-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Hf4V2QXlNOsSZA/mxUr2LKiUKeDwoahdOJsbzywpCJUOz/dVDu6JQeen/PynP3uS O798oODOWM+Yj9aFvvpIMQ== 0001005477-99-003735.txt : 19990817 0001005477-99-003735.hdr.sgml : 19990817 ACCESSION NUMBER: 0001005477-99-003735 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OGDEN CORP CENTRAL INDEX KEY: 0000073902 STANDARD INDUSTRIAL CLASSIFICATION: AIRPORTS, FLYING FIELDS & AIRPORT TERMINAL SERVICES [4581] IRS NUMBER: 135549268 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-03122 FILM NUMBER: 99691175 BUSINESS ADDRESS: STREET 1: TWO PENNSYLVANIA PLZ - 25TH FLR CITY: NEW YORK STATE: NY ZIP: 10121 BUSINESS PHONE: 2128686100 MAIL ADDRESS: STREET 1: TWO PENNSYLVANIA PLZ - 25TH FLR CITY: NEW YORK STATE: NY ZIP: 10121 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) - ---------- |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1999 - -------------------------------------------------------------------------------- OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to ____________________ Commission file number 1-3122 -------- Ogden Corporation ----------------- (Exact name of registrant as specified in its charter) Delaware 13-5549268 - ------------------------------- ------------------------------ (State or other jurisdiction of I.R.S. Employer Identification incorporation or organization) Number) Two Pennsylvania Plaza, New York, New York 10121 ------------------------------------------------ (Address or principal executive office) (Zip Code) (212)-868-6100 ------------------------------------------------ (Registrant's telephone number including area code) Not Applicable ------------------------------------------------ (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| APPLICABLE ONLY TO CORPORATE ISSUERS: The number of shares outstanding of each of the issuer's classes of common stock, as of June 30, 1999; 49,218,532 shares of Common Stock, $.50 par value per share. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS OGDEN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE SIX MONTHS FOR THE THREE MONTHS ENDED ENDED JUNE 30, JUNE 30, ---------------------- ---------------------- 1999 1998 1999 1998 --------- --------- --------- --------- (In Thousands of Dollars, Except per Share Data) Service revenues $ 557,058 $ 544,440 $ 292,483 $ 284,231 Net sales 214,005 259,720 131,066 143,898 Construction revenues 67,870 7,948 33,769 4,616 Net gain on disposition of businesses 18,431 45,222 3,500 39,710 --------- --------- --------- --------- Total revenues 857,364 857,330 460,818 472,455 --------- --------- --------- --------- Operating costs and expenses 425,937 426,924 206,682 231,132 Costs of goods sold 194,390 243,583 122,573 134,844 Construction costs 65,209 7,314 32,934 4,381 Selling, administrative and general expenses 60,192 59,449 32,356 30,428 Debt service charges 46,699 50,441 23,936 25,320 --------- --------- --------- --------- Total costs and expenses 792,427 787,711 418,481 426,105 --------- --------- --------- --------- Consolidated operating income 64,937 69,619 42,337 46,350 Equity in net income of investees and joint ventures 6,231 4,047 2,453 3,194 Interest income 4,980 7,046 1,813 3,506 Interest expense (19,690) (16,895) (10,106) (8,299) Other income (deductions)-net 5,267 172 5,108 (117) --------- --------- --------- --------- Income before income taxes, minority interests and the cumulative effect of change in accounting principle 61,725 63,989 41,605 44,634 Less: income taxes 23,457 24,316 15,811 17,151 minority interests 2,755 913 802 423 --------- --------- --------- --------- Income before cumulative effect of change in accounting principle 35,513 38,760 24,992 27,060 Cumulative effect of change in accounting principle (net of income taxes $1,313) (3,820) --------- --------- --------- --------- Net Income 31,693 38,760 24,992 27,060 --------- --------- --------- --------- Other comprehensive income, Net Of Tax: Foreign currency translation adjustments (7,357) (1,375) (1,152) (1,114) Unrealized holding gains(losses) arising during period (549) 103 (429) 48 --------- --------- --------- --------- Other comprehensive income (7,906) (1,272) (1,581) (1,066) --------- --------- --------- --------- Comprehensive income $ 23,787 $ 37,488 $ 23,411 $ 25,994 ========= ========= ========= ========= BASIC EARNINGS PER SHARE Income before cumulative effect of change in accounting principle $ .72 $ .77 $ .51 $ .54 Cumulative effect of change in accounting principle (.07) --------- --------- --------- --------- Net Income $ .65 $ .77 $ .51 .54 ========= ========= ========= ========= DILUTED EARNINGS PER SHARE Income before cumulative effect of change in accounting principle $ .71 $ .75 $ .49 $ .52 Cumulative effect of change in accounting principle (.07) --------- --------- --------- --------- Net Income $ .64 $ .75 $ .49 $ .52 ========= ========= ========= =========
OGDEN CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JUNE 30, DECEMBER 31, 1999 1998 ----------- ----------- (In Thousands of Dollars) ASSETS Current Assets: Cash and cash equivalents $ 100,196 $ 261,119 Marketable securities available for sale 44,685 Restricted funds held in trust 143,834 110,553 Receivables (less allowances: 1999, $21,889 and 1998, $30,595) 405,699 394,923 Inventories 30,985 31,100 Deferred income taxes 49,690 49,327 Other 79,560 62,742 ----------- ----------- Total current assets 809,964 954,449 Property, plant and equipment-net 2,156,811 1,987,643 Restricted funds held in trust 175,310 180,922 Unbilled service and other receivables 189,686 173,630 Unamortized contract acquisition costs 195,398 132,818 Goodwill and other intangible assets 164,626 130,031 Investments in and advances to investees and joint ventures 239,663 205,702 Other assets 159,035 157,648 ----------- ----------- Total Assets $ 4,090,493 $ 3,922,843 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Current Liabilities: Notes payable $ 25,641 $ 45,600 Current portion of long-term debt 43,513 30,232 Current portion of project debt 61,849 63,201 Dividends payable 15,415 15,403 Accounts payable 119,730 94,629 Federal and foreign income taxes payable 9,300 21,776 Accrued expenses, etc. 295,510 305,942 Deferred income 50,890 47,991 ----------- ----------- Total current liabilities 621,848 624,774 Long-term debt 497,710 391,287 Project debt 1,437,492 1,367,528 Deferred income taxes 399,968 396,648 Deferred income 196,168 201,563 Other liabilities 210,141 215,119 Minority interests 30,501 28,174 Convertible subordinated debentures 148,650 148,650 ----------- ----------- Total Liabilities 3,542,478 3,373,743 ----------- ----------- Shareholders' Equity: Serial cumulative convertible preferred stock, par value $1.00 per share; authorized 4,000,000 shares; shares outstanding: 41,316 in 1999 and 42,218 in 1998; net of treasury shares of 29,820 in 1999 and 1998,respectively 41 43 Common stock, par value $.50 per share; authorized, 80,000,000 shares; shares outstanding: 49,218,532 in 1999 and 48,945,989 in 1998, net of treasury shares of 4,486,603 and 4,561,963 in 1999 and 1998, respectively 24,609 24,473 Capital surplus 179,181 173,413 Earned surplus 368,903 367,984 Accumulated other comprehensive income (24,719) (16,813) ----------- ----------- Total Shareholders' Equity 548,015 549,100 ----------- ----------- Total Liabilities and Shareholders' Equity $ 4,090,493 $ 3,922,843 =========== =========== OGDEN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Six Months Ended Year Ended June 30, 1999 December 31, 1998 Shares Amounts Shares Amounts ---------------------- ---------------------- (In Thousands of Dollars, Except Per Share Amounts) Serial Cumulative Convertible Preferred Stock, Par Value $1.00 Per Share; Authorized 4,000,000 Shares: Balance at beginning of period 72,038 $ 73 74,166 $ 75 Shares converted into common stock (902) (2) (2,128) (2) ---------------------- ---------------------- Total 71,136 71 72,038 73 Treasury shares (29,820) (30) (29,820) (30) ---------------------- ---------------------- Balance at end of period (aggregate involuntary liquidation value - 1999 $833) 41,316 41 42,218 43 ---------------------- ---------------------- Common Stock, Par Value $.50 Per Share; Authorized, 80,000,000 Shares: Balance at beginning of year 53,507,952 26,754 53,430,246 26,715 Exercise of stock options 65,000 33 Shares issued for acquisition 191,800 96 Conversion of preferred shares 5,383 2 12,706 6 ---------------------- ---------------------- Total 53,705,135 26,852 53,507,952 26,754 ---------------------- ---------------------- Treasury shares at beginning of year 4,561,963 2,281 3,135,123 1,568 Purchase of treasury shares 102,000 51 2,121,100 1,060 Exercise of stock options (177,360) (89) (694,260) (347) ---------------------- ---------------------- Treasury shares at end of period 4,486,603 2,243 4,561,963 2,281 ---------------------- ---------------------- Balance at end of period 49,218,532 24,609 48,945,989 24,473 ---------------------- ---------------------- Capital Surplus: Balance at beginning of period 173,413 212,383 Exercise of stock options 3,323 16,355 Shares issued for acquisition 4,904 Purchase of treasury shares (2,458) (55,321) Conversion of preferred shares (1) (4) --------- --------- Balance at end of period 179,181 173,413 --------- --------- Earned Surplus: Balance at beginning of period 367,984 343,237 Net income 31,693 86,970 --------- --------- Total 399,677 430,207 --------- --------- Preferred dividends-per share 1999, $1.6752, 1998, $3.35 70 144 Common dividends-per share 1999, $.625 1998, $1.25 30,704 62,079 --------- --------- Total dividends 30,774 62,223 --------- --------- Balance at end of period 368,903 367,984 --------- --------- Cumulative Translation Adjustment-Net (23,389) (16,032) --------- --------- Minimum Pension Liability Adjustment (716) (716) --------- --------- Net Unrealized Loss on Securities Available For Sale (614) (65) --------- --------- CONSOLIDATED SHAREHOLDERS' EQUITY $ 548,015 $ 549,100 ========= =========
OGDEN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30 ---------------------- 1999 1998 --------- --------- (In Thousands of Dollars) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 31,693 $ 38,760 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and amortization 62,361 54,609 Deferred income taxes 14,632 9,416 Cumulative effect of change in accounting principle 3,820 Other (37,784) (44,694) Management of Operating Assets and Liabilities: Decrease (Increase) in Assets: Receivables (5,225) 17,931 Inventories 808 (2,879) Other assets (22,329) (20,097) Increase (Decrease) in Liabilities: Accounts payable 30,808 (10,359) Accrued expenses (9,954) (22,216) Deferred income (143) 202,504 Other liabilities (33,365) 9,667 --------- --------- Net cash provided by operating activities 35,322 232,642 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of business 19,827 79,857 Proceeds from sale of property, plant and equipment 3,283 1,074 Proceeds from sale of marketable securities available for sale 44,685 Entities purchased, net of cash acquired (133,733) Investments in Energy facilities (21,480) (12,095) Other capital expenditures (50,544) (53,629) Decrease (increase) in other receivables (7,573) 3,399 Distribution from investees and joint ventures 10,500 3,949 Increases in investments in and advances to investees and joint ventures (32,187) (38,438) Other investing activities (10,000) --------- --------- Net cash used in investing activities (177,222) (15,883) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings for Energy facilities 3,816 118,063 Other new debt 96,402 68,192 Increase in funds held in trust (27,674) (205,769) Payment of debt (58,384) (107,200) Dividends paid (30,762) (31,477) Purchase of treasury shares (2,509) (22,167) Proceeds from exercise of stock options 3,412 9,698 Other financing activities (3,324) (2,858) --------- --------- Net cash used in financing activities (19,023) (173,518) --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (160,923) 43,241 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 261,119 185,671 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 100,196 $ 228,912 ========= ========= OGDEN CORPORATION AND SUBSIDIARIES JUNE 30, 1999 ITEM 1 - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. However, in the opinion of Management, all adjustments consisting of normal recurring accruals necessary for a fair presentation of the operating results have been included in the statements. On January 1, 1999 the Company adopted the American Institute of Certified Public Accountants (AICPA) Statement of Position (SOP) 98-5 "Reporting on the Costs of Start-Up Activities". This SOP establishes accounting standards for these costs and requires they generally be expensed as incurred. The effect of the adoption of this SOP was a charge of $3,820,000 net of income taxes of $1,313,000 recorded as a cumulative effect of change in accounting principle in the accompanying financial statements. The accompanying financial statements for prior periods have been reclassified as to certain amounts to conform with the 1999 presentation. ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS: Operations: Revenues and income from operations (expressed in thousands of dollars) by segment for the six months and three months ended June 30, 1999 and 1998 were as follows:
Information Concerning Six Months Ended Three Months Ended Business Segments June 30, June 30, --------------------------------------------------- 1999 1998 1999 1998 Revenues: Entertainment $ 255,642 $ 218,032 $ 150,059 $ 124,701 Aviation 114,828 198,503 58,689 118,217 Energy 449,453 389,453 232,385 206,245 Other 37,441 51,342 19,685 23,292 --------- --------- --------- --------- Total Revenues 857,364 857,330 460,818 472,455 --------- --------- --------- --------- Income (Loss) from Operations: Entertainment 10,469 14,816 8,446 9,145 Aviation 18,108 37,493 9,147 29,883 Energy 48,057 38,597 31,243 23,020 Other (2,627) (706) (1,352) (694) --------- --------- --------- --------- Total Income from Operations 74,007 90,200 47,484 61,354 Equity in net income (loss) of investees and joint ventures: Entertainment (2,623) (2,436) (1,256) (1,348) Aviation 2,910 (2,264) 1,235 (3,292) Energy 5,944 8,747 2,474 7,834 Other -- -- -- -- --------- --------- --------- --------- Total 80,238 94,247 49,937 64,548 Corporate unallocated expenses - net (3,803) (20,409) (39) (15,121) Corporate interest - net (14,710) (9,849) (8,293) (4,793) --------- --------- --------- --------- Income Before Income Taxes and Minority Interests $ 61,725 $ 63,989 $ 41,605 $ 44,634 ========= ========= ========= =========
Revenues for the first six months of 1999 were $34,000 higher than the comparable period of 1998. This was primarily due to an increase of $60,000,000 in the Energy segment chiefly associated with an increase of $59,900,000 in construction revenues primarily reflecting increased activity in the Environmental group and in Waste-to-Energy retrofits, increased revenues in the Independent Power group overseas operations primarily reflecting operations acquired in 1999 and a gain on the sale of a joint venture interest. These increases were partially offset by lower revenue in Waste-to-Energy chiefly associated with the closing of the Lawrence, Massachusetts facility and the amortization of the prepayment of a power sales agreement, and in the Environmental group reflecting lower activity in domestic and Spanish operations. The Entertainment segment's revenues were $37,600,000 higher primarily due to the acquisition of Casino Iguazu in late 1998, five Water Park attractions in 1999, increased activity in amphitheater concert operations, the gain on the sale of certain contracts as well as a gain associated with the renegotiation of a management contract at Arrowhead Pond, partially offset by lower activity in food and beverage operations at several shopping mall locations. These increases in Energy and Entertainment revenues were offset by a decrease of $83,700,000 in the Aviation segments' revenues chiefly associated with the sale of inflight catering operations in June 1998 which had revenues of $68,300,000 in 1998 and an adjusted gain on the sale of $36,400,000 in the first six months of 1998, partially offset by the acquisition of the Flight Services Group in March 1999, Hong Kong operations which commenced in the third quarter of 1998, and increased activity in European and Domestic ground services and fueling operations. The Other segments' revenues decreased $13,900,000 chiefly associated with lower activity at Datacom (formerly Atlantic Design) and on government contracts. Consolidated operating income for the first six months of 1999 was $4,700,000 lower than the comparable period of 1998 primarily due to lower income from operations in the Aviation segment of $19,400,000 primarily reflecting the adjusted gain on the sale of the inflight catering operations in the second quarter of 1998 reduced by provisions for restructuring European operations, certain legal claims and other charges in 1998 which were partially offset by increased activity in domestic ground handling and fueling operations and in international operations as well as the acquisition of the Flight Services Group in March 1999. The Entertainment segment's income from operations was $4,400,000 lower chiefly associated with losses incurred at several site based locations (Tinseltown, Casino Iguazu and American Wilderness), start up losses at several shopping malls and certain fees received in 1998, partially offset by gain on the renegotiation of the management contract at Arrowhead Pond of $6,025,000, and the gain on the sale of certain amphitheater contracts of $7,200,000. The Other segments' income from operations was $1,900,000 lower primarily reflecting additional income recognized in 1998 on the sale of Facility Services operations which were sold in 1997, partially offset by lower operating losses in 1999 at Datacom. These reductions in income from operations for the Aviation, Entertainment and Other segments were partially offset by an increase of $9,500,000 in the Energy segment income from operations primarily due to an increase of $17,700,000 in Independent Power operations chiefly associated with a gain of $4,800,000 on the sale of a joint venture interest, adjustments of $9,000,000 associated with the acquisition of the remaining 50% interest in a joint venture and increased income in certain operations of $3,500,000. These increases were partially offset by lower income of $5,100,000 in Waste-to-Energy chiefly associated with the closing of the Lawrence facility, reduced activity at several other facilities, the amortization of the prepayment of a power sales agreement and a gain in 1998 of $9,000,000 on the sale of a power sales agreement partially offset by a gain of $9,300,000 on the renegotiation of a facility contract in 1999. Environmental operations had lower income of $3,100,000 reflecting decreased foreign and domestic activity. Debt service charges decreased $3,700,000 primarily due to lower debt outstanding on various facilities caused by redemption, refinancing and maturities of bonds. The Energy segment had interest rate swap agreements entered into as hedges against interest rate exposure on adjustable rate project debt that resulted in additional debt service expense of $1,141,000 and $355,000 for the six months ended June 30, 1999 and 1998, respectively. Two of these interest rate swap agreements were terminated in the third and fourth quarters of 1998. Corporate unallocated expenses - net for the six months ended June 30, 1999 were $16,600,000 lower than the comparable period of 1998. This decrease primarily reflects restructuring costs, certain litigation and proxy related charges provided for in the second quarter of 1998 and other income reflecting a gain of $5,100,000 on the sale of an investment in June 1999. Interest income for the six months ended June 30, 1999 was $2,100,000 lower than the comparable period of 1999 primarily reflecting the repayment of loans to customers and joint ventures, notes received from the sale of various operations, and interest received in 1998 on state tax refunds. Interest expense was $2,800,000 higher chiefly associated with increased borrowings relating to overseas and domestic acquisition and expansion activities. Ogden has one interest rate swap agreement covering a notional amount of $2,400,000 which expires November 30, 2000 and was entered into to convert Ogden's variable rate debt to a fixed rate. Another swap agreement expired December 16, 1998 and was entered into to convert Ogden's fixed rate $100,000,000 9.25% debentures to a variable rate. Additional interest expense relating to these swap agreements was not significant in the first six months of 1998 and 1999, respectively. Equity in income of investees and joint ventures for the six months ended June 30, 1999 was $2,200,000 higher than the comparable period of 1998 primarily reflecting increased earnings in Aviation joint ventures which were affected by the write off of start-up costs at Argentina and Colombia joint ventures in 1998 partially offset by decreased earnings of Pacific Energy Inc. joint ventures, which included the buy out of an energy sales agreement with respect to a 50% joint venture in 1998. The effective income tax rate for the first six months of 1999 and 1998 was 38% for both periods. Revenues for the three months ended June 30, 1999 were $11,600,000 lower than the comparable period of 1998. This decrease was primarily due to a decrease of $59,500,000 in the Aviation segment chiefly associated with the sale of the inflight catering business in June 1998 which had revenues of $35,100,000 in 1998 and an adjusted gain on the sale of $36,400,000 partially offset by the acquisition of Flight Services Group in March 1999, the start up of Hong Kong operations in late 1998 and increased activity in ground services operations. The Other segment's revenues were $3,600,000 lower primarily reflecting reduced activity at Datacom. These decreases in the Aviation and Other segments' revenues were partially offset by an increase of $26,100,000 in the Energy segment chiefly associated with an increase of $29,200,000 in construction revenues primarily reflecting increased activity in the Environmental Group and in Waste-to-Energy retrofits and an increase of $7,400,000 in Independent Power operations chiefly associated with operations acquired in 1999. These increases were partially offset by reduced operating activity in Waste-to-Energy operations chiefly associated with the closing of the Lawrence facility and the amortization of the prepayment of a power sales agreement and in the Environmental group reflecting lower activity in domestic and foreign operations. The Entertainment segment's revenues were $25,400,000 higher primarily reflecting increased concert activity, the acquisition of several new contracts, Casino Iguazu, four Water Parks and the gain on the sale of certain Amphitheater contracts. Consolidated operating income for the three months ending June 30, 1999 was $4,000,000 lower than the comparable period of 1998. The Aviation segment's income from operations was $20,700,000 lower primarily reflecting the adjusted gain on the sale of inflight catering operations in June 1998 reduced by provisions for restructuring European operations, certain legal claims and other charges partially offset by increased activity in domestic and international fueling and ground services operations and the acquisition of Flight Services Group. The Entertainment segment's income from operations was $700,000 lower chiefly associated with losses incurred at several site based locations (Tinseltown, Casino Iguazu, American Wilderness) and certain fees and bad debt recovery in 1998 partially offset by the gain on the sale of certain Amphitheater contracts. The Other segment's income from operations was $700,000 lower primarily reflecting charges relating to the sale of Facility Services, partially offset by increased margins at Datacom. These reductions in the Entertainment, Aviation and Other segments were partially offset by an increase in income from operations of $8,200,000 in the Energy segment chiefly associated with an increase of $13,300,000 in Independent Power group's income from operations reflecting adjustments of $9,000,000 associated with the acquisition of the remaining 50% of a joint venture, and increased operating income in certain subsidiaries, partially offset by decreased operating income of $5,300,000 in the Waste-to-Energy group primarily reflecting the closing of the Lawrence facility, the amortization of the prepayment of a power sales agreement and a gain of $9,300,000 on the renegotiation of a facility contract in 1999 partially offset by a gain in 1998 of $9,000,000 on the sale of a power sales agreement and lower income of $1,500,000 in Environmental operations reflecting lower domestic activity and a loss in Spanish operations. Debt service charges decreased $1,400,000 due primarily to lower debt outstanding on various facilities caused by redemption, refinancing and maturities of bonds. The Energy segment had interest rate swap agreements entered into as hedges against interest rate exposure on adjustable rate project debt that resulted in additional debt service expense of $413,000 and $108,000 for the three months ended June 30, 1999 and 1998, respectively. Two of these interest rate swap agreements were terminated in the third and fourth quarters of 1998. Corporate unallocated expenses - net for the three months ended June 30, 1999 were $15,100,000 lower than the comparable period of 1998. This decrease primarily reflects restructuring costs, certain litigation and proxy related charges provided for in the second quarter of 1998 and other income reflecting a gain of $5,100,000 on the sale of an investment in June 1999. Interest income for the three months ended June 30, 1999 was $1,700,000 lower than the comparable period of 1998 primarily reflecting the repayment of loans by customers and joint ventures, notes received from the sale of various operations and interest received in 1998 on state tax refunds. Interest expense was $1,800,000 higher primarily reflecting increased borrowings relating to overseas and domestic acquisitions and expansion activity. Ogden had one interest rate swap agreement covering a notional amount of $2,400,000 which expires November 30, 2000 and was entered into to convert Ogden's variable rate debt to a fixed rate. Another swap agreement expired December 16, 1998. Additional interest expense relating to these swap agreements was not significant for the three months ended June 30, 1999 and 1998, respectively. Equity in net income of investees and joint ventures for the three months ended June 30, 1999 was $700,000 lower than the comparable period of 1998 chiefly associated with the operations of Pacific Energy joint ventures which included the buy out of an energy sales agreement with respect to a 50% joint venture in 1998, partially offset by increased income in Aviation overseas joint ventures which were affected by the write off of start-up costs at Argentina and Colombia joint ventures in 1998. The effective income tax rate for the three months ended June 30, 1999 was 38% compared with 38.4% for the comparable period of 1998. This decrease of .4% was chiefly associated with an increase in non-deductible permanent items for U.S. purposes. Capital Investment and Commitments: For the six months ended June 30, 1999, capital investments amounted to $72,000,000, of which $21,400,000, inclusive of restricted funds transferred from funds held in trust, was for Energy facilities and $50,600,000 was for normal replacement and growth in Entertainment ($37,100,000), Aviation ($5,600,000), Energy ($6,900,000), and Other ($1,000,000) operations. At June 30, 1999, capital commitments amounted to $164,600,000, which included $107,100,000 for normal replacement, modernization, and growth in Entertainment ($93,000,000), Aviation ($3,400,000), and Energy ($10,700,000) operations. Energy also has a commitment to pay, in 2008, $10,600,000 for a service contract extension at a waste-to-energy facility. Also included was $46,900,000 for Energy's coal-fired power project in the Philippines, a natural gas-fired power plant in Bangladesh, and an investment in a joint venture, reflecting $25,200,000 for the remaining mandatory equity contributions, $5,700,000 for contingent equity contributions, and $16,000,000 for standby letters of credit in support of debt service reserve requirements. Funding for the remaining mandatory equity contributions is being provided through bank credit facilities, which must be repaid in June 2000 through December 2001. The Corporation also has a $7,300,000 contingent equity contribution in Entertainment ($2,500,000) and Aviation ($4,800,000) joint ventures. The Corporation has entered into an agreement to acquire Volume Services of America, Inc. for a purchase price of $127,000,000 plus approximately $215,000,000 in assumed debt subject to all regulatory approvals and certain other conditions. A non-refundable payment of $10,000,000 was made on the signing of this agreement. In addition, compliance with the standards and guidelines under the Clean Air Act Amendments of 1990 may require further Energy capital expenditures of approximately $40,000,000 through December 2000 subject to the final time schedules determined by the individual states in which the Corporation's waste-to-energy facilities are located. Ogden and certain of its subsidiaries have issued or are party to performance bonds and guarantees and related contractual obligations undertaken mainly pursuant to agreements to construct and operate certain waste-to-energy, entertainment, and other facilities. In the normal course of business, they are involved in legal proceedings in which damages and other remedies are sought. In connection with certain contractual arrangements, Ogden has agreed to provide a vendor with a specified amount of business over a two-year period. If this amount is not provided the Corporation may be liable for prorated damages of up to approximately $3,000,000. Management does not expect that these contractual obligations, legal proceedings, or any other contingent obligations incurred in the normal course of business will have a material adverse effect on Ogden's Consolidated Financial Statements. During 1994, a subsidiary of Ogden entered into a 30-year facility management contract, pursuant to which it agreed to advance funds to a customer, and if necessary, to assist the customer's refinancing of senior secured debt incurred in connection with the construction of the facility. Ogden is obligated to purchase such senior secured debt in the amount of $97,050,000 on December 23, 2002, if the debt is not refinanced prior to that time. Ogden is also required to repurchase the outstanding amount of certain subordinated secured debt of such customer on December 23, 2002. At June 30, 1999, the amount outstanding was $51,625,000. In addition, on June 30, 1999, the Corporation has guaranteed $3,400,000 of senior secured term debt of an affiliate and principal tenant of this customer and has guaranteed up to $3,400,000 of the tenant's secured revolving debt. In addition, Ogden is obligated to purchase $20,381,000 of the tenant's secured subordinated indebtedness on January 29, 2004, if such indebtedness has not been repaid or refinanced prior to that time. Ogden has guaranteed approximately $4,000,000 of borrowings of a joint venture in which Ogden has an equity interest. Management does not expect that these arrangements will have a material adverse effect on Ogden's Consolidated Financial Statements. Liquidity/Cash Flow: Net cash provided from operating activities was $197,300,000 lower than the comparable period of 1998 primarily reflecting a decrease in deferred income of $202,600,000 chiefly associated with the prepayment of a power sales agreement for the Haverhill waste-to-energy plant in 1998. Net cash used in investing activities increased $161,300,000 primarily reflecting the purchase of Energy operations in the Philippines and Thailand and the remaining 50% interest in a joint venture as well as the Flight Services group and five Water Parks in the United States and Brazil amounting to $133,700,000, a decrease in proceeds from sale of businesses of $57,800,000, an increase in capital expenditures of $6,300,000, an increase of $10,000,000 in other investments, partially offset by the proceeds from the sale of marketable securities of $44,700,000. Net cash used in financing activities was $154,500,000 lower primarily reflecting a reduction of funds held in trust of $178,100,000 chiefly associated with the prepayment of a power sales agreement in 1998, and a decrease of $19,700,000 for the purchase of treasury shares partially offset by a net decrease of $37,200,000 in debt chiefly associated with acquisitions and $6,300,000 lower proceeds from the exercise of stock options. Exclusive of changes in Energy facility construction activities and the contracts discussed herein, the Corporation's other types of contracts are not expected to have a material effect on liquidity. Cash required for investing and financing activities is expected to be satisfied from operating activities; available funds, including short-term investments; proceeds from the sale of noncore businesses; proceeds from the sale of debt or equity securities; and the Corporation's unused credit facilities to the extent needed. Debt service associated with project debt of waste-to-energy facilities, which is an explicit component of a client community's obligation under its service agreement, is paid as it is billed and collected. At June 30, 1999, the Corporation had $100,200,000 in cash and cash equivalents and unused revolving credit lines of $160,000,000. In 1998, Ogden's Board of Directors authorized the purchase of shares of the Corporation's common stock in an amount up to $200,000,000. Through June 30, 1999, 2,223,000 shares of common stock were purchased for $58,891,000. Year 2000 Issues: Background - The term `Year 2000 issue' generally refers to the problems that may occur from the improper processing of date sensitive calculations, date comparisons, and leap year determination by computers and other machinery containing computer chips (i.e., "embedded systems"). In an effort to save expensive memory and processing time, historically most of the world's computer hardware and software used only two digits to identify the year in a date. If not corrected or replaced, many systems will fail to distinguish between the years `2000' and `1900' and will incorrectly process related date information. State of Readiness - Ogden has established a Year 2000 Project that is actively addressing its Year 2000 issues. The project is comprised of four phases: awareness, assessment, action, and anticipation. The awareness phase included the education of the Corporation's Board of Directors, management, and staff regarding the Year 2000 issue and the Corporation's strategy to address the problem. The awareness phase of the project is completed. The objective of the project's assessment phase is to inventory and assess the Year 2000 compliance of Ogden's internal information technology and embedded systems, as well as to ascertain the compliance of the products and services provided to the Corporation by third parties. Ogden's internal assessment is complete. The assessment of third parties on which the Corporation relies for key products and services is now considered an iterative process that will continue through the end of 1999. Ogden's action phase includes the prioritization, remediation, and testing of Year 2000 solutions. The Corporation is performing the remediation of all its mission critical systems, through a series of projects with completion dates between January 1997 and November 1999. This phase is winding down. The fourth phase of Ogden's Year 2000 Project, the anticipation phase, includes the development and implementation of contingency plans for mission critical business functions. The anticipation phase of the project has begun and is expected to continue throughout 1999. Ogden has made considerable progress towards Year 2000 compliance, as a result of it's initiative to improve access to business information through the implementation of common, integrated computing systems across the operations of the Corporation. Early in the process, Ogden adopted the strategy of implementing industry standard compliant packages, rather than remediate the code of its legacy systems. This initiative commenced in 1996, with the replacement of Ogden's domestic administrative systems with the PeopleSoft systems and the upgrade of associated infrastructure. The implementations of these Year 2000 compliant systems are completed. Additional efforts to replace or upgrade the international administrative systems and a variety of key operating systems are on schedule for completion. Ogden has not deferred any specific information technology project as a result of the implementation of the Year 2000 Project. Costs - The total cost associated with resolving the Corporation's Year 2000 issues is not expected to be material to the Company's financial condition. Based on the assessments and remediation plans, the estimated costs of the Company's Year 2000 Project are $11,200,000. Ogden has spent $4,500,000 to date, and anticipates the majority of the cost being incurred during the summer months. Because of Ogden's strategy to implement or upgrade a number of systems (e.g., PeopleSoft) as part of its initiative to improve access to key business information, those costs of implementation are not included in these estimates. Risks - The Securities and Exchange Commission requires that public companies forecast the most reasonably likely worst case Year 2000 scenario. Based on the assessment efforts to date, the Company does not believe that the Year 2000 issue will have a material adverse effect on its financial condition or results of operations. The Company operates a large number of geographically dispersed sites and has a large supplier base and believes that these factors will mitigate any adverse impact. The Company's beliefs and expectations, however, are based on certain assumptions and expectations that ultimately may prove to be inaccurate. The Company has identified that a significant disruption in the supply chain represents the most reasonably likely worst case Year 2000 scenario. Potential sources of risk include (a) the inability of principal suppliers and providers, to be Year 2000 ready, which could result in delays in deliveries from such suppliers and (b) disruption of the Company's ability to provide products and services as a result of a general failure of systems and necessary infrastructure such as electricity supply. The Company is preparing contingency plans around an assumed period of disruption to the supply chain, to reduce the impact of significant failure. Contingency Plans - Ogden's Year 2000 project strategy includes the development of contingency plans for any mission critical business functions determined to be at risk. While Ogden is not presently aware of any significant exposure, there can be no assurances that all Year 2000 remediation processes will be completed and properly tested before the Year 2000, or that contingency plans will sufficiently mitigate the risk of a Year 2000 compliance problem. Ogden has begun the development of its contingency plan. The contingency planning process is an ongoing one which will continue through 1999 as Ogden obtains relevant Year 2000 compliance information resulting from its internal remediation and testing efforts, as well as from third parties. Any statements in this communication, including but not limited to the "Year 2000 Issue" discussion, which may be considered to be "forward-looking statements," as that term is defined in the Private Securities Litigation Reform Act of 1995, are subject to certain risk and uncertainties. The factors that could cause actual results to differ materially from those suggested by any such statements include, but are not limited to, those discussed or identified from time to time in the Corporation's public filings with the Securities and Exchange Commission and more generally, general economic conditions, including changes in interest rates and the performance of the financial markets; changes in domestic and foreign laws, regulations, and taxes; changes in competition and pricing environments; and regional or general changes in asset valuations. PART II - OTHER INFORMATION Item 1. Legal Proceedings Ogden Corporation and its subsidiaries (the "Company") are parties to various legal proceedings involving matters arising in the ordinary course of business. The Company does not believe that there are any pending legal proceedings for damages against the Company, other than ordinary routine litigation incidental to its business, the outcome of which would have a material adverse effect on the Company on a consolidated basis. (a) Environmental Matters The Company conducts regular inquiries of its subsidiaries regarding litigation and environmental violations which include determining the nature, amount and likelihood of liability for any such claims, potential claims or threatened litigation. In the ordinary course of its business, the Company may become involved in Federal, state, and local proceedings relating to the laws regulating the discharge of materials into the environment and the protection of the environment. These include proceedings for the issuance, amendment, or renewal of the licenses and permits pursuant to which a Company subsidiary operates. Such proceedings also include actions brought by individuals or local governmental authorities seeking to overrule governmental decisions on matters relating to the subsidiaries' operations in which the subsidiary may be, but is not necessarily, a party. Most proceedings brought against the Company by governmental authorities or private parties under these laws relate to alleged technical violations of regulations, licenses, or permits pursuant to which a subsidiary operates. The Company believes that such proceedings will not have a material adverse effect on the Company's consolidated financial statements. The Company's operations are subject to various Federal, state and local environmental laws and regulations, including the Clean Air Act, the Clean Water Act, the Comprehensive Environmental Response Compensation and Liability Act (CERCLA) and Resource Conservation and Recovery Act (RCRA). Although the Company operations are occasionally subject to proceedings and orders pertaining to emissions into the environment and other environmental violations, the Company believes that it is in substantial compliance with existing environmental laws and regulations. In connection with certain previously divested operations, the Company may be identified, along with other entities, as being among potentially responsible parties responsible for contribution for costs associated with the correction and remediation of environmental conditions at various hazardous waste disposal sites subject to CERCLA. In certain instances the Company may be exposed to joint and several liability for remedial action or damages. The Company's ultimate liability in connection with such environmental claims will depend on many factors, including its volumetric share of waste, the total cost of remediation, the financial viability of other companies that also sent waste to a given site and its contractual arrangement with the purchaser of such operations. II-1 The potential costs related to such matters and the possible impact on future operations are uncertain due in part to the complexity of government laws and regulations and their interpretations, the varying costs and effectiveness of cleanup technologies, the uncertain level of insurance or other types of recovery, and the questionable level of the Company's responsibility. Although the ultimate outcome and expense of environmental remediation is uncertain, the Company believes that required remediation and continuing compliance with environmental laws will not have a material adverse effect on the Company's consolidated financial statements. Item 4. Submission of Matters to a Vote of Security Holders (a) The Annual Meeting of Shareholders of Ogden Corporation was held on May 20, 1999. (b) Name of Each Director Elected Name of Each other ----------------------------- Director whose Term of Office Continued ------------------ George L. Farr David M. Abshire (2000) Jeffrey F. Friedman Norman G. Einspruch (2000) Helmut Volcker Attallah Kappas (2000) Homer A. Neal (2000) R. Richard Ablon (2001) Judith D. Moyers (2001) Robert E. Smith (2001) Anthony J. Bolland (2001) (c)(i) Proposal 1: Election of three directors for a three year term. Name Votes For Votes Withheld ---- --------- -------------- George L. Farr 37,078,380 5,981,507 Jeffrey F. Friedman 37,076,743 5,983,144 Helmut Volcker 37,071,842 5,988,045 (ii) Proposal 2: Proposal to amend Section 6. of Ogden's Restated Certificate of Incorporation to eliminate the provisions for the classification of Ogden's Board of Directors. For Against Abstain Broker Non-Votes --- ------- ------- ---------------- 34,831,709 2,387,468 208,576 5,644,110 (iii) Proposal 3: Approval of the Ogden 1999 Stock Option Plan. II-2 For Against Abstain Broker Non-Votes --- ------- ------- ---------------- 32,167,824 5,003,586 256,343 5,644,110 (iv) Proposal 4: Approval of the CEO Formula Bonus Plan. For Against Abstain Broker Non-Votes --- ------- ------- ---------------- 39,072,044 3,689,019 310,800 -0- (v) Proposal 5: Ratification of the selection of Deloitte & Touche LLP as independent public accountants of the corporation and its subsidiaries for the year 1999: For Against Abstain Broker Non-Votes --- ------- ------- ---------------- 42,670,661 283,357 117,845 -0- Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 2 Plans of Acquisition, Reorganization, Arrangement, Liquidation or Succession. 2.1 Agreement and Plan of Merger, dated as of October 31, 1989, among Ogden, ERCI Acquisition Corporation and ERC International, Inc.* 2.2 Agreement and Plan of Merger among Ogden Corporation, ERC International Inc., ERC Acquisition Corporation and ERC Environmental and Energy Services Co., Inc. dated as of January 17, 1991.* 2.3 Amended and Restated Agreement and Plan of Merger among Ogden Corporation, OPI Acquisition Corporation sub. and Ogden Projects, Inc., dated as of September 27, 1994.* 3 Articles of Incorporation and By-Laws. 3.1 Ogden's Restated Certificate of Incorporation as amended.* 3.2 Ogden's By-Laws, as amended through April 8, 1998.* 4 Instruments Defining Rights of Security Holders. II-3 4.1 Fiscal Agency Agreement between Ogden and Bankers Trust Company, dated as of June 1, 1987 and Offering Memorandum dated June 12, 1987, relating to U.S. $85 million Ogden 6% Convertible Subordinated Debentures, Due 2002.* 4.2 Fiscal Agency Agreement between Ogden and Bankers Trust Company, dated as of October 15, 1987, and Offering Memorandum, dated October 15, 1987, relating to U.S. $75 million Ogden 5-3/4% Convertible Subordinated Debentures, Due 2002.* 4.3 Indenture dated as of March 1, 1992 from Ogden Corporation to The Bank of New York, Trustee, relating to Ogden's $100 million debt offering.* 10 Material Contracts 10.1 (a) U.S. $95 million Term Loan and Letter of Credit and Reimbursement Agreement among Ogden, the Deutsche Bank AG, New York Branch and the signatory Banks thereto, dated March 26, 1997.* (b) Ogden $200 million Credit Agreement by and among Ogden, The Bank of New York, as Agent and the signatory Lenders thereto dated as of June 30, 1997.* 10.2 Rights Agreement between Ogden Corporation and Manufacturers Hanover Trust Company, dated as of September 20, 1990.*. 10.3 Executive Compensation Plans and Agreements. (a) Ogden Corporation 1990 Stock Option Plan.* (i) Ogden Corporation 1990 Stock Option Plan as Amended and Restated as of January 19, 1994.* (ii) Amendment adopted and effective as of September 18, 1997.* (a) (a) Ogden Corporation 1999 Stock Option Plan, as amended. (b) Ogden Services Corporation Executive Pension Plan.* (c) Ogden Services Corporation Select Savings Plan Amendment and Restatement as of January 1, 1995.* II-4 (i) Amendment Number One to the Ogden Services Corporation Select Savings Plan as amended and restated January 1, 1995, effective January 1, 1998.* (d) Ogden Services Corporation Select Savings Plan Trust Amendment and Restatement as of January 1, 1995.* (e) Ogden Services Corporation Executive Pension Plan Trust.* (i) Ogden Services Corporation Executive Pension Plan Trust Amendment Number One. (f) Changes effected to the Ogden Profit Sharing Plan effective January 1, 1990.* (g) Ogden Profit Sharing Plan as amended and restated effective as of January 1, 1995.* (h) Ogden Corporation Core Executive Benefit Program.* (i) Ogden Projects Pension Plan.* (j) Ogden Projects Profit Sharing Plan.* (k) Ogden Projects Supplemental Pension and Profit Sharing Plans.* (l) Ogden Projects Core Executive Benefit Program.* (m) Form of amendments to the Ogden Projects, Inc. Pension Plan and Profit Sharing Plans effective as of January 1, 1994.* (i) Form of amended Ogden Projects Profit Sharing Plan effective as of January 1, 1994.* (ii) Form of amended Ogden Projects Pension Plan, effective as of January 1, 1994.* (n) Ogden Corporation Amended and Restated CEO Formula Bonus Plan.* (o) Ogden Key Management Incentive Plan.* II-5 10.4 Employment Agreements (a) Employment Letter Agreement between Ogden Corporation and Lynde H. Coit, Senior Vice President and General Counsel, dated March 1, 1999.* (b) Employment Agreement between R. Richard Ablon, President, Chairman and C.E.O., and Ogden dated as of January 1, 1998.* (c) Separation Agreement between Ogden and Philip G. Husby, Senior Vice President and C.F.O., dated as of September 17, 1998.* (d) Employment Agreement between Scott G. Mackin, Executive Vice President and Ogden Corporation dated as of October 1, 1998.* (e) Employment Agreement between Ogden Corporation and David L. Hahn, Senior Vice President - Aviation, dated December 1, 1995.* (i) Letter Amendment to Employment Agreement between Ogden Corporation and David L. Hahn, Senior Vice President - Aviation effective as of October 1, 1998.* (f) Employment Agreement between Ogden Corporation and Rodrigo Arboleda, Senior Vice President dated January 1, 1997.* (i) Letter Amendment to Employment Agreement between Ogden Corporation and Rodrigo Arboleda, Senior Vice President, effective as of October 1, 1998.* (g) Employment Agreement between Ogden Projects, Inc. and Bruce W. Stone, dated June 1, 1990.* (h) Employment Agreement between Ogden Corporation and Quintin G. Marshall, Senior Vice President - Corporate Development, dated October 30, 1996.* (i) Letter Amendment to Employment Agreement between Ogden Corporation and Quintin G. II-6 Marshall, Senior Vice President - Corporate Development, effective as of October 1, 1998.* (i) Employment Agreements between Ogden and Jesus Sainz, Executive Vice President, effective as of January 1, 1998.* (i) Letter Amendment to Employment Agreement between Ogden Corporation and Jesus Sainz, Executive Vice President, effective as of October 1, 1998.* (j) Employment Agreement between Alane Baranello, Vice President - Human Resources, and Ogden Services Corporation dated October 28, 1996.* (i) Letter Amendment to Employment Agreement between Ogden Corporation and Alane Baranello, Vice President - Human Resources, dated as of October 13, 1998.* (k) Employment Agreement between Peter Allen, Senior Vice President, and Ogden Corporation dated July 1, 1998.* (l) Employment Agreement between Ogden Corporation and Raymond E. Dombrowski, Jr., Senior Vice President and C.F.O., dated as of September 21, 1998.* 10.5 Stock Purchase Agreement among Volume Services America Holdings, Inc.; BCP Volume L.P.; BCP Offshore Volume L.P.; Recreational Services L.L.C.; VSI Management Direct L.P.; General Electric Capital Corporation; and Ogden Entertainment, Inc., dated June 24, 1999. 11 Detail of Computation of Earnings applicable to Common Stock. 27 Financial Data Schedule (EDGAR Filing Only). Incorporated by reference as set forth in the Exhibit Index of this Form 10-Q. (b) Reports on Form 8-K A Form 8-K Current Report was filed on June 28, 1999 and is incorporated herein by reference. II-7 SIGNATURES Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereto duly authorized. OGDEN CORPORATION (Registrant) Date: August 16, 1999 By /s/ Raymond E. Dombrowski, Jr. ------------------------------- Raymond E. Dombrowski, Jr. Senior Vice President and Chief Financial Officer Date: August 16, 1999 By: /s/ William J. Metzger ------------------------------- William J. Metzger Vice President and Chief Accounting Officer II-8 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION OF DOCUMENT FILING INFORMATION --- ----------------------- ------------------ 2 Plan of Acquisition, Reorganization Arrangement, Liquidation or Succession. 2.1 Agreement and Plan of Filed as Exhibit 2 to Merger, dated as of October Ogden's Form S-4 31, 1989, among Ogden, ERCI Registration Statement File Acquisition Corporation and No. 33-32155, and ERC International Inc. incorporated herein by reference. 2.2 Agreement and Plan of Merger Filed as Exhibit (10)(x) to among Ogden Corporation, ERC Ogden's Form 10-K for the International Inc., ERC fiscal year ended December Acquisition Corporation and 31, 1990 and incorporated ERC Environmental and Energy herein by reference. Services Co., Inc. dated as of January 17, 1991. 2.3 Amended and Restated Filed as Exhibit 2 to Agreement and Plan of Merger Ogden's Form S-4 among Ogden Corporation, OPI Registration Statement File Acquisition Corporation sub. No. 33-56181 and and Ogden Projects, Inc. incorporated herein by dated as of September 27, reference. 1994. 3 Articles of Incorporation and By-Laws. 3.1 Ogden's Restated Certificate Filed as Exhibit (3)(a) to of Incorporation as amended. Ogden's Form 10-K for the fiscal year ended December 31, 1988 and incorporated herein by reference. 3.2 Ogden By-Laws as amended. Filed as Exhibit 3.2 to Ogden's Form 10-Q for the quarterly period ended March 31, 1998 and incorporated herein by reference. 4 Instruments Defining Rights of Security Holders. 1 EXHIBIT NO. DESCRIPTION OF DOCUMENT FILING INFORMATION --- ----------------------- ------------------ 4.1 Fiscal Agency Agreement Filed as Exhibits (C)(3) and between Ogden and Bankers (C)(4) to Ogden's Form 8-K Trust Company, dated as of filed with the Securities June 1, 1987 and Offering and Exchange Commission on Memorandum dated June 12, July 7, 1987 and 1987, relating to U.S. $85 incorporated herein by million Ogden 6% Convertible reference. Subordinated Debentures, Due 2002. 4.2 Fiscal Agency Agreement Filed as Exhibit (4)to between Ogden and Bankers Ogden's Form S-3 Trust Company, dated as of Registration Statement filed October 15, 1987, and with the Securities and Offering Memorandum, dated Exchange Commission on October 15, 1987, relating December 4, 1987, to U.S. $75 million Ogden Registration No. 33-18875, 5-3/4% Convertible and incorporated herein by Subordinated Debentures, Due reference. 2002. 4.3 Indenture dated as of March Filed as Exhibit (4)(C) to 1, 1992 from Ogden Ogden's Form 10-K for fiscal Corporation to The Bank of year ended December 31, New York, Trustee, relating 1991, and incorporated to Ogden's $100 million debt herein by reference. offering. 10 Material Contracts 10.1(a) U.S. $95 million Term Loan Filed as Exhibit 10.6 to and Letter of Credit and Ogden's Form 10-Q for the Reimbursement Agreement quarterly period ended March among Ogden, the Deutsche 31, 1997 and incorporated Bank AG, New York Branch and herein by reference. the signatory Banks thereto, dated March 26, 1997. 10.1(b) $200 million Credit Filed as Exhibit 10.1(i) to Agreement among Ogden, The Ogden's Form 10-Q for the Bank of New York as Agent quarterly period ended June and the signatory Lenders 30, 1997 and incorporated thereto, dated as of June herein by reference. 30, 1997. 10.2 Rights Agreement between Filed as Exhibit (10)(h) to Ogden Corporation and Ogden's Form 10-K for the Manufacturers Hanover Trust fiscal year ended December Company, dated as of 31, 1990 and incorporated September 20, 1990 and herein by reference. amended August 15, 1995 to provide The Bank of New York as successor agent. 2 10.3 Executive Compensation Plan and Agreements. (a) Ogden Corporation 1990 Filed as Exhibit (10)(j) to Stock Option Plan. Ogden Form 10-K for the fiscal year ended December 31, 1990 and incorporated herein by reference. (i) Ogden Filed as Exhibit 10.6(b)(i) Corporation 1990 to Ogden's Form 10-Q for the Stock Option quarterly period ended Plan as Amended September 30, 1994 and and Restated as incorporated herein by of January 19, reference. 1994. (ii) Amendment Filed as Exhibit 10.7(a)(ii) adopted and to Ogden's Form 10-K for effective as of fiscal period ended December September 18, 31, 1997 and incorporated 1997. herein by reference. (a) (a) Ogden Corporation Transmitted herewith as 1999 Stock Option Exhibit 10.3(a)(a). Plan, as amended. (b) Ogden Services Filed as Exhibit (10)(k) to Corporation Executive Ogden's Form 10-K for the Pension Plan. fiscal year ended December 31, 1990 and incorporated herein by reference. (c) Ogden Services Filed as Exhibit 10.7(d)(I) Corporation Select to Ogden's Form 10-K for the Savings Plan Amendment fiscal year ended December and Restatement as of 31, 1994 and incorporated January 1, 1995. herein by reference. (i) Amendment Number Filed as Exhibit 10.7(c)(ii) One to the Ogden to Ogden's Form 10-K for the Services fiscal year ended December Corporation 31, 1997 and incorporated Select Savings herein by reference. Plan as Amended and Restated January 1, 1995, effective January 1, 1998. (d) Ogden Services Filed as Exhibit 10.7(e)(i) Corporation Select to Ogden's Form 10-K for the Savings Plan Trust fiscal year ended December Amendment and 31, 1994 and incorporated Restatement as of herein by reference. January 1, 1995. 3 (e) Ogden Services Filed as Exhibit (10)(n) to Corporation Executive Ogden's Form 10-K for the Pension Plan Trust. fiscal year ended December 31, 1990 and incorporated herein by reference. (i) Ogden Services Transmitted herewith as Corporation Exhibit 10.3(e)(i). Executive Pension Plan Trust Amendment Number One. (f) Changes effected to Filed as Exhibit (10)(o) to the Ogden Profit Ogden's Form 10-K for the Sharing Plan effective fiscal year ended December January 1, 1990. 31, 1990 and incorporated herein by reference. (g) Ogden Profit Sharing Filed as Exhibit 10.7(p)(ii) Plan as amended and to Ogden's Form 10-K for restated effective as fiscal year ended December of January 1, 1995. 31, 1994 and incorporated herein by reference. (h) Ogden Corporation Core Filed as Exhibit 10.8(q) to Executive Benefit Ogden's Form 10-K for fiscal Program. year ended December 31, 1992 and incorporated herein by reference. (i) Ogden Projects Pension Filed as Exhibit 10.8(r) to Plan. Ogden's Form 10-K for fiscal year ended December 31, 1992 and incorporated herein by reference. (j) Ogden Projects Profit Filed as Exhibit 10.8(s) to Sharing Plan. Ogden's Form 10-K for fiscal year ended December 31, 1992 and incorporated herein by reference. (k) Ogden Projects Filed as Exhibit 10.8(t) to Supplemental Pension Ogden's Form 10-K for fiscal and Profit Sharing year ended December 31, 1992 Plans. and incorporated herein by reference. (l) Ogden Projects Core Filed as Exhibit 10.8(v) to Executive Benefit Ogden's Form 10-K for fiscal Program. year ended December 31, 1992 and incorporated 4 herein by reference. (m) Form of amendments to Filed as Exhibit 10.8(w) to the Ogden Projects, Ogden's Form 10-K for fiscal Inc. Pension Plan and year ended December 31, 1993 Profit Sharing Plans and incorporated herein by effective as of reference. January 1, 1994. (i) Form of amended Filed as Exhibit 10.7(w)(i) Ogden Projects to Ogden's Form 10-K for Profit Sharing fiscal year ended December Plan effective 31, 1994 and incorporated as of January 1, herein by reference. 1994. (ii) Form of amended Filed as Exhibit 10.7(w)(ii) Ogden Projects to Ogden's Form 10-K for Pension Plan, fiscal year ended December effective as of 31, 1994 and incorporated January 1, 1994. herein by reference. (n) Ogden Corporation Filed as Exhibit 10.3(n) to Amended and Restated Ogden's Form 10-K for the CEO Formula Bonus fiscal year ended December Plan. 31, 1998 and incorporated herein by reference. (o) Ogden Key Management Filed as Exhibit 10.7(p) to Incentive Plan. Ogden's Form 10-K for the fiscal year ended December 31, 1997 and incorporated herein by reference. 10.4 Employment Agreements (a) Employment Letter Filed as Exhibit 10.4(a) to Agreement between Ogden's Form 10-K for the Ogden Corporation and fiscal year ended December Lynde H. Coit, Senior 31, 1998 and incorporated Vice President and herein by reference. General Counsel dated March 1, 1999. (b) Employment Agreement Filed as Exhibit 10.3(h) to between R. Richard Ogden's Form 10-Q for the Ablon and Ogden dated quarterly period ended June as of January 1, 1998. 30, 1998 and incorporated herein by reference. (c) Separation Agreement Filed as Exhibit 10.8(c) to between Ogden Ogden's Form 10-Q for the Corporation and Philip quarterly period ended G. Husby, Senior Vice September 30, 1998 and President and C.F.O., incorporated herein by dated as of reference. 5 September 17, 1998. (d) Employment Agreement Filed as Exhibit 10.2(q) to between Ogden Ogden's Form 10-K for fiscal Corporation and year ended December 31, 1991 Ogden's Chief and incorporated herein by Accounting Officer reference. dated as of December 18, 1991. (e) Employment Agreement Filed as Exhibit 10.8(e) to between Scott G. Ogden's Form 10-Q for the Mackin, Executive Vice quarter ended September 30, President, and Ogden 1998 and incorporated herein Corporation dated as by reference. of October 1, 1998. (f) Employment Agreement Filed as Exhibit 10.8(i) to between Ogden Ogden's Form 10-K for fiscal Corporation and David year ended December 31, 1995 L. Hahn, Senior Vice and incorporated herein by President - Aviation, reference. dated December 1, 1995. (i) Letter Amendment Filed as Exhibit 10.8(f)(i) to Employment to Ogden's Form 10-Q for the Agreement quarterly period ended between Ogden September 30, 1998 and Corporation and incorporated herein by David L. Hahn, reference. effective as of October 1, 1998. (g) Employment Agreement Filed as Exhibit 10.8(j) to between Ogden Ogden's Form 10-K for fiscal Corporation and year ended December 31, 1996 Rodrigo Arboleda, and incorporated herein by Senior Vice President reference. dated January 1, 1997. (i) Letter Amendment Filed as Exhibit 10.8(g)(i) to Employment to Ogden's Form 10-Q for the Agreement quarterly period ended between Ogden September 30, 1998 and Corporation and incorporated herein by Rodrigo reference. Arboleda, Senior Vice President, effective as of October 1, 1998. (h) Employment Agreement Filed as Exhibit 10.8(k) to between Ogden Ogden's Form 10-K for fiscal Projects, Inc. and year ended December 31, 1996 Bruce W. Stone, dated and incorporated herein by June 1, 1990. reference. 6 (i) Employment Agreement Filed as Exhibit 10.8(l) to between Ogden Ogden's Form 10-K for fiscal Corporation and year ended December 31, 1996 Quintin G. Marshall, and incorporated herein by Senior Vice President reference. dated October 30, 1996. (i) Letter Amendment Filed as Exhibit 10.8(i)(i) to Employment to Ogden's Form 10-Q for the Agreement quarter ended September 30, between Ogden 1998 and incorporated herein Corporation and by reference. Quintin G. Marshall, Senior Vice President - Corporate Development effective as of October 1, 1998. (j) Employment Agreements Filed as Exhibit 10.8(m) to between Ogden and Ogden's Form 10-K for the Jesus Sainz, Executive fiscal year ended December Vice President, 31, 1997 and incorporated effective as of herein by reference. January 1, 1998. (i) Letter Amendment Filed as Exhibit 10.8(j)(i) to Employment to Ogden's Form 10-Q for the Agreement quarter ended September 30, between Ogden 1998 and incorporated herein Corporation and by reference. Jesus Sainz, Executive Vice President, effective as of October 1, 1998. (k) Employment Agreement Filed as Exhibit 10.3(m) to between Alane Ogden's Form 10-Q for the Baranello, Vice quarterly period ended June President - Human 30, 1998 and incorporated Resources and Ogden herein by reference. Services Corporation dated October 28, 1996. (i) Letter Amendment Filed as Exhibit 10.8(k)(i) to Employment to Ogden's From 10-Q for the Agreement quarter ended September 30, between Ogden 1998 and incorporated herein Corporation and by reference. Alane Baranello, Vice President - Human Resources, dated as of October 13, 1998. (l) Employment Agreement Filed herewith as Exhibit between Peter Allen, 10.3(M)(1) to Ogden's Form Senior 10-Q for the 7 Vice President, and quarterly ended June 30, Ogden Corporation 1998 incorporated herein dated July 1, 1998. by reference. (m) Employment Agreement Filed as Exhibit 10.4(m) to between Ogden Ogden's Form 10-Q for the Corporation and quarter ended September 30, Raymond E. Dombrowski, 1998 and incorporated herein Jr., Senior Vice by reference. President and C.F.O., dated as of September 21, 1998. 10.5 Stock Purchase Agreement Transmitted herewith as among Volume Services Exhibit 10.5. America Holdings, Inc.; BCP Volume L.P.; BCP Offshore Volume L.P.; Recreational Services L.L.C.; VSI Management Direct L.P.; General Electric Capital Corporation; and Ogden Entertainment, Inc., dated as of June 24, 1999. 11 Ogden Corporation and Transmitted herewith as Subsidiaries Detail of Exhibit 11. Computation of Earnings Applicable to Common Stock. 27 Financial Data Schedule. Transmitted herewith as Exhibit 27. 8 EX-10.3(A)(A) 2 1999 STOCK OPTION PLAN Exhibit 10.3(a)(a) OGDEN CORPORATION 1999 STOCK OPTION PLAN (Effective May 20, 1999) 1. Purpose. The purposes of this Ogden Corporation 1999 Stock Option Plan (the "Plan") are to induce certain individuals to remain in the employ of, or to continue to serve as directors of, Ogden Corporation (the "Company"), its present and future subsidiary corporations (each a "Subsidiary"), as defined in section 424(f) of the Internal Revenue Code of 1986, as amended (the "Code") and its future parent corporations, if any (each, a "Parent"), as defined in section 424(e) of the Code, to attract new individuals to enter into such employment and service and to encourage such individuals to secure or increase on reasonable terms their stock ownership in the Company. The Board of Directors of the Company (the "Board") believes that the granting of stock options and other awards (the "Awards") under the Plan will promote continuity of management and increased incentive and personal interest in the welfare of the Company and aid in securing its continued growth and financial success. 2. Shares Subject to Plan. The maximum number of shares of the common stock, par value $.50 per share (the "Common Stock"), of the Company with respect to which Awards may be granted under the Plan or that may be delivered to participants ("Participants") and their beneficiaries under the Plan shall be 4,000,000 (subject to adjustment as provided in Section 9 of the Plan). For purposes of this Section 2 other than with regard to incentive stock options described in Section 4(A) of the Plan, the number of shares that may be delivered under the Plan shall be determined after giving effect to the use by a Participant of the right, if granted, to cause the Company to withhold from the shares of Common Stock otherwise deliverable to him or her upon the exercise of an Award, shares of Common Stock in payment of all or a portion of his or her withholding obligation arising from such exercise (i.e., only the number of shares issued net of the shares tendered shall be deemed delivered for purposes of determining the maximum number of shares available for delivery under the Plan). If any Awards expire or terminate for any reason without having been exercised in full, new Awards may thereafter be granted with respect to the unpurchased shares subject to such expired or terminated Awards. If a limited stock appreciation right ("LSAR") is granted in tandem with a stock option, such grant shall only apply once against the maximum number of shares of Common Stock which may be delivered to Participants or granted under the Plan. The shares of Common Stock available under the Plan may be either authorized and unissued shares of Common Stock or shares of Common Stock held in or acquired for the treasury of the Company. 3. Administration. (A) The Plan shall be administered by a committee or subcommittee of the Board (the "Committee") which shall consist of two or more members of the Board, each of whom is intended to be, to the extent required by Rule 16b-3 promulgated under section 16(b) of the Securities Exchange Act of 1934, as amended ("Rule 16b-3"), a "non-employee director" as defined in Rule 16b-3 and, to the extent required by section 162(m) of the Code, an "outside director" as defined under section 162(m) of the Code; provided, however, that with respect to the application of the Plan to non-employee directors, the Board shall be deemed the Committee. If for any reason the Committee does not meet the requirements of Rule 16b-3 or section 162(m) of the Code, such non-compliance with the requirements of Rule 16b-3 or section 162(m) of the Code shall not affect the validity of Awards, interpretations or other actions of the Committee. The Committee shall be appointed annually by the Board, which may at any time and from time to time remove any members of the Committee, with or without cause, appoint additional members to the Committee and fill vacancies, however caused, in the Committee. In the event that no Committee shall have been appointed, the Plan shall be administered by the Board. A majority of the members of the Committee shall constitute a quorum. All determinations of the Committee shall be made by a majority of its members present at a meeting duly called and held except that the Committee may delegate to any one of its members the authority of the Committee with respect to the grant of Awards to an employee who: (i) is not an officer and/or director of the Company; (ii) is not, and may not reasonably be expected to become, a "covered employee" within the meaning of section 162(m)(3) of the Code; and (iii) who is not subject to the reporting requirements under section 16(a) of the Securities Exchange Act of 1934, as amended. Any decision or determination of the Committee reduced to writing and signed by all of the members of the Committee (or by a member of the Committee to whom authority has been delegated) shall be fully as effective as if it had been made at a meeting duly called and held. (B) The Committee's powers and authority shall include, but not be limited to (i) selecting individuals for participation who are employees of the Company, any Subsidiary or any Parent and who are members of the Board; (ii) determining the types and terms and conditions of all Awards granted, including performance and other earnout and/or vesting contingencies; (iii) permitting transferability of Awards to third parties; (iv) interpreting the Plan's provisions; and (v) administering the Plan in a manner that is consistent with its purpose. The Committee's determination on the matters referred to in this Section 3(B) shall be conclusive. Any dispute or disagreement which may arise under or as a result of or with respect to any Award shall be determined by the Committee, in its sole discretion, and any interpretations by the Committee of the terms of any Award shall be final, binding and conclusive. (C) Subject to Section 12 of the Plan, the Committee shall have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan and perform all acts, including the delegation of its administrative responsibilities, as it shall, from time to time, deem advisable; to construe and interpret the terms and provisions of the Plan and any Award issued under the Plan (and any agreements relating thereto); and to otherwise supervise the administration of the Plan. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any agreement relating thereto in the manner and to the extent it shall deem necessary to effectuate the purpose and intent of the Plan. The Committee may adopt special guidelines and provisions for persons who are residing in, or subject to, the taxes of, non-U.S. jurisdictions to comply with applicable tax, securities and other laws and may impose any limitations and restrictions that it deems necessary to comply with the applicable tax, securities and other laws of such non-U.S. jurisdictions. To the extent applicable, the Plan is intended to comply with section 162(m) of the Code (with regard to "covered employees" as defined in section 162(m) of the Code) and the applicable requirements of Rule 16b-3 and shall be limited, construed and interpreted in a manner so as to comply therewith. 4. Types of Awards. An Award may be granted singularly, in combination with another Award(s) or in tandem whereby exercise or vesting of one Award held by a Participant cancels another award held by the Participant. Subject to Section 6 hereof, an Award may be granted as an alternative to or replacement of an existing Award under the Plan or under any other compensation plans or arrangements of the Company, including the plan of any entity acquired by the Company. The types of Awards that may be granted under the Plan include: (A) A stock option, which represents a right to purchase a specified number of shares of Common Stock during a specified period at a price per share which is no less than that required by Section 6 hereof. Options will be either (a) "incentive stock options" (which term, when used herein, shall have the meaning ascribed thereto by the provisions of section 422(b) of the Code, or (b) options which are not incentive stock options ("non-qualified stock options"), as determined at the time of the grant thereof by the Committee. (B) An LSAR, which is a right granted in tandem with a related stock option, to receive a payment in cash equal to the excess of the aggregate price (as described herein) at the time specified below of a specified number of shares of Common Stock over the aggregate exercise price of the related stock option being exercised; provided, however, that such right shall be exercisable only upon the occurrence of a Change in Control and only in the alternative to exercise of its related stock option. The Committee may grant in connection with any stock option granted hereunder one or more LSARs relating to a number of shares of Common Stock less than or equal to the number of shares of Common Stock subject to the related stock option. An LSAR may be granted at the same time as, or subsequent to the time that, its related stock option is granted. The exercise of an LSAR relating to a non-qualified stock option with respect to any number of shares of Common Stock shall entitle the Participant to a cash payment, for each share, equal to the excess of (i) the greatest of (A) the highest price per share of Common Stock paid in the Change in Control in connection with which such LSAR became exercisable, (B) the fair market value of a share of Common Stock on the date of such Change of Control and (C) the fair market value of a share of Common Stock on the effective date of such exercise over (iii) the exercise price of the related stock option. Such payment shall be paid as soon as practical, but in no event later than the expiration of five business days, after the effective date of such exercise. The exercise of an LSAR relating to an incentive stock option with respect to any number of shares of Common Stock shall entitle the Participant to a cash payment, for each such share, equal to the excess of (i) the fair market value of a share of Common Stock on the effective date of such exercise over (ii) the exercise price of the related stock option. Such payment shall be paid as soon as practical, but in no event later than the expiration of five business days, after the effective date of such exercise. An LSAR shall be exercisable only during the period commencing on the first day following the occurrence of a Change in Control and terminating on the expiration of ninety days after such date. Notwithstanding anything else herein, an LSAR relating to an incentive stock option may be exercised with respect to a share of Common Stock only if the fair market value of such share on the effective date of such exercise exceeds the exercise price relating to such share. Notwithstanding anything else herein, an LSAR may be exercised only if and to the extent that the stock option to which it relates is exercisable. The exercise of an LSAR with respect to a number of shares of Common Stock shall cause the immediate and automatic cancellation of the stock option to which it relates with respect to an equal number of shares. The exercise of a related stock option, or the cancellation, termination or expiration of a related stock option (other than pursuant to this paragraph), with respect to a number of shares of Common Stock, shall cause the cancellation of the LSAR related to it with respect to an equal number of shares. Each LSAR shall be exercisable in whole or in part; provided, that no partial exercise of an LSAR shall be for an aggregate exercise price of less than $1,000. The partial exercise of an LSAR shall not cause the expiration, termination or cancellation of the remaining portion thereof. (C) A cash award, which is a right denominated in cash or cash units to receive a cash payment, based on the attainment of pre-established performance goals and such other conditions, restrictions and contingencies as the Committee shall determine; provided, however, that if the cash award is made to a "covered employee," under section 162(m)(3) of the Code, the Award is intended to satisfy section 162(m) of the Code. For each Participant for each calendar year, the Committee may specify a targeted performance award. The individual target award may be expressed, at the Committee's discretion, as a fixed dollar amount, a percentage of base pay or total pay (excluding payments made under the Plan), or an amount determined pursuant to an objective formula or standard. Establishment of an individual target award for an employee for a calendar year shall not imply or require that the same level individual target award (if any such award is established by the Committee for the relevant employee) be set for any subsequent calendar year. At the time the performance goals are established, the Committee shall prescribe a formula to determine the percentages (which may be greater than one-hundred percent (100%)) of the individual target award which may be payable based upon the degree of attainment of the performance goals during the calendar year. Notwithstanding anything else herein, the Committee may, in its sole discretion, elect to pay a Participant an amount that is less than the Participant's individual target award (or attained percentage thereof) regardless of the degree of attainment of the performance goals; provided that no such discretion to reduce an Award earned based on achievement of the applicable performance goals shall be permitted for the calendar year in which a Change in Control of the Company occurs, or during such calendar year with regard to the prior calendar year if the Awards for the prior calendar year have not been made by the time of the Change in Control of the Company, with regard to individuals who were Participants at the time of the Change in Control of the Company. For "covered employees" under section 162(m) of the Code, the Committee shall establish the objective performance goals, formulae or standards and the individual target award (if any) applicable to each Participant or class of Participants for a calendar year in writing prior to the beginning of such calendar year or at such later date as permitted under section 162(m) of the Code and while the outcome of the performance goals are substantially uncertain. Such performance goals may incorporate, if and only to the extent permitted under section 162(m) of the Code, provisions for disregarding (or adjusting for) changes in accounting methods, corporate transactions (including, without limitation, dispositions and acquisitions) and other similar type events or circumstances. The performance goals that may be used by the Committee for such Awards shall be based on the goals described in Exhibit A, attached hereto. The Committee may designate a single goal criterion or multiple goal criteria for performance measure purposes with the measurement based on absolute Company, Subsidiaries, Parent, division or business unit performance and/or on performance as compared with that of other publicly traded companies. With respect to "covered employees" under section 162(m) of the Code, the Committee shall satisfy the certification requirements in the manner set forth under section 162(m) of the Code. (D) The Committee may provide a loan to any Participant in an amount determined by the Committee to enable the Participant to pay (i) any federal, state or local income taxes arising out of the exercise of an Award or (ii) the exercise price with respect to any Award or (iii) to purchase shares of Common Stock on the open market. Any such loan (i) shall be for such term and at such rate of interest as the Committee may determine, (ii) shall be evidenced by a promissory note in a form determined by the Committee and executed by the Participant and (iii) shall be subject to such other terms and conditions as the Committee may determine. 5. Eligibility. An Award may be granted only to (i) employees of the Company, a Subsidiary or a Parent, (ii) directors of the Company who are not employees of the Company, a Subsidiary or a Parent and (iii) employees of a corporation which has been acquired by the Company, a Subsidiary or a Parent, whether by way of exchange or purchase of stock, purchase of assets, merger or reverse merger, or otherwise, who hold options with respect to the stock of such corporation which the Company has agreed to assume. Eligibility for the grant of an Award and actual participation in the Plan shall be determined by the Committee in its sole direction. 6. Stock Option Prices and Fair Market Value. (A) Except as otherwise provided in Section 14 hereof, the initial per share option price of any stock option shall not be less than the fair market value of a share of Common Stock on the date of grant; provided, however, that, in the case of a Participant who owns (within the meaning of section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company, each Subsidiary and Parent at the time a stock option which is an incentive stock option is granted to him or her, the initial per share option price shall not be less than 110% of the fair market value of a share of Common Stock on the date of grant. (B) For all purposes of this Plan, the fair market value of a share of Common Stock on any date shall be (i) the average of the high and low sales prices on such day of a share of Common Stock as reported on the principal securities exchange on which shares of Common Stock are then listed or admitted to trading or (ii) if not so reported, the average of the closing bid and ask prices on such date as reported on the NASDAQ Stock Market, Inc. or (iii) if not so reported, as furnished by any member of the National Association of Securities Dealers, Inc. selected by the Committee. In the event that the price of a share of Common Stock shall not be so reported, the Fair Market Value of a share of Common Stock shall be determined by a qualified appraiser selected by the Committee. Notwithstanding anything herein to the contrary, the fair market value of a share of Common Stock on any date means the price for Common Stock set by the Committee in good faith based on reasonable methods set forth under section 422 of the Code and the regulations thereunder including, without limitation, a method utilizing the average of prices of the Common Stock reported on the principal national securities exchange on which it is then traded on the NASDAQ Stock Market, Inc. during a reasonable period designated by the Committee. 7. Option Term. Options shall be granted for such term as the Committee shall determine, not in excess of ten years from the date of the granting thereof; provided, however, that, except as otherwise provided in Section 14 hereof, in the case of a Participant who owns (within the meaning of section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company, each Subsidiary and Parent that the time an option which is an incentive stock option is granted to him or her, the term with respect to such option shall not be in excess of five years from the date of the granting thereof. 8. Limitation on Amount of Awards Granted. (A) Except as otherwise provided in Section 14 hereof, the aggregate fair market value of the shares of Common Stock for which any Participant may be granted incentive stock options which are exercisable for the first time in any calendar year (whether under the terms of the Plan or any other stock option plan of the Company) shall not exceed $100,000. (B) No Participant shall be granted stock options and/or LSARs during any calendar year to purchase more than an aggregate of 500,000 shares of Common Stock (subject to adjustment as provided in Section 9 of the Plan). LSARs granted in tandem with a stock option shall only apply once against a Participant's maximum individual number of shares of Common Stock subject to an award of options and/or LSARs hereunder. (C) Subject to Section 8(D), the following additional maximums are imposed under the Plan. The maximum number of shares of Common Stock that may be covered by stock options intended to be incentive stock options shall be 4,000,000 (subject to adjustment as provided in Section 9 of the Plan). The maximum payment that may be made for awards granted to any one individual pursuant to Section 4(C) hereof shall be $3,000,000 for any single or combined performance goals established for a specified performance period. A specified performance period for purposes of this performance goal payment limit shall not exceed a sixty (60) consecutive month period. (D) Subject to the overall limitation on the number of shares of Common Stock that may be delivered under the Plan, the Committee may use available shares of Common Stock as the form of payment for compensation, grants or rights earned or due under any other compensation plans or arrangements of the Company, including the plan of any entity acquired by the Company. 9. Adjustment of Number of Shares. (A) In the event that a dividend shall be declared upon the Common Stock payable in shares of Common Stock, the number of shares of Common Stock then subject to any Award and the number of shares of Common Stock available for purchase or delivery under the Plan but not yet covered by an Award shall be adjusted by adding to each share the number of shares which would be distributable thereon if such shares had been outstanding on the date fixed for determining the stockholders entitled to receive such stock dividend. In the event that the outstanding shares of Common Stock are exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation, whether through reorganization, recapitalization, stock split-up, reverse stock split, reclassification, combination of shares, sale of assets or merger or consolidation in which the Company is the surviving corporation, then, if the Committee shall determine, in its sole discretion, to be appropriate, there shall be substituted for each share of Common Stock then subject to any outstanding Award and for each share of Common Stock which may be issued under the Plan but not yet covered by an outstanding Award, the number and kind of shares of stock or other securities for which each outstanding share of Common Stock shall be so exchanged and, if determined by the Committee in its sole discretion to be appropriate, the exercise or option price applicable under any then outstanding Award shall be adjusted proportionately to reflect such corporate transaction. (B) In the event that there shall be any change in the capitalization of the Company or other corporate change affecting the outstanding Common Stock, including by way of an extraordinary or stock dividend, spin-off or other corporate change, other than any change specified in Section 9(A) hereof, then, if the Committee shall, in its sole discretion, determine it to be appropriate, the number or kind of shares then subject to any outstanding Award, the number or kind of shares then available for issuance in accordance with the provisions of the Plan but not yet covered by an outstanding Award, and/or the exercise or option price applicable under any then outstanding Award shall be adjusted proportionately to reflect such corporate event and, if and to the to extent the Committee shall, in its sole discretion, determine it to be appropriate, all or any portion of the Plan may be assumed by any corporate successor to all or a portion of the Company's business and shares of such corporate successor (or the Parent or a Subsidiary thereof) shall be substituted for the shares of Common Stock covered by the portion of the Plan so assumed. (C) Notwithstanding the foregoing provisions of this Section 9, in the case of any then outstanding incentive stock options, the Committee shall make commercially reasonable efforts to effect any substitution or adjustment authorized by the Committee pursuant to this Section 9 in a manner consistent with the applicable requirements of Treasury Regulation section 1.425-1. (D) Any substitution or adjustment determined under this Section 9 by the Committee in good faith shall be final, binding and conclusive on the Company and all Participants, directors and employees and their respective heirs, executors, administrators, successors and assigns. (E) No adjustment or substitution provided for in this Section 9 shall require the Company to issue a fractional share under any Award or to sell a fractional share under any stock option. Fractional shares of Common Stock resulting from any adjustment in Awards pursuant to this Section 9 shall be aggregated until, and eliminated at, the time of exercise by rounding-down for fractions less than one-half and rounding-up for fractions equal to or greater than one-half. No cash settlements shall be made with respect to fractional shares eliminated by rounding. (F) (i) Notwithstanding the foregoing provisions of this Section 9, in the event of a Change in Control, each Award shall become fully vested and exercisable. (ii) As used herein, "Change in Control" shall mean: (I) any Person (as such term is defined in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) becomes the "beneficial owner" (as such term is defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities, other than beneficial ownership by a Participant, the Company, any subsidiary of the Company, any employee benefit plan of the Company or a subsidiary thereof or any person or entity organized, appointed or established, pursuant to the terms of any such benefit plan; (II) the Company's stockholders approve an agreement to merge or consolidate the Company with another corporation, or an agreement providing for the sale of substantially all of the assets of the Company to one or more corporations, in any case other than with or to a corporation 50% or more of which is controlled by, or is under common control with, the Company; or (III) during any two-year period, individuals who at the date on which the period commences constitute a majority of the Board cease to constitute a majority of thereof for any reason; provided, however, that a director who was not a director at the beginning of such period shall be deemed to have satisfied the two-year requirement if such director was elected by, or on the recommendation of, at least two-thirds of the directors who were directors at the beginning of such period (either actually or by prior operation of this provision), other than any director who is so approved in connection with any actual or threatened contest for election to positions on the Board. (G) In the event of the occurrence of any corporate transaction or event described in Section 9(A) or 9(B) hereof or the occurrence of a Change in Control, the Committee may reasonably determine in good faith that all or a portion of the Awards hereunder shall be honored, assumed or converted or new rights substituted therefor (each such honored, assumed, converted or substituted Award shall hereinafter be called an "Alternative Award") by a Participant's employer (or the parent or a subsidiary of such employer) immediately following such corporate transaction or event or Change in Control, provided that any such Alternative Award must meet the following criteria: (i) the Alternative Award must be based on stock which is traded on an established securities market, or which will be so traded within 30 days of the transaction, event or Change in Control; (ii) the Alternative Award must provide such Participant with rights and entitlements substantially equivalent to the rights and entitlements applicable under such Award immediately prior to such transaction, event or Change in Control, including, but not limited to, an identical or better exercise schedule; and (iii) the Alternative Award must have economic value substantially equivalent to the value of such Award (as determined by the Committee at the time of the transaction, event or Change in Control). For purposes of incentive stock options, any assumed or substituted stock option shall comply with the requirements of Treasury Regulation ss. 1.425-1 (and any amendments thereto). The Committee may, in its sole discretion, apply the same methodology to non-qualified stock options. 10. Purchase for Investment, Waivers and Withholding. (A) Unless the delivery of shares under any Award shall be registered under the Securities Act of 1933, such Participant shall, as a condition of the Company's obligation to deliver such shares, be required to represent to the Company in writing that he or she is acquiring such shares for his or her own account as an investment and not with a view to, or for sale in connection with, the distribution of any thereof. All certificates for shares of Common Stock delivered under the Plan shall be subject to such stock transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Common Stock is then listed or any national securities association system upon whose system the Common Stock is then quoted, any applicable federal or state securities law, and any applicable corporate law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. (B) In the event of the death of a Participant, an additional condition of exercising any Award shall be the delivery to the Company of such tax waivers and other documents as the Committee shall determine. (C) An additional condition of exercising any non-qualified stock option or an LSAR shall be the entry by the Participant into such arrangements with the Company with respect to withholding as the Committee shall determine. The Company shall have the right to deduct from any payment to be made to a Participant, or to otherwise require, prior to the issuance or delivery of any shares of Common Stock or the payment of any cash hereunder, payment by the Participant of, any federal, state or local taxes required by law to be withheld. Any such withholding obligation with regard to any Participant may be satisfied, subject to the consent of the Committee, by reducing the number of shares of Common Stock otherwise deliverable. Any fraction of a share of Common Stock required to satisfy such tax obligations shall be disregarded and the amount due shall be paid instead in cash by the Participant. 11. No Stockholder Status; No Restrictions on Corporate Acts; No Employment Right. (A) Neither any Participant nor his or her legal representatives, legatees or distributees shall be or be deemed to be the holder of any share of Common Stock covered by an Award unless and until a certificate for such share has been issued. Upon payment of the purchase price therefor, a share issued upon exercise of an Award shall be fully paid and non-assessable. (B) Neither the existence of the Plan nor any Award shall in any way affect the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock or the rights thereof, or dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding whether of a similar character or otherwise. (C) Neither the existence of the Plan nor the grant of any Award shall require the Company, any Subsidiary or Parent to continue any Participant in the employ or service of the Company, such Subsidiary or such Parent. 12. Termination and Amendment of the Plan. The Board may at any time terminate the Plan or make such modifications of the Plan as it shall deem advisable; provided, however, that the Board may not, without further approval of the holders of the shares of Common Stock in accordance with the laws of the State of Delaware, solely to the extent required by the applicable provisions of Rule 16b-3, section 162(m) or 422 of the Code or the rules of any applicable exchange: (i) increase the aggregate number of shares of Common Stock as to which Awards may be granted under the Plan (as adjusted in accordance with the provisions of Section 9 hereof); (ii) increase the minimum individual Participant share limitations under Section 8(B) of the Plan; (iii) increase the maximum payment under Section 8(C) of the Plan; (iv) materially alter the performance criteria described in Section 4(C) and Exhibit A of the Plan; (v) extend the maximum option period under Section 7 of the Plan; (vi) change the class of persons eligible to participate in the Plan; or (vii) change the manner of determining stock option prices under Section 6 of the Plan. Except as otherwise provided in Section 14 hereof, no termination or amendment of the Plan may, without the consent of the Participant to whom any Award shall theretofore have been granted, adversely affect the rights of such Participant under such Award. 13. Expiration and Termination of the Plan. The Plan shall terminate on May 19, 2009 or at such earlier time as the Board may determine; provided, however, that the Plan shall terminate as of its effective date in the event that it shall not be approved by the stockholders of the Company at its 1999 Annual Meeting of Stockholders. Awards may be granted under the Plan at any time and from time to time prior to its termination. Any Award outstanding under the Plan at the time of the termination of the Plan shall remain in effect until such Award shall have been exercised or shall have expired in accordance with its terms. 14. Stock Options Granted in Connection With Acquisitions. In the event that the Committee determines that, in connection with the acquisition by the Company or a Subsidiary of another corporation which will become a Subsidiary or division of the Company (such corporation being hereafter referred to as an "Acquired Subsidiary"), stock options may be granted hereunder to employees and other personnel of an Acquired Subsidiary in exchange for then outstanding stock options to purchase securities of the Acquired Subsidiary. Such stock options may be granted at such option prices, may be exercisable immediately or at any time or times either in whole or in part, and may contain such other provisions not inconsistent with the Plan, or the requirements set forth in Section 12 hereof that certain amendments to the Plan be approved by the stockholders of the Company, as the Committee, in its discretion, shall deem appropriate at the time of the granting of such stock options. EX-10.3(E)(I) 3 AMENDMENT NUMBER ONE TO THE TRUST AGREEMENT Exhibit 10.3(e)(i) AMENDMENT NUMBER ONE TO THE TRUST AGREEMENT BETWEEN OGDEN MANAGEMENT SERVICES, INC. AND AMERICAN EXPRESS TRUST COMPANY FOR THE EXECUTIVE PENSION PLAN OF OGDEN MANAGEMENT SERVICES, INC. WHEREAS, Ogden Management Services, Inc. (the "Company") maintains the Ogden Management Services, Inc. Executive Pension Plan (the "Plan") to provide retirement benefits to a select group of highly compensated employees of the Company and certain related entities; WHEREAS, the Company entered into a trust agreement (the "Trust") with American Express Trust Company (the "Trustee") dated October 30, 1998; WHEREAS, pursuant to Section 11 of the Trust, the Trust may be amended by a written instrument executed by the Trustee and the Company; and WHEREAS, the Company and the Trustee desire to amend the Trust, effective as of July 1, 1999. NOW, THEREFORE, pursuant to Section 11 of the Trust, the Trust is hereby amended, effective as of July 1, 1999, as follows: 1. Section 5 of the Trust is amended in its entirety to read as follows: "During the term of this Trust, all income received by the Trust, net of expenses and taxes, shall be accumulated and reinvested. Provided, however, the Company shall have the right at any time and from time to time, in its discretion, to direct the Trustee, in writing, to return to the Company all or any part of the income received by the Trust, net of expenses and taxes." IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed this ____ day of July, 1999. Ogden Management Services, Inc. By: __________________________ Title: ______________________ Date: _______________________ American Express Trust Company By: __________________________ Title: ______________________ Date: _______________________ EX-10.5 4 STOCK PURCHASE AGREEMENT Exhibit 10.5 Execution Copy STOCK PURCHASE AGREEMENT Among VOLUME SERVICES AMERICA HOLDINGS, INC. BCP VOLUME L.P. BCP OFFSHORE VOLUME L.P. RECREATIONAL SERVICES L.L.C. VSI MANAGEMENT DIRECT L.P. GENERAL ELECTRIC CAPITAL CORPORATION and OGDEN ENTERTAINMENT, INC. dated as of June 24, 1999 TABLE OF CONTENTS Page ---- ARTICLE I PURCHASE AND SALE OF STOCK 1 1.1 Transfer of Stock 1 1.2 Consideration 1 1.3 Escrow Deposit 3 1.4 The Closing 6 1.5 Further Assurances 8 ARTICLE II REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY 8 2.1 Corporate Organization 8 2.2 Capital Stock 8 2.3 Subsidiaries of the Company 9 2.4 Authorization, Etc. 10 2.5 Balance Sheets and Income Statements 10 2.6 No Undisclosed Liabilities 11 2.7 No Approvals or Conflicts 11 2.8 Compliance with Law; Governmental Authorizations 11 2.9 Litigation 11 2.10 Title to Assets; Inventories 12 2.11 Absence of Certain Changes 12 2.12 Taxes and Reports 13 2.13 Employee Benefits 14 2.14 Labor Relations 15 2.15 Intellectual Property 15 2.16 Contracts 16 2.17 Environmental Matters 17 2.18 Insurance 18 2.19 Licenses and Permits 19 2.20 No Brokers' or Other Fees 19 2.21 Volume Services America, Inc. Integration/Transition Plan 20 2.22 1998 Contract EBITDA 20 2.23 Ethical Standards 20 2.24 Directors; Officers; Compensation 20 2.25 Bank Accounts 20 2.26 Material Untruths or Omissions 20 2.27 Receivables and Payables 21 2.28 Year 2000 21 2.29 1999 Budget 21 ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS 21 3.1 Ownership of Shares 21 3.2 Title to Shares 21 i 3.3 Authority 22 3.4 No Approvals or Conflicts 22 3.5 Brokers and Advisors 22 3.6 Claims on the Company 22 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER 23 4.1 Organization 23 4.2 Authorization, Etc. 23 4.3 No Approvals or Conflicts 23 4.4 Acquisition for Investment 24 4.5 No Knowledge of Breach 24 4.6 No Brokers' or Other Fees 24 ARTICLE V CONDITIONS TO OBLIGATIONS OF THE COMPANY AND SELLERS 24 5.1 Representations and Warranties 25 5.2 Performance 25 5.3 Officer's Certificate 25 5.4 HSR Act 25 5.5 Injunctions 25 ARTICLE VI CONDITIONS TO PURCHASER'S OBLIGATIONS 25 6.1 Representations and Warranties 25 6.2 Performance 25 6.3 Sellers' and Officer's Certificates 26 6.4 Resignation of Directors 26 6.5 HSR Act 26 6.6 Injunctions 26 6.7 Spinoff Condition 26 ARTICLE VII COVENANTS AND AGREEMENTS 27 7.1 Conduct of Business by Company 27 7.2 Access to Books and Records; Cooperation 28 7.3 Filings and Consents 28 7.4 Publicity 29 7.5 Notice of Breaches 29 7.6 Covenant to Satisfy Conditions 29 7.7 Director and Officer Liability Insurance 29 7.8 Employee Benefits 29 7.9 Contact with Customers and Suppliers 30 7.10 No Solicitation of Other Offers 30 7.11 Termination of Stockholders' Agreement, Higgins Employment Agreement, Share Exchange Agreement and Monitoring Agreements 31 7.12 Fee to Blackstone 31 7.13 Disposition of Hatch Interest 31 ARTICLE VIII TERMINATION 32 8.1 Termination 32 8.2 Procedure and Effect of Termination 33 ii Page ---- ARTICLE IX SURVIVAL OF REPRESENTATIONS AND WARRANTIES 33 9.1 Representations and Warranties Relating to the Company 33 9.2 Representations and Warranties of Sellers 33 9.3 Representations and Warranties of the Purchaser 34 9.4 Limitation of Recourse 34 9.5 Acknowledgment by the Parties 34 ARTICLE X MISCELLANEOUS 35 10.1 Fees and Expenses 35 10.2 Governing Law 35 10.3 Amendment 35 10.4 Assignment 35 10.5 Waiver 35 10.6 Notices 35 10.7 Complete Agreement. 37 10.8 Counterparts 38 10.9 Headings 38 10.10 Knowledge and Fraud 38 10.11 Construction 38 10.12 Severability 38 10.13 Third Parties 38 10.14 CONSENT TO JURISDICTION AND SERVICE OF PROCESS 38 10.15 WAIVER OF JURY TRIAL 39 Annex A -- Ownership of Shares Disclosure Schedule Exhibit A -- Documents Purchaser Has Read Exhibit B-1 -- Compliance Notice Exhibit B-2 -- Non-Compliance Notice STOCK PURCHASE AGREEMENT This Stock Purchase Agreement (this "Agreement"), dated as of June 24, 1999, is entered into by and among Volume Services America Holdings, Inc., a Delaware corporation (the "Company"), BCP Volume L.P., a Delaware limited partnership ("Volume"), BCP Offshore Volume L.P., a Cayman Islands exempted limited partnership ("Offshore"), Recreational Services L.L.C., a Delaware limited liability company ("Services"), VSI Management Direct L.P., a Delaware limited partnership ("Management Direct" and, together with Volume, Offshore and Services, the "Sellers"), General Electric Capital Corporation, a Delaware corporation ("GECC"), and Ogden Entertainment, Inc., a Delaware corporation ("Purchaser"). WHEREAS, Sellers as of the date hereof own, beneficially and of record, an aggregate of 332.67315 shares (the "Shares") of common stock, par value $.01 per share (the "Common Stock"), of the Company in the respective amounts set forth in Annex A hereto; WHEREAS, the Shares constitute all of the issued and outstanding shares of capital stock of the Company; and WHEREAS, Purchaser desires to purchase and Sellers desire to sell the Shares upon the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained herein, the parties hereto agree as follows: ARTICLE I PURCHASE AND SALE OF STOCK 1.1 Transfer of Stock. On the Closing Date (as hereinafter defined) and subject to the terms and conditions set forth in this Agreement, Sellers shall sell, assign, transfer and deliver to Purchaser and the Company (in the proportions described in Section 1.2(a)) the Shares, free and clear of all options, pledges, security interests, liens, mortgages, charges, hypothecations, claims or other encumbrances or restrictions on voting or transfer or other restrictions or encumbrances of any kind or nature whatsoever ("Encumbrances"), except that the transfer of such shares may trigger change of control provisions in the Indenture and the Credit Agreement referred to in Section 2.2 of the Disclosure Schedule (attached hereto, the "Disclosure Schedule"), and contracts referred to in Section 2.7 of the Disclosure Schedule (the restrictions imposed by such change of control provisions, "Permitted Encumbrances"). 1.2 Consideration. (a) On the Closing Date and subject to the terms and conditions set forth in this Agreement, in reliance on the representations, warranties, covenants and agreements of the parties contained herein and in consideration of the sale, assignment, transfer and delivery of the Shares, (i) Purchaser shall pay to Sellers, for 98.531% of the Shares, by wire transfer of immediately available funds, an amount equal to $127,000,000 ($127,000,000 subject to the last sentence of this paragraph, the "Purchase Price") less the Net Escrow Amount (as defined below), subject to any adjustments made pursuant to Section 7.7 and 1 (ii) the Company shall pay to Sellers, for 1.469% of the Shares, by wire transfer of immediately available funds, an amount equal to $1,865,616, such amount to be paid from, and only to the extent of, the proceeds from the repayment at Closing of the Company Notes (as defined in Section 7.13 of the Disclosure Schedule) and the $673,801 received by the Company pursuant to the Refinancing Distribution (as defined in Section 7.13 of the Disclosure Schedule). In the event the Closing Date occurs after September 30, 1999, the Purchase Price will increase by an amount recalculated at a rate of 10% per annum, compounded quarterly, from and including September 30, 1999 to but excluding the date on which the Closing occurs, provided, such increase will be reduced by the interest earned during such period on the Net Escrow Amount. (b) In the event that the Closing occurs on or prior to August 24, 1999, then, immediately prior to such Closing, Services may distribute to GECC that number of Shares having a value (based on the Purchase Price) equal to the amount to which GECC would otherwise be entitled at the Closing, provided, that GECC will remain the sole manager of Services, and provided further, that as a condition precedent to such distribution: (i) GECC enters into an agreement, in form and substance reasonably satisfactory to Purchaser, to be bound by this Agreement with respect to Services and the Shares distributed to it as fully and with the same effect as if originally a Seller hereunder and to transfer such Shares to Purchaser at the Closing pursuant to the terms and conditions of this Agreement; and (ii) Services enters into agreements guaranteed by each of the members of Services, in form and substance reasonably satisfactory to Purchaser, (A) granting to Purchaser and the Company the option to purchase all of the Shares owned by Services (on a 98.531 to 1.469 basis as described above) at any time during the period commencing and including August 26, 1999 and ending and including September 7, 1999 at a price per Share equal to the price per Share paid to the other Sellers at the Closing (the "Per Share Price"), and providing Services the right to require Purchaser and the Company to purchase (on a 98.531 to 1.469 basis as described above) all of the Shares owned by Services at any time during the period commencing September 27, 1999 and ending October 4, 1999, at a price per Share equal to the Per Share Price increased or decreased, as the case may be, by an amount equal to the Per Share Price multiplied by the percentage change in the Dow Jones Industrial Average from September 8, 1999 to September 27, 1999 (up to a maximum percentage increase or decrease of five percent), and (B) providing for the immediate deposit upon such distribution by Services of all of the remaining Shares owned by it, duly endorsed or accompanied by duly executed stock powers for the transfer of such Shares to Purchaser or the Company, as the case may be, into escrow with an escrow agent selected by Purchaser, such Shares to be delivered by such escrow agent to Purchaser and the Company upon deposit by Purchaser and the Company with such escrow agent of the purchase price for such Shares under the option/put agreement described in clause (A) above. The payment made to Services will be subject to Section 7.7 and 10.1 to the same extent applicable to the other Sellers. There will be no conditions to the consummation of such option/put other than the accuracy of Sections 3.2, 3.3, 3.4, 3.5 and 3.6. 2 (c) If Section 1.2(b) applies, the payments and contribution required to be made by Purchaser and the Company pursuant to Sections 1.2(a) and 1.4(b) will be proportionally allocated between the Closing Date and the closing date for the exercise of the option/put under Section 1.2(b). (d) Notwithstanding anything herein to the contrary, if Purchaser, GECC and the Company cannot agree upon the terms and conditions of the agreements referred to in clauses (A) and (B) of clause (b)(ii) above prior to the day that the Closing would otherwise occur pursuant to Section 1.4 hereof (without regard to the parenthetical in such section referencing Section 1.2(b)), Services may not distribute to its members any Shares owned by it, the Closing shall occur without regard to the provisions contained in Section 1.2(b) above and at the Closing all of the Shares will be transferred to Purchaser and the Company. 1.3 Escrow Deposit. (a) Concurrent with the execution and delivery of this Agreement, Purchaser is depositing with Norwest Bank Minnesota, National Association, as escrow agent (the "Escrow Agent"), $10,000,000 in immediately available funds (the "Escrow"). Upon the Closing, such amount (together with interest earned thereon), net of fees, expenses and other charges of the Escrow Agent (the "Net Escrow Amount"), will be applied toward the Purchase Price. (b) If the Closing has not occurred by the 42nd day after the date of this Agreement or such later date, no later than the 57th day after the date of this Agreement, selected by Sellers (the "Closing Target Date"), then the Escrow will remain in effect and on the Closing Target Date the Company and Sellers will deliver to Purchaser duly executed certificates either (x) of the type described in Section 6.3 dated as of the Closing Target Date or (y) identifying the specific facts and circumstances alleged to breach either the representations and warranties of Article II or III or the covenants to be performed by the Company or Sellers on or prior to the Closing Target Date (the certificates referred to in clauses (x) or (y) collectively the "Company Certificates") and within 15 days thereafter Purchaser will deliver to the Company, Sellers and the Escrow Agent either: (i) a duly executed certificate, in the form attached as Exhibit B-1, to the effect that Purchaser irrevocably waives (subject to Section 1.3(i)) any claim that the conditions to Closing set forth in Sections 6.1, based on Article II (other than Section 2.20), and 6.2 to the extent relating to the performance of covenants on or prior to the Closing Target Date were not satisfied as of the Closing Target Date (the "Compliance Notice"); or (ii) a duly executed certificate, in the form attached as Exhibit B-2, identifying the specific facts and circumstances alleged to breach (as of the Closing Target Date) either the representations and warranties of Article II or Article III or the covenants to be performed by the Company or Sellers on or prior to the Closing Target Date, which breaches in good faith are reasonably alleged by the Purchaser to give rise to a failure of the conditions to Closing set forth in Sections 6.1 or 6.2 (the "NonCompliance Notice"). 3 (c) Subject to Section 1.3(i), upon receipt of the Compliance Notice, or if no NonCompliance Notice is received, by the Company, Sellers and Escrow Agent on or before the 15th day after the Closing Target Date, (i) the condition of Section 6.1 will thereafter not be deemed to relate back to any representation or warranty in Article II (other than Section 2.20), (ii) the condition of Section 6.2 will thereafter not be deemed to relate back to the performance or alleged non-performance of any covenant to be performed by the Company or Sellers on or prior to the Closing Target Date and (iii) if the Agreement subsequently terminates without a Closing, the Net Escrow Amount will be applied as follows: (A) If, as of the date of such termination, the then applicable conditions in Article VI (other than Section 6.7) are satisfied (the conditions in Sections 6.3 and 6.4 being deemed satisfied as of such termination date), the Net Escrow Amount will be paid to Sellers. (B) If, as of the date of such termination, any one or more of the then applicable conditions in Article VI (other than Section 6.7) is or are not satisfied (the conditions in Sections 6.3 and 6.4 being deemed satisfied as of such termination date), the Net Escrow Amount will be paid to the Purchaser. However, if the preceding sentence would not have applied but for the Purchaser's failure to comply in all material respects with the agreements and covenants contained in this Agreement to be performed by it on or before the date of such termination, the Net Escrow Amount will instead be paid to Sellers. (d) Upon receipt of the Non-Compliance Notice by the Company, Sellers and the Escrow Agent on or before the 15th day after the Closing Target Date, (A)(i) the condition of Section 6.1 will thereafter not be deemed to relate back to any representation or warranty in Article II (other than Section 2.20) and (ii) the condition of Section 6.2 will thereafter not be deemed to relate back to the performance or alleged non-performance of any covenant to be performed by the Company or Sellers on or prior to the Closing Target Date, except that, in each case, those elements of the representations, warranties or covenants relating to the alleged breaches specifically identified in the Non-Compliance Notice based on identified facts and circumstances (the "Alleged Breaches") will survive, provided, if such Alleged Breaches do not in fact give rise to a failure of the Section 6.1 or 6.2 condition as of the Closing Target Date or prior to termination of this Agreement such failure resulting from such Alleged Breaches is otherwise cured, Purchaser will be deemed to have waived any claim that the condition of Section 6.1 or 6.2 was not satisfied as of the Closing Target Date as a result of such Alleged Breaches, (B) subject to paragraph (k) below, in the event that the parties have not agreed upon a resolution for such Alleged Breaches in accordance with their obligations set forth in Section 1.3(h) below, effective two weeks after delivery of the NonCompliance Notice Section 7.10 will no longer apply and the Company will be entitled to terminate this Agreement at any time, and (C) if this Agreement subsequently terminates without a Closing, the Net Escrow Amount will be applied as follows: (i) If, as of the date of such termination, the then applicable conditions in Article VI (other than Section 6.7) are satisfied (the conditions in Section 6.3 and 6.4 being deemed satisfied as of such termination date), the Net Escrow Amount will be paid to Sellers. 4 (ii) If, as of the date of such termination, any one or more of the then applicable conditions in Article VI (other than Section 6.7) is or are not satisfied (the conditions in Section 6.3 or 6.4 being deemed satisfied as of such termination date), the Net Escrow Amount will be paid to Purchaser. However, if the preceding sentence would not have applied but for the Purchaser's failure to comply in all material respects with the agreements and covenants contained in this Agreement to be performed by it on or before the date of such termination, the Net Escrow Amount will instead be paid to Sellers. (e) The payment of the Net Escrow Amount to the party or parties entitled thereto will be made as promptly as practicable after the date of termination of this Agreement. (f) In connection with the delivery of the Purchaser's Compliance Notice or Non-Compliance Notice described in Section 1.3(b), reference is made to Section 7.2(c) of this Agreement, it being understood that Purchaser will have the specific opportunity during the fifteen day period referred to in Section 1.3(b) to ascertain whether it deems the applicable conditions of Sections 6.1 and 6.2 to be satisfied as of the Closing Target Date. (g) If the Agreement terminates before the Closing Target Date, the parties will use Sections 1.3(c) and 1.3(d) to determine how the Escrow Amount is distributed unless (i) the Agreement is terminated under Section 8.1(a)(vi), in which case the Escrow Amount will be paid to Sellers or (ii) the Agreement is terminated by the Purchaser pursuant to Section 8.1(a)(vii), in which case the Escrow Amount will be paid to Purchaser. (h) In the event Section 1.3(d) applies, should any Alleged Breaches survive, the parties will cooperate in good faith to resolve such Alleged Breaches for a period of two weeks after delivery of the Non-Compliance Notice in order to permit their cure, provided that the Company and Sellers will not be required to expend funds in order to effect any such cure, unless Purchaser provides such funds. (i) If, prior to Closing, it is established that any Seller or the Company had knowledge (as such term is defined in Section 10.10 hereof) as of the Closing Target Date of items that should have been identified on the Company Certificate delivered on the Closing Target Date but such items were not so identified, they will be deemed to have been identified in the Non-Compliance Notice (or, if a Compliance Notice was previously given, it will be deemed to convert into a Non-Compliance Notice that refers to such items). In such case, the provisions of Section 1.3(d) and 1.3(h) will apply ab initio to such revised Non-Compliance Notice, provided, if a Non-Compliance Notice was previously given and the parties were unable to resolve such Alleged Breaches so that Section 7.10 no longer applies, the two week waiting period in paragraph (d)(B) of this Section need not apply a second time. (j) All disputes arising under this Section 1.3 will be resolved by binding arbitration in accordance with the applicable rules of the American Arbitration Association. The arbitration shall be held in New York City, New York before a panel of three arbitrators selected in accordance with Section R-13 of the American Arbitration Association Commercial Arbitration Rules, and shall otherwise be conducted in accordance with the American Arbitration Association Commercial Arbitration Rules, provided, that each of Purchaser and 5 Sellers will have the opportunity to reject within five business days any arbitrator proffered and in no event will the American Arbitration Association have the power to make the appointments of an arbitrator unless the procedures in R-13(a) and (b) (but for the last sentence of R-13(b)) have failed to yield a panel of three arbitrators after submissions of three lists. The parties covenant that they will participate in the arbitration in good faith and that they will share equally its costs except as otherwise provided herein. The provisions of this paragraph (j) will be enforceable in any court of competent jurisdiction, and the parties will bear their own costs in the event of any proceeding to enforce this Agreement except as otherwise provided herein. The arbitrators may in their discretion assess costs and expenses (including the reasonable legal fees and expenses of the prevailing party) against any party to a proceeding. Any party unsuccessfully refusing to comply with an order of the arbitrators will be liable for costs and expenses, including attorneys' fees, incurred by the other party in enforcing the award. (k) At any time prior to termination of this Agreement, Purchaser may by written notice to the Company and Sellers irrevocably convert a NonCompliance Notice into a Compliance Notice, whereupon Section 7.10 will apply from the date of such conversion forward, Section 1.3(d), including, without limitation, the Company's termination right set forth therein, will no longer apply, and Section 1.3(c) will apply. 1.4 The Closing. The closing (the "Closing") of the transactions contemplated in this Agreement (other than the closing of the option/put under Section 1.2(b), which will take place as provided therein) shall take place at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, at 10:00 a.m., local time, on the fifth business day after satisfaction of the conditions set forth in Articles V (other than delivery of the certificate referred to in Section 5.3 which shall be delivered at the Closing) and VI (other than delivery of the certificates and resignations referred to in Sections 6.3 and 6.4 which shall be delivered at the Closing and the delivery of the certificate referred to in Section 6.7 which if the Closing takes place on or prior to September 30, 1999, shall be delivered at the Closing (to avoid confusion, it is understood that the Closing will not occur on or prior to September 30, 1999 unless Purchaser has made the determination referred to in Section 6.7)) (the "Closing Date"), or at such other place, date and time as may be agreed upon by Sellers and Purchaser. (a) Deliveries by Sellers. At or prior to the Closing, Sellers shall deliver or cause to be delivered to Purchaser or the Company, as the case may be, the following: (i) subject to Section 1.2(b), certificates evidencing the Shares, which certificates shall be properly endorsed for transfer or accompanied by duly executed stock powers, in either case executed in blank or in favor of Purchaser or the Company, as the case may be, and otherwise in a form acceptable for transfer on the books of the Company; (ii) resignations of those officers and directors of the Company and each of the Company Subsidiaries (as hereinafter defined) other than the Excluded Entities (as hereinafter defined) whose resignations are requested by Purchaser no later than five business days prior to the Closing, as contemplated by Section 6.4 hereof, such resignations to be effective as of the Closing; provided that Sellers shall have no obligation to deliver resignations of officers who do not agree to resign and provided further that Purchaser shall be responsible for all liabilities and obligations resulting from such resignations; 6 (iii) all other previously undelivered documents required by this Agreement to be delivered by the Company or Sellers to Purchaser at or prior to the Closing Date in connection with the transactions contemplated hereby; (iv) certificate of good standing of the Company and each of the Company Subsidiaries (other than the three joint ventures identified on Section 2.3 of the Disclosure Schedule) in their respective jurisdictions of incorporation and qualification; and (v) the minute books, seals and stock records of the Company and each of the Company Subsidiaries, to the extent available. (b) Deliveries by Purchaser. At or prior to the Closing, Purchaser shall deliver or cause to be delivered to Sellers the following: (i) subject to Section 1.2(b), the Purchase Price, less the Net Escrow Amount delivered to Sellers on the Closing Date, by wire transfer of immediately available funds to the account or accounts designated by Sellers by notice to Purchaser at least two business days prior to the Closing Date; and (ii) all other previously undelivered documents required by this Agreement to be delivered by Purchaser to the Company or Sellers at or prior to the Closing Date in connection with the transactions contemplated hereby. (c) All instruments and documents executed and delivered to Purchaser pursuant hereto shall be in form and substance, and shall be executed in a manner, reasonably satisfactory to Purchaser. All instruments and documents executed and delivered to the Company or Sellers pursuant hereto shall be in form and substance, and shall be executed in a manner, reasonably satisfactory to Sellers. 1.5 Further Assurances. After the Closing, each party hereto shall from time to time, at the request of another party and without further cost or expense to the party to whom such request is made, execute and deliver such other instruments of conveyance and transfer and take such other actions as such other party may reasonably request in order to more effectively consummate the transactions contemplated hereby and to vest in Purchaser good and valid title to the Shares, free and clear of all Encumbrances other than Permitted Encumbrances. ARTICLE II REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY The Company hereby represents and warrants to Purchaser, and (i) Volume, Offshore and Management Direct jointly and severally, on the basis of their aggregate percentage ownership of the Shares, represent and warrant to Purchaser and (ii) Services on the basis of its percentage ownership of Shares represents and warrants to Purchaser, as follows (for the absence of doubt, it is agreed that Services makes no representation as to the other Sellers or their Shares): 7 2.1 Corporate Organization. The Company is a corporation validly existing and in good standing under the laws of the State of Delaware. The Company has full corporate power and authority to own its properties and assets and to carry on its business as now being conducted and is duly qualified or licensed to do business as a foreign corporation in good standing in the jurisdictions in which the ownership of its property or the conduct of its business requires such qualification. The Company has delivered or made available to Purchaser complete and correct copies of the Certificate of Incorporation and all amendments thereto to the date hereof, and the Bylaws (or comparable organizational documents) as presently in effect of the Company and each Company Subsidiary (as hereinafter defined). Except as set forth in Section 2.1 of the Disclosure Schedule, the Company does not own, directly or indirectly, any capital stock or other equity securities of any corporation or have any direct or indirect equity or ownership interest in any partnership, limited liability company, joint venture or other business. 2.2 Capital Stock. The authorized capital stock of the Company consists of 1,000 shares of Common Stock, of which only the Shares as of the date hereof are and as of the Closing will be issued and outstanding and no other shares of any other class or series of capital stock of the Company are issued and outstanding. The Shares have been issued in full compliance with applicable federal and state securities laws. Except as set forth in Section 2.2 of the Disclosure Schedule or as expressly provided in this Agreement, there are no subscriptions, options, warrants, calls, rights, contracts, commitments, understandings, restrictions or arrangements relating to the issuance, sale, transfer or voting of any shares of capital stock of the Company, including any rights of conversion or exchange under any outstanding securities or other instruments, other than restrictions imposed by Federal and state securities laws. All of the Shares have been validly issued and are fully paid, nonassessable and, as of the date hereof, are free and clear of preemptive rights and other Encumbrances except as set forth in Section 2.2 of the Disclosure Schedule and, as of the Closing Date, will be free and clear of all Encumbrances other than Permitted Encumbrances. 2.3 Subsidiaries of the Company. The Company owns and except with respect to the joint venture with the Baltimore Convention Center (which is expected to terminate when the related account terminates in July 1999 and from such point such joint venture would no longer be considered a Company Subsidiary, as defined below), as of the Closing Date the Company will own, directly or through one or more wholly-owned subsidiaries, the number of shares of each class of outstanding capital stock and the percentage of outstanding ownership interests listed as being owned by the Company or its subsidiaries of each of the entities listed in Section 2.3 of the Disclosure Schedule (hereinafter referred to collectively as the "Company Subsidiaries"). Section 2.3 of the Disclosure Schedule sets forth an organizational chart for the Company Subsidiaries and the legal name and state of incorporation or formation, as the case may be, of each Company Subsidiary. Each Company Subsidiary is duly organized, validly existing and (except for the joint ventures and the limited liability company listed under the heading "Joint Venture Interests" in Section 2.1 of the Disclosure Schedule (the "Excluded Entities")) in good standing under the laws of the state of incorporation or formation, as the case may be, indicated for each Company Subsidiary in Section 2.3 of the Disclosure Schedule. Each Company Subsidiary (except for the Excluded Entities) is duly qualified and in good standing as a foreign entity in each jurisdiction in which it is required so to qualify and each Company Subsidiary has full power and authority to carry on the business in which it is now engaged. Except as set forth 8 in Section 2.3 of the Disclosure Schedule, the Company and the Company Subsidiaries do not own, directly or indirectly, any interest in the capital stock of any other corporation, association, trust or similar entity, any interest in the equity of any partnership or similar entity, any share in any joint venture, or any other equity or proprietary interest in any entity or enterprise, however organized and however such interest may be denominated or evidenced. Section 2.3 of the Disclosure Schedule accurately sets forth the capitalization and ownership, and/or the issued and outstanding capital stock, as applicable, of each of the Company Subsidiaries. All of the outstanding capital stock or other ownership interests of the Company Subsidiaries owned by the Company or any of the Company Subsidiaries are duly authorized and validly issued, fully paid and nonassessable and free and clear of all Encumbrances (except as set forth in Section 2.3 of the Disclosure Schedule). None of the shares of capital stock of the Company Subsidiaries and, to the knowledge of the Company with respect to the minority owned Excluded Entities were issued in violation of any preemptive rights binding on the Company Subsidiaries. There are no issued or outstanding shares of any class of capital stock of, or ownership interests in, as applicable, any of the Company Subsidiaries other than those set forth in Section 2.3 of the Disclosure Schedule. Except as disclosed in Section 2.3 of the Disclosure Schedule, none of the Company Subsidiaries has outstanding, or has agreed to issue or sell, any options, rights, warrants, calls or other commitments (either in the form of convertible securities or otherwise) pursuant to which the holder thereof has or will or may have the right to purchase or otherwise acquire any shares of stock or any other security of any of the Company Subsidiaries. 2.4 Authorization, Etc. The Company has full power and authority to execute and deliver this Agreement and to carry out the transactions contemplated hereby. The execution and delivery by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby have been duly approved and authorized, and no other corporate proceedings on the part of the Company are necessary to approve and authorize the execution and delivery by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby. This Agreement has been duly and validly executed by the Company and, assuming this Agreement constitutes the valid and binding agreement of Purchaser and Sellers, constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to applicable laws of bankruptcy, insolvency and similar laws affecting creditors' rights generally and the application of general rules of equity. 2.5 Balance Sheets and Income Statements. The Company has previously delivered to Purchaser the following financial statements, including the related notes and Schedules thereto (collectively, the "Financial Statements"): (a) the audited consolidated balance sheets of the Company and its subsidiaries as at December 31, 1996, December 30, 1997, and December 30, 1998 and the related statements of operations for each of the years then ended; (b) the audited consolidated balance sheets of Service America Corporation and its subsidiaries (collectively, "SAC") as at December 28, 1996, December 27, 1997, and the consolidated statements of operations of SAC for the fifty three (53) week period ended March 30, 1996, the thirty-nine (39) week period ended December 28, 1996, and the fifty-two (52) week period ended December 27, 1997; and 9 (c) the unaudited consolidated balance sheet (the "Balance Sheet") of the Company and the Company Subsidiaries as at March 30, 1999 and the related unaudited statement of operations for the three (3) month period then ended. The Financial Statements present fairly the consolidated assets, liabilities, stockholders' equity and results of operations and financial position of the Company and its consolidated subsidiaries or of SAC, as the case may be, as at the dates and for the periods indicated, and (including the related notes and schedules thereto) have been prepared in accordance with United States generally accepted accounting principles as consistently applied ("GAAP"). 2.6 No Undisclosed Liabilities. At March 30, 1999, neither the Company nor any Company Subsidiary had any liabilities or obligations, whether accrued, absolute or contingent, that were required to be reflected on a balance sheet of the Company and the Company Subsidiaries prepared in accordance with GAAP (including appropriate footnote disclosure), other than liabilities and obligations that are reflected, accrued or reserved for in the Balance Sheet. Except as disclosed in Section 2.6 of the Disclosure Schedule, since March 30, 1999, neither the Company nor any Company Subsidiary has incurred any liabilities or obligations other than those incurred in the ordinary course of business or pursuant to its Budget (as defined below) or as expressly permitted by Section 7.1(b)(vi) or any other Section of this Agreement. 2.7 No Approvals or Conflicts. Except as set forth in Section 2.7 of the Disclosure Schedule, neither the execution and delivery by the Company of this Agreement nor the consummation by the Company of the transactions contemplated hereby will (i) violate, conflict with or result in a breach of any provision of the Certificate of Incorporation or Bylaws (or comparable organizational documents) of the Company or any Company Subsidiary, (ii) 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 creation of any lien, security interest, charge or encumbrance upon any of the properties of the Company or any Company Subsidiary, any note, bond, mortgage, indenture, deed of trust, license, franchise, permit, lease, contract, agreement or other instrument to which the Company, the Company Subsidiaries or any of their respective properties may be bound, (iii) violate any order, injunction, judgment, ruling, law or regulation of any court or governmental authority applicable to the Company, the Company Subsidiaries or any of their respective properties or (iv) except for applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), require any consent, approval or authorization of, or notice to, or declaration, filing or registration with, any governmental or regulatory authority, or any other third party. 2.8 Compliance with Law; Governmental Authorizations. Except as set forth in Section 2.8 of the Disclosure Schedule or as reflected, accrued or reserved for in the Balance Sheet, the Company is not now, and has not been, during any period for which the applicable statute of limitations has not yet expired, in violation of any license, permit, order, injunction, judgment, ruling, law or regulation of any court or governmental authority applicable to the property or business of the Company. Except as set forth in Section 2.8 of the Disclosure Schedule, the licenses, permits and other governmental authorizations held by the Company and 10 the Company Subsidiaries are valid and sufficient to lawfully conduct the businesses of the Company and the Company Subsidiaries as currently conducted. 2.9 Litigation. Except as set forth in Section 2.9 of the Disclosure Schedule or as reflected, accrued or reserved for in the Balance Sheet, (i) there are no actions, proceedings or investigations pending or, to the knowledge of the Company, threatened against the Company or any Company Subsidiary or the transactions contemplated by this Agreement, before any court or governmental or regulatory authority or body and (ii) the Company has no knowledge of any facts or circumstances that would reasonably be expected to result in any such action, proceeding or investigation. 2.10 Title to Assets; Inventories. Except as set forth in Section 2.10 of the Disclosure Schedule, on March 30, 1999, the Company and each Company Subsidiary had and, except with respect to assets disposed of in the ordinary course of business since March 30, 1999, the Company and each Company Subsidiary now has, good and valid title to all the properties and assets owned by it and reflected on the Balance Sheet or which would have been reflected on the Balance Sheet if acquired prior to March 30, 1999, free and clear of all encumbrances of any nature except for (i) exceptions to title as set forth in Section 2.10 of the Disclosure Schedule; (ii) mortgages and encumbrances which secure indebtedness or obligations which are properly reflected on the Balance Sheet; (iii) liens for Taxes (as defined in Section 2.12) not yet payable or any Taxes being contested in good faith; (iv) liens arising as a matter of law in the ordinary course of business, provided that the obligations secured by such liens are not delinquent or are being contested in good faith; and (v) such minor imperfections of title and encumbrances, if any, as do not impair the ability of the Company to realize the practical benefits of ownership of such property. Except as set forth in Section 2.10 of the Disclosure Schedule, the Company and each Company Subsidiary owns, or has valid leasehold interests in, all tangible properties and assets used in the conduct of its business purported to be owned by it. The Company does not own any real property. (a) The assets currently owned or leased by the Company or any Company Subsidiary, or to which the Company or any Company Subsidiary is ordinarily given access in providing its services, are adequate and in satisfactory operating condition, subject to ordinary maintenance requirements from time to time, for the uses to which they are being put, and constitute all of the assets necessary for the continued conduct of the business of the Company and the Company Subsidiaries after the Closing Date in substantially the same manner as conducted prior to the Closing Date. (b) All inventories of the Company and the Company Subsidiaries are of good, usable and merchantable quality (subject to normal and customary allowances for spoilage, damage and outdated items in the case of food inventory) and, except as set forth in Section 2.10 of the Disclosure Schedule, do not include any obsolete or discontinued items. Except as set forth in Section 2.10 of the Disclosure Schedule, (i) all inventories are of such quality as to meet any applicable governmental quality control standards, (ii) all inventories that are finished goods are saleable as current inventories at the current prices thereof and (iii) all inventories are recorded on the books of the Company or the Company Subsidiaries, as applicable, at the lower of average cost, determined on the FIFO basis, or market. 11 2.11 Absence of Certain Changes. Except as disclosed in Section 2.11 of the Disclosure Schedule and as otherwise provided herein, since March 30, 1999, (i) the business of the Company and each Company Subsidiary has been conducted only in the ordinary course and consistent with past practice; and (ii) there has not been any event or circumstances that would have a material adverse effect on the business, results of operations or financial condition or prospects of the Company and the Company Subsidiaries taken as a whole (hereinafter referred to as a "Material Adverse Effect"). (a) Since March 30, 1999, the Company and each Company Subsidiary has not, except as set forth in Section 2.11 of the Disclosure Schedule, (i) purchased, agreed to purchase, redeemed or called for redemption of any outstanding shares, issued any options, warrants, shares, bonds or other securities, interests or rights to acquire securities or interests or declared or paid any dividend or distribution on or authorized or effected any split up or recapitalization of any shares; (ii) authorized any changes in its charter or by-laws; (iii) made or contracted for any capital expenditures or incurred or paid any liabilities or obligations, other than in the ordinary course of business or pursuant to its Budget (as defined below) or as expressly permitted by Section 7.1(b)(vi) or any other Section of this Agreement; (iv) sold, leased, or otherwise transferred, or contracted to sell, lease or otherwise transfer, any of its assets, other than in the ordinary course of business, or mortgaged, pledged or subjected to any lien, charge or other encumbrance any of its assets, other than in the ordinary course of business; (v) made any loan or advance to any person or entity, other than in the ordinary course of business; (vi) made any changes in directors or officers or made any change in the compensation payable to, or made any arrangement for the payment of or paid any bonus to, any director or officer; (vii) failed to keep in force any insurance coverage then in force; (viii) suffered any uninsured damage to or destruction of any of its properties or assets of any premises owned or leased by it, whether by fire, accident, labor disturbance or otherwise; (ix) transferred or granted any right under any lease, license, agreement, patent, trade name, copyright or other valuable asset, other than in the ordinary course of business; (x) failed to pay any payable or collect any receivable other than in accordance with past practice or in connection with any matter disclosed as in dispute under Section 2.9 of the Disclosure Schedule, or (xi) agreed to do any of the things set forth in Sections 2.11(b)(i), (ii), (iii), (iv), (v), (vi), (ix), or (x) above. 2.12 Taxes and Reports. (a) Filing of Tax Returns. Except as set forth in Section 2.12(a) of the Disclosure Schedule, there have been properly completed and filed on a timely basis (taking into account extensions of time to file granted therefor) all tax returns required to be filed with respect to the Company and the Company Subsidiaries on or prior to the date hereof. (b) Payment of Taxes. All Taxes of the Company or any of the Company Subsidiaries that are due and owing with respect to taxable periods ending on or before the Closing Date hereof have been paid, except to the extent that such Taxes are being contested in good faith by appropriate proceedings and disclosed in Section 2.12(b) of the Disclosure Schedule hereto or are reserved as and to the extent required by GAAP on the Financial Statements. 12 (c) Audit History. Except as disclosed in Section 2.12(c) of the Disclosure Schedule, no issues have been raised in writing by any taxing authority in connection with any tax return of the Company and the Company Subsidiaries with respect to the Company and the Company Subsidiaries. Except as disclosed in Section 2.12(c) of the Disclosure Schedule, no waivers of statutes of limitation with respect to any such tax returns have been given by the Company or the Company Subsidiaries. Except to the extent shown in Section 2.12(c) of the Disclosure Schedule, all deficiencies asserted or assessments made as a result of any examinations have been paid, or are reflected as a liability in the Financial Statements, or are being contested and are reserved as and to the extent required by GAAP on the Financial Statements. (d) Liens. Except as disclosed in Section 2.12(d) of the Disclosure Schedule, there are no liens for Taxes on the assets of the Company or any Company Subsidiary other than for current Taxes not yet due and payable or if due, (i) not delinquent or (ii) being contested in good faith by appropriate proceedings. (e) Prior Affiliated Groups. Except as disclosed in Section 2.12(e) of the Disclosure Schedule and except for the group of which the Company and the Company Subsidiaries are presently members, neither the Company nor any of the Company Subsidiaries has ever been a member of an affiliated group of corporations, within the meaning of Section 1504 of the Code. (f) Tax-Exempt Use Property. Except as disclosed in Section 2.12(f) of the Disclosure Schedule, as of Closing, none of the assets of the Company or any of the Company Subsidiaries is "tax exempt use property" within the meaning of Section 168(h) of the Code. (g) Definitions. For purposes of this Agreement, (i) "Taxes" shall mean all taxes, charges, fees, levies, penalties or other assessments imposed by any United States Federal, state, local or foreign taxing authority, including, but not limited to, income, excise, property, sales and use, transfer, franchise, payroll, withholding, social security or other taxes, including any interest, penalties or additions attributable thereto and (ii) "Tax Return" shall mean any return, report, information return or other document (including any related or supporting information) filed or required to be filed with any taxing authority with respect to Taxes. 2.13 Employee Benefits. Section 2.13 of the Disclosure Schedule sets forth a true and complete list of each employee benefit plan within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), that is maintained or to which the Company or Company Subsidiary, as applicable, is a party or obligated to contribute for or on behalf of, current or former employees or directors of the Company or any Company Subsidiary (the "Plans"). With respect to each of the Plans, and except as set forth in Section 2.13 of the Disclosure Schedule, other than multi-employer plans, the Seller has heretofore delivered or made available to Purchaser true and complete copies of (i) the text of the Plan and of any trust or insurance contract maintained in connection therewith, (ii) the most recent summary plan descriptions and all modifications thereto (including any written summaries of any unwritten Plan), any employee handbook and other communications and all modifications thereto, if any, (iii) the most recent three annual reports (Form 5500 series) together with required schedules filed with the Internal Revenue Service (the "IRS") and any financial statements or 13 opinions required under ERISA, if any, (iv) the most recent determination letter issued by the IRS with respect to 401(k) plans and the related submission and communications with the IRS, and (v) the most recent actuarial report, if any. Except as set forth in Section 2.13 of the Disclosure Schedule, each Plan has been maintained in substantial compliance with all applicable laws and regulations and has been operated in substantial compliance with its terms. Except as set forth in Section 2.13 of the Disclosure Schedule, (a) no Plan has an accumulated or waived funding deficiency within the meaning of Section 412 of the Internal Revenue Code of 1986, as amended (the "Code"), (b) no proceedings have been instituted to terminate (i) any Plan that is subject to Title IV of ERISA or (ii) any "employee pension benefit plan" (as defined in Section (3)(2) of ERISA) sponsored by a member of the Company's "Controlled Group" (defined as any organization which is a member of the same controlled group of organizations within the meaning of Code Sections 414(b) or (c) that is subject to Title IV of ERISA), and (c) the current value of the assets of each of the Plans that are subject to Title IV of ERISA, based upon the actuarial assumptions currently used by the Plans, exceeds the present value of the accrued benefits under each such Plan. Any Plan intended to be "qualified" (within the meaning of Section 401 (a) of the Code) either (x) has received a favorable Determination Letter from the Internal Revenue Service and, to the knowledge of the Company, no event has occurred nor condition exists which could reasonably be expected to result in the revocation of such Determination Letter, or (y) is the subject of an application for such a Determination Letter. Except as set forth on Section 2.13 of the Disclosure Schedule, no Plan provides health, dental, medical, hospitalization or life insurance (whether on an insured or self-insured basis) to current employees or former employees after their retirement or other termination of employment from the Company and Company Subsidiaries (other than continuation coverage required under COBRA which may be purchased at such employees' sole expense). 2.14 Labor Relations. Except as set forth in Section 2.14 of the Disclosure Schedule, neither the Company nor any Company Subsidiary is a party to any collective bargaining agreement applicable to employees of the Company or Company Subsidiary, as applicable. Except as set forth in Section 2.14 of the Disclosure Schedule, the Company and the Company Subsidiaries are in compliance with all applicable laws respecting employment and employment practices, terms and conditions of employment and wages and hours and is not engaged in any unfair labor practice, and, there is no labor strike, dispute, slowdown or stoppage actually pending or, to the knowledge of the Company, threatened against or affecting the Company or any Company Subsidiary. 2.15 Intellectual Property. Section 2.15 of the Disclosure Schedule contains an accurate and complete list of all registered patents, trademarks, trade names, service marks and copyrights (collectively, "Intellectual Property") owned by the Company or any Company Subsidiary and an accurate and complete list of all licenses and other agreements relating to Intellectual Property (collectively, "License Agreements"). Except as set forth in Section 2.15 of the Disclosure Schedule, (i) the consummation of the transactions contemplated by this Agreement will not impair Purchaser's right to use any Intellectual Property or the enforceability of the License Agreements, (ii) neither the Company nor any Company Subsidiary has received, during any period for which the applicable statute of limitations has not yet expired, a written notice of any claims by any person relating to the Company's or Company Subsidiary's, as applicable, use of any Intellectual Property, or challenging or questioning the validity or enforceability of any such License Agreement, except for such claims that have been resolved with 14 no further obligations by the Company or the Company Subsidiaries, and (iii) neither the Company nor any Company Subsidiary has given any notice of infringement to any third party with respect to any such Intellectual Property or has knowledge of facts relating to the infringement by any third party of any Intellectual Property. 2.16 Contracts. With respect to the Company and the Company Subsidiaries, the Company has delivered or made available to Purchaser true and complete copies of (i) each contract for the purchase of inventory in excess of $500,000 per calendar year, (ii) each contract with a customer involving revenues to the Company or any Company Subsidiary reasonably anticipated to be in excess of $100,000 per calendar year, (iii) each contract pertaining to employment, consulting or severance arrangements with any officer, director, employee or independent contractor, (iv) each indenture, mortgage, note, letter of credit or other instrument relating to the borrowing of money (or the guarantee thereof) involving an amount in excess of $10,000, (v) each franchise contract, (vi) each contract that was not entered into in the ordinary course of business and that involves expenditures in excess of $25,000 over its term, (vii) each lease, rental or occupancy agreement, license, installment and conditional sale agreement, software maintenance agreement, and other contract affecting the ownership of, leasing of, title to, use of, or any leasehold or other interest in, any real or personal property (except personal property leases and installment and conditional sales agreements having a value per item or aggregate payments of less than $100,000 and with terms of less than one year) (with respect to those agreements in this clause (vii) pertaining to personal property, the "Personal Property Leases"), (viii) each collective bargaining agreement and other contract to or with any labor union or other employee representative of a group of employees, (ix) each joint venture, partnership and other contract involving a sharing of profits, losses, costs or liabilities by the Company or any Company Subsidiary with any other Person, (x) each License Agreement, (xi) each contract limiting the freedom to engage in any line of business or compete with any person or entity or operate at any location and (xii) each contract, agreement, commitment or other understanding not otherwise disclosed pursuant to the foregoing clauses which, to the knowledge of the Company, would reasonably be expected to be material to the Company and the Company Subsidiaries (the items described in clauses (i) through (xii), collectively, the "Material Contracts"). Section 2.16 of the Disclosure Schedule sets forth a true and correct list of all Material Contracts as of the date hereof. (a) Except as set forth in Section 2.16 of the Disclosure Schedule, (i) each of the Material Contracts is in full force and effect, and (ii) there are no existing defaults by the Company or, to the Company's knowledge, the other party thereunder, which defaults are likely to result in a termination of any Material Contract. 2.17 Environmental Matters. As used herein, "Material Environmental Amount" shall mean an amount payable by the Company or any Company Subsidiary, in the aggregate, for investigative and remedial costs, compliance costs, damages, fines or penalties pursuant to Environmental Laws (as hereinafter defined) that in the aggregate exceeds $250,000. Except as set forth in Section 2.17 of the Disclosure Schedule and except as would not reasonably be expected, individually and in the aggregate, to result in the payment of a Material Environmental Amount: 15 (i) neither the Company nor any Company subsidiary has as of the date hereof received any written notice and otherwise has no knowledge of any alleged violation of any applicable Federal, state or local laws, regulations, ordinances, orders or principles of common law related to Hazardous Materials, pollution or the protection of the environment and/or occupational health and safety ("Environmental Laws"). To the Company's knowledge, there are no facts or circumstances that would reasonably be expected to result in any such allegation. As used herein, "Hazardous Material" means any hazardous or toxic material pollutant, contaminant, substance or waste defined in or governed by any Environmental Law, including but not limited to any material listed under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. 1801, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. 6901, et seq.; the Federal Water Pollution Control Act, 33 U.S.C. 1251, et seq.; the Clean Air Act, 42 U.S.C. 7401, et seq.; the Toxic Substances Control Act, 15 U.S.C. 2601; asbestos and asbestos containing material; petroleum, petroleum products and waste oil; or any other waste, material, substance, pollutant or contaminant that might reasonably be expected to result in liability under any applicable Environmental Law. (ii) The Company and the Company Subsidiaries are in compliance with, and at all times prior to the date hereof complied with, all Environmental Laws. (iii) The Company and the Company Subsidiaries have obtained and are in compliance with all permits and authorizations required under any Environmental Law ("Environmental Permits") to lawfully conduct the business of the Company and the Company Subsidiaries as currently conducted. All such Environmental Permits are in full force and effect. There is no proceeding pending or, to the Company's knowledge, threatened, seeking the revocation, cancellation, suspension or adverse modification of any Environmental Permit. (iv) No Hazardous Material has been used, stored, treated or disposed of by the Company or Company Subsidiaries except in compliance with Environmental Laws. To the best of the Company's knowledge, no Hazardous Materials generated by the Company or any Company Subsidiary has ever been sent directly or indirectly to any site listed or formally proposed for listing on the National Priorities List promulgated pursuant to CERCLA or to any site listed on any state list of hazardous substance sites requiring cleanup. (v) To the best of the Company's knowledge, no Hazardous Material is present on, at, under or migrating from any property where the Company and the Company Subsidiaries have conducted their business. (vi) The Company and Company Subsidiaries have maintained all records in the manner and the time periods required by all Environmental Laws and Environmental Permits. 16 (vii) There are no liens, encumbrances or restrictions of any nature whatsoever against the Company or the Company Subsidiaries arising under any Environmental Law. (viii) The Company has made available to Purchaser complete copies of all reports, analyses or other documentation prepared by or on behalf of the Company or otherwise in the Company's possession relating to (i) the Company's and the Company Subsidiaries' compliance with Environmental Laws, and (ii) the presence or absence of Hazardous Materials on, at, under or migrating from any property where the Company and the Company Subsidiaries have conducted their business (collectively referred to as "Environmental Reports"). Each Environmental Report delivered or made available to Purchaser has been listed on Section 2.17 of the Disclosure Schedule. By way of example only and not by way of limitation, Environmental Reports include Phase I and Phase II audits, compliance audits, tank closure reports, remedial investigation reports, remedial action reports or other documentation relating to investigation and remediation activities. (ix) To the extent required under Environmental Laws: all existing underground and above ground storage tanks currently operated by the Company or Company Subsidiaries are properly registered with the appropriate local, state and federal governmental authorities; all underground storage tanks currently operated by the Company or the Company Subsidiaries meet the federal and all applicable state and local upgrade requirements effective December 22, 1998; and no underground or above ground storage tank operated by the Company or the Company Subsidiaries has been closed, abandoned or removed during the Company's or the Company Subsidiaries' operations, except in compliance with all applicable Environmental Laws. Section 2.17 of the Disclosure Schedule lists all underground and above ground storage tanks now operated by the Company or any Company Subsidiary, together with applicable registration forms, filings and permits. 2.18 Insurance. Section 2.18 of the Disclosure Schedule lists all insurance policies, including, without limitation, workers compensation insurance policies, covering the assets, employees and operations of the Company and the Company Subsidiaries as of the date hereof. Such insurance policies are in full force and effect, all premiums due thereon have been paid (except as described in Section 2.18 of the Disclosure Schedule) and such policies are adequate to insure the business of the Company and the Company Subsidiaries in such amounts and against such risks as are customary for companies engaged in businesses similar to that of the Company and the Company Subsidiaries. (a) There are no unpaid deductibles or retentions or self-insured retention ("SIR") for reported insurance claims other than those that are listed in Section 2.18 of the Disclosure Schedule, where the aggregate of all such deductibles, retentions and SIR's could exceed $50,000. (b) There are no deductibles, retentions or SIR's for claims that are incurred but not yet reported other than those that are listed in Section 2.18 of the Disclosure Schedule. (c) There have been no "portfolio risk transfers" or "buyouts of claim tail" other than those that are attached as Section 2.18 of the Disclosure Schedule. 17 (d) There is no liability for retrospectively rated insurance premiums other than those listed in Section 2.18 of the Disclosure Schedule. (e) There is no liability to insurers for future audit premiums other than those listed in Section 2.18 of the Disclosure Schedule. (f) A current list of all surety bonds, with obligee, obligor, face amount, and description, is attached as Section 2.18 of the Disclosure Schedule. 2.19 Licenses and Permits. Set forth on Section 2.19 of the Disclosure Schedule is a list of each liquor license held by the Company or any of the Company Subsidiaries as of the date hereof. Subject to any filings required to be made or governmental approvals required to be obtained in connection with the Closing, which the Company, Sellers and Purchaser will cooperate in making or obtaining but which shall in any event be the obligation of Purchaser to make or obtain, the Company and each Company Subsidiary has all local, state and federal licenses, including liquor licenses, permits, registrations, certificates, consents, accreditations and approvals (collectively, the "Licenses and Permits") necessary to conduct its business in the manner currently conducted. Except as set forth in Section 2.19 of the Disclosure Schedule, there is no default under any of the Licenses and Permits, no notices have been received by the Company or any Company Subsidiary with respect to threatened, pending, or possible revocation, termination, suspension or limitation of any such License or Permit, and there exists no grounds for revocation, termination, suspension or limitation of any such License or Permit. 2.20 No Brokers' or Other Fees. Except as set forth on Section 2.20 of the Disclosure Schedule, no broker, finder or investment banker is entitled to any fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Company. 2.21 Volume Services America, Inc. Integration/Transition Plan. The Company has heretofore delivered or made available to Purchaser a true, correct and complete copy of the Volume Services America Integration/Transition Plan (the "Plan") pursuant to which Volume Services, Inc. and SAC were combined. Except as disclosed in Section 2.21 of the Disclosure Schedule attached hereto: (a) all cost saving measures included in the Plan have been fully implemented; (b) all one-time expenses incurred in connection with implementation of the Plan that are allowed to be reserved for under GAAP have been reserved by the Company for accounting purposes in 1998, which reserve is reflected in the Company's 1998 income statement delivered or made available pursuant to Section 2.5; and (c) all cash payments required to implement the Plan have been paid in full prior to the date hereof. 2.22 1998 Contract EBITDA. The Company has heretofore delivered to Purchaser as Section 2.22 of the Disclosure Schedule a true, correct and complete list of the 18 approximate earnings before interest, taxes, depreciation, and amortization ("EBITDA") contributed by each of the Company's customer locations in 1998 (other than customers individually accounting for less than $100,000 of EBITDA), which list fairly represents the EBITDA results of such customer locations, taken as a whole. 2.23 Ethical Standards. SAC and Volume Services Inc. have adopted written policies regarding ethical standards, copies of which have been delivered or made available to Purchaser. To the Company's knowledge, such policies are being complied with. 2.24 Directors; Officers; Compensation. Section 2.24 of the Disclosure Schedule contains a true and complete list, as of the date of this Agreement, of all of the Company's directors and officers, and all salaried employees who receive annual compensation in excess of $50,000 and the salaries of such directors, officers and salaried employees. 2.25 Bank Accounts. Section 2.25 of the Disclosure Schedule contains a complete list showing the name of each bank in which the Company has an account or safety deposit box and a complete list of each such account or safety box and the name of each person authorized to draw thereon or have access thereto. 2.26 Material Untruths or Omissions. This Agreement, including any disclosure contained or referred to in any Section (including Section 2.26) of the Disclosure Schedule, does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements herein and therein, in the light of the circumstances in which they were made, not misleading. 2.27 Receivables and Payables. Except as set forth in Section 2.27 of the Disclosure Schedule, all receivables of the Company as of March 30, 1999: (i) were incurred in the ordinary course of the Company's business and (ii) are not, to the Company's or any Seller's knowledge, subject to any defense, counter-claim or set off, other than those arising in the ordinary course of business, provided that certain receivables are subject to claims and counterclaims as disclosed in Section 2.9 of the Disclosure Schedule. All payables of the Company as of March 30, 1999 were incurred in the ordinary course of business. 2.28 Year 2000. The Company's primary information system, and all accounting systems at its headquarters location, are ready for "Y2K" transactions. The Company has developed a plan outline to assess, remediate and test secondary information technology systems, such as communication, security, and point of sale systems. In the second quarter of 1999, the Company plans on conducting a survey of secondary information systems to assess additional "Y2K" exposure. An independent consultant has been retained to assist the Company in performing the survey and assessment. The Company has, through normal operating requirements, been upgrading secondary information systems on an as required basis. 2.29 1999 Budget. The 1999 Budget heretofore delivered by the Company to Purchaser (the "Budget"), including the estimated capital expenditures reflected therein, has been prepared in good faith, giving effect to assumptions made on a reasonable basis and reflects the best available estimates and judgments of the Company's management as to the future financial performance of the Company. 19 ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS Volume, Offshore and Management Direct hereby jointly and severally represent and warrant to Purchaser as to themselves and their Shares, and Services hereby represents and warrants to Purchaser severally and not jointly, as to itself and its Shares, as follows (for the absence of doubt, it is agreed that Services makes no representation as to the other Sellers or their Shares): 3.1 Ownership of Shares. The Shares constitute all the issued and outstanding shares of capital stock of the Company. 3.2 Title to Shares. As of the date hereof, except as set forth in Section 3.2 of the Disclosure Schedule, each of the Sellers has good and valid title to the Shares indicated as being owned by it in Annex A, free and clear of all Encumbrances. As of the Closing Date, each of the Sellers will have good and valid title to the Shares indicated as being owned by it in Annex A. Except as set forth in Section 3.2 of the Disclosure Schedule, each Seller represents and warrants that, as of the date hereof there are no restrictions against the transfer of its Shares to Purchaser or the Company, as the case may be. Each Seller represents and warrants that as of the Closing Date, there will be no restrictions against the transfer of its Shares to Purchaser or the Company, as the case may be. Delivery of the Shares by Sellers to Purchaser or the Company, as the case may be, in accordance with Sections 1.2 and 1.4(a) will convey to Purchaser or the Company, as the case may be, good and valid title to such Shares. 3.3 Authority. Each Seller has full power and authority to execute and deliver this Agreement and to carry out the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the transactions contemplated hereby by each of the Sellers have been duly and validly authorized by all requisite action on the part of such Seller. This Agreement has been duly and validly executed by each Seller and assuming this Agreement constitutes the valid and binding agreement of Purchaser and the Company, constitutes the legal, valid and binding obligation of each Seller enforceable in accordance with its terms, subject to applicable laws of bankruptcy, insolvency and similar laws affecting creditors' rights generally and the application of general rules of equity. 3.4 No Approvals or Conflicts. Except as set forth in Section 3.4 of the Disclosure Schedule, neither the execution and delivery of this Agreement, nor the consummation by each Seller of the transactions contemplated hereby will: (a) violate, conflict with or result in a breach of any provision of the certificate of incorporation or charter papers or bylaws or other organizational documents of such Seller; (b) violate any order, injunction, judgment, ruling, law or regulation of any court or governmental authority to which such Seller or its subsidiaries or any of their respective properties is subject; (c) 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 creation of any lien, security interest, charge or encumbrance upon any of Seller's properties under any note, bond, mortgage, 20 indenture, deed of trust, license, franchise, permit, lease, contract, agreement or other instrument to which Sellers or their subsidiaries or any of their respective properties may be bound, or (d) except for applicable requirements of the HSR Act and the Exchange Act, require any consent, approval or authorization of, or notice to, or declaration, filing or registration with, any governmental or regulatory authority or other third party. Except as set forth on Section 3.4 of the Disclosure Schedule, no consent or approval of or notification to any governmental authority is required in connection with the execution and delivery by such Seller of this Agreement or the consummation of the transactions contemplated hereby. 3.5 Brokers and Advisors. Except as set forth in Section 2.20 of the Disclosure Schedule, no action taken by any Seller in connection with or in furtherance of the transactions contemplated hereby has or shall cause any of the Company, any Company Subsidiary or Purchaser to be subject to any claim against it for a brokerage commission, finder's fee, investment banker's fee or other like payment. 3.6 Claims on the Company. No Seller and no director, officer, partner or other affiliate of such Seller (other than the Company and the Company Subsidiaries) has any claim against the Company or any Company Subsidiary in respect of borrowed money or funded indebtedness or obligations or liabilities for fees, expenses and advances (other than amounts payable in the ordinary course of business as compensation to any person who is also an employee of the Company or any Company Subsidiary), nor is any Seller or director, officer, partner or any of its other affiliates (other than the Company and the Company Subsidiaries) party to any agreement, transaction or other business arrangement with the Company or any Company Subsidiary, except (other than those in connection with such person's acting as an employee of the Company or any Company Subsidiary), with respect to both of the foregoing clauses, (i) as described in Section 3.6 of the Disclosure Schedule or (ii) reimbursements and advances in accordance with the policies of the Company and the Company Subsidiaries to directors and officers for expenses incurred in connection with the Company's business. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER Purchaser hereby represents and warrants to the Company and Sellers as follows: 4.1 Organization. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. 4.2 Authorization, Etc. Purchaser has full corporate power and authority to execute and deliver this Agreement, and to carry out the transactions contemplated hereby. The execution and delivery by Purchaser of this Agreement and the consummation by Purchaser of the transactions contemplated hereby have been duly approved and authorized, and no other corporate proceedings on the part of Purchaser are necessary to approve and authorize the execution and delivery by Purchaser of this Agreement and the consummation by Purchaser of the transactions contemplated hereby. This Agreement has been duly and validly executed by Purchaser and, assuming this Agreement constitutes the valid and binding agreement of the 21 Company and Sellers, constitutes a valid and binding agreement of Purchaser, enforceable against Purchaser in accordance with its terms, subject to applicable laws of bankruptcy, insolvency and similar laws affecting creditors' rights generally and the application of general rules of equity. 4.3 No Approvals or Conflicts. Neither the execution and delivery by Purchaser of this Agreement nor, as of the Closing, the consummation by Purchaser of the transactions contemplated hereby will (i) violate, conflict with or result in a breach of any provision of the Certificate of Incorporation or By-laws of Purchaser, (ii) 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 creation of any lien, security interest, charge or encumbrance upon any of Purchaser's properties under, any note, bond, mortgage, indenture, deed of trust, license, franchise, permit, lease, contract, agreement or other instrument to which Purchaser or its subsidiaries or any of their respective properties may be bound, (iii) violate any order, injunction, judgment, ruling, law or regulation of any court or governmental authority applicable to Purchaser or its subsidiaries or any of their respective properties, or (iv) except for applicable requirements of the Exchange Act and the HSR Act require any consent, approval or authorization of, or notice to, or declaration, filing or registration with, any governmental or regulatory authority or other third party. (a) Purchaser understands that the procurement of any required consents from, or giving of notices to, customers and other parties with contractual arrangements with the Company and the Company Subsidiaries or, subject to Sections 6.5 and 6.6, governmental authorities (other than the Department of Justice and the Federal Trade Commission) who may require such consents or notices (regardless of whether such consents or notices are included in Section 2.7 of the Disclosure Schedule) will not be a condition to any party's obligation to effect the Closing. Purchaser also understands that consummation of this transaction requires the prior consent of the lenders under the bank credit facility pertaining to the Company and the Company Subsidiaries, and in the absence of such consent, Purchaser would have to cause the Company and/or the Company Subsidiaries to refinance such facility at Closing and, subject to Section 7.3, no Seller will be responsible for the failure to obtain such consent or to effect such refinancing. Finally, Purchaser understands that consummation of this transaction will constitute a "change of control" under the indenture for the 11-1/4% Notes due 2009 (the "Company Notes") and as a result, a repurchase offer must be made following the Closing in accordance with the requirements of such indenture. 4.4 Acquisition for Investment. Purchaser acknowledges that neither the offer nor the sale of the Shares has been registered under the Securities Act. Purchaser is acquiring the Shares solely for its own account and not with a view to any distribution or other disposition of such Shares, and the Shares will not be transferred except in a transaction registered or exempt from registration under the Securities Act. 4.5 No Knowledge of Breach. As of the date hereof, Purchaser has no knowledge of any breaches of any representations or warranties set forth in Article II or III above. Purchaser acknowledges that it has read the copies of the documents included in Exhibit A to this Agreement, which Exhibit A has been initialed by Sellers, the Company, and Purchaser. 22 4.6 No Brokers' or Other Fees. No broker, finder or investment banker is entitled to any fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of Purchaser. ARTICLE V CONDITIONS TO OBLIGATIONS OF THE COMPANY AND SELLERS The obligation of the Company and Sellers to effect the Closing under this Agreement is subject to the satisfaction, at or prior to the Closing, of each of the following conditions, unless waived in writing by Sellers. 5.1 Representations and Warranties. The representations and warranties made by Purchaser in this Agreement shall be true and correct in all material respects on the Closing Date as though such representations and warranties were made at such date, except for changes expressly permitted or contemplated by this Agreement. 5.2 Performance. Purchaser shall have performed and complied in all material respects with all agreements, obligations and conditions required by this Agreement to be so performed or complied with by Purchaser prior to the Closing. 5.3 Officer's Certificate. Purchaser shall have delivered to Sellers a certificate, dated as of the Closing Date and executed by the President or a Vice President of Purchaser, certifying to the best of such person's knowledge (as the term knowledge is defined in Section 10.10) to the fulfillment of the conditions specified in Sections 5.1 and 5.2 hereof. 5.4 HSR Act. All applicable waiting periods under the HSR Act with respect to the transactions contemplated hereby shall have expired or been terminated. 5.5 Injunctions. On the Closing Date there shall be no (i) injunction, writ, preliminary restraining order or other order in effect of any nature issued by a court or governmental agency of competent jurisdiction directing that the transactions provided for herein not be consummated as provided herein or (ii) statute, law, ordinance, rule or regulation enacted, entered or promulgated by any governmental authority ("Law") prohibiting or restraining the consummation of the transactions contemplated hereby. ARTICLE VI CONDITIONS TO PURCHASER'S OBLIGATIONS The obligation of Purchaser to effect the Closing under this Agreement is subject to the satisfaction, at or prior to the Closing, of each of the following conditions, unless waived in writing by Purchaser. 6.1 Representations and Warranties. The representations and warranties made by the Company and Sellers in this Agreement shall be true and correct in all respects on the Closing Date as though such representations and warranties were made at such date, except for (i) 23 changes expressly permitted or contemplated by the terms of this Agreement and (ii) any breaches of such representations and warranties that, individually and in the aggregate, do not constitute a Material Adverse Effect. 6.2 Performance. The Company and Sellers shall have performed and complied in all respects with all agreements, obligations and conditions required by this Agreement to be so performed or complied with by the Company and Sellers prior to the Closing, except where the failure to so perform or comply does not, individually and in the aggregate, result in a Material Adverse Effect. 6.3 Sellers' and Officer's Certificates. (a) Each Seller shall have delivered to Purchaser a certificate, dated as of the Closing Date, and executed by a principal, a general partner or a managing member, as the case may be, of such Seller, certifying, to the best of the certifying person's knowledge (as the term knowledge is defined in Section 10.10), to the fulfillment of the conditions specified in Sections 6.1 and 6.2 hereof insofar as such conditions relate to such Seller's representations and warranties and such Seller's covenants and (b) the Company shall have delivered to Purchaser a certificate, dated as of the Closing Date and executed by the President or a Vice President of the Company, certifying, to the best of such person's knowledge (as the term knowledge is defined in Section 10.10), to the fulfillment of the conditions specified in Sections 6.1 and 6.2 hereof insofar as such conditions relate to the Company's representations and warranties and the Company's covenants. 6.4 Resignation of Directors. Sellers shall have delivered to Purchaser the written resignations of those directors and officers of the Company and each of the Company Subsidiaries (other than the Excluded Entities) whose resignations are requested by Purchaser no later than five business days prior to the Closing, such resignations to be effective as of the Closing Date; provided, however, that Sellers shall have no obligation to deliver resignations of officers who do not agree to resign and provided further that Purchaser shall be responsible for all liabilities and obligations resulting from such resignations. 6.5 HSR Act. All applicable waiting periods under the HSR Act with respect to the transactions contemplated hereby shall have expired or been terminated. 6.6 Injunctions. On the Closing Date there shall be no (i) injunction, writ, preliminary restraining order or other order in effect of any nature issued by a court or governmental agency of competent jurisdiction directing that the transactions provided for herein not be consummated as provided herein or (ii) Law prohibiting or restraining the consummation of the transactions contemplated hereby. 6.7 Spinoff Condition. Either (a) September 30, 1999 shall have passed, or (b) Purchaser shall have delivered to Sellers and the Company on or prior to September 30, 1999, a certificate executed by the President or any Vice President of Purchaser certifying that Purchaser shall have determined, in its sole judgment, that consummation of the transactions contemplated by this Agreement (including, without limitation, any financing or refinancing transaction to be undertaken in connection therewith) is not reasonably likely to have a material adverse effect on (a) the business, results of operations, condition (financial or otherwise), prospects or capital structure of Ogden Corporation or any of its subsidiaries or business 24 segments, individually or in the aggregate, or (b) the ability of Ogden Corporation to consummate all or any material part of the recapitalization transaction publicly announced by it on March 11, 1999. ARTICLE VII COVENANTS AND AGREEMENTS 7.1 Conduct of Business by Company. Except (i) for actions taken to implement this Agreement and the transactions contemplated hereby, (ii) as disclosed in Section 7.1 of the Disclosure Schedule or any other section of the Disclosure Schedule or (iii) with the prior written consent of Purchaser, from and after the date of this Agreement and until the Closing Date Sellers will not take any actions that will impair the ability of the Company to comply with these covenants, and the Company shall and shall cause the Company Subsidiaries to: (a) use reasonable efforts consistent with good business judgment to: preserve intact the present business organization of the Company and each Company Subsidiary, preserve the goodwill of and maintain satisfactory relationships with customers, suppliers and other persons and entities having business relationships with the Company or any Company Subsidiary and generally operate the Company and each Company Subsidiary in the ordinary and regular course of business consistent with prior practices in all material respects; and (b) not (i) cause to be issued or sold any shares of capital stock or other securities of the Company or any Company Subsidiary or any options, warrants or commitments of any kind with respect thereto, (ii) directly or indirectly cause to be purchased, redeemed or otherwise acquired or disposed of any shares of capital stock of the Company or any Company Subsidiary, (iii) declare, set aside or pay any dividend or other distribution out of the Company, (iv) permit or allow the Company or any Company Subsidiary to borrow or agree to borrow any funds or incur, whether directly or by way of guarantee, any obligation for borrowed money, other than short-term accounts payable and borrowings under any existing credit facility incurred in the ordinary course of business and consistent with past practice, (v) subject any of the property or assets of the Company or any Company Subsidiary (real, personal or mixed, tangible or intangible) to any mortgage, pledge, lien or encumbrance or otherwise permit or allow the disposition of any property or assets of the Company or any Company Subsidiary (real, personal or mixed, tangible or intangible), other than in each case the ordinary course of business and consistent with past practice, (vi) enter into any new contract, which contract requires the Company or any Company Subsidiary to make capital expenditures in excess of $1,000,000, without Purchaser's consent, (vii) permit the Company or any Company Subsidiary to, except as set forth in Section 7.1 of the Disclosure Schedule, make or grant any increase in payments, wages, salaries or benefits to any director, officer or employee of the Company or any Company Subsidiary whose salary as of the date hereof is above $100,000, or hire any person at an annual salary above $100,000; (viii) make any acquisitions in excess of $100,000, (ix) change any accounting policies, (x) make a payment in excess of $25,000 for any one action, proceeding or investigation to settle or otherwise dispose of any such action, proceeding or investigation, provided that settlements of all such actions, proceedings or investigations under this Section 7.1 shall not exceed $100,000, (xi) enter into any contract, arrangement, understanding or transaction with any Seller or any of the Seller's 25 affiliates, directors, officers, partners or employees, in each case, who are not also employees of the Company (it being acknowledged that dealings with such Company employees are governed by Section 7.1(vii)), (xii) take any action prohibited by 2.11(b)(i), (ii), (iii), (iv) or (v); or (xiii) agree to do any of the foregoing. 7.2 Access to Books and Records; Cooperation. (a) Purchaser agrees that from the date of the Closing and until the second anniversary of the Closing (or such longer period as shall be necessary with respect to any tax period prior to the Closing Date for which the statute of limitations has not expired at the end of such two-year period), during normal business hours, it shall permit, at no charge, cost or expense to Purchaser and without disruption of Purchaser's business, Sellers and their respective auditors and other representatives to have reasonable access to the properties, auditors and officers of the Company and to all books and records relating to the Company and to examine and take at Seller's expense copies thereof to the extent such access is reasonably necessary in connection with such Seller's tax returns or otherwise to enable such Seller to fulfill applicable legal, regulatory or contractual requirements. In connection with any dispute under Section 1.3, Purchaser will make available to Sellers due diligence memoranda and like materials prepared in contemplation of the acquisition of the Company. (b) Purchaser agrees not to destroy at any time any files or records which are subject to Section 7.2(a) without giving reasonable notice to Sellers and, within 30 days of Sellers' receipt of such notice, to deliver to Sellers (at Sellers' expense) the records intended to be destroyed. (c) Between the date of this Agreement and the Closing Date, each of the Company and the Company Subsidiaries shall afford Purchaser and its representatives, upon reasonable prior notice by Purchaser and during normal business hours, access to the personnel, properties, contracts, files, book, records, documents and other information of the Company and the Company Subsidiaries and shall make available for inspection and copying by Purchaser true and complete copies of any documents relating to the foregoing. The Company shall authorize its accountants to make work papers relating to the Company and the Company Subsidiaries during any period prior to the Closing Date available to Purchaser, and the Company shall not take any action to preclude such accountants from making such work papers available. No investigation by Purchaser pursuant to this Section 7.2(c) shall affect any representations or warranties of the parties hereto or their respective rights and obligations hereunder, subject to the provisions of Sections 1.3, 4.5 and 7.5. 7.3 Filings and Consents. The Company, Sellers and Purchaser shall use all reasonable efforts to obtain and to cooperate in obtaining any consent, approval, authorization or order of, and in making any registration or filing with, any governmental agency or body or other third party required in connection with the execution, delivery or performance of this Agreement. The parties agree to cause to be made all appropriate filings under the HSR Act as soon as reasonably practicable after the date of this Agreement (but in no event later than five business days after the date hereof) and to diligently pursue early termination of the waiting period under such act. 26 7.4 Publicity. The parties hereto will not issue any press release or otherwise make any public statement with respect to the transactions contemplated hereby without the consent of the other party or parties (which consent shall not be unreasonably withheld), except as may be required by law, in which event such press release or public statements shall be made only after consultation with the other party or parties. 7.5 Notice of Breaches. If either Purchaser or the Company or the Sellers learns of any facts or circumstances that could reasonably be expected to result in a failure of the conditions set forth in Section 5.1 or 5.2, 6.1 or 6.2 to be satisfied, such party shall notify the other parties as promptly as practicable thereafter of such facts or circumstances; provided, however, that the delivery of any notice pursuant to this Section 7.5 shall not limit or otherwise affect the remedies available hereunder of any party receiving such notice or otherwise constitute an admission of breach. If the Company or Sellers breach any of their respective representations and warranties, and with respect to the elements of such breaches Purchaser has knowledge thereof as of the date hereof but did not disclose such knowledge under Section 4.5, such breaches by the Company or Sellers will be disregarded for purposes of Section 6.1. 7.6 Covenant to Satisfy Conditions. Each party agrees to use all reasonable efforts to insure that the conditions set forth in Article V and Article VI hereof are satisfied, insofar as such matters are within the control of such party; provided, however, that in no event shall Sellers and the Company, on the one hand, and Purchaser, on the other hand, be required to expend in excess of $25,000 in the aggregate in performing under Section 7.3 above and this Section 7.6 (other than HSR Act filing fees which Purchaser and Sellers will bear 50% each). 7.7 Director and Officer Liability Insurance. The parties agree that the Company shall be permitted to purchase directors and officers liability insurance coverage for purposes of indemnifying and insuring persons covered by such insurance of the Company or Company Subsidiaries, as the case may be, immediately prior to the Closing Date, which coverage shall be on terms and in amounts at least as favorable to such persons as they were on the Closing Date; provided, that the Purchase Price shall be reduced by the amount of the premiums paid or required to be paid in the future by the Company to obtain such coverage. 7.8 Employee Benefits. (a) Continuation of Benefits. During the period from the Closing Date until the end of the twelve months following the Closing Date, Purchaser shall maintain or cause to be maintained wages, compensation levels, employee pension and welfare plans for the benefit of employees and former employees of the Company or Company Subsidiaries, which are equal, in the aggregate, or greater than those wages, compensation levels and other benefits provided under the Plans that are in effect on the date hereof. (b) Credit for Deductibles. Purchaser will, or will cause the Company and Company Subsidiaries to, (i) waive all limitations as to preexisting conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to the employees of the Company or Company Subsidiaries under any welfare plan that such employees may be eligible to participate in after the Closing Date, (ii) provide each employee of the 27 Company or any Company Subsidiary with credit for any co-payments and deductibles paid prior to the Closing Date in satisfying any applicable deductible or out-of-pocket requirements under any welfare plans that such employees are eligible to participate in after the Closing Date, and (iii) provide each employee of the Company or any Company Subsidiary with credit for all service with the Company or Company Subsidiary, as applicable, under each employee benefit plan, program, or arrangement of Purchaser or its affiliates in which such employees are eligible to participate; provided, however, that in no event shall the employees be entitled to any credit to the extent that it would result in a duplication of benefits with respect to the same period of service. (c) Severance Policy and Other Agreements. With respect to any salaried officer or employee (other than hourly employees or employees covered by collective bargaining agreements) who is covered by a severance policy or plan separate from the standard severance policy for employees of the Company or any Company Subsidiary, Purchaser shall maintain or cause to be maintained such separate policy or plan as in effect as of the date hereof, and as to all other officers and employees (other than hourly employees or employees covered by collective bargaining agreements), Purchaser shall maintain or cause to be maintained the Company's or Company Subsidiary's, as applicable, standard severance policy as in effect as of the date hereof for a period of at least twelve months from the Closing Date. (d) 1999 Bonus. Purchaser will maintain, or cause to be maintained, the Company's and each Company Subsidiary's bonus plans, as in effect on the date hereof, through the end of 1999. 7.9 Contact with Customers and Suppliers. Purchaser and its representatives shall contact and communicate with the employees, customers, suppliers and licensers of the Company and the Company Subsidiaries in connection with the transactions contemplated hereby only with the prior written consent of Sellers, and which consent may be conditioned upon a designee of Sellers being present at any such meeting or conference. 7.10 No Solicitation of Other Offers. Subject to the provisions of Section 1.3, from the date hereof until the earlier of the Closing or a termination of this Agreement, none of the Sellers, the Company or any of their representatives will, directly or indirectly, solicit, encourage, assist, initiate discussions or engage in negotiations with, provide any nonpublic information to, or enter into any agreement or transaction with, any person, other than Purchaser, relating to the possible merger, consolidation, business combination or direct or indirect sale of assets or capital stock of the Company or the Company Subsidiaries, except for the sale of assets by the Company or the Company Subsidiaries in the ordinary course of business consistent with past practices or the terms of this Agreement. 7.11 Termination of Stockholders' Agreement, Higgins Employment Agreement, Share Exchange Agreement and Monitoring Agreements. No later than the Closing, Sellers and the Company shall cause (i) the Amended and Restated Stockholders' Agreement, dated as of August 24, 1998, among the Company and Sellers to terminate with no further liability to any party thereto, and Sellers and the Company 28 shall deliver to Purchaser prior to the Closing evidence satisfactory to Purchaser of such termination with no further liability, (ii) the Share Exchange Agreement, dated as of July 27, 1998, among the Company and the other parties thereto, to terminate without further liability to any party thereto, and Sellers and the Company shall deliver to Purchaser prior to the Closing evidence satisfactory to Purchaser of such termination with no further liability, provided, that Sections 7.13(a) (the second sentence only) and 7.13(b) (together, the "Surviving Sections") shall survive and Sections 9.1, 9.2, 9.3 (other than paragraph (d) of Section 9.3) and 9.4 shall survive insofar as they relate to the Surviving Sections, and provided further, any claims otherwise arising under such Share Exchange Agreement (other than with respect to the Surviving Sections) and including claims arising after the date hereof are irrevocably waived as of Closing, and (iii) the Monitoring Agreements listed as items (2) and (3) of Section 2.20 of the Disclosure Schedule to terminate. Purchaser and the Company hereby irrevocably waive any claim against Blackstone Management Partners L.P. and GECC, and the Company and Sellers will cause Blackstone Management Partners L.P. and GECC irrevocably to waive any claim against Purchaser and the Company, in connection with the provision of monitoring services under the Monitoring Agreements. Notwithstanding anything in this Agreement to the contrary, the Employment Agreement between Higgins and the Company dated August 24, 1998 may be terminated by the Company upon notice from GECC. GECC will be obligated to make the payments for which it agreed to be responsible pursuant to a Letter Agreement dated July 27, 1998 between GECC and Service America Corporation and a Reimbursement Agreement dated as of August 24, 1998 between GECC and Service America Corporation. In addition, GECC will be responsible for all severance payments and benefits to be paid or accruing to Mr. Higgins pursuant to the terms of his Employment Agreement in the event Mr. Higgins is terminated prior to August 24, 1999. 7.12 Fee to Blackstone. Prior to the Closing Date, the Company will enter into an investment advisory agreement and pay a one-time investment banking fee plus expenses not to exceed a maximum amount of $3 million in the aggregate to an affiliate of The Blackstone Group L.P. as described in Section 2.20 of the Disclosure Schedule. 7.13 Disposition of Hatch Interest. Prior to or concurrent with the Closing (i) the transaction in respect of the Hatch interests will occur as described in Section 7.13 of the Disclosure Schedule and (ii) each of the "selected employees" referred to in Section 7.13 of the Disclosure Schedule shall have executed releases, in form and substance reasonably satisfactory to Purchaser, releasing the Company and Purchaser (and their respective affiliates, employees, officers, directors, agents and representatives) of all liability and waiving any claims against the Company and Purchaser in respect of the transactions described in Section 7.13 of the Disclosure Schedule. ARTICLE VIII TERMINATION 8.1 Termination. This Agreement may be terminated and abandoned at any time prior to the Closing: (a) by the mutual consent of the Company and Purchaser; (b) as provided in Section 1.3; 29 (c) by either the Company or Purchaser in the event the Closing has not occurred on or before the Termination Date (as defined below), unless the absence of such consummation is due to the failure of the party seeking to terminate this Agreement to comply in all material respects with the agreements and covenants contained herein to be performed by such party on or before the Termination Date; (d) by either the Company or Purchaser in the event any court or governmental agency of competent jurisdiction shall have issued an order, decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting the transactions contemplated hereby and such order, decree or ruling or other action shall have become final and nonappealable; (e) by the Company if any conditions in Article V are not reasonably capable of being satisfied or by Purchaser if any then applicable conditions in Article VI (other than Section 6.7) are not reasonably capable of being satisfied; provided that the party seeking to terminate the Agreement must deliver to the other parties written notice of such termination at least ten business days prior to the intended date of such termination (provided that the parties will cooperate in good faith to satisfy such conditions for a period of two weeks in order to permit their cure, provided that the Company and Sellers will not be required to expend funds in order to effect any such cure, unless Purchaser provides such funds); (f) by Purchaser on or prior to September 30, 1999, if Purchaser delivers to Sellers and the Company a certificate executed by the President of Ogden Corporation, certifying as to such person's belief that the determination referred to in Section 6.7(b) cannot in Purchaser's sole judgment be made and, specifying the reasons therefor, and terminating the Agreement under this clause as of the date such certificate is delivered; or (g) by Purchaser if the Company and/or any Seller fails to deliver to Purchaser the Company Certificates in accordance with Section 1.3. (b) "Termination Date" shall mean September 30, 1999. Purchaser may by at least five business days prior written notice to the Company and Sellers extend the Termination Date for up to two (2) one month periods, such that the Termination Date may be extended to no later than November 30, 1999; provided, however, that upon any such extension, Section 6.7 shall, as of October 1, 1999, no longer apply. 8.2 Procedure and Effect of Termination. If the transactions contemplated by this Agreement are terminated as provided herein: (a) each party will redeliver all documents, work papers and other material of the other party relating to the transactions contemplated hereby, whether so obtained before or after the execution hereof, to the party furnishing the same; (b) All confidential information received by Purchaser with respect to the business of the Company and the Company Subsidiaries shall be treated in accordance with the provisions of the Confidentiality Agreement, dated as of February 24, 1999, between Purchaser and Sellers (the "Confidentiality Agreement"), which shall survive the termination of this Agreement in accordance with its terms; and 30 (c) No party to this Agreement will have any liability under this Agreement to the other except (i) with respect to the obligations set forth in the last sentence of Section 7.2(a) and Sections 7.4, 8.2(a), 8.2(b) and 10.1, (ii) in accordance with Section 1.3, (iii) for any failure to perform or satisfy in all material respects all of the agreements and covenants to be performed hereunder at or prior to the Closing, (iv) as provided in the Confidentiality Agreement and (v) in respect of fraud in connection with any representation or warranty under this Agreement. ARTICLE IX SURVIVAL OF REPRESENTATIONS AND WARRANTIES 9.1 Representations and Warranties Relating to the Company. Subject to Sections 1.3 and 9.4, the representations and warranties of the Company and Sellers contained in Article II of this Agreement shall expire as of the Closing Date and shall not survive the Closing, except for the representations set forth in Section 2.20, which shall survive the Closing until the expiration of the applicable statute of limitations. 9.2 Representations and Warranties of Sellers. The representations and warranties of Sellers contained in Article III of this Agreement shall survive the Closing until the expiration of the applicable statute of limitations. 9.3 Representations and Warranties of the Purchaser. The representations and warranties of Purchaser contained in Article IV of this Agreement shall survive the Closing until the expiration of the applicable statute of limitations. 9.4 Limitation of Recourse. Following the Closing, no party shall have any liability or obligation to indemnify or otherwise hold harmless any other party (or any of their successors or permitted assigns) for any claim or any loss or liability arising from or in any way relating to this Agreement or any of the transactions contemplated hereby or any other transaction or event occurring on or prior to the Closing (including, without limitation, any misrepresentation or inaccuracy in, or breach of, any representations or warranties (other than the representations or warranties contained in Section 2.20, Article III and Article IV) or any breach or failure in performance prior to the Closing of any covenants or agreements contained in this Agreement to be performed prior to the Closing or in any exhibit or the Disclosure Schedule hereto or any certificate or instrument delivered hereunder), and no party (nor any of their successors or permitted assigns) shall be entitled to bring any claim based on, relating to or arising out of any of the foregoing against any other party (or any of such other party's employees, officers, directors, agents or representatives), except that Sellers agree jointly but not severally to indemnify and hold harmless the Company and Purchaser (and their respective affiliates, employees, officers, directors, agents and representatives) from and against any loss, damage, claim, liability, judgment or settlement, including expenses relating thereto, arising out of, resulting from or relating to any claims or proceedings brought against the Company or Purchaser (or any of their respective affiliates, employees, officers, directors, agents and representatives) in respect of the transactions described in Section 7.13 of the Disclosure Schedule. Nothing in this Article IX (including, without limitation, the expiration of the representations and warranties referred to in Sections 9.1, 9.2 and 9.3) shall limit any party's right to bring an action for fraud. Without limiting the generality of the foregoing, in the absence of fraud in connection with a party's representations 31 and warranties, neither Purchaser nor its respective successors or permitted assigns shall be entitled to seek any recission of the transactions consummated under this Agreement or other remedy at law or in equity based on the representations and warranties of the Company and Sellers in this Agreement (other than the representations and warranties contained in Section 2.20 and Article III). 9.5 Acknowledgment by the Parties. Each party understands that the representations and warranties of the other parties will not survive the Closing (except as expressly set forth in Sections 9.1, 9.2, 9.3 and 9.4) and constitute the sole and exclusive representations and warranties of such other parties in connection with the transactions contemplated hereby, and each party understands, acknowledges and agrees that all other representations and warranties of any kind or nature expressed or implied (including, without limitation, any relating to the future or historical financial condition, results of operations, assets or liabilities of the Company or the Company Subsidiaries) are specifically disclaimed by the other parties. ARTICLE X MISCELLANEOUS 10.1 Fees and Expenses. Except as otherwise provided in this Agreement, the parties hereto shall bear their own respective expenses in connection with the negotiation and consummation of the transactions contemplated by this Agreement. The fees and expenses of outside advisors, including without limitation outside legal counsel to the Company and Sellers, incurred in connection with the transactions contemplated by this Agreement shall be paid by Sellers in proportion to their relative share ownership. Other than the fees described in Section 2.20 of the Disclosure Schedule (which shall be paid by the Company at the Closing), each party shall bear the fees and expenses of any broker or finder retained by such party or parties in connection with the transactions contemplated herein. 10.2 Governing Law. This Agreement shall be construed under and governed by the laws of the State of New York without regard to the conflicts of laws provisions thereof. 10.3 Amendment. This Agreement may not be amended, modified or supplemented except upon the execution and delivery of a written agreement executed by the parties hereto. 10.4 Assignment. Except as otherwise expressly permitted under this Agreement, no party hereunder shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the other parties hereto. Notwithstanding the preceding sentence, Purchaser may, upon five business days prior written notice to the other parties, assign its rights hereunder to Ogden Corporation, or any wholly-owned direct or indirect U.S. subsidiary of Ogden Corporation, prior to the date of the Closing; provided, however, Purchaser shall remain liable for all of its obligations under this Agreement. Nothing in this Agreement is intended or shall be construed to confer upon any person other than the parties 32 hereto and their respective permitted assigns any right, remedy or claim under or by reason of this Agreement or any part hereof. 10.5 Waiver. Any of the terms or conditions of this Agreement that may be lawfully waived may be waived in writing at any time by the party that is entitled to the benefits thereof. Any waiver of any of the provisions of this Agreement by any party hereto shall be binding only if set forth in an instrument in writing signed on behalf of such party. No failure to enforce any provision of this Agreement shall be deemed to or shall constitute a waiver of such provision and no waiver of any of the provisions of this Agreement shall be deemed to or shall constitute a waiver of any other provision hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 10.6 Notices. Any notice, demand, or communication required or permitted to be given by any provision of this Agreement shall be deemed to have been sufficiently given or served for all purposes if (a) personally delivered, (b) mailed by registered or certified first-class mail, prepaid with return receipt requested, (c) sent by a nationally recognized overnight courier service, to the recipient at the address below indicated or (d) delivered by facsimile which is confirmed in writing by sending a copy of such facsimile to the recipient thereof pursuant to clause (a) or (c) above: If to Purchaser: Ogden Services Corp. Two Pennsylvania Plaza New York, NY 10121 Attn: President, with copy to General Counsel (212) 868-5714 (telecopier) (212) 868-6056 (telephone) with a copy to: Cleary, Gottlieb, Steen & Hamilton One Liberty Plaza New York, NY 10006 Attention: Stephen H. Shalen (212) 225-3999 (telecopier) (212) 225-2420 (telephone) If to Sellers or the Company: The Blackstone Group, L.P. 345 Park Avenue, 31st Fl. New York, NY 10154 Attention: Howard A. Lipson (212) 754-8703 (telecopier) (212) 836-9844 (telephone) 33 With copies to: Volume Services America Holdings, Inc. 300 First Stamford Place Stamford, CT 06904-2203 Attention: Chief Executive Officer and General Counsel (203) 975-5949 (telecopier) (203) 975-5901 (telephone) Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017-3954 Attention: Wilson S. Neely, Esq. (212) 455-2502 (telecopier) (212) 455-2000 (telephone) Recreational Services L.L.C. c/o General Electric Capital Corporation 201 High Ridge Road Stamford, CT 06927 Attention: Counsel - Commercial Finance (203) 316-7895 (telecopier) (203) 316-7555 (telephone) Kaye, Scholer, Fierman, Hays & Handler, LLP 425 Park Avenue New York, NY 10022 Attention: Joseph D. Hansen, Esq. (212) 836-8689 (telecopier) (212) 836-8495 (telephone) or to such other address as any party hereto may, from time to time, designate in a written notice given in like manner. Except as otherwise provided herein, any notice under this Agreement will be deemed to have been given (x) on the date such notice is personally delivered or delivered by facsimile, (y) four days after the date of mailing if sent by certified or registered mail or (z) the next succeeding business day after the date such notice is delivered to the overnight courier service if sent by overnight courier; provided that in each case notices received after 4:00 p.m. (local time of the recipient) shall be deemed to have been duly given on the next business day. 10.7 Complete Agreement. This Agreement, the Confidentiality Agreement and the other documents and writings referred to herein or delivered pursuant hereto contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both written and oral, between the 34 parties with respect to the subject matter hereof and thereof. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. 10.8 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and each of which shall be deemed an original. 10.9 Headings. The headings contained in this Agreement are for reference only and shall not affect in any way the meaning or interpretation of this Agreement. 10.10 Knowledge and Fraud. For purposes of this Agreement, (a) the term "knowledge" means the actual knowledge of, or the willful failure to obtain knowledge by (A) with respect to Company or any Sellers, any executive officer, general partner, managing member or regional vice president, of such Seller or the Company, as applicable, and (B) with respect to Purchaser, any of the persons named in Section 10.10 of the Disclosure Schedule, and (b) the term "fraud" shall require knowledge (as defined in (a) above) of Purchaser, such Seller or the Company, as applicable. Whenever this Agreement calls for a certificate to be given to the best of a person's knowledge, (i) such certificate shall not alter or qualify the representations and warranties of the party on whose behalf the certificate is given contained in this Agreement (as such certificate shall so state) and (ii) the person executing such certificate shall have no personal liability in connection with rendering such certificate. 10.11 Construction. This Agreement has been negotiated by Sellers, the Company and Purchaser and their respective legal counsel, and legal and equitable principles that might require the construction of this Agreement against the party drafting this Agreement shall not apply in any construction or interpretation of this Agreement. 10.12 Severability. Any provision of this Agreement which is invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provision of this Agreement invalid, illegal or unenforceable in any other jurisdiction. 10.13 Third Parties. Except as specifically set forth or referred to herein, nothing herein expressed or implied is intended or shall be construed to confer upon or give to any person or corporation, other than the parties hereto and their permitted successors or assigns, any rights or remedies under or by reason of this Agreement. 10.14 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. THE PARTIES HERETO HEREBY CONSENT TO THE JURISDICTION OF ANY PANEL OF THREE ARBITRATORS PURSUANT TO SECTION 1.3(J) HERETO WITH RESPECT TO THE MATTERS IN SECTION 1.3 AND OTHERWISE TO ANY STATE OR FEDERAL COURT LOCATED WITHIN THE AREA ENCOMPASSED BY THE STATE OF NEW YORK AND IRREVOCABLY AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS OR BY SUCH ARBITRATORS. THE PARTIES HERETO EACH ACCEPT FOR 35 ITSELF AND IN CONNECTION WITH ITS RESPECTIVE PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION AND VENUE OF THE AFORESAID COURTS OR ARBITRATORS AND WAIVE ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY NON-APPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. THE PARTIES HERETO EACH DESIGNATE CT CORPORATION SYSTEM, INC. AND SUCH OTHER PERSONS AS MAY HEREINAFTER BE SELECTED BY SELLERS WHO IRREVOCABLY AGREE IN WRITING TO SO SERVE AS AGENT TO RECEIVE ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY COURT PROCEEDING, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY THE PARTIES HERETO TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO THE PARTIES HERETO, AS PROVIDED HEREIN, EXCEPT THAT UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. 10.15 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION. THE PARTIES HERETO ALSO WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF ANY OF THE OTHER PARTIES. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE PARTIES HERETO ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. THE PARTIES HERETO FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTION CONTEMPLATED HEREBY. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 36 IN WITNESS WHEREOF, the parties hereto have consent this Agreement to be executed as of the date first written by their respective duly authorized officers. OGDEN ENTERTAINMENT, INC. By: Name: Title: 37 VOLUME SERVICES AMERICA HOLDINGS, INC. By: Name: Title: BCP VOLUME L.P., By: Blackstone Capital Partners II Merchant Banking Fund L.P. By: Blackstone Management Associates II L.L.C., as General Partner By: Name: Title: BCP OFFSHORE VOLUME L.P. By: Blackstone Offshore Capital Partners II L.P. By: Blackstone Management Associates II L.L.C., as General Partner By: ____________________________________ Name: Title: By: Blackstone Service (Cayman) LDC as Administrative General Partner By: Name: Title: 38 VSI MANAGEMENT DIRECT L.P. By: VSI Management I L.L.C. By: ________________________________ Title: By: Blackstone Management Associates II L.L.C., as Managing Member By: ____________________________ Title: 39 RECREATIONAL SERVICES L.L.C. By: General Electric Capital Corporation Managing Member By: Name: Michael Gaudino Title: Attorney-In-Fact As to Sections 1.2(b), 1.2(c), 1.2(d) and 7.11 of this Agreement: GENERAL ELECTRIC CAPITAL CORPORATION By: Name: Title: 40 Annex A BCP Volume L.P. 157.01965 shares BCP Offshore Volume L.P. 40.73462 shares VSI Management Direct L.P. 14.12904 shares Recreational Services L.L.C. 120.78984 shares Total 332.67315 shares 41 Exhibit B-1 COMPLIANCE NOTICE The undersigned hereby certifies as follows: Ogden Entertainment, Inc., a Delaware corporation ("Purchaser"), irrevocably waives (subject to Section 1.3(i) of the Stock Purchase Agreement dated as of June 24, 1999 (the "Agreement") among Volume Services America Holdings, Inc., a Delaware corporation (the "Company"), BCP Volume L.P., a Delaware limited partnership ("Volume"), BCP Offshore Volume L.P., a Cayman Islands exempted limited partnership ("Offshore"), Recreational Services L.L.C., a Delaware limited liability company ("Services") and VSI Management Direct L.P., a Delaware limited partnership ("Management Direct" and, together with Volume, Offshore and Services, the "Sellers") and Purchaser) any claim that the conditions to Closing set forth in Sections 6.1 of the Agreement, based on Article II of the Agreement (other than Section 2.20), and 6.2 of the Agreement to the extent relating to the performance of covenants by any Seller and/or the Company on or prior to the Closing Target Date, were not satisfied as of the Closing Target Date. Capitalized terms not defined herein shall have the meaning assigned thereto in the Agreement. Date: ______ __, 1999 OGDEN ENTERTAINMENT, INC. By: ____________________________ Name: Title: Exhibit B-2 NON-COMPLIANCE NOTICE The undersigned hereby certifies as follows: Ogden Entertainment, Inc., a Delaware corporation ("Purchaser"), hereby alleges that the specific facts and circumstances identified in the attached description result in a breach as of the Closing Target Date of the indicated representations and warranties of Article II or Article III of the Stock Purchase Agreement, dated as of June 24, 1999 (the "Agreement"), among Volume Services America Holdings, Inc., a Delaware corporation (the "Company"), BCP Volume L.P., a Delaware limited partnership ("Volume"), BCP Offshore Volume L.P., a Cayman Islands exempted limited partnership ("Offshore"), Recreational Services L.L.C., a Delaware limited liability company ("Services") and VSI Management Direct L.P., a Delaware limited partnership ("Management Direct" and, together with Volume, Offshore and Services, the "Sellers") and Purchaser, and/or the indicated covenants to be performed by the Company and/or any Seller on or prior to the Closing Target Date, which in good faith are reasonably alleged by the Purchaser to give rise to a failure of the conditions to Closing set forth in Sections 6.1 or 6.2 of the Agreement. Capitalized terms not defined herein shall have the meaning assigned thereto in the Agreement. Date: ________, 1999 OGDEN ENTERTAINMENT, INC. By: ____________________________ Name: Title: EX-11 5 COMPUTATION OF EARNINGS EXHIBIT 11 OGDEN CORPORATION AND SUBSIDIARIES DETAIL OF COMPUTATION OF EARNINGS APPLICABLE TO COMMON STOCK
FOR THE SIX MONTHS ENDED JUNE 30, ------------------------------------------------------------------------------------ 1999 1998 ------------------------------------------------------------------------------------ Income Shares Per-Share Income Shares Per-Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount ----------- ------------- ------ ----------- ------------- ------ (In Thousands, Except for Share Amounts) Income before cumulative effect of change in accounting principle $ 35,513 $ 38,760 Less: preferred stock dividend 70 73 -------- -------- Basic Earnings Per Share 35,443 49,043 $ 0.72 38,687 50,283 $ 0.77 -------- -------- Effect of Dilutive Securities: Stock options 498 1,042 Convertible preferred stock 70 250 73 260 6% convertible debentures 807 1,088 775 1,088 5 3/4% convertible debentures 590 762 566 762 -------- -------- -------- -------- Diluted Earnings per Share $ 36,910 51,641 $ 0.71 $ 40,101 53,435 $ 0.75 -------- -------- -------- -------- -------- -------- FOR THE SIX MONTHS ENDED JUNE 30, ------------------------------------------------------------------------------------ 1999 1998 ------------------------------------------------------------------------------------ Income Shares Per-Share Income Shares Per-Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount ----------- ------------- ------ ----------- ------------- ------ (In Thousands, Except for Share Amounts) Net income $ 31,693 $ 38,760 Less: preferred stock 70 73 -------- -------- Basic Earnings Per Share 31,623 49,043 $ 0.65 38,687 50,283 $ 0.77 -------- -------- Effect of Dilutive Securities: Stock options 498 1,042 Convertible preferred stock 70 250 73 260 6% convertible debentures (A) 775 1,088 5 3/4% convertible debentures (A) 566 762 -------- -------- -------- -------- Diluted Earnings per Share $ 31,693 49,791 $ 0.64 $ 40,101 53,435 $ 0.75 -------- -------- -------- -------- -------- --------
(A) Antidilutive Note: Earnings per common share was computed by dividing net income, reduced by preferred stock dividend requirements, by the weighted average of the number of shares of common stock outstanding during each period. Diluted earnings per common share was computed on the assumption that all convertible debentures, convertible preferred stock, and stock options converted or exercised during each period, or outstanding at the end of each period were converted at the beginning of each period or the date of issuance or grant, if dilutive. This computation provides for the elimination of related convertible debenture interest and preferred dividends. EXHIBIT 11 OGDEN CORPORATION AND SUBSIDIARIES DETAIL OF COMPUTATION OF EARNINGS APPLICABLE TO COMMON STOCK
FOR THE THREE MONTHS ENDED JUNE 30, ------------------------------------------------------------------------------------ 1999 1998 ------------------------------------------------------------------------------------ Income Shares Per-Share Income Shares Per-Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount ----------- ------------- ------ ----------- ------------- ------ (In Thousands, Except for Share Amounts) Net income $ 24,992 $ 27,060 Less: preferred stock dividend 35 36 -------- -------- Basic Earnings Per Share 24,957 49,126 $ 0.51 27,024 50,206 $ 0.54 -------- -------- Effect of Dilutive Securities: Stock options 503 863 Convertible preferred stock 35 249 36 258 6% convertible debentures 807 2,175 775 2,175 5 3/4% convertible debentures 590 1,524 566 1,524 -------- -------- -------- -------- Diluted Earnings per Share $ 26,389 53,577 $ 0.49 $ 28,401 55,026 $ 0.52 -------- -------- -------- -------- -------- --------
Note: Earnings per common share was computed by dividing net income, reduced by preferred stock dividend requirements, by the weighted average of the number of shares of common stock outstanding during each period. Diluted earnings per common share was computed on the assumption that all convertible debentures, convertible preferred stock, and stock options converted or exercised during each period, or outstanding at the end of each period were converted at the beginning of each period or the date of issuance or grant, if dilutive. This computation provides for the elimination of related convertible debenture interest and preferred dividends. EX-27 6 FDS
5 1,000 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 100,196 0 427,598 21,889 30,985 809,964 2,848,751 691,940 4,090,493 621,848 2,083,852 0 41 24,609 523,365 4,090,493 214,005 857,364 194,390 732,325 0 610 19,690 61,725 23,457 35,513 0 0 (3,820) 31,693 0.65 0.64
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