Debt or otherwise to cause, or to permit the holder
thereof to cause, such Debt to mature; or any such Debt shall be
declared to be due and payable or required to be prepaid or redeemed
(other than by a regularly scheduled required prepayment or
redemption), purchased or defeased, or an offer to prepay, redeem,
purchase or defease such Debt shall be required to be made, in each
case prior to the stated maturity thereof; or
(f) the Borrower or any Substantial Subsidiary shall generally
not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Borrower or any Substantial Subsidiary
seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment
of a receiver, trustee, or other similar official for it or for any
substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either
such proceeding shall remain undismissed or unstayed for a period of 60
days or any of the actions sought in such proceeding (including,
without limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar official
for, it or any substantial part of its property) shall occur; or the
Borrower or any of its Subsidiaries shall take any corporate action to
authorize any of the actions set forth above in this subsection (f); or
(g) any judgment or order for the payment of money in excess
of $25,000,000 shall be rendered against any Loan Party or any
Subsidiary and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there
shall be any period of 15 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(h) any non-monetary judgment or order shall be rendered
against any Loan Party or any Subsidiary that would reasonably be
expected to have a Material Adverse Effect, and there shall be any
period of 15 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect; or
(i) any material provision of any Collateral Document or any
provision of any other Loan Document after delivery thereof pursuant to
Section 3.02 shall for any reason cease to be valid and binding on or
enforceable against any Loan Party party to it, or any such Loan Party
shall so state in writing; or
(j) any Collateral Document after delivery thereof pursuant to
Section 3.02 or 5.01(l) shall for any reason (other than pursuant to
the terms thereof) cease to create a valid and perfected lien on and
security interest in (with the priority purported to be created
thereby) a material portion of the Collateral purported to be covered
thereby; or
(k) Sodexho shall at any time for any reason cease to be the
record and beneficial owner, directly or indirectly, of at least 40.01%
of the shares of capital stock of the Parent Guarantor; or
(l) the Parent Guarantor shall at any time for any reason
cease to be the record and beneficial owner of 100% of the shares of
capital stock of the Borrower; or
(m) (i) any Person or two or more Persons acting in concert
(other than Sodexho and its Subsidiaries and Affiliates of Sodexho that
control Sodexho and Persons controlled by a Person who controls
Sodexho) shall have acquired beneficial ownership (within the meaning
of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934), directly or indirectly, of Voting
Stock of the Parent Guarantor (or other securities convertible into
such Voting Stock) representing 50% or more of the combined voting
power of all Voting Stock of the Parent Guarantor or (ii) any Person or
two or more Persons acting in concert (other than Sodexho and its
Subsidiaries and Affiliates of Sodexho that control Sodexho and Persons
controlled by a Person who controls Sodexho) shall have acquired, by
contract or otherwise, control over Voting Stock of the Parent
Guarantor (or other securities convertible into such securities)
representing 50% or more of the combined voting power of all Voting
Stock of the Parent Guarantor; or
(n) any ERISA Event shall have occurred with respect to a Plan
and the sum (determined as of the date of occurrence of such ERISA
Event) of the Insufficiency of such Plan and the Insufficiency of any
and all other Plans with respect to which an ERISA Event shall have
occurred and then exist (or the liability of the Loan Parties and the
ERISA Affiliates related to such ERISA Event) exceeds $25,000,000; or
(o) any Loan Party or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan in an amount that, when
aggregated with all other amounts required to be paid to Multiemployer
Plans by the Loan Parties and the ERISA Affiliates as Withdrawal
Liability (determined as of the date of such notification), exceeds
$25,000,000; or
(p) any Loan Party or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of
Title IV of ERISA, and as a result of such reorganization or
termination the aggregate annual contributions of the Loan Parties and
the ERISA Affiliates to all Multiemployer Plans that are then in
reorganization or being terminated have been or will be increased over
the amounts contributed to such Multiemployer Plans for the plan years
of such Multiemployer Plans immediately preceding the plan year in
which such reorganization or termination occurs by an amount exceeding
$25,000,000,
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the obligation of each Appropriate Lender to make Advances (other than
Letter of Credit Advances by an Issuing Bank or a Revolving Credit Lender
pursuant to Section 2.03(c)) and of each Issuing Bank to issue Letters of Credit
to be terminated, whereupon the same shall forthwith terminate, and (ii) shall
at the request, or may with the consent, of the Required Lenders, (A) by notice
to the Borrower, declare the Notes, all interest thereon and all other amounts
payable under this Agreement and the other Loan Documents to be forthwith due
and payable, whereupon the Notes, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower, and (B) by notice to each party required under the terms of any
agreement in support of which a Letter of Credit is issued, request that all
Obligations under such agreements be declared to be due and payable; provided,
however, that in the event of an actual or deemed entry of an order for relief
with respect to the Borrower under the Federal Bankruptcy Code, (x) the
obligation of each Lender to make Advances (other than Letter of Credit Advances
by an Issuing Bank or a Revolving Credit Lender pursuant to Section 2.03(c)) and
of each Issuing Bank to issue Letters of Credit shall automatically be
terminated and (y) the Notes, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower.
SECTION 7.02. Actions in Respect of the Letters of Credit upon
Default. If any Event of Default shall have occurred and be continuing, the
Administrative Agent may, or shall at the request of the Required Lenders,
irrespective of whether it is taking any of the actions described in Section
7.01 or otherwise, make demand upon the Borrower to, and forthwith upon such
demand the Borrower will, pay to the Administrative Agent on behalf of the
Lender Parties in same day funds at the Administrative Agent's office designated
in such demand, an amount equal to the aggregate Available Amount of all Letters
of Credit then outstanding to be held as cash collateral for the payment of all
Obligations in respect of such Letters of Credit. If at any time the
Administrative Agent determines that any funds so held are subject to any right
or claim of any Person other than the Administrative Agent and the Lender
Parties or that the total amount of such funds is less than the aggregate
Available Amount of all Letters of Credit, the Borrower will, forthwith upon
demand by the Administrative Agent, pay to the Administrative Agent, as
additional collateral, an amount equal to the excess of (a) such aggregate
Available Amount over (b) the total amount of funds, if any, then held as
collateral that the Administrative Agent determines to be free and clear of any
such right and claim.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
SECTION 8.01. Authorization and Action. (a) Each Lender Party
hereby appoints and authorizes the Administrative Agent to take such action as
agent on its behalf and to exercise such powers and discretion under this
Agreement and the other Loan Documents as are delegated to the Administrative
Agent by the terms hereof and thereof, together with such powers and discretion
as are reasonably incidental thereto. As to any matters not expressly provided
for by the Loan Documents (including, without limitation, enforcement or
collection of the Notes), the Administrative Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding upon all Lender Parties and all holders of Notes;
provided, however, that the Administrative Agent shall not be required to take
any action that exposes the Administrative Agent to personal liability or that
is contrary to this Agreement or applicable law. The Administrative Agent agrees
to give to each Lender Party prompt notice of each notice given to it by the
Borrower pursuant to the terms of this Agreement.
(b) The Arrangers shall have no powers or discretion under
this Agreement or any of the other Loan Documents and each of the Lender Parties
hereby acknowledges that the Arrangers have no liability under this Agreement or
under any of the other Loan Documents.
SECTION 8.02. Administrative Agent's Reliance, Etc. Neither
the Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with the Loan Documents, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Administrative Agent: (a) may treat the payee of any Note as the
holder thereof until the Administrative Agent receives and accepts an Assignment
and Acceptance entered into by the Lender that is the payee of such Note, as
assignor, and an Eligible Assignee, as assignee, as provided in Section 9.07;
(b) may consult with legal counsel (including counsel for any Loan Party),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (c) makes no
warranty or representation to any Lender Party and shall not be responsible to
any Lender Party for any statements, warranties or representations (whether
written or oral) made in or in connection with the Loan Documents; (d) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of any Loan Document on the part of
any Loan Party or to inspect the property (including the books and records) of
any Loan Party; (e) shall not be responsible to any Lender Party for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of, or the perfection or priority of any lien or security interest created or
purported to be created under or in connection with, any Loan Document or any
other instrument or document furnished pursuant thereto; and (f) shall incur no
liability under or in respect of any Loan Document by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telegram or
telecopy) believed by it to be genuine and signed or sent by the proper party or
parties.
SECTION 8.03. Morgan and Affiliates. With respect to its
Commitments, the Advances made by it and the Notes issued to it, Morgan shall
have the same rights and powers under the Loan Documents as any other Lender
Party and may exercise the same as though it were not the Administrative Agent;
and the term "Lender Party" or "Lenders Parties" shall, unless otherwise
expressly indicated, include Morgan in its individual capacity. Morgan and its
affiliates may accept deposits from, lend money to, act as trustee under
indentures of, accept investment banking engagements from and generally engage
in any kind of business with, any Loan Party, any of its Subsidiaries and any
Person who may do business with or own securities of any Loan Party or any such
Subsidiary, all as if Morgan were not the Administrative Agent and without any
duty to account therefor to the Lender Parties.
SECTION 8.04. Lender Party Credit Decision. Each Lender Party
acknowledges that it has, independently and without reliance upon the
Administrative Agent, the Arrangers or any other Lender Party and based on the
financial statements referred to in Section 4.01 and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender Party also acknowledges that
it will, independently and without reliance upon the Administrative Agent, the
Arrangers or any other Lender Party 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 this Agreement.
SECTION 8.05. Indemnification. (a) Each Lender Party severally
agrees to indemnify the Administrative Agent (to the extent not promptly
reimbursed by the Borrower) from and against such Lender Party's ratable share
(determined as provided below) of any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever that may be imposed on, incurred by, or
asserted against the Administrative Agent in any way relating to or arising out
of the Loan Documents or any action taken or omitted by the Administrative Agent
under the Loan Documents; provided, however, that no Lender Party shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Administrative Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender Party agrees to reimburse the
Administrative Agent promptly upon demand for its ratable share of any costs and
expenses (including, without limitation, fees and expenses of counsel) payable
by the Borrower under Section 9.04, to the extent that the Administrative Agent
is not promptly reimbursed for such costs and expenses by the Borrower. For
purposes of this Section 8.05(a), the Lender Parties' respective ratable shares
of any amount shall be determined, at any time, according to the sum of (i) the
aggregate principal amount of the Advances outstanding at such time and owing to
the respective Lender Parties, (ii) their respective Pro Rata Shares of the
aggregate Available Amount of all Letters of Credit outstanding at such time,
(iii) the Unused Term Commitments of the respective Lender Parties at such time
and (iv) their respective Unused Revolving Credit Commitments at such time;
provided that the aggregate principal amount of Letter of Credit Advances owing
to any Issuing Bank shall be considered to be owed to the Revolving Credit
Lenders ratably in accordance with their respective Revolving Credit
Commitments. In the event that any Defaulted Advance shall be owing by any
Defaulting Lender at any time, such Lender Party's Commitment with respect to
the Facility under which such Defaulted Advance was required to have been made
shall be considered to be unused for purposes of this Section 8.05 to the extent
of the amount of such Defaulted Advance. The failure of any Lender Party to
reimburse the Administrative Agent promptly upon demand for its ratable share of
any amount required to be paid by the Lender Party to the Administrative Agent
as provided herein shall not relieve any other Lender Party of its obligation
hereunder to reimburse the Administrative Agent for its ratable share of such
amount, but no Lender Party shall be responsible for the failure of any other
Lender Party to reimburse the Administrative Agent for such other Lender Party's
ratable share of such amount. Without prejudice to the survival of any other
agreement of any Lender Party hereunder, the agreement and obligations of each
Lender Party contained in this Section 8.05 shall survive the payment in full of
principal, interest and all other amounts payable hereunder and under the other
Loan Documents.
(b) Each Lender Party severally agrees to indemnify each
Issuing Bank (to the extent not promptly reimbursed by the Borrower) from and
against such Lender Party's ratable share (determined as provided below) of any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever that may be imposed on, incurred by, or asserted against such Issuing
Bank in any way relating to or arising out of the Loan Documents or any action
taken or omitted by such Issuing Bank under the Loan Documents; provided,
however, that no Lender Party 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. Without limitation of the foregoing, each
Lender Party agrees to reimburse such Issuing Bank promptly upon demand for its
ratable share of any costs and expenses (including, without limitation, fees and
expenses of counsel) payable by the Borrower under Section 9.04, to the extent
that such Issuing Bank is not promptly reimbursed for such costs and expenses by
the Borrower. For purposes of this Section 8.05(b), the Lender Parties'
respective ratable shares of any amount shall be determined, at any time,
according to the sum of (a) the aggregate principal amount of the Advances
outstanding at such time and owing to the respective Lender Parties, (b) their
respective Pro Rata Shares of the aggregate Available Amount of all Letters of
Credit outstanding at such time, (c) the Unused Term Commitments of the
respective Lender Parties at such time and (d) their respective Unused Revolving
Credit Commitments at such time; provided that the aggregate principal amount of
Letter of Credit Advances owing to any Issuing Bank shall be considered to be
owed to the Revolving Credit Lenders ratably in accordance with their respective
Revolving Credit Commitments. In the event that any Defaulted Advance shall be
owing by any Defaulting Lender at any time, such Lender Party's Commitment with
respect to the Facility under which such Defaulted Advance was required to have
been made shall be considered to be unused for purposes of this Section 8.05(b)
to the extent of the amount of such Defaulted Advance. The failure of any Lender
Party to reimburse such Issuing Bank promptly upon demand for its ratable share
of any amount required to be paid by the Lender Parties to such Issuing Bank as
provided herein shall not relieve any other Lender Party of its obligation
hereunder to reimburse such Issuing Bank for its ratable share of such amount,
but no Lender Party shall be responsible for the failure of any other Lender
Party to reimburse such Issuing Bank for such other Lender Party's ratable share
of such amount. Without prejudice to the survival of any other agreement of any
Lender Party hereunder, the agreement and obligations of each Lender Party
contained in this Section 8.05(b) shall survive the payment in full of
principal, interest and all other amounts payable hereunder and under the other
Loan Documents.
SECTION 8.06. Successor Agents. The Administrative Agent may
resign at any time by giving written notice thereof to the Lender Parties and
the Borrower. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor Administrative Agent with, unless an Event of
Default shall have occurred and be continuing, the consent of the Borrower,
which consent shall not be unreasonably withheld or delayed. If no successor
Administrative Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the retiring
Administrative Agent's giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lender Parties, appoint a successor
Administrative Agent with, unless an Event of Default shall have occurred and be
continuing, the consent of the Borrower, which consent shall not be unreasonably
withheld or delayed, which shall be a commercial bank organized under, or having
a branch authorized to operate under, the laws of the United States or of any
State thereof and having a combined capital and surplus of at least
$250,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent and upon the execution and filing
or recording of such financing statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as the Required
Lenders may request, in order to continue the perfection of the Liens granted or
purported to be granted by the Collateral Documents, such successor
Administrative Agent shall succeed to and become vested with all the rights,
powers, discretion, privileges and duties of the retiring Administrative Agent,
and the retiring Administrative Agent shall be discharged from its duties and
obligations under the Loan Documents. After any retiring Administrative Agent's
resignation hereunder as Administrative Agent, the provisions of this Article
VIII shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Notes or any other Loan Document, nor consent
to any departure by the Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed (or, in the case of the
Collateral Documents, consented to) by the Borrower and the Required Lenders,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that (a) no
amendment, waiver or consent shall, unless in writing and signed by the
Requisite Lenders, waive any of the conditions specified in Section 3.01 or
3.02, (b) no amendment, waiver or consent shall, unless in writing and signed by
all of the Lenders (other than any Lender Party that is, at such time, a
Defaulting Lender), do any of the following at any time: (i) change the number
of Lenders or the percentage of (x) the Commitments, (y) the aggregate unpaid
principal amount of the Advances or (z) the aggregate Available Amount of
outstanding Letters of Credit that, in each case, shall be required for the
Lenders or any of them to take any action hereunder, (ii) reduce or limit the
obligations of the Guarantors under Section 6.01 or, except as expressly
permitted under the Subsidiary Guaranty, Section 1 of the Subsidiary Guaranty or
otherwise limit the Guarantors' liability with respect to the Obligations owing
to the Administrative Agent and the Lender Parties, except as expressly
permitted therein, (iii) except as expressly permitted hereunder or under the
Collateral Documents, release any material portion of the Collateral in any
transaction or series of related transactions, or (iv) amend this Section 9.01
and (c) no amendment, waiver or consent shall, unless in writing and signed by
the Required Lenders and each Lender that has a Commitment under the Term
Facility or Revolving Credit Facility if affected by such amendment, waiver or
consent, (i) increase the Commitments of such Lender or subject such Lender to
any additional obligations, (ii) reduce the principal of, or interest on, the
Notes held by such Lender or any fees or other amounts payable hereunder to such
Lender, or (iii) postpone any date fixed under Section 2.04 for any payment of
principal of or fixed under Section 2.06 or 2.07 for any payment of any interest
on, the Notes held by such Lender or fixed under Section 2.08 for payment of any
fees payable hereunder to such Lender; provided further that no amendment,
waiver or consent shall, unless in writing and signed by each Issuing Bank in
addition to the Lenders required above to take such action, affect the rights or
obligations of the Issuing Banks under this Agreement; and provided further that
no amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above to take such
action, affect the rights or duties of the Administrative Agent under this
Agreement.
SECTION 9.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including telecopy
communication) and mailed, telecopied or delivered:
if to the Borrower or the Parent Guarantor:
10400 Fernwood Road
Bethesda, Maryland 20817
Attention: Robert A. Stern, General Counsel
Telecopy number: (301) 380-1092
with a copy to:
Robert Drury, Treasurer
Sodexho Marriott Operations, Inc.
10400 Fernwood Road
Bethesda, Maryland 20817
Telecopy number: (301) 380-2474
and:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Lawrence E. Wieman, Esq.
Telecopy number: (212) 450-4800
if to any Initial Lender or any Initial Issuing Bank, at its Domestic Lending
Office specified opposite its name on Schedule I hereto; if to any other Lender
Party, at its Domestic Lending Office specified in the Assignment and Acceptance
pursuant to which it became a Lender Party; and
if to the Administrative Agent:
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, New York 10260-0060
Attention: Cynthia C. Whaley
Telecopy number: (212) 648-5336
or, as to the Borrower or the Administrative Agent, at such other address as
shall be designated by such party in a written notice to the other parties and,
as to each other party, at such other address as shall be designated by such
party in a written notice to the Borrower and the Administrative Agent. All such
notices and communications shall be effective (i) if given by telecopy, when
transmitted to the telecopy number referred to in this Section and confirmation
of receipt is received, (ii) if given by mail, 72 hours after such communication
is deposited in the mails with postage prepaid, addressed as aforesaid or (iii)
if given by any other means, when delivered at the address referred to in this
Section, except that notices and communications to the Administrative Agent
pursuant to Article II or VIII shall not be effective until received by the
Administrative Agent. Delivery by telecopier of an executed counterpart of any
amendment or waiver of any provision of this Agreement or the Notes or of any
Exhibit hereto to be executed and delivered hereunder shall be effective as
delivery of a manually executed counterpart thereof.
SECTION 9.03. No Waiver; Remedies. No failure on the part of
any Lender Party or the Administrative Agent to exercise, and no delay in
exercising, any right hereunder or under any Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 9.04. Costs and Expenses. (a) The Borrower agrees to
pay on demand (i) pursuant to a written budget mutually satisfactory to the
Borrower and the Arrangers (it being understood that such budget is not a
maximum cap on any expenses payable by the Borrower specified in this Section
9.04, or otherwise), all reasonable costs and expenses of the Administrative
Agent and the Arrangers in connection with the preparation, execution, delivery,
administration, modification, waiver and amendment of the Loan Documents
(including, without limitation, (A) all due diligence, collateral review,
syndication, transportation, computer, duplication, appraisal, audit, insurance,
consultant, search, filing and recording fees and expenses and (B) the
reasonable fees and expenses of counsel for the Administrative Agent and the
Arrangers with respect thereto, with respect to advising the Administrative
Agent and the Arrangers as to their rights and responsibilities, or the
perfection, protection or preservation of rights or interests, under the Loan
Documents, with respect to negotiations with any Loan Party or with other
creditors of any Loan Party or any of their Subsidiaries arising out of any
Default or any events or circumstances that may give rise to a Default and with
respect to presenting claims in or otherwise participating in or monitoring any
bankruptcy, insolvency or other similar proceeding involving creditors' rights
generally and any proceeding ancillary thereto) and (ii) after the occurrence of
an Event of Default, all reasonable costs and expenses of the Administrative
Agent, the Arrangers and the Lender Parties in connection with the enforcement
of the Loan Documents, whether in any action, suit or litigation, any
bankruptcy, insolvency or other similar proceeding affecting creditors' rights
generally (including, without limitation, the reasonable fees and expenses of
counsel for the Administrative Agent, the Arrangers and each Lender Party with
respect thereto).
(b) Subject to the limitations set forth in Section 6.06, each
of the Borrower and the Parent Guarantor agrees to indemnify and hold harmless
the Administrative Agent, each Arranger, each Lender Party and each of their
Affiliates and their officers, directors, employees, agents and advisors (each,
an "Indemnified Party") from and against any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and
expenses of counsel) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of any investigation, litigation or proceeding or preparation of a
defense in connection therewith arising out of or relating to (i) the
Facilities, the actual or proposed use of the proceeds of the Advances or the
Letters of Credit, the Loan Documents or any of the transactions contemplated
thereby or (ii) the actual or alleged presence of Hazardous Materials on any
property of any Loan Party or any of its Subsidiaries or any Environmental
Action relating in any way to any Loan Party or any of its Subsidiaries, except
to the extent such claim, damage, loss, liability or expense is found in a
final, non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct.
In the case of an investigation, litigation or other proceeding to which the
indemnity in this Section 9.04(b) applies, such indemnity shall be effective
whether or not such investigation, litigation or proceeding is brought by any
Loan Party, its directors, shareholders or creditors or an Indemnified Party or
any Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated hereby are consummated. Each of the Borrower and the
Parent Guarantor also agrees not to assert any claim against the Administrative
Agent, any Arranger, any Lender Party or any of their Affiliates, or any of
their respective officers, directors, employees, attorneys and agents, on any
theory of liability, for consequential damages arising out of or otherwise
relating to the Facilities, the actual or proposed use of the proceeds of the
Advances or the Letters of Credit, the Loan Documents or any of the transactions
contemplated thereby.
(c) If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance is made by the Borrower to or for the account of a
Lender Party other than on the last day of the Interest Period for such Advance,
as a result of a payment or Conversion pursuant to Section 2.09(b)(i) or
2.10(d), acceleration of the maturity of the Notes pursuant to Section 7.01 or
for any other reason, the Borrower shall, upon demand by such Lender Party (with
a copy of such demand to the Administrative Agent), pay to the Administrative
Agent for the account of such Lender Party any amounts required to compensate
such Lender Party for any losses, costs or expenses that it may reasonably incur
as a result of such payment, including, without limitation, any loss, cost or
expense (but excluding loss of margin after the date of such payment or
conversion) incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by any Lender Party to fund or maintain such Advance.
(d) If any Loan Party fails to pay when due any costs,
expenses or other amounts payable by it under any Loan Document, including,
without limitation, fees and expenses of counsel and indemnities, such amount
may be paid on behalf of such Loan Party by the Administrative Agent or any
Lender Party, in its sole discretion.
(e) Without prejudice to the survival of any other agreement
of any Loan Party hereunder or under any other Loan Document, the agreements and
obligations of the Borrower and the Parent Guarantor contained in Sections 2.10
(with respect to the Borrower) and 2.12 and this Section 9.04 shall survive the
payment in full of principal, interest and all other amounts payable hereunder
and under any of the other Loan Documents.
(f) The Lender Parties acknowledge that (i) prior to the
Funding Date, the obligations of the Borrower for costs, expenses, fees and
indemnification under or in connection with this Agreement shall be the
responsibility of Sodexho and the Parent Guarantor pursuant to the terms of the
Commitment Letter dated November 26, 1997 entered into by such parties with
Morgan and the Arrangers and (ii) all amounts due and payable by the Borrower
prior to the Funding Date (including pursuant to Section 3.01(b)) shall be
advanced by Sodexho; provided that nothing contained in this paragraph (f) shall
limit the liability of the parties hereto as set forth in the terms of said
Commitment Letter.
SECTION 9.05. Right of Set-off. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the making of the request
or the granting of the consent specified by Section 7.01 to authorize the
Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 7.01, each Lender Party and each of its respective
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender Party or such
Affiliate to or for the credit or the account of the Borrower against any and
all of the Obligations of the Borrower now or hereafter existing under this
Agreement and the Note or Notes (if any) held by such Lender Party, irrespective
of whether such Lender Party shall have made any demand under this Agreement or
such Note or Notes and although such obligations may be unmatured. Each Lender
Party agrees promptly to notify the Borrower after any such set-off and
application; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Lender
Party and its respective Affiliates under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
that such Lender Party and its respective Affiliates may have.
SECTION 9.06. Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the Borrower, the Parent Guarantor, the
Administrative Agent, each Lender Party and their respective successors and
assigns, except that the Borrower shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of the Lender
Parties.
SECTION 9.07. Assignments and Participations. (a) Each Lender
may assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment or Commitments, the Advances owing to it and the Note
or Notes held by it); provided, however, that (i) each such assignment shall be
of a uniform, and not a varying, percentage of all rights and obligations under
and in respect of all of the Facilities, (ii) except in the case of an
assignment of all of a Lender's rights and obligations under this Agreement, the
amount of the Commitment or Advances of the assigning Lender being assigned
pursuant to each such assignment (determined as of the date of the Assignment
and Acceptance with respect to such assignment) shall in no event be less than
$15,000,000 (or $5,000,000, in the case of an assignment to an existing Lender),
(iii) each such assignment shall be to an Eligible Assignee and (iv) the parties
to each such assignment shall execute and deliver to the Administrative Agent,
for its acceptance and recording in the Register, an Assignment and Acceptance,
together with any Note or Notes subject to such assignment and a processing and
recordation fee of $3,500.
(b) Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in such Assignment and Acceptance,
(x) the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender or
Issuing Bank, hereunder and (y) the Lender or Issuing Bank assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's or Issuing Bank's rights and obligations under this Agreement, such
Lender or Issuing Bank shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance,
the Lender Party assignor thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender Party makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, this Agreement or any other Loan Document or any
other instrument or document furnished pursuant hereto or thereto; (ii) such
assigning Lender Party makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any
other Loan Party or the performance or observance by any Loan Party of any of
its obligations under any Loan Document or any other instrument or document
furnished pursuant thereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 4.01 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Administrative Agent, such assigning Lender Party or
any other Lender Party 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 this Agreement; (v) such assignee confirms
that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Loan Documents as are delegated to the
Administrative Agent by the terms hereof, together with such powers and
discretion as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all of the obligations which
by the terms of this Agreement are required to be performed by it as a Lender or
Issuing Bank, as the case may be.
(d) The Administrative Agent acting for this purpose (but only
for this purpose) as the agent of the Borrower, shall maintain at its address
referred to in Section 9.02 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Lender Parties and the Commitment under each Facility of, and
principal amount of the Advances owing under each Facility to, each Lender Party
from time to time (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Administrative Agent and the Lender Parties shall treat each
Person whose name is recorded in the Register as a Lender Party hereunder for
all purposes of this Agreement. The Register shall be available for inspection
by the Borrower or any Lender Party at any reasonable time and from time to time
upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender Party and an assignee, together with any Note or Notes
subject to such assignment, the Administrative Agent shall, if such Assignment
and Acceptance has been completed and is in substantially the form of Exhibit C
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Borrower. In the case of any assignment by a Lender, within 15 Business Days
after its receipt of such notice, the Borrower, at its own expense, shall
execute and deliver to the Administrative Agent in exchange for the surrendered
Note or Notes a new Note or Notes to the order of such Eligible Assignee in an
amount equal to the Commitment or after the Funding Date in the case of the Term
Facility, the sum of the principal amount of Term Advances and the Unused Term
Commitment assumed by it under a Facility pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained a Commitment or a portion
of the principal amount of its outstanding Term Advances under such Facility, a
new Note to the order of the assigning Lender in an amount equal to the
Commitment or portion of such Advances retained by it hereunder. Such new Note
or Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note or Notes, shall be dated the effective
date of such Assignment and Acceptance and shall otherwise be in substantially
the form of Exhibit A-1 or A-2 hereto, as the case may be.
(f) Each Issuing Bank may assign to one or more Eligible
Assignees all or a portion of its rights and obligations under the undrawn
portion of its Letter of Credit Commitment at any time; provided, however, that
(i) no Letter of Credit Commitment shall be less than $20,000,000 following such
assignment and (ii) the parties to each such assignment shall execute and
deliver to the Administrative Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with a processing and
recordation fee of $3,500.
(g) No assignee, participant or other transferee of any Lender
Party's rights shall be entitled to receive any greater payment under Section
2.10 or 2.12 than such Lender Party would have been entitled to receive with
respect to the rights transferred, unless such transfer is made with the
Borrower's prior written consent or by reason of the provisions of Section 2.10
or 2.12 requiring such Lender to designate a different Applicable Lending Office
under certain circumstances or at a time when the circumstances giving rise to
such greater payment did not exist.
(h) Each Lender Party may sell participations to one or more
Persons (other than any Loan Party or any of its Affiliates) in or to all or a
portion of its rights, obligations, or rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitments,
the Advances owing to it and the Note or Notes (if any) held by it); provided,
however, that (i) such Lender Party's obligations under this Agreement
(including, without limitation, its Commitments) shall remain unchanged, (ii)
such Lender Party shall remain solely responsible to the other parties hereto
for the performance of such obligations, (iii) such Lender Party shall remain
the holder of any such Note for all purposes of this Agreement, (iv) the
Borrower, the Administrative Agent and the other Lender Parties shall continue
to deal solely and directly with such Lender Party in connection with such
Lender Party's rights and obligations under this Agreement and (v) no
participant under any such participation shall have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to any
departure by any Loan Party therefrom, except to the extent that such amendment,
waiver or consent would reduce the principal of, or interest on, the Notes or
any fees or other amounts payable hereunder, in each case to the extent subject
to such participation, postpone any date fixed under Section 2.04 for any
payment of principal of, or fixed under Section 2.06 or 2.07 for any payment of
interest on, the Notes or fixed under Section 2.08 for any payment of any fees
payable hereunder, in each case to the extent subject to such participation.
(i) Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
Party by or on behalf of the Borrower; provided, however, that, prior to any
such disclosure, the assignee or participant or proposed assignee or participant
shall agree in writing to preserve the confidentiality of any Confidential
Information received by it from such Lender Party in accordance with Section
9.10 hereof.
(j) Notwithstanding any other provision set forth in this
Agreement, any Lender Party may at any time create a security interest in all or
any portion of its rights under this Agreement (including, without limitation,
the Advances owing to it and the Note or Notes held by it) in favor of any
Federal Reserve Bank in accordance with Regulation A of the Board of Governors
of the Federal Reserve System.
SECTION 9.08. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 9.09. No Liability of the Issuing Banks. The Borrower
assumes all risks of the acts or omissions of any beneficiary or transferee of
any Letter of Credit with respect to its use of such Letter of Credit. Neither
any Issuing Bank nor any of its officers or directors shall be liable or
responsible for: (a) the use that may be made of any Letter of Credit or any
acts or omissions of any beneficiary or transferee in connection therewith; (b)
the validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank
against presentation of documents that do not comply with the terms of a Letter
of Credit, including failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances whatsoever in
making or failing to make payment under any Letter of Credit, except that the
Borrower shall have a claim against such Issuing Bank, and such Issuing Bank
shall be liable to the Borrower, to the extent of any direct, but not
consequential, damages suffered by the Borrower that the Borrower proves were
caused by (i) such Issuing Bank's willful misconduct or gross negligence in
determining whether documents presented under any Letter of Credit comply with
the terms of the Letter of Credit or (ii) such Issuing Bank's willful failure to
make lawful payment under a Letter of Credit after the presentation to it of a
draft and certificates strictly complying with the terms and conditions of the
Letter of Credit. In furtherance and not in limitation of the foregoing, such
Issuing Bank may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary.
SECTION 9.10. Confidentiality. (a) Neither the Administrative
Agent nor any Lender Party shall disclose any Confidential Information to any
Person without the consent of the Borrower, other than (i) to the Administrative
Agent's or such Lender Party's Affiliates and their officers, directors,
employees, agents and advisors who need to know such Confidential Information in
connection with the Administrative Agent's or such Lender Party's evaluation or
administration of the Facilities and to actual or prospective Eligible Assignees
and participants who have agreed in writing to be bound by this Section, (ii) as
required by any law, rule or regulation or judicial process, provided that the
Administrative Agent or any Lender Party so required to disclose any
Confidential Information will, to the extent permitted under applicable law, (x)
notify the Borrower immediately of the existence, terms and circumstances
surrounding such requirement, (y) consult with the Borrower on the advisability
of taking legally available steps to resist or narrow such requirement and (z)
if disclosure of such Confidential Information is legally required, furnish only
such portion of the Confidential Information as it is legally compelled to
disclose and exercise commercially reasonable efforts to obtain an order or
other reliable assurance that confidential treatment will be accorded to the
disclosed Confidential Information, and (iii) as requested or required by any
state, federal or foreign authority or examiner regulating banks or banking.
(b) The Administrative Agent and each Lender Party hereby
acknowledges and agrees that, in the event of any breach by it of this Section
9.10, the Borrower, the Parent Guarantor and Sodexho would be irreparably and
immediately harmed and could not be made whole by monetary damages. Accordingly,
the Administrative Agent and each Lender Party agrees, to the fullest extent it
may effectively do so under applicable law, that, in addition to any other
remedy to which the Borrower, the Parent Guarantor and Sodexho may be entitled
at law or in equity, the Administrative Agent and each Lender Party shall be
entitled to an injunction or injunctions (without the posting of any bond and
without proof of actual damages) to prevent breaches or threatened breaches of
this Section 9.10 and/or to compel specific performance of this Section 9.10,
and that none of the Administrative Agents, any Lender Party or any of their
respective representatives will oppose the granting of such relief.
SECTION 9.11. No Reliance on Margin Stock. Each of the Lender
Parties represents to the Administrative Agent and each of the other Lender
Parties that it in good faith is not relying upon any "margin stock" (as defined
in Regulation U) as collateral in the extension or maintenance of the credit
provided for in this Agreement.
SECTION 9.12. Collateral Agent. As used herein, where the
context requires, the term Administrative Agent shall be deemed to include
Morgan Guaranty Trust Company of New York as collateral agent under the
Collateral Documents.
SECTION 9.13. Jurisdiction, Etc. (a) Each of the parties
hereto hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or any of the other Loan Documents to which it is a
party, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any such
New York State court or, to the extent permitted by law, in such federal court.
Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that any party may otherwise have to bring any
action or proceeding relating to this Agreement or any of the other Loan
Documents in the courts of any jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any of the
other Loan Documents to which it is a party in any such New York State or
federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
SECTION 9.14. Governing Law. This Agreement and the Notes
shall be governed by, and construed in accordance with, the laws of the State of
New York.
SECTION 9.15. Waiver of Jury Trial. Each of the Borrower, the
Parent Guarantor, the Administrative Agent and the Lender Parties irrevocably
waives all right to trial by jury in any action, proceeding or counterclaim
(whether based on contract, tort or otherwise) arising out of or relating to any
of the Loan Documents, the Advances or the actions of the Administrative Agent
or any Lender Party in the negotiation, administration, performance or
enforcement thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
SODEXHO MARRIOTT OPERATIONS, INC.
By /s/ Lawrence Hyatt
-----------------------------------
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent
By /s/ Patricia P. Lunka
-----------------------------------
Title: Vice President
Initial Lenders
SOCIETE GENERALE
By /s/ Elizabeth Peck
-----------------------------------
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By /s/ Patricia P. Lunka
-----------------------------------
Title: Vice President
Parent Guarantor
MARRIOTT INTERNATIONAL, INC. (to be
renamed SODEXHO MARRIOTT SERVICES,
INC.), as Parent Guarantor
By /s/ Lawrence Hyatt
-----------------------------------
Title: Vice President
THE BANK OF NEW YORK
By /s/ Ronald R. Reedy
-----------------------------------
Title: Vice President
THE BANK OF NOVA SCOTIA
By /s/ J.R. Trimble
-----------------------------------
Title: Senior Relationship Manager
BANQUE NATIONALE DE PARIS
By /s/ Richard Sted
-----------------------------------
Title: Senior Vice President
By /s/ Lynn H. Walkoff
-----------------------------------
Title: Vice President
BANQUE PARIBAS
By /s/ Robert Carino
-----------------------------------
Title: Vice President
By /s/ Duane Helkowski
-----------------------------------
Title: Vice President
CIBC INC.
By /s/ John Livingston
-----------------------------------
Title: Executive Director
CAISSE CENTRALE DES BANQUES
POPULAIRES
By /s/ Louis Orienti
-----------------------------------
Title: Directeur Adjoint
By /s/ Stephane Pasquier
-----------------------------------
Title: Fonde de Pouvoirs Principal
THE CHASE MANHATTAN BANK
By /s/ Carol A. Ulmer
-----------------------------------
Title: Vice President
CITIBANK, N.A.
By /s/ T.J. Berk
-----------------------------------
Title: Attorney-in-Fact
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By /s/ Dora DeBlasi-Hyduk
-----------------------------------
Title: Vice President
By /s/ Bernard Laleuf
-----------------------------------
Title: Deputy General Manager
CREDIT AGRICOLE INDOSUEZ
By /s/ Richard Mamix
-----------------------------------
Title:
By /s/ Cheryl Solometo
-----------------------------------
Title: Vice President
CREDIT COMMERCIAL DE FRANCE
NEW YORK BRANCH
By /s/ Elizabeth Fallon
-----------------------------------
Title: Asst. VP
By /s/ Jean-Jacques Salomon
-----------------------------------
Title: Sr.VP
CREDIT LYONNAIS NEW YORK BRANCH
By /s/ Olivier Perrain
-----------------------------------
Title: First Vice President
DG BANK, DEUTSCHE
GENOSSENSCHAFTSBANK
By /s/ Norah McCann
-----------------------------------
Title: Senior Vice President
By /s/ S. Winott
-----------------------------------
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Ron Galitsky
-----------------------------------
Title: Assistant Vice President
FIRST UNION NATIONAL BANK
By /s/ Mark Felker
-----------------------------------
Title: Senior Vice President
MELLON BANK, N.A.
By /s/ Arlene S. Pedovitch
-----------------------------------
Title: Vice President
NATEXIS BANQUE
By /s/ Pieter J. van Tulder
-----------------------------------
Title: Vice President
By /s/ John Rigo
-----------------------------------
Title: Assistant Vice President
NATIONSBANK, N.A.
By /s/ Marty Mitchell
-----------------------------------
Title: Vice President
RIGGS BANK N.A.
By /s/ David Olson
-----------------------------------
Title: Vice President
THE ROYAL BANK OF SCOTLAND plc
By /s/ Derek Bonnar
-----------------------------------
Title: Vice President
EXHIBIT 6
$620,000,000
CREDIT AGREEMENT
Dated as of January 30, 1998
Among
MARRIOTT INTERNATIONAL, INC. (to be renamed
SODEXHO MARRIOTT SERVICES, INC.)
as Borrower
and
THE INITIAL LENDERS NAMED HEREIN
as Initial Lenders
and
SOCIETE GENERALE and J.P. MORGAN SECURITIES INC.
as Arrangers
and
SOCIETE GENERALE
as Administrative Agent
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
as Documentation Agent
T A B L E O F C O N T E N T S
Section Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01. Certain Defined Terms............................................ 1
1.02. Computation of Time Periods...................................... 15
1.03. Accounting Terms and Determinations.............................. 15
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCE
2.01. The Advance...................................................... 16
2.02. Making the Advances.............................................. 16
2.03. Repayment of Advances............................................ 17
2.04. Termination or Reduction of the Facility......................... 17
2.05. Prepayments...................................................... 17
2.06. Interest......................................................... 17
2.07. Fees............................................................. 18
2.08. Conversion and Continuation of Advances.......................... 18
2.09. Increased Costs, Etc............................................. 19
2.10. Payments and Computations........................................ 20
2.11. Taxes............................................................ 21
2.12. Sharing of Payments, Etc......................................... 23
2.13. Use of Proceeds.................................................. 24
2.14. Defaulting Lenders............................................... 24
2.15. Regulation D Compensation........................................ 26
2.16. Base Rate Advances Substituted for Affected Eurodollar Rate
Advances....................................................... 26
2.17. Replacement of Certain Lenders................................... 26
ARTICLE III
CONDITIONS OF LENDING
3.01. Conditions Precedent to Closing.................................. 27
3.02. Conditions Precedent to Borrowing................................ 27
3.03. Determinations Under Section 3.02................................ 31
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties of the Borrower................... 32
ARTICLE V
COVENANTS OF THE BORROWER
5.01. Affirmative Covenants............................................ 36
5.02. Negative Covenants............................................... 38
5.03. Reporting Requirements........................................... 40
5.04. Financial Covenants.............................................. 42
ARTICLE VI
EVENTS OF DEFAULT
6.01. Events of Default................................................ 44
ARTICLE VII
THE ADMINISTRATIVE AGENT
7.01. Authorization and Action......................................... 46
7.02. Administrative Agent's Reliance, Etc............................. 46
7.03. Societe Generale and Affiliates.................................. 47
7.04. Lender Party Credit Decision..................................... 47
7.05. Indemnification.................................................. 47
7.06. Successor Agents................................................. 47
ARTICLE VIII
MISCELLANEOUS
8.01. Amendments, Etc.................................................. 48
8.02. Notices, Etc..................................................... 48
8.03. No Waiver; Remedies.............................................. 49
8.04. Costs and Expenses............................................... 49
8.05. Right of Set-off................................................. 51
8.06. Binding Effect................................................... 51
8.07. Assignments and Participations................................... 51
8.08. Execution in Counterparts........................................ 53
8.09. Confidentiality.................................................. 53
8.10. No Reliance on Margin Stock...................................... 54
8.11. Jurisdiction, Etc................................................ 54
8.12. Governing Law.................................................... 54
8.13. Waiver of Jury Trial............................................. 54
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of January 30, 1998 among MARRIOTT
INTERNATIONAL, INC., a Delaware corporation, (to be renamed SODEXHO MARRIOTT
SERVICES, INC., the "Borrower"), the banks, financial institutions and other
institutional lenders listed on the signature pages hereof as the Initial
Lenders (the "Initial Lenders"), SOCIETE GENERALE ("Societe Generale"), as
administrative agent (together with any successor appointed pursuant to
Article VII, the "Administrative Agent") for the Lender Parties (as
hereinafter defined), and MORGAN GUARANTY TRUST COMPANY OF NEW YORK
("Morgan"), as the documentation agent (the "Documentation Agent") for the
Lender Parties, with SOCIETE GENERALE and J.P. MORGAN SECURITIES INC., as
arrangers (the "Arrangers").
PRELIMINARY STATEMENTS:
(1) Pursuant to the Transaction Documents (as hereinafter
defined), the Borrower will (i) distribute (the "Spinoff") to its shareholders
all of its, and its Subsidiaries' (as hereinafter defined), businesses other
than the Foodservice Business, (ii) the Guarantor (as hereinafter defined)
will transfer (the "Canadian Subsidiary Transfer") the shares of Sodexho
Financiere du Canada, Inc. ("Sodexho Canada"), its Canadian Subsidiary engaged
in the food service and facilities management business, to the Borrower, (iii)
the Guarantor will pay (the "Cash Payment") $304,000,000 to the Borrower, (iv)
International Catering Corporation, a Delaware corporation and a wholly owned
indirect Subsidiary of the Guarantor ("ICC"), will merge (the "Merger") with
Merger Corp. (as hereinafter defined), a newly formed, wholly owned Subsidiary
of the Borrower, with ICC being the surviving corporation and (v) the
Guarantor will receive, as consideration in respect of the Cash Payment, the
Merger and the Canadian Subsidiary Contribution, not less than 40.1% and not
more than 49.9% of the common stock of the Borrower.
(2) Sodexho Marriott Operations, Inc., a Delaware corporation
("Sodexho Operations"), has been organized as a wholly owned Subsidiary of the
Borrower in order to facilitate the transactions contemplated by the
Transaction Documents and to obtain the financing contemplated herein. At the
time of the Merger, the Borrower will contribute (the "Subsidiary
Contribution") all of the capital stock and other Investments (as hereinafter
defined) held by the Borrower in its Subsidiaries (other than Sodexho Canada,
Marriott Corporation of Canada, Ltd. ("MMS Canada"), New Marriott and
Subsidiaries of New Marriott) to Sodexho Operations. The Spinoff, the
Canadian Subsidiary Contribution, the Cash Payment, the Merger and the
Subsidiary Contribution are herein referred to, collectively, as the
"Transaction".
(3) The Borrower has requested that, in connection with the
Transaction, the Lender Parties lend to it up to $620,000,000 to refinance
certain Existing Debt (as hereinafter defined) of the Borrower and ICC and
their respective Subsidiaries and to pay transaction fees and expenses. The
Lender Parties have indicated their willingness to agree to lend such amount
on the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain 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):
"Administrative Agent" has the meaning specified in the recital of
parties to this Agreement.
"Administrative Agent's Account" means the account of the
Administrative Agent maintained by the Administrative Agent with Societe
Generale at its office at 1221 Avenue of the Americas, New York, New York
10020, ABA No. 026004226, Attention: Sodexho Marriott Services (A/C
#9042806).
"Advance" has the meaning specified in Section 2.01.
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common
control with such Person or is a director or officer of such Person. For
purposes of this definition, the term "control" (including the terms
"controlling", "controlled by" and "under common control with") of a Person
means the possession, direct or indirect, of the power to vote 10% or more
of the Voting Stock of such Person or to direct or cause the direction of
the management and policies of such Person, whether through the ownership
of Voting Stock, by contract or otherwise; provided that, from and after
the consummation of the Transaction, none of the Borrower or any of its
Subsidiaries shall be an Affiliate of New Marriott or any of its
Subsidiaries or Affiliates unless New Marriott or any of its Subsidiaries
or Affiliates purchases or otherwise acquires more than 10% of the Voting
Stock of the Borrower or any of its Subsidiaries after the date hereof.
"Amendment Agreement" means the Amendment Agreement dated as of
January 28, 1998 among the Borrower, the Guarantor, Merger Corp., New
Marriott and ICC.
"Applicable Lending Office" means, with respect to each Lender
Party, such Lender Party's Domestic Lending Office in the case of a Base
Rate Advance and such Lender Party's Eurodollar Lending Office in the case
of a Eurodollar Rate Advance.
"Applicable Margin" means, with respect to Eurodollar Rate
Advances (i) on any day during the 12-month period commencing on the
Funding Date (as hereinafter defined), 0.45% per annum, and (ii) on any day
thereafter, the percentage per annum set forth below corresponding to (A)
the rating issued on or most recently prior to such day by S&P for the
Guarantor's senior unsecured long-term debt or, if such rating is
unavailable, the rating assigned by S&P to the Guarantor's unsecured
"implied senior debt" or the "corporate credit rating" (as the case may
be), as notified in writing to the Guarantor by S&P, or (B) if no such
rating is available from S&P, the rating issued on or most recently prior
to such day by Moody's for the Guarantor's senior unsecured long-term debt
or, if such rating is unavailable, the rating assigned by Moody's to the
Guarantor's unsecured "implied senior debt", as notified in writing to the
Guarantor by Moody's. If no such rating is available from S&P or Moody's,
the Applicable Margin for such day shall be at Level 1.
======================================================
S&P/Moody's Credit Rating Percentage
------------------------------------------------------
Level 5
A-/A3 or greater 0.35%
------------------------------------------------------
Level 4
BBB+/Baa1 0.45%
------------------------------------------------------
Level 3
BBB/Baa2 0.625%
------------------------------------------------------
Level 2
BBB-/Baa3 0.875%
------------------------------------------------------
Level 1
BB+/Ba1 or less 1.125%
======================================================
"Arrangers" has the meaning specified in the recital of parties to
this Agreement.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the
Administrative Agent, in accordance with Section 8.07 and in substantially
the form of Exhibit C hereto.
"Base Rate" means a fluctuating interest rate per annum in effect
from time to time, which rate per annum shall at all times be equal to the
higher of:
(a) the rate of interest announced publicly by Societe
Generale in New York, New York, from time to time, as Societe
Generale's prime rate; and
(b) 1/2 of one percent per annum above the Federal Funds
Rate.
"Base Rate Advance" means an Advance that bears interest at the
Base Rate pursuant to the applicable Notice of Borrowing, the applicable
Notice of Interest Rate Election, Section 2.09(c) or Section 2.16.
"Base Transaction Documents" has the meaning specified in Section
3.02(a).
"Borrower" has the meaning specified in the recital of parties to
this Agreement.
"Borrower's Account" means the account of the Borrower maintained
by the Borrower with Societe Generale at its office at 1221 Avenue of the
Americas, New York, New York 10020, Account No. 9042806.
"Borrowing" means a borrowing consisting of simultaneous Advances
made by the Lenders on the Funding Date.
"Business Day" means a day of the year on which banks are not
required or authorized by law to close in New York City and, if the
applicable Business Day relates to any Eurodollar Rate Advances, on which
dealings in U.S. dollar deposits are carried on in the London interbank
market.
"Canadian Subsidiary Transfer" has the meaning specified in
Preliminary Statement (1).
"Capitalized Leases" means all leases that have been or should be,
in accordance with GAAP, recorded as capitalized leases.
"Cash Payment" has the meaning specified in Preliminary Statement
(1).
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time.
"CERCLIS" means the Comprehensive Environmental Response,
Compensation and Liability Information System maintained by the U.S.
Environmental Protection Agency.
"Closing Date" means the date on which all conditions precedent
set forth in Section 3.01 shall have been satisfied, but in no event later
than January 30, 1998.
"Commitment" means, with respect to any Lender at any time, the
amount set forth opposite such Lender's name on Schedule I hereto under the
caption "Commitment" or, if such Lender has entered into one or more
Assignments and Acceptances, set forth for such Lender in the Register
maintained by the Administrative Agent pursuant to Section 8.07(d) as such
Lender's "Commitment," as such amount may be reduced at or prior to such
time pursuant to Section 2.04.
"Confidential Information" means any information that the
Guarantor, the Borrower or any of their respective Subsidiaries,
Affiliates, advisors or agents furnishes to the Administrative Agent or any
Lender Party other than any such information that is or becomes generally
available to the public or that is or becomes available to the
Administrative Agent or such Lender Party from a source other than the
Guarantor, the Borrower or any of their respective Subsidiaries,
Affiliates, advisors or agents that is not, to the best of the
Administrative Agent's or such Lender Party's knowledge, acting in
violation of a confidentiality agreement with the Guarantor, the Borrower
or any of their respective Subsidiaries, Affiliates, advisors or agents.
"Consents Side Letter" means the letter dated as of October 2,
1997 among the Borrower, the Guarantor, Merger Corp., New Marriott and ICC.
"Consolidated" refers to the consolidation of accounts in
accordance with GAAP.
"Consolidated Debt" means, on any date, Debt of the Borrower and
its Subsidiaries on such date (other than Debt referred to in clause (i) of
the definition of "Debt"), determined on a Consolidated basis.
"Consolidated Interest Expense" means, for any period,
Consolidated interest expense of the Borrower and its Subsidiaries for such
period (excluding any such amounts not payable on a current basis in cash
and any amounts attributable to the amortization of deferred financing
costs or other capitalized fees or expenses paid prior to the Funding Date
or incurred in connection with the Transaction, the prepayment of any
Marriott Bonds or the incurrence of the Senior Debt or any Debt hereunder),
net of Consolidated interest income of the Borrower and its Subsidiaries
for such period.
"Contingent Obligation" of any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly guaranteeing
any Debt of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of
such Person (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt (whether arising by virtue of partnership
arrangements, by virtue of an agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise), (ii) to reimburse a bank for amounts
drawn under a letter of credit for the purpose of paying such Debt or (iii)
entered into for the purpose of assuring in any other manner the holder of
such Debt of the payment thereof or to protect such holder against loss in
respect thereof (in whole or in part), provided that the term "Contingent
Obligation" shall not include endorsements for collection or deposit in the
ordinary course of business.
"Conversion", "Convert" and "Converted" each refer to a conversion
of Advances of one Type into Advances of the other Type pursuant to Section
2.08 or 2.09.
"Debt" of any Person means, at any date, without duplication, (a)
all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments, (c) 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, (d) all obligations of such
Person as lessee which are capitalized in accordance with GAAP, (e) all
obligations, contingent or otherwise, of such Person to reimburse any bank
or other Person in respect of a letter of credit or similar instrument, (f)
all Debt secured by a Lien on any asset of such Person, whether or not such
Debt is otherwise an obligation of such Person, (g) all Contingent
Obligations of such Person in respect of Debt of another Person (each such
Contingent Obligation to constitute Debt in an amount equal to the lesser
of the amount of such other Person's Debt subject to such Contingent
Obligation and the maximum amount payable under such Contingent
Obligation), (h) all obligations of such Person to purchase, redeem, retire,
defease or otherwise make any payment in respect of any Hybrid Capital
Stock of such Person or any other Person, valued, in the case of Redeemable
Hybrid Capital Stock, at the greater of its voluntary or involuntary
liquidation preference, and (i) all obligations in respect of Hedge
Agreements.
"Default" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be given
or time elapse or both.
"Defaulted Advance" means, with respect to any Lender Party at any
time, the portion of any Advance required to be made by such Lender Party
to the Borrower pursuant to Section 2.01 or 2.02 at or prior to such time
which has not been made by such Lender Party or by the Administrative Agent
for the account of such Lender Party pursuant to Section 2.02(d) as of such
time. In the event that a portion of a Defaulted Advance shall be deemed
made pursuant to Section 2.14(a), the remaining portion of such Defaulted
Advance shall continue to be considered a Defaulted Advance.
"Defaulted Amount" means, with respect to any Lender Party at any
time, any amount required to be paid by such Lender Party to the
Administrative Agent or any other Lender Party hereunder or under any other
Loan Document at or prior to such time which has not been so paid as of
such time, including, without limitation, any amount required to be paid by
such Lender Party to (a) the Administrative Agent pursuant to Section
2.02(d) to reimburse the Administrative Agent for the amount of any Advance
made by the Administrative Agent for the account of such Lender Party, (b)
any other Lender Party pursuant to Section 2.12 to purchase any
participation in Advances owing to such other Lender Party and (c) the
Administrative Agent pursuant to Section 7.05 to reimburse the
Administrative Agent for such Lender Party's ratable share of any amount
required to be paid by the Lender Parties to the Administrative Agent as
provided therein. In the event that a portion of a Defaulted Amount shall
be deemed paid pursuant to Section 2.14(b), the remaining portion of such
Defaulted Amount shall continue to be considered a Defaulted Amount.
"Defaulting Lender" means, at any time, any Lender Party that, at
such time, (a) owes a Defaulted Advance or a Defaulted Amount or (b) shall
take any action or be the subject of any action or proceeding of a type
described in Section 6.01(e).
"Disclosed Litigation" has the meaning specified in Section
3.02(j).
"Distribution Agreement" means the Distribution Agreement dated as
of September 30, 1997 between the Borrower and New Marriott, as amended by
the Amendment Agreement.
"Domestic Lending Office" means, with respect to any Lender Party,
the office of such Lender Party specified as its "Domestic Lending Office"
opposite its name on Schedule I hereto or in the Assignment and Acceptance
pursuant to which it became a Lender Party, as the case may be, or such
other office of such Lender Party as such Lender Party may from time to
time specify to the Borrower and the Administrative Agent.
"EBITDA" means, for any period (a) Consolidated net income (or net
loss) of the Borrower and its Subsidiaries for such period (after
eliminating the effect of any non-Foodservice Business discontinued
operations incurred during the period prior to the Funding Date or to be
allocated to New Marriott as contemplated by the Distribution Agreement)
plus (b) the sum of each of the following items to the extent deducted in
determining such Consolidated net income: (i) interest expense for such
period less interest income for such period, (ii) net income tax expense
for such period, (iii) depreciation expense for such period, (iv)
amortization expense for such period, (v) Integration Costs deducted for
such period in an amount not to exceed, in aggregate for all such
deductions taken over the term of the Facility, $45,000,000 less the amount
of such costs classified by the Borrower's independent public accountants,
and recorded, as capitalized expenses, (vi) the net amount of (A)
extraordinary non-cash losses for such period less (B) extraordinary
non-cash gains, for such period, (vii) non-cash non-recurring items for
such period and (viii) other non-cash items for such period, in each case
determined on a Consolidated basis and in accordance with GAAP for such
period.
"Eligible Assignee" means (i) a Lender; (ii) a financial
institution or other entity engaged in the financing of loans and accounts
which is an Affiliate of a Lender; and (iii) any other Person approved by
the Administrative Agent and, unless an Event of Default shall have
occurred and be continuing, the Borrower, such approval not to be
unreasonably withheld or delayed; provided, however, that neither any Loan
Party nor any Affiliate of a Loan Party shall qualify as an Eligible
Assignee under this definition.
"Environmental Action" means any action, suit, demand, demand
letter, claim, notice of non-compliance or violation, notice of liability
or potential liability, investigation, proceeding, consent order or consent
agreement relating in any way to any Environmental Law, any Environmental
Permit or Hazardous Material or arising from alleged injury to the
environment, including, without limitation, (a) by any governmental or
regulatory authority for enforcement, cleanup, removal, response, remedial
or other actions or damages and (b) by any governmental or regulatory
authority or third party for damages, contribution, indemnification, cost
recovery, compensation or injunctive relief.
"Environmental Law" means any applicable federal, state, local or
foreign statute, law, ordinance, rule, regulation, code, order, writ,
judgment, injunction, decree or judicial or agency interpretation, policy
or guidance relating to pollution or protection of the environment, or the
effect of the environment on human health or safety, including, without
limitation, those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge of Hazardous Materials.
"Environmental Permit" means any permit, approval, identification
number, license or other authorization required under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Affiliate" means any Person that for purposes of Title IV
of ERISA is a member of the controlled group of the Borrower, or under
common control with the Borrower, within the meaning of Section 414 of the
Internal Revenue Code.
"ERISA Event" means (a) (i) the occurrence of a reportable event,
within the meaning of Section 4043 of ERISA, with respect to any Plan
unless the 30-day notice requirement with respect to such event has been
waived by the PBGC, or (ii) the requirements of subsection (1) of Section
4043(b) of ERISA (taking into account subsection (2) of such Section) are
met with respect to a contributing sponsor, as defined in Section
4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9),
(10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected
to occur with respect to such Plan within the following 30 days; (b) the
application for a minimum funding waiver with respect to a Plan; (c) the
provision by the administrator of any Plan of a notice of intent to
terminate such Plan, pursuant to Section 4041(a)(2) of ERISA in a distress
termination pursuant to ERISA Section 4041(c) (including any such notice
with respect to a plan amendment referred to in Section 4041(e) of ERISA);
(d) the cessation of operations at a facility of the Borrower or any ERISA
Affiliate in the circumstances described in Section 4062(e) of ERISA; (e)
the withdrawal by the Borrower or any ERISA Affiliate from a Multiple
Employer Plan during a plan year for which it was a substantial employer,
as defined in Section 4001(a)(2) of ERISA; (f) the conditions for
imposition of a lien under Section 302(f) of ERISA shall have been met with
respect to any Plan; (g) the adoption of an amendment to a Plan requiring
the provision of security to such Plan pursuant to Section 307 of ERISA; or
(h) the institution by the PBGC of proceedings to terminate a Plan pursuant
to Section 4042 of ERISA, or the occurrence of any event or condition
described in Section 4042 of ERISA that constitutes grounds for the
termination of, or the appointment of a trustee to administer, such Plan.
"Eurocurrency Liabilities" has the meaning specified in Regulation
D of the Board of Governors of the Federal Reserve System, as in effect
from time to time.
"Eurodollar Lending Office" means, with respect to any Lender
Party, the office of such Lender Party specified as its "Eurodollar Lending
Office" opposite its name on Schedule I hereto or in the Assignment and
Acceptance pursuant to which it became a Lender Party (or, if no such
office is specified, its Domestic Lending Office), or such other office of
such Lender Party as such Lender Party may from time to time specify to the
Borrower and the Administrative Agent.
"Eurodollar Rate" means, for any Interest Period, an interest rate
per annum equal to the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor
page) as the London interbank offered rate for deposits in U.S. dollars at
11:00 A.M. (London time) two Business Days before the first day of such
Interest Period in an amount substantially equal to Societe Generale's
Eurodollar Rate Advance to which such Interest Period is to apply (or, if
Societe Generale shall not have such a Eurodollar Rate Advance, $1,000,000)
and for a period equal to such Interest Period (provided that if for any
reason such rate is not available, the term "Eurodollar Rate" shall mean,
for any Interest Period, the rate per annum (rounded upward, if necessary,
to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the
London interbank offered rate for deposits in U.S. dollars at approximately
11:00 A.M. (London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBO Page,
the applicable rate shall be the arithmetic mean of all such rates;
provided further that, in the case of the initial Interest Period with
respect to any Advance, if such period is not an exact period of 1, 2 ,3,
6, 9 or 12 months, the Eurodollar Rate shall mean the interest rate per
annum determined by the Administrative Agent to be the arithmetic mean
(rounded upwards, if necessary, to the nearest 1/16 of 1%) of the rates at
which deposits in U.S. dollars approximately equal in principal amount to
the Advances of the Eurodollar Reference Banks, in their capacities as
Lenders, included in such initial Advance and for a maturity comparable to
such Interest Period are offered to the principal London offices of each of
the Eurodollar Reference Banks in immediately available funds in the London
interbank market as of 11:00 A.M. (London time) on the day that is two
Business Days prior to the first day of such Interest Period.
"Eurodollar Rate Advance" means an Advance that bears interest at
a rate based on a Eurodollar Rate pursuant to the applicable Notice of
Borrowing or Notice of Interest Period Election.
"Eurodollar Rate Reserve Percentage" means for any day, the
percentage which is in effect on such day under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or
any successor) for determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or other marginal reserve
requirement) for a member bank of the Federal Reserve System in New York
City with respect to liabilities consisting of or including Eurocurrency
Liabilities (or with respect to any other category of liabilities that
includes deposits by reference to which the interest rate on Eurodollar
Rate Advances is determined).
"Eurodollar Reference Banks" means the principal London office of
each of Societe Generale, Morgan, Citibank, N.A., or such other Lender or
Lenders as from time to time may be agreed upon between the Borrower and
the Administrative Agent.
"Events of Default" has the meaning specified in Section 6.01.
"Existing Debt" has the meaning specified in Section 4.01(x).
"Facility" means the facility provided by the Lenders hereunder
for the making of Advances to the Borrower as provided herein.
"Federal Funds Rate" means, for any day, the rate per annum equal
to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published 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
that is a Business Day, the average of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Fiscal Quarter" has the meaning specified in Section 1.03(b).
"Fiscal Year" means the fiscal accounting period of 52 or 53 weeks
of the Borrower and its Consolidated Subsidiaries ending closest to
December 31 or, if the Borrower changes its fiscal year end to "August 31",
closest to August 31 in any calendar year.
"Foodservice Business" means the businesses conducted by the
Borrower and its Affiliates which consist of (i) providing food and
facilities management services to businesses and industrial operations,
health care facilities, schools and universities, (ii) providing commercial
laundry services, (iii) managing the Retained Conference Centers (as
defined in the Distribution Agreement) and (iv) business undertaken
pursuant to the NANA Joint Ventures (as defined in the Distribution
Agreement), each of the foregoing as and to the extent conducted through
the Borrower's Marriott Management Services strategic business unit
(referred to in the Distribution Agreement).
"Funding Date" means the date on which the Borrowing occurs
following satisfaction of all of the conditions precedent set forth in
Section 3.02 but in no event later than June 30, 1998.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States, applied on a basis consistent
(except for changes concurred in by the Borrower's independent public
accountants) with the most recent audited consolidated financial statements
of the Borrower and its Consolidated Subsidiaries delivered to the Lenders.
"Group of Advances" means, at any time, a group of Advances
consisting of (i) all Advances which are Base Rate Advances at such time,
(ii) all Eurodollar Rate Advances having the same Interest Period at such
time, provided that, if an Advance of any particular Lender is Converted to
or made as a Base Rate Advance pursuant to Section 2.09 or 2.16, such
Advance shall be included in the same Group or Groups of Advances from time
to time as it would have been in if it had not been so Converted or made.
"Guaranty" means the Guaranty specified in Section 3.02(k)(xv).
"Guarantor" means Sodexho Alliance, S.A., a societe anonyme
organized under the laws of France, and its successors.
"Hazardous Materials" means (a) petroleum or petroleum products,
by-products or breakdown products, radioactive materials,
asbestos-containing materials, polychlorinated biphenyls and radon gas and
(b) any other chemicals, materials or substances designated, classified or
regulated as hazardous or toxic or as a pollutant or contaminant under any
Environmental Law.
"Hedge Agreements" means interest rate swap, cap or collar
agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts and other similar
agreements.
"Hybrid Capital Stock" means, with respect to any Person, capital
stock of such Person, the dividends in respect of which are deductible by
such Person for United States federal income tax purposes.
"ICC" has the meaning specified in Preliminary Statement (1).
"Indemnified Consent Exposure" means the exposure resulting from
the absence of certain third-party consents and approvals required with
respect to the Transaction that is indemnified by New Marriott pursuant to
the Distribution Agreement.
"Indemnified Party" has the meaning specified in Section 8.04(b).
"Indemnity Support Agreement" means the Indemnity Support
Agreement referred to in the Consents Side Letter, between the Borrower and
New Marriott in connection with the indemnification of the Borrower for the
Indemnified Consent Exposure.
"Information Memorandum" means the information memorandum dated
December, 1997 used by the Arrangers in connection with the syndication of
the Commitments.
"Initial Lenders" has the meaning specified in the recital of
parties to this Agreement.
"Insufficiency" means, with respect to any Plan, the amount, if
any, of its unfunded benefit liabilities, as defined in Section 4001(a)(18)
of ERISA.
"Integration Costs" means costs incurred in connection with the
combination of the businesses of Marriott Management Services Corp., a New
York corporation, ICC, Sodexho Canada, MMS Canada and their respective
Subsidiaries and Affiliates.
"Interest Period" means, for each Eurodollar Rate Advance, the
period commencing on the date of borrowing specified in the applicable
Notice of Borrowing or the date specified in the applicable Notice of
Interest Rate Election and ending one, two, three, six, or, to the extent
available to each Lender, nine or twelve months thereafter, as the Borrower
may elect in such Notice; provided, however, that:
(a) the first Interest Period in respect of any Advances
that are Eurodollar Rate Advances shall end on the last Business
Day of the first, second, third, sixth or, to the extent available
to each Lender, ninth or twelfth, calendar month after the month
in which such Advance was made, as elected by the Borrower in the
applicable Notice of Borrowing;
(b) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day
of such Interest Period shall be extended to occur on the next
succeeding Business Day, provided, however, that, if such
extension would cause the last day of such Interest Period to
occur in the next following calendar month, the last day of such
Interest Period shall occur on the next preceding Business Day; and
(c) whenever the first day of any Interest Period occurs
on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar
month that succeeds such initial calendar month by the number of
months equal to the number of months in such Interest Period),
such Interest Period shall end on the last Business Day of such
succeeding calendar month.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"Investment" in any Person means any loan or advance to such
Person, any purchase or other acquisition of any capital stock or other
ownership or profit interest, warrants, rights, options, obligations or
other securities of such Person, any capital contribution to such Person or
any other investment in such Person, including, without limitation, any
arrangement pursuant to which the investor incurs Debt of the types
referred to in clause (f) or (g) of the definition of "Debt" in respect of
such Person, but excluding any demand deposit maintained with any Person.
"Lender Party" means any Lender.
"Lenders" means the Initial Lenders and each Person that shall
become a Lender hereunder pursuant to Section 8.07.
"Leverage Ratio" means, as of the last day of any Fiscal Quarter
of the Borrower, the ratio of Consolidated Debt as at such day to
Consolidated EBITDA for the period of four consecutive Fiscal Quarters of
the Borrower ending on such day.
"Lien" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance on
title to real property.
"Loan Documents" means this Agreement, the Notes, the Guaranty and
the agreement related to the fees referred to in Section 2.07, in each case
as amended or otherwise modified from time to time.
"Loan Parties" means the Borrower and the Guarantor.
"LYONs" means the Liquid Yield Option Notes due 2011 of the
Borrower issued pursuant to the Indenture dated as of March 25, 1996
between the Borrower and The Bank of New York, as indenture trustee,
together with all supplemental indentures executed thereunder.
"LYONs Allocation Agreement" means the LYONs Allocation Agreement
to be entered into by the Borrower, New Marriott and the Guarantor,
substantially in the form of the draft dated December 8, 1997.
"Margin Stock" has the meaning specified in Regulation U.
"Marriott Bond Tender Period" has the meaning specified in Section
2.01(a) of the Senior Debt Credit Agreement.
"Marriott Bonds" means (i) the notes in the principal amount of
$600,000,000 issued pursuant to the Indenture dated as of December 1, 1993
between the Borrower and Chemical Bank, as trustee, and (ii) the notes in
the principal amount of $120,000,000 issued pursuant to the Indenture dated
as of October 1, 1995 among RHG Finance, as issuer, Renaissance Hotel Group
N.V., as guarantor, the Borrower, as additional guarantor, and the First
National Bank of Chicago, as indenture trustee, in each case, as amended
from time to time.
"Material Adverse Change" means any material adverse change in the
business, financial condition, results of operations or prospects of the
Borrower and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a)
the business, financial condition, results of operations or prospects of
the Borrower and its Subsidiaries taken as a whole, (b) the rights and
remedies of the Administrative Agent and the Lenders under any Loan
Document or (c) the ability of any Loan Party to perform its Obligations
under any Loan Document to which it is or is to be a party.
"Material Contract" means, with respect to any Person, each
contract to which such Person is a party involving aggregate consideration
payable to or by such Person of an amount equal to not less than 2% of
Consolidated sales of the Borrower and its Subsidiaries in any year or
otherwise material to the business, financial condition or results of
operations of such Person.
"Merger" has the meaning specified in Preliminary Statement (1).
"Merger Agreement" means the Agreement and Plan of Merger dated as
of September 30, 1997 among the Borrower, the Guarantor, Merger Corp., New
Marriott and ICC as amended by the Amendment Agreement.
"Merger Corp." means Marriott-ICC Merger Corp., a Delaware
corporation.
"MMS Canada" has the meaning specified in Preliminary Statement
(2).
"Moody's" means Moody's Investors Service, Inc.
"Morgan" has the meaning specified in the recital of parties to
this Agreement.
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA which is a defined benefit plan within the
meaning of Section 3(35) of ERISA, to which the Borrower or any ERISA
Affiliate is making or accruing an obligation to make contributions, or has
within any of the preceding five plan years made or accrued an obligation
to make contributions.
"Multiple Employer Plan" means a single employer plan, as defined
in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of
the Borrower or any ERISA Affiliate and at least one Person other than the
Borrower and the ERISA Affiliates or (b) was so maintained and in respect
of which the Borrower or any ERISA Affiliate could have liability under
Section 4064 or 4069 of ERISA in the event such plan has been or were to be
terminated.
"New Marriott" means New Marriott MI, Inc., a Delaware corporation
(to be renamed Marriott International, Inc. after the Spinoff).
"Note" means a promissory note of the Borrower payable to the
order of any Lender, in substantially the form of Exhibit A hereto,
evidencing the indebtedness of the Borrower to such Lender resulting from
the Advance made by such Lender.
"Notice of Borrowing" has the meaning specified in Section 2.02(a).
"Notice of Interest Rate Election" has the meaning specified in
Section 2.08.
"NPL" means the National Priorities List under CERCLA.
"Obligation" means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind, including,
without limitation, any liability of such Person on any claim, whether or
not the right of any creditor to payment in respect of such claim is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
disputed, undisputed, legal, equitable, secured or unsecured, and whether
or not such claim is discharged, stayed or otherwise affected by any
proceeding referred to in Section 6.01(f). Without limiting the generality
of the foregoing, the Obligations of the Loan Parties under the Loan
Documents include (a) the obligation to pay principal, interest, charges,
expenses, fees, attorneys' fees and disbursements, indemnities and other
amounts payable by any Loan Party under any Loan Document and (b) the
obligation of any Loan Party to reimburse any amount in respect of any of
the foregoing that any Lender Party, in its sole discretion, may elect to
pay or advance on behalf of such Loan Party.
"Omnibus Restructuring Agreement" means the Omnibus Restructuring
Agreement dated as of September 30, 1997 among the Borrower, the Guarantor,
Merger Corp., New Marriott and ICC, as amended by the Amendment Agreement.
"Other Taxes" has the meaning specified in Section 2.11(b).
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor).
"Permitted Liens" means each of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall
have been commenced: (a) Liens for taxes, assessments and governmental
charges or levies to the extent not required to be paid under Section
5.01(b) hereof; (b) Liens imposed by law, such as materialmen's,
mechanics', carriers', workmen's and repairmen's Liens and other similar
Liens arising in the ordinary course of business securing obligations that
are not overdue for a period of more than 30 days; (c) pledges or deposits
to secure obligations under workers' compensation laws or similar
legislation or to secure public or statutory obligations; (d) easements,
rights of way and other encumbrances on title to real property that do not
render title to the property encumbered thereby unmarketable or materially
adversely affect the use of such property for its present purposes; (e)
Liens in respect of judgments not constituting an Event of Default under
Section 6.01(g); and (f) Liens on inventory or equipment arising under
Article 2 of the Uniform Commercial Code or any similar provision of
applicable law securing payment of the purchase price of such inventory or
equipment, provided that such Lien does not extend to any asset other than
such inventory and equipment and the obligation to pay such purchase price
does not constitute Debt, and provided further that neither the Borrower
nor any of its Subsidiaries shall have executed a Uniform Commercial Code
financing statement (Form UCC-1 or a comparable form) in connection with
any such Lien on inventory.
"Person" means an individual, partnership, corporation (including
a business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government
or any political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Process Agent" has the meaning specified in Section 3.02(k)(xxii).
"Proxy Statement" means the Notice of Special Meeting of
Stockholders and related Preliminary Proxy Statement filed with the
Securities and Exchange Commission on January 12, 1998 by the Borrower and
all related documents, schedules, annexes and attachments filed therewith.
"Redeemable" means, with respect to any capital stock or other
ownership or profit interest, Debt or other right or Obligation, any such
right or Obligation that (a) the issuer has undertaken to redeem at a fixed
or determinable date or dates, whether by operation of a sinking fund or
otherwise, or upon the occurrence of a condition not solely within the
control of the issuer or (b) is redeemable at the option of the holder.
"Register" has the meaning specified in Section 8.07(d).
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Related Documents" means the Transaction Documents, the Senior
Debt Documents and the Tax Agreement.
"Required Lenders" means at any time Lenders owed or holding at
least 51% of the sum of (a) the aggregate principal amount of the Advances
outstanding at such time and (b) the aggregate unused Commitments under the
Facility at such time; provided, however, that if any Lender shall be a
Defaulting Lender at such time, there shall be excluded from the
determination of Required Lenders at such time (A) the aggregate principal
amount of the Advances owing to such Lender and outstanding at such time
and (B) the unused Commitment of such Lender at such time.
"Requisite Lenders" means at any time Lenders owed or holding at
least 66 2/3% of the sum of (a) the aggregate principal amount of the
Advances outstanding at such time and (b) the aggregate unused Commitments
under the Facility at such time; provided, however, that if any Lender
shall be a Defaulting Lender at such time, there shall be excluded from the
determination of Requisite Lenders at such time (A) the aggregate principal
amount of the Advances owing to such Lender and outstanding at such time
and (B) the unused Commitment of such Lender at such time.
"Responsible Officer" means, with respect to any Loan Party, any
executive officer of such Loan Party.
"Retained Marriott Bonds" means any Marriott Bonds that, on the
last day of the Marriott Bond Tender Period, shall not have been tendered
and that are retained as obligations of the Borrower.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"Senior Debt" means the Debt under the Senior Debt Credit
Agreement or any replacement thereof.
"Senior Debt Credit Agreement" means the $735,000,000 Credit
Agreement dated as of the date hereof among Sodexho Operations, as
borrower, the Borrower, as Parent Guarantor, Morgan and Societe Generale,
as initial Issuing Banks, the lenders party thereto, and Morgan, as
Documentation Agent and as Administrative Agent (as the same may be
amended, supplemented or otherwise modified from time to time in accordance
with its terms).
"Senior Debt Documents" means the Senior Debt Credit Agreement,
together with the Notes, the Collateral Documents and the Guarantees (each
as defined therein) executed in connection therewith.
"Shareholders' Equity" means common stock, additional paid-in
capital, retained earnings and treasury stock of the Borrower and its
Subsidiaries on a Consolidated basis.
"Single Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Borrower or any ERISA Affiliate and no Person other than the Borrower and
the ERISA Affiliates or (b) was so maintained and in respect of which the
Borrower or any ERISA Affiliate could have liability under Section 4069 of
ERISA in the event such plan has been or were to be terminated.
"Societe Generale" has the meaning specified in the recital of
parties to this Agreement.
"Sodexho Canada" has the meaning specified in Preliminary
Statement (1).
"Sodexho Operations" has the meaning specified in Preliminary
Statement (2).
"Solvent" and "Solvency" mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of
such Person is greater than the total amount of liabilities, including,
without limitation, contingent liabilities, of such Person, (b) the present
fair salable value of the assets of such Person is not less than the amount
that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured, (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond
such Person's ability to pay such debts and liabilities as they mature and
(d) such Person is not engaged in business or a transaction, and is not
about to engage in business or a transaction, for which such Person's
property would constitute an unreasonably small capital. The amount of
contingent liabilities at any time shall be computed as the amount that, in
the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual
or matured liability.
"Spinoff" has the meaning specified in Preliminary Statement (1).
"Subsidiary" of any Person means any corporation, partnership,
joint venture, limited liability company, trust or estate of which (or in
which) more than 50% of the issued and outstanding capital stock or other
ownership interests having ordinary voting power to elect a majority of the
Board of Directors or other persons performing similar functions
(irrespective of whether at the time capital stock or other ownership
interests of any other class or classes shall or might have voting power
upon the occurrence of any contingency) is at the time directly or
indirectly owned or controlled by such Person, by such Person and one or
more of its other Subsidiaries or by one or more of such Person's other
Subsidiaries. Except as otherwise expressly provided herein, neither New
Marriott nor any Person that is, will be or will become a Subsidiary of New
Marriott upon the consummation of the Transaction shall be a Subsidiary of
the Borrower for any purpose under this Agreement.
"Subsidiary Contribution" has the meaning specified in Preliminary
Statement (2).
"Substantial Subsidiary" means, on any date, each Subsidiary of
the Borrower (i) whose revenues for the four Fiscal Quarters of the
Borrower most recently ended on or prior to such date equaled or exceeded
2% of the Consolidated revenues of the Borrower and its Subsidiaries for
such period or (ii) whose assets as of such date equaled or exceeded 2% of
the Consolidated assets of the Borrower and its Subsidiaries as of such
date.
"Tax Agreement" means the Tax Sharing and Indemnification
Agreement to be entered into by the Borrower, the Guarantor and New
Marriott in respect of certain tax matters in connection with the
Transaction.
"Taxes" has the meaning specified in Section 2.11(a).
"Termination Date" means the earlier of (i) the seventh
anniversary of the Funding Date and (ii) the date of termination in whole
of the Commitments pursuant to Section 2.04 or 6.01.
"Transaction" has the meaning specified in Preliminary Statement
(2).
"Transaction Documents" means the Merger Agreement, the
Distribution Agreement, the Omnibus Restructuring Agreement, the Consents
Side Letter and the Indemnity Support Agreement (but only if and to the
extent required to be entered into pursuant to the Consents Side Letter).
"Type" refers to the distinction between Advances bearing interest
at the Base Rate and Advances bearing interest at a Eurodollar Rate.
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the happening of
such a contingency.
"Welfare Plan" means a welfare plan, as defined in Section 3(1) of
ERISA, that is maintained for employees of the Borrower or any of its
Subsidiaries or in respect of which the Borrower or any of its Subsidiaries
could have liability.
"Withdrawal Liability" has the meaning specified in Part I of
Subtitle E of Title IV of ERISA.
SECTION 1.02. Computation of Time Periods. In this Agreement in
the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and
"until" each mean "to but excluding".
SECTION 1.03. Accounting Terms and Determinations. (a) Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP; provided that, if the Borrower notifies the
Administrative Agent that the Borrower wishes to amend any provision hereof to
eliminate the effect of any change in GAAP (or if the Administrative Agent
notifies the Borrower that the Required Lenders wish to amend any provision
hereof for such purpose), then such provision shall be applied on the basis of
GAAP in effect immediately before the relevant change in GAAP became
effective, until either such notice is withdrawn or such provision is amended
in a manner satisfactory to the Borrower and the Required Lenders.
(b) For all purposes of this Agreement, including the
computation of the financial covenants set forth in Section 5.04, the term
"Fiscal Quarter" with respect to the Borrower and its Subsidiaries shall mean
the three-month fiscal period of the Borrower or such Subsidiary ending
nearest to the last day of each November, February, May and August.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Advances. Each Lender severally agrees, on the
terms and conditions hereinafter set forth, to make a single advance (an
"Advance") to the Borrower on the Funding Date in an amount not to exceed such
Lender's Commitment. The Borrowing shall consist of Advances made
simultaneously by the Lenders ratably according to their Commitments. Amounts
borrowed under this Section 2.01 and repaid or prepaid may not be reborrowed.
SECTION 2.02. Making the Advances. (a) The Borrowing shall be
made on notice, given not later than 11:00 A.M. (New York City time) on the
third Business Day prior to the date of the proposed Borrowing in the case of
any part of the Borrowing consisting of Eurodollar Rate Advances, or 10:30 A.M.
(New York City time) on the date of the proposed Borrowing in the case of any
part of the Borrowing consisting of Base Rate Advances, by the Borrower to the
Administrative Agent, which shall give to each Lender prompt notice thereof by
telephone, confirmed immediately in writing, or by telecopier. Such notice of
Borrowing (the "Notice of Borrowing") shall be by telephone, confirmed
immediately in writing, or telecopier, in substantially the form of Exhibit B
hereto, specifying therein the requested (i) date of the Borrowing, (ii) Type
of Advances comprising the Borrowing, (iii) aggregate amount of the Borrowing
and (iv) in the case of any part of the Borrowing consisting of Eurodollar
Rate Advances, initial Interest Period for each such Advance. Each Lender
shall, before 11:00 A.M. (New York City time) on the date of the Borrowing,
make available for the account of its Applicable Lending Office to the
Administrative Agent at the Administrative Agent's Account, in same day funds,
such Lender's ratable portion of the Borrowing in accordance with the
Commitments of such Lender and the other Lenders. After the Administrative
Agent's receipt of such funds and upon fulfillment of the applicable
conditions set forth in Article III, the Administrative Agent will make such
funds available to the Borrower by crediting the Borrower's Account.
(b) Anything in subsection (a) above to the contrary
notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for
any Group of Advances if the aggregate amount of such Group of Advances is
less than $5,000,000 or if the obligation of the Lenders to make Eurodollar
Rate Advances shall then be suspended pursuant to Section 2.09(c) and (ii) the
Advances may not be outstanding as part of more than four separate Groups of
Advances.
(c) The Notice of Borrowing shall be irrevocable and binding on
the Borrower. In the case of any part of the Borrowing that the Notice of
Borrowing specifies is to be comprised of Eurodollar Rate Advances, the
Borrower shall, within 15 days after demand, indemnify each Lender against any
loss, cost or expense (but excluding loss of margin for any day after the date
specified in the Notice of Borrowing for such Advance) incurred by such Lender
as a result of any failure to fulfill on or before the date specified in the
Notice of Borrowing for such Advance the applicable conditions set forth in
Article III, including, without limitation, any loss, cost or expense incurred
by reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund the Advance to be made by such Lender as part
of the Borrowing when such Advance, as a result of such failure, is not made
on such date, provided that such Lender shall have delivered to the Borrower a
certificate setting forth in reasonable detail the amount of, the basis for
and the calculation of, such loss, cost or expense, which certificate shall be
conclusive in the absence of manifest error.
(d) Unless the Administrative Agent shall have received notice
from a Lender prior to the date of the Borrowing that such Lender will not
make available to the Administrative Agent such Lender's ratable portion of
the Borrowing, the Administrative Agent may assume that such Lender has made
such portion available to the Administrative Agent on the date of the
Borrowing in accordance with subsection (a) of this Section 2.02 and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount. If and to the extent that
such Lender shall not have so made such ratable portion available to the
Administrative Agent, such Lender and the Borrower severally agree to repay or
pay to the Administrative Agent forthwith on demand such corresponding amount
and to pay interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid or paid to the
Administrative Agent, at (i) in the case of the Borrower, the interest rate
applicable at such time under Section 2.06 to Advances comprising the
Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If
such Lender shall pay to the Administrative Agent such corresponding amount,
such amount so paid shall constitute such Lender's Advance as part of the
Borrowing for all purposes.
(e) The failure of any Lender to make the Advance to be made by
it as part of the Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Advance on the date of the
Borrowing, but no Lender shall be responsible for the failure of any other
Lender to make the Advance to be made by such other Lender on the date of the
Borrowing.
SECTION 2.03. Repayment of Advances. The Borrower shall repay to
the Administrative Agent for the ratable account of the Lenders the aggregate
outstanding principal amount of the Advances on the seventh anniversary of the
Funding Date or on the date the Notes become due and payable pursuant to
Section 6.01.
SECTION 2.04. Termination or Reduction of the Facility. (a)
Optional. The Borrower may, upon at least three Business Days' notice to the
Administrative Agent, terminate in whole or reduce in part, the Commitments;
provided that each partial reduction of the Commitments (i) shall be in the
aggregate amount of $10,000,000 or an integral multiple of $5,000,000 in
excess thereof and (ii) shall be made ratably among the Lenders in accordance
with their Commitments.
(b) Mandatory. At the close of business on the Funding Date,
the Commitments shall be automatically and permanently reduced to zero.
SECTION 2.05. Prepayments. The Borrower may, upon same Business
Day's notice in the case of Base Rate Advances and three Business Days' notice
in the case of Eurodollar Rate Advances, in each case given to the
Administrative Agent not later than 11:00 A.M. (New York City time) stating
the proposed date and aggregate principal amount of the prepayment, and if
such notice is given the Borrower shall, prepay the outstanding aggregate
principal amount of any Group of Advances in whole or ratably in part, together
with accrued interest to the date of such prepayment on the aggregate
principal amount prepaid; provided, however, that (x) each partial prepayment
shall be in an aggregate principal amount of $10,000,000 or an integral
multiple of $5,000,000 in excess thereof and (y) if any prepayment of a
Eurodollar Rate Advance is made on a date other than the last day of an
Interest Period for such Advance the Borrower shall also pay any amounts owing
pursuant to Section 8.04(c).
SECTION 2.06. Interest. (a) Scheduled Interest. The Borrower
shall pay interest on the unpaid principal amount of each Advance owing to
each Lender from the date of such Advance until such principal amount shall be
paid in full, at the following rates per annum:
(i) Base Rate Advances. For each day on which such Advance is a
Base Rate Advance, a rate per annum equal to the Base Rate for such day,
payable in arrears quarterly on the last day of each February, May, August
and November during such periods and on the date such Base Rate Advance
shall be Converted or paid in full.
(ii) Eurodollar Rate Advances. During such periods as such
Advance is a Eurodollar Rate Advance, for each day during each Interest
Period applicable thereto a rate per annum equal to the sum of (A) the
Eurodollar Rate for such Interest Period plus (B) the Applicable Margin for
such day, payable in arrears on the last day of such Interest Period and,
if such Interest Period has a duration of more than three months, on each
day that occurs during such Interest Period every three months from the
first day of such Interest Period and on the date such Eurodollar Rate
Advance shall be Converted or paid in full.
(b) Default Interest. The Borrower shall pay interest on (i)
the unpaid principal amount of each Advance owing to each Lender that is not
paid when due and (ii) to the fullest extent permitted by law, the amount of
any interest, fee or other amount payable hereunder that is not paid when due,
in each case, from the date such amount shall be due until such amount shall
be paid in full, payable in arrears on the date such amount shall be paid in
full and on demand, at a rate per annum equal at all times to 2% per annum
above the rate per annum required to be paid, in the case of interest, on the
Type of Advance on which such interest has accrued pursuant to clause (a)(i)
or (a)(ii) above, and, in all other cases, on Base Rate Advances pursuant to
clause (a)(i) above.
(c) Notice of Interest Rate. Promptly after receipt of a Notice
of Borrowing or Notice of Interest Rate Election pursuant to Section 2.02(a)
or 2.08(a), the Administrative Agent shall give notice to the Borrower and
each Lender of the applicable interest rate determined by the Administrative
Agent for purposes of clause (a)(i) or (a)(ii).
SECTION 2.07. Fees. (a) Ticking Fee. The Borrower shall pay to
the Administrative Agent for the account of the Lenders a ticking fee payable
in arrears on the earlier of the Funding Date and the Termination Date and, in
addition, if neither the Funding Date nor the Termination Date has occurred
prior to such date, on April 30, 1998, (A) for the period commencing February
27, 1998 until the earliest of (i) the Funding Date, (ii) April 30, 1998 and
(iii) the Termination Date, at the rate of 25 basis points per annum
(calculated on the basis of a 360-day year) on the sum of the Commitments of
each Lender hereunder and (B) for the period commencing May 1, 1998 until the
earlier of (i) the Funding Date and (ii) the Termination Date, at the rate of
37.5 basis points per annum (calculated on the basis of a 360-day year) on the
sum of the Commitments of each Lender hereunder; provided, however, that any
ticking fee accrued with respect to the Commitment of a Defaulting Lender
during the period prior to the time such Lender became a Defaulting Lender and
unpaid at such time shall not be payable by the Borrower to such Defaulting
Lender so long as such Lender shall be a Defaulting Lender except to the
extent that such ticking fee shall otherwise have been due and payable by the
Borrower prior to such time; and provided further that no ticking fee shall
accrue on the Commitment of a Defaulting Lender so long as such Lender shall
be a Defaulting Lender.
(b) Administrative Agent's Fees. The Borrower shall pay to the
Administrative Agent for its own account such fees as may from time to time be
agreed between the Borrower and the Administrative Agent.
SECTION 2.08. Conversion and Continuation of Advances. (a)
Optional. The Borrower may on any Business Day, upon notice (a "Notice of
Interest Rate Election") given to the Administrative Agent not later than
11:00 A.M. (New York City time) on the third Business Day prior to the date of
the proposed Conversion or continuation and subject to the provisions of
Sections 2.06 and 2.09, Convert all or any portion of a Group of Advances into
Advances of the other Type or, in the case of a Group of Eurodollar Rate
Advances, continue such Advances as Eurodollar Rate Advances for an additional
Interest Period; provided, however, that any Conversion of Base Rate Advances
into Eurodollar Rate Advances, and any continuation of Eurodollar Rate
Advances for an additional Interest Period, shall be in an aggregate amount
not less than the minimum amount specified in Section 2.02(b), no Conversion
of any Advances shall result in more separate Groups of Advances than
permitted under Section 2.02(b) and each Conversion or continuation of less
than all of the Advances in any Group of Advances shall apply ratably to the
Advances of the respective Lenders included in such Group. Each such Notice
of Interest Rate Election shall, within the restrictions specified above,
specify (i) the date of such Conversion or continuation, (ii) the Advances to
be Converted or continued and (iii) in the case of any such continuation of or
Conversion into Eurodollar Rate Advances, the duration of the initial or next
Interest Period for such Advances. Each Notice of Interest Rate Election
shall be irrevocable and binding on the Borrower.
(b) Mandatory. (i) On the date on which the aggregate unpaid
principal amount of Eurodollar Rate Advances comprising any Group of
Eurodollar Rate Advances shall be reduced, by prepayment or otherwise, to less
than $5,000,000, such Advances shall automatically Convert into Base Rate
Advances.
(ii) If the Borrower shall fail to select the duration of any
Interest Period for any Group of Eurodollar Rate Advances in accordance with
the provisions contained in the definition of "Interest Period" in Section
1.01, the Administrative Agent will forthwith so notify the Borrower and the
Lenders, whereupon each such Eurodollar Rate Advance will automatically, on
the last day of the then existing Interest Period therefor, Convert into a
Base Rate Advance.
SECTION 2.09. Increased Costs, Etc. (a) If, due to either (i)
the introduction, after the date hereof, of or any change in or in the
interpretation of any law or regulation or (ii) the compliance with any
guideline or request issued after the date hereof from any central bank or
other governmental authority (whether or not having the force of law), there
shall be any increase in the cost to any Lender Party of agreeing to make or
of making, funding or maintaining Eurodollar Rate Advances (excluding for
purposes of this Section 2.09 any such increased costs resulting from (i)
Taxes, Other Taxes or taxes expressly excluded from the definition of Taxes
and Other Taxes (as to which Section 2.11 shall govern), (ii) changes in the
basis of taxation of overall net income or overall gross income by the United
States or by the foreign jurisdiction or state under the laws of which such
Lender Party is organized or has its Applicable Lending Office or any
political subdivision thereof and (iii) any requirement as to which such
Lender is entitled to compensation under Section 2.15), then the Borrower
shall from time to time, within 15 days after demand by such Lender Party
(with a copy of such demand to the Administrative Agent), accompanied by a
certificate of such Lender Party setting forth in reasonable detail the amount
of, the basis for and the calculation of such additional amounts, pay to the
Administrative Agent for the account of such Lender Party additional amounts
sufficient to compensate such Lender Party for such increased cost; provided,
however, that a Lender Party claiming additional amounts under this Section
2.09(a) agrees to use reasonable efforts (consistent with its internal policy
and legal and regulatory restrictions) to designate a different Applicable
Lending Office if the making of such a designation would avoid the need for,
or reduce the amount of, such increased cost that may thereafter accrue and
would not, in the reasonable judgment of such Lender Party, be otherwise
disadvantageous to such Lender Party. A certificate as to the amount of such
increased cost, submitted to the Borrower by such Lender Party, shall be
conclusive and binding for all purposes, absent manifest error.
(b) If any Lender Party determines that the adoption, after the
date hereof, of any law or regulation or compliance with any guideline or
request issued after the date hereof from any central bank or other
governmental authority (whether or not having the force of law) regarding
capital adequacy affects or would affect the amount of capital required or
expected to be maintained by such Lender Party or any corporation controlling
such Lender Party and that the amount of such capital is increased by or based
upon the existence of such Lender Party's commitment to lend, then, upon
demand by such Lender Party (with a copy of such demand to the Administrative
Agent), accompanied by a certificate of such Lender Party setting forth in
reasonable detail the amount of, the basis for and the calculation of such
additional amounts, the Borrower shall pay to the Administrative Agent for the
account of such Lender Party, from time to time within 30 days after demand by
such Lender Party, additional amounts sufficient to compensate such Lender
Party in the light of such circumstances, for any reduction in the rate of
return on capital of such Lender or corporation controlling such Lender below
the level that such Lender or controlling corporation could have achieved but
for such adoption or issuance (taking into consideration its policies with
respect to capital adequacy) to the extent that such Lender Party reasonably
determines such increase in capital to be allocable to the existence of such
Lender Party's commitment to lend. A certificate as to such amounts submitted
to the Borrower by such Lender Party shall be conclusive and binding for all
purposes, absent manifest error.
(c) If, with respect to any Eurodollar Rate Advances under the
Facility, the Required Lenders notify the Administrative Agent that the
Eurodollar Rate for any Interest Period for such Advances will not adequately
reflect the cost to such Lenders of making, funding or maintaining their
Eurodollar Rate Advances for such Interest Period, the Administrative Agent
shall forthwith so notify the Borrower and the Lenders, whereupon (i) each
such Eurodollar Rate Advance under the Facility will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base
Rate Advance and (ii) the obligation of the Lenders to make, or to Convert
Advances into, Eurodollar Rate Advances shall be suspended until the
Administrative Agent shall notify the Borrower that such Lenders have
determined that the circumstances causing such suspension no longer exist.
(d) Notwithstanding any other provision of this Agreement, if
the introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Lender or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances
hereunder, then, on notice thereof and demand therefor by such Lender to the
Borrower through the Administrative Agent, (i) each Eurodollar Rate Advance
under the Facility made by such Lender will automatically, upon such demand,
Convert into a Base Rate Advance and (ii) the obligation of the Lenders to
make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended
until the Administrative Agent shall notify the Borrower that such Lender has
determined that the circumstances causing such suspension no longer exist;
provided, however, that, before making any such demand, such Lender agrees to
use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to designate a different Eurodollar Lending Office if
the making of such a designation would allow such Lender or its Eurodollar
Lending Office to continue to perform its obligations to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances and would
not, in the judgment of such Lender, be otherwise disadvantageous to such
Lender.
SECTION 2.10. Payments and Computations. (a) The Borrower shall
make each payment hereunder and under the Notes, irrespective of any right of
counterclaim or set-off (except as otherwise provided in Section 2.14), not
later than 12:00 noon (New York City time) on the day when due in U.S. dollars
to the Administrative Agent at the Administrative Agent's Account in same day
funds. The Administrative Agent will promptly thereafter cause like funds to
be distributed (i) if such payment by the Borrower is in respect of principal,
interest, or any other Obligation then payable hereunder and under the Notes
to more than one Lender Party, to such Lender Parties for the account of their
respective Applicable Lending Offices ratably in accordance with the amounts
of such respective Obligations then payable to such Lender Parties and (ii) if
such payment by the Borrower is in respect of any Obligation then payable
hereunder to one Lender Party, to such Lender Party for the account of its
Applicable Lending Office, in each case to be applied in accordance with the
terms of this Agreement. Upon its acceptance of an Assignment and Acceptance
and recording of the information contained therein in the Register pursuant to
Section 8.07(d), from and after the effective date of such Assignment and
Acceptance, the Administrative Agent shall make all payments hereunder and
under the Notes in respect of the interest assigned thereby to the Lender
Party assignee thereunder, and the parties to such Assignment and Acceptance
shall make all appropriate adjustments in such payments for periods prior to
such effective date directly between themselves.
(b) If the Administrative Agent receives funds for application
to the Obligations under the Loan Documents under circumstances in which
neither the Borrower nor the Loan Documents specify the Advances to which, or
the manner in which, such funds are to be applied, the Administrative Agent
may, but shall not be obligated to, elect to distribute such funds to each
Lender Party ratably in accordance with such Lender Party's proportionate
share of the principal amount of all outstanding Advances, in repayment or
prepayment of such of the outstanding Advances or other Obligations owed to
such Lender Party, and for application to such principal installments, as the
Administrative Agent shall direct.
(c) All computations of interest based on the Base Rate shall be
made by the Administrative Agent on the basis of a year of 365 or 366 days, as
the case may be, and all computations of interest based on the Eurodollar Rate
and all computations of fees (including, without limitation, fees payable
under Section 2.07) shall be made by the Administrative Agent on the basis of
a year of 360 days, in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest or fees are payable. Each determination by the Administrative Agent
of an interest rate or fee hereunder shall be conclusive and binding for all
purposes, absent manifest error.
(d) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest, fees or
commissions, as the case may be; provided, however, that, if such extension
would cause payment of interest on or principal of Eurodollar Rate Advances to
be made in the next following calendar month, such payment shall be made on
the next preceding Business Day.
(e) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to any Lender
Party hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in
full to the Administrative Agent on such date and the Administrative Agent
may, in reliance upon such assumption, cause to be distributed to each such
Lender Party on such due date an amount equal to the amount then due such
Lender Party. If and to the extent the Borrower shall not have so made such
payment in full to the Administrative Agent, each such Lender Party shall
repay to the Administrative Agent forthwith on demand such amount distributed
to such Lender Party together with interest thereon, for each day from the
date such amount is distributed to such Lender Party until the date such
Lender Party repays such amount to the Administrative Agent, at the Federal
Funds Rate.
SECTION 2.11. Taxes. (a) Any and all payments by the Borrower
hereunder or under the Notes shall be made, in accordance with Section 2.10,
free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender Party
and the Administrative Agent, taxes that are imposed on its overall net income
by the United States and taxes that are imposed on its overall net income (and
franchise and similar taxes imposed in lieu thereof) by the state or foreign
jurisdiction under the laws of which such Lender Party or the Administrative
Agent (as the case may be) is organized or in which it is resident or any
political subdivision thereof and, in the case of each Lender Party, taxes
that are imposed on its overall net income (and franchise and similar taxes
imposed in lieu thereof) by the state or foreign jurisdiction of such Lender
Party's Applicable Lending Office or any political subdivision thereof and in
the case of each Lender Party and the Administrative Agent, overall net income
taxes imposed solely by reason of such Lender Party or the Administrative
Agent (as the case may be) doing business in the jurisdiction imposing such
tax, other than taxes arising solely as a result of such Lender Party or the
Administrative Agent entering into this Agreement or holding any Note or
performing any activity contemplated herein (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities in respect
of payments hereunder or under the Notes being hereinafter referred to as
"Taxes"). If the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder or under any Note to any Lender
Party or the Administrative Agent, (i) the sum payable shall be increased as
may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.11) such
Lender Party or the Administrative Agent (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrower shall make such deductions and (iii) the Borrower
shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any present or future
stamp, documentary, excise, property or similar taxes, charges or levies that
arise from any payment made hereunder or under the Notes or from the
execution, delivery or registration of, performing under, or otherwise with
respect to, this Agreement or the Notes (hereinafter referred to as "Other
Taxes").
(c) The Borrower shall indemnify each Lender Party and the
Administrative Agent for and hold it harmless against the full amount of Taxes
and Other Taxes, and for the full amount of Taxes and Other Taxes on amounts
payable under this Section 2.11, imposed on or paid by such Lender Party or the
Administrative Agent (as the case may be) and any liability (including
penalties, additions to tax, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within 30 days from the
date such Lender Party or the Administrative Agent (as the case may be) makes
written demand therefor, accompanied by a certificate of such Lender Party
setting forth the amount thereof, the basis therefor and the calculation
thereof; provided, however, that the Borrower shall not be obligated to make
payment to the Lender Party or the Administrative Agent (as the case may be)
pursuant to this Section in respect of penalties, additions to tax, interest,
expenses and other liabilities attributable to any Taxes or Other Taxes, if
(i) written demand therefor has not been made by such Lender Party or the
Administrative Agent within 30 Business Days from the date on which such
Lender Party or the Administrative Agent received written notice of an
imposition of Taxes or Other Taxes by the relevant taxing or governmental
authority (but only to the extent that the Borrower is materially damaged as a
result of such failure), (ii) such penalties, additions to tax, interest,
expenses and other liabilities have accrued as a result of the failure of such
Lender Party to remit the amount of any indemnity payment it receives from the
Borrower pursuant to this Section to a taxing authority or (iii) such
penalties, additions to tax, interest, expenses and other liabilities are
attributable to the gross negligence or willful misconduct of such Lender
Party or the Administrative Agent. After a Lender Party or the Administrative
Agent (as the case may be) receives notice of an assessment of Taxes or Other
Taxes, such Lender Party or Administrative Agent will act in good faith to
promptly notify the Borrower of its obligations hereunder.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower shall furnish to the Administrative Agent, at its address referred to
in Section 8.02, the original or a certified copy of a receipt evidencing such
payment, except to the extent such receipt or other document is not legally
available, in which case the Borrower will furnish other satisfactory evidence
of such payment.
(e) Each Lender Party organized under the laws of a jurisdiction
outside the United States shall, on or prior to the date of its execution and
delivery of this Agreement in the case of each Initial Lender and on the date
of the Assignment and Acceptance pursuant to which it becomes a Lender Party
in the case of each other Lender Party, and from time to time thereafter as
requested in writing by the Borrower (but only so long thereafter as such
Lender Party remains lawfully able to do so), provide each of the
Administrative Agent and the Borrower with two original Internal Revenue
Service forms 1001 or 4224, as appropriate, or any successor form prescribed
by the Internal Revenue Service, certifying that such Lender Party is exempt
from or entitled to a reduced rate of United States withholding tax on
payments pursuant to this Agreement or the Notes. If the forms provided by a
Lender Party at the time such Lender Party first becomes a party to this
Agreement indicates a United States interest withholding tax rate in excess of
zero, withholding tax at such rate shall be considered excluded from Taxes
unless and until such Lender Party provides the appropriate form certifying
that a lesser rate applies, whereupon withholding tax at such lesser rate only
shall be considered excluded from Taxes for periods governed by such form;
provided, however, that, if at the date of the Assignment and Acceptance
pursuant to which a Lender Party assignee becomes a party to this Agreement,
the Lender Party assignor was entitled to payments under subsection (a) in
respect of United States withholding tax with respect to interest paid at such
date, then, to such extent, the term Taxes shall include (in addition to
withholding taxes that may be imposed in the future or other amounts otherwise
includable in Taxes) United States withholding tax, if any, applicable with
respect to the Lender Party assignee on such date.
(f) For any period with respect to which a Lender Party has
failed to provide the Borrower with the appropriate form described in
subsection (e) above (other than if such failure is due to a change in law
occurring after the date on which a form originally was required to be
provided or if such form otherwise is not required under subsection (e)
above), such Lender Party shall not be entitled to indemnification under
subsection (a) or (c) with respect to Taxes imposed by the United States by
reason of such failure; provided, however, that should a Lender Party become
subject to Taxes because of its failure to deliver a form required hereunder,
the Borrower shall take such steps as such Lender Party shall reasonably
request to assist such Lender Party to recover such Taxes at such Lender
Party's expense.
(g) If a Lender Party shall become aware that it is entitled to
receive a refund from a relevant taxing or governmental authority in respect
of Taxes or Other Taxes as to which it has been indemnified by the Borrower
pursuant to this Section, it shall promptly notify the Borrower of the
availability of such refund and shall, within 30 days after receipt of a
request by the Borrower (whether as a result of notification that it has made
to the Borrower or otherwise) make a claim to such taxing or governmental
authority for such refund at the Borrower's expense; provided that the
Borrower agrees to indemnify the Lender Party for any adverse tax consequences
resulting from the making of such claim for refund. If such Lender Party
finally and irrevocably receives a refund of any Taxes or Other Taxes
(including penalties, additions to tax and interest) for which it has been
indemnified by the Borrower pursuant to this Section, or which the Borrower
has paid pursuant to this Section, then, to the extent such Lender Party may
do so without jeopardizing the right to such refund or the right to benefit
from any other refunds, credits, reliefs, remissions or repayments to which it
may be entitled, it shall promptly notify the Borrower of such refund and
shall within 30 days from the date of receipt of such refund pay to the
Borrower the portion of such refund (including the after-tax amount of any
interest paid by the relevant taxing or governmental authority with respect to
such refund) that the Lender Party determines would leave such Lender Party in
no worse position than if no Taxes or Other Taxes had been imposed (but in no
case shall such portion exceed the amount of the indemnity payments made, or
Taxes or Other Taxes (including penalties, additions to tax, and interest)
paid, by the Borrower under this Section that gave rise to such refund), net
of all out-of-pocket expenses of such Lender Party and without interest,
provided, however, that the Borrower, upon the request of such Lender Party
agrees to repay the amount paid over to the Borrower (plus penalties, interest
or other charges due to the appropriate authorities in connection therewith)
to such Lender Party in the event such Lender Party is required to repay such
refund to such relevant authority.
(h) Any Lender Party claiming any additional amounts payable
pursuant to this Section 2.11 agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Applicable Lending Office (or take such other actions as
may be reasonably requested by the Borrower) if the making of such a change or
the taking of such an action would avoid the need for, or reduce the amount
of, any such additional amounts that may thereafter accrue and would not, in
the reasonable judgment of such Lender Party, be disadvantageous to such
Lender Party; provided that the mere existence of quantifiable fees, charges,
costs and expenses that the Borrower has offered and agreed to pay on behalf
of such Lender Party shall not be deemed to be disadvantageous to such Lender
Party.
SECTION 2.12. Sharing of Payments, Etc. If any Lender Party
shall obtain at any time any payment (whether voluntary, involuntary, through
the exercise of any right of set-off, or otherwise) (a) on account of
Obligations due and payable to such Lender Party hereunder and under the Notes
at such time in excess of its ratable share (according to the proportion of
(i) the amount of such Obligations due and payable to such Lender Party at
such time to (ii) the aggregate amount of the Obligations due and payable to
all Lender Parties hereunder and under the Notes at such time) of payments on
account of the Obligations due and payable to all Lender Parties hereunder and
under the Notes at such time obtained by all the Lender Parties at such time
or (b) on account of Obligations owing (but not due and payable) to such
Lender Party hereunder and under the Notes at such time in excess of its
ratable share (according to the proportion of (i) the amount of such
Obligations owing to such Lender Party hereunder and under the Notes at such
time to (ii) the aggregate amount of the Obligations owing (but not due and
payable) to all Lender Parties hereunder and under the Notes at such time) of
payments on account of the Obligations owing (but not due and payable) to all
Lender Parties hereunder and under the Notes at such time obtained by all of
the Lender Parties at such time, such Lender Party shall forthwith purchase
from the other Lender Parties such participations in the Obligations due and
payable or owing to them, as the case may be, as shall be necessary to cause
such purchasing Lender Party to share the excess payment ratably with each of
them; provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender Party, such purchase from
each other Lender Party shall be rescinded and such other Lender Party shall
repay to the purchasing Lender Party the purchase price to the extent of such
Lender Party's ratable share (according to the proportion of (i) the purchase
price paid to such Lender Party to (ii) the aggregate purchase price paid to
all Lender Parties) of such recovery together with an amount equal to such
Lender Party's ratable share (according to the proportion of (i) the amount of
such other Lender Party's required repayment to (ii) the total amount so
recovered from the purchasing Lender Party) of any interest or other amount
paid or payable by the purchasing Lender Party in respect of the total amount
so recovered. The Borrower agrees that any Lender Party so purchasing a
participation from another Lender Party pursuant to this Section 2.12 may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully
as if such Lender Party were the direct creditor of the Borrower in the amount
of such participation.
SECTION 2.13. Use of Proceeds. The proceeds of the Advances
shall be available (and the Borrower agrees that it shall use such proceeds)
solely to refinance certain Existing Debt of the Borrower, ICC and their
respective Subsidiaries, to make any required payment to New Marriott and to
pay transaction fees and expenses.
SECTION 2.14. Defaulting Lenders. (a) In the event that, at any
time, (i) any Lender Party shall be a Defaulting Lender, (ii) such Defaulting
Lender shall owe a Defaulted Advance to the Borrower and (iii) the Borrower
shall be required to make any payment hereunder or under any other Loan
Document to or for the account of such Defaulting Lender, then the Borrower
may, so long as no Event of Default shall have occurred and be continuing at
such time and to the fullest extent permitted by applicable law, set off and
otherwise apply the Obligation of the Borrower to make such payment to or for
the account of such Defaulting Lender against the obligation of such
Defaulting Lender to make such Defaulted Advance. In the event that, on any
date, the Borrower shall so set off and otherwise apply its obligation to make
any such payment against the obligation of such Defaulting Lender to make any
such Defaulted Advance on or prior to such date, the amount so set off and
otherwise applied by the Borrower shall constitute for all purposes of this
Agreement and the other Loan Documents an Advance by such Defaulting Lender
made on the date of such set off under the Facility pursuant to which such
Defaulted Advance was originally required to have been made pursuant to
Section 2.01. Such Advance shall be considered, for all purposes of this
Agreement, (i) to comprise part of the Borrowing in connection with which such
Defaulted Advance was originally required to have been made pursuant to
Section 2.01 and (ii) to be of the same Type as, and to bear interest at the
rate applicable to, the Advances of the other Lenders included in such
Borrowing, which interest shall be payable on the dates upon which interest is
payable on such other Advances. The Borrower shall notify the Administrative
Agent at any time the Borrower exercises its right of set-off pursuant to this
subsection (a) and shall set forth in such notice (A) the name of the
Defaulting Lender and the Defaulted Advance required to be made by such
Defaulting Lender and (B) the amount set off and otherwise applied in respect
of such Defaulted Advance pursuant to this subsection (a). Any portion of
such payment otherwise required to be made by the Borrower to or for the
account of such Defaulting Lender which is paid by the Borrower, after giving
effect to the amount set off and otherwise applied by the Borrower pursuant to
this subsection (a), shall be applied by the Administrative Agent as specified
in subsection (b) or (c) of this Section 2.14.
(b) In the event that, at any time, (i) any Lender Party shall
be a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted
Amount to the Administrative Agent or any of the other Lender Parties and
(iii) the Borrower shall make any payment hereunder or under any other Loan
Document to the Administrative Agent for the account of such Defaulting
Lender, then the Administrative Agent may, on its behalf or on behalf of such
other Lender Parties and to the fullest extent permitted by applicable law,
apply at such time the amount so paid by the Borrower to or for the account of
such Defaulting Lender to the payment of each such Defaulted Amount to the
extent required to pay such Defaulted Amount. In the event that the
Administrative Agent shall so apply any such amount to the payment of any such
Defaulted Amount on any date, the amount so applied by the Administrative
Agent shall constitute for all purposes of this Agreement and the other Loan
Documents payment, to such extent, of such Defaulted Amount on such date. Any
such amount so applied by the Administrative Agent shall be retained by the
Administrative Agent or distributed by the Administrative Agent to such other
Lender Parties, ratably in accordance with the respective portions of such
Defaulted Amounts payable at such time to the Administrative Agent and such
other Lender Parties and, if the amount of such payment made by the Borrower
shall at such time be insufficient to pay all Defaulted Amounts owing at such
time to the Administrative Agent and the other Lender Parties, in the
following order of priority:
(i) first, to the Administrative Agent for any Defaulted Amount
then owing to the Administrative Agent; and
(ii) second, to any other Lender Parties for any Defaulted
Amounts then owing to such other Lender Parties, ratably in accordance with
such respective Defaulted Amounts then owing to such other Lender Parties.
Any portion of such amount paid by the Borrower for the account of such
Defaulting Lender remaining, after giving effect to the amount applied by the
Administrative Agent pursuant to this subsection (b), shall be applied by the
Administrative Agent as specified in subsection (c) of this Section 2.14.
(c) In the event that, at any time, (i) any Lender Party shall
be a Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted
Advance or a Defaulted Amount and (iii) the Borrower, the Administrative Agent
or any other Lender Party shall be required to pay or distribute any amount
hereunder or under any other Loan Document to or for the account of such
Defaulting Lender, then the Borrower or such other Lender Party shall pay such
amount to the Administrative Agent to be held by the Administrative Agent, to
the fullest extent permitted by applicable law, in escrow or the
Administrative Agent shall, to the fullest extent permitted by applicable law,
hold in escrow such amount otherwise held by it. Any funds held by the
Administrative Agent in escrow under this subsection (c) shall be deposited by
the Administrative Agent in an account with Societe Generale, in the name and
under the control of the Administrative Agent, but subject to the provisions
of this subsection (c). The terms applicable to such account, including the
rate of interest payable with respect to the credit balance of such account
from time to time, shall be Societe Generale's standard terms applicable to
escrow accounts maintained with it. Any interest credited to such account
from time to time shall be held by the Administrative Agent in escrow under,
and applied by the Administrative Agent from time to time in accordance with
the provisions of, this subsection (c). The Administrative Agent shall, to
the fullest extent permitted by applicable law, apply all funds so held in
escrow from time to time to the extent necessary to make any Advances required
to be made by such Defaulting Lender and to pay any amount payable by such
Defaulting Lender hereunder and under the other Loan Documents to the
Administrative Agent or any other Lender Party, as and when such Advances or
amounts are required to be made or paid and, if the amount so held in escrow
shall at any time be insufficient to make and pay all such Advances and
amounts required to be made or paid at such time, in the following order of
priority:
(i) first, to the Administrative Agent for any amount then due
and payable by such Defaulting Lender to the Administrative Agent hereunder;
(ii) second, to any other Lender Parties for any amount then due
and payable by such Defaulting Lender to such other Lender Parties
hereunder, ratably in accordance with such respective amounts then due and
payable to such other Lender Parties; and
(iii) third, to the Borrower for any Advance then required to be
made by such Defaulting Lender pursuant to a Commitment of such Defaulting
Lender.
In the event that any Lender Party that is a Defaulting Lender shall, at any
time, cease to be a Defaulting Lender, any funds held by the Administrative
Agent in escrow at such time with respect to such Lender Party shall be
distributed by the Administrative Agent to such Lender Party and applied by
such Lender Party to the Obligations owing to such Lender Party at such time
under this Agreement and the other Loan Documents ratably in accordance with
the respective amounts of such obligations outstanding at such time.
(d) The rights and remedies against a Defaulting Lender under
this Section 2.14 are in addition to other rights and remedies that the
Borrower may have against such Defaulting Lender with respect to any Defaulted
Advance and that the Administrative Agent or any Lender Party may have against
such Defaulting Lender with respect to any Defaulted Amount.
SECTION 2.15. Regulation D Compensation. If and so long as a
reserve requirement of the type described in the definition of "Eurodollar
Rate Reserve Percentage" is prescribed by the Board of Governors of the
Federal Reserve System (or any successor), each Lender subject to such
requirement may require the Borrower to pay, contemporaneously with each
payment of interest on each of such Lender's Eurodollar Rate Advances,
additional interest on such Eurodollar Rate Advance at a rate per annum
determined by such Lender up to but not exceeding the excess of (i) (A) the
applicable Eurodollar Rate divided by (B) one minus the Eurodollar Rate
Reserve Percentage over (ii) the applicable Eurodollar Rate. Any Lender
wishing to require payment of such additional interest (x) shall so notify the
Borrower and the Administrative Agent, in which case such additional interest
on the Eurodollar Rate Advances of such Lender shall be payable to such Lender
at the place indicated in such notice with respect to each Interest Period
commencing at least three Business Days after such Lender gives such notice
and (y) shall notify the Borrower at least five Business Days before each date
on which interest is payable on the Eurodollar Rate Advances of the amount
then due it under this Section.
SECTION 2.16. Base Rate Advances Substituted for Affected
Eurodollar Rate Advances. If (i) the obligation of any Lender to make, or to
continue or Convert outstanding Advances as or to, Eurodollar Rate Advances
has been suspended pursuant to Section 2.09(d) or (ii) any Lender has demanded
compensation under Section 2.09(a) or (b) or Section 2.11 with respect to its
Eurodollar Rate Advances, and in any such case the Borrower shall, by at least
five Business Days' prior notice to such Lender through the Administrative
Agent, have elected that the provisions of this Section shall apply to such
Lender, then, unless and until such Lender notifies the Borrower that the
circumstances giving rise to such suspension or demand for compensation no
longer exist, all Advances which would otherwise be made by such Lender as (or
continued as or Converted to) Eurodollar Rate Advances, shall instead be Base
Rate Advances on which interest and principal shall be payable
contemporaneously with the related Eurodollar Rate Advances of the other
Lenders. If such Lender notifies the Borrower that the circumstances giving
rise to such suspension or demand for compensation no longer exist, the
principal amount of each such Base Rate Advance shall be converted into a
Eurodollar Rate Advance on the first day of the next succeeding Interest
Period applicable to the related Eurodollar Rate Advances of the other Lenders.
SECTION 2.17. Replacement of Certain Lenders. If any Lender (a
"Subject Lender") (i) is a Defaulting Lender that owes a Defaulted Advance to
the Borrower, (ii) makes demand upon the Borrower for (or if the Borrower is
otherwise required to pay) amounts pursuant to Section 2.09(a) or (b) or
Section 2.11 or (iii) gives notice pursuant to Section 2.09(d) requiring a
conversion of such Subject Lender's Eurodollar Rate Advances to Base Rate
Advances or suspending such Lender's obligation to make Advances as, or to
Convert or continue Advances into or as, Eurodollar Rate Advances, the
Borrower may, within 90 days of receipt by the Borrower of such demand or
notice (or the occurrence of such other event causing the Borrower to be
required to pay such compensation), as the case may be, give notice (a
"Replacement Notice") in writing to the Administrative Agent and such Subject
Lender of its intention to replace such Subject Lender with a financial
institution (a "Replacement Lender") designated in such Replacement Notice.
Unless the Administrative Agent shall, in the exercise of its reasonable
discretion and within 30 days of its receipt of such Replacement Notice,
notify the Borrower and such Subject Lender in writing that the designated
financial institution is unsatisfactory to the Administrative Agent (such
denial not being available to the Administrative Agent where the Replacement
Lender is already a Lender), then such Subject Lender shall, subject to the
payment of any amounts due pursuant to Sections 2.09(a) and (b) and Section
2.11 assign, in accordance with Section 8.07, all of its Commitments,
Advances, Notes and other rights and obligations under this Agreement and all
other Loan Documents to such designated financial institution; provided,
however, that (i) such assignment shall be without recourse, representation or
warranty and (ii) the purchase price paid by such designated financial
institution shall be in at least the amount of such Subject Lender's Advances,
together with all accrued and unpaid interest and fees in respect thereof,
plus all other amounts (including the amounts demanded and unreimbursed under
Sections 2.09(a) and (b) and Section 2.11) owing to such Subject Lender
hereunder. Upon the effective date of an assignment described above, the
Borrower shall issue a replacement Note or Notes, as the case may be, to such
designated financial institution or Replacement Lender, as applicable, and
such institution shall become a "Lender" for all purposes under this Agreement
and the other Loan Documents.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Closing. This Agreement
shall become effective on the date (the "Closing Date") that the following
conditions precedent are satisfied:
(a) The Administrative Agent shall have received, dated the
Closing Date, in form and substance satisfactory to the Arrangers and their
legal counsel, a copy of this Agreement duly executed by each party hereto,
with definitive forms of all exhibits hereto mutually satisfactory to the
Borrower and the Arrangers and their legal counsel;
(b) The Borrower shall have paid all accrued fees and
reimbursable expenses of the Arrangers (including the accrued reasonable
fees and expenses of counsel to the Arrangers) due on or before the Closing
Date, to the extent invoiced at least two Business Days prior to the
Closing Date; and
(c) The Senior Debt Credit Agreement shall have been duly
executed by each party thereto and delivered to the Administrative Agent.
SECTION 3.02. Conditions Precedent to Borrowing. The obligation
of each Lender to make an Advance on the Funding Date is subject to the
satisfaction of the following conditions precedent before or concurrently
therewith:
(a) The Spinoff, the Canadian Subsidiary Transfer, the Cash
Payment and the Merger shall have been consummated in accordance with the
terms of the Transaction Documents, without any written waiver or amendment
not consented to by the Requisite Lenders of any term, provision or
condition set forth therein, and in compliance with all applicable laws (it
being understood that the Consents Side Letter, the Distribution Agreement,
the Merger Agreement, the Omnibus Restructuring Agreement and related
documents delivered to the Arrangers prior to November 27, 1997, and as
amended through the date hereof pursuant to amendments provided to the
Lenders prior to the date hereof (the "Base Transaction Documents"), are
satisfactory to the Lender Parties and their legal counsel), and, if the
Hypothetical Consent Exposure Amount (as defined in the Consents Side
Letter) on the Funding Date exceeds $25,000,000, the arrangements as
contemplated by Section 1 of the Consents Side Letter and Exhibit B thereto
shall have been fully satisfied or other arrangements acceptable to the
Requisite Lenders shall have been put in place.
(b) The Subsidiary Contribution shall have been consummated in
accordance with the terms described on Schedule 3.02(b).
(c) The Transaction Documents shall be in full force and effect.
(d) The Lender Parties shall be reasonably satisfied with the
corporate and legal structure and capitalization of each Loan Party,
including the terms and conditions of the charter and bylaws (or other
similar organizational documents) and each class of capital stock of each
Loan Party and of each agreement or instrument relating to such structure
or capitalization, provided that the corporate and legal structure and
capitalization of the Loan Parties, to the extent specified in the
Information Memorandum or the Base Transaction Documents, are satisfactory
to the Lender Parties.
(e) Sodexho Operations shall have received not less than
$500,000,000 in gross cash proceeds of the Senior Debt.
(f) All Existing Debt identified as "To Be Refinanced" on
Schedule 4.01(x) (other than any Retained Marriott Bonds) shall have been
prepaid, redeemed or defeased in full or otherwise satisfied and
extinguished or arrangements therefor satisfactory to the Administrative
Agent shall have been made (or, in the case of certain Marriott Bonds,
assumed by New Marriott).
(g) There shall have occurred no Material Adverse Change since
September 12, 1997.
(h) The Borrower shall have paid all accrued fees and expenses
of the Administrative Agent and the Lender Parties (including the fees and
expenses of counsel to the Administrative Agent) due on or before the
Funding Date, to the extent invoiced at least two Business Days prior to
the Funding Date.
(i) All governmental authorizations, and material consents,
approvals and authorizations of, and notices and filings to or with, and
other actions by, any other Person necessary in connection with the
Transaction, any of the Loan Documents or the Related Documents or any
transactions contemplated thereby, other than (i) filings and recordings
under, or with respect to the Collateral under and as defined in, the
Senior Debt Documents, (ii) governmental authorizations, and consents,
approvals, authorizations, notices, filings and other actions, described on
Schedule 4.01(d) hereto, (iii) third party consents and approvals that have
not been obtained that relate to Indemnified Consent Exposure and (iv)
consents, approvals, authorizations, notices, filings and other actions the
absence of which would not reasonably be expected to have a Material
Adverse Effect, shall have been obtained (without the imposition of any
conditions that are not reasonably acceptable to the Lender Parties) and
shall remain in full force and effect; and all applicable waiting periods
shall have expired without any action being taken by any competent
authority.
(j) There shall exist no action, suit, investigation, litigation
or proceeding affecting any Loan Party or any of its Subsidiaries pending
or threatened before any court, governmental agency or arbitrator that
could reasonably be expected to have a Material Adverse Effect other than
the matters described on Schedule 4.01(i) (the "Disclosed Litigation").
(k) The Administrative Agent shall have received on or before
the Funding Date the following, each dated such day (unless otherwise
specified), in form and substance satisfactory to the Administrative Agent
(unless otherwise specified) and (except for the Notes) in sufficient
copies for each Lender Party:
(i) The Notes payable to the order of the Lenders.
(ii) Certified copies of the resolutions of the Board of
Directors of the Borrower and the Guarantor approving the
Transaction, this Agreement, the Notes and each other Loan
Document to which it is or is to be a party (including, in the
case of the resolutions of the Board of Directors of the
Guarantor, authorizing and approving the issuance of the Guaranty),
and of all documents evidencing other necessary corporate action
(including shareholder approval) and governmental approvals and
consents, if any, with respect to the Transaction, this Agreement,
the Notes, each other Loan Document and each Related Document.
(iii) A copy of the charter of the Borrower and each
amendment thereto, certified (as of a date reasonably near the
Funding Date) by the Secretary of State of the jurisdiction of its
incorporation as being a true and correct copy thereof.
(iv) To the extent reasonably available, a copy of a
certificate of the Secretary of State of the jurisdiction of its
incorporation, dated reasonably near the Funding Date, listing the
charter of the Borrower and each amendment thereto on file in his
office and certifying that (A) such amendments are the only
amendments to the Borrower's charter on file in the office of such
Secretary of State, (B) the Borrower has paid all franchise taxes
to the date of such certificate and (C) the Borrower is duly
incorporated and in good standing under the laws of the
jurisdiction of its incorporation.
(v) A copy of a certificate of the Secretary of State of
the State of Delaware certifying as to the filing and acceptance
of the certificate of merger in respect of the Merger, or other
confirmation of such filing satisfactory to the Arrangers.
(vi) A certificate of the Borrower, signed on behalf of the
Borrower by any two of its chief executive officer, chief
financial officer, chief accounting officer, president, secretary,
any vice president or any assistant secretary, dated the Funding
Date, certifying as to (A) the absence of any amendments to the
charter of the Borrower since the date of the Secretary of State's
certificate referred to in Section 3.02(k)(iv), other than the
filing of an amendment to the certificate of incorporation of the
Borrower, in the form attached thereto, on the Funding Date, (B) a
true and correct copy of the bylaws of the Borrower as in effect on
the Funding Date, (C) the due incorporation and good standing of
the Borrower as a corporation organized under the laws of the
jurisdiction of its incorporation and the absence of any
proceeding for the dissolution or liquidation of the Borrower, (D)
the truth of the representations and warranties contained in the
Loan Documents as though made on and as of the Funding Date (other
than any such representation or warranty that is limited to a
particular date or dates, as to which the truth of such
representation or warranty is as of such date or dates) and (E)
the absence of any Default at the time of, or immediately after
giving effect to, the Borrowing.
(vii) A certificate of the Guarantor, signed on behalf of
the Guarantor by the Secretary of the Board of the Guarantor,
dated the Funding Date, certifying as to (A) a true and correct
copy of the Statuts of the Guarantor as in effect on the Funding
Date, (B) the valid existence of the Guarantor as a societe
anonyme organized under the laws of the Republic of France and the
absence of any proceeding for the dissolution or liquidation of
the Guarantor, (C) a true and complete copy of a recent extract
from the Commercial Registry with respect to the Guarantor and (D)
the absence of any Guarantor Event of Default (as defined in the
Guaranty) or any event that would constitute a Guarantor Event of
Default but for the requirement that notice be given or time
elapse or both.
(viii) A certificate of the Secretary or an Assistant
Secretary of the Borrower and the Guarantor certifying the names
and true signatures of the officers of the Borrower and the
Guarantor authorized to sign this Agreement, the Notes and each
other Loan Document to which they are or are to be parties and the
other documents to be delivered hereunder and thereunder.
(ix) Completed requests for information, dated on or before
the Funding Date, listing all effective financing statements filed
in the jurisdictions in which the assets or property of the
Borrower or any Substantial Subsidiary are located that name the
Borrower or any Substantial Subsidiary as debtor, together with
copies of such financing statements.
(x) Duly executed termination statements (Form UCC-3 or a
comparable form) or the equivalent thereof in suitable form for
filing under the Uniform Commercial Code of all jurisdictions that
may be necessary or that the Administrative Agent may reasonably
deem desirable in order to terminate or amend existing liens on
the assets or property of the Borrower and any Substantial
Subsidiary (other than liens and security interests permitted
under the terms of the Loan Documents and the Senior Debt
Documents), duly executed by the appropriate secured party.
(xi) A copy of a ruling issued by the Internal Revenue
Service to the effect that the Spinoff will qualify as a tax-free
reorganization under Section 368(a)(1)(D) of the Internal Revenue
Code and a tax-free distribution under Section 355 of the Internal
Revenue Code to the holders of the stock of the Borrower.
(xii) Satisfaction of the Lender Parties and counsel for the
Administrative Agent with respect to the tax treatment of the
Borrower's debt as debt and not equity and the deductibility of
interest thereunder.
(xiii) Evidence that the Guarantor owns, directly or
indirectly, not less than 40.01% of the voting stock of the
Borrower.
(xiv) A copy of the fairness opinion with respect to the
Transaction issued to the Board of Directors of the Borrower by
Merrill Lynch, Pierce, Fenner & Smith Incorporated.
(xv) A guaranty in substantially the form of Exhibit D (as
amended, supplemented or otherwise modified from time to time in
accordance with its terms, the "Guaranty"), duly executed by the
Guarantor.
(xvi) Certified copies of each of the Related Documents,
duly executed by the parties thereto and in form and substance
satisfactory to the Lender Parties (it being understood that the
Base Transaction Documents are satisfactory to the Lender Parties
and their legal counsel), together with all agreements,
instruments and other documents delivered in connection therewith.
(xvii) Certified copies of each contract with the Guarantor
listed on Schedule 4.01(z), duly executed by the parties thereto.
(xviii) A copy of the solvency opinion with respect to the
Borrower after giving effect to the Transaction and the other
transactions contemplated hereby, from American Appraisal
Associates, Inc.
(xix) Evidence of insurance complying with the provisions of
Section 5.01(d).
(xx) An unaudited pro forma balance sheet of the Guarantor
as of August 31, 1997 as if the Transaction had been consummated
on such date.
(xxi) A duly completed and executed Notice of Borrowing for
the Borrowing.
(xxii) A letter from Corporation Service Company, presently
located at 375 Hudson Street, New York, New York 10014, consenting
to its appointment by the Guarantor as its agent for service of
process (the "Process Agent"), without reservation, until at least
one (1) year after the Termination Date, together with evidence of
the payment in full of all fees thereof.
(xxiii) An opinion of Davis Polk & Wardwell, counsel for the
Borrower and the Guarantor, in substantially the form of Exhibit
E-1 hereto and as to such other matters as the Required Lenders
through the Administrative Agent may reasonably request.
(xxiv) An opinion of Robert A. Stern, Esq., General Counsel
for the Borrower, in substantially the form of Exhibit E-2 hereto
and as to such other matters as the Required Lenders through the
Administrative Agent may reasonably request.
(xxv) An opinion of Slaughter and May, French counsel for
the Guarantor, in substantially the form of Exhibit E-3 hereto and
as to such other matters as the Required Lenders through the
Administrative Agent may reasonably request.
(xxvi) A favorable opinion of Shearman & Sterling, counsel
for the Administrative Agent, in form and substance satisfactory
to the Administrative Agent.
(l) The representations and warranties contained in each Loan
Document shall be correct in all material respects on and as of the Funding
Date, before and after giving effect to the Borrowing and the application
of the proceeds therefrom, as though made on and as of such date, except to
the extent that any such representation or warranty is limited to a
particular date or dates, in which case such representation or warranty
shall have been true on and as of such date or dates.
(m) No event shall have occurred and be continuing, or would
result from the Borrowing or from the application of the proceeds
therefrom, that constitutes a Default.
SECTION 3.03. Determinations Under Section 3.02. For purposes of
determining compliance with the conditions specified in Section 3.02, each
Lender Party shall be deemed to have consented to, approved or accepted or to
be satisfied with each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to the Lender
Parties unless an officer of the Administrative Agent responsible for the
transactions contemplated by the Loan Documents shall have received notice
from such Lender Party prior to the Borrowing specifying its objection thereto
and such Lender Party shall not have made available to the Administrative
Agent such Lender Party's ratable portion of the Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower.
The Borrower hereby represents and warrants (i) in the case of clauses (a),
(c)(i), (c)(ii)(w), (c)(ii)(x), (d) (but only insofar as clauses (c)(ii)(x)
and (d) relate to the execution and delivery, but not the performance, of this
Agreement) and (e) to the extent that such clauses relate to the Borrower (but
not to any other Loan Party) and to this Agreement (but not to any other Loan
Document) and are not expressly limited to another particular date or dates,
on the date hereof and (ii) in the case of such clauses and all other clauses
of this Section 4.01, except to the extent expressly limited to another
particular date or dates, on the Funding Date (after giving effect to the
Transaction), as follows:
(a) The Borrower (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases property
or in which the conduct of its business requires it to so qualify or be
licensed except where the failure to so qualify, be in good standing or be
licensed, either individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect and (iii) has all requisite
corporate power and authority, and all governmental licenses, permits and
other approvals (except for the absence of certain third-party consents and
approvals that result in Indemnified Consent Exposure), necessary to own or
lease and operate its properties and to carry on its business as now
conducted and as proposed to be conducted, except any such power, authority,
license, permit or approval the failure to have which would not reasonably
be expected to have a Material Adverse Effect.
(b) Set forth on Schedule 4.01(b) hereto is a complete and
accurate list as of the Funding Date (after giving effect to the
Transaction) of all Subsidiaries, including all Substantial Subsidiaries,
showing, as of the Funding Date (after giving effect to the Transaction),
as to each such Substantial Subsidiary, the correct legal name thereof, the
jurisdiction of its incorporation, the number of shares of each class of
capital stock authorized, and the number outstanding, on the Funding Date
and the percentage of the outstanding shares of each such class owned
(directly or indirectly) by each Loan Party on the Funding Date and the
number of shares covered by all outstanding options, warrants, rights of
conversion or purchase and similar rights on the Funding Date. As of the
Funding Date, all of the outstanding capital stock of all of such
Substantial Subsidiaries has been validly issued, is fully paid and
non-assessable and is owned by the person indicated on such Schedule
4.01(b), free and clear of all Liens, except those created under the Senior
Debt Documents and those permitted under Section 5.02(a). Each such
Substantial Subsidiary (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases property
or in which the conduct of its business requires it to so qualify or be
licensed except where the failure to so qualify, be in good standing or be
licensed would not reasonably be expected to have a Material Adverse Effect
and (iii) has all requisite corporate power and authority, and all
governmental licenses, permits and other approvals necessary to own or
lease and operate its properties and to carry on its business as now
conducted and as proposed to be conducted except any such power, authority,
license, permit or approval the failure to have which would not reasonably
be expected to have a Material Adverse Effect.
(c) The execution, delivery and performance by the Borrower of
each of this Agreement, the Notes, each other Loan Document to which it is
or is to be a party, and the consummation of the Transaction, are (i)
within the Borrower's corporate powers and have been duly authorized by all
necessary corporate action, and (ii) do not (w) contravene the Borrower's
charter or bylaws (or other similar organizational documents), (x) violate
any law, rule, regulation (including, without limitation, Regulation X of
the Board of Governors of the Federal Reserve System), order, writ,
judgment, injunction, decree, determination or award applicable to it the
violation of which would reasonably be expected to have a Material Adverse
Effect, (y) except for the absence of certain third-party consents and
approvals that result in Indemnified Consent Exposure, conflict with or
result in the breach of, or constitute a default under, any contract, loan
agreement, indenture, mortgage, deed of trust, lease or other instrument
binding on or affecting the Borrower, any of its Subsidiaries or any of
their properties, which conflict, default or breach would reasonably be
expected to have a Material Adverse Effect, or (z) except for the Liens
created under the Senior Debt Documents, result in or require the creation
or imposition of any Lien upon or with respect to any of the properties of
the Borrower or any of its Subsidiaries. Neither the Borrower nor any of
its Subsidiaries is in violation of any such law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award or, except as
set forth in clause (y) above, in breach of any such contract, loan
agreement, indenture, mortgage, deed of trust, lease or either instrument,
the violation or breach of which would reasonably be expected to have a
Material Adverse Effect.
(d) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body or
any other third party is required for (i) the due execution, delivery or
performance by the Borrower of this Agreement, the Notes or any other Loan
Document to which it is or is to be a party, or for the consummation of the
Transaction (excluding the transactions under, and the creation and
perfection of Liens in respect of, the Senior Debt Credit Agreement and the
Collateral Documents as defined therein) or (ii) the exercise by the
Administrative Agent or any Lender Party of its rights under the Loan
Documents, except for (w) the authorizations, approvals, actions, notices
and filings listed on Part A of Schedule 4.01(d), all of which have been
duly obtained, taken, given or made as of the Closing Date and are, as of
the Closing Date, in full force and effect, (x) the authorizations,
approvals, actions, notices and filings listed on Part B of Schedule
4.01(d), all of which will have been (except to the extent indicated on
Schedule 4.01(d)) duly obtained, taken, given or made as of the Funding
Date and, as of the Funding Date, will be in full force and effect, (y)
third-party consents and approvals that have not been obtained that result
in Indemnified Consent Exposure and (z) authorizations, approvals, actions,
notices and filings the absence of which would not reasonably be expected
to have a Material Adverse Effect. As of the Funding Date, all applicable
waiting periods in connection with the Transaction have expired without any
action having been taken by any competent authority restraining, preventing
or imposing materially adverse conditions upon the Transaction or the
rights of the Borrower or its Subsidiaries freely to transfer or otherwise
dispose of, or to create any Lien on, any properties now owned or hereafter
acquired by any of them.
(e) This Agreement has been, and each of the Notes and each
other Loan Document to which the Borrower is or is to be a party, when
executed and delivered hereunder by the Borrower, will be, duly executed
and delivered by the Borrower. This Agreement is, and each of the Notes
and each other Loan Document to which the Borrower is or is to be a party
when executed and delivered hereunder by the Borrower will be, a valid and
binding obligation of the Borrower, enforceable against the Borrower in
accordance with its terms, subject to applicable bankruptcy, insolvency and
other similar laws affecting creditors' rights generally and to general
equitable principles.
(f) The unaudited pro forma combined balance sheet of the
Borrower and its Subsidiaries as of September 12, 1997, and the related
unaudited pro forma combined statement of income of the Borrower and its
Subsidiaries for the 36 weeks then ended included in the Proxy Statement,
fairly present, subject to the provisions of Regulation S-X of the
Securities and Exchange Commission, the pro forma combined financial
condition of the Borrower and its Subsidiaries as at such date and the pro
forma combined results of operations of the Borrower and its Subsidiaries
for the period ended on such date, in each case giving effect to the
Transaction and the other transactions contemplated hereby as if the
Transaction and such other transactions had been consummated on such date
or at the beginning of such period, respectively, and since September 12,
1997, there has been no Material Adverse Change.
(g) The Consolidated forecasted balance sheets and income and
cash flow statements of the Borrower and its Subsidiaries included in the
Information Memorandum were prepared in good faith on the basis of the
assumptions stated therein, which assumptions were reasonable in the light
of conditions existing at the time of delivery of such forecasts, and
represented, at the time of delivery, the Borrower's reasonable estimate of
its future financial performance.
(h) The information concerning the Borrower and its Subsidiaries
contained in the Information Memorandum and the information concerning the
Borrower and its Subsidiaries contained in the other information, exhibits
and reports furnished by the Borrower to the Administrative Agent or any
Lender Party in connection with the negotiation of the Loan Documents or
pursuant to the terms of the Loan Documents (other than information
relating to the non-Foodservice Business), taken as a whole, did not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made therein not misleading.
(i) Except as set forth on Schedule 4.01(i), there is no action,
suit, investigation, litigation or proceeding affecting the Borrower or any
of its Subsidiaries, including any Environmental Action, pending or
threatened before any court, governmental agency or arbitrator that would
reasonably be expected to have a Material Adverse Effect.
(j) No proceeds of any Advance will be used in violation of
Regulation G, U or X of the Board of Governors of the Federal Reserve
System.
(k) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Plan that has resulted in or is reasonably
expected to result in a liability of the Borrower or any ERISA Affiliate
that would reasonably be expected to have a Material Adverse Effect.
(l) As of the last annual actuarial valuation date, except as
would not reasonably be expected to have a Material Adverse Effect, the
funded current liability percentage, as defined in Section 302(d)(8) of
ERISA, of each Plan exceeds 90% and there has been no adverse change in the
funding status of any such Plan since such date.
(m) Neither the Borrower nor any ERISA Affiliate has incurred or
is reasonably expected to incur any Withdrawal Liability to any
Multiemployer Plan that would reasonably be expected to have a Material
Adverse Effect.
(n) Neither the Borrower nor any ERISA Affiliate has been
notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or has been terminated, within the meaning of
Title IV of ERISA, and no such Multiemployer Plan is reasonably expected to
be in reorganization or to be terminated, within the meaning of Title IV of
ERISA, in any such case, in a manner or to an extent that would reasonably
be expected to have a Material Adverse Effect.
(o) Except as set forth in the financial statements referred to
in this Section 4.01 and in Section 5.03, the Borrower and its Subsidiaries
have no material liability with respect to "expected post retirement
benefit obligations" within the meaning of Statement of Financial
Accounting Standards No. 106 that would reasonably be expected to have a
Material Adverse Effect.
(p) Neither the business nor the properties of the Borrower or
any of its Subsidiaries are affected by any fire, explosion, accident,
strike, lockout or other labor dispute, drought, storm, hail, earthquake,
embargo, act of God or of the public enemy or other casualty (whether or
not covered by insurance) that could reasonably be expected to have a
Material Adverse Effect.
(q) Except to the extent that the same would not reasonably be
expected to have a Material Adverse Effect, the operations and properties
of the Borrower and each of its Subsidiaries comply in all material
respects with all applicable Environmental Laws and Environmental Permits,
all past non-compliance with such Environmental Laws and Environmental
Permits has been resolved without ongoing obligations or costs, and no
circumstances exist that could reasonably be expected to (i) form the basis
of an Environmental Action against the Borrower or any of its Subsidiaries
or any of their properties or (ii) cause any such property to be subject to
any restrictions on ownership, occupancy, use or transferability under any
Environmental Law.
(r) Except to the extent that the same would not reasonably be
expected to have a Material Adverse Effect, (i) none of the properties
currently or formerly owned or operated by the Borrower or any of its
Subsidiaries is listed or proposed for listing on the NPL or on the CERCLIS
or any analogous foreign, state or local list or is adjacent to any such
property; (ii) there are no and never have been any underground or
aboveground storage tanks or any surface impoundments, septic tanks, pits,
slumps or lagoons in which Hazardous Materials are being or have been
treated, stored or disposed on any property currently owned or operated by
the Borrower or any of its Subsidiaries or, to the best of its knowledge,
on any property formerly owned or operated by the Borrower or any of its
Subsidiaries; (iii) there is no asbestos or asbestos-containing material on
any property currently owned or operated by the Borrower or any of its
Subsidiaries; and (iv) Hazardous Materials have not been released,
discharged or disposed of on any property currently or formerly owned or
operated by the Borrower or any of its Subsidiaries.
(s) Except to the extent that any such disposal would not
reasonably be expected to have a Material Adverse Effect, all Hazardous
Materials generated, used, treated, handled or stored at, or transported to
or from, any property currently or formerly owned or operated by the
Borrower or any of its Subsidiaries have been disposed of in a manner not
reasonably expected to result in material liability to the Borrower or any
of its Subsidiaries.
(t) The Borrower and each of its Subsidiaries have filed, have
caused to be filed or have been included in all material tax returns
(federal, state, local or foreign) required to be filed and have paid (or
there has been paid by others) all material taxes shown thereon to be due,
together with applicable interest and penalties, other that any such taxes
or tax returns in respect of which the Borrower or any such Subsidiary
shall have been indemnified by New Marriott.
(u) Neither the Merger nor the Subsidiary Contribution will be
taxable to the Borrower or any of its Subsidiaries.
(v) The Borrower is not an "investment company", as such term is
defined in the Investment Company Act of 1940, as amended.
(w) As of the Funding Date, the Borrower is, individually and
together with its Subsidiaries, Solvent.
(x) Set forth on Schedule 4.01(x) hereto is a complete and
accurate list, as of the Closing Date, of all items of Existing Debt with a
principal amount in excess of $5,000,000 (other than Debt that, following
the consummation of the Transaction but without giving effect to the
redemption of any Marriott Bonds, will be Debt of New Marriott or any
Subsidiary of New Marriott and not Debt of the Borrower or any of its
Subsidiaries) showing as of the date hereof the principal amount
outstanding thereunder and showing the aggregate principal amount of all
items of such Existing Debt with an outstanding principal amount not in
excess of $5,000,000 as of the Closing Date.
(y) On the Funding Date, the Borrower and its Subsidiaries own
or have the legal right to use the "Sodexho" trade name for a period of ten
years following the Funding Date and the "Marriott" trade name for a period
of four years following the Funding Date, in each case, subject to the
terms and conditions of applicable license agreements, without known
conflict with the rights of any other Person.
(z) Set forth on Schedule 4.01(z) hereto is a complete and
accurate list, as of the date of this Agreement and as of the Funding Date,
of all contracts entered or to be entered into with the Guarantor for the
providing of business-related support services, expertise or other
assistance to the Borrower or any of its Subsidiaries, under which the
annual compensation payable to the Guarantor, or the fair market value of
the annual services to be provided by the Guarantor, exceeds $2,000,000,
showing as of the date of this Agreement the parties, subject matter and
term thereof. Each such contract has been duly authorized, executed and
delivered by all parties thereto, has not been amended or otherwise
modified except as permitted under Section 5.02(f), and, except to the
extent that any such failure to be in full force and effect, binding or
enforceable or any such default would not reasonably be expected to have a
Material Adverse Effect, is in full force and effect and is binding upon
and enforceable against all parties thereto in accordance with its terms,
and there exists no default under any such contract by any party thereto.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. From and after the Funding
Date (after giving effect to the Transaction), so long as any Advance shall
remain unpaid, the Borrower will:
(a) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects, with all applicable laws,
rules, regulations and orders, such compliance to include, without
limitation, compliance with ERISA, except to the extent that such failure
would not reasonably be expected to have a Material Adverse Effect.
(b) Payment of Taxes, Etc. Pay and discharge, and cause each of
its Subsidiaries to pay and discharge, before the same shall become
delinquent, all material taxes, assessments and governmental charges or
levies imposed upon it or upon its property; provided, however, that
neither the Borrower nor any of its Subsidiaries shall be required to pay
or discharge any such tax, assessment, charge or claim that is being
contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained.
(c) Compliance with Environmental Laws. Except to the extent
that the failure to do so would not reasonably be expected to have a
Material Adverse Effect, (i) comply, and cause each of its Subsidiaries and
all lessees and other Persons operating or occupying its properties to
comply, in all material respects, with all applicable Environmental Laws
and Environmental Permits; (ii) obtain and renew and cause each of its
Subsidiaries to obtain and renew all Environmental Permits necessary for its
operations and properties; and (iii) conduct, and cause each of its
Subsidiaries to conduct, if required under Environmental Laws, any
investigation, study, sampling and testing, and undertake any cleanup,
removal, remedial or other action necessary to remove and clean up all
Hazardous Materials from any of its properties, in accordance with the
requirements of all Environmental Laws; provided, however, that neither the
Borrower nor any of its Subsidiaries shall be required to undertake any
such cleanup, removal, remedial or other action to the extent that its
obligation to do so is being contested in good faith and by proper
proceedings and appropriate reserves are being maintained with respect to
such circumstances.
(d) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks
as is usually carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which the Borrower or such
Subsidiary operates.
(e) Preservation of Corporate Existence, Etc. Preserve and
maintain, and cause each of its Subsidiaries to preserve and maintain, its
existence, legal structure, legal name, rights (charter and statutory),
permits, licenses, approvals, privileges and franchises, including, without
limitation, on the Funding Date only, the right to use the "Sodexho" trade
name for a period of ten years following the Funding Date and the
"Marriott" trade name for a period of four years following the Funding Date
(subject, in each case, to the terms and conditions of applicable license
agreements); provided, however, that the Borrower and its Subsidiaries may
consummate the Transaction and any other merger or consolidation permitted
under Section 5.02(c) and provided further that neither the Borrower nor
any of its Subsidiaries shall be required to preserve any right, permit,
license, approval, privilege or franchise if the Borrower or such
Subsidiary shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Borrower or such
Subsidiary, as the case may be, and that the loss thereof would not
reasonably be expected to have a Material Adverse Effect.
(f) Visitation Rights. At any reasonable time and from time to
time, upon reasonable prior notice and at the expense of the Administrative
Agent or such Lender Party, permit the Administrative Agent or any of the
Lender Parties or any agents or representatives thereof, to examine and
make copies of and abstracts from the records and books of account of, and
visit the properties of, the Borrower and any of its Subsidiaries, and to
discuss the affairs, finances and accounts of the Borrower and any of its
Subsidiaries with any of their officers or directors and, subject to prior
notice to the Borrower and affording a reasonable opportunity for the
Borrower to have its representatives participate therein, with their
independent certified public accountants.
(g) Keeping of Books. Keep, and cause each of its Subsidiaries
to keep, proper books of record and account, in which full and correct
entries shall be made of all financial transactions and the assets and
business of the Borrower and each such Subsidiary in accordance with GAAP.
(h) Maintenance of Properties, Etc. Maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, all of its
properties that are used or useful in the conduct of its business in good
working order and condition, ordinary wear and tear excepted.
(i) Performance of Certain Documents. Perform and observe all
of the material terms and provisions of the Tax Agreement, the Indemnity
Support Agreement (if the Indemnity Support Agreement has been entered
into) and the Consents Side Letter to be performed or observed by it,
maintain each such document in full force and effect, enforce each such
document in accordance with its terms, take all such action to such end as
may be from time to time requested by the Administrative Agent and, upon
request of the Administrative Agent, make to each other party to each such
document such demands and requests for information and reports or for
action as the Borrower or any of its Subsidiaries is entitled to make under
such document; provided that this subsection (i) shall only apply to the
Consents Side Letter and the Indemnity Support Agreement (if the Indemnity
Support Agreement is entered into) for so long as third-party consents as
set forth in Exhibit A to the Consents Side Letter with potential liability
in excess of $25,000,000 have not been obtained.
(j) Performance of Material Contracts. Perform and observe all
the terms and provisions of each Material Contract to be performed or
observed by it (except for the absence of certain third-party consents and
approvals for which the potential liability exposure is indemnified
pursuant to the Consents Side Letter and the Indemnity Support Agreement),
maintain each such Material Contract in full force and effect (other than
such Material Contracts that may be terminated by either party thereto
without cause or by the Borrower with cause), enforce each such Material
Contract in accordance with its terms, and cause each of its Subsidiaries
to do so except in any case where the failure to do so, either individually
or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.
(k) Transactions with Affiliates. Conduct, and cause each of
its Subsidiaries to conduct, all transactions otherwise permitted under the
Loan Documents with any of their Affiliates (other than the Borrower and
its Subsidiaries) on terms that are fair and reasonable and no less
favorable to the Borrower or such Subsidiary than it would obtain in a
comparable arm's-length transaction with a Person not an Affiliate;
provided that (i) the Borrower and its Subsidiaries may enter into and
perform contracts with the Guarantor existing on the Funding Date and any
amendments thereof not prohibited by Section 5.02(f) and (ii) the Borrower
and its Subsidiaries may make payments, distributions and other transfers,
and enter into transactions, permitted under Section 5.02(h) of the Senior
Debt Credit Agreement.
(l) Ownership of Sodexho Operations. Continue to be, at all
times, the record and beneficial owner of 100% of the shares of capital
stock of Sodexho Operations.
(m) Interest Rate Hedging. Enter into, within 6 months
following the Funding Date, and maintain thereafter, interest rate Hedge
Agreements with Persons acceptable to the Administrative Agent or other
fixed rate arrangements acceptable to the Administrative Agent (i) covering
a notional amount of not less than 45% of the sum of the aggregate
outstanding principal balance of each of this Facility and the Term
Facility (as defined in the Senior Debt Credit Agreement) plus
$100,000,000, and (ii) having an average life of not less than three years
from the date of commencement.
SECTION 5.02. Negative Covenants. From and after the Funding
Date (after giving effect to the Transaction), so long as any Advance shall
remain unpaid, the Borrower will not, at any time:
(a) Liens, Etc. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist,
any Lien on or with respect to any of its properties of any character
(including, without limitation, accounts) whether now owned or hereafter
acquired, or sign or file or suffer to exist, or permit any of its
Subsidiaries to sign or file or suffer to exist, under the Uniform
Commercial Code of any jurisdiction, a financing statement that names the
Borrower or any of its Subsidiaries as debtor, or sign or suffer to exist,
or permit any of its Subsidiaries to sign or suffer to exist, any security
agreement authorizing any secured party thereunder to file such financing
statement, or assign, or permit any of its Subsidiaries to assign, any
accounts or other right to receive income, excluding, however, from the
operation of the foregoing restrictions the following:
(i) Liens created under the Senior Debt Documents;
(ii) Permitted Liens;
(iii) Liens existing on the date hereof and, in the case of
any such Lien securing any amount in excess of $3,000,000,
described on Schedule 5.02(a) hereto;
(iv) Liens arising in connection with Capitalized Leases
and other Debt permitted under Section 5.02(b)(v); provided that
no such Lien shall extend to or cover any assets other than the
assets subject to such Capitalized Leases or the purchase of which
was financed with such Debt;
(v) any Lien existing on any asset of any corporation at
the time such corporation becomes a Subsidiary of the Borrower and
not created in contemplation of such event;
(vi) any Lien on any asset of any corporation existing at
the time such corporation is merged or consolidated with or into
the Borrower or a Subsidiary of the Borrower and not created in
contemplation of such event;
(vii) any Lien existing on any asset prior to the
acquisition thereof by the Borrower or a Subsidiary of the
Borrower and not created in contemplation of such acquisition;
(viii) Liens on contract rights, accounts receivable arising
thereunder and fixed and capital assets used or to be used in
connection with the performance thereof securing obligations
incurred to finance such fixed or capital assets or investments
required under such contracts or obligations to subcontractors,
partners or other participants in respect of such contracts;
provided that accounts receivable subject to such Liens do not
exceed $50,000,000 in aggregate at any one time;
(ix) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt or other obligation secured by
any Lien permitted by any of the foregoing clauses of this
Section, provided that such Debt or other obligation is not
increased and is not secured by any additional assets;
(x) Liens not otherwise permitted by the foregoing clauses
of this Section securing Debt and other obligations in an
aggregate principal or face amount at any date not to exceed
$30,000,000; and
(xi) Uniform Commercial Code financing statements (Form
UCC-1 or other comparable form) signed in connection with
operating leases.
(b) Debt. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist, any
Debt other than:
(i) Debt owed to the Borrower or to a Subsidiary of the
Borrower;
(ii) Debt outstanding on the date hereof and identified as
"Not To Be Refinanced" on Schedule 4.01(x);
(iii) the Senior Debt;
(iv) Debt under the Loan Documents;
(v) Capitalized Leases and Debt incurred or assumed for
the purpose of financing all or a part of the cost of acquiring or
constructing any fixed or capital asset, not to exceed in the
aggregate $75,000,000 at any time outstanding;
(vi) in the case of the Borrower, Debt in respect of the
Retained Marriott Bonds, the LYONs, the indenture in respect of
the LYONs, as the same may be amended from time to time, and the
LYONs Allocation Agreement;
(vii) Debt incurred to finance capital assets for specific
clients in the ordinary course of business in connection with
management contracts with such clients;
(viii) Debt in respect of obligations secured by Liens
permitted under Section 5.02(a)(viii);
(ix) Debt in respect of Hedge Agreements entered into to
hedge against currency, interest rate and commodity price risks of
the Borrower and its Subsidiaries arising from the operations and
financing of the Borrower and its Subsidiaries and not for
speculative purposes; and
(x) other Debt not permitted under clauses (i) through
(ix) above in an aggregate principal amount outstanding at any
time not to exceed $30,000,000.
(c) Mergers, Etc. Merge into or consolidate with any Person or
permit any Person to merge into it, or convey, transfer, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) all
or substantially all of the assets (whether now owned or hereafter
acquired) of the Borrower and its Subsidiaries, taken as a whole, to any
Person.
(d) Change in Nature of Business. Make, or permit any of its
Subsidiaries to make, any material change in the nature of its business
from that described in the Proxy Statement for the Borrower and its
Subsidiaries or extensions thereof into new markets, services and product
areas in related businesses.
(e) Fiscal Year Changes. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in its Fiscal Year (other than
changing its Fiscal Year end to August 31).
(f) Amendment of Certain Guarantor Contracts. Cancel or
terminate any material contracts entered into with the Guarantor for the
providing of business related support services, expertise or other
assistance to the Borrower or any of its Subsidiaries or consent to or
accept any cancellation or termination thereof, amend or otherwise modify
any such contract or give any consent, waiver or approval thereunder, waive
any default under or breach of any such contract, agree in any manner to
any other amendment, modification or change of any term or condition of any
such contract or take any other action in connection with any such contract
that would materially impair the value of the interest or rights of the
Borrower thereunder or that would materially impair the interest or rights
of the Administrative Agent or any Lender Party, or permit any of its
Subsidiaries to do any of the foregoing, except that such contracts may be
amended, waived or modified with the consent of the independent directors
of the Borrower; provided that the fees payable to the Guarantor under such
contracts (excluding guarantee fees) do not exceed 0.3% of gross annual
revenues of the Borrower and its Consolidated Subsidiaries in any Fiscal
Year.
SECTION 5.03. Reporting Requirements. From and after the Funding
Date, so long as any Advance shall remain unpaid, the Borrower will furnish to
the Lender Parties:
(a) Default Notice. As soon as possible and in any event within
five Business Days after a Responsible Officer of the Borrower has
knowledge of the occurrence of a Default continuing on the date of such
statement, a statement of a Responsible Officer of the Borrower setting
forth details of such Default and the action that the Borrower has taken
and proposes to take with respect thereto.
(b) Quarterly Financials. As soon as available and in any event
within 45 days after the end of each of the first three quarters of each
Fiscal Year (except that the first quarterly statements may be delivered
within 90 days after the end of the relevant quarter), a Consolidated
balance sheet of the Borrower and its Subsidiaries as of the end of such
quarter, a Consolidated statement of income of the Borrower and its
Subsidiaries for such Fiscal Quarter and for the portion of the Borrower's
Fiscal Year ending at the end of such quarter and a Consolidated statement
of cash flows of the Borrower and its Subsidiaries for the portion of the
Borrower's Fiscal Year ending at the end of such quarter, setting forth,
in each case, in comparative form the corresponding figures for the
corresponding period of the preceding Fiscal Year, all in reasonable detail
and duly certified (subject to year-end adjustments) by the chief financial
officer of the Borrower as having been prepared in accordance with GAAP,
together with (i) a certificate of said officer stating that no Default has
occurred and is continuing or, if a Default has occurred and is continuing,
a statement as to the nature thereof and the action that the Borrower has
taken and proposes to take with respect thereto and (ii) a schedule in form
satisfactory to the Administrative Agent of the computations used by the
Borrower in determining compliance with the covenants contained in Sections
5.04(a) and (b).
(c) Annual Financials. As soon as available and in any event
within 90 days after the end of each Fiscal Year, a copy of the annual
report for such Fiscal Year for the Borrower and its Subsidiaries,
including therein the Consolidated balance sheet of the Borrower and its
Subsidiaries as of the end of such Fiscal Year and Consolidated statements
of income and cash flows of the Borrower and its Subsidiaries for such
Fiscal Year, reported on by independent public accountants of
internationally and nationally recognized standing in a manner acceptable
to the Securities and Exchange Commission, together with (i) a certificate
of the chief financial officer of the Borrower stating that no Default has
occurred and is continuing or, if a default has occurred and is continuing,
a statement as to the nature thereof and the action that the Borrower has
taken and proposes to take with respect thereto and (ii) a schedule in form
satisfactory to the Administrative Agent of the computations used by the
Borrower in determining, as of the end of such Fiscal Year, compliance with
the covenants contained in Sections 5.04(a) and (b).
(d) Annual Forecasts. As soon as available and in any event
within five months after the beginning of each Fiscal Year of the Borrower,
forecasts prepared by management of the Borrower, in form satisfactory to
the Administrative Agent, of Consolidated balance sheets, statements of
income and cash flows of the Borrower and its Subsidiaries on an annual
basis for the Fiscal Year following such Fiscal Year then ended and for
each Fiscal Year thereafter until the seventh anniversary of the Funding
Date, setting forth in comparative form the corresponding figures for the
immediately preceding Fiscal Year, all in reasonable detail and form
satisfactory to the Administrative Agent, together with management's
strategic discussion and analysis thereof. Any forecasts or other
information provided pursuant to this Section to any Lender Party shall be
Confidential Information subject to the provisions of Section 8.09.
(e) ERISA Events and ERISA Reports. (i) Promptly and in any
event within 10 days after the Borrower or any ERISA Affiliate knows or has
reason to know that any ERISA Event has occurred that would reasonably be
expected to have a Material Adverse Effect, a statement of the chief
financial officer of the Borrower describing such ERISA Event and the
action, if any, that the Borrower or such ERISA Affiliate has taken and
proposes to take with respect thereto and (ii) on the date any records,
documents or other information must be furnished to the PBGC with respect
to any Plan pursuant to Section 4010 of ERISA in connection with a related
event or condition that would reasonably be expected to have a Material
Adverse Effect, a copy of such records, documents and information.
(f) Plan Terminations. Promptly and in any event within two
Business Days after receipt thereof by the Borrower or any ERISA Affiliate,
copies of each notice from the PBGC stating its intention to terminate any
Plan or to have a trustee appointed to administer any Plan that would
reasonably be expected to have a Material Adverse Effect.
(g) Plan Annual Reports. Promptly and in any event within 10
days after request of the Administrative Agent therefor, copies of each
Schedule B (Actuarial Information) to the most recently filed annual report
(Form 5500 Series) with respect to each Plan.
(h) Multiemployer Plan Notices. Promptly and in any event
within five Business Days after receipt thereof by the Borrower or any
ERISA Affiliate from the sponsor of a Multiemployer Plan, copies of each
notice concerning (i) the imposition of Withdrawal Liability by any such
Multiemployer Plan that would reasonably be expected to have a Material
Adverse Effect, (ii) the reorganization or termination, within the meaning
of Title IV of ERISA, of any such Multiemployer Plan that would reasonably
be expected to have a Material Adverse Effect or (iii) the amount of
liability incurred, or that may be incurred, by the Borrower or any ERISA
Affiliate in connection with any event described in clause (i) or (ii).
(i) Litigation. Promptly after the commencement thereof, notice
of all actions, suits, investigations, litigation and proceedings before
any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Borrower or any of its
Subsidiaries of the type described in Section 4.01(i), and promptly after
the occurrence thereof, notice of any adverse change in the status or the
financial effect on the Borrower or any of its Subsidiaries of the Disclosed
Litigation from that described on Schedule 4.01(i).
(j) Securities Reports. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and reports
that the Borrower sends to its stockholders generally, and copies of all
regular, periodic and special reports, and all registration statements,
that the Borrower or any of its Subsidiaries files with the Securities and
Exchange Commission or any governmental authority that may be substituted
therefor, or with any national securities exchange.
(k) Environmental Conditions. Promptly after the assertion or
occurrence thereof, notice of any Environmental Action against or of any
noncompliance by the Borrower or any of its Subsidiaries with any
Environmental Law or Environmental Permit that would reasonably be expected
to have a Material Adverse Effect.
(l) Other Information. Such other information respecting the
business, financial condition, results of operations, or prospects of the
Borrower and its Subsidiaries as any Lender Party (through the
Administrative Agent) may from time to time reasonably request.
SECTION 5.04. Financial Covenants. On and after the Funding
Date, so long as any Advance shall remain unpaid, the Borrower will:
(a) Interest Expense Coverage Ratio. Maintain, at the end of
each three-month fiscal period of the Borrower ending nearest to the last
day of each of the months set forth below, a ratio of Consolidated EBITDA
to Consolidated Interest Expense for the immediately preceding four Fiscal
Quarters (or, in the case of any Fiscal Quarter ending less than 12 months
after the Funding Date, such number of full Fiscal Quarters commencing on
or after the Funding Date as shall have ended on such date), in each case,
of the Borrower and its Subsidiaries, of at least the ratio set forth below
for such month (provided that this Section 5.04(a) shall not apply in
respect of any month set forth below the last day of which occurs less than
one full Fiscal Quarter after the Funding Date);
========================================================================
Fiscal Quarter End Ratio Fiscal Quarter End Ratio
- ------------------------------------------------------------------------
May, 1998 1:50:1.0 November, 2001 3.25:1.0
- ------------------------------------------------------------------------
August, 1998 1:50:1.0 February, 2002 3.25:1.0
- ------------------------------------------------------------------------
November, 1998 2.00:1.0 May, 2002 3.25:1.0
- ------------------------------------------------------------------------
February, 1999 2.00:1.0 August, 2002 3.50:1.0
- ------------------------------------------------------------------------
May, 1999 2.00:1.0 November, 2002 3.50:1.0
- ------------------------------------------------------------------------
August, 1999 2.25:1.0 February, 2003 3.50:1.0
- ------------------------------------------------------------------------
November, 1999 2.25:1.0 May, 2003 3.50:1.0
- ------------------------------------------------------------------------
February, 2000 2.25:1.0 August, 2003 3.50:1.0
- ------------------------------------------------------------------------
May, 2000 2.25:1.0 November, 2003 3.50:1.0
- ------------------------------------------------------------------------
August, 2000 2.75:1.0 February, 2004 3.50:1.0
- ------------------------------------------------------------------------
November, 2000 2.75:1.0 May, 2004 3.50:1.0
- ------------------------------------------------------------------------
February, 2001 2.75:1.0 August, 2004 3.50:1.0
- ------------------------------------------------------------------------
May, 2001 2.75:1.0 November, 2004 3.50:1.0
- ------------------------------------------------------------------------
August, 2001 3.25:1.0 February, 2005 3.50:1.0
========================================================================
(b) Cash Flow Leverage Ratio. Maintain, at the end of each
three month fiscal period of the Borrower ending nearest the last day of
each month set forth below, a Leverage Ratio of not more than the ratio set
forth below for such month (provided that this Section 5.04(b) shall not
apply in respect of any month set forth below the last day of which occurs
less than one year after the Funding Date):
========================================================================
Fiscal Quarter End Ratio Fiscal Quarter End Ratio
- ------------------------------------------------------------------------
February, 1999 6:30:1.0 May, 2002 3.90:1.0
- ------------------------------------------------------------------------
May, 1999 6.30:1.0 August, 2002 3.30:1.0
- ------------------------------------------------------------------------
August, 1999 5.40:1.0 November, 2002 3.30:1.0
- ------------------------------------------------------------------------
November, 1999 5.40:1.0 February, 2003 3.30:1.0
- ------------------------------------------------------------------------
February, 2000 5.40:1.0 May, 2003 3.30:1.0
- ------------------------------------------------------------------------
May, 2000 5.40:1.0 August, 2003 3.00:1.0
- ------------------------------------------------------------------------
August, 2000 5.00:1.0 November, 2003 3.00:1.0
- ------------------------------------------------------------------------
November, 2000 5.00:1.0 February, 2004 3.00:1.0
- ------------------------------------------------------------------------
February, 2001 5.00:1.0 May, 2004 3.00:1.0
- ------------------------------------------------------------------------
May, 2001 5.00:1.0 August, 2004 3.00:1.0
- ------------------------------------------------------------------------
August, 2001 3.90:1.0 November, 2004 3.00:1.0
- ------------------------------------------------------------------------
November, 2001 3.90:1.0 February, 2005 3.00:1.0
- ------------------------------------------------------------------------
February, 2002 3.90:1.0
========================================================================
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing (i) from and after the
date of this Agreement, in the case of clauses (a) and (e) below and (ii) from
and after the Funding Date, for all clauses of this Section 6.01:
(a) (i) the Borrower shall fail to pay any principal of any
Advance when the same shall become due and payable or (ii) the Borrower
shall fail to pay any interest on any Advance, or any fees payable under
any Loan Document, in each case under this clause (ii) which remain unpaid
beyond seven Business Days after the same becomes due and payable; or
(b) any representation or warranty made by the Borrower (or any
of its officers) under or in connection with any Loan Document shall prove
to have been incorrect in any material respect when made; or
(c) the Borrower shall fail to perform or observe any term,
covenant or agreement (i) contained in Section 2.13, 5.01(e) (in respect of
maintaining the existence of the Borrower only), 5.01(k), 5.02, 5.03(a) or
5.04 or (ii) contained in Section 5.01(f) or 5.03(b) through (l) if such
failure shall remain unremedied for 5 Business Days after written notice
thereof shall have been given to the Borrower by the Administrative Agent
or any Lender Party; or
(d) the Borrower shall fail to perform any other term, covenant
or agreement contained in any Loan Document on its part to be performed or
observed if such failure shall remain unremedied for 30 days after written
notice thereof shall have been given to the Borrower by the Administrative
Agent or any Lender Party; or
(e) the Borrower or any Substantial Subsidiary shall generally
not pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment
for the benefit of creditors; or any proceeding shall be instituted by or
against the Borrower or any Substantial Subsidiary seeking to adjudicate it
a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, or other similar official
for it or for any substantial part of its property and, in the case of any
such proceeding instituted against it (but not instituted by it), either
such proceeding shall remain undismissed or unstayed for a period of 60
days or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment of
a receiver, trustee, custodian or other similar official for, it or any
substantial part of its property) shall occur; or the Borrower or any of
its Subsidiaries shall take any corporate action to authorize any of the
actions set forth above in this subsection (e); or
(f) any judgment or order for the payment of money in excess of
$25,000,000 shall be rendered against the Borrower or any Subsidiary and
either (i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order or (ii) there shall be any period of
30 consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect;
or
(g) any non-monetary judgment or order shall be rendered against
the Borrower or any Subsidiary that would reasonably be expected to have a
Material Adverse Effect, and there shall be any period of 30 consecutive
days during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; or
(h) any provision of the Guaranty or any other Loan Document
after delivery thereof pursuant to Section 3.02 shall for any reason cease
to be valid and binding on or enforceable against the Loan Party to it, or
any such Loan Party shall so state in writing; or
(i) the Guarantor shall at any time for any reason cease to be
the record and beneficial owner, directly or indirectly, of at least 40.01%
of the shares of capital stock of the Borrower; or
(j) the Borrower shall at any time for any reason cease to be
the record and beneficial owner of 100% of the shares of capital stock of
Sodexho Operations; or
(k) (i) any Person or two or more Persons acting in concert
(other than the Guarantor and its Subsidiaries and Affiliates of the
Guarantor that control the Guarantor and Persons controlled by a Person who
controls the Guarantor) shall have acquired beneficial ownership (within
the meaning of Rule 13d-3 of the Securities and Exchange Commission under
the Securities Exchange Act of 1934), directly or indirectly, of Voting
Stock of the Borrower (or other securities convertible into such Voting
Stock) representing 50% or more of the combined voting power of all Voting
Stock of the Borrower or (ii) any Person or two or more Persons acting in
concert (other than the Guarantor and its Subsidiaries and Affiliates of
the Guarantor that control the Guarantor and Persons controlled by a Person
who controls the Guarantor) shall have acquired, by contract or otherwise,
control over Voting Stock of the Borrower (or other securities convertible
into such securities) representing 50% or more of the combined voting power
of all Voting Stock of the Borrower; or
(l) any ERISA Event shall have occurred with respect to a Plan
and the sum (determined as of the date of occurrence of such ERISA Event)
of the Insufficiency of such Plan and the Insufficiency of any and all
other Plans with respect to which an ERISA Event shall have occurred and
then exist (or the liability of the Borrower and the ERISA Affiliates
related to such ERISA Event) exceeds $25,000,000; or
(m) the Borrower or any ERISA Affiliate shall have been notified
by the sponsor of a Multiemployer Plan that it has incurred Withdrawal
Liability to such Multiemployer Plan in an amount that, when aggregated
with all other amounts required to be paid to Multiemployer Plans by the
Borrower and the ERISA Affiliates as Withdrawal Liability (determined as of
the date of such notification), exceeds $25,000,000; or
(n) the Borrower or any ERISA Affiliate shall have been notified
by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of
ERISA, and as a result of such reorganization or termination the aggregate
annual contributions of the Borrower and the ERISA Affiliates to all
Multiemployer Plans that are then in reorganization or being terminated
have been or will be increased over the amounts contributed to such
Multiemployer Plans for the plan years of such Multiemployer Plans
immediately preceding the plan year in which such reorganization or
termination occurs by an amount exceeding $25,000,000,
then, and in any such event, the Administrative Agent (i) shall at the
request, or may with the consent, of the Required Lenders, by notice to the
Borrower, declare the obligation of each Lender to make Advances to be
terminated, whereupon the same shall forthwith terminate, and (ii) shall at
the request, or may with the consent, of the Required Lenders, by notice to
the Borrower, declare the Notes, all interest thereon and all other amounts
payable under this Agreement and the other Loan Documents to be forthwith due
and payable, whereupon the Notes, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest
or further notice of any kind, all of which are hereby expressly waived by the
Borrower; provided, however, that in the event of an actual or deemed entry of
an order for relief with respect to the Borrower under the Federal Bankruptcy
Code, (x) the obligation of each Lender to make Advances shall automatically
be terminated and (y) the Notes, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower.
ARTICLE VII
THE ADMINISTRATIVE AGENT
SECTION 7.01. Authorization and Action. (a) Each Lender Party
hereby appoints and authorizes the Administrative Agent to take such action as
agent on its behalf and to exercise such powers and discretion under this
Agreement and the other Loan Documents as are delegated to the Administrative
Agent by the terms hereof and thereof, together with such powers and
discretion as are reasonably incidental thereto. As to any matters not
expressly provided for by the Loan Documents (including, without limitation,
enforcement or collection of the Notes), the Administrative Agent shall not be
required to exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and
such instructions shall be binding upon all Lender Parties and all holders of
Notes; provided, however, that the Administrative Agent shall not be required
to take any action that exposes the Administrative Agent to personal liability
or that is contrary to this Agreement or applicable law. The Administrative
Agent agrees to give to each Lender Party prompt notice of each notice given
to it by the Borrower pursuant to the terms of this Agreement.
(b) The Arrangers shall have no powers or discretion under this
Agreement or any of the other Loan Documents and each of the Lender Parties
hereby acknowledges that the Arrangers have no liability under this Agreement
or under any of the other Loan Documents.
SECTION 7.02. Administrative Agent's Reliance, Etc. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them
under or in connection with the Loan Documents, except for its or their own
gross negligence or willful misconduct. Without limitation of the generality
of the foregoing, the Administrative Agent: (a) may treat the payee of any
Note as the holder thereof until the Administrative Agent receives and accepts
an Assignment and Acceptance entered into by the Lender that is the payee of
such Note, as assignor, and an Eligible Assignee, as assignee, as provided in
Section 8.07; (b) may consult with legal counsel (including counsel for the
Borrower), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith
by it in accordance with the advice of such counsel, accountants or experts;
(c) makes no warranty or representation to any Lender Party and shall not be
responsible to any Lender Party for any statements, warranties or
representations (whether written or oral) made in or in connection with the
Loan Documents; (d) shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions of
any Loan Document on the part of the Borrower or to inspect the property
(including the books and records) of the Borrower; (e) shall not be
responsible to any Lender Party for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, any Loan Document or any other instrument or
document furnished pursuant thereto; and (f) shall incur no liability under or
in respect of any Loan Document by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telegram or
telecopy) believed by it to be genuine and signed or sent by the proper party
or parties.
SECTION 7.03. Societe Generale and Affiliates. With respect to
its Commitment, the Advance made by it and the Note issued to it, Societe
Generale shall have the same rights and powers under the Loan Documents as any
other Lender Party and may exercise the same as though it were not the
Administrative Agent; and the term "Lender Party" or "Lenders Parties" shall,
unless otherwise expressly indicated, include Societe Generale in its
individual capacity. Societe Generale and its affiliates may accept deposits
from, lend money to, act as trustee under indentures of, accept investment
banking engagements from and generally engage in any kind of business with,
any Loan Party, any of its Subsidiaries and any Person who may do business with
or own securities of any Loan Party or any such Subsidiary, all as if Societe
Generale were not the Administrative Agent and without any duty to account
therefor to the Lender Parties.
SECTION 7.04. Lender Party Credit Decision. Each Lender Party
acknowledges that it has, independently and without reliance upon the
Administrative Agent, the Arrangers or any other Lender Party and based on the
financial statements referred to in Section 4.01 and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender Party also acknowledges
that it will, independently and without reliance upon the Administrative
Agent, the Arrangers or any other Lender Party 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 this Agreement.
SECTION 7.05. Indemnification. Each Lender Party severally
agrees to indemnify the Administrative Agent (to the extent not promptly
reimbursed by the Borrower) from and against such Lender Party's ratable share
(determined as provided below) of any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on,
incurred by, or asserted against the Administrative Agent in any way relating
to or arising out of the Loan Documents or any action taken or omitted by the
Administrative Agent under the Loan Documents; provided, however, that no
Lender Party shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Administrative Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender Party
agrees to reimburse the Administrative Agent promptly upon demand for its
ratable share of any costs and expenses (including, without limitation, fees
and expenses of counsel) payable by the Borrower under Section 8.04, to the
extent that the Administrative Agent is not promptly reimbursed for such costs
and expenses by the Borrower. For purposes of this Section 7.05, the Lender
Parties' respective ratable shares of any amount shall be determined, at any
time, according to the sum of (a) the aggregate principal amount of the
Advances outstanding at such time and owing to the respective Lender Parties
and (b) the Commitments of the respective Lender Parties at such time. The
failure of any Lender Party to reimburse the Administrative Agent promptly
upon demand for its ratable share of any amount required to be paid by the
Lender Party to the Administrative Agent as provided herein shall not relieve
any other Lender Party of its obligation hereunder to reimburse the
Administrative Agent for its ratable share of such amount, but no Lender Party
shall be responsible for the failure of any other Lender Party to reimburse
the Administrative Agent for such other Lender Party's ratable share of such
amount. Without prejudice to the survival of any other agreement of any
Lender Party hereunder, the agreement and obligations of each Lender Party
contained in this Section 7.05 shall survive the payment in full of principal,
interest and all other amounts payable hereunder and under the other Loan
Documents.
SECTION 7.06. Successor Agents. The Administrative Agent may
resign at any time by giving written notice thereof to the Lender Parties and
the Borrower. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor Administrative Agent with, unless an Event of
Default shall have occurred and be continuing, the consent of the Borrower,
which consent shall not be unreasonably withheld or delayed. If no successor
Administrative Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the retiring
Administrative Agent's giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lender Parties, appoint a successor
Administrative Agent with, unless an Event of Default shall have occurred and
be continuing, the consent of the Borrower, which consent shall not be
unreasonably withheld or delayed, which shall be a commercial bank organized
under, or having a branch authorized to operate under, the laws of the United
States or of any State thereof and having a combined capital and surplus of at
least $250,000,000. Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall succeed to and become vested with all the rights,
powers, discretion, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its
duties and obligations under the Loan Documents. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent under
this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Notes or any other Loan Document, nor
consent to any departure by the Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Borrower and
the Required Lenders, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given;
provided, however, that (a) no amendment, waiver or consent shall, unless in
writing and signed by the Requisite Lenders, waive any of the conditions
specified in Section 3.01 or 3.02, (b) no amendment, waiver or consent shall,
unless in writing and signed by all of the Lenders (other than any Lender
Party that is, at such time, a Defaulting Lender), do any of the following at
any time: (i) change the number of Lenders or the percentage of (x) the
Commitments or (y) the aggregate unpaid principal amount of the Advances that,
in each case, shall be required for the Lenders or any of them to take any
action hereunder, (ii) reduce or limit the obligations of the Guarantor under
Section 1 of the Guaranty or otherwise limit the Guarantor's liability with
respect to the Obligations owing to the Administrative Agent and the Lender
Parties, except as expressly permitted therein, or (iii) amend this Section
8.01 and (c) no amendment, waiver or consent shall, unless in writing and
signed by the Required Lenders and each Lender that has a Commitment or an
Advance outstanding under the Facility if affected by such amendment, waiver
or consent, (i) increase the Commitment of such Lender or subject such Lender
to any additional obligations, (ii) reduce the principal of, or interest on,
the Note held by such Lender or any fees or other amounts payable hereunder to
such Lender, or (iii) postpone any date fixed under Section 2.03 for any
payment of principal of or fixed under Section 2.05 or 2.06 for any payment of
any interest on, the Note held by such Lender or fixed under Section 2.07 for
payment of any fees payable hereunder to such Lender; provided further that no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above to take such
action, affect the rights or duties of the Administrative Agent under this
Agreement.
SECTION 8.02. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telecopy communication)
and mailed, telecopied or delivered
if to the Borrower:
10400 Fernwood Road
Bethesda, Maryland 20817
Attention: Robert A. Stern, General Counsel
Telecopy number: (301) 380-1092
with a copy to:
Robert Drury, Treasurer
Sodexho Marriott Operations, Inc.
10400 Fernwood Road
Bethesda, Maryland 20817
Telecopy number: (301) 380-2474
and:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Lawrence E. Wieman, Esq.
Telecopy number: (212) 450-4800
if to any Initial Lender, at its Domestic Lending Office specified opposite
its name on Schedule I hereto; if to any other Lender Party, at its Domestic
Lending Office specified in the Assignment and Acceptance pursuant to which it
became a Lender Party; and
if to the Administrative Agent:
1221 Avenue of the Americas
New York, New York 10020
Attention: Elizabeth R. Peck
Telecopy number: (212) 278-7463
or, as to the Borrower or the Administrative Agent, at such other address as
shall be designated by such party in a written notice to the other parties
and, as to each other party, at such other address as shall be designated by
such party in a written notice to the Borrower and the Administrative Agent.
All such notices and communications shall be effective (i) if given by
telecopy, when transmitted to the telecopy number referred to in this Section
and confirmation of receipt is received, (ii) if given by mail, 72 hours after
such communication is deposited in the mails with postage prepaid, addressed
as aforesaid or (iii) if given by any other means, when delivered at the
address referred to in this Section, except that notices and communications to
the Administrative Agent pursuant to Article II or VII shall not be effective
until received by the Administrative Agent. Delivery by telecopier of an
executed counterpart of any amendment or waiver of any provision of this
Agreement or the Notes or of any Exhibit hereto to be executed and delivered
hereunder shall be effective as delivery of a manually executed counterpart
thereof.
SECTION 8.03. No Waiver; Remedies. No failure on the part of any
Lender Party or the Administrative Agent to exercise, and no delay in
exercising, any right hereunder or under any Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude
any other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 8.04. Costs and Expenses. (a) The Borrower agrees to
pay on demand (i) pursuant to a written budget mutually satisfactory to the
Borrower and the Arrangers (it being understood that such budget is not a
maximum cap on any expenses payable by the Borrower specified in this Section
8.04, or otherwise), all reasonable costs and expenses of the Administrative
Agent and the Arrangers in connection with the preparation, execution,
delivery, administration, modification, waiver and amendment of the Loan
Documents (including, without limitation, (A) all due diligence, syndication,
transportation, computer, duplication, audit, insurance and consultant fees
and expenses and (B) the reasonable fees and expenses of counsel for the
Administrative Agent and the Arrangers with respect thereto, with respect to
advising the Administrative Agent and the Arrangers as to their rights and
responsibilities, or the perfection, protection or preservation of rights or
interests, under the Loan Documents, with respect to negotiations with the
Borrower or with other creditors of the Borrower or any of its Subsidiaries
arising out of any Default or any events or circumstances that may give rise
to a Default and with respect to presenting claims in or otherwise
participating in or monitoring any bankruptcy, insolvency or other similar
proceeding involving creditors' rights generally and any proceeding ancillary
thereto) and (ii) after the occurrence of an Event of Default, all reasonable
costs and expenses of the Administrative Agent, the Arrangers and the Lender
Parties in connection with the enforcement of the Loan Documents, whether in
any action, suit or litigation, any bankruptcy, insolvency or other similar
proceeding affecting creditors' rights generally (including, without
limitation, the reasonable fees and expenses of counsel for the Administrative
Agent, the Arrangers and each Lender Party with respect thereto).
(b) The Borrower agrees to indemnify and hold harmless the
Administrative Agent, each Arranger, each Lender Party and each of their
Affiliates and their officers, directors, employees, agents and advisors
(each, an "Indemnified Party") from and against any and all claims, damages,
losses, liabilities and expenses (including, without limitation, reasonable
fees and expenses of counsel) that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection
with or by reason of any investigation, litigation or proceeding or
preparation of a defense in connection therewith arising out of or relating to
(i) the Facility, the actual or proposed use of the proceeds of the Advances,
the Loan Documents or any of the transactions contemplated thereby or (ii) the
actual or alleged presence of Hazardous Materials on any property of the
Borrower or any of its Subsidiaries or any Environmental Action relating in
any way to the Borrower or any of its Subsidiaries, except to the extent such
claim, damage, loss, liability or expense is found in a final, non-appealable
judgment by a court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct. In the case of an
investigation, litigation or other proceeding to which the indemnity in this
Section 8.04(b) applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by the Borrower, its
directors, shareholders or creditors or an Indemnified Party or any
Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated hereby are consummated. The Borrower also agrees
not to assert any claim against the Administrative Agent, any Arranger, any
Lender Party or any of their Affiliates, or any of their respective officers,
directors, employees, attorneys and agents, on any theory of liability, for
consequential damages arising out of or otherwise relating to the Facility,
the actual or proposed use of the proceeds of the Advances, the Loan Documents
or any of the transactions contemplated thereby.
(c) If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance is made by the Borrower to or for the account of a
Lender Party other than on the last day of the Interest Period for such
Advance, as a result of a payment or Conversion pursuant to Section 2.08(b)(i)
or 2.09(d), acceleration of the maturity of the Notes pursuant to Section 6.01
or for any other reason, the Borrower shall, upon demand by such Lender Party
(with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender Party any amounts required
to compensate such Lender Party for any losses, costs or expenses that it may
reasonably incur as a result of such payment, including, without limitation,
any loss, cost or expense (but excluding loss of margin after the date of such
payment or conversion) incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by any Lender Party to fund or maintain
such Advance.
(d) If any Loan Party fails to pay when due any costs, expenses
or other amounts payable by it under any Loan Document, including, without
limitation, fees and expenses of counsel and indemnities, such amount may be
paid on behalf of such Loan Party by the Administrative Agent or any Lender
Party, in its sole discretion.
(e) Without prejudice to the survival of any other agreement of
the Borrower hereunder or under any other Loan Document, the agreements and
obligations of the Borrower contained in Sections 2.09 and 2.11 and this
Section 8.04 shall survive the payment in full of principal, interest and all
other amounts payable hereunder and under any of the other Loan Documents.
(f) The Lender Parties acknowledge that (i) prior to the Funding
Date, the obligations of the Borrower for costs, expenses, fees and
indemnification under or in connection with this Agreement shall be the
responsibility of the Borrower and the Guarantor pursuant to the terms of the
Commitment Letter dated November 26, 1997 entered into by such parties with
Morgan and the Arrangers and (ii) all amounts due and payable by the Borrower
prior to the Funding Date (including pursuant to Section 3.01(b)) shall be
advanced by the Guarantor, provided that nothing contained in this paragraph
(f) shall limit the liability of the parties hereto as set forth in the terms
of said Commitment Letter.
SECTION 8.05. Right of Set-off. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the making of the
request or the granting of the consent specified by Section 6.01 to authorize
the Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 6.01, each Lender Party and each of its respective
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by such Lender Party or
such Affiliate to or for the credit or the account of the Borrower against any
and all of the Obligations of the Borrower now or hereafter existing under
this Agreement and the Note (if any) held by such Lender Party, irrespective
of whether such Lender Party shall have made any demand under this Agreement or
such Note and although such obligations may be unmatured. Each Lender Party
agrees promptly to notify the Borrower after any such set-off and application;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender Party and
its respective Affiliates under this Section are in addition to other rights
and remedies (including, without limitation, other rights of set-off) that
such Lender Party and its respective Affiliates may have.
SECTION 8.06. Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the Borrower, the Administrative Agent, each
Lender Party and their respective successors and assigns, except that the
Borrower shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Lender Parties.
SECTION 8.07. Assignments and Participations. (a) Each Lender
may assign to one or more Eligible Assignees all or a portion of its rights
and obligations under this Agreement (including, without limitation, all or a
portion of its Commitment, the Advances owing to it and the Note held by it);
provided, however, that (i) except in the case of an assignment of all of a
Lender's rights and obligations under this Agreement, the amount of the
Commitment or Advances of the assigning Lender being assigned pursuant to each
such assignment (determined as of the date of the Assignment and Acceptance
with respect to such assignment) shall in no event be less than $15,000,000
(or $5,000,000, in the case of an assignment to an existing Lender), (ii) each
such assignment shall be to an Eligible Assignee and (iii) the parties to each
such assignment shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance,
together with any Note or Notes subject to such assignment and a processing
and recordation fee of $3,500.
(b) Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in such Assignment and Acceptance,
(x) the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender
hereunder and (y) the Lender assignor thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto).
(c) By executing and delivering an Assignment and Acceptance,
the Lender Party assignor thereunder and the assignee thereunder confirm to
and agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such assigning Lender
Party makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or any other Loan Document or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of, this
Agreement or any other Loan Document or any other instrument or document
furnished pursuant hereto or thereto; (ii) such assigning Lender Party makes
no representation or warranty and assumes no responsibility with respect to
the financial condition of the Borrower or any other Loan Party or the
performance or observance by the Borrower of any of its obligations under any
Loan Document or any other instrument or document furnished pursuant thereto;
(iii) such assignee confirms that it has received a copy of this Agreement,
together with copies of the financial statements referred to in Section 4.01
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such assignee will, independently and without reliance upon
the Administrative Agent, such assigning Lender Party or any other Lender
Party 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 this Agreement; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes the Administrative Agent
to take such action as agent on its behalf and to exercise such powers and
discretion under the Loan Documents as are delegated to the Administrative
Agent by the terms hereof, together with such powers and discretion as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the
terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent acting for this purpose (but only
for this purpose) as the agent of the Borrower, shall maintain at its address
referred to in Section 8.02 a copy of each Assignment and Acceptance delivered
to and accepted by it and a register for the recordation of the names and
addresses of the Lender Parties and the Commitment of, and principal amount of
the Advances owing to, each Lender Party from time to time (the "Register").
The entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Borrower, the Administrative Agent and the
Lender Parties shall treat each Person whose name is recorded in the Register
as a Lender Party hereunder for all purposes of this Agreement. The Register
shall be available for inspection by the Borrower or any Lender Party at any
reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender Party and an assignee, together with any Note subject to
such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit C
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Borrower. In the case of any assignment by a Lender, within 15 Business Days
after its receipt of such notice, the Borrower, at its own expense, shall
execute and deliver to the Administrative Agent in exchange for the
surrendered Note a new Note to the order of such Eligible Assignee in an
amount equal to the Commitment or, after the Funding Date, the principal
amount of the outstanding Advance assumed by it under the Facility pursuant to
such Assignment and Acceptance and, if the assigning Lender has retained a
Commitment or a portion of the principal amount of its outstanding Advance
under the Facility, a new Note to the order of the assigning Lender in an
amount equal to the Commitment or portion of such Advance retained by it
hereunder. Such new Note or Notes shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered Note, shall be
dated the effective date of such Assignment and Acceptance and shall otherwise
be in substantially the form of Exhibit A hereto.
(f) No assignee, participant or other transferee of any Lender
Party's rights shall be entitled to receive any greater payment under Section
2.09 or 2.11 than such Lender Party would have been entitled to receive with
respect to the rights transferred, unless such transfer is made with the
Borrower's prior written consent or by reason of the provisions of Section
2.09 or 2.11 requiring such Lender to designate a different Applicable Lending
Office under certain circumstances or at a time when the circumstances giving
rise to such greater payment did not exist.
(g) Each Lender Party may sell participations to one or more
Persons (other than the Borrower or any of its Affiliates) in or to all or a
portion of its rights, obligations, or rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment,
the Advances owing to it and the Note (if any) held by it); provided, however,
that (i) such Lender Party's obligations under this Agreement (including,
without limitation, its Commitment) shall remain unchanged, (ii) such Lender
Party shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Lender Party shall remain the
holder of any such Note for all purposes of this Agreement, (iv) the Borrower,
the Administrative Agent and the other Lender Parties shall continue to deal
solely and directly with such Lender Party in connection with such Lender
Party's rights and obligations under this Agreement and (v) no participant
under any such participation shall have any right to approve any amendment or
waiver of any provision of any Loan Document, or any consent to any departure
by the Borrower therefrom, except to the extent that such amendment, waiver or
consent would reduce the principal of, or interest on, the Note or any fees or
other amounts payable hereunder, in each case to the extent subject to such
participation, postpone any date fixed under Section 2.04 for any payment of
principal of, or fixed under Section 2.05 or 2.06 for any payment of interest
on the Note or fixed under Section 2.07 for any payment of any fees payable
hereunder, in each case to the extent subject to such participation.
(h) Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
8.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
Party by or on behalf of the Borrower; provided, however, that, prior to any
such disclosure, the assignee or participant or proposed assignee or
participant shall agree in writing to preserve the confidentiality of any
Confidential Information received by it from such Lender Party in accordance
with Section 8.09 hereof.
(i) Notwithstanding any other provision set forth in this
Agreement, any Lender Party may at any time create a security interest in all
or any portion of its rights under this Agreement (including, without
limitation, the Advances owing to it and the Note held by it) in favor of any
Federal Reserve Bank in accordance with Regulation A of the Board of Governors
of the Federal Reserve System.
SECTION 8.08. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 8.09. Confidentiality. (a) Neither the Administrative
Agent nor any Lender Party shall disclose any Confidential Information to any
Person without the consent of the Borrower, other than (i) to the
Administrative Agent's or such Lender Party's Affiliates and their officers,
directors, employees, agents and advisors who need to know such Confidential
Information in connection with the Administrative Agent's or such Lender
Party's evaluation or administration of the Facility and to actual or
prospective Eligible Assignees and participants who have agreed in writing to
be bound by this Section, (ii) as required by any law, rule or regulation or
judicial process, provided that the Administrative Agent or any Lender Party
so required to disclose any Confidential Information will, to the extent
permitted under applicable law, (x) notify the Borrower immediately of the
existence, terms and circumstances surrounding such requirement, (y) consult
with the Borrower on the advisability of taking legally available steps to
resist or narrow such requirement and (z) if disclosure of such Confidential
Information is legally required, furnish only such portion of the Confidential
Information as it is legally compelled to disclose and exercise commercially
reasonable efforts to obtain an order or other reliable assurance that
confidential treatment will be accorded to the disclosed Confidential
Information, and (iii) as requested or required by any state, federal or
foreign authority or examiner regulating banks or banking.
(b) The Administrative Agent and each Lender Party hereby
acknowledges and agrees that, in the event of any breach by it of this Section
8.09, the Borrower and the Guarantor would be irreparably and immediately
harmed and could not be made whole by monetary damages. Accordingly, the
Administrative Agent and each Lender Party agrees, to the fullest extent it
may effectively do so under applicable law, that, in addition to any other
remedy to which the Borrower and the Guarantor may be entitled at law or in
equity, the Administrative Agent and each Lender Party shall be entitled to an
injunction or injunctions (without the posting of any bond and without proof
of actual damages) to prevent breaches or threatened breaches of this Section
8.09 and/or to compel specific performance of this Section 8.09, and that none
of the Administrative Agents, any Lender Party or any of their respective
representatives will oppose the granting of such relief.
SECTION 8.10. No Reliance on Margin Stock. Each of the Lender
Parties represents to the Administrative Agent and each of the other Lender
Parties that it in good faith is not relying upon any "margin stock" (as
defined in Regulation U) as collateral in the extension or maintenance of the
credit provided for in this Agreement.
SECTION 8.11. Jurisdiction, Etc. (a) Each of the parties hereto
hereby irrevocably and unconditionally submits, for itself and its property,
to the nonexclusive jurisdiction of any New York State court or federal court
of the United States of America sitting in New York City, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to this Agreement or any of the other Loan Documents to which it is a party,
or for recognition or enforcement of any judgment, and each of the parties
hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any
such New York State court or, to the extent permitted by law, in such federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that any party may otherwise
have to bring any action or proceeding relating to this Agreement or any of
the other Loan Documents in the courts of any jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement or any
of the other Loan Documents to which it is a party in any such New York State
or federal court. Each of the parties hereto hereby irrevocably waives, to
the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.
SECTION 8.12. Governing Law. This Agreement and the Notes shall
be governed by, and construed in accordance with, the laws of the State of New
York.
SECTION 8.13. Waiver of Jury Trial. Each of the Borrower, the
Administrative Agent and the Lender Parties irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to any of the Loan
Documents, the Advances or the actions of the Administrative Agent or any
Lender Party in the negotiation, administration, performance or enforcement
thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized, as of
the date first above written.
MARRIOTT INTERNATIONAL, INC. (to be
renamed SODEXHO MARRIOTT SERVICES,
INC.)
By /s/ Lawrence Hyatt
----------------------------------
Title: Vice President
SOCIETE GENERALE, as Administrative
Agent
By /s/ Elizabeth Peck
----------------------------------
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as Documentation Agent
By /s/ Patricia P. Lunka
----------------------------------
Title: Vice President
Initial Lenders
SOCIETE GENERALE
By /s/ Elizabeth Peck
----------------------------------
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF NEW
YORK
By /s/ Patricia P. Lunka
----------------------------------
Title: Vice President
THE BANK OF NEW YORK
By /s/ Ronald R. Reedy
----------------------------------
Title: Vice President
THE BANK OF NOVA SCOTIA
By /s/ J.R. Trimble
----------------------------------
Title: Senior Relationship
Manager
BANQUE NATIONALE DE PARIS
By /s/ Richard L. Sted
----------------------------------
Title: Senior Vice President
By /s/ Lynn H. Walkoff
----------------------------------
Title: Vice President
BANQUE PARIBAS
By /s/ Robert G. Carino
----------------------------------
Title: Vice President
By /s/ Duane Helkowski
----------------------------------
Title: Vice President
CIBC INC.
By /s/ John Livingston
----------------------------------
Title: Executive Director
CAISSE CENTRALE DES BANQUES
POPULAIRES
By /s/ Louis Orienti
----------------------------------
Title: Directeur Adjoint
By /s/ Stephane Pasquier
----------------------------------
Title: Fonde de Pouvoirs
Principal
THE CHASE MANHATTAN BANK
By /s/ Carol A. Ulmer
----------------------------------
Title: Vice President
CITIBANK, N.A.
By /s/ Theodore Berk
----------------------------------
Title: Attorney-in-Fact
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By /s/ Dora DeBlasi-Hyduk
----------------------------------
Title: Vice President
By /s/ Bernard Laleuf
----------------------------------
Title: Deputy General Manager
CREDIT AGRICOLE INDOSUEZ
By /s/ Richard Manix
----------------------------------
Title:
By /s/ Cheryl Solometo
----------------------------------
Title: Vice President
CREDIT COMMERCIAL DE FRANCE
NEW YORK BRANCH
By /s/ Elizabeth Fallon
----------------------------------
Title: AVP
/s/ Jean-Jacques Salomon
----------------------------------
Title: SVP
CREDIT LYONNAIS NEW YORK BRANCH
By /s/ Olivier Perrain
----------------------------------
Title: First Vice President
DG BANK, DEUTSCHE GENOSSENSCHAFTSBANK
By /s/ Norah McCann
----------------------------------
Title: Senior Vice President
By /s/ S. Winott
----------------------------------
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Ron Galitsky
----------------------------------
Title: Assistant Vice President
FIRST UNION NATIONAL BANK
By /s/ Mark B. Felker
----------------------------------
Title: Senior Vice President
MELLON BANK, N.A.
By /s/ Arlene Pedovitch
----------------------------------
Title: Vice President
NATEXIS BANQUE
By /s/ Pieter J. van Tulder
----------------------------------
Title: Vice President
By /s/ John Rigo
----------------------------------
Title: Assistant Vice President
NATIONSBANK, N.A.
By /s/ Marty Mitchell
----------------------------------
Title: Vice President
RIGGS BANK N.A.
By /s/ David Olson
----------------------------------
Title: Vice President
THE ROYAL BANK OF SCOTLAND plc
By /s/ Derek Bonnar
----------------------------------
Title: Vice President
EXHIBIT 7
AMENDMENT NO. 1 TO THE LOAN DOCUMENTS
As of March 19, 1998
To the Lender Parties parties to the Credit Agreement
referred to below and to Morgan Guaranty Trust
Company of New York as the Documentation Agent
and the Administrative Agent for the Lender Parties
and the other Secured Parties thereunder (the "Administrative Agent")
Ladies and Gentlemen:
We refer to the Credit Agreement dated as of January 30, 1998 (the
"Credit Agreement"), among Sodexho Marriott Operations, Inc. (the "Borrower"),
Marriott International, Inc. (to be renamed Sodexho Marriott Services, Inc., the
"Parent Guarantor"), the Administrative Agent and each of you. Capitalized terms
not otherwise defined in this Letter Amendment shall have the same meanings as
specified in the Credit Agreement.
It is hereby agreed by you and us as follows:
SECTION 1. Amendments of the Credit Agreement. (a) Section 1.01 of the
Credit Agreement is hereby amended by adding in the appropriate alphabetical
order the following new definitions:
"'Bank Hedge Agreement' means any interest rate Hedge
Agreement that is entered into by and between the Borrower or
the Parent Guarantor and any of the Lenders to hedge interest
rate exposure in respect of Debt under this Agreement or any
Guaranteed Senior Debt.
'Hedge Bank' means any Person that is a Lender, in its
capacity as a party to a Bank Hedge Agreement."
(b) The definition of "Debt" is hereby amended by adding at the end of
clause (i) thereof the following phrase:
"; provided, however, for purposes of calculating the
financial covenants in Section 5.04 hereof, the term "Debt"
shall exclude obligations in respect of surety bonds and
performance bonds with respect to client contracts or bids
therefor entered into by the Parent Guarantor or any of its
Subsidiaries in the ordinary course of business; provided,
further, that the term "Debt" shall include such surety bonds
and performance bonds to the extent they exceed 2% of
Consolidated net sales for the immediately preceding four
Fiscal Quarters if the Leverage Ratio (calculated by including
any amount of such surety bonds and performance bonds in
excess of 2% of Consolidated net sales for such period)
exceeds 3.0:1.0."
(c) The definition of "Loan Documents" is hereby amended in its
entirety to read as follows:
"'Loan Documents' means (a) for purposes of this
Agreement and the Notes and any amendment or modification
hereof or thereof and for all other purposes other than for
purposes of the Guarantees and the Collateral Documents, (i)
this Agreement, (ii) the Notes, (iii) the Guarantees, (iv) the
Collateral Documents, (v) each Letter of Credit Agreement and
(vi) the agreement related to the fees referred to in Section
2.08, and (b) for purposes of the Guarantees and the
Collateral Documents, (i) this Agreement, (ii) the Notes,
(iii) the Guarantees, (iv) the Collateral Documents, (v) each
Letter of Credit Agreement, (vi) the agreement related to the
fees referred to in Section 2.08 and (vii) the Bank Hedge
Agreements, in each case as amended or otherwise modified from
time to time.
(d) The definition of "MMS" is hereby amended by adding after the word
"corporation" at the end thereof the parenthetical "(to be renamed Sodexho
Marriott Management, Inc. on or before the Funding Date)".
(e) The definition of "Secured Parties" is hereby amended by adding
after the phrase "Lender Parties" in the first line thereof the phrase ", the
Hedge Banks".
(f) The definition of "Subsidiary Guarantors" is hereby amended by
adding after the phrase "Marriott Laundry Services, Inc., a Delaware
corporation" in the third line thereof the parenthetical "(to be renamed Sodexho
Marriott Laundry Services, Inc. on or before the Funding Date)".
(g) Section 5.02(b) is hereby amended (i) by deleting the word "and" at
the end of clause (ix) thereof, (ii) by adding a new clause (x) to read as
follows:
"(x) Debt in respect of surety bonds and performance
bonds with respect to client contracts or bids therefor
entered into by the Parent Guarantor or any of its
Subsidiaries in the ordinary course of business; and"
(iii) by renumbering the existing clause (x) thereof as clause (xi),
and (iv) by deleting the parenthetical "(ix)" in clause (xi) and substituting
therefor the parenthetical "(x)".
(h) Section 6.04 of the Credit Agreement is hereby amended in its
entirety to read as follows:
"Subrogation. The Parent Guarantor will not exercise
any rights that it may now or hereafter acquire against the
Borrower or any other insider guarantor that arise from the
existence, payment, performance or enforcement of the
Guarantor's Obligations under this Parent Guaranty or any
other Loan Document, including, without limitation, any right
of subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or
remedy of the Administrative Agent or any other Secured Party
against the Borrower or any other insider guarantor or any
Collateral, whether or not such claim, remedy or right arises
in equity or under contract, statute or common law, including,
without limitation, the right to take or receive from the
Borrower or any other insider guarantor, directly or
indirectly, in cash or other property or by set-off or in any
other manner, payment or security on account of such claim,
remedy or right, unless and until all of the Obligations and
all other amounts payable under this Parent Guaranty shall
have been paid in full in cash, all of the Bank Hedge
Agreements shall have expired or been terminated and the
Commitments shall have expired or been terminated. If any
amount shall be paid to the Parent Guarantor in violation of
the preceding sentence at any time prior to the latest of (i)
the payment in full in cash of the Guaranteed Obligations and
all other amounts payable under this Parent Guaranty, (ii) the
expiration or termination of the Bank Hedge Agreements and
(iii) the Termination Date, such amount shall be held in trust
for the benefit of the Administrative Agent and the other
Secured Parties and shall forthwith be paid to the
Administrative Agent to be credited and applied to the
Guaranteed Obligations and all other amounts payable under
this Parent Guaranty, whether matured or unmatured, in
accordance with the terms of the Loan Documents, or to be held
as Collateral for any Guaranteed Obligations or other amounts
payable under this Parent Guaranty thereafter arising. If (i)
the Parent Guarantor shall make payment to the Administrative
Agent or any other Secured Party of all or any part of the
Guaranteed Obligations, (ii) all of the Guaranteed Obligations
and all other amounts payable under this Parent Guaranty shall
be paid in full in cash, (iii) all of the Bank Hedge
Agreements shall have expired or been terminated, and (iv) the
Termination Date shall have occurred, the Administrative Agent
and the other Secured Parties will, at the Parent Guarantor's
request and expense, execute and deliver to the Parent
Guarantor appropriate documents, without recourse and without
representation and warranty, necessary to evidence the
transfer by subrogation to the Parent Guarantor of an interest
in the Guaranteed Obligations resulting from such payment by
the Parent Guarantor."
(i) Section 6.05 of the Credit Agreement is hereby amended to (i)
delete the phrase "later of" in the second line thereof and replace it with the
phrase "latest of (i)", (ii) delete after the word "Guaranty" in the third line
thereof the word "and", and (iii) add after the word "Guaranty" in the third
line thereof the phrase ", (ii) the expiration or termination of all of the Bank
Hedge Agreements and (iii)".
(j) Schedule 4.01(b) to the Credit Agreement is hereby replaced with
Schedule 4.01(b) attached hereto.
SECTION 2. Amendments to Exhibit D (Form of Security Agreement) to the
Credit Agreement (hereinafter referred to as the "Security Agreement"). (a) The
recital of parties to the Security Agreement is hereby amended (i) to add after
the words "MARRIOTT MANAGEMENT SERVICES CORP., a New York corporation" in the
fourth line thereof the parenthetical "(to be renamed Sodexho Marriott
Management, Inc. on or before the Funding Date)", and (ii) to add after the
words "MARRIOTT LAUNDRY SERVICES, INC., a Delaware corporation" in the sixth
line thereof the parenthetical "(to be renamed Sodexho Marriott Laundry
Services, Inc. on or before the Funding Date)".
(b) The Preliminary Statements to the Security Agreement are hereby
amended (i) to add after clause (3) thereof the following new clause (4) to read
as follows:
"(4) The Borrower or the Parent Guarantor may from
time to time hereafter enter into Hedge Agreements with one or
more Lenders to hedge interest rate exposure in respect of
Debt under the Credit Agreement or Guaranteed Senior Debt
(collectively, the "Bank Hedge Agreements")."
(ii) to renumber the existing clause (4) thereof as clause (5) thereof, (iii) to
amend clause (5) to add after the phrase "Credit Agreement" at the end of the
second line thereof the phrase "and the entering into by the Hedge Banks of the
Bank Hedge Agreements from time to time", and (iv) to amend the following
paragraph thereto by adding after the word "Agreement" in the third line thereof
the following "and the Hedge Banks to enter into the Bank Hedge Agreements".
(c) Section 15 (b) of the Security Agreement is hereby amended
to add after the first sentence thereof the following:
"In determining the amounts owing to the Hedge Banks
under the Bank Hedge Agreements, the Administrative Agent
shall be entitled to rely, and be fully protected in relying,
upon the Agreement Values of the Bank Hedge Agreements. The
term "Agreement Value" means, with respect to any of the Bank
Hedge Agreements at any date of determination, the amount, if
any, that would be payable to the Hedge Bank party to such
Bank Hedge Agreement in respect of any "agreement value" under
such Bank Hedge Agreement if such Bank Hedge Agreement were
terminated on such date, calculated as provided in such Bank
Hedge Agreement. Each determination of the Agreement Value of
any of the Bank Hedge Agreements shall be made by the
Administrative Agent in good faith and in reliance on any
information (including information provided by such Hedge
Bank) that it believes to be accurate, but without any
obligation to verify such information."
(d) Section 20 of the Security Agreement is hereby amended to (i)
delete the phrase "later of" in the third line thereof and replace it with the
phrase "latest of (i)", (ii) delete after the word "Obligations" in the third
line thereof the word "and", and (iii) add after the word "Obligations" in the
third line thereof the phrase ", (ii) the expiration or termination of all of
the Bank Hedge Agreements and (iii)".
(e) Section 21(d) is hereby amended to (i) delete the phrase "later of"
in the first line thereof and replace it with the phrase "latest of (i)" and
(ii) add after the word "Obligations" in the first line thereof the phrase ",
(ii) the expiration or termination of all of the Bank Hedge Agreements and
(iii)".
SECTION 3. Amendment to Exhibit E (Form of Subsidiary Guaranty) to the
Credit Agreement (hereinafter referred to as the "Subsidiary Guaranty"). (a) The
recital of parties to the Subsidiary Guaranty is hereby amended (i) to add after
the words "MARRIOTT MANAGEMENT SERVICES CORP., a New York corporation" in the
third line thereof the parenthetical "(to be renamed Sodexho Marriott
Management, Inc. on or before the Funding Date)", and (ii) to add after the
words "MARRIOTT LAUNDRY SERVICES, INC., a Delaware corporation" in the fifth
line thereof the parenthetical "(to be renamed Sodexho Marriott Laundry
Services, Inc. on or before the Funding Date)".
(b) The Preliminary Statements to the Subsidiary Guaranty are hereby
amended (i) to add after clause (2) thereof the following new clause (3) to read
as follows:
"(3) The Borrower or the Parent Guarantor may from
time to time hereafter enter into Hedge Agreements with one or
more Lenders to hedge interest rate exposure in respect of
Debt under the Credit Agreement or Guaranteed Senior Debt
(collectively, the "Bank Hedge Agreements")."
(ii) to renumber the existing clause (3) thereof as clause (4) thereof,
(iii) to amend clause (4) to add after the phrase "Credit Agreement" in the
second line thereof the phrase "and the entering into by the Hedge Banks of the
Bank Hedge Agreements from time to time", and (iv) to amend the following
paragraph thereto by adding after the word "Agreement" in the third line thereof
the following "and the Hedge Banks to enter into the Bank Hedge Agreements".
(c) Section 4 of the Subsidiary Guaranty is hereby amended in its
entirety to read as follows:
"Subrogation. Each Guarantor hereby agrees not to
exercise any rights that it may now or hereafter acquire
against any of the other Loan Parties or any other insider
guarantor that arise from the existence, payment, performance
or enforcement of the Obligations of such Guarantor under this
Guaranty or any other Loan Document, including, without
limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Administrative Agent
or any other Secured Party against such other Loan Party or
any other insider guarantor or any Collateral, whether or not
such claim, remedy or right arises in equity or under
contract, statute or common law, including, without
limitation, the right to take or receive from such other Loan
Party or any other insider guarantor, directly or indirectly,
in cash or other property or by set-off or in any other
manner, payment or security on account of such claim, remedy
or right, unless and until all of the Guaranteed Obligations
and all other amounts payable under this Guaranty shall have
been paid in full in cash, all of the Bank Hedge Agreements
shall have expired or been terminated and the Commitments
shall have expired or been terminated. If any amount shall be
paid to any Guarantor in violation of the preceding sentence
at any time prior to the latest of (i) the payment in full in
cash of the Guaranteed Obligations and all other amounts
payable under this Guaranty, (ii) the expiration or
termination of the Bank Hedge Agreements and (iii) the
Termination Date, such amount shall be held in trust for the
benefit of the Administrative Agent and the other Secured
Parties and shall forthwith be paid to the Administrative
Agent to be credited and applied to the Guaranteed Obligations
and all other amounts payable under this Guaranty, whether
matured or unmatured, in accordance with the terms of the Loan
Documents, or to be held as Collateral for any Guaranteed
Obligations or other amounts payable under this Guaranty
thereafter arising. If (i) any Guarantor shall make payment to
the Administrative Agent or any other Secured Party of all or
any part of the Guaranteed Obligations, (ii) all of the
Guaranteed Obligations and all other amounts payable under
this Guaranty shall be paid in full in cash, (iii) all of the
Bank Hedge Agreements shall have expired or been terminated,
and (iv) the Termination Date shall have occurred, the
Administrative Agent and the other Secured Parties will, at
the Parent Guarantor's request and expense, execute and
deliver to such Guarantor appropriate documents, without
recourse and without representation and warranty, necessary to
evidence the transfer by subrogation to such Guarantor of an
interest in the Guaranteed Obligations resulting from such
payment by such Guarantor."
(d) Section 7 of the Subsidiary Guaranty is hereby amended by (i)
deleting the word "or" in the fifth line thereof and replacing it with a "," and
(ii) adding after the word "Agreement" in the sixth line thereof the phrase "or
any Bank Hedge Agreement shall remain in effect".
(e) Section 13 of the Subsidiary Guaranty is hereby amended by (i)
deleting the phrase "later of" in the second line thereof and replacing it with
the phrase "latest of (i)", (ii) deleting the word "and" after the word
"Guaranty" in the third line thereof and (iii) adding after the word "Guaranty"
in the third line thereof the phrase "(ii) the expiration or termination of all
of the Bank Hedge Agreements, and (iii)".
SECTION 4. Amendment to Exhibit F to the Credit Agreement (hereinafter
referred to as the "Pledge Agreement"). (a) The Preliminary Statements to the
Pledge Agreement are hereby amended (i) to add after clause (2) thereof the
following new clause (3) to read as follows:
"(3) The Borrower or the Parent Guarantor may from
time to time hereafter enter into Hedge Agreements with one or
more Lenders to hedge interest rate exposure in respect of
Debt under the Credit Agreement or Guaranteed Senior Debt
(collectively, the "Bank Hedge Agreements")."
(ii) to renumber the existing clause (3) thereof as clause (4) thereof, (iii) to
amend clause (4) to add after the phrase "Credit Agreement" in the second line
thereof the phrase "and the entering into by the Hedge Banks of the Bank Hedge
Agreements from time to time", and (iv) to amend the following paragraph thereto
by adding after the word "Agreement" in the third line thereof the following
"and the Hedge Banks to enter into the Bank Hedge Agreements".
(b) Section 12 (b) of the Pledge Agreement is hereby amended to add
after the first sentence thereof the following:
"In determining the amounts owing to the Hedge Banks
under the Bank Hedge Agreements, the Administrative Agent
shall be entitled to rely, and be fully protected in relying,
upon the Agreement Values of the Bank Hedge Agreements. The
term "Agreement Value" means, with respect to any of the Bank
Hedge Agreements at any date of determination, the amount, if
any, that would be payable to the Hedge Bank party to such
Bank Hedge Agreement in respect of any "agreement value" under
such Bank Hedge Agreement if such Bank Hedge Agreement were
terminated on such date, calculated as provided in such Bank
Hedge Agreement. Each determination of the Agreement Value of
any of the Bank Hedge Agreements shall be made by the
Administrative Agent in good faith and in reliance on any
information (including information provided by such Hedge
Bank) that it believes to be accurate, but without any
obligation to verify such information."
(c) Section 17 of the Pledge Agreement is hereby amended to (i) delete
the phrase "later of" in the third line thereof and replace it with the phrase
"latest of (i)", (ii) delete after the word "Obligations" in the third line
thereof the word "and", and (iii) add after the word "Obligations" in the third
line thereof the phrase ", (ii) the expiration or termination of all of the Bank
Hedge Agreements and (iii)".
(d) Section 19 of the Pledge Agreement is hereby amended to (i) delete
the phrase "later of" in the first line thereof and replace it with the phrase
"latest of (i)", (ii) delete after the word "Obligations" in the second line
thereof the word "and", and (iii) add after the word "Obligations" in the second
line thereof the phrase ", (ii) the expiration or termination of all of the Bank
Hedge Agreements and (iii)".
SECTION 5. Conditions of Effectiveness of this Letter Amendment. This
Letter Amendment shall become effective as of the date first above written when
the Administrative Agent shall have received counterparts of this Letter
Amendment executed by the Borrower, the Parent Guarantor and the Required
Lenders. This Letter Amendment is subject to the provisions of Section 9.01 of
the Credit Agreement.
SECTION 6. Reference to and Effect on the Loan Documents. (a) On and
after the effectiveness of this Letter Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in the Notes and the
Parent Guaranty (set forth in Article VI of the Credit Agreement) to the "Credit
Agreement" or "this Agreement", or words of like import referring to the Credit
Agreement, shall mean and be a reference to the Credit Agreement, as amended
hereby, and each reference in Article VI of the Credit Agreement to "hereunder",
"hereof" or words of like import referring to the Parent Guaranty shall mean and
be a reference to the Parent Guaranty as amended hereby.
(b) The Credit Agreement and the Parent Guaranty, as specifically
amended by this Letter Amendment, are and shall continue to be in full force and
effect and are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this Letter Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of any Lender Party under the Credit Agreement or the
Parent Guaranty, nor constitute a waiver of any provision of the Credit
Agreement or the Parent Guaranty.
SECTION 7. Costs and Expenses. The Borrower agrees to pay on demand all
costs and expenses of the Administrative agent in connection with the
preparation, execution, delivery and administration, modification and amendment
of this Letter Amendment (including, without limitation, the reasonable fees and
expenses of counsel for the Administrative Agent) in accordance with the terms
of Section 9.04(a) of the Credit Agreement.
SECTION 8. Execution in Counterparts. This Letter Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Letter Amendment by telecopier shall be effective as delivery of a manually
executed counterpart of this Letter Amendment.
SECTION 9. Governing Law. This Letter Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.
Very truly yours,
SODEXHO MARRIOTT OPERATIONS, INC.
By /s/ Robert E. Drury
-----------------------------
Name: Robert E. Drury
Title: V.P. and Treasurer
Consented and agreed to as of the date
first above written:
The Administrative Agent
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Administrative Agent
By /s/ John Mikolay
-------------------------------------
Name: John Mikolay
Title: Vice President
The Initial Lenders and the Initial Issuing Banks
SOCIETE GENERALE
By /s/ Elizabeth Peck
-------------------------------------
Name: Elizabeth Peck
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By /s/ John Mikolay
-------------------------------------
Name: John Mikolay
Title: Vice President
THE BANK OF NEW YORK
By /s/ Ronald R. Reedy
-----------------------------------------
Title: Vice President
THE BANK OF NOVA SCOTIA
By /s/ J.R. Trimble
-----------------------------------------
Title: Senior Relationship Manager
BANQUE NATIONALE DE PARIS
By /s/ Lynn Walkoff
-----------------------------------------
Title: Vice President
By /s/ Gwen Abbott
-----------------------------------------
Title: Assistant Vice President
BANQUE PARIBAS
By /s/ Robert G. Carino
-----------------------------------------
Title: Vice President
By /s/ Duane Helkowski
-----------------------------------------
Title: Vice President
CIBC INC.
By /s/ John Livingston
-----------------------------------------
Title: Executive Director
CAISSE CENTRALE DES BANQUES
POPULAIRES
By /s/ Louis Orienti
-----------------------------------------
Title: Directeur Adjoint
By /s/ Stephane Pasquier
-----------------------------------------
Title: Foude de Pouvoirs Principal
THE CHASE MANHATTAN BANK
By /s/ Karen Sharf
-----------------------------------------
Title: Vice President
CITIBANK, N.A.
By /s/ Stuart G. Miller
-----------------------------------------
Title: Attorney-in-Fact
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By /s/ Marcus Edward
-----------------------------------------
Title: Vice President
By /s/ Sean Mounier
-----------------------------------------
Title: First Vice President
CREDIT AGRICOLE INDOSUEZ
By /s/ Craig Welch
-----------------------------------------
Title: First Vice President
By /s/ Cheryl Solometo
-----------------------------------------
Title: Vice President
CREDIT COMMERCIAL DE FRANCE
NEW YORK BRANCH
By
-----------------------------------------
Title:
By
-----------------------------------------
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By
-----------------------------------------
Title:
DG BANK, DEUTSCHE
GENOSSENSCHAFTSBANK
By /s/ Norah McCann
-----------------------------------------
Title: Senior Vice President
By /s/ Karen Brinkman
-----------------------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Ron Galitsky
-----------------------------------------
Title: Assistant Vice President
FIRST UNION NATIONAL BANK
By /s/ Mark B. Felker
-----------------------------------------
Title: Senior Vice President
MELLON BANK, N.A.
By /s/ Arlene S. Pedovitch
-----------------------------------------
Title:
NATEXIS BANQUE
By /s/ Pieter J. van Tudler
-----------------------------------------
Title: Vice President and Manager
By /s/ John Rigo
-----------------------------------------
Title: Assistant Vice President
NATIONSBANK, N.A.
By /s/ Marty Mitchell
-----------------------------------------
Title: Vice President
RIGGS BANK N.A.
By /s/ David Olsen
-----------------------------------------
Title: Vice President
THE ROYAL BANK OF SCOTLAND plc
By
-----------------------------------------
Title:
CONSENT
As of March 19, 1998
Reference is made to Amendment No. 1 to the Loan Documents
dated as of March 19, 1998 (the "Letter Amendment"; the terms defined in the
Letter Amendment and not otherwise defined herein being used herein as therein
defined), among Sodexho Marriott Operations, Inc., the Lender Parties named
therein, Marriott International Inc. (to be renamed Sodexho Marriott Services,
Inc.), and Morgan Guaranty Trust Company of New York, as Documentation Agent and
Administrative Agent for the Lender Parties.
The undersigned, as the guarantor under the Parent Guaranty
dated January 30, 1998 (as amended through the date hereof, the "Parent
Guaranty") in favor of the Administrative Agent, on behalf of the Secured
Parties referred to therein hereby consents to the execution, delivery and
performance of the Letter Amendment and agrees that the Parent Guaranty is, and
shall continue to be, in full force and effect and is hereby in all respects
ratified and confirmed, except that, on and after the effective date of the
Letter Amendment, each reference in the Parent Guaranty to "the Agreement" or
words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement, as amended by the Letter Amendment.
This Consent shall be governed by, and construed in accordance
with, the laws of the State of New York.
Delivery of an executed counterpart of a signature page of
this Consent by telecopier shall be effective as the delivery of a manually
executed counterpart of this Consent.
MARRIOTT INTERNATIONAL, INC. (to be
renamed SODEXHO MARRIOTT SERVICES,
INC.), as Parent Guarantor
By /s/ Robert Drury
-----------------------------------------
Name: Robert Drury
Title: Vice President and Treasurer
EXHIBIT 8
AMENDMENT NO. 1 TO THE CREDIT AGREEMENT
As of March 19, 1998
To the Lender Parties parties to the Credit Agreement referred to below and to
Societe Generale as the Administrative Agent for the Lender Parties and the
other Secured Parties thereunder (the "Administrative Agent") and Morgan
Guaranty Trust Company of New York as Documentation Agent for the Lender
Parties and the other Secured Parties thereunder (the "Documentation Agent")
Ladies and Gentlemen:
We refer to the Credit Agreement dated as of January 30, 1998
(the "Credit Agreement"), among Marriott International, Inc. (to be renamed
Sodexho Marriott Services, Inc., the "Borrower"), the Administrative Agent, the
Documentation Agent and each of you. Capitalized terms not otherwise defined in
this Letter Amendment shall have the same meanings as specified in the Credit
Agreement.
It is hereby agreed by you and us as follows:
SECTION 1. Amendments of the Credit Agreement. (a) Section 1.01 of the
Credit Agreement is hereby amended by amending the definition of "Debt" therein
by adding at the end of clause (i) thereof the following phrase:
"; provided, however, for purposes of calculating the
financial covenants in Section 5.04 hereof, the term "Debt"
shall exclude obligations in respect of surety bonds and
performance bonds with respect to client contracts or bids
therefor entered into by the Borrower or any of its
Subsidiaries in the ordinary course of business; provided,
further, that the term "Debt" shall include such surety bonds
and performance bonds to the extent they exceed 2% of
Consolidated net sales for the immediately preceding four
Fiscal Quarters if the Leverage Ratio (calculated by including
any amount of such surety bonds and performance bonds in
excess of 2% of Consolidated net sales for such period)
exceeds 3.0:1.0."
(b) Section 5.02(b) is hereby amended (i) by deleting the word "and" at
the end of clause (ix) thereof, (ii) by adding a new clause (x) to read as
follows:
"(x) Debt in respect of surety bonds and performance
bonds with respect to client contracts or bids therefor
entered into by the Borrower or any of its Subsidiaries in the
ordinary course of business; and"
(iii) by renumbering the existing clause (x) thereof as clause (xi), and (iv) by
deleting the parenthetical "(ix)" in clause (xi) and substituting therefor the
parenthetical "(x)".
(c) Schedule 4.01(b) to the Credit Agreement is hereby replaced with
Schedule 4.01(b) attached hereto.
SECTION 2. Conditions of Effectiveness of this Letter Amendment. This
Letter Amendment shall become effective as of the date first above written when
the Administrative Agent shall have received counterparts of this Letter
Amendment executed by the Borrower and the Required Lenders. This Letter
Amendment is subject to the provisions of Section 8.01 of the Credit Agreement.
SECTION 3. Reference to and Effect on the Loan Documents. (a) On and
after the effectiveness of this Letter Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in the Notes to "the
Credit Agreement", or words of like import referring to the Credit Agreement,
shall mean and be a reference to the Credit Agreement, as amended hereby.
(b) The Credit Agreement, as specifically amended by this Letter
Amendment, is and shall continue to be in full force and effect and is hereby in
all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this Letter Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of any Lender Party under the Credit Agreement, nor
constitute a waiver of any provision of the Credit Agreement.
SECTION 4. Costs and Expenses. The Borrower agrees to pay on demand all
costs and expenses of the Administrative agent in connection with the
preparation, execution, delivery and administration, modification and amendment
of this Letter Amendment (including, without limitation, the reasonable fees and
expenses of counsel for the Administrative Agent) in accordance with the terms
of Section 8.04(a) of the Credit Agreement.
SECTION 5. Execution in Counterparts. This Letter Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Letter Amendment by telecopier shall be effective as delivery of a manually
executed counterpart of this Letter Amendment.
SECTION 6. Governing Law. This Letter Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.
Very truly yours,
MARRIOTT INTERNATIONAL, INC. (to be
renamed SODEXHO MARRIOTT SERVICES,
INC.)
By /s/ Lawrence Hyatt
-------------------------------------
Name: Lawrence Hyatt
Title:
Consented and agreed to as of the date
first above written:
The Administrative Agent
SOCIETE GENERALE, as Administrative Agent
By /s/ Elizabeth Peck
----------------------------------------
Name: Elizabeth Peck
Title: Vice President
The Documentation Agent
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Documentation Agent
By /s/ John Mikolay
-----------------------------------------
Name: John Mikolay
Title: Vice President
The Initial Lenders and the Initial Issuing Banks
SOCIETE GENERALE
By /s/ Elizabeth Peck
-----------------------------------------
Name: Elizabeth Peck
Title: Vice President
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By /s/ John Mikolay
-----------------------------------------
Name: John Mikolay
Title: Vice President
THE BANK OF NEW YORK
By /s/ Ronald R. Reedy
-----------------------------------------
Title: Vice President
THE BANK OF NOVA SCOTIA
By /s/ J.R. Trimble
-----------------------------------------
Title: Senior Relationship Manager
BANQUE NATIONALE DE PARIS
By /s/ Lynn Walkoff
-----------------------------------------
Title:
By /s/ Gwen Abbott
-----------------------------------------
Title: Assistant Vice President
BANQUE PARIBAS
By /s/ Robert G. Carino
-----------------------------------------
Title: Vice President
By /s/ Duane Helkowski
-----------------------------------------
Title: Vice President
CIBC INC.
By /s/ John Livingston
-----------------------------------------
Title: Executive Director
CAISSE CENTRALE DES BANQUES
POPULAIRES
By /s/ Louis Orienti
-----------------------------------------
Title: Directeur Adjoint
By /s/ Stephane Pasquier
-----------------------------------------
Title: Foude de Pouvoirs Principal
THE CHASE MANHATTAN BANK
By /s/ Karen Sharf
-----------------------------------------
Title: Vice President
CITIBANK, N.A.
By /s/ Stuart G. Miller
-----------------------------------------
Title: Attorney-in-Fact
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By /s/ Marcus Edward
-----------------------------------------
Title: Vice President
By /s/ Sean Mounier
-----------------------------------------
Title: First Vice President
CREDIT AGRICOLE INDOSUEZ
By /s/ Craig Welch
-----------------------------------------
Title: First Vice President
By /s/ Cheryl Solometo
-----------------------------------------
Title: Vice President
CREDIT COMMERCIAL DE FRANCE
NEW YORK BRANCH
By
-----------------------------------------
Title:
By
-----------------------------------------
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By
-----------------------------------------
Title:
DG BANK, DEUTSCHE
GENOSSENSCHAFTSBANK
By /s/ Norah McCann
-----------------------------------------
Title: Senior Vice President
By /s/ Karen Brinkman
-----------------------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Ron Galitsky
-----------------------------------------
Title: Assistant Vice President
FIRST UNION NATIONAL BANK
By /s/ Mark B. Felker
-----------------------------------------
Title: Senior Vice President
MELLON BANK, N.A.
By /s/ Arlene S. Pedovitch
-----------------------------------------
Title: Vice President
NATEXIS BANQUE
By /s/ Pieter J. van Tudler
-----------------------------------------
Title: Vice President and Manager
By /s/ John Rigo
-----------------------------------------
Title: Assistant Vice President
NATIONSBANK, N.A.
By /s/ Marty Mitchell
-----------------------------------------
Title: Vice President
RIGGS BANK N.A.
By /s/ David Olsen
-----------------------------------------
Title: Vice President
THE ROYAL BANK OF SCOTLAND plc
By
-----------------------------------------
Title:
