-----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, V822plDfZrOZ+1GjjFVeuWNWCCmg0EEszMoDCQrau6ua4rJtjPDP/riM37ntZ4z9 9w9dmt/VKrod8aNeh3Ii1A== 0000950130-01-501799.txt : 20010518 0000950130-01-501799.hdr.sgml : 20010518 ACCESSION NUMBER: 0000950130-01-501799 CONFORMED SUBMISSION TYPE: SC 13E3 PUBLIC DOCUMENT COUNT: 29 FILED AS OF DATE: 20010517 GROUP MEMBERS: SMS ACQUISITION CORP GROUP MEMBERS: SODEXHO ALLIANCE S A SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SODEXHO MARRIOTT SERVICES INC CENTRAL INDEX KEY: 0000905036 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 520936594 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SC 13E3 SEC ACT: SEC FILE NUMBER: 005-42819 FILM NUMBER: 1642719 BUSINESS ADDRESS: STREET 1: 9801 WASHINGTONIAN BOULEVARD CITY: GAITHERSBURG STATE: MD ZIP: 20878 BUSINESS PHONE: 3019474431 MAIL ADDRESS: STREET 1: 9801 WASHINGTONIAN BOULEVARD CITY: GAITHERSBURG STATE: MD ZIP: 20878 FORMER COMPANY: FORMER CONFORMED NAME: MARRIOTT INTERNATIONAL INC DATE OF NAME CHANGE: 19930517 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SODEXHO ALLIANCE S A CENTRAL INDEX KEY: 0000926472 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 042204498 STATE OF INCORPORATION: I0 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13E3 BUSINESS ADDRESS: STREET 1: 3 AVENUE NEWTON STREET 2: 78180 MONTIGNY LE BRETONNEUX CITY: FRANCE STATE: I0 BUSINESS PHONE: 6179517292 MAIL ADDRESS: STREET 1: 3 AVENUE NEWTON STREET 2: 78180 MONTIGNY LE BRETONNEUX CITY: FRANCE STATE: I0 ZIP: 00000 FORMER COMPANY: FORMER CONFORMED NAME: SODEXHO S A DATE OF NAME CHANGE: 19940707 SC 13E3 1 dsc13e3.txt SCHEDULE 13E-3 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------- SCHEDULE TO (RULE 14d-100) Tender Offer Statement Pursuant to Section 14(d)(1) or 13(e)(1) of the Securities Exchange Act of 1934 SODEXHO MARRIOTT SERVICES, INC. (Name of Subject Company) SMS ACQUISITION CORP. SODEXHO ALLIANCE, S.A. (Names of Filing Persons-Offerors) Common Stock, par value $1.00 per share Rights to Purchase Series A Junior Participating Preferred Stock (Title of Class of Securities) ---------------- 833793 10 2 (CUSIP Number of Class of Securities) Bernard Carton Sodexho Alliance, S.A. 3, avenue Newton 78180 Montigny-le-Bretonneux, France Telephone: 011-331-3085-7304 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Filing Persons) Copies to: Paul R. Kingsley, Esq. Davis Polk & Wardwell 450 Lexington Avenue New York, New York 10017 Telephone: (212) 450-4000 CALCULATION OF FILING FEE - --------------------------------------------------------- - ---------------------------------------------------------
Transaction Valuation* Amount of Filing Fee** - --------------------------------------------------------- $1,172,701,536 $234,541 - ---------------------------------------------------------
- -------------------------------------------------------------------------------- * Estimated for the purposes of calculating the amount of the filing fee only. This calculation assumes the purchase of 36,646,923 shares of Common Stock, par value $1.00 per share (the "Shares"), of Sodexho Marriott Services, Inc., at a purchase price of $32.00 per Share net in cash. Such number of Shares represents 63,723,383 Shares and exercisable options to purchase 2,873,465 Shares, in each case outstanding as of May 11, 2001, less the 29,949,925 Shares already owned by Sodexho Alliance, S.A. ** The amount of the filing fee, calculated in accordance with Rule 0-11 of the Securities Exchange Act of 1934, as amended, equals 1/50th of one percent of the transaction value. [_] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: Not applicable. Filing Party: Not applicable. Form or Registration No.: Not applicable. Date Filed: Not applicable. [_] Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. Check the appropriate boxes below to designate any transactions to which the statement relates: [X] third-party tender offer subject to Rule 14d-1. [_] issuer tender offer subject to Rule 13e-4. [X] going-private transaction subject to Rule 13e-3. [_] amendment to Schedule 13D under Rule 13d-2. Check the following box if the filing is a final amendment reporting the results of the tender offer. [_] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This Tender Offer Statement and Schedule 13E-3 Transaction Statement on Schedule TO (the "Schedule TO") is filed by Sodexho Alliance, S.A., a French corporation ("Sodexho"), and SMS Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of Sodexho ("Purchaser"). This Schedule TO relates to the offer by Purchaser to purchase all outstanding shares of Common Stock, par value $1.00 per share, of Sodexho Marriott Services, Inc., a Delaware corporation ("SMS"), together with the associated preferred stock purchase rights issued pursuant to the Rights Agreement dated as of October 8, 1993, as amended, between SMS and The Bank of New York, as Rights Agent (collectively, the "Shares"), other than Shares already owned by Sodexho and its subsidiaries, at $32.00 per Share net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated May 17, 2001 (the "Offer to Purchase") and in the related Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively. The information set forth in the Offer to Purchase, including all schedules and annexes thereto, is hereby expressly incorporated herein by reference in response to all items of this Schedule TO including, without limitation, all of the information required by Schedule 13E-3 that is not included in or covered by the items in Schedule TO, except as otherwise set forth below. Item 10. Financial Statements. Not applicable Item 12. Exhibits.
Exhibit No. Description ------- ----------- (a)(1) Offer to Purchase dated May 17, 2001. (a)(2) Letter of Transmittal. (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) Letter to Participants in SMS's Employee Stock Purchase Plan. (a)(7) Letter to holders of old Marriott International, Inc. certificates. (a)(8) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(9) Summary advertisement dated May 17, 2001. (a)(10) Text of Press Release Issued by Sodexho Alliance, S.A. on May 2, 2001. (a)(11) Complaint of Barry Feldman against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (a)(12) Complaint of Arthur Bieler against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (a)(13) Complaint of John McMullen against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (a)(14) Complaint of Margaret Alessi, individually and on behalf of others similarly situated against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc.
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Exhibit No. Description ------- ----------- (a)(15) Complaint of Sylvia Piven, individually and on behalf of others similarly situated against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (a)(16) Complaint of Audrey Goldberg against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (a)(17) Complaint of Gary Remmen against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (a)(18) Complaint of Neil Berg against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (a)(19) Complaint of C. Oliver Burt against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (b)(1) Term and Revolving Facilities Agreement dated April 6, 2001 for Sodexho Alliance, S.A. arranged by Citibank International plc, Goldman Sachs International and SG Investment Banking, with Societe General acting as Agent and Issuing Bank. (b)(2) Amendment letter to the Term and Revolving Facilities Agreement dated April 27, 2001. (c)(1) Opinion of UBS Warburg LLC ("UBS Warburg") to the Special Committee of the Board of Directors of SMS ("Special Committee") dated May 1, 2001 (included as Annex B of the Offer to Purchase filed herewith as Exhibit (a)(1)). (c)(2) Materials presented by representatives of UBS Warburg to the Special Committee dated May 1, 2001. (c)(3) Materials presented by representatives of Goldman Sachs International and Goldman, Sachs & Co. to Sodexho management dated January 19, 2001. (c)(4) Materials presented by representatives of Goldman Sachs International and Goldman, Sachs & Co. to the Board of Directors of Sodexho dated January 24, 2001. (d)(1) Agreement and Plan of Merger dated as of May 1, 2001 among SMS, Sodexho and Purchaser (included as Annex A of the Offer to Purchase filed herewith as Exhibit (a)(1)). (d)(2) Tax Sharing and Indemnification Agreement dated as of March 27, 1998, by and among, Marriott International, Inc., New Marriott, Inc. and Sodexho (incorporated herein by reference to Exhibit 9 of Sodexho's Schedule 13D filed with respect to its ownership of Shares). (d)(3) Royalty Agreement dated as of March 27, 1998 by and between Sodexho and SMS (incorporated herein by reference to Exhibit 10.19 of SMS's Form 10K/A filed on April 30, 1998). (d)(4) Stockholder Agreement dated as of March 27, 1998 between SMS and Sodexho (incorporated herein by reference to Exhibit 3 of Sodexho's Schedule 13D filed with respect to its ownership of Shares). (d)(5) Assistance Agreement dated as of March 27, 1998 by and between Sodexho and SMS. (d)(6) Sodexho Guaranty dated as of March 27, 1998 from Sodexho as Guarantor in favor of the Lender Parties referred to in the Credit Agreement referred to therein. (d)(7) Guaranty fee letter dated as of March 27, 1998 between Sodexho and SMS. (d)(8) Confidentiality Agreement dated as of April 5, 2001 between Sodexho and SMS.
3
Exhibit No. Description ------- ----------- (f) Section 262 of the Delaware General Corporation Law (included as Annex C of the Offer to Purchase filed herewith as Exhibit (a)(1)). (g) None. (h) None.
Item 13. Information Required by Schedule 13E-3. The audited financial statements of SMS as of and for the two fiscal years ended September 3, 1999 and September 1, 2000 are hereby expressly incorporated herein by reference to Item 8 of SMS's Annual Report on Form 10-K for the fiscal year ended September 1, 2000 filed with the Securities and Exchange Commission on November 13, 2000. The unaudited financial statements of SMS as of and for the thirteen weeks and the twenty-six weeks ended March 2, 2001 and March 3, 2000 are hereby expressly incorporated herein by reference to Part I, Item 1 of SMS's Quarterly Report on Form 10-Q for the thirteen weeks ended March 2, 2001 filed with the Securities and Exchange Commission on April 12, 2001. 4 SIGNATURES After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. SODEXHO ALLIANCE, S.A. /s/ Bernard Carton By: _________________________________ Name: Bernard Carton Title:Senior Vice President and Chief Financial Officer Date: May 17, 2001 SMS ACQUISITION CORP. /s/ Denis Robin By: _________________________________ Name: Denis Robin Title:President Date: May 17, 2001 5 EXHIBIT INDEX
(a)(1) Offer to Purchase dated May 17, 2001. (a)(2) Letter of Transmittal. (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) Letter to Participants in SMS's Employee Stock Purchase Plan. (a)(7) Letter to holders of old Marriott International, Inc. certificates. (a)(8) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(9) Summary advertisement dated May 17, 2001. (a)(10) Text of Press Release Issued by Sodexho Alliance, S.A. on May 2, 2001. (a)(11) Complaint of Barry Feldman against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (a)(12) Complaint of Arthur Bieler against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (a)(13) Complaint of John McMullen against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (a)(14) Complaint of Margaret Alessi, individually and on behalf of others similarly situated against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (a)(15) Complaint of Sylvia Piven, individually and on behalf of others similarly situated against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (a)(16) Complaint of Audrey Goldberg against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (a)(17) Complaint of Gary Remmen against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (a)(18) Complaint of Neil Berg against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc. (a)(19) Complaint of C. Oliver Burt against William J. Shaw, Daniel J. Altobello, Pierre Bellon, Bernard Carton, Edouard de Royere, Michel Landel, John W. Marriott III, Mary S. Metz, Sodexho Alliance, S.A. and Sodexho Marriott Services, Inc.
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Exhibit No. Description ------- ----------- (b)(1) Term and Revolving Facilities Agreement dated April 6, 2001 for Sodexho Alliance, S.A. arranged by Citibank International plc, Goldman Sachs International and SG Investment Banking, with Societe General acting as Agent and Issuing Bank. (b)(2) Amendment letter to the Term and Revolving Facilities Agreement dated April 27, 2001. (c)(1) Opinion of UBS Warburg LLC ("UBS Warburg") to the Special Committee of the Board of Directors of SMS ("Special Committee") dated May 1, 2001 (included as Annex B of the Offer to Purchase filed herewith as Exhibit (a)(1)). (c)(2) Materials presented by representatives of UBS Warburg to the Special Committee dated May 1, 2001. (c)(3) Materials presented by representatives of Goldman Sachs International and Goldman, Sachs & Co. to Sodexho management dated January 19, 2001. (c)(4) Materials presented by representatives of Goldman Sachs International and Goldman, Sachs & Co. to the Board of Directors of Sodexho dated January 24, 2001. (d)(1) Agreement and Plan of Merger dated as of May 1, 2001 among SMS, Sodexho and Purchaser (included as Annex A of the Offer to Purchase filed herewith as Exhibit (a)(1)). (d)(2) Tax Sharing and Indemnification Agreement dated as of March 27, 1998, by and among, Marriott International, Inc., New Marriott, Inc. and Sodexho (incorporated herein by reference to Exhibit 9 of Sodexho's Schedule 13D filed with respect to its ownership of Shares). (d)(3) Royalty Agreement dated as of March 27, 1998 by and between Sodexho and SMS (incorporated herein by reference to Exhibit 10.19 of SMS's Form 10K/A filed on April 30, 1998). (d)(4) Stockholder Agreement dated as of March 27, 1998 between SMS and Sodexho (incorporated herein by reference to Exhibit 3 of Sodexho's Schedule 13D filed with respect to its ownership of Shares). (d)(5) Assistance Agreement dated as of March 27, 1998 by and between Sodexho and SMS. (d)(6) Sodexho Guaranty dated as of March 27, 1998 from Sodexho as Guarantor in favor of the Lender Parties referred to in the Credit Agreement referred to therein. (d)(7) Guaranty fee letter dated as of March 27, 1998 between Sodexho and SMS. (d)(8) Confidentiality Agreement dated as of April 5, 2001 between Sodexho and SMS. (f) Section 262 of the Delaware General Corporation Law (included as Annex C of the Offer to Purchase filed herewith as Exhibit (a)(1)). (g) None. (h) None.
7 EX-99.(A)(1) 2 dex99a1.txt OFFER TO PURCHASE Exhibit 99.(a)(1) Offer to Purchase for Cash All Outstanding Shares of Common Stock (Together with the Associated Preferred Stock Purchase Rights) of Sodexho Marriott Services, Inc. at $32.00 Net Per Share by SMS Acquisition Corp. a wholly-owned subsidiary of Sodexho Alliance, S.A. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, JUNE 14, 2001, UNLESS THE OFFER IS EXTENDED. This Offer is being made pursuant to an Agreement and Plan of Merger (the "Merger Agreement") dated as of May 1, 2001 among Sodexho Marriott Services, Inc. ("SMS"), Sodexho Alliance, S.A. ("Sodexho") and SMS Acquisition Corp. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the expiration of the offer a number of shares of common stock of SMS, $1.00 par value per share (the "Shares"), which, when taken together with Shares then owned by Sodexho or any of its subsidiaries, represents at least a majority of the Shares outstanding on a fully-diluted basis. The board of directors of SMS, by unanimous decision of those directors participating and based on the recommendation of a Special Committee of independent directors of SMS: (1) has determined that the Merger Agreement and the transactions contemplated thereby are fair to and in the best interests of SMS and its stockholders (other than Sodexho), (2) has approved and declared advisable the Merger Agreement and (3) has resolved to recommend that SMS's stockholders accept the Offer and approve the Merger Agreement if submitted for their approval. UBS Warburg LLC, the financial advisor to the Special Committee, has delivered to the Special Committee its written opinion that as of the date of the opinion the consideration to be received by the holders of Shares (other than Sodexho and its affiliates) in the Offer and the Merger is fair from a financial point of view to such holders. See "Special Factors--Opinion of Financial Advisor." ---------------- A summary of the principal terms of the Offer appears on pages 1-4 of this Offer to Purchase. If you have questions about the Offer, you can call MacKenzie Partners, Inc., the Information Agent for the Offer, or Goldman, Sachs & Co., the Dealer Manager for the Offer, at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. You can also obtain additional copies of this Offer to Purchase, the related Letter of Transmittal and the Notice of Guaranteed Delivery from the Information Agent or your broker, dealer, commercial bank, trust company or other nominee. This transaction has not been approved or disapproved by the Securities and Exchange Commission nor has the Commission passed upon the fairness or merits of such transaction or upon the accuracy or adequacy of the information contained in this document. Any representation to the contrary is unlawful. ---------------- The Dealer Manager for the Offer is: Goldman, Sachs & Co. May 17, 2001 ---------------- TABLE OF CONTENTS ----------------
Page ---- SUMMARY TERM SHEET............................................................. 1 INTRODUCTION................................................................... 5 SPECIAL FACTORS................................................................ 7 Background of the Offer...................................................... 7 Recommendation of the Special Committee and the SMS Board; Fairness of the Offer and the Merger.................................................... 12 Opinion of Financial Advisor................................................. 15 Position of Sodexho and the Purchaser Regarding Fairness of the Offer and the Merger.............................................................. 19 Purpose and Structure of the Offer and the Merger; Reasons of Sodexho for the Offer and the Merger................................................ 20 Plans for SMS after the Offer and the Merger; Certain Effects of the Offer....................................................................... 20 The Merger Agreement......................................................... 21 Appraisal Rights............................................................. 28 Transactions and Arrangements Concerning the Shares.......................... 30 Related Party Transactions................................................... 31 Interests of Certain Persons in the Offer and the Merger..................... 32 Goldman Sachs Reports........................................................ 32 THE OFFER...................................................................... 38 1. Terms of the Offer; Expiration Date...................................... 38 2. Extension of Tender Period; Termination; Amendment; Subsequent Offering Period............................................................. 38 3. Acceptance for Payment and Payment....................................... 40 4. Procedure for Tendering Shares........................................... 40 5. Withdrawal Rights........................................................ 43 6. Certain United States Federal Income Tax Consequences.................... 43 7. Price Range of Shares; Dividends......................................... 44 8. Certain Information Concerning SMS....................................... 45 9. Certain Information Concerning the Purchaser, Sodexho and Bellon S.A. ... 49 10. Source and Amount of Funds............................................... 49 11. Effect of the Offer on the Market for the Shares; Stock Exchange Listing(s); Registration under the Exchange Act......................... 50 12. Dividends and Distributions.............................................. 51 13. Conditions of the Offer.................................................. 52 14. Certain Legal Matters; Regulatory Approvals.............................. 53 15. Fees and Expenses........................................................ 55 16. Miscellaneous............................................................ 56 Schedule I Directors and Executive Officers of Sodexho, the Purchaser and Bellon S.A. ANNEX A Agreement and Plan of Merger ANNEX B Opinion of UBS Warburg LLC ANNEX C General Corporation Law of Delaware Section 262
i SUMMARY TERM SHEET SMS Acquisition Corp., a wholly-owned subsidiary of Sodexho Alliance, S.A., is offering to purchase all of the outstanding shares of Common Stock, par value $1.00 per share, of Sodexho Marriott Services, Inc. ("SMS"), together with the associated preferred stock purchase rights (collectively, the "Shares"), other than Shares already owned by Sodexho Alliance, S.A. and its subsidiaries, for $32.00 per Share net to the seller in cash pursuant to the Merger Agreement. The following are some of the questions you, as a stockholder of SMS, may have and answers to those questions. You should carefully read this Offer to Purchase and the accompanying Letter of Transmittal in their entirety because the information in this summary term sheet is not complete and additional important information is contained in the remainder of this Offer to Purchase and the Letter of Transmittal. Who is offering to buy my securities? Our name is SMS Acquisition Corp. We are a Delaware corporation and a wholly-owned subsidiary of Sodexho Alliance, S.A., a French corporation ("Sodexho"). Sodexho was founded in 1966 by its current Chairman, Pierre Bellon. It is today the world leader in food and management services. With 286,000 employees and operations in 70 countries at 22,000 sites, Sodexho generated Euro 10.5 billion in sales in its fiscal year ended August 31, 2000. Sodexho has held 29,949,925 Shares since SMS's formation in 1998, which currently represents about 47.1 percent of SMS. What are the classes and amounts of securities sought in the Offer? We are seeking to purchase all of the outstanding Shares that Sodexho does not already own. The Offer is conditioned upon the tender of a number of Shares that, together with the Shares then owned by Sodexho or any of its subsidiaries, represents at least a majority of the Shares outstanding on a fully-diluted basis. How much are you offering to pay for my securities and what is the form of payment? Will I have to pay any fees or commissions? We are offering to pay $32.00 per Share, net to you, in cash. If you tender your Shares to us in the Offer, you will not have to pay brokerage fees, commissions or similar expenses. If you own your Shares through a broker or other nominee, and your broker tenders your Shares on your behalf, your broker or nominee may charge you a fee for doing so. You should consult your broker or nominee to determine whether any charges will apply. Do you have the financial resources to make payment? We will need approximately $1.15 billion to purchase all Shares that Sodexho does not already own pursuant to the Offer, to cash out certain employee stock options in the Merger and to pay related fees and expenses. We intend to fund this amount through borrowings under a credit agreement with a group of lenders. See "The Offer--Source and Amount of Funds" for a description of the credit agreement. The Offer is not subject to any financing condition. What does SMS's Board of Directors think of the Offer? The Board of Directors of SMS (the "SMS Board"), by unanimous decision of those directors participating and based upon the recommendation of a Special Committee of independent directors of the SMS Board (the "Special Committee"): (1) has determined that the Merger Agreement and the transactions contemplated thereby are fair to and in the best interests of SMS and its stockholders (other than Sodexho); (2) has approved and declared advisable the Merger Agreement; and 1 (3) has resolved to recommend that SMS's stockholders accept the Offer and approve the Merger Agreement if submitted for their approval. See "Special Factors--Recommendation of the Special Committee and the SMS Board; Fairness of the Offer and the Merger--Recommendation of the Special Committee and the SMS Board." Is your financial condition relevant to my decision to tender in the Offer? Because the form of payment consists solely of cash and the Offer is not conditioned on our ability to obtain financing, we do not think our financial condition is relevant to your decision whether to tender in the Offer. We have arranged for the financing of this transaction under a credit agreement with a group of lenders. See "The Offer--Source and Amount of Funds." How long do I have to decide whether to tender in the Offer? You have until at least 12:00 Midnight, New York City time, on Thursday, June 14, 2001, to tender your Shares in the Offer. Further, if you cannot deliver everything required to make a valid tender to EquiServe Trust Company, N.A. ("EquiServe" or the "Depositary"), the depositary for the Offer, prior to such time, you may be able to use a guaranteed delivery procedure, which is described in "The Offer--Procedure for Tendering Shares." In addition, if we decide to include a subsequent offering period in the Offer as described under "The Offer--Extension of Tender Period; Termination; Amendment; Subsequent Offering Period", you will have an additional opportunity to tender your Shares. We have not at this time made a final decision to include or not to include a subsequent offering period. Can the Offer be extended and under what circumstances? Subject to the terms of the Merger Agreement, we can extend the Offer. We might extend, for instance, if any conditions to the Offer have not been satisfied or waived prior to the expiration of the Offer or, for a period of up to ten business days, if all of the conditions to the Offer are satisfied or waived, but the number of Shares validly tendered and not withdrawn is insufficient to result in Sodexho and its subsidiaries owning at least 90% of the then outstanding number of Shares on a fully-diluted basis. We may establish a subsequent offering period of up to 20 business days under certain circumstances. See "The Offer--Extension of Tender Period; Termination; Amendment; Subsequent Offering Period." If you do not tender your Shares during the initial offering period or the subsequent offering period (if any), you will have to wait until after the Merger is completed to receive cash consideration for your Shares. How will I be notified if the Offer is extended? If we decide to extend the Offer, we will inform EquiServe, the depositary for the Offer, of that fact and will make a public announcement of the extension, not later than 9:00 a.m., New York City time, on the business day after the day on which the Offer was scheduled to expire. What are the most significant conditions to the Offer? We are not obligated to purchase any Shares unless the number of Shares validly tendered and not withdrawn, together with the Shares then owned by Sodexho or any of its subsidiaries, represents at least a majority of the Shares outstanding on a fully-diluted basis. For other conditions to the Offer, see "The Offer--Conditions of the Offer." How do I tender my Shares? To tender Shares, you must deliver the certificates representing your Shares, together with a completed Letter of Transmittal, to EquiServe, the depositary for the Offer, not later than the time the Offer expires. If 2 your Shares are held in street name by your broker, dealer, bank, trust company or other nominee, such nominee can tender your shares through The Depository Trust Company. If you cannot deliver everything required to make a valid tender to the Depositary prior to the expiration of the Offer, you may have a limited amount of additional time by having a broker, a bank or other fiduciary which is a member of the Securities Transfer Agents Medallion Program or other eligible institution guarantee that the missing items will be received by the Depositary within three New York Stock Exchange trading days. However, the Depositary must receive the missing items within that three trading day period. Until what time can I withdraw tendered Shares? You can withdraw tendered Shares at any time until the Offer has expired and, if we have not by July 15, 2001, agreed to accept your Shares for payment, you can withdraw them at any time until we accept Shares for payment. You may not, however, withdraw Shares tendered during a subsequent offering period, if one is included. See "The Offer--Withdrawal Rights." How do I withdraw tendered Shares? To withdraw Shares, you must deliver a written notice of withdrawal, or a facsimile of one, with the required information to EquiServe while you have the right to withdraw the Shares. See "The Offer--Withdrawal Rights." When and how will I be paid for my tendered Shares? Subject to the terms and conditions of the Offer, we will pay for all Shares validly tendered and not withdrawn promptly after the Expiration Date. We will pay for your validly tendered and not withdrawn Shares by depositing the purchase price with EquiServe, which will act as your agent for the purpose of receiving payments from us and transmitting such payments to you. In all cases, payment for tendered Shares will be made only after timely receipt by EquiServe of certificates for such Shares (or of a confirmation of a book-entry transfer of such shares as described in "The Offer--Procedure for Tendering Shares"), a properly completed and duly executed Letter of Transmittal and any other required documents for such Shares. Will the Offer be followed by a merger? If we purchase Shares in the Offer and the other conditions to the Merger are satisfied or waived (where permissible), the Purchaser will be merged with and into SMS. If we purchase Shares in the Offer, we will have sufficient voting power to approve the Merger without the affirmative vote of any other stockholder of SMS. Furthermore, if as a result of our purchases in the Offer we own in excess of 90% of the outstanding Shares, we may effect the Merger without any further action by the stockholders of SMS. If the Merger takes place, SMS will become a wholly-owned subsidiary of Sodexho, and all remaining stockholders (other than Sodexho and its subsidiaries and any SMS stockholders who properly exercise their appraisal rights under Delaware law) will receive $32.00 net per Share in cash (or any higher price per Share which is paid in the Offer). Following the Offer, will SMS continue as a public company? If and when the Merger takes place, SMS will no longer be publicly owned. Even if the Merger does not take place, there may be so few remaining stockholders and publicly held Shares that the Shares will no longer be eligible to be traded on the New York Stock Exchange (the "NYSE") or any other securities exchange and there may not be an active public trading market (or, possibly, any public trading market) for the Shares. As a result of the Merger, the registration of the Shares under the Securities Exchange Act of 1934, as amended (the 3 "Exchange Act"), will be terminated. Consequently, following the Merger, SMS will be relieved of the duty to file annual and other periodic reports and proxy and information statements under the Exchange Act, and its officers, directors and more than 10% stockholders will be relieved of the reporting requirements under, and the "short swing" profit liability provisions of, Section 16 of the Exchange Act. SMS will no longer be a public company and its common stock will no longer be traded on the NYSE. If I decide not to tender, how will the Offer affect my Shares? If the Merger takes place, stockholders not tendering in the Offer (other than Sodexho and its subsidiaries) will receive the same amount of cash per Share which they would have received had they tendered their Shares in the Offer. Therefore, if the Merger takes place (and you do not exercise your appraisal rights under Delaware law), the only difference to you between tendering your Shares pursuant to the Offer and not tendering your Shares is that you will be paid earlier if you tender your Shares in the Offer. Stockholders who hold Shares at the time of the Merger will also be entitled to appraisal rights under Delaware law. See "Special Factors--Appraisal Rights." If for some reason the Merger does not take place and the Offer is consummated, the number of stockholders and Shares that are still in the hands of the public may be so small that there will no longer be an active public trading market (or, possibly, any public trading market) for the Shares, which may affect prices at which Shares trade. Also, as described above, SMS may cease making certain filings with the SEC or otherwise cease to be required to comply with the SEC rules relating to publicly held companies. What is the market value of my Shares as of a recent date? On January 24, 2001, the last full trading day before public announcement of Sodexho's initial proposal to acquire all Shares it did not already own, the closing price per Share on the NYSE was $24.875. On May 1, 2001, the last full trading day before public announcement of the Merger Agreement, the closing price per Share on the NYSE was $29.50. On May 15, 2001, a recent trading day before the date of this Offer to Purchase, the closing price per Share on the NYSE was $31.75. We advise you to obtain a recent quotation for Shares before deciding whether to tender your Shares. Who can I talk to if I have questions about the Offer? You can call MacKenzie Partners, Inc., the Information Agent for the Offer, at (800) 322-2885 (toll free) or (212) 929-5500 (call collect) or Goldman, Sachs & Co., the Dealer Manager for the Offer, at (800) 323-5678 (toll free) or (212) 902-1000 (call collect). Are there transactions between Sodexho and SMS? Yes. When Sodexho acquired Shares of SMS in 1998, the companies entered into a number of agreements to govern the ongoing relationship between the parties. These agreements include a Stockholder Agreement, a Tax Sharing Agreement, a Royalty Agreement, an Assistance Agreement and a Guaranty Agreement. See "Special Factors--Related Party Transactions." What are the tax consequences to me of the transaction? If your Shares are accepted for payment pursuant to the Offer, you will generally recognize gain or loss measured by the difference between the cash you receive and your tax basis in the Shares tendered. See "The Offer--Certain United States Federal Income Tax Consequences." 4 To the Holders of Common Stock of Sodexho Marriott Services, Inc.: INTRODUCTION SMS Acquisition Corp. (the "Purchaser"), a Delaware corporation and a wholly-owned subsidiary of Sodexho Alliance, S.A., a French corporation ("Sodexho"), hereby offers to purchase all of the outstanding shares of Common Stock, par value $1.00 per share, of Sodexho Marriott Services, Inc., a Delaware corporation ("SMS"), together with the associated preferred stock purchase rights issued pursuant to the Rights Agreement dated as of October 8, 1993, as amended, between SMS and The Bank of New York, as Rights Agent (collectively the "Shares"), other than Shares already owned by Sodexho and its subsidiaries, for $32.00 per Share, net to the seller in cash (the "Offer Price"), upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which together constitute the "Offer"). You will not be obligated to pay brokerage fees, commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, transfer taxes on the sale of Shares pursuant to the Offer. We will pay all charges and expenses of Goldman, Sachs & Co. (the "Dealer Manager"), EquiServe Trust Company, N.A. ("EquiServe" or the "Depositary") and MacKenzie Partners, Inc. (the "Information Agent") incurred in connection with the Offer. See "The Offer--Fees and Expenses." The Offer is being made pursuant to an Agreement and Plan of Merger dated as of May 1, 2001 (the "Merger Agreement") among SMS, Sodexho and the Purchaser. The Merger Agreement provides that following completion of the Offer and the satisfaction or waiver of certain conditions in the Merger Agreement, the Purchaser will be merged into SMS (the "Merger"), with SMS continuing as the surviving corporation (the "Surviving Corporation"), which will be wholly-owned by Sodexho. At the effective time of the Merger (the "Effective Time"), (1) each Share issued and outstanding immediately prior to the Effective Time (other than Shares of holders exercising appraisal rights, as described below in "Special Factors--Appraisal Rights," and Shares to be cancelled as provided in (2) below) will be converted into the right to receive the Offer Price in cash (the "Merger Consideration"); and (2) each Share held in the treasury of SMS or owned by Sodexho or any of its subsidiaries immediately prior to the Effective Time will be cancelled, and no payment or distribution will be made with respect to such Shares; see "Special Factors--The Merger Agreement" for a description of the Merger and the Merger Agreement. The Board of Directors of SMS ("SMS Board"), by unanimous decision of those directors participating and based upon the recommendation of a special committee of independent directors of the SMS Board (the "Special Committee"): (1) has determined that the Merger Agreement and the transactions contemplated thereby are fair to and in the best interests of SMS and its stockholders (other than Sodexho); (2) has approved and declared advisable the Merger Agreement; and (3) has resolved to recommend that SMS's stockholders accept the Offer and approve the Merger Agreement if submitted for their approval. See "Special Factors--Recommendation of the Special Committee and the SMS Board; Fairness of the Offer and the Merger--Recommendation of the Special Committee and the SMS Board." Messrs. Pierre Bellon, Bernard Carton and Edouard de Royere, each a director on the SMS Board, did not participate in this meeting (or any other SMS Board meeting in which the acquisition proposal was discussed) in light of their positions as Sodexho's designees on the SMS Board. See "Special Factors-- Recommendation of the Special Committee to the SMS Board; Fairness of the Offer and the Merger." UBS Warburg LLC ("UBS Warburg"), the financial advisor to the Special Committee, has delivered to the Special Committee its written opinion that as of the date of the opinion the consideration to be received by the holders of Shares (other than Sodexho and its affiliates) in the Offer and the Merger is fair from a financial point of view to such holders. See "Special Factors-- Opinion of Financial Advisor." 5 This Offer is conditioned upon the tender of a number of Shares that, together with the Shares then owned by Sodexho or any of its subsidiaries, represents at least a majority of the Shares outstanding on a fully-diluted basis. The Offer is also subject to certain other conditions. See "The Offer-- Conditions of the Offer." SMS has advised Sodexho that to the best of its knowledge each of its executive officers and directors, other than those individuals, if any, for whom the tender of Shares could cause them liability under the provisions of Section 16(b) of the Exchange Act or to the extent their Shares are restricted shares, intends to tender all of his or her Shares pursuant to the Offer. If, as a result of the purchase of Shares pursuant to the Offer, Sodexho and the Purchaser own in the aggregate at least 90% of the outstanding Shares, then Sodexho will contribute any of its Shares to the Purchaser and the Purchaser will effect the Merger as a short-form merger under the Delaware General Corporation Law (the "DGCL"), without a vote of the stockholders of SMS. If, following the purchase of Shares pursuant to the Offer, Sodexho and the Purchaser own in the aggregate less than 90% of the outstanding Shares, SMS, Sodexho, and the Purchaser have agreed to take certain actions necessary to seek stockholder approval and effect a long-form merger pursuant to the DGCL. See "Special Factors--The Merger Agreement." If a vote of the stockholders of SMS is necessary to effect the Merger, Sodexho has agreed in the Merger Agreement to vote or cause to be voted all Shares owned by it or any of its subsidiaries in favor of adoption of the Merger Agreement. THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION, AND YOU SHOULD CAREFULLY READ BOTH IN THEIR ENTIRETY BEFORE YOU MAKE A DECISION WITH RESPECT TO THE OFFER. 6 SPECIAL FACTORS BACKGROUND OF THE OFFER Formation of SMS SMS is the result of the combination in March 1998 of the operations of Marriott Management Services and Sodexho North America. On March 27, 1998, Marriott International, Inc. spun off its lodging, senior living and distribution services businesses to its stockholders, retaining its Marriott Management Services business. Immediately thereafter, the Marriott Management Services business was merged with the North American operations of Sodexho and the company changed its name to Sodexho Marriott Services, Inc. In connection with the merger, Sodexho received 29,949,925 Shares, which at that time represented 48.4% of the outstanding common stock of SMS. In March 1998, SMS and Sodexho entered into a number of agreements. These agreements include: a Stockholder Agreement, a Tax Sharing Agreement, a Royalty Agreement, an Assistance Agreement and a Guaranty Agreement. Under the Stockholder Agreement, Sodexho is entitled to designate three directors to the eight-member SMS Board. Under the Tax Sharing Agreement, the parties made certain representations and agreements with respect to the tax treatment of the 1998 transaction, including a restriction on Sodexho's ability to acquire a 50 percent or greater ownership interest in SMS before March 27, 2001. Under the Royalty Agreement, SMS has the right to use the name "Sodexho" in connection with SMS's operations in the United States and Canada for a period of ten years. The annual royalty rate was initially 0.05 percent of the annual gross revenues of SMS until March 27, 2001 and thereafter was to be a rate negotiated by the parties in good faith based on the fair market value. As described below, the parties have agreed to extend the initial 0.05 percent rate until August 31, 2001. Under the Assistance Agreement, Sodexho provides various services to SMS, including services relating to purchasing, catering, site support, marketing, management and administration, legal, fiscal, human resources, communications and cash management. The annual fee for these services is currently 0.15 percent of SMS's annual gross revenues. Each year, the independent directors of SMS assess the fair market value of the services that Sodexho provides to SMS to confirm that it exceeds the combined fee paid by SMS under the Royalty Agreement and the Assistance Agreement. Under the Guaranty Agreement, Sodexho guarantees SMS's obligations under its $620 million credit facility. SMS pays Sodexho a guarantee fee of 0.50 percent per annum of the outstanding amount under this facility. On March 26, 2001, SMS sent to Sodexho a proposed amendment to the Royalty Agreement to extend the 0.05 percent royalty rate beyond its initial expiration date of March 27, 2001 until August 31, 2001 in light of the pending acquisition proposal from Sodexho. After initially rejecting this request, on April 9, 2001 Sodexho accepted the proposed extension. Recent Contacts and Negotiations In April 2000, Sodexho management began to consider various alternatives with respect to its investment in SMS. In October 2000, Sodexho retained Goldman Sachs International ("Goldman Sachs") as its financial advisor in connection with the consideration of these alternatives. Throughout October, November and December of 2000, Sodexho, together with representatives of Goldman Sachs and Davis Polk & Wardwell ("Davis Polk"), legal counsel to Sodexho, evaluated several options, including maintaining or increasing its stake in SMS, making an offer for all publicly-held Shares, and increasing its representation on the SMS Board. In January 2001, Sodexho management decided to recommend to the Sodexho board of directors that Sodexho should pursue an offer for all Shares held by the public. Sodexho's reasons for pursuing an offer are discussed under "Special Factors--Purpose and Structure of the Offer and the Merger; Reasons of Sodexho for the Offer and the Merger." At a meeting on January 24, 2001, Sodexho's board of directors authorized an offer at $27.00 per Share. Immediately after the meeting, Pierre Bellon, Chairman and Chief Executive Officer of Sodexho, together with a representative of Davis Polk, called William J. Shaw, Chairman of the Board of SMS, and Robert A. Stern, 7 Senior Vice President and General Counsel of SMS, to propose that Sodexho acquire all Shares it did not already own for $27.00 per Share in cash. After the call, Mr. Bellon sent a letter to Mr. Shaw confirming the proposal and stating that Sodexho would not consider a sale of any portion of its SMS stake. The following morning, on January 25, 2000, Sodexho issued a press release announcing its proposal. On January 29, 2001, the SMS Board met to discuss the Sodexho proposal. Because Sodexho is the beneficial owner of approximately 47% of the outstanding common stock of SMS and certain of the SMS directors (Pierre Bellon, Bernard Carton and Edouard de Royere) serve on the SMS Board as representatives of Sodexho and may have an interest in the consummation of the proposal that conflicts with the interests of SMS and its other stockholders, the SMS Board formed a Special Committee composed of two independent directors, Daniel J. Altobello, a private investor and former Chairman of Onex Food Services, Inc., and Mary S. Metz, President of the S.H. Cowell Foundation. The SMS Board appointed Mr. Altobello as chairman of the Special Committee. Neither member of the Special Committee is an officer or employee of SMS, Sodexho or any of their affiliates. The SMS Board delegated to the Special Committee, among other things, the responsibility and authority to review, evaluate and, if appropriate, negotiate the terms of the proposal. Sodexho's designees on the SMS Board, Pierre Bellon, Bernard Carton and Edouard de Royere, attended the meeting but did not participate in the discussion or vote. Later on January 29, 2001, SMS publicly announced the formation of the Special Committee. The Special Committee was authorized by the SMS Board to retain independent financial and legal advisors to assist it in its evaluation of the Sodexho proposal. During February 2001, the members of the Special Committee received presentations from several internationally recognized investment banking firms for the purpose of retaining independent financial advisors to the Special Committee and ultimately decided to retain UBS Warburg. During this month the Special Committee also conducted interviews with several nationally recognized law firms, and retained Shaw Pittman, Washington, D.C. ("Shaw Pittman"), as its legal advisor and Potter Anderson & Corroon LLP, Wilmington, Delaware ("Potter Anderson"), as its Delaware legal advisor. On February 21, 2001, the Special Committee held its first meeting at the offices of Shaw Pittman. At the meeting, Potter Anderson advised the Special Committee as to its fiduciary duties and responsibilities in considering and acting upon the acquisition proposal. The Special Committee also discussed with its legal advisors and UBS Warburg various possible deal structures, current conditions in the financial markets, and the implications of Sodexho's statement in its January 24, 2001 letter that it would not consider a sale of any portion of its ownership interest in SMS as part of any alternative to its proposal. On February 26, 2001, at the Sodexho annual shareholders meeting, Pierre Bellon spoke briefly about the pending proposal to acquire SMS, noting that at the $27.00 per Share price, the accretion to Sodexho's earnings was limited and Sodexho intended to pursue the acquisition only if it would clearly benefit Sodexho's shareholders. On February 27, 2001, at the direction of the Special Committee, SMS entered into an engagement letter with UBS Warburg and issued a press release announcing that the Special Committee had retained financial and legal advisors. On February 28, 2001, UBS Warburg began its financial due diligence review of SMS, which included a review of public and non-public documents relating to SMS, including historical and projected financial information, as well as research reports, industry information and various agreements to which SMS is a party. On March 5, 2001, representatives of UBS Warburg and Shaw Pittman met with SMS senior management to discuss SMS's business, prospects and financial objectives, including management's financial forecasts for the period from September 2, 2000 through September 2, 2005. On that day, Shaw Pittman commenced its legal due diligence review of SMS. On March 13, 2001, the Special Committee held a telephonic meeting during which a summary of the due diligence review by UBS Warburg was discussed. The Special Committee reviewed with UBS Warburg a number of factors, including management's financial projections, the potential financial impact on SMS of a 8 favorable determination by the federal government with respect to SMS's bids on two military contracts and the consequences to SMS of a potential acquisition by Sodexho of Wood Management Services, a competitor of SMS. The Special Committee also discussed with UBS Warburg some of SMS's strengths and weaknesses, including its market position, its customer base, its balance sheet, its prospects for growth, the effect of changes in the labor market and the health care industry and certain factors relating to SMS's ability to expand internationally. The Special Committee asked UBS Warburg to prepare a valuation analysis of SMS. On March 13, 2001, Shaw Pittman called Davis Polk to report that the Special Committee had instructed UBS Warburg to contact Goldman Sachs to facilitate any confirmatory due diligence that Sodexho would like to perform, subject to the parties signing a confidentiality agreement. Davis Polk responded that in view of Sodexho's existing knowledge of SMS's operations through its participation on the SMS Board since 1998, Sodexho had concluded that it needed little additional due diligence material. On April 5, 2001, Sodexho and SMS signed a confidentiality agreement. In the course of its evaluation of Sodexho's proposal throughout February and March 2001, the Special Committee concluded, in light of Sodexho's statement that it would not consider a sale of its interest in SMS, that an acquisition of SMS by a third party was not a feasible alternative. Accordingly UBS Warburg was not authorized to and did not solicit indications of interest from any third party with respect to an acquisition of SMS. On March 15, 2001, SMS issued a press release announcing that SMS had been awarded two military contracts with anticipated revenues of $850 million over eight years. On March 22, 2001, representatives of UBS Warburg and Goldman Sachs met in New York to discuss their respective client's approaches to valuation. UBS Warburg advised Goldman Sachs that UBS Warburg's preliminary financial analysis indicated that SMS was worth more than $27.00 per Share and suggested that Goldman Sachs and Sodexho refine their analysis of SMS with a view to making a higher offer. On March 29, 2001, representatives of UBS Warburg and Goldman Sachs spoke via conference call to discuss in further detail approaches to valuation of the transaction. During this conference call Goldman Sachs focused in particular on the accretion/dilution impact of the transaction to Sodexho's earnings per share. On April 9, 2001, representatives of UBS Warburg and Goldman Sachs spoke via conference call to review Goldman Sachs' model with respect to the accretion/dilution impact of the transaction to Sodexho. UBS Warburg and Goldman Sachs agreed on the technical aspects of the accretion/dilution analysis, but disagreed on whether the appropriate measure of accretion/dilution was before or after amortization of goodwill. On April 11, 2001, the Special Committee held a telephonic meeting at which UBS Warburg reported to the Special Committee on its communications with Goldman Sachs. The Special Committee discussed negotiating strategies for UBS Warburg to use with Goldman Sachs, as well as due diligence requests by Sodexho. After discussions with its legal advisors, the Special Committee provided guidance to UBS Warburg for further negotiations. On April 12, 2001, representatives of UBS Warburg and Goldman Sachs met in New York. The discussion focused mainly on valuation metrics. At this meeting, UBS Warburg conveyed the Special Committee's formal rejection of Sodexho's $27.00 offer. On instructions from Sodexho, Goldman Sachs indicated that Sodexho would be willing to increase its offer to $30.00 per Share. UBS Warburg and Goldman Sachs discussed timing generally, including Sodexho's upcoming board meeting and delivery of a draft of the Merger Agreement. Following that meeting, representatives of UBS Warburg contacted the members of the Special Committee to advise them of the proposed increase in the offer price. 9 On April 17, 2001, Davis Polk sent a draft of the Merger Agreement to Shaw Pittman. In a series of conversations between April 17, 2001 and April 22, 2001, UBS Warburg indicated that the Special Committee would be unlikely to support an offer at $30.00 per Share and would consider a transaction at a price per Share in the mid-$30s. At Sodexho's request, Goldman Sachs informed UBS Warburg that Sodexho would not consider a transaction at or anywhere near $35.00 per Share. Additionally, Goldman Sachs explained that Sodexho's board was scheduled to meet on April 25, 2001 and would at that meeting determine whether to proceed with the transaction or publicly announce termination of discussions. On behalf of Sodexho, Goldman Sachs requested clarification regarding the Special Committee's view on price before the Sodexho board meeting. On April 20, 2001, representatives of Shaw Pittman had a telephone conference with representatives of Davis Polk in which they expressed their preliminary views regarding the principal issues raised by their review of the draft Merger Agreement, including that the proposed $75 million fee payable to Sodexho by SMS upon termination of the Merger Agreement by SMS under certain conditions was unacceptably high, and that the representations and warranties of the parties in the draft Merger Agreement should be substantially modified. On April 23, 2001, the Special Committee held a telephonic meeting during which UBS Warburg formally reported to the Special Committee that on April 12, 2001, Goldman Sachs had indicated to it that Sodexho would be willing to raise its offer to $30.00 per Share. The Special Committee provided further guidance to UBS Warburg as to price negotiations. The Special Committee also discussed the draft Merger Agreement with its legal advisors and provided guidance as to the negotiation of the Merger Agreement. The Special Committee noted that SMS's management had prepared an analysis of the treatment of stock options in connection with the proposed transaction with Sodexho. The Special Committee agreed to defer consideration of management's analysis until the parties had reached agreement on price. Following this meeting, UBS Warburg called Goldman Sachs and reported that the Special Committee had rejected the offer at $30.00 per Share and repeated that the Special Committee believed that a price per Share in the mid-$30s was appropriate. On April 24, 2001, Shaw Pittman sent Davis Polk a markup of the Merger Agreement reflecting the comments of the Special Committee and its advisors. Also on April 24, 2001, at Sodexho's request, representatives from SMS and Shaw Pittman participated in a conference call with Sodexho to answer questions relating to SMS equity-based compensation. On April 25, 2001, the Sodexho board of directors met in Paris and authorized a best and final offer of $32.00 per Share in cash. On instructions from the Sodexho board, Goldman Sachs spoke with UBS Warburg and sent a letter to Mr. Altobello, confirming that $32.00 per Share was Sodexho's best and final price. In view of this, and noting that it was not in the interest of either party to needlessly prolong discussions, Sodexho indicated to Mr. Altobello that, unless accepted by 5:00 p.m. Eastern Time on April 26, 2001, the offer would expire and, consistent with its disclosure obligations, Sodexho would publicly announce the termination of discussions. Later that evening, Davis Polk provided Shaw Pittman with a draft press release regarding such an announcement. The Special Committee held a telephonic meeting on the evening of April 25, 2001 to discuss the April 25, 2001 letter. At the request of the Special Committee, UBS Warburg discussed its preliminary views regarding the fairness of the $32.00 proposal. The Special Committee instructed UBS Warburg to respond to Sodexho's statement that $32.00 per Share was its best and final offer with a counteroffer of $32.50 per Share. On the morning of April 26, 2001, UBS Warburg called Goldman Sachs to request that Sodexho increase its offer to $32.50 per Share. After consultation with Sodexho, Goldman Sachs advised UBS Warburg that Sodexho would under no circumstances increase its offer. Following that discussion, the Special Committee 10 held a telephonic meeting in order to discuss Sodexho's response. UBS Warburg reported that Goldman Sachs had confirmed Sodexho's position that the $32.00 proposal was Sodexho's best and final offer and that UBS Warburg believed it could deliver a fairness opinion based on that price. The Special Committee agreed that it would end negotiations with Sodexho as to price and accept the offer subject to certain conditions, including negotiation by counsel of a definitive Merger Agreement on terms acceptable to the Special Committee, receipt and review by the Special Committee of an updated financial analysis by UBS Warburg, and the delivery by UBS Warburg of a fairness opinion. Representatives of UBS Warburg then so advised Goldman Sachs. Later that evening, Shaw Pittman distributed to management of SMS for the first time the marked-up version of the draft Merger Agreement, and indicated to Davis Polk that management was expected to make a number of proposals regarding treatment of options and other related compensation issues. The next morning, Davis Polk and Shaw Pittman met in New York to discuss the Merger Agreement. The parties made progress on many issues, including the scope of the parties' respective representations and warranties, but were unable to resolve several important points. In particular, the size of the break-up fee, the right of Sodexho to match any competing offer made for SMS, and Sodexho's ability to terminate the Offer because of a material adverse change in SMS's business were left open at the end of the meeting. On that same day and over the course of the weekend, SMS management also began discussions with Davis Polk about the treatment in the transaction of various stock-based awards held by SMS employees. On April 29 and 30, 2001, UBS Warburg provided the Special Committee with a summary of its financial analysis of Sodexho's proposal. On Monday, April 30, 2001 and Tuesday, May 1, 2001 Shaw Pittman, Davis Polk and SMS management continued to discuss the remaining open issues on the Merger Agreement. These issues were resolved on the afternoon of May 1, 2001, with Sodexho agreeing, among other things, to reduce the break-up fee to $20 million. On the evening of May 1, 2001, the Special Committee held a telephonic meeting with its legal and financial advisors. UBS Warburg reviewed with the Special Committee its financial analyses and orally expressed its opinion (subsequently confirmed in writing) that as of the date of the opinion $32.00 per Share is fair to the SMS stockholders (other than Sodexho and its affiliates) from a financial point of view. In addition, Shaw Pittman reviewed with the Special Committee the principal terms of the Merger Agreement, including the changes made as a result of the negotiations that took place from April 27, 2001 through May 1, 2001. After further discussion and consideration of the advice of its financial and legal advisors, the Special Committee (1) determined that it is fair to and in the best interests of SMS and its stockholders (other than Sodexho and its affiliates) to consummate the Offer and the Merger upon the terms and subject to the conditions of the Merger Agreement and in accordance with Delaware law, (2) resolved to recommend that the SMS Board approve and declare advisable the Offer, the Merger and the Merger Agreement, and (3) resolved to recommend that the SMS stockholders accept the Offer, tender their Shares pursuant thereto and adopt the Merger Agreement and the Merger if submitted for their approval. Later in the evening of May 1, 2001, a meeting of the SMS Board was convened at the offices of Shaw Pittman to discuss the transaction and consider the recommendation of the Special Committee. All board members were present except Messrs. Bellon, Carton and de Royere, Sodexho's designees on the SMS Board, who did not attend the meeting in light of the subject matter being considered. At the meeting, the Special Committee advised the SMS Board of its conclusions. In addition, the financial and legal advisors to the Special Committee made oral presentations to the SMS Board summarizing the financial analysis of the proposed transaction and the Merger Agreement. After discussions with the Special Committee's financial and legal advisors, the SMS Board, by unanimous decision of those directors in attendance, (1) determined that the Merger Agreement and the transactions contemplated thereby are fair to and in the best interests of SMS and its stockholders (other than Sodexho), (2) approved and declared advisable the Merger Agreement and (3) resolved to recommend that SMS's stockholders accept the Offer and approve the Merger Agreement if submitted for their approval. On the evening of May 1, 2001, the parties executed the Merger Agreement. 11 On May 2, 2001, Sodexho and SMS announced in separate press releases that the parties had executed the Merger Agreement providing for the Offer and the acquisition of all Shares held by the public at a price of $32.00 per Share. RECOMMENDATION OF THE SPECIAL COMMITTEE AND THE SMS BOARD; FAIRNESS OF THE OFFER AND THE MERGER Recommendation of the Special Committee and the SMS Board The Special Committee, at a meeting held on May 1, 2001: (1) determined that it is fair to and in the best interests of SMS and its stockholders (other than Sodexho and its affiliates) to consummate the Offer and the Merger upon the terms and subject to the conditions of the Merger Agreement and in accordance with Delaware law; (2) resolved to recommend that the SMS Board approve and declare advisable the Offer, the Merger and the Merger Agreement; and (3) resolved to recommend that SMS's stockholders accept the Offer, tender their shares pursuant thereto and adopt the Merger Agreement and the Merger if submitted for their approval. On May 1, 2001, the SMS Board, by unanimous decision of those directors participating and based upon the recommendation of the Special Committee: (1) determined that the Merger Agreement and the transactions contemplated thereby are fair to and in the best interests of SMS and its stockholders (other than Sodexho); (2) approved and declared advisable the Merger Agreement; and (3) resolved to recommend that SMS's stockholders accept the Offer and approve the Merger Agreement if submitted for their approval. Messrs. Pierre Bellon, Bernard Carton and Edouard de Royere did not attend the meeting in light of their positions, in the case of Mr. Bellon as Chairman and Chief Executive Officer of Sodexho, in the case of Mr. Carton as Senior Vice President and Chief Financial Officer of Sodexho, and in the case of Mr. de Royere as a director of Sodexho. Fairness of the Offer and the Merger The Special Committee In reaching the recommendations described above, the Special Committee considered a number of factors, including the following: 1. SMS Operating and Financial Condition. The Special Committee took into account the current and historical financial condition and results of operations of SMS, as well as the prospects and strategic objectives of SMS, including the risks involved in achieving those prospects and objectives, and the current and expected conditions in the general economy and in the food services and facilities management industries. 2. Transaction Financial Terms/Premium to Market Price. The Special Committee considered the relationship of the Offer Price to the historical market price of Shares. The Offer Price represents a premium of 28.6% over the closing price per share on January 24, 2001, the day before the public announcement of Sodexho's preliminary proposal to acquire all of the outstanding Shares, a premium of 30.9% over the closing price per Share one week prior to Sodexho's announcement, a premium of 53.8% over the closing price per Share one month prior to Sodexho's announcement, and a premium of 18.5% over Sodexho's initial offer price of $27 per Share. The Special Committee discussed with its financial advisors whether, in comparing the premiums represented by the Offer Price with premiums paid in comparable transactions, it would be most 12 appropriate to compare the proposed transaction with transactions in which a controlling stockholder acquires from the public the remaining interest in a company rather than transactions in which a buyer acquires a controlling interest in a company. The Special Committee believes that, after extensive negotiations on its behalf with Sodexho's representatives, SMS has obtained the highest price per Share that Sodexho is willing to pay. The Special Committee took into account the fact that the terms of the Offer were determined through extensive negotiations between Sodexho and SMS and its financial and legal advisors, all of whom are unaffiliated with Sodexho. The Special Committee also considered the risk that further price negotiations with Sodexho could cause Sodexho to abandon the transaction. The Special Committee also considered the form of consideration to be paid to SMS's stockholders in the Offer and the Merger, and the certainty of value of such cash consideration compared to stock. The Special Committee was aware that the consideration to be received by SMS's stockholders in the Offer and the Merger would be taxable to such stockholders for federal income tax purposes. 3. Strategic Alternatives. The Special Committee considered the fact that Sodexho currently owns approximately 47% of the capital stock of SMS. The Special Committee also took into account Sodexho's statement in its letter of January 24, 2001 that it has no interest in, and would not consider, a sale of any portion of its ownership interest in SMS as part of any alternative to its proposal. Accordingly, the Special Committee concluded that an acquisition of SMS by a third party was not a feasible alternative. 4. UBS Warburg's Fairness Opinion. The Special Committee took into account presentations from UBS Warburg and the fairness opinion, dated May 1, 2001, that, based upon and subject to certain considerations and assumptions, the consideration to be received by the holders of Shares (other than Sodexho and its affiliates) in the Offer and the Merger is fair from a financial point of view to such holders. A copy of the fairness opinion is attached to this Offer to Purchase as Annex B and incorporated herein by reference. For information regarding the analysis conducted by UBS Warburg, see "Special Factors--Opinion of Financial Advisor." SMS stockholders are urged to read the fairness opinion and the section entitled "Special Factors--Opinion of Financial Advisor" in their entirety. The Special Committee was aware that UBS Warburg becomes entitled to certain fees described under "The Offer--Fees and Expenses" upon the consummation of the Offer. 5. Timing of Completion. The Special Committee considered the anticipated timing of the consummation of the transactions contemplated by the Merger Agreement. In that regard, the Special Committee noted that stockholders who tender in the Offer would receive their consideration earlier than they would have had SMS pursued only a merger transaction. The Special Committee further noted that if sufficient Shares were tendered in the Offer to enable Sodexho to effect a merger without a stockholder vote then all the stockholders would receive their consideration more quickly than they would have had SMS pursued a merger transaction that required a stockholder vote. 6. Limited Conditions to Consummation. The Special Committee considered the fact that the obligation of Sodexho to consummate the Offer and the Merger is subject to a limited number of conditions, including, among others, the condition that sufficient Shares be tendered that, when added to the Shares already owned by Sodexho and its affiliates, would give Sodexho and its affiliates a majority of the outstanding Shares on a fully-diluted basis. The Special Committee also considered the fact that consummation of the Offer and the Merger is not subject to a financing condition. Subject to the limited conditions set forth in the Merger Agreement, Sodexho is required to purchase Shares in the Offer. Once Sodexho purchases any Shares in the Offer, Sodexho will be obligated to consummate the Merger subject to the limited conditions set forth in the Merger Agreement. 7. Appraisal Rights. The Special Committee considered the fact that stockholders who do not tender their Shares pursuant to the Offer and who perfect their appraisal rights will have the right to dissent from the Merger and to demand appraisal of the fair value of their Shares under the DGCL, whether or not a stockholder vote is required, as described under "Special Factors--Appraisal Rights." 13 8. Possible Conflicts of Interest. The Special Committee also took into account the possible conflicts of interest of certain directors and members of management of both SMS and Sodexho discussed below under "Special Factors-- Interests of Certain Persons in the Offer and the Merger." The SMS Board In reaching its determinations referred to above, the SMS Board considered the following factors, each of which, in the view of the SMS Board, supported such determinations: (1) the conclusions and recommendations of the Special Committee; (2) the factors referred to above as having been taken into account by the Special Committee, including the receipt by the Special Committee of the opinion of UBS Warburg that, based upon and subject to the assumptions stated therein, the $32.00 per Share to be received by SMS's stockholders (other than Sodexho and its affiliates) in the Offer and the Merger pursuant to the Merger Agreement is fair from a financial point of view to such stockholders, and the financial analysis presented by UBS Warburg to the SMS Board; and (3) the fact that the Offer Price and the terms and conditions of the Merger Agreement were the result of extensive negotiations between the Special Committee and Sodexho. The members of the SMS Board, including the members of the Special Committee but excluding members who are directors or officers of Sodexho, evaluated the Offer and the Merger in light of their knowledge of the business, financial condition and prospects of SMS, and based upon the advice of financial and legal advisors. The SMS Board, including the members of the Special Committee, believes that the Offer and the Merger are procedurally fair based upon a number of factors, including: (1) the fact that the Special Committee consisted of independent directors appointed to represent the interests of SMS's stockholders (other than Sodexho and its affiliates); (2) the fact that the Special Committee retained and was advised by its own independent legal counsel; (3) the fact that the Special Committee retained and was advised by UBS Warburg, as its independent financial advisor, to assist it in evaluating a potential transaction with Sodexho; (4) the nature of the deliberations pursuant to which the Special Committee evaluated the Offer and the Merger and the alternatives thereto; and (5) the fact that the Offer Price resulted from extensive bargaining between representatives of the Special Committee, on the one hand, and representatives of Sodexho, on the other. The SMS Board and the Special Committee recognized that, while the consummation of the Offer and the Merger will result in all stockholders (other than Sodexho and its affiliates) being entitled to receive $32.00 per Share in cash for each of their Shares, it will eliminate the opportunity for current stockholders (other than Sodexho and its affiliates) to participate in the benefit of increases, if any, in the value of SMS's business following the Merger. Nevertheless, the Special Committee and the SMS Board concluded that this fact did not justify foregoing the receipt of the immediate cash premium represented by the Offer Price. Neither the Special Committee nor the SMS Board considered the liquidation of SMS's assets to be a viable course of action. Therefore, no appraisal of liquidation values was sought for purposes of evaluating the Offer and the Merger. In view of the wide variety of factors considered in connection with their evaluation of the Offer and the Merger, neither the Special Committee nor the SMS Board found it practicable to, and did not, quantify or otherwise attempt to assign relative weights to the specific factors they considered in reaching their determinations. 14 The foregoing discussion of the information and factors considered by the Special Committee and the SMS Board is not intended to be exhaustive but is believed to include all material factors considered by the Special Committee and the SMS Board. SMS's executive officers have not been asked to make a recommendation as to the Offer or the Merger. OPINION OF FINANCIAL ADVISOR Under the terms of an engagement letter dated February 27, 2001, the Special Committee retained UBS Warburg to provide financial advisory services and a financial fairness opinion to the Special Committee in connection with the Offer and the Merger. At the meeting of the Special Committee held on May 1, 2001, UBS Warburg delivered its oral opinion to the effect that, as of that date and based on and subject to the matters described in the opinion, the $32.00 per Share cash consideration to be received by the holders of the Shares (other than Sodexho and its affiliates) in the Offer and the Merger is fair from a financial point of view to such holders. THE FOLLOWING SUMMARY OF THE UBS WARBURG OPINION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE OPINION. THE FULL TEXT OF THE OPINION SETS FORTH THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED AND LIMITATIONS ON THE SCOPE OF THE REVIEW UNDERTAKEN, BY UBS WARBURG. THE OPINION IS INCLUDED AS ANNEX B TO THIS OFFER TO PURCHASE AND IS INCORPORATED IN THIS OFFER TO PURCHASE BY REFERENCE. THE OPINION WILL ALSO BE MADE AVAILABLE FOR INSPECTION AND COPYING AT THE PRINCIPAL EXECUTIVE OFFICES OF SMS DURING ITS REGULAR BUSINESS HOURS BY ANY INTERESTED STOCKHOLDER OF SMS OR REPRESENTATIVE WHO HAS BEEN SO DESIGNATED IN WRITING. WE ENCOURAGE YOU TO READ CAREFULLY THE UBS WARBURG OPINION IN ITS ENTIRETY. UBS Warburg's opinion: . is directed to the Special Committee; . relates only to the fairness from a financial point of view of the $32.00 per Share cash consideration to be received by SMS stockholders (other than Sodexho and its affiliates) whose Shares are tendered in the Offer or converted in the Merger; . does not constitute a recommendation to any stockholder as to whether such stockholder should tender its Shares in the Offer or how such stockholder should vote with respect to the Merger; and . is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to UBS Warburg as of, the date of the opinion. In arriving at its opinion, UBS Warburg, among other things: . reviewed certain publicly available business and historical financial information relating to SMS; . reviewed the reported prices and trading activity for the Shares; . reviewed certain internal financial information and other data relating to the business and financial prospects of SMS, including estimates and financial forecasts prepared by management of SMS, that were provided to UBS Warburg by SMS and not publicly available; . conducted discussions with members of the senior management of SMS concerning the business and financial prospects of SMS; . reviewed publicly available financial and stock market data with respect to certain other companies in lines of business UBS Warburg believed to be generally relevant; . compared the financial terms of the Offer and the Merger with the publicly available financial terms of certain other transactions which UBS Warburg believed to be generally relevant; 15 . reviewed drafts of the Merger Agreement; and . conducted such other financial studies, analyses, and investigations, and considered such other information as UBS Warburg deemed necessary or appropriate. In connection with its review, with the Special Committee's consent, UBS Warburg: . assumed that the final executed form of the Merger Agreement did not differ in any material respect from the drafts that UBS Warburg examined, and that SMS, Sodexho and Purchaser will comply with all the material terms of the Merger Agreement; . did not assume any responsibility for independent verification of any of the information reviewed by UBS Warburg for the purpose of this opinion and have relied on it as being complete and accurate in all material respects; . did not make any independent evaluation or appraisal of any of the assets or liabilities (contingent or otherwise) of SMS, nor was UBS Warburg furnished with any such evaluation or appraisal; and . assumed that the financial projections internally prepared by SMS were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of SMS as to the future performance of SMS. UBS Warburg was not asked to, and did not, at the Special Committee's direction, offer any opinion as to the material terms of the Merger Agreement or the form of the transactions contemplated by the Merger Agreement. In addition, in connection with its engagement by the Special Committee, UBS Warburg was not authorized to and did not solicit indications of interest from any party with respect to a business combination with SMS. In preparing its opinion, UBS Warburg performed a variety of financial and comparative analyses. The preparation of a fairness opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, is not susceptible to partial analysis or summary descriptions. In arriving at its opinion, UBS Warburg made qualitative judgments as to the significance and relevance of each analysis and factor considered by it. Accordingly, UBS Warburg believes that its analyses must be considered as a whole and that selecting portions of its analyses and the factors considered by it, without considering all analyses and factors, could create an incomplete view of the processes underlying the analyses set forth in its opinion. In performing its analyses, UBS Warburg made numerous assumptions with respect to industry performance, general business, financial, market and economic conditions and other matters, many of which are beyond the control of SMS. No company, transaction or business used in those analyses as a comparison is identical to SMS or its businesses or the Offer and the Merger, nor is an evaluation of the results entirely mathematical. Rather, the analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the operating results, public trading or other values of the companies or transactions being analyzed. The estimates contained in the analyses performed by UBS Warburg and the ranges of valuations resulting from any particular analysis are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than suggested by these analyses. In addition, analyses relating to the value of securities do not purport to be appraisals or to reflect the prices at which a business might actually be sold or the prices at which any securities may trade at the present time or at any time in the future. The following is a summary of the material financial analyses used by UBS Warburg in connection with the rendering of its opinion. The financial analyses summarized below include information presented in tabular format. In order to understand the financial analyses fully, the tables must be read together with the text of each 16 summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the financial analyses. Historical Stock Performance. UBS Warburg reviewed trading prices for the Shares prior to the announcement by Sodexho of its initial offer to purchase the outstanding Shares not owned by Sodexho or its affiliates on January 25, 2001. This share price performance review indicated that for the latest twelve months ended January 24, 2001, the low and high closing prices for the shares were $10.31 and $25.69, respectively. UBS Warburg also reviewed the closing price of the Shares on January 24, 2001 and average closing prices over periods prior to January 25, 2001 as set forth in the following table:
Selected Statistics Price ------------------- ------ January 24, 2001 closing price.................................... $24.88 30 day average.................................................... $22.58 90 day average.................................................... $20.90 52 week average................................................... $16.31
Selected Comparable Public Company Analysis. UBS Warburg compared certain financial information, ratios and public market multiples for SMS to the corresponding data for the following eight publicly-traded food and facilities services companies: . ABM Industries, Inc. . Autogrill SpA . Chemed Corporation . Compass Group Plc . Elior . ISS A/S . Rentokil Initial Plc . The ServiceMaster Company UBS Warburg chose the selected companies because they were publicly-traded companies that, for purposes of the analysis, UBS Warburg considered reasonably similar to SMS in that these companies operate in the food and facilities services industry. These certain public companies may significantly differ from SMS based on, among other things, the size of the companies, the geographic coverage of the companies' operations and the particular segments of the food and facilities services industry in which the companies focus. UBS Warburg noted that several of the comparable companies are global businesses, are traded on foreign stock exchanges and have higher earnings before interest, taxes, depreciation and amortization, referred to as EBITDA, margins than SMS. UBS Warburg reviewed, among other information, the comparable companies' multiples of total enterprise value, referred to as TEV, which consists of the market value on a fully-diluted basis of the particular company's equity plus total debt outstanding and minority interests of the particular company, minus cash, cash equivalents, marketable securities and unconsolidated investments to: . latest twelve months, referred to as LTM, EBITDA UBS Warburg also reviewed, among other information, the comparable companies' projected price/cash earnings per share multiples, referred to as P/Cash EPS, based on I/B/E/S International Inc., referred to as IBES, consensus earnings estimates and other published research analyst estimates all adjusted to exclude the amortization of goodwill for the calendar years ending December 31, 2001 and December 31, 2002. 17 The SMS comparable companies analysis resulted in the following ranges of multiples as of April 27, 2001:
Implied Multiple Multiple for SMS at Analysis Multiple Range Mean/Median $32.00 per share -------- -------------- ----------- ---------------- TEV/LTM EBITDA 7.4x to 15.4x 10.0x/10.0x 10.1x P/2001E Cash EPS 11.6x to 20.6x 14.9x/14.0x 19.1x P/2002E Cash EPS 11.7x to 17.7x 13.5x/12.7x 16.7x
Selected Comparable Transaction Analysis. UBS Warburg reviewed publicly available financial information relating to the following certain mergers and acquisitions in the food and facilities services industry since November 1998:
Acquiror Target -------- ------ Lufthansa AG........................... LSG SkyChefs Compass Group Plc...................... Selecta Group Compass Group Plc...................... Morrison Management Specialists, Inc. Ecolab, Inc............................ Henkel-Ecolab Granada Group Plc...................... Compass Group Plc Autogrill SpA.......................... Host Marriott Services Corp. The ServiceMaster Company.............. LandCare USA, Inc.
UBS Warburg chose the certain transactions because they were business combinations that, for the purposes of the analysis, UBS Warburg considered to be reasonably similar to the Offer and the Merger in that these transactions involved companies in the food and facilities services industry. The certain transactions may differ significantly from the Offer and the Merger based on, among other things, the size of the transactions, the structure of the transactions, whether or not a change of control was effected, the expected synergies associated with the transactions and the dates that the transactions were announced and consummated. UBS Warburg reviewed, among other things, the TEV implied for each of the relevant transactions as a multiple of LTM EBITDA. UBS Warburg also reviewed the equity market value, referred to as EMV, when available, implied in the relevant transactions as a multiple of LTM cash earnings and the premiums paid one day, one week and one month prior to the announcement of the transactions where the target was a public company. The analysis indicated the following implied multiples and implied premiums for the certain transactions and for the Offer and the Merger:
Implied Multiple/Premium Multiple/Premium Multiple/Premium for SMS at Analysis Range Mean/Median $32.00 per share ---------------- ---------------- ----------- ---------------- TEV/LTM EBITDA 7.2x to 17.6x 11.6x/9.4x 10.1x EMV/LTM Cash Earnings 14.6x to 36.3x 25.4x/25.1x 21.2x Premium to One Day 3.5% to 61.5% 27.1%/30.1% 28.6% Premium to One Week (11.4%) to 78.7% 28.2%/30.4% 30.9% Premium to One Month (8.9%) to 111.8% 41.5%/38.5% 53.8%
All multiples for the certain transactions were based on publicly-available information at the time of the announcement of the particular transaction. LTM data for SMS was based on its applicable Form 10-K and 10-Q. Premiums Paid Analysis. UBS Warburg reviewed certain purchase price per share premiums paid in publicly-disclosed mergers and acquisitions and publicly-disclosed cash acquisitions in non-financial industries 18 announced and completed, excluding certain outlier transactions, from January 1, 1999 through April 23, 2001 with deal sizes of more than $50.0 million where at least 10% of the target was acquired. UBS Warburg noted that Sodexho owned a significant portion of SMS prior to the announcement of the Offer and the Merger. This analysis indicated mean premiums to the target's closing stock prices on dates prior to the announcement as set forth in the following table:
Mean Premiums Implied Premium Paid in Mean Premiums for SMS at Period Prior Certain Paid in Certain $32.00 per to Announcement Transactions Cash Transactions share --------------- ------------- ----------------- --------------- One day 32.1% 30.8% 28.6% One week 38.0% 35.8% 30.9% One month 45.5% 43.0% 53.8%
UBS Warburg also reviewed generally with the Special Committee certain purchase price per share premiums paid under two different set of criteria as follows: (1) where the target was acquired in a minority squeeze-out and (2) where less than 50%, but more than 5% of the target was owned prior to the announcement of the transaction and greater than 50% was owned after the transaction. Discounted Cash Flow Analysis. UBS Warburg performed a discounted cash flow analysis, using the financial forecast prepared by management of SMS. The discounted cash flow analysis determined the discounted present value of the unleveraged after-tax cash flows generated over the five-year period covered by financial forecast and then added a terminal value based upon multiples of EBITDA and a range of growth perpetuity based on unleveraged after-tax free cash flow. The unleveraged after-tax cash flows and terminal values were discounted using a range of discount rates that UBS Warburg deemed appropriate, based on SMS' weighted average cost of capital and other qualitative factors. UBS Warburg noted that SMS debt is guaranteed by Sodexho. The valuation ranges indicated by this analysis are summarized in the table below:
Approximate Terminal Value Terminal Implied Range Analysis Value Range per Share -------------- ----------- ------------- EBITDA 8.0x to 10.0x $29.00 to $39.00 Terminal Growth 2.5% to 3.5% $23.50 to $35.50
Pursuant to the engagement letter, in connection with its advisory services, including delivery of its financial fairness opinion, UBS Warburg is entitled to a transaction fee and reimbursement of certain expenses as set forth in "The Offer--Fees and Expenses." The Special Committee selected UBS Warburg based on its experience, expertise and reputation. UBS Warburg is an internationally recognized investment banking firm that regularly engages in the valuation of securities in connection with mergers and acquisitions, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. Prior to this engagement, UBS Warburg had not provided investment banking and other financial services to SMS. In the ordinary course of business, UBS Warburg, its successors and affiliates may trade or have traded securities of SMS for their own accounts and, accordingly, may at any time hold a long or short position in such securities. POSITION OF SODEXHO AND THE PURCHASER REGARDING FAIRNESS OF THE OFFER AND THE MERGER Sodexho and the Purchaser believe that the consideration to be received by SMS's stockholders (other than Sodexho and its affiliates) pursuant to the Offer and the Merger is fair to and in the best interests of SMS's stockholders (other than Sodexho and its affiliates). Sodexho and the Purchaser base their belief on the following factors: . the $32.00 offer price represents a premium of 28.6% over the closing price per Share of $24.875 on January 24, 2001, the last trading day before public announcement of Sodexho's initial proposal to 19 SMS, and a premium of 44% and 71% over the average closing prices per Share for the 30-day and 180-day periods prior to January 24, 2001, respectively; . the Offer and the Merger will each provide consideration to the stockholders entirely in cash; . the Offer and the Merger and the other terms and conditions of the Merger Agreement were the result of extensive negotiations between the Special Committee and Sodexho and their respective financial and legal advisors; . the conclusions and recommendations of the Special Committee and the SMS Board that each of the Offer and the Merger is fair to and in the best interests of SMS's stockholders (other than Sodexho and its affiliates); . the Special Committee received an opinion from UBS Warburg that the $32.00 per Share in cash to be received by the holders of Shares (other than Sodexho and its affiliates) in the Offer and the Merger is fair from a financial point of view to such holders; and . the financial performance of SMS. Sodexho and the Purchaser did not find it practicable to assign, nor did they assign, relative weights to the individual factors considered in reaching their conclusions as to fairness. In light of the nature of SMS's business, Sodexho and the Purchaser did not deem net book value or liquidation value to be relevant indicators of the value of Shares. Although Goldman Sachs generally acted as financial advisor to Sodexho in this transaction and, in particular, advised Sodexho on negotiating strategies and assisted Sodexho in its negotiations with the Special Committee and its financial advisor, UBS Warburg, Goldman Sachs was not asked to and did not deliver an opinion as to the fairness from a financial point of view to the stockholders of SMS or any other person of the $32.00 per Share to be received by the stockholders of SMS. PURPOSE AND STRUCTURE OF THE OFFER AND THE MERGER; REASONS OF SODEXHO FOR THE OFFER AND THE MERGER The purpose of the Offer and the Merger is for Sodexho to increase its ownership of SMS from approximately 47% to 100%. Upon completion of the Merger, SMS will become a wholly-owned subsidiary of Sodexho. The acquisition of Shares not owned by Sodexho has been structured as a cash tender offer followed by a cash merger in order to effect a prompt and orderly transfer of ownership of SMS from the public stockholders to Sodexho and the Purchaser and to provide stockholders with cash for all of their Shares. Sodexho has decided to acquire SMS at this time because (1) the acquisition will allow Sodexho access to 100% of SMS's cash flow and enhance financing flexibility for the entire Sodexho group, including SMS, (2) the acquisition will provide increased operational flexibility between Sodexho and SMS, particularly in marketing to global clients and purchasing from global suppliers, (3) the acquisition will reinforce employee incentives with respect to the Sodexho group as a whole by linking even more closely Sodexho and SMS associates and aligning their incentive programs through Sodexho stock-based awards, (4) Sodexho believes the acquisition will enhance investor perception of Sodexho through simplification of the group structure, (5) the contractual restrictions imposed in connection with the formation of SMS in 1998 limiting Sodexho's ability to increase its ownership of SMS expired in March 2001, and (6) Sodexho believes the combination of the operations of SMS with those of Wood Dining Services, a US company engaged in the on-site managed food services business which Sodexho agreed to acquire on April 6, 2001, will permit the realization of synergies. PLANS FOR SMS AFTER THE OFFER AND THE MERGER; CERTAIN EFFECTS OF THE OFFER Pursuant to the Merger Agreement, upon completion of the Offer, Sodexho and the Purchaser intend to effect the Merger in accordance with the Merger Agreement. See "Special Factors--The Merger Agreement." 20 Except as otherwise described in this Offer to Purchase, Sodexho has no current plans or proposals or negotiations which relate to or would result in: (1) other than the Merger, an extraordinary corporate transaction, such as a merger, reorganization or liquidation involving SMS or any of its subsidiaries; (2) any purchase, sale or transfer of a material amount of assets of SMS or any of its subsidiaries; (3) any change in the management of SMS or any change in any material term of the employment contract of any executive officer; or (4) any other material change in SMS's corporate structure or business. Nevertheless, Sodexho may initiate a review of SMS and its assets, corporate structure, capitalization, operations, properties, policies, management and personnel to determine what changes, if any, would be desirable, following the Merger in order best to organize and integrate the activities of SMS and Sodexho. In particular, Sodexho plans to change the SMS Board by electing persons as directors of SMS who likely will be employees or officers of Sodexho or SMS or their affiliates, and may also consider material changes in the present dividend rate and policy, indebtedness and capitalization of SMS and may consider pursuing acquisition opportunities through SMS. In addition, Sodexho may take actions to achieve potential scale efficiencies. Sodexho will also take steps to align goals and rewards in the merged SMS organization such as adopting a Sodexho incentive plan for SMS management. Sodexho expressly reserves the right to make any changes that it deems necessary or appropriate in light of its review or in light of future developments. As a result of the Offer, the direct and indirect interest of Sodexho in SMS's net book value and net earnings will increase to the extent of the number of Shares acquired under the Offer. Following consummation of the Merger, Sodexho's indirect interest in such items will increase to 100% and Sodexho and its subsidiaries will be entitled to all benefits resulting from that interest, including all income generated by SMS's operations and any future increase in SMS's value and the right to elect all members of the SMS Board. Similarly, Sodexho will also bear the risk of losses generated by SMS's operations and any decrease in the value of SMS after the Merger. Upon consummation of the Merger, SMS will become a privately held corporation. Accordingly, stockholders other than Sodexho will not have the opportunity to participate directly in the earnings and growth of SMS after the Merger and will not have any right to vote on corporate matters. Similarly, stockholders will not face the risk of losses generated by SMS's operations or decline in the value of SMS after the Merger. As a result of the Merger, public trading of SMS Common Stock will cease and the registration of such shares under the Exchange Act will be terminated. Consequently, following the Merger, SMS will be relieved of the duty to file annual and other periodic reports and proxy and information statements under the Exchange Act, and its officers, directors and more than 10% stockholders will be relieved of the reporting requirements under, and the "short swing" profit liability provisions of, Section 16 of the Exchange Act. SMS will no longer be a public company and its stock will no longer be traded on the NYSE. THE MERGER AGREEMENT The following is a summary of the material provisions of the Merger Agreement, a copy of which is attached as Annex A to this Offer to Purchase. The summary is qualified in its entirety by reference to the Merger Agreement. The following summary may not contain all of the information important to you. Capitalized terms not otherwise defined in the following summary or elsewhere in this Offer to Purchase shall have the meanings set forth in the Merger Agreement. 21 The Offer. The Merger Agreement provides for the making of the Offer by the Purchaser as promptly as practicable (but no later than May 21, 2001). Purchaser's obligation to accept for payment and pay for Shares tendered pursuant to the Offer is subject to the satisfaction of the Minimum Condition and the other conditions set forth in "The Offer--Conditions of the Offer." We expressly reserve the right to waive any of the conditions to the Offer and to make any change in the terms of or conditions to the Offer, provided that no change or waiver may be made, without the prior written consent of SMS, that changes the form of consideration to be paid, decreases the price per Share or the number of Shares sought in the Offer or imposes conditions to the Offer in addition to those set forth in "The Offer--Conditions of the Offer." In addition, the Purchaser has the right to extend the Offer, without the consent of SMS, (1) from time to time if, at the scheduled or extended expiration date of the Offer, any condition to the Offer has not been satisfied or waived, until such conditions are satisfied or waived, (2) for any period required by any rule, regulation, interpretation or position of the SEC or the staff thereof applicable to the Offer or any period required by applicable law, (3) on one or more occasions for an aggregate period of not more than 10 business days beyond the latest expiration date that would otherwise be permitted under clause (1) or (2) above, if, on such expiration date, the number of Shares tendered (and not withdrawn), together with the Shares then owned by Sodexho or any of its subsidiaries, represents less than 90% of the outstanding Shares on a fully-diluted basis, and (4) pursuant to a "subsequent offering period" under Rule 14d-11 of the Exchange Act. If the Purchaser purchases Shares pursuant to the Offer, the Merger Agreement provides that Sodexho will be entitled to designate representatives to serve on the SMS Board in proportion to our ownership of Shares following such purchase. SMS will take all reasonable action necessary to cause Sodexho's designees to be elected or appointed to the SMS Board, each committee of the SMS Board (other than the Special Committee and the Audit Committee) and each board of directors of each material subsidiary of SMS. Recommendation. The SMS Board, acting on the unanimous recommendation of the Special Committee: (1) has determined that the Merger Agreement and the transactions contemplated thereby are fair to and in the best interests of SMS and its stockholders (other than Sodexho); (2) has approved and declared advisable the Merger Agreement; and (3) has resolved to recommend that SMS's stockholders accept the Offer and approve the Merger Agreement if submitted for their approval. This recommendation of the SMS Board may be withdrawn, or modified in a manner adverse to Sodexho, only if SMS has received an unsolicited Acquisition Proposal (as defined below) which the SMS Board determines in good faith constitutes a Superior Proposal (as defined below), the SMS Board determines in good faith, after consultation with outside legal counsel, that the failure to take such action could reasonably be deemed to constitute a breach of its fiduciary duties under applicable law and SMS delivers three business days prior written notice advising Sodexho that it intends to take such action. The Merger. The Merger Agreement provides that, upon the terms and subject to the conditions thereof, at the time at which SMS (or, if applicable, Purchaser) files a Certificate of Merger (or, if applicable, a certificate of ownership and merger) with the Delaware Secretary of State (or such later time as indicated in such certificate) (the "Effective Time"), the Purchaser will be merged with and into SMS in accordance with Delaware Law, whereupon the separate existence of the Purchaser shall cease and SMS shall be the surviving corporation (the "Surviving Corporation"). At the Effective Time, (1) each Share outstanding immediately prior to the Effective Time, together with the associated preferred stock purchase right issued under SMS's stockholder rights plan, will, except as otherwise provided in clause (2) below and except for Shares of holders exercising appraisal rights, be converted into the right to receive $32.00 in cash or any higher price paid for each Share in the Offer, without interest (the "Merger Consideration"); (2) each Share held in the treasury of SMS or held by Sodexho or any of its subsidiaries shall be canceled, and no payment shall be made with respect thereto; and (3) each share of 22 common stock of the Purchaser shall be converted into and become one share of common stock of the Surviving Corporation and shall constitute the only outstanding shares of capital stock of the Surviving Corporation. The Merger Agreement further provides that, at the Effective Time, the certificate of incorporation of SMS will be the certificate of incorporation of the Surviving Corporation until amended in accordance with applicable law, and the bylaws of the Surviving Corporation in effect at the Effective Time will be amended to conform to the bylaws of the Purchaser in effect immediately prior to the Effective Time until further amended in accordance with applicable law. The directors of the Purchaser at the Effective Time will be the directors of the Surviving Corporation and the officers of SMS at the Effective Time will be the officers of the Surviving Corporation. The Surviving Corporation will indemnify and hold harmless the present and former officers and directors of SMS in respect of acts or omissions occurring at or prior to the Effective Time to the fullest extent permitted by Delaware law or any other applicable laws or provided under SMS's certificate of incorporation and bylaws in effect on the date of the Merger Agreement. For six years after the Effective Time the Surviving Corporation will provide officers' and directors' liability insurance in respect of acts or omissions occurring prior to the Effective Time covering each such person currently covered by SMS's officers' and directors' liability insurance policy on terms with respect to coverage and amount no less favorable than those of such policy in effect on the date of the Merger Agreement, provided that the Surviving Corporation will not be obligated to pay premiums in excess of 200% of the amount per annum paid by SMS in its last full fiscal year. SMS Options and Other Stock-Based Awards. The Merger Agreement contains provisions addressing the treatment of SMS options and other stock-based awards, as follows: Vested Options. At or immediately prior to the Effective Time, each stock option to purchase Shares outstanding under any SMS employee stock option or compensation plan or arrangement which is vested immediately prior to the Effective Time (the "Vested Options") shall be canceled, and SMS shall pay each holder of any such option at or promptly after the Effective Time an amount in cash determined by multiplying (1) the excess, if any, of Merger Consideration per Share over the applicable exercise price of such option by (ii) the number of Shares such holder could have purchased had such holder exercised such option in full immediately prior to the Effective Time. Unvested Options. At or immediately prior to the Effective Time, each option to purchase SMS Shares other than Vested Options shall be converted into the right to receive options to purchase ordinary shares of Sodexho or American Depositary Shares representing ordinary shares of Sodexho. The number and exercise price of such options will be determined in accordance with applicable tax and accounting rules and the other terms of such options will be substantially similar to their existing terms, except that a moratorium on exercise will be imposed until registration statements with respect to Sodexho ordinary shares have been declared effective by the SEC. Notwithstanding the foregoing, if registration statements with respect to Sodexho ordinary shares have not been declared effective by the SEC by March 31, 2002, the parties have agreed to cancel any options which become vested between the Effective Time and the effective date of the registration statements in exchange for cash payments. Special provisions in the Merger Agreement address the treatment of unvested options held by employees who separate from SMS or who die between the Effective Time and the effective date of the registration statements. Restricted Stock Units. At or immediately prior to the Effective Time, each restricted stock unit granted under SMS's compensation plans shall be converted into the right to receive a similar award with respect to ordinary shares of Sodexho or American Depositary Shares representing ordinary shares of Sodexho. The terms of such awards will be substantially similar to their existing terms, but shall be adjusted to the extent necessary to preserve their existing value and a moratorium on vesting will be imposed until registration statements with respect to Sodexho ordinary shares have been declared effective by the SEC. Notwithstanding the foregoing, if registration statements with respect to Sodexho ordinary 23 shares have not been declared effective by the SEC by December 15, 2001, the parties have agreed to cancel any awards which otherwise would become vested between the Effective Time and the effective date of the registration statements in exchange for cash payments. Special provisions in the Merger Agreement address the treatment of restricted stock units held by employees who separate from SMS or who die between the Effective Time and the effective date of the registration statements. Deferred Shares and Restricted Shares. Unless otherwise agreed by Sodexho and SMS, at the Effective Time each deferred share (whether vested or unvested) and each restricted share of SMS outstanding immediately prior to the Effective Time shall be canceled in exchange for the right to receive the Merger Consideration at the Effective Time. Employee Stock Purchase Plan. Prior to the Effective Time, each outstanding option under the SMS Employee Stock Purchase Plan will be exercised and each Share purchased pursuant to such exercise shall be converted into the right to receive the Merger Consideration. At or before the Effective Time, the SMS Employee Stock Purchase Plan will terminate. Stockholders Meeting. Pursuant to the Merger Agreement, SMS shall cause a meeting of its stockholders to be duly called and held as soon as reasonably practicable after the consummation of the Offer for the purpose of voting on the adoption of the Merger Agreement, unless a vote of SMS stockholders is not required by Delaware law. In connection with such meeting, SMS will use all reasonable efforts to obtain the necessary approvals by its stockholders of the Merger Agreement. Certain Covenants. Prior to the Effective Time, SMS and its subsidiaries shall conduct their business in the ordinary course consistent with past practice and shall use commercially reasonable efforts to preserve intact their business organizations and relationships with third parties and to keep available the services of their present officers and employees. In addition, except with the prior written consent of Sodexho or as expressly contemplated by the Merger Agreement, SMS will not, and will not permit any subsidiary to: . change SMS's certificate of incorporation or bylaws; . merge or consolidate with any other person or acquire a material amount of stock or assets of any other person; . dispose of any material subsidiary or material amount of assets, securities or property except pursuant to existing contracts or commitments and in the ordinary course consistent with past practice; . take any action that would make any representation and warranty of SMS under the Merger Agreement inaccurate in any respect at, or as of any time prior to, the Effective Time or omit to take any action necessary to prevent any such representation or warranty from being inaccurate in any respect at any such time; . make or change any tax election or tax accounting method or take any other action which would reasonably be expected to have the effect of materially increasing the tax liabilities or reducing the tax assets of SMS and its material subsidiaries; and . agree or commit to do any of the foregoing. SMS and Sodexho have agreed to promptly notify the other of (1) any notice or other communication alleging that the consent of any person is or may be required in connection with the transactions contemplated by the Merger Agreement, (2) any notice or other communication from any governmental or regulatory agency or authority in connection with the transactions contemplated by the Merger Agreement, and (3) any actions, suits, claims, investigations or proceedings commenced or, to its knowledge, threatened against, relating to or involving or otherwise affecting SMS or Sodexho or any of their respective subsidiaries that relate to the consummation of the transactions contemplated by the Merger Agreement. 24 Representations and Warranties. Pursuant to the Merger Agreement, SMS has made customary representations and warranties to Sodexho and Purchaser, including representations relating to: . corporate existence and power . disclosure documents . corporate authorization . absence of changes . governmental authorization . litigation . non-contravention . finders' fees . Capitalization . taxes . material subsidiaries . employee benefit plans . SEC filings . antitakeover statutes and . financial statements rights agreement Pursuant to the Merger Agreement, Sodexho and Purchaser have made customary representations and warranties to SMS, including representations relating to: . corporate existence and power . disclosure documents . corporate authorization . finders' fees . governmental authorization . tax sharing agreement matters . non-contravention Certain of the representations and warranties of SMS, Sodexho and Purchaser are qualified as to "materiality" or "Material Adverse Effect." "Material Adverse Effect" means, with respect to any person, a material adverse effect on the condition (financial or otherwise), business, assets or results of operations of such person and its subsidiaries, taken as a whole. No Solicitation. In the Merger Agreement, SMS has agreed that SMS and its subsidiaries will not, and SMS will cause the officers, directors and employees of SMS and its subsidiaries not to, and SMS will not knowingly permit the investment bankers, attorneys, consultants and other agents or advisors of SMS and its subsidiaries to, directly or indirectly, (1) take any action to solicit, initiate or knowingly facilitate or encourage the submission of any Acquisition Proposal (as defined below), (2) engage in discussions or negotiations with, or disclose any nonpublic information relating to SMS or any of its subsidiaries or afford access to the properties, books or records of SMS or any of its subsidiaries to, any person who is considering making, or has made, an Acquisition Proposal, or (3) grant any waiver or release under any standstill or similar agreement with respect to any class of equity securities of SMS. However, SMS may engage in discussions or negotiations with, and furnish nonpublic information or access to, any person in response to an unsolicited Acquisition Proposal if (x) the SMS Board determines in good faith that such Acquisition Proposal could reasonably be expected to result in a Superior Proposal and, after consultation with outside legal counsel, that the failure to take such action could reasonably be deemed to constitute a breach of its fiduciary duties under applicable law, (y) such Person executes a confidentiality agreement with terms no less favorable to SMS than those contained in its confidentiality agreement with Sodexho and (z) SMS shall have delivered to Sodexho three business days' prior written notice advising Sodexho that it intends to take such action. "Acquisition Proposal" means, any offer or proposal for, or any indication of interest in, any (1) direct or indirect acquisition or purchase of a business or assets that constitute 20% or more of the net revenues, net income or assets of SMS and its subsidiaries, taken as a whole, (2) direct or indirect acquisition or purchase of 20% or more of any class of equity securities of SMS or any of its subsidiaries whose business constitutes 20% or more of the net revenues, net income or assets of SMS and its subsidiaries, taken as a whole, (3) tender offer or exchange offer that if consummated would result in any person beneficially owning 20% or more of any class of equity securities of SMS or any of its subsidiaries whose business constitutes 20% or more of the net revenues, net income or assets of SMS and its subsidiaries, taken as a whole, or (4) merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving SMS or any of its subsidiaries whose business constitutes 20% or more of the net revenue, net income or assets of SMS and its subsidiaries, taken as a whole, other than the transactions contemplated by the Merger Agreement. 25 "Superior Proposal" means any bona fide Acquisition Proposal for or in respect of more than 50% of the outstanding Shares on terms that the SMS Board determines in its good faith judgment (after consultation with a financial advisor of nationally recognized reputation, taking into account all the terms and conditions of the Acquisition Proposal) are more favorable to SMS's stockholders than the transactions contemplated by the Merger Agreement and is reasonably capable of being consummated. Conditions to the Merger. The obligations of each of Sodexho, Purchaser and SMS to consummate the Merger are subject to the satisfaction at or prior to the Effective Time of the following conditions: . if required by Delaware law, the Merger Agreement shall have been approved and adopted by the stockholders of SMS in accordance with such law; . no provision of any applicable law or regulation and no judgment, injunction, order or decree shall prohibit the consummation of the Merger; and . Purchaser shall have purchased Shares pursuant to the Offer. In addition, the obligations of the Purchaser and Sodexho to consummate the Merger are subject to the condition that SMS shall have performed in all material respects all of its obligations under the Merger Agreement required to be performed by it at or prior to the Effective Time, except where such failure to perform would not have, individually or in the aggregate, a Material Adverse Effect on SMS. Termination. The Merger Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time (notwithstanding any approval of the Merger Agreement by the stockholders of SMS): (1) by mutual written agreement of SMS and Sodexho; (2) by either SMS or Sodexho, if: (a) the Offer has not been consummated on or before August 31, 2001, provided that this right to terminate the Merger Agreement will not be available to any party whose breach of any provision of the Merger Agreement results in the failure of the Offer to be consummated by such time; or (b) there shall be any law or regulation that makes acceptance for payment of, and payment for, the Shares pursuant to the Offer or consummation of the Merger illegal or otherwise prohibited or any judgment, injunction, order or decree of any court or governmental body having competent jurisdiction enjoining the Purchaser from accepting for payment of, and paying for, the Shares pursuant to the Offer or SMS or Sodexho from consummating the Merger and such judgment, injunction, order or decree shall have become final and nonappealable; (3) by Sodexho, if, (a) the SMS Board shall have failed to recommend, or shall have withdrawn or modified in a manner adverse to Sodexho its approval or recommendation of, the Merger Agreement or the Offer or the Merger or shall have approved or recommended an Acquisition Proposal, or (b) SMS shall have entered into, or publicly announced its intention to enter into, a definitive agreement or an agreement in principle with respect to an Acquisition Proposal, or (c) Sodexho has terminated the Offer because of a failure of any of the conditions set forth in Annex I to the Merger Agreement; (4) by SMS, if, prior to the acceptance for payment of the Shares under the Offer, (a) (A) the SMS Board authorizes SMS, subject to complying with the terms of the Merger Agreement, to enter into a written agreement concerning a Superior Proposal, (B) SMS shall have complied with its obligations described under "--No Solicitation" above, (C) SMS shall have given Sodexho a prior written notice of its intention to terminate the Merger Agreement, attaching a 26 description of all material terms and conditions of the Superior Proposal to such notice, (D) Sodexho does not make, within three business days after receipt of such notice, an offer which the SMS Board determines, in good faith after consultation with its financial advisors, is at least as favorable to the stockholders of SMS as the Superior Proposal, it being understood that SMS shall not enter into any such written agreement during such three business day period, and (E) SMS prior to such termination pays to Sodexho in immediately available funds the termination fee described below; or (b) the Purchaser shall have breached its obligation to commence the Offer under the Merger Agreement; or (c) the Purchaser shall have terminated the Offer in breach of its obligations under the Merger Agreement, provided that SMS is not then in breach of its obligations under the Merger Agreement; or (d) after the expiration date of the Offer (as such date may be extended), the Purchaser shall have failed to accept for payment or pay for Shares validly tendered and not withdrawn pursuant to the Offer, provided that all conditions to the Offer set forth in Annex I to the Merger Agreement shall have been satisfied or waived. Fees and Expenses. Except as discussed below, the Merger Agreement provides that all costs and expenses incurred in connection with the transactions contemplated by the Merger Agreement shall be paid by the party incurring such costs and expenses. The Merger Agreement provides that, if . SMS terminates the Merger Agreement as described under item (4)(a) under "--Termination" above, . Sodexho terminates the Merger Agreement as described under item (3)(a) or (3)(b) under "--Termination" above, or . (1) the Offer is not consummated because of failure to satisfy the Minimum Condition, (2) either SMS or Sodexho terminates the Merger Agreement as described under item (2)(a) under "--Termination" above, (3) prior to the expiration or termination of the Offer an Acquisition Proposal is made, and (4) SMS enters into a definitive agreement within twelve months after termination of the Merger Agreement in respect of any Acquisition Proposal and that transaction is consummated, then SMS shall pay to Sodexho an amount equal to $20 million at the times specified in the Merger Agreement. The Merger Agreement further provides that if Sodexho terminates the Merger Agreement as described under item (3)(c) under "--Termination" above in circumstances where SMS has breached its obligations or representations under the Merger Agreement, SMS will pay to Sodexho an amount equal to Sodexho's reasonable out-of-pocket expenses (not to exceed $15 million) incurred in connection with the Merger Agreement and the transactions contemplated thereby. The Merger Agreement provides that if SMS terminates the Merger Agreement as described under items (4)(b), (4)(c) or (4)(d) under "--Termination" above, Sodexho will pay to SMS an amount equal to SMS's reasonable out-of-pocket expenses (not to exceed $4 million) incurred in connection with the Merger Agreement and the transactions contemplated thereby. Amendment and Waivers. Any provision of the Merger Agreement may be amended or waived prior to the Effective Time if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to the Merger Agreement or, in the case of a waiver, by each party against whom the waiver is to be effective, provided that, after the adoption of the Merger Agreement by the stockholders of SMS and without their further approval, no such amendment or waiver shall reduce the amount or change the 27 kind of consideration to be received in exchange for the Shares. Failure or delay in exercising a right, power or privilege under the Merger Agreement shall not operate as a waiver. APPRAISAL RIGHTS Under Section 262 of the DGCL, any holder of Shares at the Effective Time (a "Remaining Stockholder") who does not wish to accept the Merger Consideration pursuant to the Merger has the right to seek an appraisal and be paid the "fair value" of its Shares at the Effective Time (exclusive of any element of value arising from the accomplishment or expectation of the Merger) judicially determined and paid to it in cash provided that such holder complies with the provisions of such Section 262 of the DGCL. The following is a brief summary of the statutory procedures to be followed by a Remaining Stockholder in order to dissent from the Merger and perfect appraisal rights under Delaware law. This summary is not intended to be complete and is qualified in its entirety by reference to Section 262 of the DGCL, the text of which is set forth in Annex C hereto. Any Remaining Stockholder considering demanding appraisal is advised to consult legal counsel. Appraisal rights will not be available unless and until the Merger is consummated. Remaining Stockholders of record who desire to exercise their appraisal rights must fully satisfy all of the following conditions. A written demand for appraisal of Shares must be delivered to the Secretary of SMS (x) before the taking of the vote on the approval and adoption of the Merger Agreement if the Merger is being consummated following approval thereof at a meeting of SMS's stockholders (a "Long-Form Merger") or (y) within 20 days after the date that the Surviving Corporation mails to the Remaining Stockholders a notice (the "Notice of Merger") to the effect that the Merger has been approved and/or is effective and that appraisal rights are available (and includes in such notice a copy of Section 262 of the DGCL and any other information required thereby) if the Merger is being effected without a vote or meeting of SMS's stockholders either in a Short-Form Merger pursuant to Section 253 of the DGCL or otherwise by stockholder written consent without a meeting of stockholders (both of which are referred to in this discussion as a "Short-Form Merger"). If the Merger is effected as a Long-Form Merger, this written demand for appraisal of Shares must be in addition to and separate from any proxy or vote abstaining from or against the approval and adoption of the Merger Agreement, and neither voting against, abstaining from voting, nor failing to vote on the Merger Agreement will constitute a demand for appraisal within the meaning of Section 262 of the DGCL. In the case of both a Long-Form Merger and a Short-Form Merger, any stockholder seeking appraisal rights must hold the Shares for which appraisal is sought on the date of the making of the demand, continuously hold such Shares through the Effective Time, and otherwise comply with the provisions of Section 262 of the DGCL. Any holder of Shares who votes or delivers a written consent in favor of the Merger Agreement, as the case may be, will lose appraisal rights under Section 262. In the case of both a Short-Form Merger and a Long-Form Merger, a demand for appraisal must be executed by or for the stockholder of record, fully and correctly, as such stockholder's name appears on the stock certificates. If Shares are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, such demand must be executed by the fiduciary. If Shares are owned of record by more than one person, as in a joint tenancy or tenancy in common, such demand must be executed by all joint owners. An authorized agent, including an agent for two or more joint owners, may execute the demand for appraisal for a stockholder of record; however, the agent must identify the record owner and expressly disclose the fact that, in exercising the demand, he is acting as agent for the record owner. A record owner, such as a broker, who holds Shares as a nominee for others, may exercise appraisal rights with respect to the Shares held for all or less than all beneficial owners of Shares as to which the holder is the record owner. In such case, the written demand must set forth the number of Shares covered by such demand. Where the number of Shares is not expressly stated, the demand will be presumed to cover all Shares outstanding in the name of such record owner. Beneficial owners who are not record owners and who intend to exercise appraisal rights should instruct the record owner to comply strictly with the statutory requirements with respect to the exercise of appraisal rights before the date of any meeting of stockholders of SMS called to 28 approve the Merger in the case of a Long-Form Merger and within 20 days following the mailing of the Notice of Merger in the case of a Short-Form Merger. Remaining Stockholders who elect to exercise appraisal rights must mail or deliver their written demands to: Joan McGlockton, Secretary, Sodexho Marriott Services, Inc., 9801 Washingtonian Boulevard, Suite 1251, Gaithersburg, MD 20878. The written demand for appraisal should specify the stockholder's name and mailing address, the number of Shares covered by the demand and that the stockholder is thereby demanding appraisal of such Shares. In the case of a Long-Form Merger, SMS must, within ten days after the Effective Time, provide notice of the Effective Time to all stockholders who have complied with Section 262 of the DGCL and have not voted for approval and adoption of the Merger Agreement. Remaining Stockholders electing to exercise their appraisal rights under Section 262 must not vote for the approval and adoption of the Merger Agreement or consent thereto in writing. Voting or consenting in favor of the approval and adoption of the Merger Agreement, or delivering a proxy in connection with the stockholders meeting called to approve the Merger Agreement (unless the proxy votes against, or expressly abstains from the vote on, the approval and adoption of the Merger Agreement), will constitute a waiver of the stockholder's right of appraisal and will nullify any written demand for appraisal submitted by the stockholder. Regardless of whether the Merger is effected as a Long-Form Merger or a Short-Form Merger, within 120 days after the Effective Time, either SMS or any stockholder who has complied with the required conditions of Section 262 and who is otherwise entitled to appraisal rights may file a petition in the Delaware Court of Chancery demanding a determination of the fair value of the Shares of the dissenting stockholders. This petition must also be served on the Surviving Corporation. If a petition for an appraisal is timely filed, after a hearing on such petition, the Delaware Court of Chancery will determine which stockholders are entitled to appraisal rights and thereafter will appraise the Shares owned by such stockholders, determining the fair value of such Shares, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with a fair rate of interest to be paid, if any, upon the amount determined to be the fair value. In determining fair value, the Delaware Court of Chancery is to take into account all relevant factors. In Weinberger v. UOP, Inc., et al., the Delaware Supreme Court discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that "proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court" should be considered and that "[f]air price obviously requires consideration of all relevant factors involving the value of a company." The Delaware Supreme Court stated that in making this determination of fair value the court must consider "market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts which were known or which could be ascertained as of the date of merger which throw any light on future prospects of the merged corporation . . ." The Delaware Supreme Court has construed Section 262 to mean that "elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered." However, the court noted that Section 262 provides that fair value is to be determined "exclusive of any element of value arising from the accomplishment or expectation of the merger." Remaining Stockholders who in the future consider seeking appraisal should have in mind that the fair value of their Shares determined under Section 262 could be more than, the same as, or less than the Merger Consideration if they do seek appraisal of their Shares, and that opinions of investment banking firms as to fairness from a financial point of view are not necessarily opinions as to fair value under Section 262 of the DGCL. The cost of the appraisal proceeding may be determined by the Delaware Court of Chancery and taxed upon the parties as the Delaware Court of Chancery deems equitable in the circumstances. Upon application of a dissenting stockholder, the Delaware Court of Chancery may order that all or a portion of the expenses incurred by any dissenting stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorneys' fees and the fees and expenses of experts, be charged pro rata against the value of all Shares entitled to appraisal. In the absence of such a determination or assessment, each party bears its own expenses. 29 Any Remaining Stockholder who has duly demanded appraisal in compliance with Section 262 of the DGCL will not, after the Effective Time, be entitled to vote the Shares subject to such demand for any purpose, or to receive payment of dividends or other distributions on such Shares, except for dividends or other distributions payable to stockholders of record at a date prior to the Effective Time. At any time within 60 days after the Effective Time, any former holder of Shares shall have the right to withdraw his or her demand for appraisal and to accept the Merger Consideration. After this period, such holder may withdraw his or her demand for appraisal only with the consent of SMS as the Surviving Corporation. If no petition for appraisal is filed with the Delaware Court of Chancery within 120 days after the Effective Time, stockholders' rights to appraisal shall cease and all stockholders shall be entitled to receive the Merger Consideration. Inasmuch as SMS has no obligation to file such a petition, and Sodexho has no present intention to cause or permit the Surviving Corporation to do so, any stockholder who desires such a petition to be filed is advised to file it on a timely basis. No petition timely filed in the Delaware Court of Chancery demanding appraisal shall be dismissed as to any stockholder without the approval of the Delaware Court of Chancery, and such approval may be conditioned upon such terms as the Delaware Court of Chancery deems just. Failure to take any required step in connection with the exercise of appraisal rights may result in the termination or waiver of such rights. APPRAISAL RIGHTS CANNOT BE EXERCISED AT THIS TIME. THE INFORMATION SET FORTH ABOVE IS FOR INFORMATIONAL PURPOSES ONLY WITH RESPECT TO ALTERNATIVES AVAILABLE TO STOCKHOLDERS IF THE MERGER IS CONSUMMATED. STOCKHOLDERS WHO WILL BE ENTITLED TO APPRAISAL RIGHTS IN CONNECTION WITH THE MERGER WILL RECEIVE ADDITIONAL INFORMATION CONCERNING APPRAISAL RIGHTS AND THE PROCEDURES TO BE FOLLOWED IN CONNECTION THEREWITH BEFORE SUCH STOCKHOLDERS HAVE TO TAKE ANY ACTION RELATING THERETO. STOCKHOLDERS WHO SELL SHARES IN THE OFFER WILL NOT BE ENTITLED TO EXERCISE APPRAISAL RIGHTS WITH RESPECT THERETO BUT, RATHER, WILL RECEIVE THE PRICE PAID IN THE OFFER THEREFOR. TRANSACTIONS AND ARRANGEMENTS CONCERNING THE SHARES Other than purchases or sales under SMS's employee benefits plans described in the following paragraph, to the knowledge of SMS, Sodexho and the Purchaser, no transactions in the Shares have been effected during the past 60 days by SMS, Sodexho, the Purchaser, Bellon S.A., any of their respective associates or major subsidiaries, or any person listed in Schedule I. Pursuant to the SMS Employee Stock Purchase Plan, Mellon Investor Services LLC has purchased 37,302 Shares since March 1, 2001, on behalf of the plan participants, all of whom are or were employees of SMS. The aggregate purchase price for such acquisition was $944,922. The highest per Share purchase price paid was $31.74 and the lowest per Share purchase price paid was $29.14. As of the date hereof, none of such Shares have been allocated to the individual plan participants. Pursuant to the SMS 401(k) Employees' Retirement Savings Plan, T. Rowe Price Trust Company has purchased 80,939.291 Shares since March 1, 2001, on behalf of the 401(k) plan participants, all of whom are or were employees of SMS. The aggregate purchase price for such acquisition was $2,426,744. The highest per Share purchase price paid was $31.75 and the lowest per Share purchase price paid was $28.09. As of the date hereof, none of such Shares have been allocated to any director, executive officer or affiliate of SMS. Neither Sodexho nor the Purchaser has purchased any Shares during the past two years. Except as set forth in this Offer to Purchase, neither Sodexho nor the Purchaser nor, to Sodexho's knowledge, any person listed in Schedule I hereto (including Bellon S.A.), is a party to any agreement, arrangement or understanding with any other person with respect to any securities of SMS (including, without limitation, any agreement, arrangement or understanding concerning the transfer or the voting of any such 30 securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or the giving or withholding of proxies, consents or authorizations). Except as described in this Offer to Purchase, to Sodexho's knowledge, during the past two years no negotiations, transactions or material contacts concerning a merger, consolidation, or acquisition, a tender offer for or other acquisition of any securities of SMS, an election of directors of SMS, or a sale or other transfer of a material amount of assets of SMS, has been entered into or has occurred between (1) Sodexho, the Purchaser, Bellon S.A. or any person listed in Schedule I hereto, on the one hand, and SMS or any of its affiliates, on the other hand or (2) any affiliates of SMS or (3) between SMS or any of its affiliates and any unaffiliated person with a direct interest therein. SMS has not made any underwritten public offering of Shares during the past three years. SMS has informed Sodexho that, to the best of SMS's knowledge, after reasonable inquiry, all directors and executive officers of SMS who hold Shares, other than those individuals, if any, for whom the tender of Shares could cause them liability under the provisions of Section 16(b) of the Exchange Act or to the extent their Shares are restricted shares, intend to tender Shares held by them pursuant to the Offer. RELATED PARTY TRANSACTIONS 1998 Agreements In March 1998, SMS and Sodexho entered into a number of agreements. These agreements include: a Stockholder Agreement, a Tax Sharing Agreement, a Royalty Agreement, an Assistance Agreement and a Guaranty Agreement. These agreements are described under "Special Factors--Background of the Offer--Formation of SMS" and are more fully described in SMS's Definitive Proxy Statement for a Special Meeting of Stockholders to be held on March 17, 1998 under the sections entitled "The Transactions--Arrangements between SMS and Sodexho" and "The Transactions--Arrangements between SMS and New Marriott--Tax Sharing Agreement", which sections are incorporated by reference herein. SMS paid Sodexho $2.25 million and $2.0 million under the Royalty Agreement in its 1999 fiscal year and 2000 fiscal year, respectively. SMS paid Sodexho $2.25 million and $7.0 million under the Assistance Agreement in its 1999 fiscal year and 2000 fiscal year, respectively. SMS paid Sodexho $3.2 million and $3.15 million under the Guaranty Agreement in its 1999 fiscal year and 2000 fiscal year, respectively. Sodexho paid SMS $9.21 million during the 2000 fiscal year under the Tax Sharing Agreement relating to tax returns filed prior to the formation of SMS. See Note 10 of the Notes to the Consolidated Financial Statements on page 44 of SMS's Annual Report on Form 10-K for the fiscal year ended September 1, 2000, which section is incorporated by referenced herein. Other Relationships and Transactions. Sodexho also guarantees (1) the payment when due of certain deferred compensation amounts payable by SMS to SMS employees and (2) the obligations of SMS with respect to certain insurance costs. These agreements and arrangements are described in more detail in Note 5 and Note 8 of the Notes to the Consolidated Financial Statements on pages 36-37 and 39-40 of SMS's Annual Report on Form 10-K for the fiscal year ended September 1, 2000, which sections are incorporated by reference herein. SMS paid Sodexho $0.3 million pursuant to these agreements and arrangements in each of its 1999 fiscal year and 2000 fiscal year. During the 2000 fiscal year, SMS and Sodexho entered into a Software Sublicense Agreement pursuant to which SMS subleases a certain facilities management software program from Sodexho. SMS made no payments to Sodexho under this agreement in fiscal year 2000. 31 INTERESTS OF CERTAIN PERSONS IN THE OFFER AND THE MERGER Employment Agreements Thirteen of SMS's executive officers have employments agreements on the following terms. The employment agreements provide for twenty-four months of the benefits specified below in the case of disability, termination for other than cause, death or disability, or voluntary termination for good cause. "Good cause" includes, among other things, if at any time prior to March 27, 2006, the stock of SMS is no longer publicly traded or if Sodexho owns greater than or equal to 90% of the outstanding Shares (which events may occur upon completion of the Offer and will occur upon completion of the Merger). The benefits are: salary continuation; continued participation in health and dental benefits; continued stock vesting; continued 401(k) participation; and pro- rated incentive compensation based on time worked during the fiscal year. Treatment of Shares, Options and Other Stock-Based Awards Any Shares (to the extent not tendered pursuant to the Offer), stock options or other stock-based awards held by any officer of SMS will be converted as described under "Special Factors--The Merger Agreement--The Merger" and "--SMS Options and Other Stock-Based Awards." Indemnification Under the Merger Agreement, the directors and officers of SMS are entitled to certain rights of indemnification and to be insured by the Surviving Corporation or Sodexho with respect to certain matters from and after the completion of the Merger. See "Special Factors--The Merger Agreement--Certain Covenants." Special Committee Compensation The members of the Special Committee received compensation in connection with serving on the Special Committee as follows: Daniel J. Altobello, Chairman--$85,000 and Mary Metz, member--$70,000. The SMS Board and the Special Committee believe that the foregoing payments do not affect the Special Committee's independence or impartiality. The Special Committee and the SMS Board were aware of these actual and potential conflicts of interest and considered them along with the other matters described under "Special Factors--Recommendation of the Special Committee and the SMS Board; Fairness of the Offer and the Merger." GOLDMAN SACHS REPORTS Sodexho retained Goldman Sachs as its financial advisor in connection with the SMS transaction. In this capacity, Goldman Sachs prepared and delivered the Goldman Sachs Reports (as defined below) to the senior management and board of directors of Sodexho. Goldman Sachs relied upon the accuracy and completeness of all of the financial and other information discussed with or reviewed by it and assumed such accuracy and completeness for purposes of preparing the Goldman Sachs Reports. Accordingly, Goldman Sachs did not attempt to verify the accuracy or completeness of the information supplied by Sodexho or obtained through other sources. In addition, Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities of SMS and Goldman Sachs was not furnished with any such evaluation or appraisal. The Goldman Sachs Reports were provided solely for the information and assistance of the senior management and board of directors of Sodexho in connection with their consideration of the transaction. In connection with preparing the Goldman Sachs Reports, Goldman Sachs reviewed, among other things: Annual Reports on Form 10-K of SMS for the two years ended September 1, 2000; certain interim reports to stockholders and Quarterly Reports on Form 10-Q of SMS; certain other communications from SMS to its stockholders; and certain other publicly available information on SMS as filed by SMS with the SEC. Goldman 32 Sachs also reviewed Sodexho management projections estimating Sodexho's performance, which incorporate estimates regarding SMS's performance, as SMS is consolidated by Sodexho under French GAAP. Goldman Sachs also held discussions with members of the senior management of Sodexho regarding their assessment of the past and current business operations, financial condition and future prospects of Sodexho. On January 19, 2001, representatives of Goldman Sachs provided summaries of certain financial information and analyses regarding SMS and the proposed transaction (the "January 19th Report") to certain members of the senior management of Sodexho. The January 19th Report has been filed as Exhibit (c)(3) to the Schedule TO. The summary of the material analyses contained in the January 19th Report set forth below is qualified by reference to the full text of the January 19th Report. The January 19th Report contains various financial analyses, including: . Review of the various strategies for the financing of the transaction by Sodexho, including analysis of its pro forma effect on Sodexho's balance sheet, . Comparison of the volume of Shares traded at various prices, as well as the weighted average price, the total volume of Shares traded and the average daily trading volume of the Shares, for the period from the formation of SMS on March 27, 1998 to January 16, 2001, for the one-year period from January 17, 2000 to January 16, 2001, for the period from March 27, 2000 to January 16, 2001 and for the three-month period from October 16, 2000 to January 16, 2001, . Comparison of the volume of Shares traded at specific prices, as well as the weighted average price, the total volume of Shares traded and the average daily trading volume of the Shares, for the period from March 1, 2000 to April 27, 2000, . Review of the ownership history of the top twenty-five United States institutional and fund stockholders of SMS, . Review of the historical closing market prices of the Shares from March 27, 1998 to January 16, 2001, . Comparison of the daily indexed trading history for the Shares, a composite comprised of Morrison Management Specialists, Inc. and ServiceMaster Company, and the S&P 500 since the formation of SMS on March 27, 1998 to January 16, 2001, . Comparison of the daily indexed common stock price history for shares of SMS, S&P Pharmaceuticals, S&P Foods and Goldman Sachs Technologies indices for the period from March 27, 2000 to January 16, 2001, . Review of the daily indexed common stock price history for shares of SMS, ServiceMaster Company and Morrison Management Specialists for the period from March 27, 2000 to January 16, 2001, . Review of the daily indexed common stock price history for shares of SMS and ServiceMaster Company for the period from December 1, 1999 to January 16, 2001, and . Summaries of the financial terms of various selected transactions involving buyouts of minority and majority shareholders of public companies. Goldman Sachs also reviewed and compared certain financial information relating to SMS to corresponding financial information and public market multiples as of January 17, 2001 for the following seven publicly-traded companies in the catering and business service industry in Europe and the United States: Europe . Sodexho, . Autogrill SpA, . Groupe Elior, 33 . Compass Hospitality, and .International Service System A/S. United States .Morrison Management Specialists, Inc., and .ServiceMaster Company. The selected companies were chosen because they are publicly-traded companies with operations that for purposes of analysis may be considered similar to SMS's business. Goldman Sachs compared the following information for the selected companies to that of SMS: . Percent of the highest closing price per share for the preceding 52 weeks represented by the closing price per share as of January 17, 2001, . Equity market capitalization and enterprise value, . Ratios of enterprise value to calendar year 2000 revenues, calendar year 2001 revenues and calendar year 2002 revenues, . Ratios of enterprise value to calendar year 2000 earnings before interest and taxes, or EBIT, calendar year 2001 EBIT and calendar year 2002 EBIT, . Ratios of equity market capitalization to calendar year 2000 earnings per share, calendar year 2001 earnings per share and calendar year 2002 earnings per share, and . Ratio of price to calendar year 2000 earnings per share ratio to the estimated five year cumulative annual growth rate in earnings per share, or EPS, based on Institutional Brokers Estimate System, or I/B/E/S, data. The results of these analyses are summarized as follows:
Enterprise Value/ Market Value/ ----------------------------------------- -------------------- CY 2000 Revenues EBIT EPS P E / 5- -------------------- -------------------- -------------------- Year EPS CY2000 CY2001 CY2002 CY2000 CY2001 CY2002 CY2000 CY2001 CY2002 Growth ------ ------ ------ ------ ------ ------ ------ ------ ------ -------- Company SMS..................... 0.5x 0.5x 0.5x 12.4x 11.2x 10.0x 22.9x 18.7x 15.3x 1.6x Sodexho................. 0.8x 0.7x 0.7x 16.0x 14.6x 13.1x 53.4x 31.0x 28.0x 2.8x Autogrill SpA........... 1.4x 1.3x 1.2x 32.4x 27.9x 23.8x 318.0x 70.7x 45.4x 13.8x Groupe Elior............ 1.1x 1.0x 0.9x 21.9x 18.8x 16.7x 51.6x 25.0x 24.7x 3.4x Compass Hospitality..... 1.8x 1.6x 1.5x 14.9x 13.8x 12.4x 20.5x 18.4x 16.1x 1.6x International Service System................. 0.9x 0.8x 0.8x 34.7x 27.6x 23.9x 85.8x 54.9x 38.8x 5.7x European Mean........... 1.3x 1.2x 1.1x 26.0x 22.0x 19.2x 52.6x 32.8x 26.5x 3.6x European Median......... 1.2x 1.1x 1.1x 27.1x 23.2x 20.3x 51.6x 25.0x 24.7x 3.4x Morrison Management Specialists, Inc....... 0.6x 0.5x 0.5x 16.3x 13.3x 11.4x 24.9x 20.0x 17.1x 1.4x ServiceMaster Company... 0.9x 0.9x 0.8x 12.0x 10.9x 9.6x 18.7x 17.5x 14.7x 1.6x
Goldman Sachs also compared the following information for the selected companies to that of SMS: . Growth rates of revenues, EBIT and EPS for calendar year 2001 and calendar year 2002, . EBIT and net income margins for calendar year 2001 and calendar year 2002, . Net debt as a percentage of market equity, and . Long term EPS growth, based on I/B/E/S data. 34 The results of these analyses are summarized as follows:
Growth Margins ------------------------------------------ --------------------------- Net Long Revenues EBIT EPS EBIT Net Income Debt/ Term ------------- ------------- -------------- ------------- ------------- Market EPS CY2001 CY2002 CY2001 CY2002 CY2001 CY2002 CY2000 CY2001 CY2001 CY2002 Equity Growth ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ Company SMS..................... 4.3% 8.0% 10.4% 12.3% 22.5% 21.9% 4.2% 4.5% 1.4% 1.7% 60.6% 14.5% Sodexho................. 6.3% 10.6% 9.5% 11.9% 72.5% 10.6% 5.0% 5.1% 1.2% 1.9% 25.4% 19.3% Autogrill SpA........... 8.6% 8.6% 15.8% 17.5% 350.0% 55.6% 4.4% 4.7% 0.3% 1.4% 33.0% 23.0% Groupe Elior............ 9.6% 8.3% 16.3% 12.6% 106.4% 1.3% 4.9% 5.2% 1.6% 2.9% 33.1% 15.3% Compass Hospitality..... 6.8% 7.5% 7.9% 11.4% 11.6% 14.6% 11.8% 11.9% 6.6% 6.9% 30.1% 12.5% International Service System................. 12.7% 6.2% 26.0% 15.2% 56.1% 41.8% 2.7% 3.0% 0.9% 1.3% 18.5% 15.0% European Mean........... 9.4% 7.6% 16.5% 14.2% 58.0% 19.2% 5.9% 6.2% 2.3% 3.1% 28.7% 16.5% European Median......... 9.1% 7.9% 16.0% 13.9% 56.1% 14.6% 4.6% 4.9% 1.2% 2.2% 31.6% 15.2% Morrison Management Specialists, Inc....... 13.2% 15.7% 22.5% 16.8% 24.4% 17.2% 3.8% 4.1% 2.2% 2.4% 11.6% 18.0% ServiceMaster Company... 4.4% 6.3% 10.6% 13.5% 6.3% 19.4% 7.4% 7.9% 3.2% 3.2% 51.8% 12.0% ServiceMaster Management Services 1.0% 1.0% -4.5% 7.8% N.A. N.A. 3.6% 3.4% N.A. N.A. N.A. N.A.
The selected companies analyses were based on historical and projected financial data from publicly available information and from Wall Street research reports and estimates. The long term earnings per share growth estimates were from I/B/E/S. The European Mean and Median ratios excluded Sodexho. The January 19th Report also contains a summary of certain information relating to eight North American and eight European transactions in the catering industry, excluding in-flight catering transactions, since March 1993. Goldman Sachs's summary of the selected transactions compared total transaction enterprise value as a multiple of latest twelve months, or LTM, sales, LTM EBIT and the transaction equity value as a multiple of LTM net income of the target company in the selected transactions. The summary resulted in (1) a range of LTM sales multiples for the selected transactions in North America from 0.3x to 0.7x, with a mean of 0.5x and a median of 0.5x, and in Europe a range from 0.5x to 1.3x, with a mean of 0.7x and a median of 0.6x; (2) a range of LTM EBIT multiples for the selected transactions in North America from 12.4x to 23.6x, with a mean of 16.2x and a median of 14.4x, and in Europe a range from 11.1x to 23.7x, with a mean of 14.3x and a median of 12.3x; and (3) a range of LTM net income multiples for the selected transactions in North America from 19.8x to 22.7x, with a mean of 21.3x and a median of 21.3x, and in Europe a range from 20.5x to 35.9x, with a mean of 26.5x and a median of 23.1x. Goldman Sachs presented this analysis to Sodexho because Goldman Sachs believed that the Special Committee of the SMS Board would review a similar analysis as part of their deliberations. At the same time, however, Goldman Sachs emphasized to Sodexho its view that valuation methodologies relating to a change of control were not appropriate under the circumstances. On January 24, 2001, representatives of Goldman Sachs provided certain financial information and analyses (the "January 24th Report" and, together with the January 19th Report, the "Goldman Sachs Reports") to the board of directors of Sodexho. The January 24th Report has been filed as Exhibit (c)(4) to the Schedule TO. The following is a summary of the material analyses contained in the January 24th Report. The January 24th Report contains various financial analyses, including: . Comparison of the daily indexed trading history for Shares from the formation of SMS on March 27, 1998 to January 16, 2001, and . An analysis of premiums paid in acquisitions of public companies where the consideration was composed only of cash and the acquiror's existing ownership of the target company was greater than 40%, based on company filings and public information. 35 Goldman Sachs also conducted a sensitivity analysis of the financial effect of the merger on Sodexho. Goldman Sachs compared certain potential cash offer prices per share by Sodexho for SMS and calculated: . the implied premium to the closing price of $25.44 per Share on January 23, 2001, . the percentage accretion represented by Sodexho's 2002 and 2003 EPS following consummation of the transaction (without giving effect to goodwill deductions resulting from the transaction) relative to Sodexho's stand-alone 2002 and 2003 EPS, . the percentage accretion represented by Sodexho's 2002 and 2003 EPS following consummation of the transaction (giving effect to goodwill deductions resulting from the transaction) relative to Sodexho's stand- alone 2002 and 2003 EPS, . Sodexho's 2002 earnings before interest, taxes, depreciation and amortization, or EBITDA, as a multiple of Sodexho's 2002 interest expense following consummation of the transaction and . Sodexho's 2002 funds from operations, or FFO, as a percentage of net debt following consummation of the transaction. The results of the analysis is summarized below:
Implied Premium on SMS Stock 2002 Price 2002 EPS 2003 EPS 2002 EPS 2003 EPS EBITDA 2002 Cash on Accretion Accretion Accretion Accretion Interest FFO/Net Offer/Share 1/23/01 pre-goodwill pre-goodwill post-goodwill post-goodwill Cover Debt - ----------- ------- ------------ ------------ ------------- ------------- -------- ------- $25.00 -2% 8.8% 10.9% 5.5% 8.5% 5.10x 33.6% $26.00 2% 8.2% 10.4% 4.5% 7.7% 5.07x 33.2% $27.00 5% 7.7% 9.9% 3.4% 6.9% 5.04x 32.7% $28.00 10% 7.1% 9.4% 2.4% 6.0% 5.01x 32.3% $29.00 14% 6.5% 8.9% 1.4% 5.2% 4.98x 31.9%
The above analysis assumed a 50% equity financing by Sodexho of the total consideration through a rights issue. The implied premium is based on the closing price of $25.44 per Share on January 23, 2001. The analysis also assumed an exchange rate of Dollar/Euro of 0.95 with a Sodexho share price of Euro 200.00 (prior to the 4-to-1 stock split by Sodexho that became effective after the date of the January 24th Report). The financial information used in the above analysis was based on Sodexho management projections estimating Sodexho's performance, which incorporate estimates regarding SMS's performance, as SMS is consolidated by Sodexho under French GAAP. The preparation of the Goldman Sachs Reports was a complex process and is not necessarily susceptible to summary description. Selecting portions of the Goldman Sachs Reports or of the summary set forth above, without considering the Goldman Sachs Reports as a whole, could create an incomplete view of the Goldman Sachs Reports. No company or transaction used in the above analyses as a comparison is directly comparable to Sodexho or SMS or the contemplated transaction. The analyses were prepared solely for purpose of Goldman Sachs providing the Goldman Sachs Reports to the senior management and board of directors of Sodexho. These analyses do not purport to be appraisals or necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by such analyses. Because such analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Sodexho, SMS, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast. Goldman Sachs, as part of its investment banking business, is continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements, and valuations for estate, corporate and other purposes. Goldman Sachs is familiar with Sodexho having acted as its 36 financial advisor in connection with, and having participated in certain of the negotiations leading to, the Merger Agreement. Goldman Sachs may also provide investment banking services to Sodexho in the future. Sodexho selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the Offer and the Merger. Goldman Sachs provides a full range of financial, advisory and brokerage services and in the course of its normal trading activities may from time to time effect transactions and hold positions in the securities or options on securities of Sodexho for its own account and for the account of customers. As of May 15, 2001, Goldman Sachs accumulated a long position of 18,562 Shares and a long position of 988 shares of Sodexho, against which Goldman Sachs is short 11,722 shares of Sodexho. Pursuant to a letter agreement, dated October 20, 2000, Sodexho engaged Goldman Sachs to act as its financial advisor in connection with the Offer and the Merger. Pursuant to the terms of the engagement letter, Sodexho has agreed to pay Goldman Sachs as compensation for its services as financial advisor in connection with the Offer (including the services of Goldman, Sachs & Co. as Dealer Manager) a fee of $7,100,000, of which $250,000 has been paid, with the balance due upon the closing of the Offer. Sodexho also has agreed to reimburse Goldman Sachs for certain reasonable out-of-pocket expenses incurred in connection with the Offer and the Merger (including the fees and disbursements of outside counsel) and to indemnify Goldman Sachs against certain liabilities, including certain liabilities under the federal securities laws. Copies of the Goldman Sachs Reports have been filed as Exhibits (c)(3) and (c)(4) to the Schedule TO filed by Sodexho and are incorporated herein by reference. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs and is qualified by reference to the Goldman Sachs Reports filed as exhibits to the Schedule TO. Copies of the Goldman Sachs Reports are available for inspection and copying at the principal executive offices of SMS during regular business hours by any stockholder of SMS, or a stockholder's representative who has been so designated in writing. Copies of the Goldman Sachs Reports shall be provided by SMS to any stockholder or any representative of a stockholder who has been so designated in writing upon written request and at the expense of the requesting stockholder or representative. 37 THE OFFER 1. Terms of the Offer; Expiration Date. On the terms and subject to the conditions set forth in the Offer, the Purchaser will accept for payment and pay for all Shares that are validly tendered prior to the Expiration Date and not withdrawn. "Expiration Date" means 12:00 Midnight, New York City time, on Thursday, June 14, 2001, unless the Purchaser extends the period of time for which the Offer is open under the terms set forth in the Merger Agreement, in which event "Expiration Date" means the latest time and date at which the Offer, as so extended, shall expire. The Offer is subject to the conditions set forth in "The Offer--Conditions of the Offer". If any such condition is not satisfied, we may (a) extend the Offer and, subject to certain conditions and to your withdrawal rights as set forth in "The Offer--Withdrawal Rights," retain all Shares until the expiration of the Offer as so extended; (b) waive such condition and, subject to any requirement to extend the period of time during which the Offer is open, purchase all Shares validly tendered prior to the Expiration Date and not withdrawn or delay acceptance for payment or payment for Shares, subject to applicable law; or (c) terminate the Offer as to any Shares not then paid for. For a description of our right to extend, amend, delay or terminate the Offer, see "The Offer--Extension of the Tender Period; Termination; Amendment; Subsequent Offering Period"; and "The Offer--Conditions of the Offer." 2. Extension of Tender Period; Termination; Amendment; Subsequent Offering Period. The "Initial Expiration Date" of the Offer will be the twentieth business day from the date the Offer is commenced. The Purchaser has the right to extend the Offer beyond the Initial Expiration Date, without the consent of SMS, in the following events: (1) from time to time if, at the Initial Expiration Date (or extended expiration date of the Offer, if applicable), any of the conditions to the Offer shall not have been satisfied or waived until such conditions are satisfied or waived; (2) for any period required by any rule, regulation, interpretation or position of the SEC or the staff thereof applicable to the Offer or any period required by applicable law; (3) on one or more occasions for an aggregate period not to exceed ten business days beyond the latest expiration date that would otherwise be permitted under clause (1) or (2), if the number of Shares validly tendered and not withdrawn, together with Shares then owned by Sodexho or any of its subsidiaries, represents less than 90% of the then outstanding number of Shares on a fully-diluted basis; or (4) pursuant to a "subsequent offering period" under Rule 14d-11 under the Exchange Act. We expressly reserve the right to waive any of the conditions to the Offer and to make any change in the terms of our conditions to the Offer, provided that without the consent of SMS we cannot make any change or waiver that changes the form of consideration to be paid in the Offer, decreases the price per Share or the number of Shares sought, or imposes additional conditions to the Offer. If we increase or, with the consent of SMS, decrease the consideration to be paid for Shares pursuant to the Offer and the Offer is scheduled to expire at any time before the expiration of a period of ten business days from, and including, the date that notice of such increase or decrease is first published, sent or given in the manner specified below, the Offer will be extended until the expiration of such period of ten business days. If we make a material change in the terms of the Offer (other than a change in price or percentage of securities sought) or in the information concerning the Offer, or waive a material condition of the Offer, we will extend the Offer, if required by applicable law, for a period sufficient to allow you to consider the amended terms of the Offer. In a published release, the SEC has stated that in its view an offer must remain open for a minimum period of time following a material change in the terms of such offer. The release states that an offer should remain open for a minimum of five business days from the date the material change is first published, sent or 38 given to stockholders, and that if material changes are made with respect to information that approaches the significance of price and percentage of Shares sought, a minimum of ten business days may be required to allow adequate dissemination and investor response. The term "business day" means any day other than Saturday, Sunday or a federal holiday and shall consist of the time period from 12:01 A.M. through 12:00 Midnight, New York City time. Any extension, delay, termination, waiver or amendment will be followed as promptly as practicable by a public announcement, in the case of an extension of the Offer, to be made no later than 9:00 A.M., New York City time, on the next business day after the previously scheduled Expiration Date, in accordance with the public announcement requirements of Rule 14e-1(d) under the Exchange Act. Subject to applicable law (including Rules 14d-4(d) and 14d-6(c) under the Exchange Act, which require that material changes in the information published, sent or given to any stockholders in connection with the Offer be promptly disseminated to stockholders in a manner reasonably designed to inform them of such changes), and without limiting the manner in which we may choose to make any public announcement, we have no obligation to publish, advertise or otherwise communicate any public announcement other than by issuing a press release to the Dow Jones News Service. If we extend the time during which the Offer is open, or if we are delayed in our acceptance for payment of or payment for Shares pursuant to the Offer for any reason, then, without prejudice to our rights under the Offer, the Depositary may retain tendered Shares on our behalf and those Shares may not be withdrawn except to the extent tendering stockholders are entitled to withdrawal rights as described herein under "The Offer--Withdrawal Rights." However, our ability to delay the payment for Shares that we have accepted for payment is limited by (1) Rule 14e-1(c) under the Exchange Act, which requires that a bidder pay the consideration offered or return the securities deposited by or on behalf of stockholders promptly after the termination or withdrawal of such bidder's offer and (2) the terms of the Merger Agreement, which require that, on the terms and subject to prior satisfaction (or waiver) of the conditions to the Offer, we must accept for payment and pay for Shares promptly after expiration of the Offer. Pursuant to Rule 14d-11 under the Exchange Act, after the expiration of the Offer, if all of the conditions to the Offer have been satisfied or waived, we may, subject to certain conditions, include a subsequent offering period (a "Subsequent Offering Period") pursuant to which we may add a period of between three and 20 business days to permit additional tenders of Shares. We may include a Subsequent Offering Period so long as, among other things, (1) the initial 20 business day period of the Offer has expired, (2) all conditions to the Offer are deemed satisfied or waived by the Purchaser on or before the Expiration Date, (3) we accept and promptly pay for all Shares validly tendered during the Offer, (4) we announce the results of the Offer, including the approximate number and percentage of Shares deposited in the Offer, no later than 9:00 A.M., New York City time on the next business day after the Expiration Date and immediately begin the Subsequent Offering Period and (5) we immediately accept and promptly pay for Shares as they are tendered during the Subsequent Offering Period. In addition, we may extend any initial Subsequent Offering Period by any period or periods, provided that the aggregate of the Subsequent Offering Periods (including extensions thereof) is no more than 20 business days. We have not at this time made a final decision to include or to not include a Subsequent Offering Period. Such decision will be made in our sole discretion, and there is no assurance that we will or will not include such a Subsequent Offering Period. In the event we elect to include a Subsequent Offering Period, we will notify stockholders of SMS in a manner consistent with the requirements of the SEC. No withdrawal rights apply to Shares tendered in a Subsequent Offering Period and no withdrawal rights apply during the Subsequent Offering Period with respect to Shares tendered in the Offer and accepted for payment. The same consideration and offer price will be paid to stockholders tendering Shares in the Offer or in any Subsequent Offering Period. Any extension, termination or amendment or extension of a Subsequent Offering Period will be followed as promptly as practicable by a public announcement thereof. Without limiting the manner in which we may choose to make any public announcement, we will have no obligation (except as otherwise required by applicable law) to publish, advertise or otherwise communicate any such public announcement other than by making a release to the Dow Jones News Service. In the case of an 39 extension of the Offer, we will make a public announcement of such extension no later than 9:00 A.M., New York City time, on the next business day after the previously scheduled Expiration Date. SMS has provided us with its stockholder list and security position listings so we can disseminate the Offer to holders of Shares. We will send this Offer to Purchase and the related Letter of Transmittal to record holders of Shares and to brokers, dealers, banks, trust companies and other nominees whose names appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. 3. Acceptance for Payment and Payment. Upon the terms and subject to the conditions of the Offer, we will accept for payment and pay for all Shares validly tendered prior to the Expiration Date and not withdrawn promptly after the Expiration Date. For a description of our right to terminate the Offer and not accept for payment or pay for Shares or to delay acceptance for payment or payment for Shares, see "The Offer--Terms of the Offer; Expiration Date." For purposes of the Offer, we shall be deemed to have accepted for payment tendered Shares when, as and if we give oral or written notice of our acceptance to the Depositary. We will pay for Shares accepted for payment pursuant to the Offer by depositing the purchase price with the Depositary. The Depositary will act as your agent for the purpose of receiving payments from us and transmitting such payments to you. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of certificates for such Shares (or of a confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility (as defined in "The Offer--Procedure for Tendering Shares")), a properly completed and duly executed Letter of Transmittal and any other required documents. Accordingly, payment may be made to tendering stockholders at different times if delivery of the Shares and other required documents occurs at different times. For a description of the procedure for tendering Shares pursuant to the Offer, see "The Offer--Procedure for Tendering Shares." Under no circumstances will we pay interest on the consideration paid for Shares pursuant to the Offer, regardless of any delay in making such payment. If we increase the consideration to be paid for Shares pursuant to the Offer, we will pay such increased consideration for all Shares purchased pursuant to the Offer. We reserve the right to transfer or assign, in whole or from time to time in part, to one or more of our affiliates the right to purchase Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve us of our obligations under the Offer or prejudice your rights to receive payment for Shares validly tendered and accepted for payment. If any tendered Shares are not purchased pursuant to the Offer for any reason, or if certificates are submitted for more Shares than are tendered, certificates for such unpurchased or untendered Shares will be returned (or, in the case of Shares tendered by book-entry transfer, such Shares will be credited to an account maintained at the Book-Entry Transfer Facility as defined below), without expense to you, as promptly as practicable following the expiration or termination of the Offer. 4. Procedure for Tendering Shares. To tender Shares pursuant to the Offer, either (1) the Depositary must receive at one of its addresses set forth on the back cover of this Offer to Purchase (A) a properly completed and duly executed Letter of Transmittal and any other documents required by the Letter of Transmittal and (B) certificates for the Shares to be tendered or delivery of such Shares pursuant to the procedures for book-entry transfer described below (and a confirmation of such delivery including an Agent's Message (as defined below) if the tendering stockholder has not delivered a Letter of Transmittal), in each case by the Expiration Date, or (2) the guaranteed delivery procedure described below must be complied with. Current or former SMS employees who wish to tender their Shares acquired and held under the SMS Employee Stock Purchase Plan by Mellon Investor Services LLC must comply with the procedures 40 described below under Employee Stock Purchase Plan. Outstanding options to purchase Shares held by SMS employees enrolled in the SMS Employee Stock Purchase Plan during calendar year 2001 will not be eligible to be tendered in the Offer, but will be exercised (unless the employee has withdrawn from the plan) and each Share purchased pursuant to such exercise shall automatically be converted into the right to receive the Merger Consideration at the Effective Time. Book Entry Delivery. The Depositary will establish an account with respect to the Shares at The Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of the Offer within two business days after the date of this Offer to Purchase, and any financial institution that is a participant in the system of the Book-Entry Transfer Facility may make delivery of Shares by causing the Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with the procedures of the Book-Entry Transfer Facility. However, although delivery of Shares may be effected through book-entry transfer, the Letter of Transmittal properly completed and duly executed together with any required signature guarantees or an Agent's Message and any other required documents must, in any case, be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase by the Expiration Date, or the guaranteed delivery procedure described below must be complied with. Delivery of the Letter of Transmittal and any other required documents to the Book-Entry Transfer Facility does not constitute delivery to the Depositary. "Agent's Message" means a message, transmitted by the Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a book-entry confirmation which states that the Book-Entry Transfer Facility has received an express acknowledgment from the participant in the Book-Entry Transfer Facility tendering the Shares that are the subject of such book-entry confirmation which such participant has received, and agrees to be bound by, the terms of the Letter of Transmittal and that SMS may enforce such agreement against such participant. Signature Guarantees. Except as otherwise provided below, all signatures on a Letter of Transmittal must be guaranteed by a financial institution (including most banks, savings and loan associations and brokerage houses) that is a member of a recognized Medallion Program approved by The Securities Transfer Association Inc., including the Securities Transfer Agents Medallion Program (STAMP), the Stock Exchange Medallion Program (SEMP) and the New York Stock Exchange, Inc. Medallion Signature Program (MSP) (each an "Eligible Institution"). Signatures on a Letter of Transmittal need not be guaranteed (1) if the Letter of Transmittal is signed by the registered holder of the Shares tendered therewith and such holder has not completed the box entitled "Special Payment Instructions" on the Letter of Transmittal or (2) if such Shares are tendered for the account of an Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal. Guaranteed Delivery. If you wish to tender Shares pursuant to the Offer and cannot deliver such Shares and all other required documents to the Depositary by the Expiration Date, or cannot complete the procedure for delivery by book- entry transfer on a timely basis, you may nevertheless tender such Shares if all of the following conditions are met: (1) such tender is made by or through an Eligible Institution; (2) a properly completed and duly executed Notice of Guaranteed Delivery in the form provided by the Purchaser is received by the Depositary (as provided below) by the Expiration Date; and (3) the certificates for such Shares (or a confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility), together with a properly completed and duly executed Letter of Transmittal with any required signature guarantee or an Agent's Message and any other documents required by the Letter of Transmittal, are received by the Depositary within three New York Stock Exchange trading days after the date of execution of the Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in such Notice. Facsimiles may be sent to (781) 575-4826, Attn: Sodexho Marriott. To obtain confirmation that a facsimile has been received, call (781) 575-4816. 41 The method of delivery of Shares and all other required documents, including through the Book-Entry Transfer Facility, is at your option and risk, and the delivery will be deemed made only when actually received by the Depositary. If certificates for Shares are sent by mail, we recommend registered mail with return receipt requested, properly insured. Employee Stock Purchase Plan. Current or former SMS employees participating in the SMS Employee Stock Purchase Plan (which we refer to in this Offer to Purchase as the "ESPP") who wish to tender Shares acquired under the ESPP during calendar year 2000 held by Mellon Investor Services LLC should so indicate by completing, executing, and returning to Mellon Investor Services LLC the confidential direction form included in the notice sent to such participants. Participants in the ESPP may not use the Letter of Transmittal or the guaranteed delivery procedures to tender their interests in Shares held under the ESPP on their behalf, but must use the separate direction form sent to them. Under the terms of the ESPP, participants who fail to timely instruct Mellon Investor Services LLC to tender the Shares held under the ESPP on their behalf will be deemed to have chosen not to tender their Shares. Outstanding options to purchase Shares held by SMS employees enrolled in the ESPP during calendar year 2001 will not be eligible to be tendered in the Offer, but will be exercised (unless the employee has withdrawn from the ESPP) and each Share purchased pursuant to such exercise shall automatically be converted into the right to receive the Merger Consideration at the Effective Time. Back-up Withholding. Under the federal income tax laws, the Depositary will be required to withhold 31% of the amount of any payments made to certain stockholders pursuant to the Offer. In order to avoid such backup withholding, you must provide the Depositary with your correct taxpayer identification number and certify that you are not subject to such backup withholding by completing the Substitute Form W-9 included in the Letter of Transmittal. If you are a non-resident alien or foreign entity not subject to back-up withholding, you must give the Depositary a completed Form W-8BEN Certificate of Foreign Status or other appropriate form prior to receipt of any payment. Grant of Proxy. By executing a Letter of Transmittal (or delivering an Agent's Message), you irrevocably appoint our designees as your proxies in the manner set forth in the Letter of Transmittal to the full extent of your rights with respect to the Shares tendered and accepted for payment by us (and any and all other Shares or other securities issued or issuable in respect of such Shares on or after May 1, 2001). All such proxies are irrevocable and coupled with an interest in the tendered Shares. Such appointment is effective only upon our acceptance for payment of such Shares. Upon such acceptance for payment, all prior proxies and consents granted by you with respect to such Shares and other securities will, without further action, be revoked, and no subsequent proxies may be given nor subsequent written consents executed (and, if previously given or executed, will cease to be effective). Our designees will be empowered to exercise all your voting and other rights as they, in their sole discretion, may deem proper at any annual, special or adjourned meeting of SMS's stockholders, by written consent or otherwise. We reserve the right to require that, in order for Shares to be validly tendered, immediately upon our acceptance for payment of such Shares, we are able to exercise full voting rights with respect to such Shares and other securities (including voting at any meeting of stockholders then scheduled or acting by written consent without a meeting). The tender of Shares pursuant to any one of the procedures described above will constitute your acceptance of the Offer, as well as your representation and warranty that (1) you own the Shares being tendered within the meaning of Rule 14e-4 promulgated under the Exchange Act, (2) the tender of such Shares complies with Rule 14e-4 and (3) you have the full power and authority to tender, sell, assign and transfer the Shares tendered, as specified in the Letter of Transmittal. Our acceptance for payment of Shares tendered by you pursuant to the Offer will constitute a binding agreement between us with respect to such Shares, upon the terms and subject to the conditions of the Offer. Validity. We will determine, in our sole discretion, all questions as to the form of documents and the validity, eligibility (including time of receipt) and acceptance for payment of any tender of Shares, and our determination shall be final and binding. We reserve the absolute right to reject any or all tenders of Shares that we determine not to be in proper form or the acceptance for payment of, or payment for, which may, in the 42 opinion of our counsel, be unlawful. We also reserve the absolute right to waive any defect or irregularity in any tender of Shares. Our interpretation of the terms and conditions of the Offer will be final and binding. None of the Purchaser, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defect or irregularity in tenders or waiver of any such defect or irregularity or incur any liability for failure to give any such notification. 5. Withdrawal Rights. You may withdraw tenders of Shares made pursuant to the Offer at any time prior to the Expiration Date. Thereafter, such tenders are irrevocable, except that they may be withdrawn after July 15, 2001, unless such Shares are accepted for payment as provided in this Offer to Purchase. If we extend the period of time during which the Offer is open or are delayed in accepting for payment or paying for Shares pursuant to the Offer for any reason, then, without prejudice to our rights under the Offer, the Depositary may, on our behalf, retain all Shares tendered, and such Shares may not be withdrawn except as otherwise provided in this Section. To withdraw tendered Shares, a written or facsimile transmission notice of withdrawal with respect to the Shares must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase, and the notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn and the number of Shares to be withdrawn and the name of the registered holder of Shares, if different from that of the person who tendered such Shares. If the Shares to be withdrawn have been delivered to the Depositary, a signed notice of withdrawal with (except in the case of Shares tendered by an Eligible Institution) signatures guaranteed by an Eligible Institution must be submitted prior to the release of such Shares. In addition, such notice must specify, in the case of Shares tendered by delivery of certificates, the name of the registered holder (if different from that of the tendering stockholder) and the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn or, in the case of Shares tendered by book-entry transfer, the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares. Withdrawals may not be rescinded, and Shares withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered by again following one of the procedures described in "The Offer--Procedures for Tendering Shares" at any time prior to the Expiration Date. If we include a Subsequent Offering Period (as described in more detail in "The Offer--Extensions of the Tender Period") following the Offer, no withdrawal rights will apply to Shares tendered in such Subsequent Offering Period or to Shares previously tendered in the Offer and accepted for payment. We will determine, in our sole discretion, all questions as to the form and validity (including time of receipt) of any notice of withdrawal, and our determination shall be final and binding. None of the Purchaser, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defect or irregularity in any notice of withdrawal or waiver of any such defect or irregularity or incur any liability for failure to give any such notification. 6. Certain United States Federal Income Tax Consequences This summary of the material United States federal income tax consequences of the Offer and the Merger is for general information only and is based on the law as currently in effect. This summary does not discuss all of the tax consequences that may be relevant to a stockholder in light of its particular circumstances or to stockholders subject to special rules, such as financial institutions, broker-dealers, tax-exempt organizations, stockholders that hold their Shares as part of a straddle or a hedging or conversion transaction and stockholders who acquired their Shares through the exercise of an employee stock option or otherwise as compensation. This summary does not discuss the tax consequences of the Offer and the Merger for non-United States holders. Stockholders are urged to consult their own tax advisors as to the particular tax consequences to them of the offer and the Merger, including the effect of United States state and local tax laws or foreign tax laws. 43 A United States holder refers to a stockholder that is, for United States federal income tax purposes: . a citizen or resident of the United States, . a corporation or other entity taxable as a corporation created or organized in the United States or under the laws of the United States or of any political subdivision of the United States, or . an estate or trust, the income of which is includible in gross income for federal income tax purposes regardless of its source. The receipt by a United States holder of cash for Shares pursuant to the Offer or the Merger will be a taxable transaction under the United States Internal Revenue Code of 1986, as amended (the "Code"). A United States holder will generally recognize gain or loss in an amount equal to the difference between the cash received by the stockholder pursuant to the Offer or the Merger and the stockholder's adjusted tax basis in the Shares tendered pursuant to the Offer or converted in the Merger. That gain or loss will be a capital gain or loss if the Shares are a capital asset in the hands of the stockholder, and will be a long-term capital gain or loss if the Shares have been held for more than one year. Stockholders are urged to consult their own tax advisors as to the federal income tax treatment of a capital gain or loss (including limitations on the deductibility of a capital loss). A United States holder may be subject to backup withholding at a rate of 31% unless it provides its taxpayer identification number and certifies that the number is correct or properly certifies that it is awaiting a taxpayer identification number. See "Procedures for Accepting the Offer and Tendering Shares--Other Requirements." Backup withholding is not an additional tax. Amounts so withheld can be refunded or credited against the federal income tax liability of the stockholder, provided appropriate information is forwarded to the IRS. A tendering United States holder should complete the Substitute Form W-9 that is included in the Letter of Transmittal. None of Sodexho, the Purchaser or SMS will recognize gain or loss for United States federal income tax purposes with respect to the Offer or the Merger. 7. Price Range of Shares; Dividends. The Shares are listed and principally traded on the New York Stock Exchange under the symbol "SDH". The following table sets forth for the periods indicated the high and low sales prices per Share on the NYSE based on published financial sources.
High Low ------ ------ Fiscal Year 1999 First Quarter.................................................. $33.38 $24.63 Second Quarter................................................. $29.25 $22.00 Third Quarter.................................................. $25.13 $18.88 Fourth Quarter................................................. $23.25 $13.75 Fiscal Year 2000 First Quarter.................................................. $19.31 $13.81 Second Quarter................................................. $15.75 $10.13 Third Quarter.................................................. $15.25 $10.44 Fourth Quarter................................................. $18.94 $14.00 Fiscal Year 2001 First Quarter.................................................. $21.63 $15.63 Second Quarter................................................. $29.75 $19.75 Third Quarter (through May 15, 2001)........................... $31.77 $28.15
On January 24, 2001, the last full trading day before public announcement of Sodexho's initial proposal to acquire all Shares it did not already own, the closing price per Share on the NYSE was $24.875. On May 1, 44 2001, the last full trading day before public announcement of the Merger Agreement, the closing price per Share on the NYSE was $29.50. On May 15, 2001, a recent trading day before the date of this Offer to Purchase, the closing price per Share on the NYSE was $31.75. We advise you to obtain a recent quotation for Shares before deciding whether to tender your Shares. On December 10, 1999, SMS paid a dividend of $0.08 per Share to holders of record as of November 22, 1999. SMS has not paid any subsequent dividends. SMS's credit facilities contain covenants restricting its ability to pay dividends. In general, the restrictive covenants do not permit SMS to pay dividends to stockholders in an amount greater than 40 percent of SMS's net income, or 45 percent when the ratio of SMS's consolidated debt to earnings before interest, taxes, depreciation or amortization, or EBITDA, is less than 4 but not less than 3. This restriction will no longer apply when such ratio is less than 3. As of May 11, 2001, there were 63,723,383 Shares outstanding. 8. Certain Information Concerning SMS. General. SMS is the leading provider in North America of outsourced food and facilities management services, to businesses, health care facilities, colleges and universities, and primary and secondary schools, with $4.7 billion in sales for the fiscal year ended September 1, 2000. SMS operates at 5,000 locations across the United States and Canada. Food services include food and beverage procurement, preparation and menu planning, as well as the operation and maintenance of food service and catering facilities, generally on a client's premises. Facilities management services include plant maintenance, energy management, grounds keeping, and housekeeping and custodial services. The address and phone number of its principal executive office are 9801 Washingtonian Boulevard, Gaithersburg, MD 20878, (301) 987-4500. Available Information. SMS is subject to the informational requirements of the Exchange Act and in accordance therewith files periodic reports, proxy statements and other information with the SEC relating to its business, financial condition and other matters. SMS is required to disclose in such proxy statements certain information, as of particular dates, concerning SMS's directors and officers, their remuneration, stock options granted to them, the principal holders of SMS's securities and any material interest of such persons in transactions with SMS. Such reports, proxy statements and other information may be inspected at the public reference facilities maintained by the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, Suite 1400, 500 W. Madison Street, Chicago, Illinois 60661. Copies of such material can also be obtained at prescribed rates from the Public Reference Section of the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, or free of charge at the Web site maintained by the SEC at http://www.sec.gov. Except as otherwise stated in this Offer to Purchase, the information concerning SMS contained herein has been taken from or is based upon reports and other documents on file with the SEC or otherwise publicly available. Although Sodexho has no knowledge that would indicate that any statements contained herein based upon such reports and documents are untrue, Sodexho takes no responsibility for the accuracy or completeness of the information contained in such reports and other documents or for any failure by SMS to disclose events that may have occurred and may affect the significance or accuracy of any such information but that are unknown to Sodexho. 45 Selected Financial Information. The following table presents selected consolidated financial information of SMS which has been excerpted or derived from the audited financial statements contained in SMS's annual report on Form 10-K for the fiscal year ended September 1, 2000 (the "SMS 10-K") and the unaudited financial statements contained in SMS's Quarterly Report on Form 10-Q for the thirteen weeks ended March 2, 2001 (the "SMS 10-K"). The financial information that follows is qualified in its entirety by reference to the SMS 10-K and the SMS 10-Q and other documents filed by SMS with the SEC which contain comprehensive financial information. The SMS 10-K and the SMS 10-Q and such other documents may be examined and copies may be obtained from the offices of the SEC in the manner set forth above.
26 Weeks Ended 34 Weeks Fiscal Year ----------------- Ended ------------------------- March 2, March 3, Fiscal Year Fiscal Year August 28, 2001 2000 2000(1) 1999(1) 1998(1) 1997(2) 1996(3) 1995(3) -------- -------- ----------- ----------- ---------- ------- ------- ------- (in millions, except per share data) Income Statement Data: Sales................... $2,596 $2,467 $4,734 $4,502 $2,828 $5,026 $4,318 $3,634 Operating Profit Before Corporate Expenses and Interest............... 198 181 319 299 119 157 177 130 Total Corporate Expenses and Interest(4)........ (106) (106) (207) (207) (151) (172) (127) (78) ------ ------ ------ ------ ------ ------ ------ ------ Income (Loss) From Continuing Operations, Before Taxes and Extraordinary Item..... 92 75 112 92 (32) (15) 50 52 (Provision) Benefit for Income Taxes from Continuing Operations.. (39) (33) (49) (41) 13 15 (17) (20) ------ ------ ------ ------ ------ ------ ------ ------ Income (Loss) From Continuing Operations, Before Discontinued Operations and Extraordinary Item..... 53 42 63 51 (19) -- 33 32 Discontinued Operations, Net of Income Taxes(5)............... -- -- -- -- 77 335 273 215 ------ ------ ------ ------ ------ ------ ------ ------ Income Before Extraordinary Item..... 53 42 63 51 58 335 306 247 Loss from Extraordinary Item, Net of Income Taxes(6) -- -- -- -- (44) -- -- -- ------ ------ ------ ------ ------ ------ ------ ------ Net Income.............. $ 53 $ 42 $ 63 $ 51 $ 14 $ 335 $ 306 $ 247 ====== ====== ====== ====== ====== ====== ====== ====== Per Share Data(7): Basic Earnings Per Share: Continuing Operations.. $ 0.84 $ 0.67 $ 1.01 $ 0.82 $(0.36) $ -- $ 1.03 $ 1.03 Discontinuing Operations(5)......... -- -- -- -- 1.48 10.53 8.56 6.89 ------ ------ ------ ------ ------ ------ ------ ------ Basic Earnings Per Share before Extraordinary Item..... 0.84 0.67 1.01 0.82 1.12 10.53 9.59 7.92 Extraordinary Item(6) -- -- -- -- (0.85) -- -- -- ------ ------ ------ ------ ------ ------ ------ ------ Basic Earnings Per Share.................. $ 0.84 $ 0.67 $ 1.01 $ 0.82 $ 0.27 $10.53 $ 9.59 $ 7.92 ====== ====== ====== ====== ====== ====== ====== ====== Basic Weighted-Average Shares................. 63.3 62.9 63.0 62.1 52.0 31.8 31.9 31.2 Diluted Earnings Per Share: Continuing Operations.. $ 0.83 $ 0.67 $ 1.00 $ 0.81 $(0.36) $ -- $ 0.97 $ 0.97 Discontinued Operations(5)......... -- -- -- -- 1.48 10.53 8.08 6.51 ------ ------ ------ ------ ------ ------ ------ ------ Diluted Earnings Per Share before Extraordinary Item..... 0.83 0.67 1.00 0.81 1.12 10.53 9.05 7.48 Extraordinary Item(6).. -- -- -- -- (0.85) -- -- -- ------ ------ ------ ------ ------ ------ ------ ------ Diluted Earnings Per Share.................. $ 0.83 $ 0.67 $ 1.00 $ 0.81 $ 0.27 $10.53 $ 9.05 $ 7.48 ====== ====== ====== ====== ====== ====== ====== ====== Diluted Weighted-Average Shares................. 64.1 63.5 63.5 63.9 52.0 31.8 33.8 33.0
46
26 Weeks Ended 34 Weeks Fiscal Year ----------------- Ended ----------------------- March 2, March 3, Fiscal Year Fiscal Year August 28, 2001 2000 2000(1) 1999(1) 1998(1) 1997(2) 1996(3) 1995(3) -------- -------- ----------- ----------- ---------- ------- ------- ------- (in millions, except per share data) Cash Dividends Declared(8)............ $ -- $ 0.08 $ 0.08 $ -- $ 0.36 $ 1.40 $ 1.28 $ 1.12 Ratio of Earnings to Fixed Charges(9)....... 3.4 2.7 2.3 2.0 2.5 4.0 4.5 4.8 Book Value at Period End(10)................ n/m n/m n/m n/m n/m 46.4 40.0 33.6 Balance Sheet Data (at end of period): Total Current Assets.... $ 744 $ 707 $ 682 $ 642 $ 605 $ 914 $ 764 $ 784 Total Noncurrent Assets................. 677 696 682 705 736 4,095 3,416 2,437 ------ ------ ------ ------ ------ ------ ------ ------ Total Assets............ $1,421 $1,403 $1,364 $1,347 $1,341 $5,009 $4,180 $3,221 ====== ====== ====== ====== ====== ====== ====== ====== Total Current Liabilities............ $ 809 $ 788 $ 765 $ 718 $ 695 $1,149 $1,092 $ 934 Total Long-Term and Convertible Subordinated Debt...... 859 940 900 1,010 1,091 1,829 1,300 795 Total Other Noncurrent Liabilities............ 110 110 112 113 110 568 528 438 Stockholders' (Deficit) /Equity................ (357) (435) (413) (494) (555) 1,463 1,260 1,054 ------ ------ ------ ------ ------ ------ ------ ------ Total Liabilities and Stockholders' (Deficit)/Equity....... $1,421 $1,403 $1,364 $1,347 $1,341 $5,009 $4,180 $3,221 ====== ====== ====== ====== ====== ====== ====== ======
- -------- (1) On April 15, 1998, the SMS Board changed the fiscal year from the Friday closest to the end of December to the Friday closest to the end of August, thereby creating a 34-week Transition Period. On March 27, 1998, SMS acquired Sodexho North America. In addition, fiscal year 2000 had 52 weeks ended on September 1, 2000, fiscal year 1999 had 53 weeks and ended on September 3, 1999. The historical data for fiscal year 1997 and prior years does not include the revenue and expenses of the acquired business. (2) Operating results in fiscal year 1997 (52 weeks ended January 2, 1998) include a loss before income taxes of $22 million ($14 million after tax, or $0.40 per share) on the sale of the MMS-UK operations to Sodexho in connection with the 1998 merger transactions. (3) Fiscal year 1996 includes 53 weeks ending on January 3, 1997, with fiscal year 1995 including 52 weeks ending on December 29, 1995. (4) Total corporate expenses include the amortization of intangible assets. For fiscal year 1999 and the 34 weeks ended August 28, 1998, $16 million and $31 million pretax, respectively, of integration and restructuring charges were recognized. (5) On March 27, 1998, SMS distributed to its stockholders the Lodging, MSLS and MDS divisions as part of the 1998 transactions. For reporting purposes, the Lodging segment is considered Discontinued Operations prior to March 27, 1998. MSLS and MDS are considered part of continuing operations for the same periods. (6) On March 27, 1998, SMS refinanced its debt as part of the 1998 transactions, resulting in a $71 million pretax charge from the early extinguishment of debt ($44 million after-tax). (7) Earnings per share data have been restated to reflect the adoption in 1997 of Statement of Financial Accounting Standards No. 128, "Earnings Per Share." All per share data has been adjusted to reflect a one-for-four reverse stock split effective March 27, 1998. (8) The SMS Board declared on October 13, 1999, an $0.08 per common share dividend for fiscal year 1999, paid on December 10, 1999 to stockholders of record on November 22, 1999. (9) Earnings have been calculated by adding interest expense and the portion of rentals estimated to represent the interest factor to income before income taxes. Fixed charges include interest charges (including capitalized interest). (10) Book value per share is calculated as to total stockholders' equity at the end of the period divided by the diluted number of shares of Common Stock outstanding at the end of the period. Book value is not meaningful for the 34 weeks ended August 28, 1998 to present, as SMS had a Stockholders' Deficit Balance. 47 Certain Projections. As a significant stockholder of SMS, Sodexho and its representatives on the SMS Board were routinely given access to nonpublic management projections of possible future performance of SMS. Following the receipt by the SMS Board on January 24, 2001 of Sodexho's initial proposal to acquire all of the outstanding Shares it did not already own, SMS did not give Sodexho and its representatives on the SMS Board routine access to such projections. SMS provided Sodexho with the January 2001 projections summarized below prior to January 24, 2001. The SMS projections were not prepared with a view to public disclosure or compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants regarding projections or forecasts. The SMS projections are included in this Offer to Purchase only because such information was provided to Sodexho and was in the possession of Sodexho during its evaluation of a business combination transaction. These projections are based on then-current expectations, forecasts and assumptions of SMS management and involve risks and uncertainties, some of which are outside of SMS's control, that could cause actual outcomes and results to differ materially from current expectations. These risks and uncertainties include, among other things: (1) the ability of SMS to adapt to various changes, including changes in its structure, senior management and relationship with Sodexho, (2) the potential adverse impact of SMS's substantial indebtedness, including restrictions and remedies available within the related debt covenants, (3) the ability of SMS to attract, hire, train and retain competent management personnel, (4) competition in the food services and facilities management industries, (5) the effects of general economic conditions, (6) the ability of SMS to retain clients and obtain new clients on satisfactory terms, and other factors described from time to time in SMS's filings with the SEC. Accordingly, there can be no assurance that the assumptions made in preparing any of the SMS projections will prove accurate or that any of the SMS projections will be realized. It is expected that there will be differences between actual and projected results, and actual results may be materially greater or less than those contained in any of the SMS projections. The inclusion of any of the SMS projections herein should not be regarded as an indication that any of Sodexho, the Purchaser or SMS or their respective affiliates or representatives considered or consider any of the SMS projections to be a reliable prediction of future events, and none of the SMS projections should be relied upon as such. None of Sodexho, the Purchaser or SMS or any of their respective affiliates or representatives has made or makes any representations to any person regarding the ultimate performance of SMS compared to the information contained in any of SMS projections, and none of them has updated or intends to update or otherwise revise any of the SMS projections to reflect circumstances existing after the date when made or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying any of the SMS projections are shown to be in error. January 2001 SMS Projections
Fiscal Year -------------------------------------- Projected -------------------------------------- 2001 2002 2003 2004 2005 ------ ------ ------ ------ ------ Dollars in millions Total Revenues.......................... $4,970 $5,244 $5,559 $6,011 $6,263 EBITDA.................................. $ 300 $ 320 $ 355 $ 390 $ 430 Depreciation............................ $ (48) $ (49) $ (52) $ (58) $ (59) Amortization............................ $ (37) $ (36) $ (34) $ (33) $ (32) ------ ------ ------ ------ ------ EBIT.................................... $ 215 $ 235 $ 269 $ 299 $ 338 Interest Expense........................ $ (78) $ (74) $ (71) $ (54) $ (43) ------ ------ ------ ------ ------ Earnings before Taxes................... $ 137 $ 160 $ 198 $ 245 $ 295 Provision for Taxes..................... $ (59) $ (68) $ (83) $ (102) $ (121) ------ ------ ------ ------ ------ Net Income.............................. $ 78 $ 92 $ 115 $ 143 $ 174 ====== ====== ====== ====== ======
48 9. Certain Information Concerning the Purchaser, Sodexho and Bellon S.A. The Purchaser is a Delaware corporation incorporated on April 3, 2001. It is wholly-owned subsidiary of Sodexho. The Purchaser has not engaged in any activities other than in connection with or as contemplated by the Merger Agreement or in connection with arranging financing required to consummate the transactions contemplated by the Merger Agreement. The Purchaser's business address is 3 Avenue Newton, 78180 Montigny-le-Bretonneux, France. Sodexho is a French corporation. Sodexho was founded in 1966 by its current Chairman, Pierre Bellon. It is today the world leader in food and management services. With 286,000 employees and operations in 70 countries at 22,000 sites, Sodexho generated Euro 10.5 billion in sales in fiscal year ended August 31, 2000. Sodexho has held 29,949,925 Shares since SMS's formation in 1998, which currently represents about 47.1 percent of the outstanding Shares. Prior to the closing of the Merger, Sodexho may transfer these Shares to the Purchaser. Bellon S.A. is a privately held French corporation and the beneficial owner of approximately 40.2 percent of Sodexho. Pierre Bellon, together with members of his family, beneficially owns an approximate 54.9 percent economic interest (representing a 70.8 percent voting interest) in Bellon S.A. The name, business address, principal occupation or employment, five year employment history and citizenship of each director and executive officer of Sodexho, the Purchaser and Bellon S.A. and certain other information are set forth on Schedule I. 10. Source and Amount of Funds. We will need approximately $1.15 billion to purchase all Shares held by non-affiliates of Sodexho pursuant to the Offer and to pay related fees and expenses. We intend to pay for all Shares validly tendered and not withdrawn in the Offer and to provide funding for the Merger and related expenses through borrowings under a Euro 1,332,500,000 multicurrency term loan facility ("Facility A2") provided under a term and revolving facilities agreement dated as of April 6, 2001, as amended on April 27, 2001, among Sodexho, Citibank International plc, Goldman Sachs International and SG Investment Banking as arrangers, Societe Generale as agent and issuing bank, and certain other financial institutions (the "Facilities Agreement"). Maturity. Facility A2 has a maturity of 364 days (subject to extension, at the option of Sodexho, for an additional one year subject to certain conditions) and is to be repaid in full at maturity. Interest Rates and Fees. All amounts outstanding under Facility A2 will bear interest at an annual rate equal to the sum of (i) an applicable margin (between 50 basis points and 140 basis points, depending generally on Sodexho's long term credit rating as published by Standard & Poor's), (ii) as applicable, LIBOR (defined as the British Bankers Association Interest Settlement Rate for the relevant currency and period) or EURIBOR (defined as the percentage rate per annum determined by the Banking Federation for the European Union for the relevant period) and (iii) an amount determined by the agent, as necessary, to reflect mandatory costs associated with compliance by each lender with applicable reserve requirements. The applicable margin will be decreased by 15 basis points if Sodexho applies the net proceeds of a contemplated capital increase to prepay certain facilities under the Facilities Agreement in specified amounts. Interest payments will be made on the last date of each interest period (which shall be 1, 2, 3 or 6 months or, to the extent available to each lender, 9 or 12 months) and, in the case of interest periods of longer than 6 months, semi-annually in arrears. Sodexho has agreed to pay certain arrangement, agency, and commitment fees in connection with the Facilities Agreement. The commitment fee will accrue on the unused amount of Facility A2 at a rate per annum of 33 1/3% of the applicable margin, payable quarterly in arrears. 49 Mandatory Prepayments. Under the following circumstances mandatory prepayments are required under Facility A2. First, if any subsidiary borrower ceases to be a subsidiary of Sodexho, the facilities borrowed and or made available to that borrower shall be repaid and cancelled. Second, if Bellon S.A. ceases to hold at least 33 1/3% of the shares and/or voting rights of Sodexho, Facility A2 shall be repaid and cancelled in full. Third, Facility A2 is to be mandatorily prepaid and permanently reduced by an amount equal to the net proceeds received by Sodexho or any of its subsidiaries from: (i) any note, bond or other debt securities issued by Sodexho or any of its subsidiaries in any of the capital markets of the United States, Europe or Japan (subject to certain exceptions) and (ii) any issue of equity or equity related security (excluding stock options, the exercise of existing warrants and a proposed international share ownership plan for employees). Conditions to Borrowing. The availability of Facility A2 is subject to satisfaction of conditions precedent typical for this type of facility including (i) the expiration of all applicable waiting periods under the Hart- Scott-Rodino Antitrust Improvements Act of 1976; (ii) confirmation that all fees and expenses then due have been paid, and (iii) receipt by the lenders of customary documentation, including legal opinions, documentation relating to the existence of Sodexho and its subsidiaries, and documentation relating to the Offer and the Merger. Guarantees. Sodexho, Purchaser and each other subsidiary borrower under the Facilities Agreement guarantee the payment of all amounts under the Facilities Agreement. In addition, if any amounts remain outstanding under SMS's existing indebtedness or Sodexho exercises its option to extend the maturity of Facility A2 in an amount in excess of Euro 250,000,000, it is contemplated that Sodexho Operations, LLC, a wholly-owned subsidiary of SMS, will, no later than 60 days from the date of the first drawing under Facility A2, guarantee the payment of all amounts outstanding under the Facilities Agreement. Covenants. The Facilities Agreement contains covenants typical for such types of facilities including (1) maintenance of authorizations and consents; (2) compliance with laws and regulations; (3) negative pledge (subject to certain exceptions); (4) restrictions on disposals of assets; (5) restriction on subsidiary borrowings and guarantees; (6) no merger or consolidation (subject to certain exceptions); (7) no substantial changes to the general nature of the business; (8) maintenance of insurance; (9) compliance of the Offer with applicable laws and regulations; (10) pari passu ranking; (11) payment of taxes; (12) transactions with affiliates to be on arms length terms (subject to certain exceptions); (13) no contravention of Regulations T, U or X of the Federal Reserve Board or any other applicable laws or regulations; and (14) proper capitalization of Purchaser for the purposes of US laws and regulations. Events of Default. The Facilities Agreement also contains events of default typical for such type of facilities including (1) non-payment of amounts under the Facilities Agreement (subject to certain grace periods); (2) breach of financial ratios; (3) breach of representations or misleading statements in any material respect; (4) cross default on other debt of at least Euro 30,000,000; (5) inability generally to pay debts; (6) bankruptcy, winding-up, foreclosure; (7) expropriation, attachment, execution of assets; (8) ceasing to carry on all or a substantial part of its business; (9) unlawfulness or repudiation of finance documents; (10) judgments having a material adverse effect; (11) occurrence of certain ERISA events; and (12) material adverse change affecting (A) the ability of Sodexho to perform the payment obligations or (B) the business or financial condition of Sodexho and its subsidiaries taken as a whole. The Facilities Agreement also provides the following additional facilities: (1) $930,000,000 five-year term loan to refinance existing indebtedness of SMS, if required, (2) $150,000,000 multicurrency revolving and letter of credit facility to fund working capital requirements of SMS following the refinancing of existing SMS indebtedness, and (3) Euro 600,000,000 364-day multicurrency term loan facility to finance an unrelated acquisition by Sodexho. 11. Effect of the Offer on the Market for the Shares; Stock Exchange Listing(s); Registration under the Exchange Act. If the Merger is consummated, stockholders who have not tendered their Shares in the Offer will receive cash in an amount equal to the price per Share provided pursuant to the Offer, unless the 50 stockholder exercises its appraisal rights under Delaware law. Therefore, if such Merger takes place, the only difference between tendering Shares in the Offer and not tendering Shares in the Offer is that tendering stockholders will be paid earlier. If, however, the Merger is not consummated, the purchase of Shares pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly and may reduce the number of holders of Shares, which could adversely affect the liquidity and market value of the remaining Shares held by stockholders other than Sodexho. We cannot predict whether the reduction in the number of Shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for, or marketability of, the Shares or whether such reduction would cause future market prices to be greater or less than the Offer Price. Depending upon the number of Shares purchased pursuant to the Offer, the Shares may no longer meet the requirements of the NYSE for continued listing and may, therefore, be delisted from such exchange. According to the NYSE's published guidelines, the NYSE would consider delisting the Shares if, among other things (1) there were fewer than 400 holders, (2) there were fewer than 1,200 holders and the average monthly trading volume was less than 100,000 Shares over the most recent 12 months, (3) the number of publicly held Shares (excluding Shares held by officers, directors, their immediate families and other concentrated holdings of 10% or more) were less than 600,000, or (4) the aggregate market value of the publicly held Shares were less than $15 million. If, as a result of the purchase of Shares pursuant to the Offer, the Shares no longer meet the requirements of the NYSE for continued listing and the listing of Shares is discontinued, the market for the Shares could be adversely affected. If the NYSE were to delist the Shares, it is possible that the Shares would trade on another securities exchange or in the over-the-counter market and that price quotations for the Shares would be reported by such exchange or through the NASDAQ National Market or other sources. The extent of the public market for the Shares and availability of such quotations would, however, depend upon such factors as the number of holders and/or the aggregate market value of the publicly-held Shares at such time, the interest in maintaining a market in the Shares on the part of securities firms, the possible termination of registration of the Shares under the Exchange Act and other factors. The Shares are currently "margin securities" under the regulations of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit on the collateral of such Shares. Depending upon factors similar to those described above regarding listing and market quotations, the Shares might no longer constitute "margin securities" for the purposes of the Federal Reserve Board's margin regulations and, therefore, could no longer be used as collateral for loans made by brokers. The Shares are currently registered under the Exchange Act. Registration may be terminated upon application of SMS to the SEC if the Shares are neither listed on a national securities exchange nor held by 300 or more holders of record. Termination of the registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by SMS to holders of Shares and to the SEC and would make certain of the provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b), the requirement of furnishing a proxy statement pursuant to Section 14(a) in connection with a stockholders' meeting and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions, no longer applicable to the Shares. Furthermore, "affiliates" of SMS and persons holding "'restricted securities" of SMS may be deprived of the ability to dispose of such securities pursuant to Rule 144 promulgated under the Securities Act of 1933. If registration of the Shares under the Exchange Act were terminated, the Shares would no longer be "margin securities" or eligible for listing or NASDAQ National Market reporting. 12. Dividends and Distributions. Pursuant to the Merger Agreement, without the prior written approval of Sodexho or the Purchaser or as otherwise contemplated in the Merger Agreement, SMS has agreed not to declare or pay any dividend on, or make any other distribution in respect of outstanding shares of its capital stock. 51 13. Conditions of the Offer. Notwithstanding any other provision of the Offer, the Purchaser shall not be required to accept for payment or pay for any Shares, and may terminate the Offer, if (1) at the Expiration Date, the Minimum Condition shall not have been satisfied; or (2) at any time on or after May 1, 2001 and prior to the Expiration Date, any of the following conditions exists: (a) there shall be instituted or pending any action or proceeding by any governmental authority (domestic, foreign or supranational) before any court or governmental authority or agency (domestic, foreign or supranational), (1) challenging or seeking to make illegal, to delay materially or otherwise to restrain or prohibit the making of the Offer, the acceptance for payment of or payment for some or all of the Shares pursuant to the Offer or the consummation of the Merger, or seeking to obtain material damages in connection with the Offer or the Merger, (2) seeking to restrain or prohibit the ownership or operation by Sodexho or its affiliates of all or any portion of the business of SMS and its subsidiaries, or of Sodexho and its subsidiaries, or to compel Sodexho or any of its affiliates to dispose of or hold separate all or any portion of the business or assets of SMS and its subsidiaries or of Sodexho and its subsidiaries, (3) seeking to impose limitations on the ability of Sodexho, the Purchaser or any of their affiliates effectively to exercise full rights of ownership of the Shares, including the right to vote any Shares on any matters properly presented to SMS's stockholders, (4) seeking to require divestiture by Sodexho, the Purchaser or any of their affiliates of any Shares, or (5) that otherwise would reasonably be expected to have a Material Adverse Effect on SMS or Sodexho, or (b) there shall have been any action taken, or any statute, rule, regulation, injunction, order or decree proposed, enacted, enforced, promulgated, issued or deemed applicable to the Offer or the Merger, by any court or governmental authority or agency (domestic, foreign or supranational) that would reasonably be expected, directly or indirectly, to result in any of the consequences referred to in clauses (1) through (5) of paragraph (a) above, or (c) there shall have been any event, occurrence, development or state of circumstances or facts that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on SMS, or (d) SMS shall have breached or failed to perform in all material respects any of its obligations under the Merger Agreement, except where such breach or failure to perform would not have, individually or in the aggregate a Material Adverse Effect on SMS, or (e) any of the representations and warranties of SMS contained in the Merger Agreement (without giving effect to any qualifications contained therein as to "materiality" or "Material Adverse Effect") shall not be true and correct in all respects when made or at any time prior to the consummation of the Offer as if made at and as of such time, except where failure to be true or correct would not have, individually or in the aggregate a Material Adverse Effect on SMS, or (f) the Merger Agreement shall have been terminated in accordance with its terms, or (g) the SMS Board shall have failed to recommend, or shall have withdrawn or modified in a manner adverse to Sodexho its approval or recommendation of, the Merger Agreement or the Offer or the Merger or shall have approved or recommended an Acquisition Proposal, or (h) SMS shall have entered into, or publicly announced its intention to enter into, a definitive agreement or an agreement in principle with respect to an Acquisition Proposal. The foregoing conditions are for the sole benefit of Sodexho and Purchaser and may, subject to the terms of the Merger Agreement, be waived by Sodexho and Purchaser in whole or in part at any time and from time to time prior to the Expiration Date in their discretion. The failure by Sodexho or Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, the waiver of any such 52 right with respect to particular facts and circumstances shall not be deemed a waiver with respect to any other facts and circumstances, and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time prior to consummation of the Offer. 14. Certain Legal Matters; Regulatory Approvals. General. We are not aware of any governmental license or regulatory permit that appears to be material to SMS's business that might be adversely affected by our acquisition of Shares pursuant to the Offer or, except as set forth below, of any approval or other action by any government or governmental administrative or regulatory authority or agency, domestic or foreign, that would be required for our acquisition or ownership of Shares pursuant to the Offer. Should any such approval or other action be required, we currently contemplate that, except as described below under "State Takeover Laws," such approval or other action will be sought. There is, however, no current intent to delay the purchase of Shares tendered pursuant to the Offer pending the outcome of any such matter. There can be no assurance that any such approval or other action, if needed, would be obtained (with or without substantial conditions) or that if such approvals were not obtained or such other actions were not taken adverse consequences might not result to SMS's business or certain parts of SMS's business might not have to be disposed of, any of which could cause us to elect to terminate the Offer without the purchase of Shares thereunder. Our obligation under the Offer to accept for payment and pay for Shares is subject to certain conditions. See "The Offer--Conditions of the Offer." State Takeover Laws. SMS is incorporated under the laws of the State of Delaware. In general, Section 203 of the DGCL ("Section 203") prevents an "interested stockholder" (including a person who owns or has the right to acquire 15% or more of the corporation's outstanding voting stock) from engaging in a "business combination" (defined to include mergers and certain other actions) with a Delaware corporation for a period of three years following the date such person became an interested stockholder. The restrictions of Section 203 do not apply to any stockholder as to which, prior to the time it became an interested stockholder, the board of directors of the corporation approved the transaction which resulted in the stockholder becoming an interested stockholder. Since the SMS Board approved Sodexho's initial acquisition of Shares in 1998 and has approved the Merger Agreement, Sodexho and the Purchaser do not believe that the restrictions of Section 203 would apply to the Merger. In addition, Sodexho and the Purchaser believe that the restrictions of Section 203 are inapplicable to the Merger because Sodexho has been an interested stockholder of SMS for more than three years. A number of other states have adopted laws which purport, to varying degrees, to apply to attempts to acquire corporations that are incorporated in, or which have substantial assets, stockholders, principal executive offices or principal places of business or whose business operations otherwise have substantial economic effects in, such states. SMS, directly or through subsidiaries, conducts business in a number of states throughout the United States, some of which have enacted such laws. Except as described herein, we do not know whether any of these laws will, by their terms, apply to the Offer or any merger or other business combination between us or any of our affiliates and SMS and we have not complied with any such laws. To the extent that certain provisions of these laws purport to apply to the Offer or any such merger or other business combination, we believe that there are reasonable bases for contesting such laws. In 1982, in Edgar v. MITE Corp., the Supreme Court of the United States invalidated on constitutional grounds the Illinois Business Takeover Statute which, as a matter of state securities law, made takeovers of corporations meeting certain requirements more difficult. However, in 1987 in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of Indiana could, as a matter of corporate law, constitutionally disqualify a potential acquiror from voting shares of a target corporation without the prior approval of the remaining stockholders where, among other things, the corporation is incorporated, and has a substantial number of stockholders, in the state. Subsequently, in TLX Acquisition Corp. v. Telex Corp., a Federal District Court in Oklahoma ruled that the Oklahoma statutes were unconstitutional insofar as they apply to corporations incorporated outside Oklahoma in that they would subject such corporations to inconsistent regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a Federal District Court in Tennessee ruled that four Tennessee takeover statutes were unconstitutional as applied to corporations incorporated outside Tennessee. This decision 53 was affirmed by the United States Court of Appeals for the Sixth Circuit. In December 1988, a Federal District Court in Florida held in Grand Metropolitan PLC v. Butterworth, that the provisions of the Florida Affiliated Transactions Act and the Florida Control Share Acquisition Act were unconstitutional as applied to corporations incorporated outside of Florida. If any government official or third party should seek to apply any state takeover law to the Offer or any merger or other business combination between us or any of our affiliates and SMS, we will take such action as then appears desirable, which action may include challenging the applicability or validity of such statute in appropriate court proceedings. In the event it is asserted that one or more state takeover statutes is applicable to the Offer or any such merger or other business combination and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer or any such merger or other business combination, we might be required to file certain information with, or to receive approvals from, the relevant state authorities or holders of Shares, and we might be unable to accept for payment or pay for Shares tendered pursuant to the Offer, or be delayed in continuing or consummating the Offer or any such merger or other business combination. In such case, we may not be obligated to accept for payment or pay for any tendered Shares. See "The Offer--Conditions of the Offer." Antitrust. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and the rules that have been promulgated thereunder by the Federal Trade Commission ("FTC"), certain acquisition transactions may not be consummated unless certain information has been furnished to the Antitrust Division of the Department of Justice (the "Antitrust Division") and the FTC, and certain waiting period requirements have been satisfied. This information was furnished to the Antitrust Division on March 7, 2001 and the waiting period requirements were satisfied on April 6, 2001. The Antitrust Division and the FTC frequently scrutinize the legality under the antitrust laws of transactions such as our acquisition of Shares pursuant to the Offer. At any time before or after the consummation of any such transactions, the Antitrust Division or the FTC could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the purchase of Shares pursuant to the Offer or seeking divestiture of the Shares so acquired or divestiture of Sodexho's or SMS's substantial assets. Private parties (including individual states) may also bring legal actions under the antitrust laws. We do not believe that the consummation of the Offer will result in a violation of any applicable antitrust laws. However, there can be no assurance that a challenge to the Offer on antitrust grounds will not be made, or if such a challenge is made, what the result will be. See "The Offer--Conditions of the Offer" for certain conditions to the Offer, including conditions with respect to litigation and certain governmental actions. Litigation. Following Sodexho's January 25, 2001 announcement that it had made a proposal to acquire the outstanding Shares of the company, nine separate lawsuits were filed in the Delaware Court of Chancery on behalf of a purported class of SMS stockholders, excluding Sodexho and the other defendants. The actions, which were styled Feldman v. Shaw, et al., C.A. No. 18640; Bieler v. Shaw, et al., C.A. No. 18641; McMullen v. Shaw, et al., C.A. No. 18642; Alessi v. Shaw, et al., C.A. No. 18644; Piven v. Shaw, et al., C.A. No. 18645; Goldberg v. Shaw, et al., C.A. No. 18650; Remmen v. Shaw, et al., C.A. No. 18651; Berg v. Shaw, et al., C.A. No. 18653; and Burt v. Shaw, et al., C.A. No. 18661, were subsequently consolidated by order of the court under the caption In re Sodexho Marriott Shareholders Litigation, Cons. C.A. No. 18640 (the "Action"). That order designates the complaint in the Feldman action to be the operative complaint in the Action. That complaint names as defendants SMS, the members of the SMS Board and Sodexho, and generally alleges that the $27.00 per Share offer announced by Sodexho on January 25, 2001 would provide inadequate value to SMS stockholders, that Sodexho improperly used its position as a large stockholder of SMS in making that proposal and that the members of the SMS Board were beholden to Sodexho and could not impartially evaluate the proposal. That complaint seeks preliminary and permanent injunctive relief against the transaction proposed by Sodexho, monetary damages in an unspecified amount and plaintiffs' costs and attorneys' fees. Prior to SMS and Sodexho entering into the Merger Agreement, the parties to the Action reached an agreement in principle to settle the Action based on the facts (1) that plaintiffs' counsel and their financial 54 advisor had conveyed plaintiffs' views about the adequacy of Sodexho's earlier proposal to the advisors to the Special Committee and that those views had been taken into consideration by the members of the Special Committee in reaching their determination to recommend to the full SMS Board that the board approve the Merger Agreement, (2) that Sodexho was aware of the allegations made in the complaints in the Action and took into account the desirability of addressing those claims in determining to increase the per Share consideration to be paid to SMS's stockholders from $27.00 to $32.00 per Share, and (3) that the $32.00 per Share consideration provided in the Merger Agreement was within the range of fairness for such shares in the view of plaintiffs' financial advisor. The proposed settlement is subject to a number of conditions, including, among other things, that plaintiffs' counsel conclude, after completion of appropriate discovery, that the proposed settlement is fair and reasonable to members of the putative class, and approval by the Delaware Court of Chancery of the settlement. Subject to final court approval of the settlement, plaintiffs' counsel intend to apply to the Court for an award of their fees and expenses. Defendants have agreed not to oppose such an application up to an aggregate amount of $725,000, as may be awarded by the Court. Provisions for Unaffiliated Security Holders. In connection with the Offer and the Merger, none of Sodexho, Purchaser or SMS has granted to unaffiliated security holders access to their corporate files or arranged for counsel or appraisal services at the expense of Sodexho, Purchaser or SMS. 15. Fees and Expenses. Goldman Sachs International is acting as Sodexho's financial advisor and Goldman, Sachs & Co. is acting as Dealer Manager in connection with the Offer and the Merger. Sodexho has agreed to pay Goldman Sachs International as compensation for its services as financial advisor (including the services of Goldman, Sachs & Co. as Dealer Manager) a fee of $7,100,000, of which $250,000 has been paid, with the balance due upon the closing of the Offer. Sodexho has also agreed to reimburse Goldman Sachs for certain reasonable out-of-pocket expenses incurred in connection with the Offer and the Merger (including the fees and disbursements of outside counsel) and to indemnify Goldman Sachs against certain liabilities, including certain liabilities under the federal securities laws. Sodexho has retained MacKenzie Partners, Inc. to act as the Information Agent and EquiServe Trust Company, N.A. to act as the Depositary in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, telex, telegraph and personal interviews and may request brokers, dealers, banks, trust companies and other nominees to forward materials relating to the Offer to beneficial owners. The Information Agent and the Depositary each will receive reasonable and customary compensation for their respective services, will be reimbursed for certain reasonable out-of-pocket expenses and will be indemnified against certain liabilities in connection therewith, including certain liabilities under the federal securities laws. None of Sodexho, Purchaser or SMS will pay any fees or commissions to any broker or dealer or any other person (other than the Dealer Manager, the Information Agent and the Depository) for soliciting tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks and trust companies will, upon request, be reimbursed by us for reasonable and necessary costs and expenses incurred by them in forwarding materials to their customers. Fees and Expenses to Be Paid by Sodexho or the Purchaser: Financial Advisor/Dealer Manager........................... $ 7,250,000 Legal...................................................... 1,950,000 Communications/Printing.................................... 250,000 Filing..................................................... 496,000 Depositary................................................. 430,000 Information Agent (including mailing)...................... 132,500 Miscellaneous.............................................. 300,000 ----------- Total.................................................... $10,808,500 ===========
55 Fees and Expenses to Be Paid by SMS: Financial Advisor............................................ $8,600,000 Legal........................................................ 900,000 Miscellaneous................................................ 250,000 ---------- Total...................................................... $9,750,000 ==========
The fees payable by SMS to UBS Warburg are described under Item 5 in SMS's Solicitation/ Recommendation Statement on Schedule 14 D-9 referenced below. 16. Miscellaneous. The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making of the Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction. However, we may, in our discretion, take such action as we may deem necessary to make the Offer in any such jurisdiction and extend the Offer to holders of Shares in such jurisdiction. No person has been authorized to give any information or make any representation on behalf of the Purchaser or Sodexho not contained in this Offer to Purchase or in the Letter of Transmittal and, if given or made, such information or representation must not be relied upon as having been authorized. We have filed with the SEC a Tender Offer Statement on Schedule TO, together with exhibits, pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange Act, furnishing certain additional information with respect to the Offer which includes information required by Schedule 13E-3. In addition, SMS has filed a Solicitation/Recommendation Statement on Schedule 14D-9, together with all exhibits thereto, pursuant to Rule 14d-9 of the Exchange Act Rules setting forth its recommendation with respect to the Offer and the reasons for such recommendations and furnishing certain additional related information and has also filed a related Rule 13e-3 Transaction Statement on Schedule 13E-3. Such Schedules and any amendments thereto, including exhibits, may be examined and copies may be obtained from the offices of the SEC in the manner set forth in "The Offer--Certain Information Concerning the Purchaser and Sodexho--Available Information" of this Offer to Purchase (except that such information will not be available at the regional offices of the SEC). SMS Acquisition Corp. May 17, 2001 56 SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF SODEXHO, THE PURCHASER AND BELLON S.A. 1. DIRECTORS AND EXECUTIVE OFFICERS OF SODEXHO The following table sets forth (1) the name, business address and present principal occupation or employment, (2) material occupations, positions, offices or employments and business addresses thereof for the past five years and (3) information as to beneficial ownership of Shares of each director and executive officer of Sodexho. The principal place of business of Sodexho and, unless otherwise indicated below, the business address of each director and officer, is care of Sodexho Alliance, S.A., 3, avenue Newton, 78180 Montigny- le-Bretonneux, France. Sodexho's telephone number is 011-331-3085-7500. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to employment with Sodexho and each individual has served in his or her current position for at least the past five years. None of the directors and officers of Sodexho listed below has, during the past five years, (1) been convicted in a criminal proceeding or (2) been a party to any judicial or administrative proceeding that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws. Unless otherwise indicated, all directors and officers listed below are citizens of France. Other than Pierre Bellon, who may be deemed to beneficially own approximately 47.1% of the outstanding Shares, no director or officer of Sodexho beneficially owns more than 1% of the outstanding Shares.
Current Principal Occupation or Beneficial Employment and Ownership Name and Address Five-Year Employment History of Shares ---------------- -------------------------------- ------------- Directors Pierre Bellon................ Mr. Bellon founded Sodexho in 29,949,926(1) 1966. He currently serves as Chairman and Chief Executive Officer of Sodexho. Since 1988 Mr. Bellon has served as Chairman and Chief Executive Officer of Bellon, S.A. Remi Baudin.................. Mr. Baudin currently serves as Vice Chairman of Sodexho. Mr. Baudin is also President of FERCO, the European food services confederation, which he founded in 1988. Astrid Bellon................ Ms. Bellon has served as a Member of the Management Board of Bellon, S.A. since 1996. Bernard Bellon............... In 1988 Mr. Bellon founded Le Derby 570, Finadvance S.A., a venture Avenue du Club Hippique, capital company, and has served 13090 Aix-en-Provence, as its Chairman since its France founding. Francois-Xavier Bellon....... Mr. Bellon has served as the Sodexho Mexico, Chief Operating Officer of Anatole France Sodexho Mexico since 2000, and #319--Colonia Polanco, has been a member of the CP 11550 Mexico DF Management Board of Bellon, S.A. since 1996. Sophie Clamens............... Ms. Clamens serves as a Corporate Finance Director of Sodexho, and has been a member of the Management Board of Bellon, S.A. since 1996.
I-1
Current Principal Occupation or Beneficial Employment and Ownership Name and Address Five-Year Employment History of Shares ---------------- ------------------------------------- ---------- Patrice Douce.............. Mr. Douce has been with Sodexho since Sodexho International, 1972 when he created and managed the PO Box 17132, Remote Site Management Business. From Dubai UAE 1990 until his retirement in 1998 he served as Chief Operating Officer of Sodexho. After his retirement, Mr. Douce has continued to serve as a director of Sodexho. Paul Jeanbart.............. Mr. Jeanbart is the Chief Executive 28, Bd du Pont d'Arve, Officer of the Rolaco Group, a CH 1205 Geneva, company he co-founded in 1967. Mr. Switzerland Jeanbart also serves as Chief Executive Officer of Rolaco Holding, S.A. Mr. Jeanbart is a citizen of Canada. Francois Perigot........... Mr. Perigot has been the President of 31, Avenue Pierre 1 de the Franco-Dutch Chamber of Commerce Serbie, 75116 Paris, since 1996 and President of MEDEF France International since 1997. Prior to that Mr. Perigot served as Chairman of Compagnie du Platre from 1986 through 1998, and Vice Chairman, and later Chairman, of UNICE, the European union of employer and industry confederations, from 1988 through 1998. Edouard de Royere.......... Mr. de Royere serves as President c/o L'Air Liquide, Emeritus and Director of L'Air 75, Quai d'Orsay, Liquide. Mr. de Royere has served as 75007 Paris, France a director and Honorary Chairman of L'Air Liquide since 1997, and served as its Chairman and Chief Executive Officer from 1985 until his retirement in 1995. Nathalie Szabo............. Ms. Szabo serves as the Chief Operating Officer of Sodexho Prestige France, and has been a member of the Management Board of Bellon, S.A. since 1996. Executive Officers (Who Are Not Directors) Bernard Carton............. Mr. Carton serves as the Senior Vice 10,100 President and Chief Financial Officer of Sodexho. Raphael Dubrule............ Mr. Dubrule serves as the Corporate Secretary and General Counsel of Sodexho. Albert George.............. Mr. George serves as President of Sodexho. Mr. George has been with Sodexho for over thirty years. Prior to his recent appointment as President, Mr. George served as Chief Operating Officer of the Services Vouchers and Cards business.
- -------- Note: (1) Includes 29,949,925 shares beneficially owned by Sodexho Alliance, S.A. Mr. Bellon, along with members of his family, beneficially owns an approximate 54.9 percent economic interest (representing a 70.8 percent voting interest) in Bellon, S.A. Bellon, S.A. is the beneficial owner of approximately 40.2 percent of Sodexho. Except to the extent of their pecuniary interest in such shares, Bellon S.A. and Mr. Bellon disclaim beneficial ownership of such shares. I-2 2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER The following table sets forth (1) the name, business address and present principal occupation or employment, (2) material occupations, positions, offices or employments and business addresses thereof for the past five years and (3) information as to beneficial ownership of Shares of each director and executive officer of the Purchaser. The principal place of business of the Purchaser and, unless otherwise indicated below, the business address of each director and officer, is care of Sodexho Alliance, S.A., 3, avenue Newton, 78180 Montigny-le-Bretonneux, France. The Purchaser's telephone number is 011- 331-3085-7500. Unless otherwise indicated, each individual has served in his or her current position for at least the past five years. None of the directors and officers of the Purchaser listed below has, during the past five years, (1) been convicted in a criminal proceeding or (2) been a party to any judicial or administrative proceeding that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws. Unless otherwise indicated all directors and officers listed below are citizens of France.
Current Principal Occupation or Employment Beneficial and Ownership Name and Address Five-Year Employment History of Shares ---------------- -------------------------------------------- ---------- Bernard Carton...... Director of the Purchaser. Mr. Carton serves 10,100 as the Senior Vice President and Chief Financial Officer of Sodexho. Denis Robin......... Director and President of the Purchaser. Mr. Robin serves as the Director of Group Corporate Finance and Development of Sodexho. Sian Herbert-Jones.. Director and Secretary of the Purchaser. Ms. Herbert-Jones serves as the Director of Finance and Treasury of Sodexho, and is a citizen of the United Kingdom.
3. DIRECTORS AND EXECUTIVE OFFICERS OF BELLON S.A. The following table sets forth (1) the name, business address and present principal occupation or employment, (2) material occupations, positions, offices or employments and business addresses thereof for the past five years and (3) information as to beneficial ownership of Shares of each director and executive officer of Bellon, S.A. The principal place of business of Bellon S.A. and, unless otherwise indicated below or previously indicated above, the business address of each director and officer, is care of Bellon, S.A., 5 Place de la Joliette, 13002 Marseille, France. Bellon S.A.'s telephone number is 011- 334-91-90-84-72. None of the directors and officers of Bellon S.A. listed below has, during the past five years, (1) been convicted in a criminal proceeding or (2) been a party to any judicial or administrative proceeding that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws. Unless otherwise indicated all directors and officers listed below are citizens of France.
Current Principal Occupation or Beneficial Employment and Ownership Name and Address Five-Year Employment History of Shares ---------------- ---------------------------------------- ---------- Supervisory Board Remi Baudin...... See above under "Directors and Executive Officers of Sodexho." Danielle Bellon.. Member, Bellon S.A. Supervisory Board Bernard Bellon... See above under "Directors and Executive Officers of Sodexho." Bernard Carton... See above under "Directors and Executive 10,100 Officers of Sodexho."
I-3
Current Principal Occupation or Beneficial Employment and Ownership Name and Address Five-Year Employment History of Shares ---------------- ---------------------------------------- ---------- Management Board Pierre Bellon........... See above under "Directors and Executive 29,949,926 Officers of Sodexho." Astrid Bellon........... See above under "Directors and Executive Officers of Sodexho." Francois-Xavier Bellon.. See above under "Directors and Executive Officers of Sodexho." Sophie Clamens.......... See above under "Directors and Executive Officers of Sodexho." Nathalie Szabo.......... See above under "Directors and Executive Officers of Sodexho."
I-4 ANNEX A -- AGREEMENT AND PLAN OF MERGER - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- AGREEMENT AND PLAN OF MERGER dated as of May 1, 2001 among SODEXHO MARRIOTT SERVICES, INC. SODEXHO ALLIANCE, S.A. and SMS ACQUISITION CORP. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF CONTENTS ----------------
Page ---- ARTICLE 1 Definitions Section 1.01. Definitions............................................... A-1 ARTICLE 2 The Offer Section 2.01. The Offer................................................. A-3 Section 2.02. Company Action............................................ A-4 Section 2.03. Directors................................................. A-5 ARTICLE 3 The Merger Section 3.01. The Merger................................................ A-6 Section 3.02. Conversion of Shares...................................... A-6 Section 3.03. Surrender and Payment..................................... A-6 Section 3.04. Dissenting Shares......................................... A-7 Section 3.05. Stock Based Awards........................................ A-7 Section 3.06. Adjustments............................................... A-9 Section 3.07. Withholding Rights........................................ A-9 Section 3.08. Lost Certificates......................................... A-9 ARTICLE 4 The Surviving Corporation Section 4.01. Certificate of Incorporation.............................. A-10 Section 4.02. Bylaws.................................................... A-10 Section 4.03. Directors and Officers.................................... A-10 ARTICLE 5 Representations and Warranties of the Company Section 5.01. Corporate Existence and Power............................. A-10 Section 5.02. Corporate Authorization................................... A-10 Section 5.03. Governmental Authorization................................ A-10 Section 5.04. Non-contravention......................................... A-11 Section 5.05. Capitalization............................................ A-11 Section 5.06. Material Subsidiaries..................................... A-11 Section 5.07. SEC Filings............................................... A-12 Section 5.08. Financial Statements...................................... A-12 Section 5.09. Disclosure Documents...................................... A-12 Section 5.10. Absence of Certain Changes................................ A-13 Section 5.11. Litigation................................................ A-14 Section 5.12. Finders' Fees............................................. A-14 Section 5.13. Taxes..................................................... A-14 Section 5.14. Employee Benefit Plans.................................... A-15 Section 5.15. Antitakeover Statutes and Rights Agreement................ A-16
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Page ---- ARTICLE 6 Representations and Warranties of Parent Section 6.01. Corporate Existence and Power.......................... A-16 Section 6.02. Corporate Authorization................................ A-16 Section 6.03. Governmental Authorization............................. A-16 Section 6.04. Non-contravention...................................... A-16 Section 6.05. Disclosure Documents................................... A-17 Section 6.06. Finders' Fees.......................................... A-17 Section 6.07. Tax Sharing Agreement Matters.......................... A-17 ARTICLE 7 Covenants of the Company Section 7.01. Conduct of the Company................................. A-17 Section 7.02. Stockholder Meeting; Proxy Material.................... A-18 Section 7.03. Access to Information.................................. A-18 Section 7.04. No Solicitation; Other Offers.......................... A-18 Section 7.05. Tax Matters............................................ A-20 ARTICLE 8 Covenants of Parent Section 8.01. Obligations of Merger Subsidiary....................... A-20 Section 8.02. Voting of Shares....................................... A-20 Section 8.03. Director and Officer Liability......................... A-20 Section 8.04. Other Indemnification.................................. A-21 ARTICLE 9 Covenants of Parent and the Company Section 9.01. Commercially Reasonable Efforts........................ A-21 Section 9.02. Certain Filings........................................ A-21 Section 9.03. Public Announcements................................... A-21 Section 9.04. Further Assurances..................................... A-21 Section 9.05. Merger Without Meeting of Stockholders................. A-21 Section 9.06. Notices of Certain Events.............................. A-22 ARTICLE 10 Conditions to the Merger Section 10.01. Conditions to Obligations of Each Party................ A-22 Section 10.02. Conditions to the Obligations of Parent and Merger Subsidiary............................................. A-22 ARTICLE 11 Termination Section 11.01. Termination............................................ A-22 Section 11.02. Effect of Termination.................................. A-23
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Page ---- ARTICLE 12 Miscellaneous Section 12.01. Notices.................................................. A-24 Section 12.02. Non-Survival of Representations and Warranties........... A-24 Section 12.03. Amendments; No Waivers................................... A-24 Section 12.04. Expenses................................................. A-25 Section 12.05. Successors and Assigns................................... A-25 Section 12.06. Governing Law............................................ A-25 Section 12.07. Jurisdiction............................................. A-25 Section 12.08. WAIVER OF JURY TRIAL..................................... A-26 Section 12.09. Counterparts; Effectiveness; Benefit..................... A-26 Section 12.10. Entire Agreement......................................... A-26 Section 12.11. Captions................................................. A-26 Section 12.12. Severability............................................. A-26 Section 12.13. Specific Performance..................................... A-26
iii AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER dated as of May 1, 2001, among Sodexho Marriott Services, Inc., a Delaware corporation (the "Company"), Sodexho Alliance, S.A., a societe anonyme organized under the laws of the Republic of France ("Parent"), and SMS Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Parent ("Merger Subsidiary"). The parties hereto agree as follows: ARTICLE 1 Definitions Section 1.01. Definitions. (a) The following terms, as used herein, have the following meanings: "Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person. "Agreement" means this Agreement and Plan of Merger, as it may be amended from time to time. "Business Day" means a day other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close. "Code" means the Internal Revenue Code of 1986. "Company 10-K" means the Company's annual report on Form 10-K for the fiscal year ended September 1, 2000. "Deferred Share" means a deferred share (whether vested or unvested) under any Deferred Share Agreement between the Company and an employee or former employee of the Company or any of its Subsidiaries. "Delaware Law" means the General Corporation Law of the State of Delaware. "ERISA" means the Employee Retirement Income Security Act of 1974. "ERISA Affiliate" of any entity means any other entity that, together with such entity, would be treated as a single employer under Section 414 of the Code. "Excluded Arrangement" means any employment letter or agreement setting forth the terms of employment or separation from employment for any non- officer employee of the Company or any of its Subsidiaries which does not address the grant, terms or treatment of equity based compensation provided to such employee by the Company or any of its Material Subsidiaries. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976. "Lien" means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, encumbrance or other adverse claim of any kind in respect of such property or asset. For purposes of this Agreement, a Person shall be deemed to own subject to a Lien, any property or asset that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such property or asset. "Material Adverse Effect" means, with respect to any Person, a material adverse effect on the condition (financial or otherwise), business, assets or results of operations of such Person and its Subsidiaries, taken as a whole. "Material Subsidiary" means any entity listed or required to be listed in an exhibit to the Company 10-K pursuant to Item 601 of Regulation S-K promulgated by the SEC, except as set forth in Schedule 1.01. "Moratorium Period" means the period from the Effective Time through the Registration Date. "1933 Act" means the Securities Act of 1933. "1934 Act" means the Securities Exchange Act of 1934. "Person" means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Plans" means the Sodexho Marriott Services, Inc. 1993 Comprehensive Stock Incentive Plan and the Sodexho Marriott Services, Inc. 1998 Comprehensive Stock Incentive Plan, and "Plan" means either of the foregoing. "Registration Date" means the earliest date upon which both (i) a Registration Statement on Form 20-F with respect to Parent's ordinary shares has been declared effective under the 1934 Act and (ii) a Registration Statement on Form S-8 with respect to Parent's ordinary shares underlying the options issued pursuant to Section 3.05(b) has been declared effective under the 1933 Act. "Restricted Share" means a Share which is subject to forfeiture granted under any of the Plans. "Restricted Stock Units" means restricted stock units, granted under the Sodexho Marriott Services, Inc. 1998 Comprehensive Stock Incentive Plan, which result in the issuance of Shares upon vesting. "Rights" means the preferred stock purchase rights issued pursuant to the Rights Agreement. "Rights Agreement" means the Rights Agreement dated as of October 8, 1993 between the Company and The Bank of New York, as Rights Agent, as amended by Amendment No. 1 thereto dated as of September 30, 1997 and Amendment No. 2 thereto dated as of March 27, 1998. "SEC" means the Securities and Exchange Commission. "Shares" means the shares of common stock, $1.00 par value, of the Company. "Subsidiary" means, with respect to any Person, any entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at any time directly or indirectly owned by such Person. "Tax Sharing Agreement" means the Tax Sharing and Indemnification Agreement dated as of March 27, 1998 by and among the Company, New Marriott MI, Inc. (later renamed Marriott International, Inc.) and Parent. Any reference in this Agreement to a statute shall be to such statute, as amended from time to time, and to the rules and regulations promulgated thereunder. A-2 (b) Each of the following terms is defined in the Section set forth opposite such term:
Term Section ---- ------- Acquisition Proposal................................................. 7.04 Certificates......................................................... 3.03 Company Disclosure Documents......................................... 5.09 Company Disclosure Schedule.......................................... Art. 5 Company ESPP......................................................... 3.05 Company Proxy Statement.............................................. 5.09 Company SEC Documents................................................ 5.07 Company Securities................................................... 5.05 Company Subsidiary Securities........................................ 5.06 Company Stockholder Meeting.......................................... 7.02 Confidentiality Agreement............................................ 7.03 Effective Time....................................................... 3.01 Employee Plans....................................................... 5.14 Exchange Agent....................................................... 3.03 GAAP................................................................. 5.08 Indemnified Person................................................... 8.03 Merger............................................................... 3.01 Merger Consideration................................................. 3.02 Minimum Condition.................................................... 2.01 Multiemployer Plan................................................... 5.14 Offer................................................................ 2.01 Offer Documents...................................................... 2.01 Option............................................................... 3.05 Option Cash-Out Amount............................................... 3.05 Schedule TO.......................................................... 2.01 Schedule 14D-9....................................................... 2.02 Special Committee.................................................... 2.02 Superior Proposal.................................................... 7.04 Surviving Corporation................................................ 3.01 Tax Return........................................................... 5.13 Tax.................................................................. 5.13 Taxing Authority..................................................... 5.13 Vested Options....................................................... 3.05
ARTICLE 2 The Offer Section 2.01. The Offer. (a) Provided that nothing shall have occurred that, had the Offer referred to below been commenced, would give rise to a right to terminate the Offer pursuant to any of the conditions set forth in Annex I hereto, as promptly as practicable (but no later than twenty days after the date hereof), Merger Subsidiary shall commence an offer (the "Offer") to purchase any and all of the outstanding Shares, together with the associated Rights, at a price of $32.00 per Share, net to the seller in cash. The initial expiration date of the Offer shall be twenty Business Days from the date the Offer is commenced. The Offer shall be subject to the condition that there shall be validly tendered in accordance with the terms of the Offer, prior to the expiration date of the Offer and not withdrawn, a number of Shares that, together with the Shares then owned by Parent or any of its Subsidiaries, represents at least a majority of the Shares outstanding on a fully-diluted basis (the "Minimum Condition") and to the other conditions set forth in Annex I hereto. Merger Subsidiary expressly reserves the right to waive any of the conditions to the Offer and to make any A-3 change in the terms of or conditions to the Offer, provided that no change or waiver may be made, without the prior written consent of the Company, that changes the form of consideration to be paid, decreases the price per Share or the number of Shares sought in the Offer or imposes conditions to the Offer in addition to those set forth in Annex I. Notwithstanding the foregoing, without the consent of the Company, Merger Subsidiary shall have the right to extend the Offer (i) from time to time if, at the scheduled or extended expiration date of the Offer, any of the conditions to the Offer shall not have been satisfied or waived, until such conditions are satisfied or waived, (ii) for any period required by any rule, regulation, interpretation or position of the SEC or the staff thereof applicable to the Offer or any period required by applicable law, (iii) on one or more occasions for an aggregate period of not more than 10 Business Days beyond the latest expiration date that would otherwise be permitted under clause (i) or (ii) of this sentence, if, on such expiration date, the number of Shares tendered (and not withdrawn) pursuant to the Offer, together with the Shares then owned by Parent or any of its Subsidiaries, represents less than 90% of the outstanding Shares on a fully- diluted basis and (iv) pursuant to a "subsequent offering period" under Rule 14d-11 of the 1934 Act. Subject to the foregoing and upon the terms and subject to the conditions of the Offer, Merger Subsidiary shall, and Parent shall cause it to, accept for payment and pay for, promptly after the expiration of the Offer, all Shares validly tendered and not withdrawn pursuant to the Offer. (b) As soon as practicable on the date of commencement of the Offer, Parent and Merger Subsidiary shall file with the SEC a Tender Offer Statement on Schedule TO (the "Schedule TO") with respect to the Offer (such Schedule TO and such documents included therein, including a Rule 13e-3 Transaction Statement on Schedule 13E-3, pursuant to which the Offer will be made, together with any supplements or amendments thereto, the "Offer Documents"). Parent, Merger Subsidiary and the Company each agrees promptly to correct any information provided by it for use in the Offer Documents if and to the extent that such information shall have become false or misleading in any material respect. Parent and Merger Subsidiary agree to take all steps necessary to cause the Schedule TO as so corrected to be filed with the SEC and the other Offer Documents as so corrected to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. The Company and its counsel shall be given a reasonable opportunity to review and comment on the Offer Documents prior to their being filed with the SEC or disseminated to the holders of Shares. Parent shall provide the Company with a copy of any comments received from the SEC on the Offer Documents. Section 2.02. Company Action. (a) The Company hereby consents to the Offer and represents that its Board of Directors, at a meeting duly called and held and acting on the unanimous recommendation of a special committee of the Board of Directors of the Company composed entirely of non-management independent directors (the "Special Committee"), has (i) determined that this Agreement and the transactions contemplated hereby, including the Offer and the Merger, are advisable and are fair to and in the best interests of the Company's stockholders (other than Parent and its Affiliates), (ii) approved this Agreement and the transactions contemplated hereby, including the Offer and the Merger, in accordance with the requirements of the Delaware Law and (iii) subject to Section 7.04(c), resolved to recommend acceptance of the Offer and adoption of this Agreement by its stockholders. The Company further represents that UBS Warburg LLC has delivered to the Special Committee its written opinion that the consideration to be paid in the Offer and the Merger is fair to the holders of Shares (other than Parent and its Affiliates) from a financial point of view. The Company has been advised that all of its directors who own Shares intend either to tender their Shares pursuant to the Offer or to vote in favor of the Merger. The Company will promptly furnish Parent with a list of its stockholders, mailing labels and any available listing or computer file containing the names and addresses of all record holders of Shares and lists of securities positions of Shares held in stock depositories, in each case true and correct as of the most recent practicable date, and, subject to Section 7.04(c), will provide to Parent such additional information (including updated lists of stockholders, mailing labels and lists of securities positions) and such other assistance as Parent may reasonably request in connection with the Offer. (b) As soon as practicable on the day that the Offer is commenced, the Company shall file with the SEC and disseminate to holders of Shares, in each case as and to the extent required by applicable federal securities laws, a Solicitation/Recommendation Statement on Schedule 14D-9 (together with any amendments A-4 or supplements thereto, the "Schedule 14D-9") that, subject to Section 7.04(c), shall reflect the recommendations of the Company's Board of Directors referred to above. The Company, Parent and Merger Subsidiary each agrees promptly to correct any information provided by it for use in the Schedule 14D-9 if and to the extent that it shall have become false or misleading in any material respect. The Company agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated to holders of Shares, in each case as and to the extent required by applicable federal securities laws. Parent and its counsel shall be given a reasonable opportunity to review and comment on the Schedule 14D-9 prior to its being filed with the SEC. The Company shall provide Parent with a copy of any comments received from the SEC on the Schedule 14D-9. Section 2.03. Directors. (a) Effective upon the acceptance for payment of any Shares pursuant to the Offer, Parent shall be entitled to designate the number of directors, rounded up to the next whole number, on the Company's Board of Directors that equals the product of (i) the total number of directors on the Company's Board of Directors (giving effect to the election of any additional directors pursuant to this Section) and (ii) the percentage that the number of Shares beneficially owned by Parent and/or Merger Subsidiary (including Shares accepted for payment) bears to the total number of Shares outstanding, and the Company shall take all reasonable action necessary to cause Parent's designees to be elected or appointed to the Company's Board of Directors, including increasing the number of directors, and seeking and accepting resignations of incumbent directors. At such time, subject to applicable law and the rules and regulations of the New York Stock Exchange, the Company will also use all reasonable efforts to cause individuals designated by Parent to constitute the number of members, rounded up to the next whole number, on (i) each committee of the Board other than the Audit Committee and the Special Committee or any committee of the Board established to take action under this Agreement and (ii) each board of directors of each Material Subsidiary of the Company (and each committee thereof) that represents the same percentage as such individuals represent on the Board of Directors of the Company. Notwithstanding the foregoing, the Company shall use all reasonable efforts to ensure that at least two of the members of the Board of Directors and such committees as of the date hereof who are not employees of the Company shall remain members of the Board of Directors and such committees until the Effective Time. (b) The Company's obligations to appoint Parent's designees to the Board of Directors shall be subject to Section 14(f) of the 1934 Act and Rule 14f-1 promulgated thereunder. The Company shall promptly take all actions, and shall include in the Schedule 14D-9 such information with respect to the Company and its officers and directors, as Section 14(f) and Rule 14f-1 require in order to fulfill its obligations under this Section. Parent shall supply to the Company in writing and be solely responsible for any information with respect to itself and its nominees, officers, directors and affiliates required by Section 14(f) and Rule 14f-1. (c) Following the election or appointment of Parent's designees pursuant to Section 2.03(a) and until the Effective Time, the approval of a majority of the directors of the Company present and voting at a meeting at which a quorum exists (including the concurrence of a majority of the directors who were not designated by Parent) shall be required to authorize any termination of this Agreement by the Company, any amendment of this Agreement requiring action by the Board of Directors, any extension of time for performance of any obligation or action hereunder by Parent or Merger Subsidiary and any waiver of compliance with any of the agreements or conditions contained herein for the benefit of the Company. Parent shall cause a sufficient number of its designees pursuant to Section 2.03(a) to attend any meeting at which an action may be taken to terminate or amend this Agreement, extend the time for performance of any obligation or action hereunder by Parent or Merger Subsidiary, waive compliance with any of the agreements or conditions contained herein for the benefit of the Company, or take any action to enforce the Company's rights under this Agreement, so that a quorum is present at such meeting for the time necessary to take such action. A-5 ARTICLE 3 The Merger Section 3.01. The Merger. (a) At the Effective Time, Merger Subsidiary shall be merged (the "Merger") with and into the Company in accordance with Delaware Law, whereupon the separate existence of Merger Subsidiary shall cease, and the Company shall be the surviving corporation (the "Surviving Corporation"). (b) As soon as practicable (but no later than three Business Days) after satisfaction or, to the extent permitted hereunder, waiver of all conditions to the Merger, the Company (or, if applicable, Merger Subsidiary) will file a certificate of merger (or, if applicable, a certificate of ownership and merger) with the Delaware Secretary of State and make all other filings or recordings required by Delaware Law in connection with the Merger. The Merger shall become effective at such time (the "Effective Time") as the certificate of merger (or, if applicable, the certificate of ownership and merger) is duly filed with the Delaware Secretary of State or at such later time as is specified in such certificate. (c) From and after the Effective Time, the Surviving Corporation shall possess all the rights, powers, privileges and franchises and be subject to all of the obligations, liabilities, restrictions and disabilities of the Company and Merger Subsidiary, all as provided under Delaware Law. Section 3.02. Conversion of Shares. At the Effective Time: (a) except as otherwise provided in Section 3.02(b), Section 3.04 or Section 3.05, each Share outstanding immediately prior to the Effective Time, together with the associated Right, shall be converted into the right to receive $32.00 in cash or any higher price paid for each Share in the Offer, without interest (the "Merger Consideration"); (b) each Share held by the Company as treasury stock (other than Shares in an Employee Plan of the Company) or owned by Parent or any of its Subsidiaries immediately prior to the Effective Time shall be canceled, and no payment shall be made with respect thereto; and (c) each share of common stock of Merger Subsidiary outstanding immediately prior to the Effective Time shall be converted into and become one share of common stock of the Surviving Corporation with the same rights, powers and privileges as the shares so converted and shall constitute the only outstanding shares of capital stock of the Surviving Corporation. Section 3.03. Surrender and Payment. (a) Prior to the Effective Time, Parent shall appoint an agent (the "Exchange Agent") for the purpose of exchanging certificates representing Shares (the "Certificates") for the Merger Consideration. Parent will, or will cause Merger Subsidiary to, provide the Exchange Agent with immediately available funds sufficient for the payment of the aggregate Merger Consideration payable in respect of the Shares pursuant to this Agreement. Promptly after the Effective Time, Parent will send, or will cause the Exchange Agent to send, to each holder of Shares at the Effective Time a letter of transmittal and instructions (which shall specify that the delivery shall be effected, and risk of loss and title shall pass, only upon proper delivery of the Certificates to the Exchange Agent) for use in such exchange. (b) Each holder of Shares that have been converted into the right to receive the Merger Consideration will be entitled to receive, upon surrender to the Exchange Agent of a Certificate, together with a properly completed letter of transmittal, the Merger Consideration payable for each Share represented by such Certificate. Until so surrendered, each such Certificate shall represent after the Effective Time for all purposes only the right to receive such Merger Consideration. (c) If any portion of the Merger Consideration is to be paid to a Person other than the Person in whose name the surrendered Certificate is registered, it shall be a condition to such payment that the Certificate A-6 so surrendered shall be properly endorsed or otherwise be in proper form for transfer and that the Person requesting such payment shall pay to the Exchange Agent any transfer or other taxes required as a result of such payment to a Person other than the registered holder of such Certificate or establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable. (d) After the Effective Time, there shall be no further registration of transfers of Shares. If, after the Effective Time, Certificates are presented to the Surviving Corporation, they shall be canceled and exchanged for the Merger Consideration provided for, and in accordance with the procedures set forth, in this Article 3. (e) Any portion of the Merger Consideration provided to the Exchange Agent pursuant to Section 3.03(a) (and any interest or other income earned thereon) that remains unclaimed by the holders of Shares six months after the Effective Time shall be returned to Parent, upon demand, and any such holder who has not exchanged Shares for the Merger Consideration in accordance with this Section 3.03 prior to that time shall thereafter look only to Parent for payment of the Merger Consideration in respect of such Shares without any interest thereon. Notwithstanding the foregoing, Parent shall not be liable to any holder of Shares for any amount paid to a public official pursuant to applicable abandoned property, escheat or similar laws. Any amounts remaining unclaimed by holders of Shares two years after the Effective Time (or such earlier date immediately prior to such time when the amounts would otherwise escheat to or become property of any governmental authority) shall become, to the extent permitted by applicable law, the property of Parent free and clear of any claims or interest of any Person previously entitled thereto. (f) Any portion of the Merger Consideration made available to the Exchange Agent pursuant to Section 3.03(a) to pay for Shares for which appraisal rights have been perfected shall be returned to Parent, upon demand. Section 3.04. Dissenting Shares. Notwithstanding Section 3.02, Shares outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of the Merger or consented thereto in writing and who has demanded appraisal for such Shares in accordance with Delaware Law shall not be converted into a right to receive the Merger Consideration, unless such holder fails to perfect, withdraws or otherwise loses its right to appraisal. If, after the Effective Time, such holder fails to perfect, withdraws or loses its right to appraisal, such Shares shall be treated as if they had been converted as of the Effective Time into a right to receive the Merger Consideration. The Company shall give Parent prompt notice of any demands received by the Company for appraisal of Shares, and Parent shall have the right to participate in all negotiations and proceedings with respect to such demands. Except with the prior written consent of Parent, the Company shall not make any payment with respect to, or settle or offer to settle, any such demands. Section 3.05. Stock Based Awards. (a) At or immediately prior to the Effective Time, except as set forth in Section 3.05(e), each stock option to purchase Shares outstanding under any employee stock option or compensation plan or arrangement of the Company (each an "Option") which is vested immediately prior to the Effective Time (the "Vested Options"), shall be canceled, and the Company shall pay each holder of any such option at or promptly after the Effective Time for each such option an amount in cash determined by multiplying (i) the excess, if any, of the Merger Consideration per Share over the applicable exercise price of such option (the "Option Cash- Out Amount") by (ii) the number of Shares such holder could have purchased had such holder exercised such option in full immediately prior to the Effective Time. (b) At or immediately prior to the Effective Time, except as set forth in Section 3.05(e), each Option other than Vested Options shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive, and become exchangeable for, options to purchase ordinary shares of Parent or American Depositary Shares representing ordinary shares of Parent, the number and exercise price of such options to be determined in accordance with the methodology set forth in Section 424 of the Code and Financial Accounting Standards Board Interpretation No. 44, and the other terms of such options to be substantially similar to their existing terms, provided that (i) no such option shall be exercisable until the conclusion of the Moratorium Period, A-7 (ii) if the Moratorium Period has not concluded by March 31, 2002, any options that have become vested between the Effective Time and March 31, 2002 will be canceled on March 31, 2002 in exchange for a payment equal to the Option Cash-Out Amount in respect of the number of Shares such holder could have purchased prior to the Effective Time as a result of such vesting plus interest on such amount calculated in arrears from the date of the Effective Time through March 31, 2002 at a rate of 6% per annum, such payment to be made by the Company to the holder of such option on March 31, 2002, and any options that vest following March 31, 2002 through the conclusion of the Moratorium Period shall be canceled on the date such options become vested in exchange for a payment equal to the Option Cash- Out Amount in respect of the number of Shares such holder could have purchased prior to the Effective Time as a result of such vesting plus interest on such amount calculated in arrears from the date of the Effective Time through the date of such payment at a rate of 6% per annum, such payment to be made by the Company to the holder of such option on the vesting date, and (iii) any such option granted to an employee of the Company who separates from the Company or who dies during the Moratorium Period shall become exercisable upon the conclusion of the Moratorium Period (unless such options have been canceled in accordance with clause (ii) of this Section 3.05(b)) to the extent that such option would have become exercisable during such employee's employment with the Company but for the delay in the ability to exercise such option as a result of clause (i) of this Section 3.05(b), and shall remain exercisable for three months (or one year, in the case of an employee death) following the date such option becomes exercisable. (c) At or immediately prior to the Effective Time, each Restricted Stock Unit shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive, and become exchangeable for, a similar award with respect to ordinary shares of Parent or American Depositary Shares representing ordinary shares of Parent, the terms of such awards to be substantially similar to their existing terms, provided that (i) such awards shall be adjusted to the extent necessary to preserve the existing value thereof, (ii) no such award shall vest until the conclusion of the Moratorium Period, (iii) (A) if the Moratorium Period has not concluded by December 15, 2001, each award that would have become vested on December 15, 2001, in the absence of the Moratorium Period (without giving effect to any accelerated vesting as a result of death), will be canceled in exchange for a payment equal to the Merger Consideration in respect of the number of Shares originally deliverable pursuant to the vesting of such award, such payment to be made by the Company to the holder of such award (or his or her estate, as applicable) on December 15, 2001, (B) if the Moratorium Period has not concluded by March 31, 2002, any award that would have become vested, in the absence of the Moratorium Period, as a result of the death of the holder thereof between the Effective Time and March 31, 2002 (other than awards described in preceding clause (A)) will be canceled on March 31, 2002 in exchange for a payment equal to the Merger Consideration in respect of the number of Shares originally deliverable pursuant to the vesting of such award plus interest on such amount calculated in arrears from the date of the Effective Time through the date of such payment, such payment to be made to the estate of the holder of the award on March 31, 2002, and (C) any award that would have vested, in the absence of the Moratorium Period, following December 15, 2001 through the conclusion of the Moratorium Period (in accordance with its vesting schedule or as a result of death) shall be canceled on the date such award would have become vested for a payment equal to the Merger Consideration in respect of the number of Shares originally deliverable pursuant to the vesting of such award, plus interest on such amount calculated in arrears from the date of the Effective Time through the date of such payment at a rate of 6% per annum, such payment to be made by the Company to the holder of such award, or his or her estate, as applicable, on the later of March 31, 2002 and the vesting date, and (iv) any such award granted to an employee of the Company who separates from the Company after December 15, 2001 but during the Moratorium Period (if not canceled in accordance with clause (iii) of this Section 3.05(c)) shall vest upon the conclusion of the Moratorium Period, to the same extent that A-8 such similar award would have vested had such an employee separated from the Company immediately following the conclusion of the Moratorium Period. (d) Unless otherwise agreed by Parent and the Company, at the Effective Time, each Deferred Share and Restricted Share outstanding immediately prior to the Effective Time shall be canceled in exchange for the right to receive the Merger Consideration, the payment thereof to be made at the Effective Time. (e) Prior to the Effective Time, each outstanding option under the Sodexho Marriott Services, Inc. Employee Stock Purchase Plan (the "Company ESPP") shall be exercised in accordance with Section 12.04(c) of the Company ESPP, and each Share purchased pursuant to such exercise shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive the Merger Consideration. The Company agrees that it shall terminate the Company ESPP immediately following the aforesaid purchase of Shares thereunder. (f) The Company and Parent shall take any actions necessary to give effect to the transactions contemplated by the provisions of this Section 3.05. (g) Parent will use commercially reasonable efforts to cause the Registration Date to occur as soon as reasonably practicable. (h) The Company shall be permitted to establish a deferred compensation program allowing deferral of receipt of the cash payments to be made to employees of the Company under this Section 3.05, with interest accruing in respect of such deferred payments at a rate no greater than the rate currently applicable to deferred compensation obligations under the Sodexho Marriott Services, Inc. Executive Deferred Compensation Plan. (i) Prior to the Effective Time, the Company shall provide to Parent detailed information, as of the date immediately prior to the Effective Time, with respect to the number of Shares subject to outstanding Options and the exercise prices of such Options, the number of Shares subject to Options which are exercisable immediately prior to the Effective Time and the exercise prices of such Options, the number of Shares subject to Restricted Stock Units, the number of Shares subject to Deferred Shares and the number of Restricted Shares. Section 3.06. Adjustments. If, during the period between the date of this Agreement and the Effective Time, any change in the outstanding Shares shall occur, including by reason of any reclassification, recapitalization, stock split or combination, exchange or readjustment of Shares, or stock dividend thereon with a record date during such period, the cash payable pursuant to the Offer, the Merger Consideration and any other amounts payable pursuant to this Agreement shall be appropriately adjusted. Section 3.07. Withholding Rights. Each of the Surviving Corporation and Parent shall be entitled to deduct and withhold from the consideration otherwise payable to any Person pursuant to this Article 3 such amounts as it is required to deduct and withhold with respect to the making of such payment under any provision of federal, state, local or foreign tax law. If the Surviving Corporation or Parent, as the case may be, so withholds amounts, such amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Shares in respect of which the Surviving Corporation or Parent, as the case may be, made such deduction and withholding. Section 3.08. Lost Certificates. If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation, the posting by such Person of a bond, in such reasonable amount as the Surviving Corporation may direct, as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will pay, in exchange for such lost, stolen or destroyed Certificate, the Merger Consideration to be paid in respect of the Shares represented by such Certificate, as contemplated by this Article 3. A-9 ARTICLE 4 The Surviving Corporation Section 4.01. Certificate of Incorporation. The certificate of incorporation of the Company in effect at the Effective Time shall be the certificate of incorporation of the Surviving Corporation until amended in accordance with applicable law. Section 4.02. Bylaws. The bylaws of the Surviving Corporation in effect at the Effective Time shall be amended to conform to the bylaws of Merger Subsidiary as in effect immediately prior to the Effective Time, until further amended in accordance with applicable law. Section 4.03. Directors and Officers. From and after the Effective Time, until successors are duly elected or appointed and qualified in accordance with applicable law, (i) the directors of Merger Subsidiary at the Effective Time shall be the directors of the Surviving Corporation and (ii) the officers of the Company at the Effective Time shall be the officers of the Surviving Corporation. ARTICLE 5 Representations and Warranties of the Company Except as set forth in the corresponding sections or subsection of the disclosure schedule delivered by the Company to Parent on or prior to the date hereof (the "Company Disclosure Schedule") or in the Company SEC Documents, the Company represents and warrants to Parent that: Section 5.01. Corporate Existence and Power. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has all corporate powers and all governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted, except for those licenses, authorizations, permits, consents and approvals the absence of which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. The Company is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. The Company has heretofore delivered to Parent true and complete copies of the certificate of incorporation and bylaws of the Company as currently in effect. Section 5.02. Corporate Authorization. The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby are within the Company's corporate powers and, except for the affirmative vote of the holders of a majority of the outstanding Shares in connection with the consummation of the Merger (if required by law), have been duly authorized by all necessary corporate action on the part of the Company. The affirmative vote of the holders of a majority of the outstanding Shares (if required by law) is the only vote of the holders of any of the Company's capital stock necessary in connection with the consummation of the Merger. This Agreement constitutes a valid and binding agreement of the Company. Section 5.03. Governmental Authorization. The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby require no action by or in respect of, or filing with, any governmental body, agency, official or authority, domestic, foreign or supranational, other than (i) the filing of a certificate of merger (or, a certificate of ownership and merger, as applicable) with respect to the Merger with the Delaware Secretary of State and appropriate documents with the relevant authorities of other states in which the Company is qualified to do business, (ii) compliance with the requirements of the HSR Act (under which the applicable waiting period expired prior to the date hereof), (iii) compliance with any applicable requirements of the 1933 Act, the 1934 A-10 Act and any other applicable securities or takeover laws, whether state or foreign, and (iv) any actions or filings the absence of which would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or materially impair the ability of the Company to consummate the transactions contemplated by this Agreement. Section 5.04. Non-contravention. The execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby do not and will not (i) contravene, conflict with, or result in any violation or breach of any provision of the certificate of incorporation or bylaws of the Company, (ii) assuming compliance with the matters referred to in Section 5.03, contravene, conflict with, or result in a violation or breach of any provision of any applicable law, statute, ordinance, rule, regulation, judgment, injunction, order or decree, (iii) require any consent or other action by any Person under, constitute a default, or an event that, with or without notice or lapse of time or both, could become a default, under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which the Company or any of its Subsidiaries is entitled under any provision of any agreement or other instrument binding upon the Company or any of its Subsidiaries or any license, franchise, permit, certificate, approval or other similar authorization affecting, or relating in any way to, the assets or business of the Company and its Subsidiaries or (iv) result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries, except, in the case of clauses (ii), (iii) and (iv), for such matters as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or materially impair the ability of the Company to consummate the actions contemplated by this Agreement. Section 5.05. Capitalization. (a) The authorized capital stock of the Company consists of 300,000,000 Shares and 1,000,000 shares of preferred stock, without par value, of which 300,000 shares are designated as Series A Junior Participating Preferred Stock. As of April 27, 2001 there were outstanding (i) 63,641,911 Shares (excluding Deferred Shares and Restricted Shares), (ii) no shares of preferred stock, (iii) Options to purchase an aggregate of 6,608,590 Shares (of which Options to purchase an aggregate of 2,879,254 Shares were exercisable), (iv) 27,417 Restricted Shares, (v) Deferred Shares with respect to 162,207 Shares (of which 120,324 Shares are vested) and (vi) Restricted Stock Units with respect to 356,904 Shares. Under the Company ESPP, a maximum of 600,000 Shares can be allocated in any year, and the agent for the Company ESPP is required to make a corresponding purchase of Shares on the open market in respect of any such allocation. All shares of capital stock of the Company outstanding as of the date hereof have been duly authorized and validly issued and are fully paid and nonassessable. All Shares issuable upon exercise of outstanding employee stock options have been duly authorized and, when issued in accordance with the terms thereof, will be validly issued and will be fully paid and nonassessable. (b) Except as set forth in this Section 5.05 and for changes since April 27, 2001 resulting from the exercise of employee stock options outstanding on such date, there are no outstanding (i) shares of capital stock or voting securities of the Company, (ii) securities of the Company convertible into or exchangeable for shares of capital stock or voting securities of the Company or (iii) options or other rights to acquire from the Company or other obligation of the Company to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the Company (the items in clauses (i), (ii) and (iii) being referred to collectively as the "Company Securities"). Except as contemplated by Section 3.05, there are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the Company Securities. (c) Except as set forth in this Section 5.05, none of the Shares is owned by any Subsidiary of the Company. Section 5.06. Material Subsidiaries. (a) Each Material Subsidiary of the Company is a business entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, has all business entity powers and all governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted, except for those licenses, authorizations, permits, consents A-11 and approvals the absence of which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. Each such Material Subsidiary is duly qualified to do business as a foreign business entity and is in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. All Material Subsidiaries of the Company and their respective jurisdictions of organization are identified in the Company 10-K. (b) All of the outstanding capital stock of, or other voting securities or ownership interests in, each Material Subsidiary of the Company, is owned by the Company, directly or indirectly, free and clear of any Lien and free of any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other voting securities or ownership interests). There are no outstanding (i) securities of the Company or any of its Material Subsidiaries convertible into or exchangeable for shares of capital stock or other voting securities or ownership interests in any Material Subsidiary of the Company or (ii) options or other rights to acquire from the Company or any of its Material Subsidiaries, or other obligation of the Company or any of its Material Subsidiaries to issue, any capital stock or other voting securities or ownership interests in, or any securities convertible into or exchangeable for any capital stock or other voting securities or ownership interests in, any Material Subsidiary of the Company (the items in clauses (i) and (ii) being referred to collectively as the "Company Subsidiary Securities"). There are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the Company Subsidiary Securities. Section 5.07. SEC Filings. (a) The Company has made available to Parent (i) the Company's annual reports on Form 10-K for its fiscal years ended September 3, 1999 and September 1, 2000, (ii) its quarterly reports on Form 10- Q for its fiscal quarters ended December 1, 2000 and March 2, 2001, (iii) its proxy or information statements relating to meetings of, or actions taken without a meeting by, the stockholders of the Company held since September 1, 2000 and (iv) all of its other reports, statements, schedules and registration statements filed with the SEC since September 1, 2000 (the documents referred to in this Section 5.07(a), collectively, the "Company SEC Documents"). (b) As of its filing date, each Company SEC Document complied as to form in all material respects with the applicable requirements of the 1934 Act. (c) As of its filing date (or, if amended or superseded by a filing prior to the date hereof, on the date of such filing), each Company SEC Document filed pursuant to the 1934 Act did not, and each such Company SEC Document filed subsequent to the date hereof will not, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. (d) No Company SEC Document is a registration statement filed pursuant to the 1933 Act. Section 5.08. Financial Statements. The audited consolidated financial statements and unaudited consolidated interim financial statements of the Company included in the Company SEC Documents fairly present in all material respects, in conformity with generally accepted accounting principles ("GAAP") applied on a consistent basis (except as may be indicated in the notes thereto), the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and their consolidated results of operations and cash flows for the periods then ended (subject to normal year-end adjustments in the case of any unaudited interim financial statements). Section 5.09. Disclosure Documents. (a) Each document required to be filed by the Company with the SEC or required to be distributed or otherwise disseminated to the Company's stockholders in connection with the transactions contemplated by this Agreement (the "Company Disclosure Documents"), including the Schedule 14D-9, the proxy or information statement of the Company (the "Company Proxy Statement"), if any, to be filed with the SEC in connection with the Merger, and any amendments or A-12 supplements thereto, when filed, distributed or disseminated, as applicable, will comply as to form in all material respects with the applicable requirements of the 1934 Act. (b) (i) The Company Proxy Statement, as supplemented or amended, if applicable, at the time such Company Proxy Statement or any amendment or supplement thereto is first mailed to stockholders of the Company and at the time such stockholders vote on adoption of this Agreement, and (ii) any Company Disclosure Document (other than the Company Proxy Statement), at the time of the filing of such Company Disclosure Document or any supplement or amendment thereto and at the time of any distribution or dissemination thereof, will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. The representations and warranties contained in this Section 5.09(b) will not apply to statements or omissions included in the Company Disclosure Documents based upon information furnished to the Company by Parent specifically for use therein. (c) The information with respect to the Company or any of its Subsidiaries that the Company furnishes to Parent specifically for use in the Offer Documents, at the time of the filing thereof, at the time of any distribution or dissemination thereof and at the time of the consummation of the Offer, will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. Section 5.10. Absence of Certain Changes. Since March 2, 2001, the business of the Company and its Subsidiaries has been conducted in the ordinary course consistent with past practices and there has not been: (a) to the knowledge of the Company's Chief Executive Officer, Chief Financial Officer, President of Corporate Services, President of Education Services or President of Health Care Services, any event, occurrence, development or state of circumstances or facts that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company; (b) any declaration, setting aside or payment of any dividend or other distribution with respect to any shares of capital stock of the Company or any repurchase, redemption or other acquisition by the Company or any of its Material Subsidiaries of any outstanding shares of capital stock or other securities of, or other ownership interests in, the Company or any of its Material Subsidiaries; (c) any amendment of any material term of any outstanding security of the Company or any of its Material Subsidiaries; (d) any incurrence, assumption or guarantee by the Company or any of its Subsidiaries of any indebtedness for borrowed money other than in the ordinary course of business and in amounts and on terms consistent with past practices; (e) any creation or other incurrence by the Company or any of its Subsidiaries of any Lien on any material asset other than in the ordinary course of business consistent with past practices; (f) any making of any material loan, advance or capital contributions to or investment in any Person other than loans, advances or capital contributions to or investments in its wholly-owned Subsidiaries or advances to customers made in the ordinary course of business consistent with past practices; (g) any damage, destruction or other casualty loss (whether or not covered by insurance) affecting the business or assets of the Company or any of its Subsidiaries that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company; (h) any transaction or commitment made, or any contract or agreement entered into, by the Company or any of its Subsidiaries relating to its assets or business (including the acquisition or disposition of any assets) A-13 or any relinquishment by the Company or any of its Subsidiaries of any contract or other right, in either case, material to the Company and its Subsidiaries, taken as a whole, other than transactions and commitments in the ordinary course of business consistent with past practices and those contemplated by this Agreement; (i) any change in any method of accounting, method of tax accounting or accounting principles or practice by the Company or any of its Material Subsidiaries, except for any such change required by reason of a concurrent change in GAAP or Regulation S-X under the 1934 Act; (j) any (i) grant of any severance or termination pay to (or amendment to any existing arrangement with) any director or officer of the Company or any of its Material Subsidiaries, (ii) increase in benefits payable under any existing severance or termination pay policies or employment agreements, (iii) any entering into any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any director, officer or employee who reports directly to an officer of the Company or any of its Material Subsidiaries, (iv) establishment, adoption or amendment (except as required by applicable law) of any collective bargaining, bonus, profit- sharing, thrift, pension, retirement, deferred compensation, compensation, stock option, restricted stock or other benefit plan or arrangement covering any director, officer or employee who reports directly to an officer of the Company or any of its Material Subsidiaries or is otherwise applicable generally to any related group of employees of the Company or any of its Material Subsidiaries, or (v) increase in compensation, bonus or other benefits payable to any director, officer or employee of the Company or any of its Material Subsidiaries other than in the ordinary course of business consistent with past practice; or (k) any material Tax election made or changed, any annual tax accounting period changed, any method of tax accounting adopted or changed, any material amended Tax Returns or claims for material Tax refunds filed, any material closing agreement entered into, any material Tax claim, audit or assessment settled, or any right to claim a material Tax refund, offset or other reduction in Tax liability surrendered. Section 5.11. Litigation. There is no action, suit, investigation or proceeding pending or, to the knowledge of the Company, threatened, against the Company, any of its Subsidiaries, any present or former officer, director or employee of the Company or any of its Subsidiaries or any other Person for whom the Company or any of such Subsidiary may be liable or any of their respective properties before any court or arbitrator or before or by any governmental body, agency or official, domestic, foreign or supranational, that in any manner challenges or seeks to prevent, enjoin, alter or materially delay the Offer or the Merger or any of the other transactions contemplated hereby. Section 5.12. Finders' Fees. Except for UBS Warburg LLC, a copy of whose engagement agreement has been provided to Parent, there is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of the Company or any of its Subsidiaries who might be entitled to any fee or commission from the Company or any of its Affiliates in connection with the transactions contemplated by this Agreement. Section 5.13. Taxes. (a) The Company and each of its Subsidiaries has paid (or, to the Company's knowledge, has had paid on its behalf) or has withheld and remitted to the appropriate Taxing Authority, or, where payment is not yet due, has established (or has had established on its behalf and for its sole benefit and recourse) in accordance with GAAP an adequate accrual for all material Taxes through the end of the last period for which the Company and its Subsidiaries ordinarily record items on their respective books. (b) There is no material claim, audit, action, suit, proceeding or investigation now pending or, to the knowledge of the Company, threatened against or with respect to Company or its Subsidiaries in respect of any Tax or Tax Asset for which the Company has not made an adequate accrual in accordance with GAAP. (c) "Tax" means (i) any tax, governmental fee or other like assessment or charge of any kind whatsoever (including, but not limited to, withholding on amounts paid to or by any Person), together with any A-14 interest, penalty, addition to tax or additional amount imposed by any governmental authority (a "Taxing Authority") responsible for the imposition of any such tax (domestic or foreign). "Tax Return" shall mean any report, return, document, declaration or other information or filing required to be supplied to any Taxing Authority with respect to Taxes, including information returns, any documents with respect to or accompanying payments of estimated Taxes, or with respect to or accompanying requests for the extension of time in which to file any such report, return, document, declaration or other information. Section 5.14. Employee Benefit Plans. (a) Within 20 days following the date hereof, the Company will deliver to Parent a correct and complete list identifying each material "employee benefit plan", as defined in Section 3(3) of ERISA, each employment, severance, benefit or similar contract, plan, arrangement or policy and each other plan or arrangement (written or oral) providing for compensation, bonuses, profit-sharing, stock option or other stock related rights or other forms of incentive or deferred compensation which is maintained, administered or contributed to by the Company or any Affiliate of the Company and covers any employee or former employee of the Company or any of its Subsidiaries, or with respect to which the Company or any of its Subsidiaries has any liability other than the Excluded Arrangements. Such plans (including the Excluded Arrangements) are referred to collectively herein as the "Employee Plans". Notwithstanding the foregoing, the Company will provide to Parent within 20 days of the date hereof a description of the range of severance for employees who may receive benefits under any of the Excluded Arrangements, an estimate of the number of individuals participating in such Excluded Arrangements and an estimate of the maximum payments that may be made under all of the Excluded Arrangements. (b) Neither the Company nor any ERISA Affiliate nor any predecessor thereof sponsors, maintains or contributes to, or has in the past six years sponsored, maintained or contributed to, any employee plan subject to Title IV of ERISA. Neither the Company nor any of its ERISA Affiliates nor any predecessor thereof has failed to make any material contribution or payment to any plan subject to Title IV including any multiemployer plan ("Multiemployer Plan"), as defined in Section 3(37) of ERISA, which in either case has resulted or could result in the imposition of a material Lien or the posting of a material bond or other material security under ERISA or the Code. Neither the Company nor any of its ERISA Affiliates has incurred any material withdrawal liability within the meaning of Sections 4201 and 4204 of ERISA to any Multiemployer Plan. (c) Each Employee Plan which is intended to be qualified under Section 401(a) of the Code is so qualified and has been so qualified during the period since its adoption. Each Employee Plan has been maintained in substantial compliance with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations, including but not limited to ERISA and the Code, which are applicable to such Employee Plan. (d) The consummation of the transactions contemplated by this Agreement will not (either alone or together with any other event) entitle any employee, former employee or independent contractor of the Company or any of its Subsidiaries to severance pay or other payment, bonus, retirement, job security or similar benefit or enhanced such benefit or accelerate the time of payment or vesting or trigger any payment of funding (through a grantor trust or otherwise) of compensation or benefits under, increase the amount payable or trigger any other material obligation pursuant to, any Employee Plan or otherwise. There is no contract, plan or arrangement (written or otherwise) covering any employee or former employee of the Company or any of its Subsidiaries that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to the terms of Section 280G or 162(m) of the Code. (e) The Company and the Subsidiaries maintain policies and practices that are designed to ensure that the Company and its Subsidiaries are in compliance with all currently applicable laws respecting employment and employment practices, terms and conditions of employment and wages and laws, and are not engaged in any unfair labor practice and, to the knowledge of the Company, the Company and its Subsidiaries are in substantial compliance with such laws. A-15 Section 5.15. Antitakeover Statutes and Rights Agreement. (a) The Company has taken all action necessary to exempt the Offer, the Merger, this Agreement and the transactions contemplated hereby from the restrictions of Section 203 of Delaware Law, and, accordingly, none of the restrictions of such Section nor those of any other antitakeover or similar statute or regulation apply or purport to apply to any such transactions. No other "control share acquisition," "fair price," "moratorium" or other antitakeover laws or regulations enacted under U.S. state or federal laws apply to this Agreement or any of the transactions contemplated hereby. (b) The Company has taken all action necessary to render the Rights issued pursuant to the terms of the Rights Agreement inapplicable to the Offer, the Merger, this Agreement and the transactions contemplated hereby. ARTICLE 6 Representations and Warranties of Parent Parent represents and warrants to the Company that: Section 6.01. Corporate Existence and Power. Each of Parent and Merger Subsidiary is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all corporate powers and all governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted, except for those licenses, authorizations, permits, consents and approvals the absence of which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent. Since the date of its incorporation, Merger Subsidiary has not engaged in any activities other than in connection with or as contemplated by this Agreement or in connection with arranging any financing required to consummate the transactions contemplated hereby. Section 6.02. Corporate Authorization. The execution, delivery and performance by Parent and Merger Subsidiary of this Agreement and the consummation by Parent and Merger Subsidiary of the transactions contemplated hereby are within the corporate powers of Parent and Merger Subsidiary and have been duly authorized by all necessary corporate action. This Agreement constitutes a valid and binding agreement of each of Parent and Merger Subsidiary. Section 6.03. Governmental Authorization. The execution, delivery and performance by Parent and Merger Subsidiary of this Agreement and the consummation by Parent and Merger Subsidiary of the transactions contemplated hereby require no action by or in respect of, or filing with, any governmental body, agency, official or authority, domestic, foreign or supranational, other than (i) the filing of a certificate of merger (or a certificate of ownership and merger, as applicable) with respect to the Merger with the Delaware Secretary of State and appropriate documents with the relevant authorities of other states in which the Company is qualified to do business, (ii) compliance with the requirements of the HSR Act (under which the applicable waiting period expired prior to the date hereof), (iii) compliance with any applicable requirements of the 1933 Act, the 1934 Act and any other applicable securities or takeover laws, whether state or foreign, and (iv) any actions or filings the absence of which would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent or materially impair the ability of Parent and Merger Subsidiary to consummate the transactions contemplated by this Agreement. Section 6.04. Non-contravention. The execution, delivery and performance by Parent and Merger Subsidiary of this Agreement and the consummation by Parent and Merger Subsidiary of the transactions contemplated hereby do not and will not (i) contravene, conflict with, or result in any violation or breach of any provision of the organizational documents of Parent or Merger Subsidiary, (ii) assuming compliance with the matters referred to in Section 6.03, contravene, conflict with, or result in any violation or breach of any provision of any law, rule, regulation, judgment, injunction, order or decree or (iii) require any consent or other action by any Person under, constitute a default, or an event that, with or without notice or lapse of time or A-16 both, could become a default, under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which Parent or Merger Subsidiary is entitled under any provision of any agreement or other instrument binding upon Parent or Merger Subsidiary, except, in the case of clauses (ii) and (iii), for such matters as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent or materially impair the ability of Parent and Merger Subsidiary to consummate the transactions contemplated by this Agreement. Section 6.05. Disclosure Documents. (a) The information with respect to Parent and any of its Subsidiaries that Parent furnishes to the Company in writing specifically for use in any Company Disclosure Document will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading (i) in the case of the Company Proxy Statement, as supplemented or amended, if applicable, at the time such Company Proxy Statement or any amendment or supplement thereto is first mailed to stockholders of the Company and at the time such stockholders vote on adoption of this Agreement, and (ii) in the case of any Company Disclosure Document other than the Company Proxy Statement, at the time of the filing of such Company Disclosure Document or any supplement or amendment thereto and at the time of any distribution or dissemination thereof. (b) The Offer Documents, when filed, distributed or disseminated, as applicable, will comply as to form in all material respects with the applicable requirements of the 1934 Act and, at the time of the filing thereof, at the time of any distribution or dissemination thereof and at the time of consummation of the Offer, will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading, provided that this representation and warranty will not apply to statements or omissions included in the Offer Documents based upon information furnished to Parent or Merger Subsidiary by the Company specifically for use therein. Section 6.06. Finders' Fees. Except for Goldman Sachs International, whose fees will be paid by Parent, there is no investment banker, broker, finder or other intermediary that has been retained by or is authorized to act on behalf of Parent who might be entitled to any fee or commission from the Company or any of its Affiliates upon consummation of the transactions contemplated by this Agreement. Section 6.07. Tax Sharing Agreement Matters. (a) The representations made by Parent in the Tax Sharing Agreement were true when made. (b) Parent is in compliance with its covenants and obligations under the Tax Sharing Agreement. ARTICLE 7 Covenants of the Company The Company agrees that: Section 7.01. Conduct of the Company. From the date hereof until the Effective Time, the Company and its Subsidiaries shall conduct their business in the ordinary course consistent with past practice and shall use commercially reasonable efforts to preserve intact their business organizations and relationships with third parties and to keep available the services of their present officers and employees. Without limiting the generality of the foregoing, except with the prior written consent of Parent or as expressly contemplated by this Agreement, from the date hereof until the Effective Time: (a) except as may be required to comply with its obligations under Section 2.03, the Company will not adopt or propose any change to its certificate of incorporation or bylaws; A-17 (b) the Company will not, and will not permit any of its Subsidiaries to, merge or consolidate with any other Person or acquire a material amount of stock or assets of any other Person; (c) the Company will not, and will not permit any of its Subsidiaries to, sell, lease, license or otherwise dispose of any material subsidiary or material amount of assets, securities or property except (i) pursuant to existing contracts or commitments and (ii) in the ordinary course consistent with past practice; (d) the Company will not, and will not permit any of its Subsidiaries to, (i) take any action that would make any representation and warranty of the Company hereunder inaccurate in any respect at, or as of any time prior to, the Effective Time or (ii) omit to take any action necessary to prevent any such representation or warranty from being inaccurate in any respect at any such time; and (e) the Company will not, and will not permit any of its Subsidiaries to, agree or commit to do any of the foregoing. Section 7.02. Stockholder Meeting; Proxy Material. The Company shall cause a meeting of its stockholders (the "Company Stockholder Meeting") to be duly called and held as soon as reasonably practicable after consummation of the Offer for the purpose of voting on the adoption of this Agreement, unless Delaware Law does not require a vote of stockholders of the Company for consummation of the Merger. Subject to Section 7.04(c), the Board of Directors of the Company shall recommend adoption of this Agreement by the Company's stockholders. In connection with such meeting, the Company will (i) promptly prepare and file with the SEC, use all reasonable efforts to have cleared by the SEC and thereafter mail to its stockholders as promptly as practicable the Company Proxy Statement and all other proxy materials for such meeting, (ii) use all reasonable efforts to obtain the necessary approvals by its stockholders of this Agreement and the transactions contemplated hereby and (iii) otherwise comply with all legal requirements applicable to such meeting. Section 7.03. Access to Information. From the date hereof until the Effective Time and subject to applicable law and, as applicable, the Confidentiality Agreement dated as of April 5, 2001 between the Company and Parent (the "Confidentiality Agreement") and Section 5.13 of the Stockholder Agreement dated as of March 27, 1998 between the Company and Parent, the Company shall (i) give Parent, its counsel, financial advisors, auditors and other authorized representatives full access to the offices, properties, books and records of the Company and the Subsidiaries, (ii) furnish to Parent, its counsel, financial advisors, auditors and other authorized representatives such financial and operating data and other information as such Persons may reasonably request and (iii) instruct the employees, counsel, financial advisors, auditors and other authorized representatives of the Company and its Subsidiaries to cooperate with Parent in its investigation of the Company and its Subsidiaries. Any investigation pursuant to this Section shall be conducted in such manner as not to interfere unreasonably with the conduct of the business of the Company and its Subsidiaries. No information or knowledge obtained by Parent in any investigation pursuant to this Section shall affect or be deemed to modify any representation or warranty made by the Company hereunder. Section 7.04. No Solicitation; Other Offers. (a) The Company and its Subsidiaries will not, and the Company will cause the officers, directors and employees of the Company and its Subsidiaries not to, and the Company will not knowingly permit the investment bankers, attorneys, consultants and other agents or advisors of the Company and its Subsidiaries to, directly or indirectly, (i) take any action to solicit, initiate or knowingly facilitate or encourage the submission of any Acquisition Proposal (including by amending, or granting any waiver under, the Rights Agreement), (ii) engage in discussions or negotiations with, or disclose any nonpublic information relating to the Company or any of its Subsidiaries or afford access to the properties, books or records of the Company or any of its Subsidiaries to, any Person who is considering making, or has made, an Acquisition Proposal, or (iii) grant any waiver or release under any standstill or similar agreement with respect to any class of equity securities of the Company. The Company will notify Parent promptly (but in no event later than 24 hours) after receipt by the Company (or any of its advisors) of any Acquisition Proposal, any indication that any Person is considering making an Acquisition Proposal or any request for nonpublic A-18 information relating to the Company or any of its Subsidiaries or for access to the properties, books or records of the Company or any of its Subsidiaries by any Person who is considering making, or has made, an Acquisition Proposal. The Company shall provide such notice orally and in writing and shall identify the Person making, and the terms and conditions of, any such Acquisition Proposal, indication or request. The Company shall keep Parent fully informed, on a current basis, of the status and details of any such Acquisition Proposal, indication or request. The Company and its Subsidiaries shall, and the Company shall cause the officers, directors, employees, agents and advisors of the Company and its Subsidiaries to, cease immediately and cause to be terminated all activities, discussions and negotiations, if any, with any Persons conducted prior to the date hereof with respect to any Acquisition Proposal. Nothing contained in this Agreement shall prevent the Board of Directors of the Company from complying with Rule 14d-9 or Rule 14e-2 under the 1934 Act with respect to any Acquisition Proposal. (b) Notwithstanding the foregoing, the Company may engage in discussions or negotiations with, and furnish nonpublic information or access to, any Person in response to an unsolicited Acquisition Proposal by such Person if (i) the Company has complied with the terms of Section 7.04(a), (ii) the Board of Directors of the Company determines in good faith that such Acquisition Proposal could reasonably be expected to result in a Superior Proposal and, after consultation with outside legal counsel, that the failure to take such action could reasonably be deemed to constitute a breach of its fiduciary duties under applicable law, (iii) such Person executes a confidentiality agreement with terms no less favorable to the Company than those contained in the Confidentiality Agreement and (iv) the Company shall have delivered to Parent three Business Days' prior written notice advising Parent that it intends to take such action. (c) The Board of Directors of the Company shall be permitted to withdraw, or modify in a manner adverse to Parent, its recommendation to its stockholders referred to in Sections 2.02 and 7.02 hereof, but only if (i) the Company has complied with the terms of Section 7.04(a), (ii) the Company has received an unsolicited Acquisition Proposal which the Board of Directors determines in good faith constitutes a Superior Proposal, (iii) the Board of Directors of the Company determines in good faith, after consultation with outside legal counsel, that the failure to take such action could reasonably be deemed to constitute a breach of its fiduciary duties under applicable law and (iv) the Company shall have delivered to Parent three Business Days' prior written notice advising Parent that it intends to take such action. (d) For purposes of this Agreement: "Acquisition Proposal" means any offer or proposal for, or any indication of interest in, any (i) direct or indirect acquisition or purchase of a business or assets that constitute 20% or more of the net revenues, net income or assets of the Company and its Subsidiaries, taken as a whole, (ii) direct or indirect acquisition or purchase of 20% or more of any class of equity securities of the Company or any of its Subsidiaries whose business constitutes 20% or more of the net revenues, net income or assets of the Company and its Subsidiaries, taken as a whole, (iii) tender offer or exchange offer that if consummated would result in any person beneficially owning 20% or more of any class of equity securities of the Company or any of its Subsidiaries whose business constitutes 20% or more the net revenues, net income or assets of the Company and its Subsidiaries, taken as a whole, or (iv) merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving the Company or any of its Subsidiaries whose business constitutes 20% or more of the net revenue, net income or assets of the Company and its Subsidiaries, taken as a whole, other than the transactions contemplated by this Agreement. "Superior Proposal" means any bona fide Acquisition Proposal for or in respect of more than 50% of the outstanding Shares on terms that the Board of Directors of the Company determines in its good faith judgment (after consultation with a financial advisor of nationally recognized reputation, taking into account all the terms and conditions of the Acquisition Proposal) are more favorable to the Company's stockholders than the transactions contemplated by this Agreement and is reasonably capable of being consummated. A-19 Section 7.05. Tax Matters. Except in the ordinary course or as required by applicable law, neither the Company nor any of its Subsidiaries shall make or change any Tax election, change any annual tax accounting period, adopt or change any method of tax accounting, file any amended Tax Returns or claims for Tax refunds, enter into any closing agreement, surrender any Tax claim, audit or assessment, surrender any right to claim a Tax refund, offset or other reduction in Tax liability surrendered, consent to any extension or waiver of the limitations period applicable to any Tax claim or assessment or take any other action, which would reasonably be expected to have the effect of materially increasing the Tax liabilities or reducing the Tax assets of the Company and its Material Subsidiaries (considered collectively). ARTICLE 8 Covenants of Parent Parent agrees that: Section 8.01. Obligations of Merger Subsidiary. Parent will take all action necessary to cause Merger Subsidiary to perform its obligations under this Agreement and to consummate the Merger on the terms and conditions set forth in this Agreement. Section 8.02. Voting of Shares. Parent agrees to vote all Shares beneficially owned by it or any of its Subsidiaries in favor of adoption of this Agreement at the Company Stockholder Meeting. Section 8.03. Director and Officer Liability. Parent shall cause the Surviving Corporation, and the Surviving Corporation hereby agrees, to do the following: (a) The Surviving Corporation shall indemnify and hold harmless the present and former officers and directors of the Company (each an "Indemnified Person") in respect of acts or omissions occurring at or prior to the Effective Time to the fullest extent permitted by Delaware Law or any other applicable laws or provided under the Company's certificate of incorporation and bylaws in effect on the date hereof, provided that such indemnification shall be subject to any limitation imposed from time to time under applicable law. (b) For six years after the Effective Time, the Surviving Corporation shall provide officers' and directors' liability insurance in respect of acts or omissions occurring prior to the Effective Time covering each such Indemnified Person currently covered by the Company's officers' and directors' liability insurance policy on terms with respect to coverage and amount no less favorable than those of such policy in effect on the date hereof, provided that, in satisfying its obligation under this Section 8.03(b), the Surviving Corporation shall not be obligated to pay premiums in excess of 200% of the amount per annum the Company paid in its last full fiscal year, which amount Company has disclosed to Parent prior to the date hereof. (c) If Parent, the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers or conveys all or substantially all of its properties and assets to any Person, then, and in each such case, to the extent necessary, proper provision shall be made so that the successors and assigns of Parent or the Surviving Corporation, as the case may be, shall assume the obligations set forth in this Section 8.03. (d) The rights of each Indemnified Person under this Section 8.03 shall be in addition to any rights such Person may have under the certificate of incorporation or bylaws of the Company or any of its Subsidiaries, under Delaware Law or any other applicable laws or under any agreement of any Indemnified Person with the Company or any of its Subsidiaries. These rights shall survive consummation of the Merger and are intended to benefit, and shall be enforceable by, each Indemnified Person. A-20 Section 8.04. Other Indemnification. (a) Parent hereby agrees to indemnify, defend and hold harmless the Company (until the Effective Time) and its directors from and against any costs or expenses (including Taxes, claims under the Tax Sharing Agreement, and lawyers' and accountants' fees), and its directors from any damages, in each case resulting from (i) a breach by Parent of any representation contained in Section 6.07 hereof, or (ii) the loss of Tax-Free Status (as defined in the Tax Sharing Agreement) by reason of the consummation of the transactions contemplated by this Agreement. (b) If Parent or any of its successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger, or (ii) transfers or conveys all or substantially all of its properties and assets to any Person, then, and in each such case, to the extent necessary, proper provision shall be made so that the successors and assigns of Parent shall assume the obligations set forth in Section 8.04(a). ARTICLE 9 Covenants of Parent and the Company The parties hereto agree that: Section 9.01. Commercially Reasonable Efforts. Subject to the terms and conditions of this Agreement, Company and Parent will use all commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate the transactions contemplated by this Agreement. Section 9.02. Certain Filings. The Company and Parent shall cooperate with one another (i) in connection with the preparation of the Company Disclosure Documents and the Offer Documents, (ii) in determining whether any action by or in respect of, or filing with, any governmental body, agency, official, or authority is required, or any actions, consents, approvals or waivers are required to be obtained from parties to any material contracts, in connection with the consummation of the transactions contemplated by this Agreement and (iii) in taking such actions or making any such filings, furnishing information required in connection therewith or with the Company Disclosure Documents or the Offer Documents and seeking timely to obtain any such actions, consents, approvals or waivers. Section 9.03. Public Announcements. Parent and the Company will consult with each other before issuing any press release or making any public statement with respect to this Agreement or the transactions contemplated hereby and, except as may be required by applicable law or any listing agreement with any national securities exchange, will not issue any such press release or make any such public statement prior to such consultation. Section 9.04. Further Assurances. At and after the Effective Time, the officers and directors of the Surviving Corporation will be authorized to execute and deliver, in the name and on behalf of the Company or Merger Subsidiary, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of the Company or Merger Subsidiary, any other actions and things to vest, perfect or confirm of record or otherwise in the Surviving Corporation any and all right, title and interest in, to and under any of the rights, properties or assets of the Company acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger. Section 9.05. Merger Without Meeting of Stockholders. If Parent, Merger Subsidiary or any other Subsidiary of Parent shall acquire at least 90% of the outstanding Shares pursuant to the Offer or otherwise, the parties hereto agree, at the request of Parent, to take all necessary and appropriate action to cause the Merger to be effective as soon as practicable after the acceptance for payment and purchase of Shares pursuant to the Offer without a meeting of stockholders of the Company in accordance with Delaware Law. A-21 Section 9.06. Notices of Certain Events. Each of Parent and the Company shall promptly notify the other of: (a) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement; (b) any notice or other communication from any governmental or regulatory agency or authority in connection with the transactions contemplated by this Agreement; and (c) any actions, suits, claims, investigations or proceedings commenced or, to its knowledge, threatened against, relating to or involving or otherwise affecting the Company, Parent or any of their respective Subsidiaries that relate to the consummation of the transactions contemplated by this Agreement. ARTICLE 10 Conditions to the Merger Section 10.01. Conditions to Obligations of Each Party. The obligations of the Company, Parent and Merger Subsidiary to consummate the Merger are subject to the satisfaction of the following conditions: (a) if required by Delaware Law, this Agreement shall have been approved and adopted by the stockholders of the Company in accordance with such Law; (b) no provision of any applicable law or regulation and no judgment, injunction, order or decree shall prohibit the consummation of the Merger; and (c) Merger Subsidiary shall have purchased Shares pursuant to the Offer. Section 10.02. Conditions to the Obligations of Parent and Merger Subsidiary. The obligations of Parent and Merger Subsidiary to consummate the Merger are subject to the satisfaction of the following further condition: that the Company shall have performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the Effective Time, except where such failure to perform would not have, individually or in the aggregate, a Material Adverse Effect on the Company. ARTICLE 11 Termination Section 11.01. Termination. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time (notwithstanding any approval of this Agreement by the stockholders of the Company): (a) by mutual written agreement of the Company and Parent; (b) by either the Company or Parent, if: (i) the Offer has not been consummated on or before August 31, 2001, provided that the right to terminate this Agreement pursuant to this Section 11.01(b)(i) shall not be available to any party whose breach of any provision of this Agreement results in the failure of the Offer to be consummated by such time; or (ii) there shall be any law or regulation that makes acceptance for payment of, and payment for, the Shares pursuant to the Offer or consummation of the Merger illegal or otherwise prohibited or any judgment, injunction, order or decree of any court or governmental body having competent jurisdiction enjoining Merger Subsidiary from accepting for payment of, and paying for, the Shares pursuant to the Offer or Company or Parent from consummating the Merger and such judgment, injunction, order or decree shall have become final and nonappealable; A-22 (c) by Parent, if, (i) the Board of Directors of the Company shall have failed to recommend, or shall have withdrawn or modified in a manner adverse to Parent its approval or recommendation of, this Agreement or the Offer or the Merger or shall have approved or recommended an Acquisition Proposal, or (ii) the Company shall have entered into, or publicly announced its intention to enter into, a definitive agreement or an agreement in principle with respect to an Acquisition Proposal, or (iii) Parent has terminated the Offer because of a failure of any of the conditions set forth in Annex I hereto; (d) by the Company, if, prior to the acceptance for payment of the Shares under the Offer, (i) (A) the Board of Directors of the Company authorizes the Company, subject to complying with the terms of this Agreement, to enter into a written agreement concerning a Superior Proposal, (B) the Company shall have complied with Section 7.04, (C) the Company shall have given Parent a prior written notice of its intention to terminate the Agreement, attaching a description of all material terms and conditions of the Superior Proposal to such notice, (D) Parent does not make, within three Business Days after receipt of such notice, an offer which the Board of Directors of the Company determines, in good faith after consultation with its financial advisors, is at least as favorable to the stockholders of the Company as the Superior Proposal, it being understood that the Company shall not enter into any such written agreement during such three Business Day period, and (E) the Company prior to such termination pursuant to this clause (d)(i) pays to Parent in immediately available funds the fee required to be paid pursuant to Section 12.04(b). The Company agrees to notify Parent promptly if its intention to enter into a written agreement referred to in its notification shall change at any time after giving such notification; or (ii) Merger Subsidiary shall have breached its obligation to commence the Offer as set forth in the first sentence of Section 2.01(a); or (iii) Merger Subsidiary shall have terminated the Offer in breach of its obligations under this Agreement, provided that the Company is not then in breach of its obligations under this Agreement; or (iv) after the expiration date of the Offer (as such date may be extended pursuant to Section 2.01(a)), Merger Subsidiary shall have failed to accept for payment or pay for Shares validly tendered and not withdrawn pursuant to the Offer, provided that all conditions to the Offer set forth in Annex I shall have been satisfied or waived. The party desiring to terminate this Agreement pursuant to this Section 11.01 (other than pursuant to Section 11.01(a)) shall give notice of such termination to the other party. Section 11.02. Effect of Termination. If this Agreement is terminated pursuant to Section 11.01, this Agreement shall become void and of no effect with no liability on the part of any party (or any stockholder, director, officer, employee, agent, consultant or representative of such party) to the other party hereto, provided that, if such termination shall result from the willful (i) failure of either party to fulfill a condition to the performance of the obligations of the other party or (ii) failure of either party to perform a covenant hereof, such party shall be fully liable for any and all liabilities and damages incurred or suffered by the other party as a result of such failure. The provisions of Sections 12.02, 12.04, 12.06, 12.07 and 12.08 shall survive any termination hereof pursuant to Section 11.01. A-23 ARTICLE 12 Miscellaneous Section 12.01. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmission) and shall be given, if to Parent or Merger Subsidiary, to: Sodexho Alliance, S.A. 3, Avenue Newton 78180 Montigny-le-Bretonneux, France Attention: Bernard Carton Fax: 011-33-1-30-85-50-88 with a copy to: Davis Polk & Wardwell 450 Lexington Avenue New York, New York 10017 Attention: Paul R. Kingsley, Esq. Fax: (212) 450-3800 if to the Company, to: Sodexho Marriott Services, Inc. 9801 Washingtonian Boulevard Gaithersburg, MD 20878 Attention: Robert A. Stern, Esq. Fax: (301) 987-4499 with a copy to: Shaw Pittman 2300 N Street, N.W. Washington, D.C. 20037 Attention: Thomas H. McCormick, Esq. Fax: (202) 663-8007 or such other address or facsimile number as such party may hereafter specify for the purpose by notice to the other parties hereto. All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5 p.m. in the place of receipt and such day is a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt. Section 12.02. Non-Survival of Representations and Warranties. The representations and warranties contained herein and in any certificate or other writing delivered pursuant hereto shall not survive the Effective Time or the termination of this Agreement. Section 12.03. Amendments; No Waivers. (a) Any provision of this Agreement may be amended or waived prior to the Effective Time if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement or, in the case of a waiver, by each party against whom the waiver is to be effective, provided that, after the adoption of this Agreement by the stockholders of the Company and without their further approval, no such amendment or waiver shall reduce the amount or change the kind of consideration to be received in exchange for the Shares. A-24 (b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. Section 12.04. Expenses. (a) Except as otherwise provided in this Section, all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. (b) If: (i) the Company shall terminate this Agreement pursuant to Section 11.01(d)(i); (ii) Parent shall terminate this Agreement pursuant to Section 11.01(c)(i) or 11.01(c)(ii); or (iii) (w) the Offer shall not have been consummated solely by reason of the failure to satisfy the Minimum Condition, (x) either the Company or Parent shall terminate this Agreement pursuant to Section 11.01(b)(i), (y) prior to expiration or termination of the Offer, an Acquisition Proposal is made by any Person and (z) the Company enters into a definitive agreement within twelve months after termination of this Agreement in respect of any Acquisition Proposal and the transaction contemplated thereby is consummated; then in any case as described in clause (i), (ii) or (iii), the Company shall pay to Parent an amount equal to $20 million by wire transfer of immediately available funds not later than (x) the date of termination of this Agreement in the case of clause (i), (y) three Business Days following the termination of this Agreement in the case of clause (ii) or (z) the date of the closing of the transaction contemplated by the definitive agreement, in the case of clause (iii). (c) If Parent shall terminate this Agreement pursuant to Section 11.01(c)(iii) in the circumstances set forth in clause (ii)(D) or (ii)(E) of Annex I hereto, the Company shall pay to Parent (by wire transfer of immediately available funds not later than the date of termination of this Agreement) an amount equal to Parent's reasonable out-of-pocket expenses (not to exceed $15 million) incurred in connection with this Agreement and the transactions contemplated hereby. (d) If the Company shall terminate this Agreement pursuant to Sections 11.01(d)(ii), 11.01(d)(iii) or 11.01(d)(iv), Parent shall pay to the Company (by wire transfer of immediately available funds not later than the date of termination of this Agreement) an amount equal to the Company's reasonable out- of-pocket expenses (not to exceed $4 million) incurred in connection with this Agreement and the transactions contemplated hereby. Section 12.05. Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of each other party hereto, except that Parent or Merger Subsidiary may transfer or assign, in whole or from time to time in part, to one or more of its Affiliates, the right to purchase all or a portion of the Shares pursuant to the Offer, but no such transfer or assignment will relieve Parent or Merger Subsidiary of its obligations under the Offer or prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. Section 12.06. Governing Law. This Agreement shall be governed by and construed in accordance with the law of the State of Delaware, without regard to the conflicts of law rules of such state. Section 12.07. Jurisdiction. Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby may be brought in any federal court located in the State of Delaware or any Delaware state court, and each of the parties hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts A-25 therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient form. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 12.01 shall be deemed effective service of process on such party. Section 12.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. Section 12.09. Counterparts; Effectiveness; Benefit. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received counterparts hereof signed by all of the other parties hereto. Except as provided in Section 8.03, no provision of this Agreement is intended to confer any rights, benefits, remedies, obligations, or liabilities hereunder upon any Person other than the parties hereto and their respective successors and assigns. Section 12.10. Entire Agreement. This Agreement and the Confidentiality Agreement constitute the entire agreement between the parties with respect to the subject matter of this Agreement and supersedes all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter of this Agreement. Section 12.11. Captions. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. Section 12.12. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible. Section 12.13. Specific Performance. The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in any federal court located in the State of Delaware or any Delaware state court, in addition to any other remedy to which they are entitled at law or in equity. A-26 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. SODEXHO MARRIOTT SERVICES, INC. /s/ Michel Landel By: _________________________________ Name: Michel Landel Title: President and Chief Executive Officer SODEXHO ALLIANCE, S.A. /s/ Pierre Bellon By: _________________________________ Name: Pierre Bellon Title: Chairman and Chief Executive Officer SMS ACQUISITION CORP. /s/ Denis Robin By: _________________________________ Name: Denis Robin Title: President A-27 ANNEX I Notwithstanding any other provision of the Offer, Merger Subsidiary shall not be required to accept for payment or pay for any Shares, and may terminate the Offer, if (i) at the expiration date of the Offer (as such date may be extended pursuant to Section 2.01(a) of the Merger Agreement), the Minimum Condition shall not have been satisfied; or (ii) at any time on or after May 1, 2001 and prior to the expiration date of the Offer (as such date may be extended pursuant to Section 2.01(a) of the Merger Agreement), any of the following conditions exists: (A) there shall be instituted or pending any action or proceeding by any governmental authority (domestic, foreign or supranational) before any court or governmental authority or agency (domestic, foreign or supranational), (1) challenging or seeking to make illegal, to delay materially or otherwise to restrain or prohibit the making of the Offer, the acceptance for payment of or payment for some or all of the Shares pursuant to the Offer or the consummation of the Merger, or seeking to obtain material damages in connection with the Offer or the Merger, (2) seeking to restrain or prohibit the ownership or operation by Parent or its Affiliates of all or any portion of the business of the Company and its Subsidiaries, or of Parent and its Subsidiaries, or to compel Parent or any of its Affiliates to dispose of or hold separate all or any portion of the business or assets of the Company and its Subsidiaries or of Parent and its Subsidiaries, (3) seeking to impose limitations on the ability of Parent, Merger Subsidiary or any of their Affiliates effectively to exercise full rights of ownership of the Shares, including the right to vote any Shares on any matters properly presented to the Company's stockholders, (4) seeking to require divestiture by Parent, Merger Subsidiary or any of their Affiliates of any Shares, or (5) that otherwise would reasonably be expected to have a Material Adverse Effect on the Company or Parent, or (B) there shall have been any action taken, or any statute, rule, regulation, injunction, order or decree proposed, enacted, enforced, promulgated, issued or deemed applicable to the Offer or the Merger, by any court or governmental authority or agency (domestic, foreign or supranational) that would reasonably be expected, directly or indirectly, to result in any of the consequences referred to in clauses (1) through (5) of paragraph (A) above, or (C) there shall have been any event, occurrence, development or state of circumstances or facts that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company, or (D) the Company shall have breached or failed to perform in all material respects any of its obligations under the Merger Agreement, except where such breach or failure to perform would not have, individually or in the aggregate, a Material Adverse Effect on the Company, or (E) any of the representations and warranties of the Company contained in the Merger Agreement (without giving effect to any qualifications contained therein as to "materiality" or "Material Adverse Effect") shall not be true and correct in all respects when made or at any time prior to the consummation of the Offer as if made at and as of such time, except where such failure to be true or correct would not have, individually or in the aggregate, a Material Adverse Effect on the Company, or (F) the Merger Agreement shall have been terminated in accordance with its terms, or (G) the Board of Directors of the Company shall have failed to recommend, or shall have withdrawn or modified in a manner adverse to Parent its approval or recommendation of, the Merger Agreement or the Offer or the Merger or shall have approved or recommended an Acquisition Proposal, or A-I-1 (H) the Company shall have entered into, or publicly announced its intention to enter into, a definitive agreement or an agreement in principle with respect to an Acquisition Proposal. The foregoing conditions are for the sole benefit of Parent and Merger Subsidiary and may, subject to the terms of the Merger Agreement, be waived by Parent and Merger Subsidiary in whole or in part at any time and from time to time in their discretion. The failure by Parent or Merger Subsidiary at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, the waiver of any such right with respect to particular facts and circumstances shall not be deemed a waiver with respect to any other facts and circumstances, and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time prior to consummation of the Offer. A-I-2 ANNEX B (UBS Warburg Logo) May 1, 2001 Special Committee of the Board of Directors Sodexho Marriott Services, Inc. 9801 Washingtonian Boulevard Gaithersburg, MD 20878 Members of the Special Committee: We understand that Sodexho Marriott Services, Inc., a Delaware corporation (the "Company"), is considering a transaction whereby SMS Acquisition Corp. ("Merger Subsidiary"), a Delaware corporation controlled by Sodexho Alliance S.A. ("Sodexho Alliance"), will tender for the outstanding shares of common stock, par value $1.00 per share (the "Common Stock"), of the Company not currently owned by Sodexho Alliance or its affiliates. Pursuant to the terms of the proposed Agreement and Plan of Merger dated May 1, 2001 (the "Merger Agreement"), Merger Subsidiary will commence a cash tender offer (the "Offer") to acquire all of the outstanding shares of Common Stock (other than shares held by Sodexho Alliance or its Affiliates (as such term is defined in the Merger Agreement)) for a cash payment in the amount of $32.00 per share (the "Consideration"). Pursuant to the Merger Agreement, the Offer will be followed by a merger of the Merger Subsidiary with and into the Company (the "Merger" and, together with the Offer, the "Transaction") in which the remaining shares of Common Stock not tendered in the Offer (other than shares held by Sodexho Alliance or its Affiliates) will convert into the right to receive the Consideration. The terms and conditions of the Transaction are more fully set forth in the Merger Agreement. You have requested our opinion as to the fairness from a financial point of view to the holders of the shares of Common Stock (other than Sodexho Alliance and its Affiliates) of the Consideration to be received by such holders in the Transaction. UBS Warburg LLC ("UBSW") has acted as financial advisor to the Special Committee of the Board of Directors of the Company in connection with the Transaction. UBSW will receive a fee from the Company in connection with the rendering of this opinion and upon the consummation of the Transaction. In the ordinary course of business, UBSW, its successors and affiliates may trade or have traded securities of the Company and/or Sodexho Alliance for their own accounts and the accounts of their customers and, accordingly, may at any time hold a long or short position in such securities. This letter does not constitute a recommendation to any shareholder of the Company as to whether such shareholder should tender its shares of Common Stock in the Offer or how such shareholder should vote with respect to the Merger. At your direction, we have not been asked to, nor do we, offer any opinion as to the material terms of the Merger Agreement or the form of the Transaction contemplated thereby. In rendering this opinion, we have assumed, with your consent, that the final executed form of the Merger Agreement does not differ in any material respect from the drafts that we have examined, and that the Company, Sodexho Alliance and Merger Subsidiary will comply with all the material terms of the Merger Agreement. We have not been authorized to and have not solicited indications of interest from any party with respect to a business combination with the Company. In arriving at our opinion, we have, among other things: (i) reviewed certain publicly available business and historical financial information relating to the Company, (ii) reviewed the reported prices and trading activity for the Common Stock of the Company, (iii) reviewed certain internal financial information and other B-1 (UBS Warburg Logo) data relating to the business and financial prospects of the Company, including estimates and financial forecasts prepared by management of the Company, that were provided to us by the Company and not publicly available, (iv) conducted discussions with members of the senior management of the Company concerning the business and financial prospects of the Company, (v) reviewed publicly available financial and stock market data with respect to certain other companies in lines of business we believe to be generally comparable to those of the Company, (vi) compared the financial terms of the Transaction with the publicly available financial terms of certain other transactions which we believe to be generally relevant, (vii) reviewed drafts of the Merger Agreement, and (viii) conducted such other financial studies, analyses, and investigations, and considered such other information as we deemed necessary or appropriate. In connection with our review, at your direction, we have not assumed any responsibility for independent verification of any of the information reviewed by us for the purpose of this opinion and have, with your consent, relied on such information being complete and accurate in all material respects. In addition, at your direction, we have not made any independent evaluation or appraisal of any of the assets or liabilities (contingent or otherwise) of the Company, nor have we been furnished with any such evaluation or appraisal. In addition, at your direction, we have assumed that the financial projections internally prepared by Sodexho Marriott Services were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of Sodexho Marriott Services as to the future performance of Sodexho Marriott Services. Our opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to us as of, the date hereof. This letter has been prepared for the information of the Special Committee of the Board of Directors in connection with its consideration of the proposed Transaction. Based upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Consideration to be received by the holders of shares of Common Stock (other than Sodexho Alliance and its Affiliates) in the Transaction is fair from a financial point of view to such holders. Very truly yours, UBS Warburg LLC B-2 ANNEX C--GENERAL CORPORATION LAW OF DELAWARE SECTION 262 APPRAISAL RIGHTS (a) Any stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to (S)228 of this title shall be entitled to an appraisal by the Court of Chancery of the fair value of the stockholder's shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word "stockholder" means a holder of record of stock in a stock corporation and also a member of record of a nonstock corporation; the words "stock" and "share" mean and include what is ordinarily meant by those words and also membership or membership interest of a member of a nonstock corporation; and the words "depository receipt" mean a receipt or other instrument issued by a depository representing an interest in one or more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository. (b) Appraisal rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to (S)251 (other than a merger effected pursuant to (S)251(g) of this title), (S)252, (S)254, (S)257, (S)258, (S)263 or (S)264 of this title: (1) Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in subsection (f) of (S)251 of this title. (2) Notwithstanding paragraph (1) of this subsection, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to (S)251, (S)252, (S)254, (S)257, (S)258, (S)263 and (S)264 of this title to accept for such stock anything except: a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof; b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or held of record by more than 2,000 holders; c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a. and b. of this paragraph; or d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a., b. and c. of this paragraph. (3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under (S)253 of this title is not owned by the parent corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation. C-1 (c) Any corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the assets of the corporation. If the certificate of incorporation contains such a provision, the procedures of this section, including those set forth in subsections (d) and (e) of this section, shall apply as nearly as is practicable. (d) Appraisal rights shall be perfected as follows: (1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for such meeting with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) hereof that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section. Each stockholder electing to demand the appraisal of such stockholder's shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder,s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder's shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or (2) If the merger or consolidation was approved pursuant to (S)228 or (S)253 of this title, each constituent corporation, either before the effective date of the merger or consolidation or within ten days thereafter, shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section; provided that, if the notice is given on or after the effective date of the merger or consolidation, such notice shall be given by the surviving or resulting corporation to all such holders of any class or series of stock of a constituent corporation that are entitled to appraisal rights. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder's shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder's shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder's shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given. C-2 (e) Within 120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with subsections (a) and (d) hereof and who is otherwise entitled to appraisal rights, may file a petition in the Court of Chancery demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder shall have the right to withdraw such stockholder's demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of subsections (a) and (d) hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such written statement shall be mailed to the stockholder within 10 days after such stockholder's written request for such a statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) hereof, whichever is later. (f) Upon the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within 20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation. (g) At the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder. (h) After determining the stockholders entitled to an appraisal, the Court shall appraise the shares, determining their fair value exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together with a fair rate of interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors. In determining the fair rate of interest, the Court may consider all relevant factors, including the rate of interest which the surviving or resulting corporation would have had to pay to borrow money during the pendency of the proceeding. Upon application by the surviving or resulting corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court may, in its discretion, permit discovery or other pretrial proceedings and may proceed to trial upon the appraisal prior to the final determination of the stockholder entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has submitted such stockholder's certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that such stockholder is not entitled to appraisal rights under this section. (i) The Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto. Interest may be simple or compound, as the Court may direct. Payment shall be so made to each such stockholder, in the case of holders of C-3 uncertificated stock forthwith, and the case of holders of shares represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Court's decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such surviving or resulting corporation be a corporation of this State or of any state. (j) The costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney's fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal. (k) From and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e) of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such stockholder's demand for an appraisal and an acceptance of the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just. (l) The shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation. C-4 The Letter of Transmittal and certificates for Shares and any other required documents should be sent to the Depositary at one of the addresses set forth below: The Depositary for the Offer is: EQUISERVE TRUST COMPANY, N.A. By Mail: By Overnight Courier: By Hand: EquiServe Trust Company, N.A. EquiServe Trust Company, N.A. EquiServe Trust Company, N.A. P.O. Box 842010 40 Campanelli Drive c/o Securities Transfer & Reporting Boston, MA Braintree, MA Services, Inc. 02284-2010 02184 100 William Street--Galleria Attn: Corporate Actions New York, NY 10038
If you have questions or need additional copies of this Offer to Purchase and the Letter of Transmittal, you can call the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth below. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer. The Information Agent for the Offer is: [MACKENZIE PARTNERS, INC. LOGO APPEARS HERE] 156 Fifth Avenue New York, New York 10010 (212) 929-5500 (Call Collect) or Call Toll-Free (800) 322-2885 Email: proxy@mackenziepartners.com The Dealer Manager for the Offer is: Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 (212) 902-1000 (Call Collect) or Call Toll-Free: (800) 323-5678 EX-99.(A)(2) 3 dex99a2.txt LETER OF TRANSMITTAL Exhibit 99.(a)(2) LETTER OF TRANSMITTAL To Tender Shares of Common Stock (Together with the Associated Preferred Stock Purchase Rights) of Sodexho Marriott Services, Inc. Pursuant to the Offer to Purchase dated May 17, 2001 of SMS Acquisition Corp. a wholly-owned subsidiary of Sodexho Alliance, S.A. THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, JUNE 14, 2001, UNLESS THE OFFER IS EXTENDED. The Depositary for the Offer is: EQUISERVE TRUST COMPANY, N.A. By Mail: By Overnight Courier: By Hand: EquiServe Trust Company, EquiServe Trust Company, EquiServe Trust Company, N.A. P.O. Box 842010 N.A. 40 Campanelli Drive N.A. c/o Securities Boston, MA 02284-2010 Braintree, MA 02184 Attn: Transfer & Reporting Corporate Actions Services, Inc. 100 William Street - Galleria New York, NY 10038 DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be used if certificates are to be forwarded herewith or, unless an Agent's Message (as defined in the Offer to Purchase) is utilized, if delivery of Shares (as defined below) is to be made by book-entry transfer to the Depositary's account at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth under "The Offer -- Procedure for Tendering Shares" in the Offer to Purchase. DESCRIPTION OF SHARES TENDERED - --------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s) (Please correct details if incorrect (or fill in, if blank). Please ensure name(s) appear(s) exactly as on Shares Tendered Certificates). (Attach additional list if necessary) - ----------------------------------------------------------------- Total Number of Shares Number of Certificate Represented by Shares Number(s)* Certificate(s)* Tendered** -------------------- -------------------- -------------------- -------------------- -------------------- Total Shares
* Need not be completed by stockholders tendering by book-entry transfer. ** Unless otherwise indicated, it will be assumed that all Shares represented by any certificates delivered to the Depositary are being tendered. See Instruction 4. TENDER OF SHARES HELD IN THE DIRECT REGISTRATION SYSTEM (SEE INSTRUCTION 12) Complete this section if you want to tender Shares held in your account under the Direct Registration System of SMS. Please check only one box. If you check more than one box, do not check a box, or you check the second box but do not indicate a number of Shares, it will be assumed that all Shares held in your account under the Direct Registration System of SMS are being tendered. [_]Please tender ALL of the Shares credited to my account. [_]Please tender the following number of Shares credited to my account: Number of Shares to be tendered. --------------- Holders of Shares whose certificates for such Shares (the "Share Certificates") are not immediately available or who cannot deliver their Share Certificates and all other required documents to the Depositary at or prior to 12:00 midnight, New York City time, on Thursday, June 14, 2001 (unless the Offer is extended as described in the Offer to Purchase) (the "Expiration Date"), or who cannot complete the procedure for book-entry transfer on a timely basis, must tender their Shares according to the guaranteed delivery procedure set forth under "The Offer -- Procedure for Tendering Shares" in the Offer to Purchase. See Instruction 2. Delivery of documents to the Book-Entry Transfer Facility does not constitute delivery to the Depositary. --------------- NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY. [_]CHECK HERE IF SHARE CERTIFICATES HAVE BEEN MUTILATED, LOST, STOLEN OR DESTROYED. SEE INSTRUCTION 9. [_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING: Name of Tendering Institution_________________________________________ Account Number________________________________________________________ Transaction Code Number_______________________________________________ [_]CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Tendering Stockholder(s)___________________________________ Date of Execution of Notice of Guaranteed Delivery____________________ Name of Institution which Guaranteed Delivery_________________________ If delivery is by book-entry transfer: Name of Tendering Institution_________________________________________ Account Number________________________________________________________ Transaction Code Number_______________________________________________ 2 Ladies and Gentlemen: The undersigned hereby tenders to SMS Acquisition Corp. (the "Purchaser"), a Delaware corporation and a wholly-owned subsidiary of Sodexho Alliance, S.A., a French corporation, the above-described shares of Common Stock, par value $1.00 per share, of Sodexho Marriott Services, Inc., a Delaware corporation ("SMS"), together with the associated preferred stock purchase rights issued pursuant to the Rights Agreement dated as of October 8, 1993, as amended, between SMS and The Bank of New York, as Rights Agent (collectively the "Shares"), pursuant to the Purchaser's Offer to Purchase all outstanding Shares, other than Shares already owned by Sodexho Alliance, S.A. and its subsidiaries, for $32.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated May 17, 2001, receipt of which is hereby acknowledged, and in this Letter of Transmittal (which together constitute the "Offer"). The Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more of its affiliates the right to purchase Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Purchaser of its obligations under the Offer or prejudice your rights to receive payment for Shares validly tendered and accepted for payment. Upon the terms and subject to the conditions of the Offer and effective upon acceptance for payment of and payment for the Shares tendered herewith, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Purchaser all right, title and interest in and to all the Shares that are being tendered hereby (and any and all other Shares or other securities issued or issuable in respect thereof on or after May 1, 2001) and appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares (and all such other Shares or securities), with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (1) deliver certificates for such Shares (and all such other Shares or securities), or transfer ownership of such Shares (and all such other Shares or securities) on the account books maintained by it or any of the Book-Entry Transfer Facilities, together, in any such case, with all accompanying evidences of transfer and authenticity, to or upon the order of the Purchaser, (2) present such Shares (and all such other Shares or securities) for transfer on the books of SMS and (3) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and all such other Shares or securities), all in accordance with the terms of the Offer. The undersigned hereby irrevocably appoints Denis Robin and Bernard Carton, the attorneys and proxies of the undersigned, each with full power of substitution, to exercise all voting and other rights of the undersigned in such manner as each such attorney and proxy or his substitute shall in his sole discretion deem proper, with respect to all of the Shares tendered hereby which have been accepted for payment by the Purchaser prior to the time of any vote or other action (and any and all other Shares or other securities issued or issuable in respect thereof on or after May 1, 2001) at any meeting of stockholders of SMS (whether annual or special and whether or not an adjourned meeting), by written consent or otherwise. This proxy is irrevocable and is granted in consideration of, and is effective upon, the acceptance for payment of and payment for such Shares by the Purchaser in accordance with the terms of the Offer. Such acceptance for payment shall revoke any other proxy or written consent granted by the undersigned at any time with respect to such Shares (and all such other Shares or securities), and no subsequent proxies will be given or written consents will be executed by the undersigned (and if given or executed, will not be deemed to be effective). The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby (and any and all other Shares or other securities issued or issuable in respect thereof on or after May 1, 2001) and that when the same are accepted for payment by the Purchaser, the Purchaser will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claims. The undersigned will, upon request, execute and deliver any additional documents deemed by the Depositary or the Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby (and all such other Shares or securities). 3 All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer, this tender is irrevocable. The undersigned understands that tenders of Shares pursuant to any one of the procedures described under "The Offer--Procedure for Tendering Shares" in the Offer to Purchase and in the instructions hereto will constitute an agreement between the undersigned and the Purchaser upon the terms and subject to the conditions of the Offer. Unless otherwise indicated under "Special Payment Instructions", please issue the check for the purchase price of any Shares purchased, and return any Shares not tendered or not purchased, in the name(s) of the undersigned (and, in the case of Shares tendered by book-entry transfer, by credit to the account at the Book-Entry Transfer Facility). Similarly, unless otherwise indicated under "Special Delivery Instructions", please mail the check for the purchase price of any Shares purchased and any certificates for Shares not tendered or not purchased (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned's signature(s). In the event that both "Special Payment Instructions" and "Special Delivery Instructions" are completed, please issue the check for the purchase price of any Shares purchased and return any Shares not tendered or not purchased in the name(s) of, and mail said check and any certificates to, the person(s) so indicated. The undersigned recognizes that the Purchaser has no obligation, pursuant to the "Special Payment Instructions", to transfer any Shares from the name of the registered holder(s) thereof if the Purchaser does not accept for payment any of the Shares so tendered. SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (See Instructions 1, 5, 6, 7 and 8) (See Instructions 1, 5, 6, 7 and 8) To be completed ONLY if the check To be completed ONLY if the check for the purchase price of Shares for the purchase price of Shares purchased (less the amount of any purchased (less the amount of any federal income and backup federal income and backup withholding tax required to be withholding tax required to be withheld) or certificates for withheld) or certificates for Shares not tendered or not Shares not tendered or not purchased are to be issued in the purchased are to be mailed to name of someone other than the someone other than the undersigned undersigned. or to the undersigned at an address other than that shown below the undersigned's signature(s). Mail: [_] check [_] certificate(s) to: Mail: [_] check Name _______________________________ [_] certificate(s) to: (Please Print) Name _______________________________ Address ____________________________ (Please Print) Address ____________________________ ____________________________________ (Zip Code) ------------------------------------ (Zip Code) ------------------------------------ (Taxpayer Identification No.) ------------------------------------ 4 SIGN HERE (Please complete Substitute Form W-9 below) ____________________________________________________ ____________________________________________________ Signature(s) of Owners Dated ___________________ , 2001 Name(s)_____________________________________________ ____________________________________________________ (Please Print) Capacity (full title)_______________________________ Address_____________________________________________ ____________________________________________________ (Include Zip Code) Area Code and Telephone Number _____________________ (Must be signed by registered holder(s) exactly as name(s) appear(s) on stock certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, agent, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth full title and see Instruction 5.) Guarantee of Signature(s) (If required; see Instructions 1 and 5) Name of Firm _______________________________________ Authorized Signature _______________________________ Dated __________________ , 2001 (right arrow) (left arrow) 5
- ------------------------------------------------------------------------------------------------------------- Part 1 Taxpayer Identification No.-- For All Accounts Part II For SUBSTITUTE Payees Form W-9 ------------------------------------------------------------------- Exempt From Backup With- Department of Enter your taxpayer holding the Treasury identification number in the ------------------------------- (see Internal appropriate box. For most ------------------------------- enclosed Revenue individuals and sole Social Security Number Guidelines) Service proprietors, this is your Social Security Number. For Payer's Request other entities it is your for Taxpayer Employer Identification OR Identification Number. If you do not have a No. number, see "How to Obtain a TIN" in the enclosed Guidelines. ------------------------------- Note: If the account is in ------------------------------- more than one name, see the Employer Identification Number chart on page 2 of the enclosed Guidelines to determine what number to enter. - -------------------------------------------------------------------------------------------------------------
Certification--Under penalties of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me) and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number within (60) days, 31% of all reportable payments made to me thereafter will be withheld until I provide a number; (2) I am not subject to backup withholding either because (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding; and (3) Any information provided on this form is true, correct and complete. - ------------------------------------------------------------------------------- SIGNATURE ____________________________ DATE ______________________, 2001 NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. 6 INSTRUCTIONS Forming Part of the Terms and Conditions of the Offer 1. Guarantee of Signatures. Except as otherwise provided below, all signatures on this Letter of Transmittal must be guaranteed by a financial institution (including most banks, savings and loan associations and brokerage houses) that is a member of a recognized Medallion Program approved by The Securities Transfer Association, Inc., including the Securities Transfer Agents Medallion Program (STAMP), the Stock Exchange Medallion Program (SEMP) and the New York Stock Exchange, Inc. Medallion Signature Program (MSP) or any other "eligible guarantor institution" (as such term is defined in Rule 17Ad- 15 under the Securities Exchange Act of 1934, as amended) (each an "Eligible Institution"). Signatures on this Letter of Transmittal need not be guaranteed (i) if this Letter of Transmittal is signed by the registered holder(s) of the Shares (which term, for purposes of this document, shall include any participant in the Book-Entry Transfer Facility whose name appears on a security position listing as the owner of Shares) tendered herewith and such holder(s) have not completed the instruction entitled "Special Payment Instructions" or "Special Delivery Instructions" on this Letter of Transmittal or (ii) if such Shares are tendered for the account of an Eligible Institution. See Instruction 5. 2. Delivery of Letter of Transmittal and Shares. This Letter of Transmittal is to be used either if certificates are to be forwarded herewith or, unless an Agent's Message is utilized, if delivery of Shares is to be made by book- entry transfer pursuant to the procedures set forth under "The Offer-- Procedure for Tendering Shares" in the Offer to Purchase. Certificates for all physically delivered Shares, or a confirmation of a book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility of all Shares delivered electronically, as well as a properly completed and duly executed Letter of Transmittal (or, in the case of a book-entry transfer, an Agent's Message) and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the front page of this Letter of Transmittal by the Expiration Date. Stockholders who cannot deliver their Shares and all other required documents to the Depositary by the Expiration Date must tender their Shares pursuant to the guaranteed delivery procedure set forth under "The Offer-- Procedure for Tendering Shares" in the Offer to Purchase. Under the guaranteed delivery procedure: (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form provided by the Purchaser must be received by the Depositary by the Expiration Date; and (iii) the certificates for all physically delivered Shares, or a confirmation of a book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility of all Shares delivered electronically, as well as a properly completed and duly executed Letter of Transmittal (or facsimile thereof or, in the case of a book-entry delivery, an Agent's Message) and any other documents required by this Letter of Transmittal, must be received by the Depositary within three New York Stock Exchange, Inc. trading days after the date of execution of such Notice of Guaranteed Delivery, all as provided under "The Offer--Procedure for Tendering Shares" in the Offer to Purchase. The method of delivery of Shares and all other required documents is at the option and risk of the tendering stockholder. If certificates for Shares are sent by mail, registered mail with return receipt requested, properly insured, is recommended. No alternative, conditional or contingent tenders will be accepted. Except as otherwise indicated in this Letter of Transmittal, no fractional Shares will be purchased. By executing this Letter of Transmittal, the tendering stockholder waives any right to receive any notice of the acceptance for payment of the Shares. 3. Inadequate Space. If the space provided herein is inadequate, the certificate numbers and/or the number of Shares should be listed on a separate schedule attached hereto. 7 4. Partial Tenders (not applicable to stockholders who tender by book-entry transfer or Direct Registration System). If fewer than all the Shares represented by any certificate delivered to the Depositary are to be tendered, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered". In such case, a new certificate for the remainder of the Shares represented by the old certificate will be sent to the person(s) signing this Letter of Transmittal, unless otherwise provided in the appropriate box on this Letter of Transmittal, as promptly as practicable following the expiration or termination of the Offer. All Shares represented by certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the certificates without alteration, enlargement or any change whatsoever. If any of the Shares tendered hereby is held of record by two or more persons, all such persons must sign this Letter of Transmittal. If any of the Shares tendered hereby are registered in different names on different certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, no endorsements of certificates or separate stock powers are required unless payment of the purchase price is to be made, or Shares not tendered or not purchased are to be returned, in the name of any person other than the registered holder(s). Signatures on any such certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Shares tendered hereby, certificates must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name(s) of the registered holder(s) appear(s) on the certificates for such Shares. Signature(s) on any such certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal or any certificate or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to the Purchaser of the authority of such person to so act must be submitted. 6. Stock Transfer Taxes. The Purchaser will pay any stock transfer taxes with respect to the sale and transfer of any Shares to it pursuant to the Offer. If, however, payment of the purchase price is to be made to, or Shares not tendered or not purchased are to be returned in the name of, any person other than the registered holder(s), or if a transfer tax is imposed for any reason other than the sale or transfer of Shares to the Purchaser pursuant to the Offer, then the amount of any stock transfer taxes (whether imposed on the registered holder(s), such other person or otherwise) will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted herewith. 7. Special Payment and Delivery Instructions. If the check for the purchase price of any Shares purchased is to be issued, or any Shares not tendered or not purchased are to be returned, in the name of a person other than the person(s) signing this Letter of Transmittal or if the check or any certificates for Shares not tendered or not purchased are to be mailed to someone other than the person(s) signing this Letter of Transmittal or to the person(s) signing this Letter of Transmittal at an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. Stockholders tendering Shares by book-entry transfer may request that Shares not purchased be credited to such account at any of the Book-Entry Transfer Facilities as such stockholder may designate under "Special Payment Instructions". If no such instructions are given, any such Shares not purchased will be returned by crediting the account at the Book-Entry Transfer Facilities designated above. 8 8. Substitute Form W-9. Under the federal income tax laws, the Depositary will be required to withhold 31% of the amount of any payments made to certain stockholders pursuant to the Offer. In order to avoid such backup withholding, each tendering stockholder, and, if applicable, each other payee, must provide the Depositary with such stockholder's or payee's correct taxpayer identification number and certify that such stockholder or payee is not subject to such backup withholding by completing the Substitute Form W-9 set forth above. In general, if a stockholder or payee is an individual, the taxpayer identification number is the Social Security number of such individual. If the Depositary is not provided with the correct taxpayer identification number, the stockholder or payee may be subject to a $50 penalty imposed by the Internal Revenue Service. Certain stockholders or payees (including, among others, all corporations and certain non-United States individuals) are not subject to these backup withholding and reporting requirements. In order to satisfy the Depositary that a non-United States individual qualifies as an exempt recipient, such stockholder or payee must submit a completed Form W-8 BEN, signed under penalties of perjury, attesting to that individual's exempt status. Such Form W-8 BEN can be obtained from the Depositary. For further information concerning backup withholding and instructions for completing the Substitute Form W-9 (including how to obtain a taxpayer identification number if you do not have one and how to complete the Substitute Form W-9 if Shares are held in more than one name), consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. Failure to complete the Substitute Form W-9 will not, by itself, cause Shares to be deemed invalidly tendered, but may require the Depositary to withhold 31% of the amount of any payments made pursuant to the Offer. Backup withholding is not an additional federal income tax. Rather, the federal income tax liability of a person subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained provided that the required information is furnished to the Internal Revenue Service. NOTE: FAILURE TO COMPLETE AND RETURN THE SUBSTITUTE FORM W-9 MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. 9. Mutilated, Lost, Stolen or Destroyed Certificates. If any certificate(s) representing Shares has been mutilated, lost, stolen, or destroyed, the holder should (i) complete this Letter of Transmittal and check the appropriate box above and (ii) contact the Depositary immediately by calling (800) 251-4215. The Depositary will provide such holder with all necessary forms and instructions to replace any mutilated, lost, stolen or destroyed certificates. The holder may also be required to give SMS a bond as indemnity against any claim that may be made against it with respect to the certificate(s) alleged to have been mutilated, lost, stolen or destroyed. 10. Requests for Assistance or Additional Copies. Requests for assistance or additional copies of the Offer to Purchase and this Letter of Transmittal may be obtained from the Information Agent or the Dealer Manager at their respective addresses or telephone numbers set forth below. 11. Non-United States Holder. Non-United States holders must submit a completed IRS Form W-8BEN or similar form to avoid backup withholding. IRS Form W-8BEN or such similar form may be obtained by contacting the Depositary at one of the addresses on the face of this Letter of Transmittal. 12. Shares Held in the Direct Registration System. If you want to tender Shares held in your account under the Direct Registration System ("DRS") of SMS, you must: . complete the box in this Letter of Transmittal entitled "Tender of Shares Held in the Direct Registration System" by choosing the option to tender all of the Shares in your DRS account or the option to tender a specific number of the Shares in your DRS account (if the box is not completed, it will be assumed that all Shares held in your account under the DRS are being tendered); and 9 . indicate the number of Shares being tendered from your DRS account in the box in this Letter of Transmittal entitled "Description of Shares Tendered". If you tender Shares held in your DRS account, all such Shares credited to your DRS account, including fractional shares, will be tendered, unless otherwise specified in the box entitled "Tender of Shares Held in the Direct Registration System". 10 The Information Agent for the Offer is: [MACKENZIE PARTNERS, INC. LOGO APPEARS HERE] 156 Fifth Avenue New York, New York 10010 (212) 929-5500 (Call Collect) or Call Toll-Free (800) 322-2885 Email: proxy@mackenziepartners.com The Dealer Manager for the Offer is: Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 (212) 902-1000 (Call Collect) or Call Toll-Free: (800) 323-5678 EX-99.(A)(3) 4 dex99a3.txt NOTICE OF GUARANTEED DELIVERY Exhibit 99.(a)(3) NOTICE OF GUARANTEED DELIVERY To Tender Shares of Common Stock (Together with the Associated Preferred Stock Purchase Rights) of Sodexho Marriott Services, Inc. Pursuant to the Offer to Purchase dated May 17, 2001 of SMS Acquisition Corp. a wholly-owned subsidiary of Sodexho Alliance, S.A. (Not to Be Used for Signature Guarantees) This form, or a form substantially equivalent to this form, must be used to accept the Offer (as defined below) if the share certificates representing shares of Common Stock, par value $1.00 per share, of Sodexho Marriott Services, Inc., a Delaware corporation ("SMS"), together with the associated preferred stock purchase rights issued pursuant to the Rights Agreement dated as of October 8, 1993, as amended, between SMS and The Bank of New York, as Rights Agent (collectively, the "Shares") and all other documents required by the Letter of Transmittal cannot be delivered to the Depositary by the expiration of the Offer, or if the procedure for delivery by book-entry transfer cannot be completed on a timely basis. Such form may be delivered by hand, facsimile transmission or mail to the Depositary. See "The Offer-- Procedure for Tendering Shares" in the Offer to Purchase. The Depositary for the Offer is: EQUISERVE TRUST COMPANY, N.A. By Mail: By Overnight Courier: By Hand: EquiServe Trust Company, N.A. EquiServe Trust Company, N.A. EquiServe Trust Company, N.A. P.O. Box 842010 40 Campanelli Drive c/o Securities Transfer & Boston, MA 02284-2010 Braintree, MA 02184 Reporting Services, Inc. Attn: Corporate Actions 100 William Street--Galleria New York, NY 10038
By Facsimile: Attention: Sodexho Marriott (781) 575-4826 Confirm receipt of facsimile by Telephone: (781) 575-4816 DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL. Ladies and Gentlemen: The undersigned hereby tenders to SMS Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Sodexho Alliance, S.A., a French corporation, upon the terms and subject to the conditions set forth in the Offer to Purchase dated May 17, 2001 and the related Letter of Transmittal (which together constitute the "Offer"), receipt of which is hereby acknowledged, the number of Shares set forth below pursuant to the guaranteed delivery procedure set forth under "The Offer--Procedure for Tendering Shares" in the Offer to Purchase. SIGN HERE Number of Shares: ____________________ -------------------------------------- Certificate Numbers (if available) Signature(s) - -------------------------------------- Dated: _______________________________ If shares will be tendered by book- -------------------------------------- entry transfer: (Name(s)) (Please Print) Name of Tendering Institution -------------------------------------- (Address) - -------------------------------------- -------------------------------------- Account Number _______________________ (City, State, Zip Code) -------------------------------------- (Area Code and Telephone Number) 2 GUARANTEE (Not to be used for signature guarantee) The undersigned, a firm which is a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of a recognized Medallion Program approved by the Securities Transfer Association Inc., including the Securities Transfer Agents Medallion Program (STAMP), the Stock Exchange Medallion Program (SEMP) and the New York Stock Exchange Medallion Signature Program (MSP) or any other "eligible guarantor institution" (as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended), guarantees (a) that the above named person(s) "own(s)" the Shares tendered hereby within the meaning of Rule 14e-4 under the Securities Exchange Act of 1934, (b) that such tender of Shares complies with Rule 14e-4 and (c) to deliver to the Depositary the Shares tendered hereby, together with a properly completed and duly executed Letter(s) of Transmittal and certificates for the Shares to be tendered or an Agent's Message (as defined in the Offer to Purchase) in the case of a book-entry delivery, and any other required documents, all within three New York Stock Exchange, Inc. trading days of the date hereof. ------------------------------------ ------------------------------------ (Name of Firm) (Address) ------------------------------------ ------------------------------------ (Authorized Signature) (Zip Code) ------------------------------------ ------------------------------------ (Name) (Please Print) (Area Code and Telephone Number) Dated: ______________, 2001. DO NOT SEND CERTIFICATES WITH THIS NOTICE OF GUARANTEED DELIVERY. CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. 3 EX-99.(A)(4) 5 dex99a4.txt LETTER TO BROKERS, DEALERS Exhibit 99.(a)(4) Offer to Purchase for Cash All Outstanding Shares of Common Stock (Together with the Associated Preferred Stock Purchase Rights) of Sodexho Marriott Services, Inc. at $32.00 Net Per Share by SMS Acquisition Corp. a wholly-owned subsidiary of Sodexho Alliance, S.A. May 17, 2001 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been appointed by SMS Acquisition Corp. (the "Purchaser"), a Delaware corporation and a wholly-owned subsidiary of Sodexho Alliance, S.A., a French corporation ("Sodexho"), to act as Dealer Manager in connection with its offer to purchase all of the outstanding shares of Common Stock, par value $1.00 per share of Sodexho Marriott Services, Inc., a Delaware corporation ("SMS"), together with the associated preferred stock purchase rights issued pursuant to the Rights Agreement dated as of October 8, 1993, as amended, between SMS and The Bank of New York, as Rights Agent (collectively the "Shares"), other than Shares already owned by Sodexho and its subsidiaries, at a price of $32.00 per Share net to the seller in cash, upon the terms and subject to the conditions set forth in the Purchaser's Offer to Purchase dated May 17, 2001 and the related Letter of Transmittal (which together constitute the "Offer"). For your information and for forwarding to your clients for whom you hold Shares registered in your name or in the name of your nominee, we are enclosing the following documents: 1. Offer to Purchase dated May 17, 2001; 2. Letter of Transmittal for your use and for the information of your clients, together with Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 providing information relating to backup federal income tax withholding; 3. Notice of Guaranteed Delivery to be used to accept the Offer if certificates for Shares and all other required documents cannot be delivered to EquiServe Trust Company, N.A. (the "Depositary"), or if the procedures for book-entry transfer cannot be completed on a timely basis, by the Expiration Date (as defined in the Offer to Purchase); 4. A form of letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer; and 5. Return envelope addressed to EquiServe Trust Company, N.A., the Depositary. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, JUNE 14, 2001, UNLESS THE OFFER IS EXTENDED. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (1) certificates representing the Shares tendered or timely confirmation of a book- entry transfer of such Shares into the Depositary's account at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth under "The Offer--Procedure for Tendering Shares" in the Offer to Purchase, (2) a properly completed and duly executed Letter of Transmittal with any required signature guarantees, or in the case of a book-entry transfer, an Agent's Message (as defined in the Offer to Purchase), and (3) any other documents required by the Letter of Transmittal. The Offer is being made pursuant to an Agreement and Plan of Merger dated as of May 1, 2001 (the "Merger Agreement"), among SMS, Sodexho and Purchaser. The Merger Agreement provides that following the completion of the Offer and the satisfaction or waiver of certain conditions in the Merger Agreement, the Purchaser will be merged into SMS (the "Merger"), with SMS continuing as the surviving corporation which will be wholly owned by Sodexho. At the effective time of the Merger (the "Effective Time"), each issued and outstanding Share (other than (1) Shares held in the treasury of SMS, (2) Shares held by Sodexho and its subsidiaries and (3) Shares of holders exercising appraisal rights), will be converted into the right to receive the per Share price paid in the Offer in cash without interest thereon (the "Merger Consideration") as described in the Offer to Purchase. If a stockholder desires to tender Shares pursuant to the Offer and such stockholder's certificates are not immediately available or such stockholder cannot deliver the certificates and all other required documents to the Depositary on or prior to the Expiration Date (as defined in the Offer to Purchase), or such stockholder cannot complete the procedure for delivery by book-entry transfer on a timely basis, such Shares may nevertheless be tendered by following the guaranteed delivery procedure set forth under "The Offer-- Procedure for Tendering Shares" in the Offer to Purchase. The Purchaser will not pay any fees or commissions to any broker or dealer or any other person (other than the Dealer Manager, the Information Agent or the Depositary as described in the Offer to Purchase) for soliciting tenders of Shares pursuant to the Offer. The Purchaser will, however, upon request, reimburse brokers, dealers, commercial banks and trust companies for reasonable and necessary costs and expenses incurred by them in forwarding materials to their customers. The Purchaser will pay all stock transfer taxes applicable to its purchase of Shares pursuant to the Offer, subject to Instruction 6 of the Letter of Transmittal. In order to accept the Offer, a properly completed and duly executed Letter of Transmittal with any required signature guarantees, or in the case of a book-entry transfer, an Agent's Message (as defined in the Offer to Purchase) and any other required documents should be sent to the Depositary by 12:00 Midnight, New York City time, on Thursday, June 14, 2001. If you have questions with respect to the Offer or need additional copies of the enclosed materials, you can call the Information Agent or the undersigned at the addresses and telephone numbers set forth on the back cover of the Offer to Purchase. Very truly yours, Goldman, Sachs & Co. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU THE AGENT OF SMS ACQUISITION CORP., SODEXHO ALLIANCE, S.A., THE DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN. EX-99.(A)(5) 6 dex99a5.txt LETTER TO CLIENTS Exhibit 99.(a)(5) Offer to Purchase for Cash All Outstanding Shares of Common Stock (Together with the Associated Preferred Stock Purchase Rights) of Sodexho Marriott Services, Inc. at $32.00 Net Per Share by SMS Acquisition Corp. a wholly-owned subsidiary of Sodexho Alliance, S.A. May 17, 2001 To Our Clients: Enclosed for your consideration are the Offer to Purchase dated May 17, 2001 and the related Letter of Transmittal (which together constitute the "Offer") in connection with the offer by SMS Acquisition Corp. ("Purchaser"), a Delaware corporation and a wholly-owned subsidiary of Sodexho Alliance, S.A., a French corporation ("Sodexho"), to purchase for cash all of the outstanding shares of Common Stock, par value $1.00 per share of Sodexho Marriott Services, Inc., a Delaware corporation ("SMS"), together with the associated preferred stock purchase rights issued pursuant to the Rights Agreement dated as of October 8, 1993, as amended, between SMS and The Bank of New York, as Rights Agent (collectively the "Shares"), other than Shares already owned by Sodexho and its subsidiaries. We, or our nominee, are the holder of record of Shares held for your account. A tender of such Shares can be made only by us as the holder of record and pursuant to your instructions. The Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Shares held by us for your account. We request instructions as to whether you wish us to tender any or all of the Shares held by us for your account, upon the terms and subject to the conditions of the Offer. Your attention is directed to the following: 1. The tender price is $32.00 per Share, net to you in cash, without interest. 2. The Offer and withdrawal rights expire at 12:00 Midnight, New York City time, on Thursday, June 14, 2001, unless the Offer is extended. 3. The Offer is being made pursuant to an Agreement and Plan of Merger dated as of May 1, 2001 (the "Merger Agreement"), among SMS, Sodexho and Purchaser. The Merger Agreement provides that following the completion of the Offer and the satisfaction or waiver of certain conditions in the Merger Agreement, Purchaser will be merged into SMS (the "Merger"), with SMS continuing as the surviving corporation, which will be wholly owned by Sodexho. At the effective time of the Merger (the "Effective Time"), each issued and outstanding Share (other than (1) Shares held in the treasury of SMS, (2) Shares held by Sodexho or any of its subsidiaries and (3) Shares of holders exercising appraisal rights), will be converted into the right to receive the per Share price paid in the Offer in cash, without interest thereon (the "Merger Consideration") as described in the Offer to Purchase. 4. The Offer is made for all outstanding Shares (other than Shares already owned by Sodexho and its subsidiaries). 5. The Board of Directors of SMS (the "SMS Board"), by unanimous decision of those directors participating and based upon the recommendation of a Special Committee of independent directors of the SMS Board (1) has determined that the Merger Agreement and the transactions contemplated thereby are fair to and in the best interests of SMS and its stockholders (other than Sodexho), (2) has approved and declared advisable the Merger Agreement and (3) has resolved to recommend that SMS's stockholders accept the Offer and approve the Merger Agreement if submitted for their approval. 6. Tendering stockholders will not be obligated to pay brokerage fees or commissions to the Dealer Manager, the Depositary or the Information Agent. 7. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the expiration of the Offer a number of Shares that, together with the Shares then owned by Sodexho or any of its subsidiaries, represents at least a majority of the Shares outstanding on a fully-diluted basis. The Offer is also subject to the other terms and conditions set forth under "The Offer--Conditions of the Offer" in the Offer to Purchase. 8. Any stock transfer taxes applicable to the sale of Shares to the Purchaser pursuant to the Offer will be paid by Purchaser, except as otherwise set forth in Instruction 6 of the Letter of Transmittal. However, federal income tax backup withholding at a rate of 31% may be required, unless an exemption is provided or unless the required taxpayer identification information is provided. See Instruction 8 of the Letter of Transmittal. If you wish to have us tender any or all of your Shares, please so instruct us by completing, executing, detaching and returning to us the instruction form on the reverse side of this letter. An envelope to return your instructions to us is enclosed. If you authorize tender of your Shares, all such Shares will be tendered unless otherwise specified on the reverse side of this letter. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf prior to the expiration of the Offer. The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making of the Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by EquiServe Trust Company, N.A. (the "Depositary") of (1) certificates representing the Shares tendered or timely confirmation of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth under "The Offer--Procedure for Tendering Shares" in the Offer to Purchase, (2) a properly completed and duly executed Letter of Transmittal with any required signature guarantees, or in the case of a book-entry transfer, an Agent's Message (as defined in the Offer to Purchase), and (3) any other documents required by the Letter of Transmittal. Accordingly, payment may not be made to all tendering stockholders at the same time depending upon when certificates for or confirmations of book- entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility are actually received by the Depositary. 2 Instructions with Respect to Offer to Purchase for Cash All Outstanding Shares of Common Stock (Together with the Associated Preferred Stock Purchase Rights) of Sodexho Marriott Services, Inc. The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase dated May 17, 2001 and the related Letter of Transmittal, in connection with the offer by SMS Acquisition Corp. to purchase all of the outstanding shares of Common Stock, par value $1.00 per share, of Sodexho Marriott Services, Inc., a Delaware corporation ("SMS"), together with the associated preferred stock purchase rights issued pursuant to the Rights Agreement dated as of October 8, 1993, as amended, between SMS and The Bank of New York, as Rights Agent (collectively the "Shares") (other than Shares already owned by Sodexho and its subsidiaries). This will instruct you to tender the number of Shares indicated below held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer to Purchase and the related Letter of Transmittal. Number of Shares to be Tendered: SIGN HERE _____________________________ Shares* ------------------------------------- Signature(s) Account No.: ________________________ ------------------------------------- Name (Please Print) Dated ________________________ , 2001 ------------------------------------- Address ------------------------------------- City/State/Zip Code ------------------------------------- Tax Identification or Social Security Number THIS FORM MUST BE RETURNED TO THE BROKERAGE FIRM MAINTAINING YOUR ACCOUNT. - -------- * Unless otherwise indicated, it will be assumed that all Shares held by us for your account are to be tendered. EX-99.(A)(6) 7 dex99a6.txt LETTER TO PARTICIPANTS IN SMS Exhibit 99.(a)(6) Immediate Attention Required May 17, 2001 Dear Participant in Sodexho Marriott Services, Inc.'s Employee Stock Purchase Plan: As a participant in the Employee Stock Purchase Plan ("ESPP") of Sodexho Marriott Services, Inc. ("SMS"), you are receiving the enclosed tender offer materials describing the offer by SMS Acquisition Corp. ("Purchaser"), a Delaware corporation and a wholly-owned subsidiary of Sodexho Alliance, S.A., a French corporation ("Sodexho"), to purchase all of the outstanding shares of Common Stock, par value $1.00 per share of SMS together with the associated preferred stock purchase rights issued pursuant to the Rights Agreement dated as of October 8, 1993, as amended, between SMS and The Bank of New York, as Rights Agent (collectively the "Shares"), other than Shares already owned by Sodexho and its subsidiaries, at a price of $32.00 per Share, net to the seller in cash. Mellon Investor Services LLC ("Mellon"), or its nominee, is the holder of record for your account of the Shares acquired by you under the ESPP (the "ESPP Shares"). Thus, if you wish to tender any or all of your ESPP Shares, you must instruct us to do so on your behalf. These materials need your immediate attention. If you want to tender your ESPP Shares, you must use the enclosed Direction Form to instruct us to do so. If you do not properly complete the Direction Form or do not return it to us by the deadline specified, or as extended, you will be deemed to have directed us NOT to tender your ESPP Shares. To properly complete the DIRECTION FORM to instruct us to tender your ESPP Shares, you must do the following: (1) Check either Box 1 or Box 2 in BOX A on the face of the Direction Form. CHECK ONLY ONE BOX. . CHECK BOX 1 if you want to direct us to tender ALL of the Shares credited to your ESPP account. . CHECK BOX 2 if you want to direct us to tender only a portion of the Shares credited to your ESPP account. Specify the whole number of shares credited to your ESPP account that you want to direct us to tender in accordance with the terms of the Offer. If the number of Shares you specify is less than 100% of the Shares credited to your ESPP account, you will be deemed to have instructed us NOT to tender the balance of the Shares credited to your ESPP account. (2) Complete, date and sign the DIRECTION FORM in the spaces provided at the end of the Direction Form. (3) Return the form to Mellon so that it is received by Mellon not later than 5:00 p.m., New York City time, on Tuesday, June 12, 2001 as follows: (i) Mail to: Reorganization Department PO Box 3301 South Hackensack, NJ 07606 (ii) Overnight Courier to: Reorganization Department 85 Challenger Road Mail Stop--Reorg Ridgefield Park, NJ 07660 (iii) Hand delivery to: Reorganization Department 120 Broadway 13th Floor New York, NY 10271 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO ESPP PARTICIPANTS This summary of the material United States federal income tax consequences of the Offer and the Merger (as described in the accompanying Offer to Purchase) for ESPP participants is for general information only and is based on the law as currently in effect. This summary does not discuss all of the tax consequences that may be relevant to an ESPP participant in light of a participant's particular circumstances. If you hold Shares other than in your ESPP account, please see the Offer to Purchase for, among other things, a summary of the United States federal income tax consequences generally applicable to you in such capacity. ESPP participants are urged to consult their own tax advisors as to the particular tax consequences to them of the Offer and the Merger, including the effect of United States state and local tax laws or foreign tax laws. The receipt by an ESPP participant of cash for Shares pursuant to the Offer or the Merger will be a taxable transaction under the United States Internal Revenue Code of 1986, as amended (the "Code"). The disposition of your ESPP Shares in the Offer or the Merger will be considered a disqualifying disposition of your ESPP Shares under the Code. Upon disposition of your ESPP Shares in the Offer or the Merger, you will recognize ordinary income in the year of the disposition equal to the excess of (a) the fair market value of your ESPP Shares on the purchase date under the ESPP over (b) the purchase price you paid under the ESPP for your ESPP Shares. Any additional gain or loss upon the disposition of your ESPP Shares will be recognized as a capital gain or capital loss. The applicable capital gain rate will depend on the period of time you held the ESPP Shares. ESPP participants are urged to consult their own tax advisors as to the federal income tax treatment of a capital gain or loss (including limitations on the deductibility of a capital loss). You may be subject to backup withholding at a rate of 31% unless you provide your taxpayer identification number and certify that the number is correct or properly certify that you are awaiting a taxpayer identification number, or unless you demonstrate that you are eligible for an exemption. See "The Offer-- Procedure for Tendering Shares" in the Offer to Purchase. Backup withholding is not an additional tax. Amounts so withheld can be refunded or credited against the federal income tax liability of the holder of Shares, provided appropriate information is forwarded to the Internal Revenue Service. Please note that this discussion relates only to the federal income tax consequences of the Offer and the Merger and that there may be additional state law income tax consequences not disclosed herein. ESPP participants are urged to consult their own tax advisors as to the state law income tax consequences of the Offer and the Merger. 2 IMPORTANT If you hold additional Shares as a public stockholder, you will be receiving a further package of tender offer materials. Each package needs your immediate and individual attention, as the instructions on tendering Shares may vary depending upon how the Shares are held. If you have any questions about your ESPP account or completing the DIRECTION FORM, call Mellon at (877) 867-7526. Very truly yours, Mellon Investor Services LLC 3 DIRECTION FORM TO TENDER SHARES OF COMMON STOCK OF SODEXHO MARRIOTT SERVICES, INC. HELD IN THE SODEXHO MARRIOTT SERVICES, INC. EMPLOYEE STOCK PURCHASE PLAN DESCRIPTION OF SHARES TENDERED - ------------------------------------------------------------------------------------------- Name(s) and Address(es) of Registered Number of Shares of Common Stock of Sodexho Holder(s) (Please correct details if Marriott Services, Inc. owned by you in the incorrect (or fill in, if blank)). Employee Stock Purchase Plan - ------------------------------------------------------------------------------------------- ------------------------------------------------------ Taxpayer ID Number: ------------------------------------------------------
I, the undersigned, acknowledge receipt of the Offer to Purchase dated May 17, 2001 for Shares held in my account under Sodexho Marriott Services, Inc. Employee Stock Purchase Plan ("ESPP"). This Direction Form will instruct Mellon Investor Services LLC ("Mellon") to receive on my behalf $32.00 per Share, net to me in cash and without interest thereon, for each Share that Mellon holds for my account under the ESPP and tenders pursuant to my instructions and on my behalf. I understand that if I have not properly completed this form, Mellon will regard me as not having made a valid tender with respect to any of the Shares held in my ESPP account. - -------------------------------------------------------------------------------- Box A (Please check only one box) - -------------------------------------------------------------------------------- BOX 1 [_] I direct Mellon to tender ALL of the Shares credited to my account under the ESPP in accordance with the terms of the Offer. - -------------------------------------------------------------------------------- BOX 2 [_] I direct Mellon to tender Shares credited to my account ----- under the ESPP, in accordance with the terms of the Offer. - -------------------------------------------------------------------------------- By signing below, the undersigned hereby: (1) Tenders to SMS Acquisition Corp. (the "Purchaser"), a Delaware corporation and a wholly-owned subsidiary of Sodexho Alliance, S.A., a French corporation, the above-described shares of Common Stock, par value $1.00 per share, of Sodexho Marriott Services, Inc. ("SMS"), together with the associated preferred stock purchase rights issued pursuant to the Rights Agreement dated as of October 8, 1993, as amended, between SMS and The Bank of New York, as Rights Agent (collectively the "Shares"), pursuant to the Purchaser's Offer to Purchase all outstanding Shares, other than Shares already owned by Sodexho Alliance or its subsidiaries, at $32.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated May 17, 2001 and in this Direction Form (which collectively constitute the "Offer"), receipt of which is hereby acknowledged. The Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more of its affiliates the right to purchase Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Purchaser of its obligations under the Offer or prejudice your rights to receive payment for Shares validly tendered and accepted for payment. (2) Upon the terms and subject to the conditions of the Offer and effective upon acceptance for payment of and payment for the Shares tendered herewith, sells, assigns and transfers to, or upon the order of, the Purchaser all right, title and interest in and to all the Shares that are being tendered hereby (and any and all other Shares or other securities issued or issuable in respect thereof on or after May 1, 2001) and appoints the Depositary for the Offer ("Depositary") the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares (and all such other Shares or securities), with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (i) deliver certificates for such Shares (and all such other Shares or securities), or transfer ownership of such Shares (and all such other Shares or securities) on the account books maintained by any of the Book-Entry Transfer Facilities, together, in any such case, with all accompanying evidences of transfer and authenticity, to or upon the order of the Purchaser, (ii) present such Shares (and all such other Shares or securities) for transfer on the books of SMS and (iii) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and all such other Shares or securities), all in accordance with the terms of the Offer. (3) Irrevocably appoints Denis Robin and Bernard Carton, the attorneys and proxies of the undersigned, each with full power of substitution, to exercise all voting and other rights of the undersigned in such manner as each such attorney and proxy or his substitute shall in his sole discretion deem proper, with respect to all of the Shares tendered hereby which have been accepted for payment by the Purchaser prior to the time of any vote or other action (and any and all other Shares or other securities issued or issuable in respect thereof on or after May 1, 2001) at any meeting of stockholders of SMS (whether annual or special and whether or not an adjourned meeting), by written consent or otherwise. This proxy is irrevocable and is granted in consideration of, and is effective upon, the acceptance for payment of such Shares by the Purchaser in accordance with the terms of the Offer. Such acceptance for payment shall revoke any other proxy or written consent granted by the undersigned at any time with respect to such Shares (and all such other Shares or securities), and no subsequent proxies will be given or written consents will be executed by the undersigned (and if given or executed, will not be deemed to be effective). (4) Represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby (and any and all other Shares or other securities issued or issuable in respect thereof on or after May 1, 2001) and that when the same are accepted for payment by the Purchaser, the Purchaser will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claims. The undersigned will, upon request, execute and deliver any additional documents deemed by the 2 Depositary or the Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby (and all such other Shares or securities). (5) Consents that all authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer, this tender is irrevocable. (6) Understands that tenders of Shares pursuant to the instructions hereto will constitute an agreement between the undersigned and the Purchaser upon the terms and subject to the conditions of the Offer. (7) Requests that the check for the purchase price of any Shares purchased be issued in the name(s) of the undersigned. Similarly, please mail the check for the purchase price of any Shares purchased to the undersigned at the address shown below the undersigned's signature(s). SIGN HERE - -------------------------------------------------------------------------------- Signature - -------------------------------------------------------------------------------- Daytime Area Code and Telephone Number(s) - -------------------------------------------------------------------------------- Tax Identification or Social Security Number(s) - -------------------------------------------------------------------------------- Please print name(s) and address(es) here - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Date 3 EX-99.(A)(7) 8 dex99a7.txt LETTER TO HOLDERS Exhibit 99.(a)(7) Offer to Purchase for Cash All Outstanding Shares of Common Stock (Together with the Associated Preferred Stock Purchase Rights) of Sodexho Marriott Services, Inc. at $32.00 Net Per Share by SMS Acquisition Corp. a wholly-owned subsidiary of Sodexho Alliance, S.A. May 17, 2001 To holders of stock certificates issued by Marriott International, Inc. prior to March 27, 1998: We are sending this letter to you in your capacity as a stockholder of Sodexho Marriott Services, Inc. ("SMS"). As more fully described in the enclosed documents, we are making an offer to purchase all of the outstanding shares of SMS for $32.00 per share in cash, without interest (the "Offer"). Before March 27, 1998, SMS was called "Marriott International, Inc." (We refer to this old name as "Old Marriott"). On March 27, 1998, Old Marriott changed its name to "Sodexho Marriott Services, Inc." and each share of Old Marriott common stock became subject to a one-for-four reverse stock split. Because of the reverse stock split, every four shares of Old Marriott common stock held on March 27, 1998 were combined into one share of SMS stock. In 1998, Old Marriott asked its stockholders to exchange their Old Marriott stock certificates for SMS stock certificates which reflect the company's new name and the reverse stock split. SMS's records indicate that you have not yet exchanged your certificates. If you still hold Old Marriott stock certificates, you may participate in the Offer by: (1) submitting your Old Marriott stock certificate(s) pursuant to the Offer; and (2) completing the enclosed Letter of Transmittal along with any other required documents as specified in the enclosed materials. Old Marriott stock certificates are easy to identify--they were issued prior to March 27, 1998, they bear the name "Marriott International, Inc." and they have a red border surrounding the certificate. Old Marriott certificates that are properly tendered to EquiServe Trust Company, N.A., as depositary (the "Depositary"), pursuant to the Offer will be forwarded to SMS's transfer agent following completion of the Offer. SMS's transfer agent, in turn, will forward certificates representing SMS shares to the Depositary, who will pay the $32.00 per share offered by us. For example, if you hold a certificate for 100 shares of Old Marriott, that certificate now represents 25 shares of SMS. So, you would receive $800 for the shares (that is, 25 shares multiplied by $32.00 per share). When completing the Letter of Transmittal, in the space requesting number of shares, please fill in the number of shares listed on your Old Marriott stock certificate, and the Depositary will make the proper exchange. While the Offer is fully explained in the enclosed materials, should you have any questions you may call MacKenzie Partners, Inc., the information agent for the Offer at (800) 322-2885 (Toll Free) or (212) 929-5500 (Call Collect). Very truly yours, SMS Acquisition Corp. EX-99.(A)(8) 9 dex99a8.txt GUIDELINES Exhibit 99.(a)(8) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 Guidelines for Determining the Proper Identification Number to Give the Payer.--Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payer.
- -------------------------------------------- -------------------------------------------------- Give the Give the EMPLOYER SOCIAL SECURITY IDENTIFICATION For this type of account: number of: For this type of account: number of: - -------------------------------------------- -------------------------------------------------- 1. An individual's account The individual 6. A valid trust, estate, The legal entity or pension trust (Do not furnish 2. Two or more individuals The actual owner the identifying (joint account) of the account number of the or, if combined personal funds, the first representative individual on or trustee the account(1) unless the legal entity itself is 3. Custodian account of a The minor(2) not designated minor (Uniform Gift to in the account Minors Act) title.)(4) 4. a. The usual revocable The grantor- 7. Corporate account The corporation savings trust account trustee(1) (grantor is also 8. Association, club, The organization trustee) religious, charitable, educational or other b. So-called trust account The actual tax-exempt that is not a legal or owner(1) organization account valid trust under State law 9. Partnership account The partnership 5. Sole proprietorship The owner(3) 10. A broker or registered The broker or account nominee nominee 11. Account with the The public Department of entity Agriculture in the name of a public entity (such as a State or local government, school district or prison) that receives agricultural program payments - -------------------------------------------- --------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) You must show your individual name, but you may also enter your business or "doing business as" name. You may use either your social security number or employer identification number. (4) List first and circle the name of the legal trust, estate, or pension trust. Note: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. How to Obtain a TIN If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. Payees Exempt from Backup Withholding Even if the payee does not provide a TIN in the manner required, you are not required to backup withhold on any payments you make if the payee is: . An organization exempt from tax under section 501(a), any IRA, or a custodial account under section 403(b)(7) if the account satisfies the requirements of Section 401(f)(2). . The United States or any of its agencies or instrumentalities. . A state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities. . A foreign government or any of its political subdivisions, agencies, or instrumentalities. . An international organization or any of its agencies or instrumentalities. Other payees that may be exempt from backup withholding include: . A corporation. . A foreign central bank of issue. . A dealer in securities or commodities required to register in the United States, the District of Columbia, or a possession of the United States. . A real estate investment trust. . An entity registered at all times during the tax year under the Investment Company Act of 1940. . A common trust fund operated by a bank under section 584(a). . A financial institution. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: . Payments to nonresident aliens subject to withholding under section 1441. . Payments to partnerships not engaged in a trade or business in the United States and that have at least one nonresident alien partner. . Payments of patronage dividends where the amount received is not paid in money. . Payments made by certain foreign organizations. Payments of interest not generally subject to backup withholding include the following: . Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade of business and you have not provided your correct taxpayer identification number to the payer. . Payments of tax-exempt interest (including exempt-interest dividends under section 852). . Payments described in section 6049(b)(5) to nonresident aliens. . Payments on tax-free covenant bonds under section 1451. . Payments made by certain foreign organizations. Exempt payees described above should file Substitute Form W-9 to avoid possible erroneous backup withholding. FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM IN PART II, SIGN AND DATE THE FORM, AND RETURN IT TO THE PAYER. Certain payments, other than interest, dividends and patronage dividends that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6045 and 6050A. Privacy Act Notice.--Section 6109 requires most recipients of dividend, interest or other payments to give their correct taxpayer identification numbers to payers who must report the payments to the IRS. The IRS uses the numbers for identification purposes and to help verify the accuracy of tax returns. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 31% of taxable interest, dividend and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. Penalties (1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you fail to furnish your correct taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) Civil Penalty for False Information With Respect to Withholding.--If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) Criminal Penalty for Falsifying Information.--Wilfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE. EX-99.(A)(9) 10 dex99a9.txt SUMMARY ADVERTISEMENT DATED MAY 17, 2001 EXHIBIT 99.(A)(9) This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares (as defined below). The Offer (as defined below) is made solely by the Offer to Purchase dated May 17, 2001 and the related Letter of Transmittal and any amendments or supplements thereto, and is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making of the Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction. In those jurisdictions where the applicable laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by Goldman, Sachs & Co., the Dealer Manager, or one or more registered brokers or dealers licensed under the laws of such jurisdiction. Notice of Offer to Purchase for Cash All Outstanding Shares of Common Stock (Together with the Associated Preferred Stock Purchase Rights) of Sodexho Marriott Services, Inc. at $32.00 Net Per Share by SMS Acquisition Corp. a wholly-owned subsidiary of Sodexho Alliance, S.A. SMS Acquisition Corp., a Delaware corporation (Purchaser) and a wholly-owned subsidiary of Sodexho Alliance, S.A., a French corporation (Sodexho), is offering to purchase all of the outstanding shares of common stock, par value $1.00 per share, of Sodexho Marriott Services, Inc., a Delaware corporation (SMS), together with the associated preferred stock purchase rights issued pursuant to the Rights Agreement dated as of October 8, 1993, as amended, between SMS and The Bank of New York, as Rights Agent (collectively, the Shares), other than Shares already owned by Sodexho or any of its subsidiaries, at a price of $32.00 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated May 17, 2001 (the Offer to Purchase) and in the related Letter of Transmittal (which together constitute the Offer). The Offer is a third-party tender offer by Purchaser to purchase at the given price all Shares tendered pursuant to the Offer. Following the consummation of the Offer, Purchaser and SMS intend to effect the Merger (as defined below). THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, JUNE 14, 2001, UNLESS THE OFFER IS EXTENDED. The Offer is conditioned upon there being validly tendered and not withdrawn prior to the expiration of the Offer a number of Shares that, together with the Shares then owned by Sodexho or any of its subsidiaries, represents at least a majority of the Shares outstanding on a fully-diluted basis. The Offer is also subject to the other terms and conditions set forth in the Offer to Purchase. The Offer is being made pursuant to the Agreement and Plan of Merger dated as of May 1, 2001 (the Merger Agreement) among SMS, Sodexho and Purchaser. The Merger Agreement provides that following completion of the Offer and the satisfaction or waiver of certain conditions in the Merger Agreement, Purchaser will be merged into SMS (the Merger), with SMS continuing as the surviving corporation. At the effective time of the Merger each issued and outstanding Share (other than (1) Shares held in the treasury of SMS, (2) Shares owned by Sodexho or any of its subsidiaries and (3) Shares of holders exercising appraisal rights) will be converted into the right to receive the per Share price paid in the Offer in cash, without interest thereon (the Merger Consideration). The Board of Directors of SMS (the SMS Board), by unanimous decision of those directors participating and based upon the recommendation of a Special Committee of independent directors of the SMS Board (1) has determined that the Merger Agreement and the transactions contemplated thereby are fair to and in the best interests of SMS and its stockholders (other than Sodexho), (2) has approved and declared advisable the Merger Agreement and (3) has resolved to recommend that SMSs stockholders accept the Offer and approve the Merger Agreement if submitted for their approval. Stockholders of record who tender Shares directly will not be obligated to pay brokerage fees, commissions or, except as set forth in the Letter of Transmittal, transfer taxes. Stockholders who hold their Shares through a broker or other nominee should consult with such institution as to whether it charges any service fees. Sodexho will pay the expenses of EquiServe Trust Company, N.A., which is acting as the depositary (the Depositary), MacKenzie Partners, Inc., which is acting as the information agent (the Information Agent), and Goldman, Sachs & Co., which is acting as the dealer manager (the Dealer Manager) in connection with the Offer. For purposes of the Offer, Purchaser shall be deemed to have accepted for payment tendered Shares when, as and if Purchaser gives oral or written notice of such acceptance to the Depositary. Payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price with the Depositary. The Depositary will act as agent for tendering stockholders whose Shares have been previously accepted for payment. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of certificates for such Shares (or of a confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility (as defined in the Offer to Purchase)), a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other required documents. The term Expiration Date means 12:00 Midnight, New York City time, on Thursday, June 14, 2001 unless Purchaser shall have extended the period of time for which the Offer is open under the terms set forth in the Merger Agreement, in which event, Expiration Date means the latest time and date at which the Offer, as so extended, shall expire. Purchaser may, without the consent of SMS, extend the Offer beyond the initial Expiration Date in the following events: (1) from time to time if, at the initial Expiration Date (or the extended expiration date of the Offer, if applicable), any of the conditions to the Offer, specified in the Offer to Purchase under The Offer Conditions of the Offer, shall not have been satisfied or waived, until such conditions are satisfied or waived; (2) for any period required by any rule, regulation, interpretation or position of the Securities and Exchange Commission or the staff thereof applicable to the Offer or any period required by applicable law; (3) on one or more occasions for an aggregate period not to exceed ten business days beyond the latest expiration date that would otherwise be permitted, if the number of Shares validly tendered and not withdrawn, together with Shares then owned by Sodexho or any of its subsidiaries, represents less than 90% of the then outstanding number of Shares on a fully-diluted basis; or (4) pursuant to a subsequent offering period under Rule 14d-11 under the Securities Exchange Act of 1934, as amended (the Exchange Act). Any such extension will be followed by public announcement thereof no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the rights of a tendering stockholder to withdraw such stockholders Shares, except for an extension pursuant to Rule 14d-11 under the Exchange Act. Without limiting the manner in which Purchaser may choose to make any public announcement, Purchaser will have no obligation to publish, advertise or otherwise communicate any such public announcement other than by making a release to the Dow Jones News Service. Tenders of Shares made pursuant to the Offer may be withdrawn at any time prior to the Expiration Date. Thereafter, such tenders are irrevocable, except that they may be withdrawn after July 15, 2001 unless such Shares have been previously accepted for payment as provided in the Offer to Purchase. To withdraw tendered Shares, a written or facsimile transmission notice of withdrawal with respect to the Shares must be timely received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase, and the notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of Shares, if different from that of the person who tendered such Shares. If the Shares to be withdrawn have been delivered to the Depositary, a signed notice of withdrawal with (except in the case of Shares tendered by an Eligible Institution (as defined in the Offer to Purchase)) signatures guaranteed by an Eligible Institution must be submitted prior to the release of such Shares. In addition, such notice must specify, in the case of Shares tendered by delivery of certificates, the name of the registered holder (if different from that of the tendering stockholder) and the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn or, in the case of Shares tendered by book-entry transfer, the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares. Withdrawals may not be rescinded, and Shares withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered by again following one of the procedures described in the Offer to Purchase under The Offer Procedure for Tendering Shares at any time prior to the Expiration Date. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by Purchaser, in its sole discretion, whose determination will be final and binding on all parties. The information required to be disclosed by paragraph (d)(1) of Rule 14d-6 and Rule 13e-3(e)(1) of the General Rules and Regulations under the Exchange Act is contained in the Offer to Purchase and is incorporated herein by reference. SMS has provided Purchaser with SMSs stockholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase and the related Letter of Transmittal will be sent to record holders of Shares and to brokers, dealers, banks, trust companies and other nominees whose names appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. The Offer to Purchase and the related Letter of Transmittal contain important information. Stockholders should carefully read both in their entirety before any decision is made with respect to the Offer. Questions and requests for assistance may be directed to the Information Agent or the Dealer Manager as set forth below. Requests for copies of the Offer to Purchase and the related Letter of Transmittal and other tender offer materials may be directed to the Information Agent or the Dealer Manager as set forth below, and copies will be furnished promptly at Purchaser's expense. The Information Agent for the Offer is: [MACKENZIE PARTNERS, INC. LOGO APPEARS HERE] 156 Fifth Avenue New York, New York 10010 (212) 929-5500 (Call Collect) E-mail: proxy@mackenziepartners.com or Call Toll-Free: (800) 322-2885 The Dealer Manager for the Offer is: Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 (212) 902-1000 (Call Collect) or Call Toll-Free: (800) 323-5678 May 17, 2001 EX-99.(A)(10) 11 dex99a10.txt PRESS RELEASE ISSUED BY SODEXHO ALLIANCE, S.A. Paris, France - May 2nd, 2001 EXHIBIT 99.(a)(10) PRESS RELEASE... PRESS RELEASE ... PRESS REALESE... [LOGO OF SODEXHO] SODEXHO ALLIANCE AGREES TO BUY SODEXHO MARRIOTT SERVICES -------------------------------------------------------- SODEXHO ALLIANCE (EXHO; PARIS) announced today that it has reached an agreement with Sodexho Marriott Services, Inc. (SDH; NYSE) to acquire all Sodexho Marriott Services shares it does not already own for $ 32 per share in cash. Based on 33.7 million Sodexho Marriott Services shares held by the public, the total equity value of the transaction is approximately $ 1 079 million. Under the agreement, Sodexho Alliance will make a cash tender offer for the publicly held Sodexho Marriott Services shares followed by a merger. The tender offer is not subject to any financing condition but is subject to other customary closing conditions. Vested employee stock options will be cashed out at their spread value and unvested options will be rolled over into Sodexho Alliance stock-based awards. Sodexho Alliance intends to obtain a NYSE listing before the end of the first calendar quarter of 2002. Sodexho Alliance has held an approximate 48% interest in Sodexho Marriott Services since its formation in 1998. On January 24, 2001 Sodexho Alliance made an acquisition proposal to Sodexho Marriott Services at $ 27 per share. The Board of Directors of Sodexho Marriott Services designated a Special Committee of independent directors to evaluate Sodexho Alliance's offer. The current transaction at $ 32 per share has been approved by the Board of Directors of Sodexho Marriott Services based on the recommendation of the Special Committee. On April 6, 2001, Sodexho Alliance announced the acquisition of Sogeres in France and Wood Dining Services in the United States. Completion remains subject to customary conditions, including approval by the European Commission and Federal Trade Commission in the United States. Sodexho Alliance has arranged new debt facilities required to fund the acquisition of Sogeres and Wood Dining Services, the 52% of Sodexho Marriott Services it does not already own together with options cashed out and transaction fees and, as appropriate, to refinance existing debt of Sodexho Marriott Services. Assuming favorable market conditions, Sodexho Alliance intends to raise approximately Euro 1 billion by way of a rights issue to existing shareholders. Bellon SA (a 40.2% shareholder of Sodexho Alliance, controlled by the family of Pierre Bellon, Chairman of Sodexho Alliance) has indicated that it will subscribe in full for its share of the rights issue. Since Sodexho Alliance already consolidates Sodexho Marriott Services in its accounts, upon completion of the above acquisition and refinancing transactions, the additional debt on Sodexho Alliance's balance sheet will be approximately Euro 800 million and the debt to equity ratio will be 1.12. [GRAPHIC] PRESS RELEASE... PRESS RELEASE... PRESS RELEASE... As Sodexho Alliance has demonstrated in the past following the acquisition in 1995 of Gardner Merchant (UK, Holland) and Partena (Scandinavia) and in 1998, when Sodexho Marriott Services was formed, strong and predictable growth in cash flows should enable the Sodexho Group to deleverage rapidly. Within 3 years, Sodexho Alliance anticipates returning to its targeted financial ratios : EBITA greater than 5 times interest expense and debt representing less than 4 years of cash flow. In the current market conditions, Sodexho Alliance expects the acquisition of the Sodexho Marriott Services shares it does not already own to be accretive to fiscal 2002 and 2003 earnings per share by 6% before goodwill amortization and neutral after goodwill amortization. As previously announced, the acquisition of Sogeres and Wood Dining Services is expected to be accretive to earnings per share in fiscal 2002 and 2003 respectively by 3% and 5% before goodwill amortization and by 1% and 3% after goodwill amortization. Pierre Bellon, Chairman of Sodexho Alliance, declared : "These transactions will allow us to reinforce our worldwide leadership in Food and Management Services and our position in the segments with the highest potential for growth : healthcare, seniors and education. Furthermore, the acquisition of 100% of Sodexho Marriott Services will reinforce group coherence by linking even more closely Sodexho Alliance and Sodexho Marriott Services associates. We have the highest regard for and full confidence in the management and associates of Sodexho Marriott Services. We do not anticipate any change in the management, strategy or operations of Sodexho Marriott Services." o O o US Legend : Sodexho Alliance has not yet commenced the tender offer described in - --------- this press release. Upon the commencement of the tender offer, Sodexho Alliance will file a tender offer statement with the Securities and Exchange Commission (SEC). Sodexho Marriott Services shareholders should read this tender offer statement when it becomes available, because it will contain important information. The tender offer statement and other documents filed by Sodexho Alliance will be available free of charge at the SEC's website (http://www.sec.gov) and also from the information agent for the offer. EX-99.(A)(11) 12 dex99a11.txt COMPLAINT OF BARRY FELDMAN Exhibit 99.(a)(11) IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - -----------------------------------------x BARRY FELDMAN, : : Plaintiff, : : v. : 18640NC : WILLIAM J. SHAW; DANIEL J. ALTOBELLO; : PIERRE BELLON; BERNARD CARTON; : EDOUARD DE ROYERE; MICHEL LANDEL; : JOHN W. MARRIOTT III; MARY S. METZ; : SODEXHO ALLIANCE SA; and SODEXHO : MARRIOTT SERVICES, INC., : : Defendants. : - -----------------------------------------x CLASS ACTION COMPLAINT ---------------------- Plaintiff alleges upon information and belief, except as to paragraph 1 which is alleged upon personal knowledge, as follows: THE PARTIES ----------- 1. Plaintiff is the owner of shares of the common stock of Sodexho Marriott Services Inc. ("SDH" or the "Company") and has been the owner of such shares continuously since prior to the wrongs complained of herein. 2. SDH is a corporation duly organized under the laws of the State of Delaware, with its principal executive offices located at 9801 Washingtonian Boulevard, Gaithersburg, Maryland. The Company is a provider in North America of outsourced food and facilities management services to businesses, health care facilities, colleges and universities, primary and secondary schools, and other clients. 3. Defendant William J. Shaw ("Shaw") is Chairman of the Board of SDH. 4. Defendant Pierre Bellon ("Bellon") is a director of SDH. Bellon also is Chairman and Chief Executive Officer of Sodexho Alliance SA ("Sodexho"), which beneficially owns approximately 48% of the Company's outstanding common stock and thereby effectively controls SDH. 5. Defendant Bernard Carton ("Carton") is a director of SDH. Carton also is Senior Vice President and Chief Financial Officer of Sodexho. 6. Defendant Edouard de Royere ("Royere") is a director of SDH. Royere also is a director of Sodexho. 7. Defendant Michel Landel ("Landel") is a director of SDH. Landel joined Sodexho in 1984 and has served in various executive positions with Sodexho. 8. Defendants Daniel J. Altobello, John W. Marriott, III, and Mary S. Metz are directors of SDH. 9. The Individual Defendants, as directors of the Company, and Sodexho, as controlling shareholder, are in a fiduciary relationship with plaintiff and the other public stockholders of SDH, and owe plaintiff and the other members of the class the highest obligations of good faith, fair dealing, due care, loyalty and full and candid disclosure. CLASS ACTION ALLEGATIONS ------------------------ 10. Plaintiff brings this action on his own behalf and as a class action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf all shareholders of SDH, or their successors in interest, who are being and will be harmed by defendants' conduct described herein (the "Class"). Excluded from the Class are defendants herein and any person, firm, trust, corporation or other entity related to or affiliated with any of the defendants. 11. This action is properly maintainable as a class action because: (a) The Class is so numerous that joinder of all members is impracticable. There are millions shares of SDH common stock outstanding beneficially owned by hundreds, if not thousands, of SDH shareholders who are members of the Class. (b) There are questions of law and fact which are common to the Class including, inter alia, the following: ----- ---- (i) whether defendants have improperly engaged in a course of conduct designed to benefit Sodexho at the expense of SDH's public stockholders; and (ii) whether plaintiff and the other members of the Class would be irreparably damaged were the transactions complained of herein consummated. (c) Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. Plaintiff's claims are typical of the claims of the other members of the Class and plaintiff has the same interests as the other members of the Class. Accordingly, plaintiff is an adequate representative of the Class and will fairly and adequately protect the interests of the Class. (d) The prosecution of separate actions by individual Class members would create the risk of inconsistent or varying adjudications with respect to the individual members of the Class which would establish incompatible standards of conduct for defendants, or adjudications with respect to individual members of the Class which would, as a practical matter, be dispositive of the interests of the other members not parties to the adjudications or substantially impair their ability to protect their interests. (e) Defendants have acted on grounds generally applicable to the Class with respect to the matters complained of herein, thereby making appropriate the relief sought herein with respect to the Class as a whole. SUBSTANTIVE ALLEGATIONS ----------------------- 12. On or about January 25, 2001, Sodexho announced that it had made a proposal to the SDH Board of Directors to take the Company private for $27.00 per share in cash. 13. Sodexho's offer would provide SDH's public shareholders with a mere 8% premium to the closing price of SDH shares on January 24, 2001, the last trading day prior to announcement of the offer. 14. Sodexho has timed the proposal to freeze out SDH's public shareholders in order to capture for itself SDH's future potential without paying an adequate or fair price to the Company's public shareholders. 15. Sodexho timed the announcement of the proposed buyout to place an artificial lid on the market price of SDH common stock so that the market would not reflect SDH's improving potential, thereby purporting to justify an unreasonably low price. 16. Sodexho has access to internal financial information about SDH, its true value, expected increase in true value, and the benefits of 100% ownership of SDH to which plaintiff and the Class members are not privy. Sodexho is using such inside information to benefit itself in the proposed transaction, to the detriment of the SDH's public stockholders. 17. Sodexho has clear and material conflicts of interest and is acting to better its own interests at the expense of SDH's public shareholders. Sodexho has voting control of the Company and controls its proxy machinery. Sodexho has selected and/or controls a majority of SDH's directors, with the remaining SDH directors beholden to Sodexho for their offices and the valuable perquisites which they enjoy therefrom. 18. Sodexho is engaging in self-dealing and not acting in good faith toward plaintiff and the other members of the Class. By reason of the foregoing, Sodexho and the Individual Defendants have breached and are breaching their fiduciary duties to the members of the Class. 19. Unless the proposed buyout is enjoined by the Court, defendants will continue to breach their fiduciary duties owed to plaintiff and the members of the Class to the irreparable harm of the members of the Class. 20. Plaintiff and the Class have no adequate remedy at law. WHEREFORE, plaintiff prays for judgment and relief as follows: A. Ordering that this action may be maintained as a class action and certifying plaintiff as the Class representative; B. Preliminarily and permanently enjoining defendants and all persons acting in concert with them, from proceeding with, consummating or closing the proposed transaction; C. In the event the proposed buyout is consummated, rescinding it and setting it aside or awarding rescissory damages to the Class; D. Directing defendants to account to Class members for their damages sustained as a result of the wrongs complained of herein; E. Awarding plaintiff the costs of this action, including a reasonable allowance for plaintiff's attorneys' and experts' fees; F. Granting such other and further relief as this Court may deem just and proper. ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By: /s/ [illegible] ------------------------------------ Suite 1401, Mellon Bank Center P.O Box 1070 Wilmington, DE 19899 (302) 656-4433 Of Counsel: SCHIFFRIN & BARROWAY, LLP Marc A. Topaz Gregory M. Castaldo Three Bala Plaza East, Suite 400 Bala Cynwyd, PA 19004 (610) 667-7706 EX-99.(A)(12) 13 dex99a12.txt COMPLAINT OF ARTHUR BIELER Exhibit 99.(a)(12) IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - -----------------------------------------x ARTHUR BIELER, : : Plaintiff, : : v. : 18641NC : WILLIAM J. SHAW; DANIEL J. ALTOBELLO; : PIERRE BELLON; BERNARD CARTON; : EDOUARD DE ROYERE; MICHEL LANDEL; : JOHN W. MARRIOTT III; MARY S. METZ; : SODEXHO ALLIANCE SA; and SODEXHO : MARRIOTT SERVICES, INC., : : Defendants. : - -----------------------------------------x CLASS ACTION COMPLAINT ---------------------- Plaintiff alleges upon information and belief, except as to paragraph 1 which is alleged upon personal knowledge, as follows: THE PARTIES ----------- 1. Plaintiff is the owner of shares of the common stock of Sodexho Marriott Services Inc. ("SDH" or the "Company") and has been the owner of such shares continuously since prior to the wrongs complained of herein. 2. SDH is a corporation duly organized under the laws of the State of Delaware, with its principal executive offices located at 9801 Washingtonian Boulevard, Gaithersburg, Maryland. The Company is a provider in North America of outsourced food and facilities management services to businesses, health care facilities, colleges and universities, primary and secondary schools, and other clients. 3. Defendant William J. Shaw ("Shaw") is Chairman of the Board of SDH. 4. Defendant Pierre Bellon ("Bellon") is a director of SDH. Bellon also is Chairman and Chief Executive Officer of Sodexho Alliance SA ("Sodexho"), which beneficially owns approximately 48% of the Company's outstanding common stock and thereby effectively controls SDH. 5. Defendant Bernard Carton ("Carton") is a director of SDH. Carton also is Senior Vice President and Chief Financial Officer of Sodexho. 6. Defendant Edouard de Royere ("Royere") is a director of SDH. Royere also is a director of Sodexho. 7. Defendant Michel Landel ("Landel") is a director of SDH. Landel joined Sodexho in 1984 and has served in various executive positions with Sodexho. 8. Defendants Daniel J. Altobello, John W. Marriott, III, and Mary S. Metz are directors of SDH. 9. The Individual Defendants, as directors of the Company, and Sodexho, as controlling shareholder, are in a fiduciary relationship with plaintiff and the other public stockholders of SDH, and owe plaintiff and the other members of the class the highest obligations of good faith, fair dealing, due care, loyalty and full and candid disclosure. CLASS ACTION ALLEGATIONS ------------------------ 10. Plaintiff brings this action on his own behalf and as a class action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf all shareholders of SDH, or their successors in interest, who are being and will be harmed by defendants' conduct described herein (the "Class"). Excluded from the Class are defendants herein and any person, firm, trust, corporation or other entity related to or affiliated with any of the defendants. 11. This action is properly maintainable as a class action because: (a) The Class is so numerous that joinder of all members is impracticable. There are millions shares of SDH common stock outstanding beneficially owned by hundreds, if not thousands, of SDH shareholders who are members of the Class. (b) There are questions of law and fact which are common to the Class including, inter alia, the following: ----- ---- (i) whether defendants have improperly engaged in a course of conduct designed to benefit Sodexho at the expense of SDH's public stockholders; and (ii) whether plaintiff and the other members of the Class would be irreparably damaged were the transactions complained of herein consummated. (c) Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. Plaintiff's claims are typical of the claims of the other members of the Class and plaintiff has the same interests as the other members of the Class. Accordingly, plaintiff is an adequate representative of the Class and will fairly and adequately protect the interests of the Class. (d) The prosecution of separate actions by individual Class members would create the risk of inconsistent or varying adjudications with respect to the individual members of the Class which would establish incompatible standards of conduct for defendants, or adjudications with respect to individual members of the Class which would, as a practical matter, be dispositive of the interests of the other members not parties to the adjudications or substantially impair their ability to protect their interests. (e) Defendants have acted on grounds generally applicable to the Class with respect to the matters complained of herein, thereby making appropriate the relief sought herein with respect to the Class as a whole. SUBSTANTIVE ALLEGATIONS ----------------------- 12. On or about January 25, 2001, Sodexho announced that it had made a proposal to the SDH Board of Directors to take the Company private for $27.00 per share in cash. 13. Sodexho's offer would provide SDH's public shareholders with a mere 8% premium to the closing price of SDH shares on January 24, 2001, the last trading day prior to announcement of the offer. 14. Sodexho has timed the proposal to freeze out SDH's public shareholders in order to capture for itself SDH's future potential without paying an adequate or fair price to the Company's public shareholders. 15. Sodexho timed the announcement of the proposed buyout to place an artificial lid on the market price of SDH common stock so that the market would not reflect SDH's improving potential, thereby purporting to justify an unreasonably low price. 16. Sodexho has access to internal financial information about SDH, its true value, expected increase in true value, and the benefits of 100% ownership of SDH to which plaintiff and the Class members are not privy. Sodexho is using such inside information to benefit itself in the proposed transaction, to the detriment of the SDH's public stockholders. 17. Sodexho has clear and material conflicts of interest and is acting to better its own interests at the expense of SDH's public shareholders. Sodexho has voting control of the Company and controls its proxy machinery. Sodexho has selected and/or controls a majority of SDH's directors, with the remaining SDH directors beholden to Sodexho for their offices and the valuable perquisites which they enjoy therefrom. 18. Sodexho is engaging in self-dealing and not acting in good faith toward plaintiff and the other members of the Class. By reason of the foregoing, Sodexho and the Individual Defendants have breached and are breaching their fiduciary duties to the members of the Class. 19. Unless the proposed buyout is enjoined by the Court, defendants will continue to breach their fiduciary duties owed to plaintiff and the members of the Class to the irreparable harm of the members of the Class. 20. Plaintiff and the Class have no adequate remedy at law. WHEREFORE, plaintiff prays for judgment and relief as follows: A. Ordering that this action may be maintained as a class action and certifying plaintiff as the Class representative; B. Preliminarily and permanently enjoining defendants and all persons acting in concert with them, from proceeding with, consummating or closing the proposed transaction; C. In the event the proposed buyout is consummated, rescinding it and setting it aside or awarding rescissory damages to the Class; D. Directing defendants to account to Class members for their damages sustained as a result of the wrongs complained of herein; E. Awarding plaintiff the costs of this action, including a reasonable allowance for plaintiff's attorneys' and experts' fees; F. Granting such other and further relief as this Court may deem just and proper. ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By: /S/ [illegible] ---------------------------------- Suite 1401, Mellon Bank Center P.O Box 1070 Wilmington, DE 19899 (302) 656-4433 Of Counsel: FARUQI & FARUQI, LLP 320 East 39th Street New York, NY 10016 (212) 983-9330 EX-99.(A)(13) 14 dex99a13.txt COMPLAINT OF JOHN MCMULLEN Exhibit 99.(a)(13) IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - -------------------------------------------x JOHN McMULLEN, : : Plaintiff, : : v. : 18642 NC : WILLIAM J. SHAW; DANIEL J. ALTOBELLO; : PIERRE BELLON; BERNARD CARTON; : EDOUARD DE ROYERE; MICHEL LANDEL; : JOHN W. MARRIOTT III; MARY S. METZ; : SODEXHO ALLIANCE SA; and SODEXHO : MARRIOTT SERVICES, INC., : : Defendants. : - -------------------------------------------x CLASS ACTION COMPLAINT ---------------------- Plaintiff alleges upon information and belief, except as to paragraph 1 which is alleged upon personal knowledge, as follows: THE PARTIES ----------- 1. Plaintiff is the owner of shares of the common stock of Sodexho Marriott Services Inc. ("SDH" or the "Company") and has been the owner of such shares continuously since prior to the wrongs complained of herein. 2. SDH is a corporation duly organized under the laws of the State of Delaware, with its principal executive offices located at 9801 Washingtonian Boulevard, Gaithersburg, Maryland. The Company is a provider in North America of outsourced food and facilities management services to businesses, health care facilities, colleges and universities, primary and secondary schools, and other clients. 3. Defendant William J. Shaw ("Shaw") is Chairman of the Board of SDH. 4. Defendant Pierre Bellon ("Bellon") is a director of SDH. Bellon also is Chairman and Chief Executive Officer of Sodexho Alliance SA ("Sodexho"), which beneficially owns approximately 48% of the Company's outstanding common stock and thereby effectively controls SDH. 5. Defendant Bernard Carton ("Carton") is a director of SDH. Carton also is Senior Vice President and Chief Financial Officer of Sodexho. 6. Defendant Edouard de Royere ("Royere") is a director of SDH. Royere also is a director of Sodexho. 7. Defendant Michel Landel ("Landel") is a director of SDH. Landel joined Sodexho in 1984 and has served in various executive positions with Sodexho. 8. Defendants Daniel J. Altobello, John W. Marriott, III, and Mary S. Metz are directors of SDH. 9. The Individual Defendants, as directors of the Company, and Sodexho, as controlling shareholder, are in a fiduciary relationship with plaintiff and the other public stockholders of SDH, and owe plaintiff and the other members of the class the highest obligations of good faith, fair dealing, due care, loyalty and full and candid disclosure. CLASS ACTION ALLEGATIONS ------------------------ 10. Plaintiff brings this action on his own behalf and as a class action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf all shareholders of SDH, or their successors in interest, who are being and will be harmed by defendants' conduct described herein (the "Class"). Excluded from the Class are defendants herein and any person, firm, trust, corporation or other entity related to or affiliated with any of the defendants. 11. This action is properly maintainable as a class action because: (a) The Class is so numerous that joinder of all members is impracticable. There are millions shares of SDH common stock outstanding beneficially owned by hundreds, if not thousands, of SDH shareholders who are members of the Class. (b) There are questions of law and fact which are common to the Class including, inter alia, the following: ----- ---- (i) whether defendants have improperly engaged in a course of conduct designed to benefit Sodexho at the expense of SDH's public stockholders; and (ii) whether plaintiff and the other members of the Class would be irreparably damaged were the transactions complained of herein consummated. (c) Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. Plaintiff's claims are typical of the claims of the other members of the Class and plaintiff has the same interests as the other members of the Class. Accordingly, plaintiff is an adequate representative of the Class and will fairly and adequately protect the interests of the Class. (d) The prosecution of separate actions by individual Class members would create the risk of inconsistent or varying adjudications with respect to the individual members of the Class which would establish incompatible standards of conduct for defendants, or adjudications with respect to individual members of the Class which would, as a practical matter, be dispositive of the interests of the other members not parties to the adjudications or substantially impair their ability to protect their interests. (e) Defendants have acted on grounds generally applicable to the Class with respect to the matters complained of herein, thereby making appropriate the relief sought herein with respect to the Class as a whole. SUBSTANTIVE ALLEGATIONS ----------------------- 12. On or about January 25, 2001, Sodexho announced that it had made a proposal to the SDH Board of Directors to take the Company private for $27.00 per share in cash. 13. Sodexho's offer would provide SDH's public shareholders with a mere 8% premium to the closing price of SDH shares on January 24, 2001, the last trading day prior to announcement of the offer. 14. Sodexho has timed the proposal to freeze out SDH's public shareholders in order to capture for itself SDH's future potential without paying an adequate or fair price to the Company's public shareholders. 15. Sodexho timed the announcement of the proposed buyout to place an artificial lid on the market price of SDH common stock so that the market would not reflect SDH's improving potential, thereby purporting to justify an unreasonably low price. 16. Sodexho has access to internal financial information about SDH, its true value, expected increase in true value, and the benefits of 100% ownership of SDH to which plaintiff and the Class members are not privy. Sodexho is using such inside information to benefit itself in the proposed transaction, to the detriment of the SDH's public stockholders. 17. Sodexho has clear and material conflicts of interest and is acting to better its own interests at the expense of SDH's public shareholders. Sodexho has voting control of the Company and controls its proxy machinery. Sodexho has selected and/or controls a majority of SDH's directors, with the remaining SDH directors beholden to Sodexho for their offices and the valuable perquisites which they enjoy therefrom. 18. Sodexho is engaging in self-dealing and not acting in good faith toward plaintiff and the other members of the Class. By reason of the foregoing, Sodexho and the Individual Defendants have breached and are breaching their fiduciary duties to the members of the Class. 19. Unless the proposed buyout is enjoined by the Court, defendants will continue to breach their fiduciary duties owed to plaintiff and the members of the Class to the irreparable harm of the members of the Class. 20. Plaintiff and the Class have no adequate remedy at law. WHEREFORE, plaintiff prays for judgment and relief as follows: A. Ordering that this action may be maintained as a class action and certifying plaintiff as the Class representative; B. Preliminarily and permanently enjoining defendants and all persons acting in concert with them, from proceeding with, consummating or closing the proposed transaction; C. In the event the proposed buyout is consummated, rescinding it and setting it aside or awarding rescissory damages to the Class; D. Directing defendants to account to Class members for their damages sustained as a result of the wrongs complained of herein; E. Awarding plaintiff the costs of this action, including a reasonable allowance for plaintiff's attorneys' and experts' fees; F. Granting such other and further relief as this Court may deem just and proper. ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By: /S/ [Illegible] ------------------------------------ Suite 1401, Mellon Bank Center P.O Box 1070 Wilmington, DE 19899 (302) 656-4433 Of Counsel: ABBEY GARDY, LLP 212 East 39th Street New York, NY 10016 (212) 889-3700 EX-99.(A)(14) 15 dex99a14.txt COMPLAINT OF MARGARET ALESSI Exhibit 99.(a)(14) IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - ---------------------------------------------x MARGARET ALESSI, individually and on behalf : C.A. No.: 18644 of all others similarly situated, : : Plaintiff, : : v. : CLASS ACTION : COMPLAINT WILLIAM J. SHAW; DANIEL J. ALTOBELLO; : PIERRE BELLON; BERNARD CARTON; : EDOARD DE ROYERE; MICHAEL LANDEL; : JOHN W. MARRIOTT III; MARY S. METZ; : SODEXHO MARRIOTT, INC. and SODEXHO : ALLIANCE S.A., : : Defendants. : - ---------------------------------------------x INTRODUCTION ------------ Plaintiff alleges on information and belief, except for those allegations which pertain to plaintiff which are alleged upon personal knowledge, as follows: 1. This action arises out of an unlawful scheme and plan by Sodexho Alliance, S.A. ("Alliance"), to acquire the remaining ownership of Sodexho Marriott Services Inc. ("Marriott" or the "Company") for grossly inadequate consideration and without full and complete disclosure of all material information, in breach of defendants' fiduciary duties. THE PARTIES 2. Plaintiff is and has been at all relevant times the owner of Marriott common stock. 3. Defendant William J. Shaw ("Shaw") is and has been at all relevant times Chairman and a director of Marriott. Shaw is also President and Chief Operating Officer of Marriott International, Inc., which is a party to a number of agreements with the Company pursuant to which Marriott International receives substantial benefits. 4. Defendant Pierre Bellon ("Bellon") is and has been at all relevant times a director of Marriott. Bellon also is Chairman and Chief Executive Officer of Alliance. Bellon together with members of his family, is the majority shareholder of Bellon, S.A., which is the majority shareholder of defendant Alliance. 5. Defendant Bernard Carton ("Carton") is and has been at all relevant times a director of Marriott. Carton also is Senior Vice President and Chief Financial Officer of Sodexho. 6. Defendant Edward de Royere ("Royere") is and has been at all relevant times a director of Marriott. de Royere is also a director of Sodexho. 7. Defendant Michael Landel ("Landel") is and has been at all relevant times President, Chief Executive Officer and a director of Marriott. Landel previously served as President and Chief Executive Officer of Sodexho North America. 8. Defendants Daniel J. Altobello, John W. Marriott, III, and Mary S. Metz are and have been at all relevant times directors of Marriott. 9. Defendants John W. Marriott, III is a director of Marriott. Marriott is also an executive officer of Marriott International and a member of the Marriott family with substantial interests in Marriott concerns. 10. Defendant Mary S. Metz is a director of Marriott. 11. The defendants named in (P)(P) 3-8 above (the "Individual Defendants"), as officers and/or directors of the Company, owe the highest fiduciary duties of good faith, loyalty, fair dealing, due care, and candor to plaintiff and the other members of the Class (as defined below). 12. Defendant Marriott is a corporation organized and existing under the laws of the Delaware with its principal executive offices located at 9801 Washingtonian Boulevard in Gaithersburg, Maryland. Marriott provides outsourced food and facilities management services in North America, offering food services, housekeeping, grounds keeping, plant operations and maintenance, and integrated facilities management. 13. Defendant Alliance is the beneficial owner of approximately 48% of Marriott's outstanding shares as of October 31, 2000. CLASS ACTION ALLEGATIONS ------------------------ 14. Plaintiff brings this action pursuant to Rule 23 of the Rules of the Court of Chancery, individually and on behalf of all other shareholders of the Company (except the defendants herein and any persons, firm, trust, corporation, or other entity related to or affiliated with them and their successors in interest), who are or will be threatened with injury arising from defendants' actions, as more fully described herein (the "Class"). 15. This action is properly maintainable as a class action for the following reasons: (a) The Class is so numerous that joinder of all members is impracticable. As of November 15, 2000, there were approximately 63.3 million shares of Marriott common stock issue and outstanding, held by thousands of shareholders of record and likely many more beneficial owners. (b) There are questions of law and fact which are common to the Class and which predominate over questions affecting any individual class member. The common questions include, inter alia, the following: ----- ---- (c) whether defendants have engaged and are continuing to engage in a plan and scheme to benefit themselves at the expense of the members of the Class; (d) whether the defendants have fulfilled, and are capable of fulfilling, their fiduciary duties to plaintiff and the other members of the Class, including their duties of entire fairness, fair dealing, loyalty, due care, and candor; (e) whether defendants have disclosed all material facts in connection with the challenged transaction; and (f) whether plaintiff and the other members of the Class would be irreparably damaged if defendants are not enjoined from the conduct described herein; 16. The claims of plaintiff are typical of the claims of the other members of the Class in that all members of the Class will be damaged by defendants' actions. 17. Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. Plaintiff is an adequate representative of the Class. 18. A class action is superior to any other method available for the fair and efficient adjudication of this controversy since it would be impractical and undesirable for each of the members of the Class, who has suffered or will suffer damages, to bring separate actions. 19. Moreover, Defendants have acted and will continue to act on grounds generally applicable to the Class, thereby making appropriate final injunctive or corresponding declaratory relief with respect to the Class as a whole. BACKGROUND AND SUBSTANTIVE ALLEGATIONS -------------------------------------- 21. Marriott, formerly known as Marriott International, Inc. On March 27, 1998, Marriott International, Inc. ("Old Marriott") completed the distribution to its shareholders of a new company consisting of its lodging, senor living services and distribution services businesses. This new company adopted the name Marriott International, Inc. The remaining business of Old Marriott, which was comprised primarily of the operations of Marriott Management Services, combined its food service and facilities management business with the North American operations of defendant Sodexho Alliance, S.A. and changed its name to Sodexho Marriott Services, Inc. 21. On or about January 25, 2001, Alliance announced a plan to acquire the remaining 52% of Marriott it does not already own for $27.00 in a transaction valued at $900 million (the "Offer"). 22. Marriott, which reported losses for the past two years, has only just recently moved into profitability. On January 11, 2001, the Company issued a press release reporting net income of $36 million, or $0.56 per diluted share for the 13 weeks ended December 1, 2000, up 29% compared with net income of $28 million, or $0.44 per share, for the corresponding period in 1999. Revenues for the first quarter of fiscal year 2001 reportedly totaled $1.36 billion, an increase of $71 million, or 6% over the same period in 1999. According to the January 11 press release, Marriott benefited from "continued favorable outsourcing trends in the North American markets, in addition to continued growth in sales to existing clients and expanding its relationships with its clients through competitive add-on services." 23. Defendant Landel made the following comments in the January 11 press release with respect to Marriott's performance and its outlook for the future: We had a great quarter to start our new fiscal year . . . The Education division did an outstanding job in improving the results of several accounts that were underperforming last year, while our other divisions enjoyed solid results for the quarter. We continue to focus on adding value for our existing clients and the new relationships we enter. Looking ahead, we reiterate this year's financial goals of 5%-6% top line and mid-teens bottom line growth. 24. Marriott's shares, which are only just beginning to reflect the Company's improved performance and inherent value, have risen nearly 20 percent from $20.81 on December 22, 2000, but do not yet fully reflect the Company's earnings potential. 25. The $27 price offered by Alliance is thus grossly inadequate in light of Marriott's recent share price and its future financial prospects, representing only a 9% premium to Marriott's closing price of $24-7/8 on January 24, 2001. 26. As noted above, Alliance and its affiliates beneficially own approximately 48% of Marriott's outstanding shares. 27. Defendants are intent on paying the lowest possible price to Class members, even though they are duty-bound to maximize shareholder value. While defendants have announced the plan they cannot commence the Offer until March 2001 under the terms of a standstill agreement with the government. Consequently, the meager premium has been locked in. Defendants have clear and material conflicts of interest in the Offer. 28. Because of their control over the Company, defendants are in a position to dictate the terms of the Offer. Defendants have conflicts of interest and thus cannot represent or protect the interests of the Company's public shareholders with impartiality and vigor. 29. The Offer is in furtherance of an unfair plan to take Marriott private, which, if not enjoined, will result in the elimination of the public stockholders of Marriott in a transaction that is inherently unfair to them and that is the product of the defendants' conflict of interest, as described herein. More particularly, the Offer is in violation of defendants' fiduciary duties and has been timed and structured unfairly in that: (a) the Offer is designed and intended to eliminate members of the Class as stockholders of the Company from continued equity participation in the Company at a price per share which defendants know or should know is grossly unfair and inadequate; (b) defendants, by virtue of, among other things, their voting and ownership power, control and dominate Marriott's Board of Directors; (c) defendants have unique knowledge of the Company and have access to information denied or unavailable to the class. Without all material information, Class members are unable to determine whether the price offered in the Offer is fair; and (d) defendants have violated their duty of fair dealing by manipulating the timing of the Offer to benefit themselves at the expense of the plaintiff and the class. 30. Unless enjoined by this Court, defendants will continue to breach their fiduciary duties owed to plaintiff and the Class and will consummate the Offer to the irreparable harm of plaintiff and the Class. 31. Plaintiff and the other members of the Class have no adequate remedy at law. WHEREFORE, plaintiff demands judgment as follows: A. Declaring this to be a proper class action and naming plaintiff as Class representative; B. Granting preliminary and permanent injunctive relief against the consummation of the Offer as described herein; C. In the event the Offer is consummated, rescinding the Offer and awarding rescissionary damages; D. Ordering defendants to pay to plaintiff and to other members of the Class all damages suffered and to be suffered by them as the result of the acts and transactions alleged herein; E. Awarding plaintiff the costs and disbursements of the action including allowances for plaintiff's reasonable attorneys and experts fees; and F. Granting such other and further relief as may be just and proper. Dated: January 25, 2001 CHIMICLES & TIKELLIS LLP By: ____________________________________ Pamela S. Tikellis Robert J. Kriner, Jr. Timothy R. Dudderar One Rodney Square Wilmington, DE 19899 (302) 656-2500 Attorneys for Plaintiff OF COUNSEL: GOODKIND LABATON RUDOFF & SUCHAROW LLP 100 Park Avenue New York, New York 10017 (212) 907-0700 EX-99.(A)(15) 16 dex99a15.txt COMPLAINT OF SYLVIA PIVEN Exhibit 99.(a)(15) IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - -------------------------------------------------x : : SYLVIA PIVEN, individually and on behalf of all : others similarly situated, : : Plaintiffs, : : - against - : : C.A. No. 18645NC WILLIAM J. SHAW, DANIEL J. ALTOBELLO, PIERRE : BELLON, BERNARD CARTON, EDOARD DE ROYERE, : CLASS ACTION MICHAEL LANDEL, JOHN W. MARRIOTT, III, MARY S. : COMPLAINT METZ, SODEXHO MARRIOTT, INC. AND SODEXHO : ALLIANCE, S.A., : : Defendants. : : - -------------------------------------------------x INTRODUCTION ------------ Plaintiff alleges on information and belief, except for those allegations which pertain to plaintiff which are alleged upon personal knowledge, as follows: 1. This action arises out of an unlawful scheme and plan by Sodexho Alliance, S.A. ("Alliance") to acquire the remaining ownership of Sodexho Marriott Services, Inc. ("Marriott" or the "Company") for grossly inadequate consideration and without full and complete disclosure of all material information, in breach of defendants' fiduciary duties. THE PARTIES ----------- 2. Plaintiff is and has been at all relevant times the owner of Marriott common stock. 3. Defendant William J. Shaw ("Shaw") is and has been at all relevant times Chairman and a director of Marriott. Shaw is also President and Chief Operating Officer of Marriott International, Inc., which is a party to a number of agreements with the Company pursuant to which Marriott International receives substantial benefits. 4. Defendant Pierre Bellon ("Bellon") is and has been at all relevant times a director of Marriott. Bellon is also Chairman and Chief Executive Officer of Alliance. Bellon, together with members of his family, is the majority shareholder of Bellon, S.A., which is the majority shareholder of defendant Alliance. 5. Defendant Bernard Carton ("Carton") is and has been at all relevant times a director of Marriott. Carton is also Senior Vice President and Chief Financial Officer of Sodexho. 6. Defendant Edward de Royere ("Royere") is and has been at all relevant times a director of Marriott. de Royere is also a director of Sodexho. 7. Defendant Michael Landel ("Landel") is and has been at all relevant times President, Chief Executive Officer and a director of Marriott. Landel previously served as President and Chief Executive Officer of Sodexho North America. 8. Defendants Daniel J. Altobello, John W. Marriott, III and Mary S. Metz are and have been at all relevant times directors of Marriott. 9. Defendant John W. Marriott III is a director of Marriott. Marriott is also an executive officer of Marriott International and a member of the Marriott family with substantial interests in Marriott concerns. 10. Defendant Mary S. Metz is a director of Marriott. 11. The defendants names in (P)(P) 3-8 above (the "Individual Defendants"), as officers and/or directors of Company, owe the highest fiduciary duties of good faith, loyalty, fair dealing, due care, and candor to plaintiff and the other members of the Class (as defined below). 2 12. Defendant Marriott is a corporation organized and existing under the laws of the Delaware with its principal executive offices located at 9801 Washingtonian Boulevard in Gaithersburg, Maryland. Marriott provides outsourced food and facilities management in North America, offering food services, housekeeping, grounds keeping, plant operations and maintenance, and integrated facilities management. 13. Defendant Alliance is the beneficial owner of approximately 48% of Marriott's outstanding shares as of October 31, 2000. CLASS ACTION ALLEGATIONS ------------------------ 14. Plaintiff brings this action pursuant to Rule 23 of the Rules of the Court of Chancery, individually and on behalf of all other stockholders of the Company (except the defendants herein and any persons, firm, trust, corporation, or other entity related to or affiliated with them and their successors in interest), who are or will be threatened with injury arising from defendants' actions, as more fully described herein (the "Class"). 15. This action is properly maintainable as a class action for the following reasons: (a) the Class is so numerous that joinder of all members is impracticable. As of November 15, 2000, there were approximately 63.3 million shares of Marriott common stock issued and outstanding, held by thousands of shareholders of record and likely many more beneficial owners. (b) there are questions of law and fact which are common to the Class and which predominate over questions affecting any individual class member. The common questions include, inter alia, the following: ----- ---- (c) whether defendants have engaged and are continuing to engage in a plan and scheme to benefit themselves at the expense of the members of the Class; (d) whether the defendants have fulfilled, and are capable of fulfilling, their fiduciary duties to plaintiff and the other members of the Class, including their duties of entire fairness, fair dealing, loyalty, due care, and candor; (e) whether defendants have disclosed all material facts in connection with the challenged transaction; and 3 (f) whether plaintiff and the other members of the Class would be irreparably damaged if defendants are not enjoined from the conduct described herein; 16. The claims of plaintiff are typical of the claims of the other members of the Class in that all members of the Class will be damaged by defendants' actions. 17. Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. Plaintiff is an adequate representative of the Class. 18. A class action is superior to any other method available for the fair and efficient adjudication of this controversy since it would be impractical and undesirable for each of the members of the Class, who has suffered or will suffer damages, to bring separate actions. 19. Moreover, Defendants have acted and will continue to act on grounds generally applicable to the Class, thereby making appropriate final injunctive or corresponding declaratory relief with respect to the Class as a whole. BACKGROUND AND SUBSTANTIVE ALLEGATIONS -------------------------- 20. Marriott, formerly known as Marriott International, Inc. On March 27, 1998, Marriott International, Inc. ("Old Marriott") completed the distribution to its shareholders of a new company consisting of its lodging, senior living services and distribution services businesses. This new company adopted the name Marriott International, Inc. The remaining business of Old Marriott, which was comprised primarily of the operations of Marriott Management Services, combined its food service and facilities management business with the North American operations of defendant Sodexho Alliance, S.A. and changed its name to Sodexho Marriott Services, Inc. 21. On January 25, 2001, Alliance announced a plan to acquire the remaining 52% of Marriott it does not already own for $27.00 in a transaction valued at $900 million (the "Offer"). 4 22. Marriott, which reported losses for the past two years, has only just recently moved into profitability. On January 11, 2001, the Company issued a press release reporting net income of $36 million, or $0.56 per diluted share for the 13 weeks ended December 1, 2000, up 29% compared with net income of $28 million, or $0.44 per share, for the corresponding period in 1999. Revenues for the first quarter of fiscal year 2001 reportedly totaled $1.36 billion, an increase of $71 million, or 6% over the same period in 1999. According to the January 11, press release, Marriott benefitted from "continued favorable outsourcing trends in the North American markets, in addition to continued growth in sales to existing clients and expanding its relationships with its clients through competitive add-on services." 23. Defendant Landel made the following comments in the January 11 press release with respect to Marriott's performance and its outlook for the future: We had a great quarter to start our new fiscal year ...The Education division did an outstanding job in improving the results of several accounts that were underperforming last year, while our other divisions enjoyed solid results for the quarter. We continue to focus on adding value for our existing clients and the new relationships we enter. Looking ahead, we reiterate this year's financial goals of 5%-6% top line and mid-teens bottom line growth. 24. Marriott's shares, which are only just beginning to reflect the Company's improved performance and inherent value, have risen nearly 20 percent from $20.81 on December 22, 2000, but do not yet fully reflect the Company's earnings potential. 25. The $27 price offered by Alliance is thus grossly inadequate in light of Marriott's recent share price and its future financial prospects, representing only a 9% premium to Marriott's closing price of $24-7/8 on January 24, 2001. 26. As noted above, Alliance and its affiliates beneficially own approximately 48% of Marriott's outstanding shares. 27. Defendants are intent on paying the lowest possible price to Class members, even though they are duty-bound to maximize shareholder value. While defendants have announced the plan they cannot commence the Offer until March 2001 under the terms of a standstill agreement with the government. Consequently, the meager 5 premium has been locked in. Defendants have clear and material conflicts of interest in the Offer. 28. Because of their control over the Company, defendants are in a position to dictate the terms of the Offer. Defendants have conflicts of interest and thus cannot represent or protect the interests of the Company's public shareholders with impartiality and vigor. 29. The Offer is in furtherance of an unfair plan to take Marriott private, which, if not enjoined, will result in the elimination of the public stockholders of Marriott in a transaction that is inherently unfair to them and that is the product of the defendants' conflict of interest, as described herein. More particularly, the Offer is in violation of defendants' fiduciary duties and has been timed and structured unfairly in that: (a) the Offer is designed and intended to eliminate members of the Class as stockholders of the Company from continued equity participation in the Company at a price per share which defendants know or should know is grossly unfair and inadequate; (b) defendants, by virtue of, among other things, their voting and ownership power, control and dominate Marriott's Board of Directors; (c) defendants have unique knowledge of the Company and have access to information denied or unavailable to the class. Without all material information, Class members are unable to determine whether the price offered in the Offer is fair; and (d) defendants have violated their duty of fair dealing by manipulating the timing of the Offer to benefit themselves at the expense of the plaintiff and the class. 30. Unless enjoined by this Court, defendants will continue to breach their fiduciary duties owed to plaintiff and the Class and will consummate the Offer to the irreparable harm of plaintiff and the Class. 6 31. Plaintiff and the other members of the Class have no adequate remedy at law. WHEREFORE, plaintiff demands judgment as follows: A. Declaring this to be a proper class action and naming plaintiff as Class representative; B. Granting preliminary and permanent injunctive relief against the consummation of the Offer as described herein; C. In the event the Offer is consummated, rescinding the Offer and awarding rescissionary damages; D. Ordering defendants to pay to plaintiff and to other members of the Class all damages suffered and to be suffered by them as the result of the acts and transactions alleged herein; E. Awarding plaintiff the costs and disbursements of the action including allowances for plaintiff's reasonable attorneys and experts fees; and F. Granting such other and further relief as may be just and proper. Dated: January 25, 2001 CHIMICLES & TIKELLIS LLP By: /s/ [Illegible] ------------------------------- Pamela S. Tikellis Robert J. Kriner, Jr. Timothy R. Dudderar One Rodney Square P.O. Box 1035 Wilmington, DE 19899 (302) 656-2500 Attorneys for Plaintiff 7 EX-99.(A)(16) 17 dex99a16.txt COMPLAINT OF AUDREY GOLDBERG Exhibit 99.(a)(16) IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - -----------------------------------------x AUDREY GOLDBERG, : : Plaintiff, : : v. : C.A. No.: 18650-NC : WILLIAM J. SHAW; DANIEL J. ALTOBELLO; : PIERRE BELLON; BERNARD CARTON; : EDOUARD DE ROYERE; MICHEL LANDEL; : JOHN W. MARRIOTT III; MARY S. METZ; : SODEXHO ALLIANCE SA; and SODEXHO : MARRIOTT SERVICES, INC., : : Defendants. : - -----------------------------------------x CLASS ACTION COMPLAINT ---------------------- Plaintiff alleges upon information and belief, except as to paragraph 1 which is alleged upon personal knowledge, as follows: THE PARTIES ----------- 1. Plaintiff is the owner of shares of the common stock of Sodexho Marriott Services Inc. ("SDH" or the "Company") and has been the owner of such shares continuously since prior to the wrongs complained of herein. 2. SDH is a corporation duly organized under the laws of the State of Delaware, with its principal executive offices located at 9801 Washingtonian Boulevard, Gaithersburg, Maryland. The Company is a provider in North America of outsourced food and facilities management services to businesses, health care facilities, colleges and universities, primary and secondary schools, and other clients. 3. Defendant William J. Shaw ("Shaw") is Chairman of the Board of SDH. 4. Defendant Pierre Bellon ("Bellon") is a director of SDH. Bellon also is Chairman and Chief Executive Officer of Sodexho Alliance SA ("Sodexho"), which beneficially owns approximately 48% of the Company's outstanding common stock and thereby effectively controls SDH. 5. Defendant Bernard Carton ("Carton") is a director of SDH. Carton also is Senior Vice President and Chief Financial Officer of Sodexho. 6. Defendant Edouard de Royere ("Royere") is a director of SDH. Royere also is a director of Sodexho. 7. Defendant Michel Landel ("Landel") is a director of SDH. Landel joined Sodexho in 1984 and has served in various executive positions with Sodexho. 8. Defendants Daniel J. Altobello, John W. Marriott, III, and Mary S. Metz are directors of SDH. 9. The Individual Defendants, as directors of the Company, and Sodexho, as controlling shareholder, are in a fiduciary relationship with plaintiff and the other public stockholders of SDH, and owe plaintiff and the other members of the class the highest obligations of good faith, fair dealing, due care, loyalty and full and candid disclosure. CLASS ACTION ALLEGATIONS ------------------------ 10. Plaintiff brings this action on his own behalf and as a class action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf all shareholders of SDH, or their successors in interest, who are being and will be harmed by defendants' conduct described herein (the "Class"). Excluded from the Class are defendants herein and any person, firm, trust, corporation or other entity related to or affiliated with any of the defendants. 11. This action is properly maintainable as a class action because: (a) The Class is so numerous that joinder of all members is impracticable. There are millions shares of SDH common stock outstanding beneficially owned by hundreds, if not thousands, of SDH shareholders who are members of the Class. (b) There are questions of law and fact which are common to the Class including, inter alia, the following: ----- ---- (i) whether defendants have improperly engaged in a course of conduct designed to benefit Sodexho at the expense of SDH's public stockholders; and (ii) whether plaintiff and the other members of the Class would be irreparably damaged were the transactions complained of herein consummated. (c) Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. Plaintiff's claims are typical of the claims of the other members of the Class and plaintiff has the same interests as the other members of the Class. Accordingly, plaintiff is an adequate representative of the Class and will fairly and adequately protect the interests of the Class. (d) The prosecution of separate actions by individual Class members would create the risk of inconsistent or varying adjudications with respect to the individual members of the Class which would establish incompatible standards of conduct for defendants, or adjudications with respect to individual members of the Class which would, as a practical matter, be dispositive of the interests of the other members not parties to the adjudications or substantially impair their ability to protect their interests. (e) Defendants have acted on grounds generally applicable to the Class with respect to the matters complained of herein, thereby making appropriate the relief sought herein with respect to the Class as a whole. SUBSTANTIVE ALLEGATIONS ----------------------- 12. On or about January 25, 2001, Sodexho announced that it had made a proposal to the SDH Board of Directors to take the Company private for $27.00 per share in cash. 13. Sodexho's offer would provide SDH's public shareholders with a mere 8% premium to the closing price of SDH shares on January 24, 2001, the last trading day prior to announcement of the offer. 14. Sodexho has timed the proposal to freeze out SDH's public shareholders in order to capture for itself SDH's future potential without paying an adequate or fair price to the Company's public shareholders. 15. Sodexho timed the announcement of the proposed buyout to place an artificial lid on the market price of SDH common stock so that the market would not reflect SDH's improving potential, thereby purporting to justify an unreasonably low price. 16. Sodexho has access to internal financial information about SDH, its true value, expected increase in true value, and the benefits of 100% ownership of SDH to which plaintiff and the Class members are not privy. Sodexho is using such inside information to benefit itself in the proposed transaction, to the detriment of the SDH's public stockholders. 17. Sodexho has clear and material conflicts of interest and is acting to better its own interests at the expense of SDH's public shareholders. Sodexho has voting control of the Company and controls its proxy machinery. Sodexho has selected and/or controls a majority of SDH's directors, with the remaining SDH directors beholden to Sodexho for their offices and the valuable perquisites which they enjoy therefrom. 18. Sodexho is engaging in self-dealing and not acting in good faith toward plaintiff and the other members of the Class. By reason of the foregoing, Sodexho and the Individual Defendants have breached and are breaching their fiduciary duties to the members of the Class. 19. Unless the proposed buyout is enjoined by the Court, defendants will continue to breach their fiduciary duties owed to plaintiff and the members of the Class to the irreparable harm of the members of the Class. 20. Plaintiff and the Class have no adequate remedy at law. WHEREFORE, plaintiff prays for judgment and relief as follows: A. Ordering that this action may be maintained as a class action and certifying plaintiff as the Class representative; B. Preliminarily and permanently enjoining defendants and all persons acting in concert with them, from proceeding with, consummating or closing the proposed transaction; C. In the event the proposed buyout is consummated, rescinding it and setting it aside or awarding rescissory damages to the Class; D. Directing defendants to account to Class members for their damages sustained as a result of the wrongs complained of herein; E. Awarding plaintiff the costs of this action, including a reasonable allowance for plaintiff's attorneys' and experts' fees; F. Granting such other and further relief as this Court may deem just and proper. ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By: /s/ [illegible] ---------------------------------- Suite 1401, Mellon Bank Center P.O Box 1070 Wilmington, DE 19899 (302) 656-4433 Of Counsel: CAULEY GELLER BOWMAN & COATES, LLP One Boca Place 2255 Glades Road Suite 421A Boca Raton, FL 33431 (561) 750-3000 EX-99.(A)(17) 18 dex99a17.txt COMPLAINT OF GARY REMMEN Exhibit 99.(a)(17) IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - -----------------------------------------x GARY REMMEN, : : Plaintiff, : : v. : C.A. No.: 18651 : WILLIAM J. SHAW; DANIEL J. ALTOBELLO; : PIERRE BELLON; BERNARD CARTON; : EDOUARD DE ROYERE; MICHEL LANDEL; : JOHN W. MARRIOTT III; MARY S. METZ; : SODEXHO ALLIANCE SA; and SODEXHO : MARRIOTT SERVICES, INC., : : Defendants. : - -----------------------------------------x CLASS ACTION COMPLAINT ---------------------- Plaintiff alleges upon information and belief, except as to paragraph 1 which is alleged upon personal knowledge, as follows: THE PARTIES ----------- 1. Plaintiff is the owner of shares of the common stock of Sodexho Marriott Services Inc. ("SDH" or the "Company") and has been the owner of such shares continuously since prior to the wrongs complained of herein. 2. SDH is a corporation duly organized under the laws of the State of Delaware, with its principal executive offices located at 9801 Washingtonian Boulevard, Gaithersburg, Maryland. The Company is a provider in North America of outsourced food and facilities management services to businesses, health care facilities, colleges and universities, primary and secondary schools, and other clients. 3. Defendant William J. Shaw ("Shaw") is Chairman of the Board of SDH. 4. Defendant Pierre Bellon ("Bellon") is a director of SDH. Bellon also is Chairman and Chief Executive Officer of Sodexho Alliance SA ("Sodexho"), which beneficially owns approximately 48% of the Company's outstanding common stock and thereby effectively controls SDH. 5. Defendant Bernard Carton ("Carton") is a director of SDH. Carton also is Senior Vice President and Chief Financial Officer of Sodexho. 6. Defendant Edouard de Royere ("Royere") is a director of SDH. Royere also is a director of Sodexho. 7. Defendant Michel Landel ("Landel") is a director of SDH. Landel joined Sodexho in 1984 and has served in various executive positions with Sodexho. 8. Defendants Daniel J. Altobello, John W. Marriott, III, and Mary S. Metz are directors of SDH. 9. The Individual Defendants, as directors of the Company, and Sodexho, as controlling shareholder, are in a fiduciary relationship with plaintiff and the other public stockholders of SDH, and owe plaintiff and the other members of the class the highest obligations of good faith, fair dealing, due care, loyalty and full and candid disclosure. CLASS ACTION ALLEGATIONS ------------------------ 10. Plaintiff brings this action on his own behalf and as a class action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf all shareholders of SDH, or their successors in interest, who are being and will be harmed by defendants' conduct described herein (the "Class"). Excluded from the Class are defendants herein and any person, firm, trust, corporation or other entity related to or affiliated with any of the defendants. 11. This action is properly maintainable as a class action because: (a) The Class is so numerous that joinder of all members is impracticable. There are millions shares of SDH common stock outstanding beneficially owned by hundreds, if not thousands, of SDH shareholders who are members of the Class. (b) There are questions of law and fact which are common to the Class including, inter alia, the following: ----- ---- (i) whether defendants have improperly engaged in a course of conduct designed to benefit Sodexho at the expense of SDH's public stockholders; and (ii) whether plaintiff and the other members of the Class would be irreparably damaged were the transactions complained of herein consummated. (c) Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. Plaintiff's claims are typical of the claims of the other members of the Class and plaintiff has the same interests as the other members of the Class. Accordingly, plaintiff is an adequate representative of the Class and will fairly and adequately protect the interests of the Class. (d) The prosecution of separate actions by individual Class members would create the risk of inconsistent or varying adjudications with respect to the individual members of the Class which would establish incompatible standards of conduct for defendants, or adjudications with respect to individual members of the Class which would, as a practical matter, be dispositive of the interests of the other members not parties to the adjudications or substantially impair their ability to protect their interests. (e) Defendants have acted on grounds generally applicable to the Class with respect to the matters complained of herein, thereby making appropriate the relief sought herein with respect to the Class as a whole. SUBSTANTIVE ALLEGATIONS ----------------------- 12. On or about January 25, 2001, Sodexho announced that it had made a proposal to the SDH Board of Directors to take the Company private for $27.00 per share in cash. 13. Sodexho's offer would provide SDH's public shareholders with a mere 8% premium to the closing price of SDH shares on January 24, 2001, the last trading day prior to announcement of the offer. 14. Sodexho has timed the proposal to freeze out SDH's public shareholders in order to capture for itself SDH's future potential without paying an adequate or fair price to the Company's public shareholders. 15. Sodexho timed the announcement of the proposed buyout to place an artificial lid on the market price of SDH common stock so that the market would not reflect SDH's improving potential, thereby purporting to justify an unreasonably low price. 16. Sodexho has access to internal financial information about SDH, its true value, expected increase in true value, and the benefits of 100% ownership of SDH to which plaintiff and the Class members are not privy. Sodexho is using such inside information to benefit itself in the proposed transaction, to the detriment of the SDH's public stockholders. 17. Sodexho has clear and material conflicts of interest and is acting to better its own interests at the expense of SDH's public shareholders. Sodexho has voting control of the Company and controls its proxy machinery. Sodexho has selected and/or controls a majority of SDH's directors, with the remaining SDH directors beholden to Sodexho for their offices and the valuable perquisites which they enjoy therefrom. 18. Sodexho is engaging in self-dealing and not acting in good faith toward plaintiff and the other members of the Class. By reason of the foregoing, Sodexho and the Individual Defendants have breached and are breaching their fiduciary duties to the members of the Class. 19. Unless the proposed buyout is enjoined by the Court, defendants will continue to breach their fiduciary duties owed to plaintiff and the members of the Class to the irreparable harm of the members of the Class. 20. Plaintiff and the Class have no adequate remedy at law. WHEREFORE, plaintiff prays for judgment and relief as follows: A. Ordering that this action may be maintained as a class action and certifying plaintiff as the Class representative; B. Preliminarily and permanently enjoining defendants and all persons acting in concert with them, from proceeding with, consummating or closing the proposed transaction; C. In the event the proposed buyout is consummated, rescinding it and setting it aside or awarding rescissory damages to the Class; D. Directing defendants to account to Class members for their damages sustained as a result of the wrongs complained of herein; E. Awarding plaintiff the costs of this action, including a reasonable allowance for plaintiff's attorneys' and experts' fees; F. Granting such other and further relief as this Court may deem just and proper. ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By: /s/ [illegible] ---------------------------------- Suite 1401, Mellon Bank Center P.O Box 1070 Wilmington, DE 19899 (302) 656-4433 Of Counsel: SHEPHERD, FINKELMAN & GAFFIGAN, LLC 117 Gayley Street Suite 200 Media, PA 19063 (610) 891-9880 EX-99.(A)(18) 19 dex99a18.txt COMPLAINT OF NEIL BERG Exhibit 99.(a)(18) IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - -----------------------------------------x NEIL BERG, : : Plaintiff, : : v. : C.A. No.: 18653-NC : WILLIAM J. SHAW; DANIEL J. ALTOBELLO; : PIERRE BELLON; BERNARD CARTON; : EDOUARD DE ROYERE; MICHEL LANDEL; : JOHN W. MARRIOTT III; MARY S. METZ; : SODEXHO ALLIANCE SA; and SODEXHO : MARRIOTT SERVICES, INC., : : Defendants. : - -----------------------------------------x CLASS ACTION COMPLAINT ---------------------- Plaintiff alleges upon information and belief, except as to paragraph 1 which is alleged upon personal knowledge, as follows: THE PARTIES ----------- 1. Plaintiff is the owner of shares of the common stock of Sodexho Marriott Services Inc. ("SDH" or the "Company") and has been the owner of such shares continuously since prior to the wrongs complained of herein. 2. SDH is a corporation duly organized under the laws of the State of Delaware, with its principal executive offices located at 9801 Washingtonian Boulevard, Gaithersburg, Maryland. The Company is a provider in North America of outsourced food and facilities management services to businesses, health care facilities, colleges and universities, primary and secondary schools, and other clients. 3. Defendant William J. Shaw ("Shaw") is Chairman of the Board of SDH. 4. Defendant Pierre Bellon ("Bellon") is a director of SDH. Bellon also is Chairman and Chief Executive Officer of Sodexho Alliance SA ("Sodexho"), which beneficially owns approximately 48% of the Company's outstanding common stock and thereby effectively controls SDH. 5. Defendant Bernard Carton ("Carton") is a director of SDH. Carton also is Senior Vice President and Chief Financial Officer of Sodexho. 6. Defendant Edouard de Royere ("Royere") is a director of SDH. Royere also is a director of Sodexho. 7. Defendant Michel Landel ("Landel") is a director of SDH. Landel joined Sodexho in 1984 and has served in various executive positions with Sodexho. 8. Defendants Daniel J. Altobello, John W. Marriott, III, and Mary S. Metz are directors of SDH. 9. The Individual Defendants, as directors of the Company, and Sodexho, as controlling shareholder, are in a fiduciary relationship with plaintiff and the other public stockholders of SDH, and owe plaintiff and the other members of the class the highest obligations of good faith, fair dealing, due care, loyalty and full and candid disclosure. CLASS ACTION ALLEGATIONS ------------------------ 10. Plaintiff brings this action on his own behalf and as a class action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf all shareholders of SDH, or their successors in interest, who are being and will be harmed by defendants' conduct described herein (the "Class"). Excluded from the Class are defendants herein and any person, firm, trust, corporation or other entity related to or affiliated with any of the defendants. 11. This action is properly maintainable as a class action because: (a) The Class is so numerous that joinder of all members is impracticable. There are millions shares of SDH common stock outstanding beneficially owned by hundreds, if not thousands, of SDH shareholders who are members of the Class. (b) There are questions of law and fact which are common to the Class including, inter alia, the following: ----- ---- (i) whether defendants have improperly engaged in a course of conduct designed to benefit Sodexho at the expense of SDH's public stockholders; and (ii) whether plaintiff and the other members of the Class would be irreparably damaged were the transactions complained of herein consummated. (c) Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. Plaintiff's claims are typical of the claims of the other members of the Class and plaintiff has the same interests as the other members of the Class. Accordingly, plaintiff is an adequate representative of the Class and will fairly and adequately protect the interests of the Class. (d) The prosecution of separate actions by individual Class members would create the risk of inconsistent or varying adjudications with respect to the individual members of the Class which would establish incompatible standards of conduct for defendants, or adjudications with respect to individual members of the Class which would, as a practical matter, be dispositive of the interests of the other members not parties to the adjudications or substantially impair their ability to protect their interests. (e) Defendants have acted on grounds generally applicable to the Class with respect to the matters complained of herein, thereby making appropriate the relief sought herein with respect to the Class as a whole. SUBSTANTIVE ALLEGATIONS ----------------------- 12. On or about January 25, 2001, Sodexho announced that it had made a proposal to the SDH Board of Directors to take the Company private for $27.00 per share in cash. 13. Sodexho's offer would provide SDH's public shareholders with a mere 8% premium to the closing price of SDH shares on January 24, 2001, the last trading day prior to announcement of the offer. 14. Sodexho has timed the proposal to freeze out SDH's public shareholders in order to capture for itself SDH's future potential without paying an adequate or fair price to the Company's public shareholders. 15. Sodexho timed the announcement of the proposed buyout to place an artificial lid on the market price of SDH common stock so that the market would not reflect SDH's improving potential, thereby purporting to justify an unreasonably low price. 16. Sodexho has access to internal financial information about SDH, its true value, expected increase in true value, and the benefits of 100% ownership of SDH to which plaintiff and the Class members are not privy. Sodexho is using such inside information to benefit itself in the proposed transaction, to the detriment of the SDH's public stockholders. 17. Sodexho has clear and material conflicts of interest and is acting to better its own interests at the expense of SDH's public shareholders. Sodexho has voting control of the Company and controls its proxy machinery. Sodexho has selected and/or controls a majority of SDH's directors, with the remaining SDH directors beholden to Sodexho for their offices and the valuable perquisites which they enjoy therefrom. 18. Sodexho is engaging in self-dealing and not acting in good faith toward plaintiff and the other members of the Class. By reason of the foregoing, Sodexho and the Individual Defendants have breached and are breaching their fiduciary duties to the members of the Class. 19. Unless the proposed buyout is enjoined by the Court, defendants will continue to breach their fiduciary duties owed to plaintiff and the members of the Class to the irreparable harm of the members of the Class. 20. Plaintiff and the Class have no adequate remedy at law. WHEREFORE, plaintiff prays for judgment and relief as follows: A. Ordering that this action may be maintained as a class action and certifying plaintiff as the Class representative; B. Preliminarily and permanently enjoining defendants and all persons acting in concert with them, from proceeding with, consummating or closing the proposed transaction; C. In the event the proposed buyout is consummated, rescinding it and setting it aside or awarding rescissory damages to the Class; D. Directing defendants to account to Class members for their damages sustained as a result of the wrongs complained of herein; E. Awarding plaintiff the costs of this action, including a reasonable allowance for plaintiff's attorneys' and experts' fees; F. Granting such other and further relief as this Court may deem just and proper. ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By: /s/ [Illegible] ----------------------------------- Suite 1401, Mellon Bank Center P.O Box 1070 Wilmington, DE 19899 (302) 656-4433 Of Counsel: STULL STULI, & BRODY Aaron Brody, Esquire 6 East 45the Street, 5/th/ Floor New York, NY 10017 (212) 687-7230 WEISS & YOURMAN Joseph Weiss, Esquire 551 Fifth Avenue New York, NY 10176 (212) 682-3025 EX-99.(A)(19) 20 dex99a19.txt COMPLAINT OF C. OLIVER BURT Exhibit 99.(a)(19) IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - -----------------------------------------x C. OLIVER BURT, : : Plaintiff, : : v. : C.A. No.: 18661NC : WILLIAM J. SHAW; DANIEL J. ALTOBELLO; : PIERRE BELLON; BERNARD CARTON; : EDOUARD DE ROYERE; MICHEL LANDEL; : JOHN W. MARRIOTT III; MARY S. METZ; : SODEXHO ALLIANCE SA; and SODEXHO : MARRIOTT SERVICES, INC., : : Defendants. : - -----------------------------------------x CLASS ACTION COMPLAINT ---------------------- Plaintiff alleges upon information and belief, except as to paragraph 1 which is alleged upon personal knowledge, as follows: THE PARTIES ----------- 1. Plaintiff is the owner of shares of the common stock of Sodexho Marriott Services Inc. ("SDH" or the "Company") and has been the owner of such shares continuously since prior to the wrongs complained of herein. 2. SDH is a corporation duly organized under the laws of the State of Delaware, with its principal executive offices located at 9801 Washingtonian Boulevard, Gaithersburg, Maryland. The Company is a provider in North America of outsourced food and facilities management services to businesses, health care facilities, colleges and universities, primary and secondary schools, and other clients. 3. Defendant William J. Shaw ("Shaw") is Chairman of the Board of SDH. 4. Defendant Pierre Bellon ("Bellon") is a director of SDH. Bellon also is Chairman and Chief Executive Officer of Sodexho Alliance SA ("Sodexho"), which beneficially owns approximately 48% of the Company's outstanding common stock and thereby effectively controls SDH. 5. Defendant Bernard Carton ("Carton") is a director of SDH. Carton also is Senior Vice President and Chief Financial Officer of Sodexho. 6. Defendant Edouard de Royere ("Royere") is a director of SDH. Royere also is a director of Sodexho. 7. Defendant Michel Landel ("Landel") is a director of SDH. Landel joined Sodexho in 1984 and has served in various executive positions with Sodexho. 8. Defendants Daniel J. Altobello, John W. Marriott, III, and Mary S. Metz are directors of SDH. 9. The Individual Defendants, as directors of the Company, and Sodexho, as controlling shareholder, are in a fiduciary relationship with plaintiff and the other public stockholders of SDH, and owe plaintiff and the other members of the class the highest obligations of good faith, fair dealing, due care, loyalty and full and candid disclosure. CLASS ACTION ALLEGATIONS ------------------------ 10. Plaintiff brings this action on his own behalf and as a class action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf all shareholders of SDH, or their successors in interest, who are being and will be harmed by defendants' conduct described herein (the "Class"). Excluded from the Class are defendants herein and any person, firm, trust, corporation or other entity related to or affiliated with any of the defendants. 11. This action is properly maintainable as a class action because: (a) The Class is so numerous that joinder of all members is impracticable. There are millions shares of SDH common stock outstanding beneficially owned by hundreds, if not thousands, of SDH shareholders who are members of the Class. (b) There are questions of law and fact which are common to the Class including, inter alia, the following: ----- ---- (i) whether defendants have improperly engaged in a course of conduct designed to benefit Sodexho at the expense of SDH's public stockholders; and (ii) whether plaintiff and the other members of the Class would be irreparably damaged were the transactions complained of herein consummated. (c) Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. Plaintiff's claims are typical of the claims of the other members of the Class and plaintiff has the same interests as the other members of the Class. Accordingly, plaintiff is an adequate representative of the Class and will fairly and adequately protect the interests of the Class. (d) The prosecution of separate actions by individual Class members would create the risk of inconsistent or varying adjudications with respect to the individual members of the Class which would establish incompatible standards of conduct for defendants, or adjudications with respect to individual members of the Class which would, as a practical matter, be dispositive of the interests of the other members not parties to the adjudications or substantially impair their ability to protect their interests. (e) Defendants have acted on grounds generally applicable to the Class with respect to the matters complained of herein, thereby making appropriate the relief sought herein with respect to the Class as a whole. SUBSTANTIVE ALLEGATIONS ----------------------- 12. On or about January 25, 2001, Sodexho announced that it had made a proposal to the SDH Board of Directors to take the Company private for $27.00 per share in cash. 13. Sodexho's offer would provide SDH's public shareholders with a mere 8% premium to the closing price of SDH shares on January 24, 2001, the last trading day prior to announcement of the offer. 14. Sodexho has timed the proposal to freeze out SDH's public shareholders in order to capture for itself SDH's future potential without paying an adequate or fair price to the Company's public shareholders. 15. Sodexho timed the announcement of the proposed buyout to place an artificial lid on the market price of SDH common stock so that the market would not reflect SDH's improving potential, thereby purporting to justify an unreasonably low price. 16. Sodexho has access to internal financial information about SDH, its true value, expected increase in true value, and the benefits of 100% ownership of SDH to which plaintiff and the Class members are not privy. Sodexho is using such inside information to benefit itself in the proposed transaction, to the detriment of the SDH's public stockholders. 17. Sodexho has clear and material conflicts of interest and is acting to better its own interests at the expense of SDH's public shareholders. Sodexho has voting control of the Company and controls its proxy machinery. Sodexho has selected and/or controls a majority of SDH's directors, with the remaining SDH directors beholden to Sodexho for their offices and the valuable perquisites which they enjoy therefrom. 18. Sodexho is engaging in self-dealing and not acting in good faith toward plaintiff and the other members of the Class. By reason of the foregoing, Sodexho and the Individual Defendants have breached and are breaching their fiduciary duties to the members of the Class. 19. Unless the proposed buyout is enjoined by the Court, defendants will continue to breach their fiduciary duties owed to plaintiff and the members of the Class to the irreparable harm of the members of the Class. 20. Plaintiff and the Class have no adequate remedy at law. WHEREFORE, plaintiff prays for judgment and relief as follows: A. Ordering that this action may be maintained as a class action and certifying plaintiff as the Class representative; B. Preliminarily and permanently enjoining defendants and all persons acting in concert with them, from proceeding with, consummating or closing the proposed transaction; C. In the event the proposed buyout is consummated, rescinding it and setting it aside or awarding rescissory damages to the Class; D. Directing defendants to account to Class members for their damages sustained as a result of the wrongs complained of herein; E. Awarding plaintiff the costs of this action, including a reasonable allowance for plaintiff's attorneys' and experts' fees; F. Granting such other and further relief as this Court may deem just and proper. ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By: /s/ [illegible] ------------------------------------ Suite 1401, Mellon Bank Center P.O Box 1070 Wilmington, DE 19899 (302) 656-4433 Of Counsel: DONOVAN MILLER, LLC Michael Donovan, Esquire 1608 Walnut Street Suite 1400 Philadelphia, PA 19103 (215) 732-6020 EX-99.(B)(1) 21 dex99b1.txt TERM AND REVOLVING FACILITIES AGREEMENT Exhibit 99.(b)(1) CONFORMED COPY TERM AND REVOLVING FACILITIES AGREEMENT (Euro) 1,720,000,000 and US$1,080,000,000 FACILITY AGREEMENT dated 6 April 2001 for SODEXHO ALLIANCE, S.A. arranged by CITIBANK INTERNATIONAL plc GOLDMAN SACHS INTERNATIONAL AND SG INVESTMENT BANKING with SOCIETE GENERALE acting as Agent and SOCIETE GENERALE acting as Issuing Bank LINKLATERS & ALLIANCE LINKLATERS Ref: PHPS CONTENTS
CLAUSE PAGE SECTION 1 INTERPRETATION 1. Definitions and interpretation..................................... 1 SECTION 2 THE FACILITIES 2. The Facilities..................................................... 21 3. Purpose............................................................ 21 4. Conditions of Utilisation.......................................... 22 SECTION 3 UTILISATION 5. Utilisation - Loans................................................ 25 6. Utilisation - Letters of Credit.................................... 26 7. Letters of Credit.................................................. 31 8. Optional Currencies................................................ 36 SECTION 4 REPAYMENT, PREPAYMENT AND CANCELLATION 9. Repayment.......................................................... 38 10. Prepayment and cancellation........................................ 39 SECTION 5 COSTS OF UTILISATION 11. Interest........................................................... 44 12. Interest Periods................................................... 46 13. Changes to the calculation of interest............................. 48 14. Fees............................................................... 49 SECTION 6 ADDITIONAL PAYMENT OBLIGATIONS 15. Tax gross up and indemnities....................................... 50 16. Increased costs.................................................... 53 17. Other indemnities.................................................. 54 18. Mitigation by the Lenders.......................................... 55 19. Costs and expenses................................................. 55 SECTION 7 GUARANTEE 20. Guarantee and indemnity............................................ 57 SECTION 8 REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT 21. Representations.................................................... 60 22. Information undertakings........................................... 64 23. Financial Covenants................................................ 68 24. General undertakings............................................... 70 25. Events of Default.................................................. 75
SECTION 9 CHANGES TO PARTIES 26. Changes to the Lenders........................................... 80 27. Changes to the Obligors.......................................... 84 SECTION 10 THE FINANCE PARTIES 28. Role of the Agent and the Arranger............................... 86 29. Conduct of business by the Finance Parties....................... 90 30. Sharing among the Lenders........................................ 90 SECTION 11 ADMINISTRATION 31. Payment mechanics................................................ 93 32. Set-off.......................................................... 95 33. Notices.......................................................... 95 34. Calculations and certificates.................................... 97 35. Partial invalidity............................................... 97 36. Remedies and waivers............................................. 97 37. Amendments and waivers........................................... 98 38. Counterparts..................................................... 98 SECTION 12 GOVERNING LAW AND ENFORCEMENT 39. Governing law.................................................... 99 40. Enforcement...................................................... 99
THE SCHEDULES SCHEDULE PAGE SCHEDULE 1 The Original Lenders....................................... 100 SCHEDULE 2 Conditions precedent....................................... 101 SCHEDULE 3 Requests................................................... 105 SCHEDULE 4 Mandatory Cost formulae.................................... 108 SCHEDULE 5 Form of Transfer Certificate............................... 111 SCHEDULE 6 Form of Accession Letter................................... 112 SCHEDULE 7 Form of Compliance Certificate............................. 113 SCHEDULE 8 LMA Form of Confidentiality Undertaking.................... 114 SCHEDULE 9 Timetables................................................. 119 SCHEDULE 10 Acquisition Financing Indemnity............................ 121 SCHEDULE 11 Form of TEG Letter......................................... 123 SCHEDULE 12 Material Subsidiaries...................................... 125 SCHEDULE 13 Form of Letter of Credit................................... 126 THIS AGREEMENT is dated 6 April 2001 and made between: (1) SODEXHO ALLIANCE, S.A. (the "Company"); (2) CITIBANK INTERNATIONAL plc, GOLDMAN SACHS INTERNATIONAL and SG INVESTMENT BANKING (whether acting individually or together, the "Arranger"); (3) THE FINANCIAL INSTITUTIONS listed in Schedule 1 as lenders (the "Original Lenders"); (4) SOCIETE GENERALE as agent of the Lenders (the "Agent"); and (5) SOCIETE GENERALE as issuing bank of Letters of Credit (the "Issuing Bank"). IT IS AGREED as follows: SECTION 1 INTERPRETATION 1. Definitions and interpretation 1.1 Definitions In this Agreement: "AA" means Albert Abela Corporation. "AA Group" means AA and its Subsidiaries and "member of the AA Group" shall be construed accordingly. "AA Acquisition" means each proposed acquisition by an AA Bidco of the relevant businesses of members of the AA Group pursuant to an AA Acquisition Agreement. "AA Acquisition Agreement" means each sale and purchase agreement and, if applicable, attached schedules made between a member of the AA Group and an AA Bidco in respect of the Wood Dining Services, Sogeres, Other Businesses and Airline Catering businesses and, in each case, any amendments thereto and in the case of the Sogeres acquisition, the related substitution agreement. "AA Acquisition Costs" means all costs, fees and expenses and all registration and other similar Taxes incurred by or on behalf of the Company or any other member of the Group in connection with the AA Acquisitions and/or the Facilities. "AA Bidcos" means the four French and/or US companies incorporated by the Company for the purpose of carrying out the potential AA Acquisitions. "Accession Letter" means a document substantially in the form set out in Schedule 6 (Form of Accession Letter). "Acquired Shares" means any of the Shares which are acquired pursuant to an Offer and/or Market Purchases. "Additional Borrower" means a company which becomes an Additional Borrower in accordance with Clause 27 (Changes to the Obligors). "Additional Guarantor" means a company which becomes an Additional Guarantor in accordance with Clause 27 (Changes to the Obligors). "Additional Obligor" means an Additional Borrower or an Additional Guarantor. "Adjusted Net Worth" means, at any time, the sum of: (a) the amount of shareholders' funds ("capitaux propres") as shown in the Group's then most recent consolidated balance sheet; (b) the amount of minority interests ("interets minoritaires") as shown in the Group's then most recent consolidated balance sheet; and (c) the amount of goodwill arising on acquisitions ("ecarts de premiere consolidation") which has been written off against reserves, minority interests or amortised (but only to the extent that such write-off or amortisation has been deducted in computing profit or reserves), such amount to be calculated on a cumulative basis since 31 August 1994. "Affiliate" means: (a) in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company; and (b) for the purposes of this Agreement: (i) Citibank International plc, Citicorp USA, Inc. and Citibank, N.A. will be treated as Affiliates of each other; (ii) Goldman Sachs Credit Partners, L.P. and Goldman Sachs International Bank will be treated as Affiliates of each other; and (iii) except, for the avoidance of doubt, for the purposes of Clause 24.12 (Transactions with Affiliates and shareholders), Bellon S.A. shall not be treated as an Affiliate. "Agent's Spot Rate of Exchange" means the Agent's spot rate of exchange for the purchase of the relevant currency with the relevant Base Currency in the London foreign exchange market at or about 11:00 a.m. on a particular day. "Authorisation" means an authorisation, consent, approval, resolution, licence, exemption, filing or registration. "Availability Period" means: (a) in relation to Facility A1, the period from and including the date of this Agreement to and including the date which is 90 days after the date of this Agreement, provided that up to Euro 200,000,000 only of Facility A1 shall be available for drawing up to and including 30 November 2001; (b) in relation to Facility A2, the period from and including the date of this Agreement to and including the date which is 90 days after the date of this Agreement; (c) in relation to Facility B, the period from and including the date of this Agreement to and including the date which is 90 days after the date of this Agreement; and (d) in relation to Facility C, the period from and including the date of this Agreement to and including the Termination Date applicable to Facility C. "Available Commitment" means, in relation to a Facility, a Lender's Commitment under that Facility minus: (a) the Base Currency Amount of its participation in any outstanding Utilisations under that Facility; and (b) in relation to any proposed Utilisation, the Base Currency Amount of its participation in any Utilisations that are due to be made under that Facility on or before the proposed Utilisation Date, other than, in relation to Facility C only, that Lender's participation in any Facility C Utilisations that are due to be repaid or prepaid on or before the proposed Utilisation Date. "Available Facility" means, in relation to a Facility, the aggregate for the time being of each Lender's Available Commitment in respect of that Facility. "Base Currency" (a) in relation to Facility A and all Facility A Loans, euro; and (b) in relation to Facility B and a Facility B Loan and Facility C and a Facility C Loan or Letter of Credit, US Dollars. "Base Currency Amount" means, in relation to a Utilisation, the amount specified in the Utilisation Request delivered by a Borrower for that Utilisation (or, if the amount requested is not denominated in the Base Currency relative to that Utilisation, that amount converted into the Base Currency relative to that Utilisation at the Agent's Spot Rate of Exchange on the date which is three Business Days before the Utilisation Date or, if later, on the date the Agent receives the Utilisation Request) adjusted to reflect any repayment, prepayment, consolidation or division of that Utilisation. "Board" means the Board of Governors of the Federal Reserve System of the United States (or any successor). "Borrower" means the Company or an Additional Borrower. "Break Costs" means the amount (if any) by which: (a) the interest which a Lender should have received for the period from the date of receipt of all or any part of its participation in a Loan or Unpaid Sum to the last day of the current Interest Period in respect of that Loan or Unpaid Sum had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period; exceeds: (b) the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period. "Business Day" means a day (other than a Saturday or Sunday) on which banks are open for general business in London, New York and Paris and: (a) (in relation to any date for payment or purchase of a currency other than euro) the principal financial centre of the country of that currency; or (b) (in relation to any date for payment or purchase of euro) any TARGET Day. "Canadian Dollars" means the lawful currency for the time being of Canada. "Clean-up Period" means the period of 3 months: (a) in respect of an AA Acquisition, from and including the Company or the relevant AA Bidco completing that AA Acquisition, being the date on which the relevant business is transferred to the Company or, as the case may be, an AA Bidco under the relevant Acquisition Agreement; and (b) in respect of a Kodak Acquisition, from and including the Company or Kodak Bidco gaining control of Kodak (with "control" having the meaning specified in the definition of "Subsidiary"). "Code" means the United States Internal Revenue Code of 1986, as amended. "Commitment" means, in relation to a Lender at any time, the aggregate of its Facility A1 Commitment, its Facility A2 Commitment, its Facility B Commitment and its Facility C Commitment. "Commitment Letter" means the letter dated 5 March 2001 from, inter alia, each Arranger and Lender to the Company relating to the underwriting of the Facilities on the terms set out in such letter. "Compliance Certificate" means a certificate substantially in the form set out in Schedule 7 (Form of Compliance Certificate). "Confidentiality Undertaking" means a confidentiality undertaking substantially in a recommended form of the LMA as set out in Schedule 9 (LMA Form of Confidentiality Undertaking) or in any other form agreed between the Company and the Agent. "Default" means an Event of Default or any event or circumstance specified in Clause 25 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default. "EBITDA" means EBIT (as defined in Clause 23.2 (Definitions)) for the Group or relevant member of the Group, as the case may be, plus depreciation and amortisation plus or minus, as appropriate, changes in operating provisions as determined in accordance with French GAAP. "Environmental Approvals" means and includes (in relation to a person) any permits, consents, licences, certificates, specifications, registrations and other authorisations and approvals (including without limitation any conditions which attach to the above) required under Environmental Laws to be obtained in connection with the ownership, occupation, holding or use of any real property or the conduct of business by that party at any real property. "Environmental Claim" means any and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, notices of non-compliance or violation, investigations, proceedings, consent orders or consent agreements relating in any way to any Environmental Laws or Environmental Approvals. "Environmental Laws" means and includes (in relation to any person) the following; (a) all European community, national, regional or local statutes, treaty codes, or other laws or legislation (including, without limitation, those of the United States) concerning health, safety or Environmental Matters which are applicable to the business or to any real property owned, occupied, held or used by that person and all rules, regulations, ordinances, orders, notices, directives, circulars, codes of practice and guidance notes made thereunder including any amendment, re-enactment or consolidation thereof (whether or not applicable at the date hereof); and (b) judicial and administrative interpretation of each of the foregoing. "Environmental Matters" means and includes in relation to a person's business and any real property owned, occupied, held or used by that person all matters related to pollution or protection of the environment including, without limitation, harm to the health of human beings, animals, and plants including without limitation public and employee health and safety, noise, emissions, discharges, and releases of Hazardous Substances into air, water, sewage systems and land, and the manufacture, processing, distribution, use, treatment, storage, disposal, transport and handling of Hazardous Substances. "ERISA" means the Employee Retirement Income Security Act of 1974 and the regulations promulgated and rulings issued thereunder. "ERISA Affiliate" means any person that for the purposes of Title IV of ERISA is a member of the controlled group of a US Material Subsidiary, or under common control with a US Material Subsidiary, within the meaning of Section 414 of the Internal Revenue Code. "ERISA Event" means: (a) (i) the occurrence of a reportable event, within the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day notice requirement with respect to such event has been waived by the PBGC, or (ii) the requirements of subsection (1) of Section 4043(b) of ERISA (taking into account subsection (2) of such Section) are met with respect to a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such Plan within the following 30 days; (b) the application for a minimum funding waiver with respect to a Plan; (c) the provision by the administrator of any Plan of a notice of intent to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA in a distress termination pursuant to ERISA Section 4041(c) (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (d) the cessation of operations at a facility of a US Obligor or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by a US Material Subsidiary or any ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions for imposition of a lien under Section 302(f) of ERISA shall have been met with respect to any Plan; (g) the adoption of an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA; or (h) the institution by the PBGC of proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any event or condition described in Section 4042 of ERISA that constitutes grounds for the termination of, or the appointment of a trustee to administer, such Plan. "EURIBOR" means, in relation to any Loan in euro: (a) the applicable Screen Rate; or (b) (if no Screen Rate is available for the period of that Loan) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request quoted by the Reference Banks to leading banks in the European Interbank market, as of the Specified Time on the Quotation Day for the offering of deposits in euro for a period comparable to the Interest Period of the relevant Loan. "euro" or "EURO" means the single currency of the Participating Member States and, for the avoidance of doubt, excludes National Currency Units. "Event of Default" means any event or circumstance specified as such in Clause 25 (Events of Default). "Facility" means Facility A, Facility B and/or, as the context may require, Facility C. "Facility A" means either or both of Facility A1 or Facility A2, as the case may be. "Facility A Loan" means a Facility A1 Loan or a Facility A2 Loan. "Facility A1" means the term loan facility made available under this Agreement as described in paragraph (a) of Clause 2.1 (The Facilities). "Facility A1 Commitment" means: (a) in relation to an Original Lender, the amount in the Base Currency relative to Facility A1 set opposite its name under the heading "Facility A1 Commitment" in Part II of Schedule 1 (The Original Parties) and the amount of any other Facility A1 Commitment transferred to it under this Agreement; and (b) in relation to any other Lender, the amount in the Base Currency relative to Facility A1 of any Facility A1 Commitment transferred to it under this Agreement, to the extent not cancelled, reduced or transferred by it under this Agreement. "Facility A1 Loan" means a loan made or to be made under Facility A1 or the principal amount outstanding for the time being of that loan. "Facility A1 Repayment Date" means the Termination Date applicable to Facility A1. "Facility A2" means the term loan facility made available under this Agreement as described in paragraph (b) of Clause 2.1 (The Facilities). "Facility A2 Commitment" means: (a) in relation to an Original Lender, the amount in the Base Currency relative to Facility A2 set opposite its name under the heading "Facility A2 Commitment" in Part II of Schedule 1 (The Original Parties) and the amount of any other Facility A2 Commitment transferred to it under this Agreement; and (b) in relation to any other Lender, the amount in the Base Currency relative to Facility A2 of any Facility A2 Commitment transferred to it under this Agreement, to the extent not cancelled, reduced or transferred by it under this Agreement. "Facility A2 Loan" means a loan made or to be made under Facility A2 or the principal amount outstanding for the time being of that loan. "Facility A2 Repayment Date" means the Termination Date applicable to Facility A2. "Facility B" means the term loan facility made available under this Agreement as described in paragraph (c) of Clause 2.1 (The Facilities). "Facility B Commitment" means: (a) in relation to an Original Lender, the amount in the Base Currency relative to Facility B set opposite its name under the heading "Facility B Commitment" in Part II of Schedule 1 (The Original Parties) and the amount of any other Facility B Commitment transferred to it under this Agreement; and (b) in relation to any other Lender, the amount in the Base Currency relative to Facility B of any Facility B Commitment transferred to it under this Agreement, to the extent not cancelled, reduced or transferred by it under this Agreement. "Facility B Loan" means a loan made or to be made under Facility B or the principal amount outstanding for the time being of that loan. "Facility B Repayment Date" means each date specified in Clause 9.2 (Repayment of Facility B Loans) for the payment of a Repayment Instalment. "Facility C" means the revolving credit facility made available under this Agreement as described in paragraph (d) of Clause 2.1 (The Facilities). "Facility C Commitment" means: (a) in relation to an Original Lender, the amount in the Base Currency relative to Facility C set opposite its name under the heading "Facility C Commitment" in Part II of Schedule 1 (The Original Parties) and the amount of any other Facility C Commitment transferred to it under this Agreement; and (b) in relation to any other Lender, the amount in the Base Currency relative to Facility C of any Facility C Commitment transferred to it under this Agreement, to the extent not cancelled, reduced or transferred by it under this Agreement. "Facility C Loan" means a loan made or to be made under Facility C or the principal amount outstanding for the time being of that loan. "Facility C Utilisation" means a Facility C Loan or a Letter of Credit. "Facility Office" means the office or offices notified by a Lender to the Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than five Business Days' written notice) as the office or offices through which it will perform its obligations under this Agreement. "Fee Letter" means any letter or letters dated on or prior to the date of this Agreement between the Arranger and the Company (or the Agent and the Company or the Issuing Bank and the Company) setting out any of the fees referred to in Clause 7.3(a) (Fees payable in respect of Letters of Credit) and Clause 14 (Fees). "Finance Document" means this Agreement, any Syndication Agreement, the Commitment Letter, any Fee Letter, any Accession Letter and any other document designated as such by the Agent and the Company. "Finance Party" means the Agent, the Arranger or a Lender. "Financial Indebtedness" means any indebtedness for or in respect of: (a) moneys borrowed; (b) any amount raised by acceptance under any acceptance credit facility; (c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; (d) the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with French GAAP, be treated as a finance or capital lease; (e) receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis); (f) any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing; (g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account); (h) shares which are expressed to be redeemable prior to the Termination Date for Facility B and Facility C; (i) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and (j) the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (i) above, and for the avoidance of doubt no particular Financial Indebtedness shall be taken into account more than once (so that, for example (i) a guarantee shall be excluded to the extent the Financial Indebtedness guaranteed thereby is already taken into account; (ii) there shall be excluded any performance guarantee issued in favour of Spirit Marine in respect of the contractual arrangements entered into by Spirit Cruises; and (iii) there shall also be excluded, for the avoidance of doubt, Financial Indebtedness of any person (not being a member of the Group) that is guaranteed by a member of the Group which guarantee thereof is treated as Financial Indebtedness). "French GAAP" means generally accepted accounting principles, standards and practices in France under the "Plan Comptable General" and "Code de Commerce". "French Obligor" means an Obligor incorporated in France. "Group" means the Company and its Subsidiaries for the time being. "Guaranteed Investments" means, in relation to any member of the Group, amounts invested by that member of the Group in order to finance on behalf of a customer, whether by "credit-bail" or leasing transaction or other means, the construction and/or installation of a facility to be utilised in connection with an operating contract awarded to it or any other member of the Group on terms which provide that the financing cost of the relevant investment is not to be borne by the relevant member of the Group. Guaranteed Investments shall not include amounts invested by the Company or its Subsidiaries: (a) prior to 1 September 2000; or (b) to the extent that the inclusion of such amounts would at any time cause the aggregate amount of all the Guaranteed Investments of the Group (taken together with those of its Subsidiaries) to exceed an amount equal to 5 per cent. of the Group's annual consolidated sales in its most recent financial year, as shown in its most recently delivered accounts delivered under Clause 22.1 (Financial statements). "Hazardous Substances" means and includes pollutants, contaminants and hazardous, flammable and toxic substances, materials, and waste whether solid, semi-solid, liquid or gaseous and whether or not such pollutant, contaminant, substance, material or waste is referred to specifically in any of the Environmental Laws. "Guarantor" means the Company or an Additional Guarantor. "Holding Company" means, in relation to a company or corporation, any other company or corporation in respect of which it is a Subsidiary excluding, save for the purpose of Clause 24.12 (Transactions with Affiliates and Shareholders), Bellon S.A.. "Information Memorandum" means the document in the form approved by the Company which, at the Company's request and on its behalf, is to be or was prepared in relation to the syndication of the Facilities and distributed by the Arranger to selected financial institutions. "Insufficiency" means, with respect to any Plan, the amount, if any, of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA. "Interest Period" means, in relation to a Loan, each period determined in accordance with Clause 12 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 11.4 (Default interest). "Internal Revenue Code" means the Internal Revenue Code of 1986 and the regulations promulgated and rulings issued thereunder. "Kodak" means Sodexho Marriott Services, Inc. "Kodak Acquisition" means the acquisition by the Company or Kodak Bidco of Shares, whether pursuant to a Recommended Offer, Non-Recommended Offer or Market Purchases. "Kodak Bidco" means the US company incorporated by the Company for the purpose of carrying out the potential Kodak Acquisition. "Kodak Existing Facility" means the existing US$620,000,000 syndicated term facility between Kodak and the banks and financial institutions named therein, dated as of 30 January 1998, as amended. "Kodak Waiver" means a waiver by the banks and financial institutions party to the Kodak Existing Facility (and who have the benefit of the guarantee by the Company of the Kodak Existing Facility dated as of 27 March 1998) due to the transactions contemplated in this Agreement. "Lender" means: (a) any Original Lender (provided that Citibank International plc and Citicorp USA, Inc. shall be deemed to be a single Lender); and (b) any bank, financial institution or other person which has become a Party in accordance with Clause 26 (Changes to the Lenders), which in each case has not ceased to be a Party in accordance with the terms of this Agreement. "Letter of Credit" means a letter of credit, substantially in the form set out in Schedule 13 (Form of Letter of Credit) or in any other form requested by SMO and agreed by the Agent and the Issuing Bank (in each case within 2 Business Days from the receipt of the form of such letter of credit from SMO). "LIBOR" means, in relation to any Loan: (a) the applicable Screen Rate; or (b) (if no Screen Rate is available for the currency or period of that Loan) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request quoted by the Reference Banks to leading banks in the London Interbank market, as of the Specified Time on the Quotation Day for the offering of deposits in the currency of that Loan and for a period comparable to the Interest Period for that Loan. "Loan" means a Facility A Loan, a Facility B Loan or a Facility C Loan. "LMA" means the Loan Market Association. "Majority Lenders" means: (a) until the Total Commitments have been reduced to zero, a Lender or Lenders whose Commitments aggregate more than 66 2/3% of the Total Commitments (or, if the Total Commitments have been reduced to zero and there are no Utilisations then outstanding, aggregated more than 66 2/3% of the Total Commitments immediately prior to the reduction); or (b) at any other time, a Lender or Lenders whose participations in the Utilisations then outstanding aggregate more than 66 2/3% of all the Utilisations then outstanding, and, for the purpose of calculating the Total Commitments and Utilisations, each Facility B Commitment and Facility C Commitment of a Lender shall be taken into account in euro at the Agent's Spot Rate of Exchange for the purchase of US Dollars with euro on the date (as determined by the Agent) a Majority Lender determination is, or is required to be, made. "Mandatory Cost" means the percentage rate per annum calculated by the Agent in accordance with Schedule 4 (Mandatory Cost formulae). "Margin" means, in relation to a Facility at any time, the basis points per annum determined to be the Margin applicable to that Facility in accordance with Clause 11.2 (Margin and adjustment). "Market Purchases" means any purchase of Shares in Kodak in the open market or by private treaty (not pursuant to an Offer). "Material Adverse Effect" means a material adverse effect on: (a) the financial condition or business of the Group taken as a whole; or (b) the ability of any Obligor to perform and comply with its payment obligations under any Finance Document. "Material Subsidiary" means, at any time, a Subsidiary of the Company: (a) whose revenues (excluding intra-Group items) then accounts for at least 5 per cent. of the consolidated revenues of the Group; or (b) whose EBITDA (excluding intra-Group items) then accounts for at least 5 per cent. of the consolidated EBITDA of the Group; or (c) whose gross assets (excluding intra-Group items) then accounts for at least 5 per cent. of the consolidated gross assets of the Group. For this purpose: (i) the revenues, EBITDA or gross assets of a Subsidiary of the Company will be determined from its financial statements (on an unconsolidated basis) upon which the latest audited financial statements of the Group have been based; (ii) if a Subsidiary of the Company becomes a member of the Group after the date on which the latest audited financial statements of the Group have been prepared, the revenues, EBITDA or gross assets of that Subsidiary will be determined from its latest financial statements; (iii) the revenues, EBITDA or gross assets of the Group will be determined from its latest audited or half yearly financial statements; and (iv) if a Material Subsidiary disposes of all or substantially all of its assets to another Subsidiary of the Company, it will immediately cease to be a Material Subsidiary and the other Subsidiary (if it is not already) will immediately become a Material Subsidiary; the subsequent financial statements (audited or half yearly) of those Subsidiaries and the Group will be used to determine whether those Subsidiaries are Material Subsidiaries or not. If there is a dispute as to whether or not a company is a Material Subsidiary, a certificate of the auditors of the Company will be, in the absence of manifest error, conclusive. "Month" means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that: (a) if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day; and (b) if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month. The above rules will only apply to the last Month of any period. "Multiemployer Plan" means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA which is a defined benefit plan within the meaning of Section 3(35) of ERISA, to which a US Obligor or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions. "Multiple Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of a US Obligor or any ERISA Affiliate and at least one person other than that US Obligor and the ERISA Affiliates or (b) was so maintained and in respect of which a US Obligor or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated. "National Currency Unit" means a currency unit (other than euros) of a Participating Member State. "Negative Committee Announcement" means an announcement made by the Special Committee that it has not reached agreement with the Company on the terms of a Recommended Offer. "Net Debt Proceeds" means the cash proceeds (net of commissions, VAT and other equivalent Taxes and transaction costs) received by a member of the Group as a result of issuing any note, bond, or other debt securities (whether issued to the public or by means of private placement) by the Company or any of its Subsidiaries in any of the capital markets of the United States, Europe or Japan but excluding: (a) any such debt securities issued in the ordinary course of their day to day business with maturities of less than 6 months; and (b) any such debt security issued after the date of this Agreement up to a maximum aggregate amount for the Company and its Subsidiaries of 50,000,000 (or its equivalent in other currencies) outstanding at any one time; and (c) any such debt securities issued by Kodak or its Subsidiaries until the earlier of (i) Kodak becoming a wholly-owned Subsidiary of the Company and (ii) the Company otherwise being able to control the use of any such proceeds received by Kodak or its Subsidiaries. "Net Equity Proceeds" means the cash proceeds (net of commissions, VAT and other equivalent Taxes and transaction costs) received by the Company as a result of the issue by the Company in the international capital markets or elsewhere (whether by public offer or private placement) of any share or stock (including the proposed Rights Issue) or any other instrument convertible into any share or stock provided that no such cash proceeds shall constitute Net Equity Proceeds to the extent that such cash proceeds also constitute Net Debt Proceeds and there shall be excluded from Net Equity Proceeds cash proceeds relating to: (a) stock options of the Company; (b) the exercise of warrants existing as at the date of this Agreement; and (c) the proposed international share ownership plan for employees. "Non-Recommended Offer" means an Offer made in the event that the Special Committee does not recommend the Offer. "Obligor" means a Borrower or a Guarantor. "Offer" means an offer for all or part of the Shares that are not already owned by the Company made or proposed to be made by or on behalf of the Company or Kodak Bidco, as the case may be, substantially on the terms and conditions set out in the Tender Offer Statement, as that offer may from time to time be amended, extended, revised or waived without causing a breach of this Agreement. "Offer Costs" means all costs, fees and expenses (and Taxes on them) and all registration and other similar Taxes incurred by or on behalf of the Company or any other member of the Group in connection with the Offer and/or the Facilities. "Optional Currency" means a currency (other than, in relation to a Facility, a Loan or a Letter of Credit, the Base Currency relative to that Facility, Loan or Letter of Credit, as the case may be) which complies with the conditions set out in Clause 4.3 (Conditions relating to Optional Currencies). "Original Financial Statements" means in relation to the Company, the audited consolidated financial statements of the Group for the financial year ended 31 August 2000. "Participating Member State" means any member state of the European Communities that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Union relating to European Monetary Union. "Party" means a party to this Agreement and includes its successors in title, permitted assigns and permitted transferees. "PBGC" means the Pension Benefit Guaranty Corporation (or any successor). "Plan" means a Single Employer Plan or a Multiple Employer Plan. "Positive Committee Announcement" means an announcement made by the Special Committee that it has reached agreement with the Company on the terms of a Recommended Offer. "Qualifying Lender" has the meaning given to it in Clause 15 (Tax gross-up and indemnities). "Quotation Day" means, in relation to any period for which an interest rate is to be determined: (a) (if the currency is sterling) the first day of that period; (b) (if the currency is euro) two TARGET Days before the first day of that period; or (c) (for any other currency) two Business Days before the first day of that period, unless market practice differs in the Relevant Interbank Market for a currency, in which case the Quotation Day for that currency will be determined by the Agent in accordance with market practice in the Relevant Interbank Market (and if quotations for that currency and period would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days). "Rating" has the meaning ascribed thereto in Clause 11.2(g) (Margin and adjustment). "Recommended Offer" means an Offer which is recommended by the Special Committee. "Reference Banks" means, in relation to LIBOR, the principal London offices of Citibank N.A., Societe Generale and HSBC Bank PLC and, in relation to EURIBOR, the principal office in Brussels of Citibank International plc, the principal office in Paris of Societe Generale and the principal office in Paris of HSBC Bank PLC or such other banks as may be appointed by the Agent in consultation with the Company. "Regulation D" means Regulation D of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. "Regulation T" means Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. "Regulation U" means Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. "Regulation X" means Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. "Relevant Interbank Market" means in relation to euro, the European Interbank market and, in relation to any other currency, the London Interbank market. "Repayment Instalment" means each instalment for repayment of the Facility B Loans specified in Clause 9.2 (Repayment of Facility B Loans). "Repeating Representations" means each of the representations set out in Clause 21 other than those set out in Clauses 21.7 (Information Memorandum), 21.8 (Financial statements), 21.13 (Material Subsidiaries), 21.14 (Insolvency), 21.15 (Tax liabilities) and, following the completion of the Offer or, as the case may be, relevant AA Acquisition, 21.19 (The Offer and AA Acquisitions). "Reservations" means: (a) the principle that equitable remedies are at the discretion of the court; (b) the limitation on enforcement by laws relating to insolvency, liquidation, reorganisation, court schemes, moratoria, administration and other laws affecting the rights of creditors generally; (c) the time barring of claims; and (d) similar principles and rights. "Rights Issue" means the increase in share capital (augmentation de capital) in respect of shares of the Company proposed to be carried out and completed by the Company in connection with the Kodak Acquisition. "Rollover Loan" means one or more Facility C Loans: (a) made or to be made on the same day that one or more maturing Facility C Loans is or are due to be repaid; (b) the aggregate amount of which is equal to or less than the maturing Facility C Loan(s) (unless it is more than the maturing Facility C Loan(s) solely because it arose as a result of the operation of Clause 8.2 (Unavailability of a currency)); (c) in the same currency as the maturing Facility C Loan(s) (unless it arose as a result of the operation of Clause 8.2 (Unavailability of a currency)); and (d) made or to be made to the same Borrower for the purpose of refinancing the maturing Facility C Loan(s). "S&P" means Standard & Poor's Corporation. "Screen Rate" means: (a) in relation to LIBOR, the British Bankers Association Interest Settlement Rate for the relevant currency and period; and (b) in relation to EURIBOR, the percentage rate per annum determined by the Banking Federation of the European Union for the relevant period, displayed on the appropriate page of the Telerate screen. If the agreed page is replaced or service ceases to be available, the Agent may specify another page or service displaying the appropriate rate after consultation with the Company and the Lenders. "Security" means a mortgage, charge, pledge, lien or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect. "Selection Notice" means a notice substantially in the form set out in Part II of Schedule 3 (Requests) given in accordance with Clause 12 (Interest Periods) in relation to Facility A or Facility B. "Shares" means all the issued shares of each class in the capital of Kodak (including any issued while an Offer remains open for acceptance). "Single Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of a US Obligor or any ERISA Affiliate and no person other that US Obligor and the ERISA Affiliates or (b) was so maintained and in respect of which a US Obligor or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated. "SMO" means Sodexho Marriott Operations, Inc. "SMO Credit Agreement" means the US$735,000,000 credit agreement dated as of 30 January 1998 among SMO as borrower, the lenders party thereto, SMS as parent guarantor, and Morgan Guaranty Trust Company of New York, as documentation agent and administrative agent for the lender parties thereto. "SMO Drawn Debt" means: (a) the amounts outstanding under the US$500,000,000 term loan facility provided under the SMO Credit Agreement; and (b) any outstandings under the SMO Revolving Facilities. "SMO Guarantee" means the unlimited guarantee given or to be given by SMO of all amounts due under this Agreement, by SMO acceding as an Additional Guarantor to this Agreement, in the circumstances set out in Clause 27.3 (Additional Guarantors). "SMO Revolving Facilities" means the US$235,000,000 revolving credit facility of SMO provided under the SMO Credit Agreement. "SMO Waiver" means a waiver by the banks and financial institutions party to the SMO Credit Agreement due to the transactions contemplated in this Agreement. "Special Committee" means the committee of Kodak's board of directors formed to consider the proposal made by the Company to Kodak's board of directors in January 2001. "Specified Time" means a time determined in accordance with Part I of Schedule 9 (Timetables) for Loans and Part II of Schedule 9 (Timetables) for Letters of Credit. "Spirit Cruises" means Spirit Cruises Inc. of 5700 Lake Wright Drive, Ste 203, VA 32502 Norfolk, United States. "Spirit Marine" means Spirit Marine of 5700 Lake Wright Drive, Ste 203, VA 32502 Norfolk, United States. "Sterling" means the lawful currency for the time being in the United Kingdom. "Subsidiary" means, subject to Clause 1.4 (Kodak and SMO as Subsidiaries), any company or corporation: (a) which is controlled, directly or indirectly, by the first-mentioned company or corporation; (b) more than half the issued share capital of which is beneficially owned, directly or indirectly, by the first-mentioned company or corporation; or (c) which is a subsidiary of another subsidiary of the first-mentioned company or corporation, and, for these purposes, a company or corporation shall be treated as being controlled by another if that other company or corporation is able to control the composition of its board of directors or equivalent body or similarly direct its affairs. "Syndication Agreement" means each or any agreement to be entered into between the Parties to novate rights and obligations under this Agreement to persons becoming Parties as a result of the syndication of the Facilities in each case in a form and substance acceptable to the Arranger and the Company (each acting reasonably). "Syndication Date" means the earlier of: (a) the Arranger notifying the Company that syndication of the Facilities has been completed; and (b) 30 August 2001. "TARGET" means Trans-European Automated Real-time Gross Settlement Express Transfer payment system. "TARGET Day" means any day on which TARGET is open for the settlement of payments in euro. "Tax" means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty, interest payable or any other costs which may be incurred in connection with any failure to pay or any delay in paying any of the same) imposed by a governmental authority. "Taxes Act" means the Income and Corporation Taxes Act 1988. "Tender Offer Statement" means the tender offer statement filed, or to be filed, with the Securities and Exchange Commission of the United States setting out the terms and conditions on which the Offer is being made to the holders of the Shares resident in the United States. "Termination Date" means: (a) in relation to Facility A1 and Facility A2, the date which, subject to Clause 5.5 (Extension of Facility A1 and Facility A2), is 364 days after the date of this Agreement; and (b) in relation to Facility B and Facility C, the date which is five years after the date of this Agreement. "Total Commitments" means the aggregate of: (a) the Total Facility A Commitments being (Euro)1,720,000,000 at the date of this Agreement; and (b) the Total Facility B Commitments and the Total Facility C Commitments, being US$1,080,000,000 at the date of this Agreement. "Total Facility A Commitments" means the aggregate of the Total Facility A1 Commitments and the Total Facility A2 Commitments, being (Euro)1,720,000,000 at the date of this Agreement. "Total Facility A1 Commitments" means the aggregate of the Facility A1 Commitments, being (Euro)670,000,000 at the date of this Agreement. "Total Facility A2 Commitments" means the aggregate of the Facility A2 Commitments, being (Euro)1,050,000,000 at the date of this Agreement. "Total Facility B Commitments" means the aggregate of the Facility B Commitments, being US$930,000,000 at the date of this Agreement. "Total Facility C Commitments" means the aggregate of the Facility C Commitments, being US$150,000,000 at the date of this Agreement. "Transfer Certificate" means a certificate substantially in one of the forms set out in Schedule 5 (Form of Transfer Certificate) or any other form agreed between the Agent and the Company. "Transfer Date" means, in relation to a transfer, the later of: (a) the proposed Transfer Date specified in the Transfer Certificate; and (b) the date on which the Agent executes the Transfer Certificate. "Unpaid Sum" means any sum due and payable but unpaid by an Obligor under the Finance Documents. "US company" means a company incorporated in the United States. "US Dollars" or "US$" means the lawful currency for the time being of the United States. "United States" means the United States of America. "US GAAP" means the generally accepted accounting principles, standards and practices in the United States. "US Obligor" means an Obligor which is a US Person. "US Material Subsidiary" means a Material Subsidiary which is a US Person. "US Person" means a United States Person within the meaning of Code section 7701(a)(30). "Utilisation" means a Loan or a Letter of Credit. "Utilisation Date" means the date on which a Utilisation is made or is to be made. "Utilisation Request" means a notice substantially in the form set out in Part I (or where applicable, Part III) of Schedule 3 (Requests). "VAT" means value added tax as provided for in the Value Added Tax Act 1994 and any other tax of a similar nature. "Waivers" means the Kodak Waiver and/or the SMO Waiver. "Withdrawal Liability" has the meaning specified in Part I of Subtitle E of Title IV of ERISA. 1.2 Construction (a) Any reference in this Agreement to: (i) "assets" includes present and future properties, revenues and rights of every description; (ii) the "European interbank market" means the interbank market for euro operating in Participating Member States; (iii) a "Finance Document" or any other agreement or instrument is a reference to that Finance Document or other agreement or instrument as amended or novated; (iv) "indebtedness" includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent; (v) a "person" includes any person, firm, company, corporation, government, state or agency of a state or any association, trust or partnership (whether or not having separate legal personality) or two or more of the foregoing; (vi) a "regulation" includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation; (vii) "syndication" shall include (unless the contrary intention appears) a reference to each phase of primary syndication (being sub- underwriting, general syndication or otherwise) on the basis set out in the Commitment Letter and "launch of syndication" shall be the date on which potential Lenders are invited to become a Lender. (viii) a provision of law is a reference to that provision as amended or re-enacted; and (ix) unless a contrary indication appears, a time of day is a reference to London time. (b) Section, Clause and Schedule headings are for ease of reference only. (c) Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement. (d) A Default (other than an Event of Default) is "continuing" if it has not been remedied or waived and an Event of Default is "continuing" if it has not been waived. 1.3 Third Party Rights A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Agreement. 1.4 Kodak and SMO as Subsidiaries Notwithstanding that at the date of this Agreement Kodak and SMO may not satisfy the requirements to qualify as a Subsidiary, as set out in the definition thereof, each of Kodak and SMO shall be deemed to be a Subsidiary (and consequently a member of the Group and Material Subsidiary (to the extent it satisfies the criteria therefor)) under this Agreement from the date of this Agreement other than in relation to the following Clauses or, as specified below, parts of the following Clauses: (a) Clause 21.15 (Tax liabilities); (b) Clause 22.4(b) and (c) (Information: miscellaneous) provided that Kodak and SMO shall be deemed to be a member of the Group as specified in such Clauses to the extent the Company has actual knowledge of such details or information, as the case may be, in relation to Kodak or SMO; (c) Clause 22.11 (Environment) provided that Kodak and SMO shall be deemed to be a member of the Group as specified in such Clause to the extent the Company has actual knowledge of such matters and the Company (not Kodak or SMO) shall notify the Agent of the same: (d) Clause 24.2 (Compliance with laws) and Clause 24.3(a) (Negative pledge); (e) The reference to Group in the first line of Clause 24.4 (Disposals); (f) Clause 24.8 (Insurance), Clause 24.9 (The Offer), Clause 24.11 (Taxes) and Clause 24.12 (Transactions with Affiliates and shareholders). For the avoidance of doubt, Kodak and SMO shall be a Subsidiary (and consequently a member of the Group and Material Subsidiary (to the extent it satisfies the criteria therefor)) for each of the Clauses referred to in (a) to (f) above, as soon as it satisfies the requirements of being a "Subsidiary" as set out in that definition. SECTION 2 THE FACILITIES 2. THE FACILITIES 2.1 The Facilities Subject to the terms of this Agreement, the Lenders make available to: (a) the Company and/or, following their accession under Clause 27.2 (Additional Borrowers), AA Bidcos, a multicurrency term loan facility in an aggregate amount equal to the Total Facility A1 Commitments; (b) the Company and/or, following its accession under Clause 27.2 (Additional Borrowers), Kodak Bidco, a multicurrency term loan facility in an aggregate amount equal to the Total Facility A2 Commitments; (c) to the Company and, following their accession under Clause 27.2 (Additional Borrowers), Kodak and/or SMO, a US Dollars term loan facility in an aggregate amount equal to the Total Facility B Commitments; and (d) to SMO, following its accession under Clause 27.2 (Additional Borrowers), a multicurrency revolving credit facility in an aggregate amount equal to the Total Facility C Commitments. 2.2 Lenders' rights and obligations (a) The obligations of each Lender under the Finance Documents are several. Failure by a Lender to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents. (b) The rights of each Lender under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Lender from an Obligor shall be a separate and independent debt. (c) A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents. 3. PURPOSE 3.1 Purpose (a) The Company and/or AA Bidcos shall apply all amounts they borrow under Facility A1 in or towards financing or refinancing: (i) consideration payable by the Company and/or AA Bidcos for an AA Acquisition under an AA Acquisition Agreement; (ii) Financial Indebtedness existing within the AA group at the time of, and which remains existing following, an AA Acquisition; and (iii) AA Acquisition Costs. (b) The Company and/or Kodak Bidco shall apply all amounts they borrow under Facility A2 in or towards financing or refinancing: (i) consideration payable by the Company and/or Kodak Bidco for the acquisition by it of those Shares to be acquired by it pursuant to an Offer (whether a Recommended Offer or a Non-Recommended Offer, but in the case of a Non-Recommended Offer, only if it is launched or publicly announced by 2 May 2001); (ii) consideration payable by the Company and/or Kodak Bidco in relation to (A) any merger of Kodak and Kodak Bidco in connection with the Offer and (B) the cash-out of employee options on the Shares in relation to the Offer; (iii) consideration payable by the Company and/or Kodak Bidco in making Market Purchases up to an aggregate maximum amount of not more than (Euro)250,000,000 and provided that Market Purchases cannot be made following the launch of a Non-Recommended Offer; and (iv) Offer Costs. (c) the Company, Kodak and/or SMO shall apply all amounts borrowed by it under Facility B to refinance or repurchase the Kodak Existing Facility and the SMO Drawn Debt provided that, for the avoidance of doubt, following a reduction of the Total Facility B Commitments pursuant to Clause 10.5(b)(ii) (Waivers, cancellation and refinancing), Facility B may only be used by the Company or Kodak to refinance or repurchase the Kodak Existing Facility. (d) SMO shall apply all amounts utilised by it under Facility C: (i) to refinance SMO Drawn Debt to the extent not refinanced by amounts borrowed under Facility B; and (ii) to finance the working capital requirements (including letters of credit) of SMO following the refinancing of all SMO Drawn Debt under Facility B and/or Facility C and the cancellation in full of the credit facilities provided under the SMO Credit Agreement. 3.2 Monitoring No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement. 4. CONDITIONS OF UTILISATION 4.1 Initial conditions precedent (a) No Borrower may deliver a Utilisation Request unless the Agent has received all of the documents and other evidence listed in Part 1A of Schedule 2 (Conditions Precedent) in form and substance satisfactory to the Agent. (b) No Borrower (as applicable) may deliver a Utilisation Request for a Utilisation of Facility A1 unless the Agent has received, in relation to the AA Acquisition to be funded pursuant to such Utilisation Request, all of the documents and other evidence listed in Part 1B of Schedule 2 (Conditions Precedent) in form and substance satisfactory to the Agent. (c) No Borrower (as applicable) may deliver a Utilisation Request for a Utilisation of Facility A2 unless the Agent has received, subject to the following sentence, all of the documents and other evidence listed in Part 1C of Schedule 2 (Conditions Precedent) in form and substance satisfactory to the Agent. As regards a Utilisation of Facility A2 for the purpose of making Market Purchases, to the extent not already satisfied with regard to the making of an Offer, the Agent need only have received the documents and other evidence listed in paragraphs (b), (d) and (e) in Part 1C of Schedule 2 (Conditions Precedent) in form and substance satisfactory to the Agent. (d) The Agent shall, in each case, notify the Company and the Lenders promptly upon being so satisfied. 4.2 Further conditions precedent The Lenders will only be obliged to comply with Clause 5.4 (Lenders' participation) if on the date of the Utilisation Request and on the proposed Utilisation Date: (i) in the case of a Rollover Loan, no Event of Default is continuing or would result from the proposed Loan and, in the case of any other Utilisation, no Default is continuing or would result from the proposed Utilisation; and (ii) the Repeating Representations to be made by each Obligor are true in all material respects. 4.3 Conditions relating to Optional Currencies (a) A currency will constitute an Optional Currency in relation to a Utilisation if: (i) it is readily available in the amount required and freely convertible into the Base Currency relative to that Utilisation in the Relevant Interbank Market on the Quotation Day and the Utilisation Date for that Utilisation; and (ii) in the case of Facility A1, it is US Dollars or Sterling, in the case of Facility A2, it is US Dollars and, in the case of Facility C, it is Canadian Dollars. (b) Euro will only be made available in the euro unit. 4.4 Maximum number of Utilisations (a) A Borrower may not deliver a Utilisation Request (as appropriate) if as a result of the proposed Utilisation more than 20 Utilisations in aggregate would be outstanding provided that up to 31 August 2001 there may be additional Loans outstanding to the extent such additional Loans are drawn for the same purpose and the same currency as an existing Loan, by the same Borrower as for that existing Loan and provided that such additional Loan has an Interest Period maturing at the same time as another Loan drawn under the same Facility such that the same are consolidated into one Loan at the end of the relevant Interest Period. (b) A Borrower may not request that a Facility A Loan or Facility B Loan be divided if, as a result of the proposed division, the provisions of paragraph (a) above would be breached. (c) Any Loan made by a single Lender under Clause 8.2 (Unavailability of a currency) shall not be taken into account in this Clause 4.4. 4.5 Limit on timing and amount of Loans (a) No more than (Euro)200,000,000 of Facility A1 may be drawn between the period commencing the date falling 90 days after the date of this Agreement and 30 November 2001 (the "Additional A1 Period"). If the undrawn amount of the Total Facility A1 Commitments would, but for this Clause, exceed (Euro)200,000,000 on the date falling 90 days after the date of this Agreement, the Total Facility A1 Commitments shall be automatically cancelled by the requisite amount on such date so that, if not already utilised by such date, a maximum additional amount of (Euro)200,000,000 only may be drawn by the Company and/or AA Bidcos during the Additional A1 Period. (b) If by 2 May 2001 an Offer has not been made, the amount available to be utilised under Facility A2 shall be reduced to (Euro)250,000,000 and the Total Facility A2 Commitments shall be automatically cancelled by the requisite amount on such date. (c) Facility B (subject to paragraph (d) below) and Facility C may only be utilised following the drawing of Facility A2 and the subsequent cancellation of any undrawn portion of Facility A2. (d) Up to US$620,000,000 of Facility B may be drawn by the Company or Kodak for the purpose of refinancing or repurchasing the Kodak Existing Facility if Facility A1 has been drawn and up to US$930,000,000 of Facility B may be drawn by the Company, Kodak or SMO (for the purposes specified in Clause 3.1(c) (Purpose)) if paragraph (c) above has been satisfied. (e) Facility C may only be utilised after Facility B has been drawn in full or, if drawn in part, any undrawn portion of Facility B has been cancelled and provided that the SMO Drawn Debt has been (or is to be pursuant to Facility C) refinanced in full and the SMO Credit Agreement has been cancelled in full. SECTION 3 UTILISATION 5. UTILISATION - LOANS 5.1 Delivery of a Utilisation Request A Borrower may utilise a Facility by delivery to the Agent of a duly completed Utilisation Request not later than the Specified Time. 5.2 Completion of a Utilisation Request (a) Each Utilisation Request is irrevocable and will not be regarded as having been duly completed unless: (i) it identifies the Facility to be utilised; (ii) the proposed Utilisation Date is a Business Day within the Availability Period applicable to that Facility; (iii) the currency and amount of the Utilisation comply with Clause 5.3 (Currency and amount); (iv) the proposed Interest Period complies with Clause 12 (Interest Periods); (v) it specifies the account and bank (which must be in the principal financial centre of the country of the currency of the Utilisation or, in the case of euro, the principal financial centre of a Participating Member State in which banks are open for general business on that day or London) to which the proceeds of the Utilisation are to be credited; (vi) in the case of a requested Utilisation of Facility A1, the Utilisation Request is accompanied by such documents and/or evidence in form and substance satisfactory to the Agent as is applicable to that relevant AA Acquisition or other purpose for which such proceeds may be used as set out in Part 1B of Schedule 2 (Conditions Precedent) to the extent the same have not previously been provided pursuant to this Clause 5.2(vi) or Clause 4.1(b) (Initial Conditions Precedent) in relation to that AA Acquisition or other permitted purpose now proposed to be funded; and (vii) in the case of a requested Utilisation of Facility A2, the Utilisation Request is accompanied by a certificate of the Company confirming how many shares and stock options have been bought to date (whether pursuant to the Facilities or otherwise) since the date of this Agreement and how many are to be acquired by way of the proposed Loan the subject of the Utilisation Request. (b) Only one Loan may be requested in each Utilisation Request. 5.3 Currency and amount (a) The currency specified in a Utilisation Request must be in the Base Currency relating to that Facility or an Optional Currency. (b) The amount of the proposed Loan must be an amount which is not more than the Available Facility and which is a minimum of, in the case of Facility A, (Euro)5,000,000, and in the case of Facility B and Facility C, US$5,000,000 or, in each case, the relevant Optional Currency equivalent or, if less, the Available Facility. 5.4 Lenders' participation (a) If the conditions set out in this Agreement have been met, each Lender shall make its participation in each Loan available through its Facility Office. (b) The amount of each Lender's participation in each Loan will be equal to the proportion borne by its Available Commitment to the Available Facility in each case in respect of the relevant Facility immediately prior to making the Loan. (c) The Agent shall notify each Lender of the amount, currency and the Base Currency Amount of each Loan by the Specified Time. 5.5 Extension of Facility A1 and Facility A2 (a) The Company shall be entitled on one occasion only to request an extension of Facility A1 and/or Facility A2 for a period of one year by giving notice to the Agent (an "Extension Request") not later than five Business Days before the Termination Date applicable to Facility A1 and/or Facility A2, as the case may be, specifying the Facility or Facilities to be extended. The Extension Request shall be made in writing and shall be unconditional and irrevocable. The Agent shall forward a copy of the Extension Request (if any) to the Lenders as soon as practicable after receipt thereof. Upon receipt of the Extension Request, subject to this Clause 5.5, the Facility A1 Repayment Date and/or the Facility A2 Repayment Date, as the case may be, for the amount extended (and the corresponding Termination Date) shall be extended by one year provided that: (i) no Extension Request may be delivered if there is a Default continuing at such time, and the Facility A1 Repayment Date and Facility A2 Repayment Date shall not be so extended if on the date of such extension there is a Default continuing; (ii) subject to paragraph (iv) below, no more than (Euro)500,000,000 in aggregate may be extended under Facility A1 and/or Facility A2 pursuant to this Clause 5.5; (iii) subject to paragraph (iv) below, no more than (Euro)375,000,000 may be extended under Facility A1 pursuant to this Clause 5.5; and (iv) no more than (Euro)250,000,000 in aggregate may be extended under Facility A1 and/or Facility A2 pursuant to this Clause 5.5 if, by the time the proposed extension is to take effect, the SMO Guarantee has not been given and the conditions in Clause 27.3(d) (Additional Guarantors) have not been satisfied. (b) The Company shall pay to the Agent (on behalf of the Lenders) a fee of 10 basis points flat on the principal amount extended pursuant to this Clause 5.5 on the date on which it gives the Agent notice pursuant to paragraph (a) above. 6. UTILISATION - LETTERS OF CREDIT 6.1 General (a) In this Clause 6 and Clause 7 (Letters of Credit): (i) "Affected Lender" means a Lender: (A) whose long term unsecured unguaranteed debt credit rating (or, if it does not have such a rating, that of its Parent) is BBB- or less (S&P) or Baa3 or less (Moody's Investors' Services, Inc.); or (B) which, if neither it nor its Parent has a long term unsecured unguaranteed debt credit rating, in the opinion of the Issuing Bank, has suffered a material adverse change in its financial condition; or (C) which is subject to any insolvency, moratorium or rehabilitation procedure or which seeks protection from, or begins negotiations with, its creditors, with a view to the general readjustment or rescheduling of its indebtedness. In this definition, "Parent" means an entity of which the relevant Lender is a Subsidiary; (ii) "Available Letter of Credit Facility" means, in relation to Letters of Credit available under Facility C, the Letter of Credit Sub-Limit or, if less, the Available Facility for Facility C minus: (A) the Base Currency Amount of any outstanding Letters of Credit; and (B) in relation to any proposed Letter of Credit, the Base Currency Amount of any Letters of Credit that are due to be made on or before the proposed Utilisation Date; (iii) "L/C Proportion" means, in relation to a Lender in respect of any Letter of Credit, the proportion (expressed as a percentage) borne by that Lender's Available Commitment under Facility C to the Available Facility for Facility C immediately prior to the issue of that Letter of Credit, adjusted to reflect any assignment or transfer under this Agreement to or by that Lender; (iv) "Letter of Credit Sub-Limit" means US$75,000,000; (v) "Maturity Date" means, for a Letter of Credit, the last day of its Term; (vi) "Term" means each period determined under this Agreement for which the Issuing Bank is under a liability under a Letter of Credit which cannot extend beyond the Termination Date applicable to Facility C; (vii) a Letter of Credit is "repaid" or "prepaid" if: (A) SMO provides cash cover for that Letter of Credit; (B) the maximum amount payable under the Letter of Credit is reduced in accordance with its terms; or (C) the Issuing Bank is satisfied that it has no further liability under that Letter of Credit, and the amount by which a Letter of Credit is repaid or prepaid under sub-paragraphs (vii)(A) and (vii)(B) above is the amount of the relevant cash cover or reduction; and (viii) "cash cover" is provided for a Letter of Credit if SMO or, as the case may be, an Affected Lender pays an amount in the currency of the Letter of Credit to an interest-bearing account in the name of SMO or, as the case may be, the Affected Lender and the following conditions are met: (A) the account is with the Agent (if the cash cover is to be provided for all the Lenders) or with a Lender (if not an Affected Lender and if the cash cover is to be provided for that Lender) or with the Issuing Bank (if the cash cover is to be provided for an Affected Lender or for the Issuing Bank from an Affected Lender); (B) withdrawals from the account may only be made to pay a Finance Party amounts due and payable to it under this Agreement in respect of that Letter of Credit until no amount is or may be outstanding under that Letter of Credit; and (C) SMO or the Affected Lender, as the case may be, has executed a security document over that account, in form and substance satisfactory to the Agent or the Finance Party with which that account is held, creating a first ranking security interest over that account. (b) Any reference in this Agreement to: (i) a "Finance Party" includes the Issuing Bank; (ii) the Interest Period of a Letter of Credit will be construed as a reference to the Term of that Letter of Credit; (iii) an amount borrowed includes any amount utilised by way of Letter of Credit; (iv) a Utilisation made or to be made by SMO includes a Letter of Credit issued on its behalf; (v) a Lender funding its participation in a Utilisation includes a Lender participating in a Letter of Credit; (vi) amounts outstanding under this Agreement include amounts outstanding under any Letter of Credit; and (vii) an outstanding amount of a Letter of Credit at any time is the maximum amount that is or may be payable by SMO under or in respect of that Letter of Credit at that time. (c) Clause 5 (Utilisation - Loans) does not apply to a Utilisation by way of Letter of Credit. 6.2 Facility C Facility C may be utilised by way of Letters of Credit up to a maximum Base Currency Amount equal to the Letter of Credit Sub-Limit or, if less, the Total Facility C Commitments at the time of the relevant Utilisation. Facility A or Facility B may not be utilised by way of Letters of Credit. 6.3 Delivery of a Utilisation Request for Letters of Credit (a) SMO may request a Letter of Credit to be issued by delivery to the Agent of a duly completed Utilisation Request in the form of Part III of Schedule 3 (Requests) not later than the Specified Time. (b) The Agent shall (notwithstanding the provisions of Clause 6.6(d) (Issue of Letters of Credit)) promptly notify the Issuing Bank of the receipt of, and contents of, such Utilisation Request. 6.4 Completion of a Utilisation Request for Letters of Credit Each Utilisation Request for a Letter of Credit is irrevocable and will not be regarded as having been duly completed unless: (a) it specifies that it is for a Letter of Credit; (b) the proposed Utilisation Date is a Business Day within the Availability Period for Facility C; (c) the currency and amount of the Letter of Credit comply with Clause 6.5 (Currency and amount); (d) the form of Letter of Credit is attached or has been approved by the Agent and the Issuing Bank prior to the delivery of such Utilisation Request; (e) the Maturity Date of the Letter of Credit falls on or before the Termination Date for Facility C; (f) the delivery instructions for the Letter of Credit are specified; and (g) the identity of the beneficiary of the Letter of Credit is approved by the Issuing Bank (which approval or non-approval shall be given by the Issuing Bank to SMO within 1 Business Day of request for such approval). 6.5 Currency and amount (a) The currency specified in a Utilisation Request must be the Base Currency relative to Facility C or Canadian Dollars. (b) The amount of the proposed Letter of Credit must be an amount whose Base Currency Amount is not more than the Available Letter of Credit Facility and which is: (i) if the currency selected is the Base Currency, for Facility C a minimum of US$50,000 or, if less, the Available Letter of Credit Facility; or (ii) if the currency selected is Canadian Dollars, the relevant Optional Currency equivalent of US$50,000 or, if less, the Available Letter of Credit Facility. 6.6 Issue of Letters of Credit (a) If the conditions set out in this Agreement have been met, the Issuing Bank shall issue the Letter of Credit on the Utilisation Date. (b) The Issuing Bank will only be obliged to comply with paragraph (a) above if on the date of the Utilisation Request and on the proposed Utilisation Date: (i) in the case of a Letter of Credit renewed in accordance with sub- clause 6.8 (Renewal of a Letter of Credit), no Event of Default is continuing or would result from the proposed Utilisation and, in the case of any other Utilisation, no Default is continuing or would result from the proposed Utilisation; and (ii) the Repeating Representations to be made by each Obligor are true in all material respects. (c) The amount of each Lender's participation in each Letter of Credit will be equal to the proportion borne by its Available Commitment for Facility C to the Available Facility for Facility C immediately prior to the issue of the Letter of Credit. (d) The Agent shall determine the Base Currency Amount of each Letter of Credit which is to be issued in an Optional Currency and shall notify the Issuing Bank and each Lender of the details of the requested Letter of Credit and its participation in that Letter of Credit by the Specified Time including, for the avoidance of doubt, the amount, the currency and the Term. 6.7 Protection of Issuing Bank (a) Notwithstanding anything to the contrary in this Agreement: (i) an Issuing Bank is not obliged to issue a Letter of Credit if there is at the time an Affected Lender, unless the Affected Lender or, failing the Affected Lender (but subject to paragraph (b)(i) below), SMO has provided the Issuing Bank with cash cover in respect of the Affected Lender's participation in the relevant Letter of Credit; and (ii) forthwith on demand by the Issuing Bank an Affected Lender shall provide cash cover to the Issuing Bank: (A) in respect of any proposed Letter of Credit for the purposes of paragraph (a)(i) above; and/or (B) in respect of the Affected Lender's participation in all outstanding Letters of Credit issued by the Issuing Bank. (b) If an Affected Lender does not provide cash cover as required by paragraph (a)(ii) above: (i) to allow a proposed Letter of Credit to be issued in the amount requested in the relevant Utilisation Request, SMO may itself (but is not obliged to) provide cash cover to the Issuing Bank and shall, in respect of such Letter of Credit, be entitled to receive amounts under this Agreement payable in respect of such Utilisation relating to that Letter of Credit as if it were a Lender hereunder; and (ii) the Company may (but is not obliged), to the extent it is able, replace that Affected Lender with another existing Lender or a new Lender, in each case in accordance with Clause 26 (Changes to the Lenders) and Clause 7.2 (Assignments and transfers), or give notice to the Agent of cancellation of the Facility C Commitments of that Lender and its intention to procure the repayment of that Affected Lender's participation in Utilisations under Facility C. On receipt of such a notice, the Facility C Commitments of the Affected Lender shall immediately be reduced to zero. On the last day of each Interest Period for a Facility C Loan which ends after the Company has given notice to the Agent as specified above (or, if earlier, the date specified by the Company in that notice), SMO shall repay that Affected Lender's participation in that Facility C Loan. SMO shall also, within 5 Business Days of giving such notice on the Agent, provide cash cover to the Affected Lender in respect of its participation in all outstanding Letters of Credit. On the cancellation of an Affected Lender's Facility C Commitment under this paragraph, the Total Facility C Commitments shall be reduced accordingly. 6.8 Renewal of a Letter of Credit (a) SMO may request any Letter of Credit issued on its behalf be renewed by delivery to the Agent of written notice by the Specified Time (a "Renewal Request"). (b) The Finance Parties shall treat any Renewal Request in the same way as a Utilisation Request for a Letter of Credit (including, for the avoidance of doubt, Clause 6.6(d)) except that the conditions set out in paragraphs (d) and (g) of Clause 6.4 (Completion of a Utilisation Request for Letters of Credit) shall not apply. (c) The terms of each renewed Letter of Credit shall be the same as those of the relevant Letter of Credit immediately prior to its renewal, except that: (i) its amount may be less than the amount of the Letter of Credit immediately prior to its renewal; and (ii) its Term shall start on the date which was the Maturity Date of the Letter of Credit immediately prior to its renewal, and shall end on the proposed Maturity Date specified in the Renewal Request. (d) If the conditions set out in this Agreement have been met, the Issuing Bank shall amend any Letter of Credit pursuant to a Renewal Request. 6.9 Revaluation of Letters of Credit (a) If any Letters of Credit are denominated in an Optional Currency, the Agent shall at six monthly intervals after the date of this Agreement, recalculate the Base Currency Amount of each Letter of Credit by notionally converting into the Base Currency the outstanding amount of that Letter of Credit on the basis of the Agent's Spot Rate of Exchange on the date of calculation. (b) SMO shall, if requested by the Agent, ensure that within three Business Days of such request sufficient Facility C Utilisations are prepaid to prevent the Base Currency Amount of the Utilisations by way of Letter of Credit exceeding the Letter of Credit Sub-Limit or, if less, the Total Facility C Commitment at that time following any adjustment to a Base Currency Amount under paragraph (a) above. 6.10 Information (a) The Issuing Bank will inform the Agent: (i) promptly upon the issue of a Letter of Credit, of the identity of the beneficiary thereunder, the principal amount and the expiry date of such Letter of Credit; and (ii) at the end of each quarter, of the amount, currency and Term of any Letters of Credit then outstanding. In each case, the Agent will promptly notify the Lenders of the same. (b) The Agent will notify the Company and the Issuing Bank promptly on receiving notification from any Party that a Lender has become an Affected Lender. (c) A Lender will promptly notify the Agent and the Issuing Bank if and when it has become an Affected Lender. (d) The Issuing Bank will promptly notify the Company following its making a demand on an Affected Lender under this Agreement for cash cover if that Affected Lender has not provided such cash cover within 5 Business Days of making such demand. 7. LETTERS OF CREDIT 7.1 Immediately payable If a Letter of Credit or any amount outstanding under a Letter of Credit is expressed to be immediately payable, SMO shall repay or prepay that amount immediately. 7.2 Assignments and transfers (a) Notwithstanding any other provision of this Agreement, the consent of the Issuing Bank is required for any assignment or transfer of any Lender's rights and/or obligations under Facility C except on an assignment or transfer to an Affiliate of a Lender (of at least the same (or equivalent) long term unsecured unguaranteed debt credit rating as the transferring Lender) or to another existing Lender (who is not an Affected Lender) and provided that the consent of the Issuing Bank will be deemed to be given if, within 15 Business Days of receipt of an application for consent, it has not been expressly refused. (b) If paragraph (a) and the conditions and procedure for transfer specified in Clause 26 (Changes to the Lenders) are satisfied, then on the Transfer Date the Issuing Bank and the New Lender shall acquire the same obligations between themselves as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Issuing Bank and the Existing Lender shall each be released from further obligations to each other under this Agreement. 7.3 Fees payable in respect of Letters of Credit (a) The Company shall pay to the Issuing Bank a fronting fee in respect of each Letter of Credit in the amount and at the times agreed in the letter dated on or about the date of this Agreement between the Issuing Bank and the Company. A reference in this Agreement to a Fee Letter shall include the letter referred to in this paragraph. (b) The Company shall pay to the Agent (for the account of each Lender) a letter of credit fee in an amount per annum equal to the applicable Margin from time to time for Facility C on the outstanding amount each day of each Letter of Credit for the period from the issue of that Letter of Credit until its Maturity Date. This fee shall be distributed according to each Lender's L/C Proportion of that Letter of Credit. (c) The accrued letter of credit fee on a Letter of Credit shall be payable on the last day of each successive period of three months (or such shorter period as shall end on the Maturity Date for that Letter of Credit) starting on the date of issue of that Letter of Credit. Accrued letter of credit fee is also payable to the Agent on the cancelled amount of any Lender's Facility C Commitment at the time the cancellation is effective if that Commitment is cancelled in full and the Letters of Credit prepaid or repaid in full. 7.4 Claims under a Letter of Credit (a) SMO irrevocably and unconditionally authorises the Issuing Bank to pay any claim made or purported to be made under a Letter of Credit requested by it and which appears on its face to be in order (a "claim"). (b) SMO shall immediately on demand pay to the Agent for the Issuing Bank an amount equal to the amount of any claim. (c) SMO acknowledges that the Issuing Bank: (i) is not obliged to carry out any investigation or seek any confirmation from any other person before paying a claim; and (ii) deals in documents only and will not be concerned with the legality of a claim or any underlying transaction or any available set-off, counterclaim or other defence of any person. (d) The obligations of SMO under this Clause will not be affected by: (i) the sufficiency, accuracy or genuineness of any claim or any other document; or (ii) any incapacity of, or limitation on the powers of, any person signing a claim or other document. (e) The Issuing Bank shall promptly notify the Agent once a claim has been made on it under a Letter of Credit. 7.5 Indemnities (a) SMO shall immediately on demand indemnify the Issuing Bank against any cost, loss or liability incurred by the Issuing Bank (otherwise than by reason of the Issuing Bank's gross negligence or wilful misconduct) in acting as the Issuing Bank under any Letter of Credit requested by SMO. The Issuing Bank shall be entitled to use any cash cover provided under this Agreement by SMO in relation to the Letter of Credit the subject to the relevant demand for the purposes of this indemnity. (b) Each Lender shall (according to its L/C Proportion) immediately on demand indemnify the Issuing Bank against any cost, loss or liability incurred by the Issuing Bank (otherwise than by reason of the Issuing Bank's gross negligence or wilful misconduct) in acting as the Issuing Bank under any Letter of Credit (unless the Issuing Bank has been reimbursed by an Obligor pursuant to a Finance Document). The Issuing Bank shall be entitled to use any cash cover provided by an Affected Lender in relation to the Letter of Credit the subject of the relevant demand under this Agreement for the purposes of this indemnity. (c) If any Lender is not permitted (by its constitutional documents or any applicable law) to comply with paragraph (b) above), then that Lender will not be obliged to comply with paragraph (b) and shall instead be deemed to have taken, on the date the Letter of Credit is issued (or if later, on the date the Lender's participation in the Letter of Credit is transferred or assigned to the Lender in accordance with the terms of this Agreement), an undivided interest and participation in the Letter of Credit in an amount equal to its L/C Proportion of that Letter of Credit. On receipt of demand from the Agent, that Lender shall pay to the Agent (for the account of the Issuing Bank) an amount equal to its L/C Proportion of the amount demanded. The last sentence of paragraph (b) above shall apply to this paragraph mutatis mutandis. (d) SMO shall immediately reimburse any Lender for any payment it makes to the Issuing Bank under this Clause 7.5 (Indemnities) in respect of that Letter of Credit. (e) The obligations of each Lender under this Clause are continuing obligations and will extend to the ultimate balance of sums payable by that Lender in respect of any Letter of Credit, regardless of any intermediate payment or discharge in whole or in part. (f) The obligations of any Lender under this Clause will not be affected by any act, omission matter or thing which, but for this Clause, would reduce, release or prejudice any of its obligations under this Clause (without limitation and whether or not known to it or any other person) including: (i) any time, waiver or consent granted to, or composition with, any Obligor, any beneficiary under a Letter of Credit or other person; (ii) the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor or any member of the Group; (iii) the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor, any beneficiary under a Letter of Credit or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security; (iv) any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor, any beneficiary under a Letter of Credit or any other person; (v) any amendment (however fundamental) or replacement of a Finance Document, any Letter of Credit or any other document or security; (vi) any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document, any Letter of Credit or any other document or security; or (vii) any insolvency or similar proceedings. 7.6 Rights of contribution No Obligor will be entitled to any right of contribution or indemnity from any Finance Party in respect of any payment it may make under this Clause 7. 7.7 Role of the Issuing Bank (a) Nothing in this Agreement constitutes the Issuing Bank as a trustee or fiduciary of any other person. (b) The Issuing Bank shall not be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account. (c) The Issuing Bank may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group. (d) The Issuing Bank may rely on: (i) any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and (ii) any statement made by a director, authorised signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify. (e) The Issuing Bank may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts. (f) The Issuing Bank may act in relation to the Finance Documents through its personnel and agents. (g) The Issuing Bank is not responsible for: (i) the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Issuing Bank, the Agent, the Arranger, an Obligor or any other person given in or in connection with any Finance Document or the Information Memorandum; or (ii) the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of or in connection with any Finance Document. 7.8 Exclusion of liability (a) Without limiting paragraph (b) below, the Issuing Bank will not be liable for any action taken by it under or in connection with any Finance Document, unless directly caused by its gross negligence or wilful misconduct. (b) No Party may take any proceedings against any officer, employee or agent of the Issuing Bank in respect of any claim it might have against the Issuing Bank or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document and any officer, employee or agent of the Issuing Bank may rely on this Clause. 7.9 Credit appraisal by the Lenders Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Lender confirms to the Issuing Bank that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance Document, including but not limited to, those listed in paragraphs (a) to (d) of Clause 28.14 (Credit appraisal by the Lenders). 7.10 Partial payments (a) Notwithstanding any other provision of this Agreement, if the Agent receives a payment that is insufficient to discharge all the amounts then due and payable by an Obligor under the Finance Documents, the Agent shall apply that payment towards the obligations of that Obligor under the Finance Documents in the order set out in paragraph (a) of Clause 31.5 (Partial Payments), except that payments shall secondly be applied in or towards payment pro rata of any sums due to the Issuing Bank under this Agreement and the order set out in sub-paragraphs 31.5(a)(ii) to (a)(iv) shall be varied accordingly. (b) Paragraph (a) above will override any appropriation made by an Obligor. 7.11 Address for notices The address, fax number (and the department or officer, if any, for whose attention the communication is to be made) and electronic mail address of the Issuing Bank for any communication or document to be made or delivered under or in connection with the Finance Documents is, in the case of its address and fax number (and relevant department or officer), that identified with its name below and, in the case of its electronic mail address, that notified in writing to the Agent prior to the date of this Agreement or any substitute address, fax number (or department or officer) or electronic mail address as the Issuing Bank may notify to the Agent by not less than five Business Days' notice. 7.12 Amendments and Waivers Notwithstanding any other provision of this Agreement, an amendment or waiver which relates to the rights or obligations of the Issuing Bank may not be effected without the consent of the Issuing Bank. 8. OPTIONAL CURRENCIES 8.1 Selection of currency A Borrower (or the Company on behalf of a Borrower) shall select the currency of a Facility A Loan or a Facility C Utilisation in a Utilisation Request. 8.2 Unavailability of a currency If before the Specified Time on any Quotation Day: (a) the Agent has received notice from a Lender that the Optional Currency requested is not readily available to it in the amount required; or (b) a Lender notifies the Agent that compliance with its obligation to participate in a Facility A Loan or a Facility C Loan in the proposed Optional Currency would contravene a law or regulation applicable to it, the Agent will give notice to the relevant Borrower to that effect by the Specified Time on that day. In this event, any Lender that gives notice pursuant to this Clause 8.2 will be required to participate in the Facility A Loan or Facility C Loan, as the case may be, in the Base Currency relative to that Facility (in an amount equal to that Lender's proportion of the Base Currency Amount or, in respect of a Rollover Loan, an amount equal to that Lender's proportion of the Base Currency Amount of the maturing Facility C Loan that is due to be repaid) and its participation will be treated as a separate Facility A Loan or Facility C Loan, as the case may be, denominated in the Base Currency during that Interest Period. 8.3 Exchange rate movements (a) In respect of successive Interest Periods of a Facility A Loan denominated in an Optional Currency, the Agent shall calculate the amount of the Facility A Loan in that currency for the next following Interest Period (by calculating the amount of that currency equal to the Base Currency Amount of that Facility A Loan at the Agent's Spot Rate of Exchange at the Specified Time) and (subject to paragraph (b) below): (i) if the amount calculated is less than the existing amount of that Facility A Loan in the Optional Currency during the then current Interest Period, promptly notify the Borrower that has borrowed that Facility A Loan and that Borrower shall pay, on the last day of that Interest Period, an amount equal to the difference; or (ii) if the amount calculated is more than the existing amount of that Facility A Loan in the Optional Currency during the then current Interest Period, promptly notify each Lender and, if no Event of Default is continuing, each Lender shall, on the last day of that Interest Period, pay its participation in an amount equal to the difference. (b) If the calculation made by the Agent pursuant to paragraph (a) above shows that the amount of the Facility A Loan in the Optional Currency has increased or decreased by less than 10 per cent. compared to its Base Currency Amount, no notification shall be made by the Agent and no payment shall be required under paragraph (a) above. 8.4 Agent's calculations (a) All calculations made by the Agent pursuant to this Clause 8 will take into account any repayment, prepayment, consolidation or division of Facility A Loans to be made on the last day of the first Interest Period. (b) Each Lender's participation in a Loan will, subject to paragraph (a) above, be determined in accordance with paragraph (b) of Clause 5.4 (Lenders' participation). SECTION 4 REPAYMENT, PREPAYMENT AND CANCELLATION 9. REPAYMENT 9.1 Repayment of Facility A Loans (a) Each Borrower (as applicable) shall repay each Facility A1 Loan made to it on the Facility A1 Repayment Date. (b) Each Borrower (as applicable) shall repay each Facility A2 Loan made to it on the Facility A2 Repayment Date. (c) No Borrower may reborrow any part of Facility A which is repaid. 9.2 Repayment of Facility B Loans (a) Each Borrower to which Facility B Loans are made shall repay Facility B Loans so that, on each of the following dates below, the aggregate amount of Facility B Loans shall be reduced by the amount set opposite that date: Facility B Repayment Date Repayment Instalment 30 November 2001 US$26,000,000 28 February 2002 US$26,000,000 30 May 2002 US$30,000,000 31 August 2002 US$30,000,000 30 November 2002 US$30,000,000 28 February 2003 US$30,000,000 30 May 2003 US$30,000,000 31 August 2003 US$30,000,000 30 November 2003 US$39,000,000 28 February 2004 US$39,000,000 30 May 2004 US$39,000,000 31 August 2004 US$39,000,000 30 November 2004 US$39,000,000 28 February 2005 US$39,000,000 30 May 2005 US$39,000,000 31 August 2005 US$39,000,000 30 November 2005 US$39,000,000 28 February 2006 US$39,000,000 The Termination Date for Facility B US$308,000,000 (b) If the aggregate amount of Facility B Loans outstanding at the end of the Availability Period for Facility B is less than US$930,000,000, the amount of each Repayment Instalment under paragraph (a) above shall be reduced accordingly on a pro rata basis. (c) No Borrower may reborrow any part of Facility B which is repaid. 9.3 Repayment of Facility C Loans SMO shall repay each Facility C Loan on the last day of its Interest Period. 10. PREPAYMENT AND CANCELLATION 10.1 Illegality If it becomes unlawful in any jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund its participation in any Utilisation: (a) that Lender shall promptly notify the Agent upon becoming aware of that event; (b) upon the Agent notifying the Company, the Commitment of that Lender will be immediately cancelled; and (c) each Borrower shall repay that Lender's participation in the Utilisations made to that Borrower on the last day of the Interest Period for each Utilisation occurring after the Agent has notified the Company or, if earlier, the date specified by the Lender in the notice delivered to the Agent (being no earlier than the last day of any applicable grace period permitted by law). 10.2 Change of control of Company (a) If Bellon S.A. ceases to hold at least 33 1/3 per cent. of the shares and/or voting rights of the shares of the Company (a "loss of control"): (i) the Company shall promptly notify the Agent upon becoming aware of that event; (ii) no Borrower may make a Utilisation unless otherwise agreed by the Majority Lenders; and (iii) unless all of the Lenders have agreed to such loss of control, the Agent shall, by not less than 10 days' notice to the Company, cancel the Facilities and declare all outstanding Utilisations, together with accrued interest, and all other amounts accrued under the Finance Documents immediately due and payable, whereupon the Facilities will be cancelled and all such outstanding amounts will become immediately due and payable. (b) A Lender shall be deemed to have agreed to a loss of control if it has not approved or disapproved of such loss of control by the date falling 30 Business Days after receiving notice from the Company of such loss of control. 10.3 Change of control of Borrowers (other than Company) (a) If any Borrower (other than the Company) ceases to be (or the Company intends that it should cease to be) a Subsidiary of the Company: (i) the Company shall promptly notify the Agent of its intention that such Borrower shall cease to be a Subsidiary; (ii) no such Borrower may make a Utilisation unless otherwise agreed by the Majority Lenders following such notification; and (iii) the Agent shall, by no later than the date on which, but prior to, such Borrower ceasing to be a Subsidiary of the Company, cancel the Facilities outstanding to that Borrower and declare all outstanding Utilisations to that Borrower, together with accrued interest, and all other amounts accrued under the Finance Documents and due from that Borrower immediately due and payable, whereupon such Facilities will be cancelled (to the extent stated above) and all such outstanding amounts from the Borrower will become immediately due and payable. 10.4 Mandatory prepayment of Equity and Debt proceeds (a) If any member of the Group receives any Net Equity Proceeds or Net Debt Proceeds after the date of this Agreement, the Company shall ensure that those proceeds (or an amount equal thereto) are used to reduce permanently the Facilities in accordance with paragraph (b) or (d) below. (b) Net Equity Proceeds (subject to paragraph (d) below) and Net Debt Proceeds shall be applied: (i) firstly, to prepay or, as the case may be, cancel Facility A and the Commitments of the Lenders under Facility A shall be reduced rateably; (ii) secondly, after Facility A Commitments have been reduced to zero and all Facility A Loans have been repaid, prepaid or cancelled in full, to prepay or, as the case may be, cancel Facility B and the Commitments of the Lenders under Facility B shall be reduced rateably provided that this paragraph (b)(ii) shall only apply if the Company has, at the time such Net Equity Proceeds or Net Debt Proceeds are received, a Rating of BBB- or lower; and (iii) thirdly, after (if applicable) the Facility B Commitments have been reduced to zero and, if Facility B Loans have been repaid, prepaid or cancelled in full, towards such purposes as the Company or relevant member of the Group so decides. (c) Any amounts to be applied in prepaying or cancelling Facility B pursuant to paragraph (b)(ii) above shall be so applied pro rata against each Repayment Instalment. (d) Net Equity Proceeds relating to the Rights Issue shall be applied: (i) firstly, to prepay or, as the case may be, cancel Facility A2 and the Commitments of the Lenders under Facility A2 shall be reduced rateably; (ii) secondly, against amounts (if any) incurred by the Company for the purpose of making Market Purchases to the extent such amounts do not exceed (Euro)150,000,000 and provided such amounts have been incurred by the Company by the time of completion of the Rights Issue; (iii) thirdly, to prepay or, as the case may be, cancel Facility A1 and the Commitments of the Lenders under Facility A1 shall be reduced rateably; and (iv) fourthly, against Facility B (to the extent applicable) in accordance with paragraph (b)(ii) above. (e) Net Debt Proceeds and Net Equity Proceeds shall be applied on the earlier of (i) the date falling 3 Months after the end of the current Month of receipt by the relevant member of the Group of the Net Debt Proceeds or Net Equity Proceeds, as the case may be, and (ii) the last day of the current Interest Period applicable to each relevant Facility to be prepaid pursuant to paragraph (b) or (d) above, following receipt by the relevant member of the Group of the Net Debt Proceeds or Net Equity Proceeds, as the case may be, unless, in either case, the Company elects by notice in writing to the Agent to make the relevant prepayment before such time. 10.5 Waivers, cancellation and refinancing (a) If there has been a Positive Committee Announcement and a Recommended Offer is launched, the Company will notify the Arranger prior to the earlier of the launch of syndication of the Facilities and 2 May 2001 whether the Company: (i) will seek the Kodak Waiver and SMO Waiver; or (ii) will not seek those Waivers and will use Facility B and Facility C to refinance or repurchase the Kodak Existing Facility and SMO Credit Agreement. If such Waivers are sought and obtained, Facility B and Facility C shall be cancelled forthwith and the Commitment relative to such Facilities shall be immediately reduced to zero. (b) If there has been a Negative Committee Announcement and the Company determines that it shall not launch a Non-Recommended Offer or make Market Purchases, the Company shall: (i) forthwith cancel Facility A2 and the Total Facility A2 Commitments shall be immediately reduced to zero; (ii) forthwith cancel Facility C and at least US$310,000,000 of Facility B and the Total Facility C Commitments shall be immediately reduced to zero and the Total Facility B Commitments shall be reduced accordingly; and (iii) if the Kodak Waiver is obtained, forthwith cancel the remaining part of Facility B and the Total Facility B Commitments shall be immediately reduced to zero. (c) If the AA Acquisitions are not to proceed, the Company shall promptly on reaching such decision or being notified of the same by the relevant vendor notify the Agent of the same and thereupon Facility A1 shall be cancelled and the Total Facility A1 Commitments shall be immediately reduced to zero. (d) The Company shall ensure that the Kodak Existing Facility and the SMO Credit Agreement are refinanced or repurchased by no later than the earlier of: (i) the end of the Availability Period for Facility B; and (ii) the completion of a merger of Kodak in connection with the Offer. If by that time a Waiver is required but has not been requested or been given. 10.6 Voluntary cancellation The Company may, if it gives the Agent not less than 5 Business Days' (or such shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any part (being a minimum amount of, in the case of Facility A, (Euro)5,000,000 and, in the case of Facility B and Facility C, US$5,000,000) of an Available Facility. Any cancellation under this Clause 10.6 shall reduce the Commitments of the Lenders rateably under that Facility. 10.7 Voluntary prepayment of Facility A Loans and Facility B Loans (a) The Borrower to which a Facility A Loan or Facility B Loan has been made may, if it gives the Agent not less than 5 Business Days' (or such shorter period as the Majority Lenders may agree) prior notice, prepay the whole or any part of any Facility A Loan or Facility B Loan (but, if in part, being an amount that reduces the Base Currency Amount of the Facility A Loan by a minimum amount of (Euro)5,000,000 and the amount of the Facility B Loan by a minimum amount of US$5,000,000). (b) A Facility A Loan or Facility B Loan may only be prepaid after the last day of the Availability Period applicable to that Facility (or, if earlier, the day on which the applicable Available Facility is zero). (c) Any prepayment of Facility B under this Clause 10.7 shall satisfy the obligations under Clause 9.2 (Repayment of Facility B Loans) in chronological order. 10.8 Voluntary prepayment of Facility C Loans SMO may, if it gives the Agent not less than 5 Business Days' (or such shorter period as the Majority Lenders may agree) prior notice, prepay the whole or any part of a Facility C Loan (but if in part, being an amount that reduces the Base Currency Amount of the Facility C Loan by a minimum amount of US$5,000,000). 10.9 Right of repayment and cancellation in relation to a single Lender (a) If: (i) any sum payable to any Lender by an Obligor is required to be increased under paragraph (c) of Clause 15.2 (Tax gross-up); or (ii) any Lender claims indemnification from the Company under Clause 15.3 (Tax indemnity) or Clause 16.1 (Increased costs), the Company may, whilst the circumstance giving rise to the requirement or indemnification continues, give the Agent notice of cancellation of the Commitments of that Lender and its intention to procure the repayment of that Lender's participation in the Utilisations. (b) On receipt of a notice referred to in paragraph (a) above, the Commitments of that Lender shall immediately be reduced to zero. (c) On the last day of each Interest Period which ends after the Company has given notice under paragraph (a) above (or, if earlier, the date specified by the Company in that notice), each Borrower to which a Utilisation is outstanding shall repay that Lender's participation in that Utilisation. In addition, in relation to Facility C, SMO shall provide cash-cover (as defined in Clause 6.1 (General)) in relation to that Lender's participation in all outstanding Letters of Credit within 5 Business Days of giving the notice specified in paragraph (a). 10.10 Restrictions (a) Any notice of cancellation or prepayment given by any Party under this Clause 10 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment. (b) Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs, without premium or penalty. (c) No Borrower (as applicable) may reborrow any part of Facility A or Facility B which is prepaid. (d) Unless a contrary indication appears in this Agreement, any part of Facility C which is prepaid may be reborrowed in accordance with the terms of this Agreement. (e) The Borrowers shall not repay or prepay all or any part of the Utilisations or cancel all or any part of the Commitments except at the times and in the manner expressly provided for in this Agreement. (f) No amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated. (g) If the Agent receives a notice under this Clause 10 it shall promptly forward a copy of that notice to either the Company or the affected Lender, as appropriate. SECTION 5 COSTS OF UTILISATION 11. INTEREST 11.1 Calculation of interest The rate of interest on each Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable: (a) Margin; (b) LIBOR or, in relation to any Loan in euro, EURIBOR; and (c) Mandatory Cost, if any. 11.2 Margin and adjustment (a) Subject to the following provisions of this Clause 11.2, the Margin will be 55 basis points per annum in respect of Facility A and 65 basis points per annum in respect of Facility B and Facility C. (b) The Margin for all Utilisations in a Facility will be adjusted in accordance with paragraph (f) below to the number of basis points per annum specified below the reference to that Facility in the table below and set opposite the Rating assigned by S&P at such time to the Company: Rating Margin (bps p.a.) Facility A Facilities B and C A- (or higher) 45 55 BBB+ 55 65 BBB 65 75 BBB- 85 95 BB+ (or lower) 135 160 (c) (i) The Margin as shown in the table set out in paragraph (b) above will, in respect of each Facility, be reduced in accordance with paragraph (f) below by 10 basis points (the "Reduction") if and whenever Net Equity Proceeds from the Rights Issue have been received by the Company and, to the extent required by Clause 10.4 (Mandatory prepayment of Equity and Debt Proceeds), used to prepay and/or cancel the Facilities, in an amount (the "Required Amount") equal to or greater than, subject to the proviso below, 50 per cent. of the aggregate of (A) the total aggregate amount spent in euro (or the euro equivalent) by or on behalf of members of the Group since the date of this Agreement on each of the AA Acquisitions and the Kodak Acquisition, in each case, whether completed in whole or in part and (B) the Available Commitments under Facility A1 and Facility A2 provided that, in any event, for the purposes of this Clause, the Required Amount need not exceed (EURO) 750,000,000. (ii) For the purposes of paragraph (i) above, the Company shall notify the Agent at the time it considers that it has qualified for the Reduction as set out in paragraph (i) above which notification shall be accompanied with a certificate of the Company confirming how much it has spent for the purposes of (A) above and what it calculates the Required Amount to be. The Agent shall promptly notify the Company that it has qualified for the Reduction (or not, as the case may be) as soon as possible following its receipt of the notification, certificate and calculation specified above. (d) The Reduction shall also apply, in accordance with paragraph (f) below, if: (i) no part of the Kodak Acquisition has been made and Facility A2, Facility B and Facility C have been cancelled in full and the Commitments relating to such Facilities reduced to zero; or (ii) no more than [EURO] 450,000,000 (or its equivalent) in aggregate has been spent on the Kodak Acquisition and AA Acquisitions (whether that be a partial AA Acquisition or partial Kodak Acquisition, including by way of Market Purchases). Such determination shall be made at the end of the Availability Period for Facility A1 and Facility A2 or such earlier date on which the Available Commitments under Facility A1 and Facility A2, as the case may be, are cancelled to the extent that the aggregate of the Total Facility A1 Commitments and Total Facility A2 Commitments does not exceed [EURO] 450,000,000. (e) If a Non-Recommended Offer is made, the Margin as shown in the table set out in paragraph (b) above will, in each case and in respect of each Facility, and in accordance with paragraph (f) below, be increased by 20 basis points. (f) Any adjustment to the Margin (whether upwards or downwards) in accordance with paragraphs (b), (c), (d) or (e) above or (g)(ii) or (iii) below will apply for all purposes under this Agreement immediately on, as appropriate: (i) the date of publication of any relevant change to the Rating assigned to the Company; or (ii) the date on which the Facilities have been prepaid and/or cancelled following the receipt by the Company of the Net Equity Proceeds from the Rights Issue provided that, whether before or after the date of such prepayment and/or cancellation, the Agent has notified the Company that it has qualified for the Reduction; or (iii) the date on which the condition in Clause 11.2(d)(i) or (ii) as the case may be, is satisfied; or (iv) the date on which a Non-Recommended Offer is launched by the Company; or (v) the date on which a substitute Rating is assigned to the Company as provided in paragraph (g)(ii) or (iii) below, as the case may be. (g) For the purpose of this Clause 11.2, Clause 10.4(b) (Mandatory prepayment of Equity and Debt Proceeds) and Clause 24.4 (Disposals): (i) "Rating" means the long term credit rating of the Company last published by S&P (taking into account the AA Acquisitions and the Kodak Acquisition, to the extent made) and not withdrawn prior to the Quotation Day for an Interest Period; (ii) If at any time the Company does not have a Rating assigned to it by S&P, the Company and the Agent (acting on the instructions of the Majority Lenders) shall negotiate (in good faith) a substitute Rating having regard to the Company's financial condition and Rating existing immediately prior to it ceasing to have a Rating from S&P; and (iii) if, after 15 Business Days, the Company and the Agent are unable to agree a new Rating notwithstanding the provisions of paragraph (ii) above, a Rating for the purpose of the table set out in paragraph (b) above shall be deemed to be BB+. (h) Promptly after becoming aware of the same the Company shall inform the Agent in writing if any change in the Rating assigned to the Company occurs or the circumstances contemplated in paragraph (g)(ii) above arise. 11.3 Payment of interest The Borrower to which a Loan has been made shall pay accrued interest on that Loan on the last day of each Interest Period (and, if the Interest Period is longer than six Months, on the dates falling at six monthly intervals after the first day of the Interest Period). 11.4 Default interest (a) If an Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which is the sum of 1 per cent and the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Loan in the currency of the overdue amount for successive Interest Periods, each of a duration selected by the Agent (acting reasonably). (b) However if the overdue amount is principal of a Loan and became due on a day other than the last day of an Interest Period relating to that Loan, the first Interest Period applicable to that overdue amount shall be of a duration equal to the unexpired portion of that Interest Period and the rate of interest on that overdue amount for that Interest Period shall be the sum of 1 per cent and the rate applicable to it immediately before it became due. (c) Any interest accruing under this Clause 11.4 shall be immediately payable by the Obligor on demand by the Agent. 11.5 Notification of rates of interest The Agent shall promptly (and in any event within 2 Business Days of the determination of the same) notify the Lenders and the relevant Borrower of the determination of a rate of interest under this Agreement. 12. INTEREST PERIODS 12.1 Selection of Interest Periods (a) A Borrower (or the Company on behalf of a Borrower) may select an Interest Period for a Loan in the Utilisation Request for that Loan or (if the Loan has already been borrowed) in a Selection Notice. (b) Each Selection Notice for a Facility A Loan and/or Facility B Loan is irrevocable and must be delivered to the Agent by the relevant Borrower (or the Company on behalf of a Borrower) not later than the Specified Time. (c) If the Company or other appropriate Borrower fails to deliver a Selection Notice to the Agent in accordance with paragraph (b) above, the relevant Interest Period will be one Month. (d) Subject to this Clause 12, a Borrower may select an Interest Period of 1, 2, 3 or 6 (or, to the extent available to each Lender, 9 or 12) Months or any other period agreed between the Company and the Agent (acting on the instructions of all the Lenders). In addition, the Company or other appropriate Borrower may select an Interest Period of less than one month in relation to Facility B if necessary to ensure that there are sufficient Facility B Loans which have an Interest Period ending on a Facility B Repayment Date for the Company or other appropriate Borrower to make the Repayment Instalment due on that date. (e) An Interest Period for a Loan shall not extend beyond the Termination Date applicable to its Facility (or, in the case of Facility A where the Termination Date has been extended for a portion of that Facility pursuant to Clause 5.5 (Extension of Facility A1 and Facility A2), beyond the Termination Date applicable to the relevant portion of Facility A). (f) Each Interest Period for a Facility A Loan and/or a Facility B Loan shall start on the Utilisation Date or (if already made) on the last day of its preceding Interest Period. (g) A Facility C Loan has one Interest Period only. 12.2 Changes to Interest Periods (a) Prior to determining the interest rate for an Interest Period beginning before the Syndication Date, the Agent may after consultation (where practicable) with the Company shorten that Interest Period to a duration of 1 month (or such shorter duration as may be necessary to ensure that the Interest Period ends on a date on which rights and obligations under this Agreement are to be novated to persons becoming Parties as a result of the syndication of the Facilities). The Company may request that Interest Periods be similarly shortened until 30 August 2001 in order to harmonise Interest Periods with its existing swap payment dates. (b) Prior to determining the interest rate for a Facility B Loan, the Agent may shorten an Interest Period for any Facility B Loan to the extent necessary to ensure there are sufficient Facility B Loans with an Interest Period ending on a Facility B Repayment Date for the Company or other appropriate Borrower to make the Repayment Instalment due on that Facility B Repayment Date. (c) If the Agent makes any of the changes to an Interest Period referred to in this Clause 12.2, it shall promptly notify the Company and the Lenders. 12.3 Non-Business Days If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not). 12.4 Consolidation and division of Facility A and Facility B Loans (a) Subject to paragraph (b) below, if two or more Interest Periods relate to Facility A1 Loans, Facility A2 Loans or Facility B Loans in the same currency, to the same Obligor and end on the same date, those Facility A1 Loans, Facility A2 Loans or Facility B Loans (as the case may be) will, unless the Company or other appropriate Borrower specifies to the contrary in the Selection Notice for the next Interest Period, be consolidated into, and treated as, a single Facility A1 Loan, Facility A2 Loan or Facility B Loan (as the case may be) on the last day of the Interest Period. (b) Subject to Clause 4.4 (Maximum number of Loans), if the Company or other appropriate Borrower requests in a Selection Notice that a Facility A1 Loan, a Facility A2 Loan or a Facility B Loan be divided into two or more Facility A1 Loans, Facility A2 Loans or Facility B Loans, that Facility A1 Loan, Facility A2 Loan or Facility B Loan (as the case may be) will, on the last day of its Interest Period, be so divided. 12.5 Taux Effectif Global In order to comply with the provisions of Articles L313-1 and L313-2 of the French consumer Code (Code de la Consommation), the effective global rate ("taux effectif global") calculated in accordance with the articles referred to above is as set out in a letter dated the date of this Agreement from the Agent to the Company substantially in the form of Schedule 11 (Form of TEG Letter). 13. CHANGES TO THE CALCULATION OF INTEREST 13.1 Absence of quotations Subject to Clause 13.2 (Market disruption), if LIBOR or, if applicable, EURIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by the Specified Time on the Quotation Day, the applicable LIBOR or EURIBOR shall be determined on the basis of the quotations of the remaining Reference Banks. 13.2 Market disruption (a) If a Market Disruption Event occurs in relation to a Loan for any Interest Period, then the rate of interest on each Lender's share of that Loan for the Interest Period shall be the rate per annum which is the sum of: (i) the Margin; (ii) the rate notified to the Agent by that Lender as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period, to be that which expresses as a percentage rate per annum the cost to that Lender of funding its participation in that Loan from whatever source it may reasonably select; and (iii) the Mandatory Cost, if any, applicable to that Lender's participation in the Loan. (b) In this Agreement "Market Disruption Event" means: (i) at or about noon on the Quotation Day for the relevant Interest Period the Screen Rate is not available and none or only one of the Reference Banks supplies a rate to the Agent to determine LIBOR or, if applicable, EURIBOR for the relevant currency and period; or (ii) before close of business in London on the Quotation Day for the relevant Interest Period, the Agent receives notifications from a Lender or Lenders (whose participations in a Loan exceed 35 per cent. of that Loan) that the cost to it of obtaining matching deposits in the Relevant Interbank Market would be in excess of LIBOR or, if applicable, EURIBOR. 13.3 Alternative basis of interest or funding (a) If a Market Disruption Event occurs and the Agent or the Company so requires, the Agent and the Company shall enter into negotiations (for a period of not more than thirty days) with a view to agreeing a substitute basis for determining the rate of interest. (b) Any alternative basis agreed pursuant to paragraph (a) above shall, with the prior consent of all the Lenders and the Company, be binding on all Parties. 13.4 Break Costs (a) Each Borrower shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of a Loan or Unpaid Sum being paid by that Borrower on a day other than the last day of an Interest Period for that Loan or Unpaid Sum. (b) Each Lender shall, as soon as reasonably practicable after a demand by the Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue. 14. FEES 14.1 Commitment fee (a) The Company shall pay to the Agent (for the account of each Lender) a fee in the Base Currency relative to the Facility for which the fee is payable computed at the rate of: (i) 33 1/3 per cent. of the applicable Margin which would apply to a Facility A or Facility B Loan drawn, on the daily amount of that Lender's Available Commitment under Facility A during the Availability Period applicable to Facility A and on the daily amount of that Lender's Available Commitment under Facility B during the Availability Period applicable to Facility B; and (ii) 50 per cent. of the applicable Margin which would apply to a Facility C Loan drawn, on the daily amount of that Lender's Available Commitment under Facility C during the Availability Period applicable to Facility C. (b) The accrued commitment fee is payable on the last day of each successive period of three Months which ends during the relevant Availability Period, on the last day of the Availability Period and on the cancelled amount of the relevant Lender's Commitment at the time the cancellation is effective. 14.2 Arrangement fee The Company shall pay to the Agent (on behalf of the Arranger, who shall distribute the proceeds to the market at their sole discretion) the fees in the amount and at the times agreed in a Fee Letter. 14.3 Agency fee The Company shall pay to the Agent (for its own account) an agency fee in the amount and at the times agreed in a Fee Letter. SECTION 6 ADDITIONAL PAYMENT OBLIGATIONS 15. TAX GROSS UP AND INDEMNITIES 15.1 Definitions (a) In this Clause 15: "Protected Party" means a Finance Party which is or will be, for or on account of Tax, subject to any liability or required to make any payment in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document, or any Finance Party that will suffer a reduction in any payment made pursuant to a Finance Document by reason of a Tax Deduction. "Qualifying Lender" means a Lender which is (on the date a payment falls due): (i) with respect to any payment made pursuant to a Finance Document, a resident of a jurisdiction (the "Payee Jurisdiction") that has concluded a double taxation treaty in force as of the date hereof with the jurisdiction (the "Payor Jurisdiction") in which the payor of the payment is resident which exempts Payor Jurisdiction source interest payments made to Payee Jurisdiction residents from Tax Deductions (a "Treaty Lender"); (ii) able to fulfil the conditions imposed by French law, taking into account, as the case may be, any applicable international treaty signed by France, in order for any sum payable by an Obligor which is resident in France to the Agent for the account of the Facility Office of such person not to be subject to any Tax Deduction; or (iii) with respect to payments from US Obligors, a US Person (a "US Lender"). "Tax Credit" means a credit against, relief or remission for, or repayment of any Tax. "Tax Deduction" means a deduction or withholding for or on account of Tax from a payment under a Finance Document. "Tax Payment" means an increased payment made by an Obligor to a Finance Party under Clause 15.2 (Tax gross-up) or a payment under Clause 15.3 (Tax indemnity). (b) In this Clause 15 a reference to "determines" or "determined" means a determination made in the absolute discretion of the person making the determination. 15.2 Tax gross-up (a) Each Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law. (b) The Company or a Lender shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Agent accordingly. If the Agent receives such notification from a Lender it shall notify the Company and that Obligor. (c) If a Tax Deduction is required by law to be made by an Obligor the amount of the payment due from that Obligor shall, subject to paragraphs (d) and (e) below, be increased to an amount which (after making any Tax Deduction) leaves an amount equal (on a net after Tax basis) to the payment which would have been due if no Tax Deduction had been required. (d) In the case of a Tax Deduction for or on account of US Federal withholding tax required by law to be made by a US Obligor, paragraph (c) shall only apply if the Lender: (i) is a Treaty Lender or a US Lender unless (in the case of a Treaty Lender) the US Obligor is able to demonstrate the Tax Deduction is required to be made as a result of the Lender failing to comply with paragraph (h) below; or (ii) is not or has ceased to be a Treaty Lender to the extent that this altered status results from any change after the date of this Agreement in (or in the interpretation, administration or application of) any law or double taxation agreement or any published practice or published concession of any relevant taxing authority. (e) In the case of a Tax Deduction for or on account of French law to be made by a French Obligor, paragraph (c) shall only apply if the Lender: (i) is a Qualifying Lender; or (ii) is not or has ceased to be a Qualifying Lender to the extent that this altered status results from any change after the date of this Agreement in (or in the interpretation, administration, or application of) any law or double taxation agreement or any published practice or published concession of any relevant taxing authority. (f) If an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law. (g) Within thirty days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Agent for the Finance Party entitled to the payment original receipts or certified copies thereof and, if not available, other evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority. (h) A Treaty Lender and each Obligor which makes a payment to which that Treaty Lender is entitled shall co-operate in completing any procedural formalities necessary for that Obligor to obtain authorisation to make that payment without a Tax Deduction. With respect to payments made from or on behalf of a Borrower which is a US Person, each Treaty Lender shall supply to that Borrower's paying agent a properly completed and executed United States Internal Revenue Service Form W-8BEN (a "Form W-8BEN") as of the date hereof, and will supply additional Forms W-8BEN (or appropriate successor forms) within 30 days of written request by that Borrower. 15.3 Tax indemnity (a) The Company shall (within three Business Days of demand by the Agent) pay to a Protected Party an amount equal (on a net after Tax basis) to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party. (b) Paragraph (a) above shall not apply with respect to any Tax assessed on: (i) a Finance Party: (A) under the law of the jurisdiction in which that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes; or (B) under the law of the jurisdiction in which that Finance Party's Facility Office is located in respect of amounts received or receivable in that jurisdiction, if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Finance Party; or (ii) the Agent (to the extent acting through an office in the United Kingdom), as a result of the failure by a Lender to satisfy on the due date of a payment of interest either of the conditions set out in paragraphs (a) and (b) of Clause 28.15 (Lenders' tax status confirmation). (c) A Protected Party making, or intending to make, a claim pursuant to paragraph (a) above shall promptly notify the Agent of the event which will give, or has given, rise to the claim, following which the Agent shall notify the Company. (d) A Protected Party shall, on receiving a payment from an Obligor under this Clause 15.3, notify the Agent. 15.4 Tax Credit If an Obligor makes a Tax Payment and the relevant Finance Party determines that: (i) a Tax Credit is attributable to that Tax Payment; and (ii) that Finance Party has obtained, utilised and retained that Tax Credit, the Finance Party shall pay an amount to the Obligor which that Finance Party determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been made by the Obligor. 15.5 Stamp taxes The Company shall pay and, within three Business Days of demand, indemnify each Finance Party against any cost, loss or liability that Finance Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document. 15.6 Value added tax (a) All consideration payable under a Finance Document by an Obligor to a Finance Party shall be deemed to be exclusive of any VAT. If VAT is chargeable, the Obligor shall pay to the Finance Party (in addition to and at the same time as paying the consideration) an amount equal to the amount of the VAT. (b) Where a Finance Document requires an Obligor to reimburse a Finance Party for any costs or expenses, that Obligor shall also at the same time pay and indemnify that Finance Party against all VAT incurred by that Finance Party in respect of the costs or expenses save to the extent that the Finance Party has received repayment or credit in respect of such VAT. 16. INCREASED COSTS 16.1 Increased costs (a) Subject to Clause 16.3 (Exceptions) the Company shall, within three Business Days of a demand by the Agent, pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of (i) the introduction of or any change in (or in the interpretation or application of) any law or regulation or (ii) compliance with any law or regulation made after the date of this Agreement. (b) In this Agreement "Increased Costs" means: (i) a reduction in the rate of return from the Facility or on a Finance Party's (or its Affiliate's) overall capital; (ii) an additional or increased cost; (iii) a reduction of any amount due and payable under any Finance Document; (iv) the imposition, modification or application of any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of a Finance Party which is not otherwise included in the determination of LIBOR or EURIBOR under this Agreement, including, without limitation, the imposition of any reserves with respect to "Eurocurrency Liabilities" under Regulation D (for which purpose, the Utilisations shall be deemed to constitute Eurocurrency Liabilities and to be subject to such reserve requirements without benefit of or credit for proration, exceptions or offsets which may be available from time to time to any Finance Party under Regulation D); or (v) an imposition on a Finance Party of any condition, which is directly incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into its Commitment or funding or performing its obligations under any Finance Document. 16.2 Increased cost claims (a) A Finance Party intending to make a claim pursuant to Clause 16.1 (Increased costs) shall notify the Agent of the event giving rise to the claim, following which the Agent shall promptly notify the Company. (b) Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate to the Agent and the Company confirming the amount of its Increased Costs (and setting out in reasonable detail the basis of calculation of such Increased Costs). 16.3 Exceptions (a) Clause 16.1 (Increased costs) does not apply to the extent any Increased Cost is: (i) attributable to a Tax Deduction required by law to be made by an Obligor; (ii) compensated for by Clause 15.3 (Tax indemnity) (or would have been compensated for under Clause 15.3 (Tax indemnity) but was not so compensated solely because one of the exclusions in paragraph (b) of Clause 15.3 (Tax indemnity) applied); (iii) compensated for by the payment of the Mandatory Cost; or (iv) attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation or to its negligence or wilful default. (b) In this Clause 16.3, a reference to a "Tax Deduction" has the same meaning given to the term in Clause 15.1 (Definitions). 17. OTHER INDEMNITIES 17.1 Currency indemnity (a) If any sum due from an Obligor under the Finance Documents (a "Sum"), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the "First Currency") in which that Sum is payable into another currency (the "Second Currency") for the purpose of: (i) making or filing a claim or proof against that Obligor; (ii) obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings, that Obligor shall as an independent obligation, within three Business Days of demand, indemnify each Finance Party to whom that Sum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum. (b) Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable. 17.2 Other indemnities The Company shall (or shall procure that an Obligor will), within three Business Days of demand (which demand shall include reasonable detail of the basis of calculation of the amount demanded), indemnify each Lender against any cost, loss or liability incurred by that Lender as a result of: (a) the occurrence of any Event of Default; (b) a failure by an Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of Clause 30 (Sharing among the Lenders); (c) funding, or making arrangements to fund, its participation in a Utilisation requested by a Borrower in a Utilisation Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Lender alone); or (d) a Utilisation (or part of a Utilisation) not being prepaid in accordance with a notice of prepayment given by a Borrower or the Company. 17.3 Indemnity to the Agent The Company shall promptly indemnify the Agent against any cost, loss or liability incurred by the Agent (acting reasonably) as a result of: (a) investigating any event which it reasonably believes is a Default; or (b) entering into or performing any foreign exchange contract for the purposes of Clause 6 (Optional Currencies); or (c) acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised. 17.4 Acquisition Financing Indemnity The Company shall indemnify each Finance Party in accordance with Schedule 10 (Acquisition Financing Indemnity). 18. MITIGATION BY THE LENDERS 18.1 Mitigation (a) Each Finance Party shall, in consultation with the Company, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under, or cancelled pursuant to, any of Clause 10.1 (Illegality), Clause 15 (Tax gross-up and indemnities) or Clause 16 (Increased costs) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office. (b) Paragraph (a) above does not in any way limit the obligations of any Obligor under the Finance Documents. 18.2 Limitation of liability (a) The Company shall indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 18.1 (Mitigation). (b) A Finance Party is not obliged to take any steps under Clause 18.1 (Mitigation) if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it. 19. COSTS AND EXPENSES 19.1 Transaction expenses The Company shall promptly on demand (and subject to the Fee Letter relating, inter alia, to the same) pay the Agent and the Arranger the amount of all costs and expenses and related taxes (including legal fees) reasonably incurred by any of them in connection with the negotiation, preparation, printing, execution and syndication of: (a) this Agreement and any other documents referred to in this Agreement; and (b) any other Finance Documents executed after the date of this Agreement. 19.2 Amendment costs If: (a) an Obligor requests an amendment, waiver or consent; or (b) an amendment is required pursuant to Clause 31.9 (Change of currency); or (c) an amendment is required to Clause 20 (Guarantee and Indemnity) as a result of the accession of an Additional Guarantor who has a legal restriction on the ability to give a guarantee in the specified form, the Company shall, within three Business Days of demand, reimburse the Agent for the amount of all third party costs and expenses (including legal fees) reasonably incurred by the Agent in responding to, evaluating, negotiating or complying with that request or requirement, it being understood that such costs and expenses shall (so far as practically possible) be subject to a pre-agreed budget mutually satisfactory to the Company and the Agent. 19.3 Enforcement costs The Company shall, within three Business Days of demand, pay to each Finance Party the amount of all reasonable costs and expenses (including legal fees) incurred by that Finance Party in connection with the enforcement of, or the preservation of any rights under, any Finance Document. 19.4 Notification The relevant person who has incurred any costs for which the Company is responsible to pay pursuant to this Clause 19, shall provide the Company with copies of invoices showing the relevant matters in reasonable detail. SECTION 7 GUARANTEE 20. Guarantee and indemnity 20.1 Guarantee and indemnity (a) Each Guarantor irrevocably and unconditionally jointly and severally: (i) guarantees to each Finance Party punctual performance by each Borrower of all that Borrower's obligations under the Finance Documents; (ii) undertakes with each Finance Party that whenever a Borrower does not pay any amount when due under or in connection with any Finance Document, that Guarantor shall immediately on demand pay that amount as if it was the principal obligor; and (iii) indemnifies each Finance Party immediately on demand against any cost, loss or liability suffered by that Finance Party if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal. The amount of the cost, loss or liability shall be equal to the amount which that Finance Party would otherwise have been entitled to recover, provided that, in the case of each Guarantor incorporated in France (other than the Company) its liability under this Clause 20 shall be limited in amount to the outstanding Utilisations of that Guarantor at the relevant time and the amount of any outstanding intra-group loans granted to it by any other Obligor using the proceeds of any Loan Pursuant to this Agreement. (b) As regards the guarantee given by the Company under this Clause 20, if: (i) Security is created or permitted to subsist by the Company or any other member of the Group over any of the Acquired Shares; or (ii) the holder of the Acquired Shares disposes of all or part of them, each Finance Party shall, independently of paragraph (a) above, be entitled to: (A) make demand on the Company for all Utilisations, accrued interest and other amounts accrued under the Finance Documents to be immediately due and payable whereon they shall become immediately due and payable and the Total Commitments shall be immediately cancelled; or (B) request that cash cover be provided to it in respect of all principal amounts actually or contingently due to that Finance Party under the Finance Documents. 20.2 Continuing guarantee This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Obligor under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part. 20.3 Reinstatement If any payment by an Obligor or any discharge given by a Finance Party (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is avoided or reduced as a result of insolvency or any similar event: (a) the liability of each Obligor shall continue as if the payment, discharge, avoidance or reduction had not occurred; and (b) each Finance Party shall be entitled to recover the value or amount of that security or payment from each Obligor, as if the payment, discharge, avoidance or reduction had not occurred. 20.4 Waiver of defences The obligations of each Guarantor under this Clause 20 will not be affected by an act, omission, matter or thing which, but for this Clause, would reduce, release or prejudice any of its obligations under this Clause 20 (without limitation and whether or not known to it or any Finance Party) including: (a) any time, waiver or consent granted to, or composition with, any Obligor or other person; (b) the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any member of the Group; (c) the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor or other person or any non- presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security; (d) any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person; (e) any amendment (however fundamental) or replacement of a Finance Document or any other document or security; (f) any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; or (g) any insolvency or similar proceedings. 20.5 Immediate recourse Each Guarantor waives any right it may have of first requiring any Finance Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or security or claim payment from any person before claiming from that Guarantor under this Clause 20. This waiver applies irrespective of any law or any provision of a Finance Document to the contrary. 20.6 Appropriations Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full, each Finance Party (or any trustee or agent on its behalf) may: (a) refrain from applying or enforcing any other moneys, security or rights held or received by that Finance Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and no Guarantor shall be entitled to the benefit of the same; and (b) hold in an interest-bearing suspense account any moneys received from any Guarantor or on account of any Guarantor's liability under this Clause 20. 20.7 Deferral of Guarantors' rights Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full and unless the Agent otherwise directs, no Guarantor will exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents: (a) to be indemnified by an Obligor; (b) to claim any contribution from any other guarantor of any Obligor's obligations under the Finance Documents; and/or (c) to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by any Finance Party. 20.8 Additional security This guarantee is in addition to and is not in any way prejudiced by any other guarantee or security now or subsequently held by any Finance Party. 20.9 Limitation on guarantee of US Guarantors (a) For the purposes of this Clause 20.9: "Fraudulent Transfer Law" means any applicable United States bankruptcy and state fraudulent transfer or conveyance statute and any related case law. "US Guarantor" means any Guarantor incorporated or organised under the laws of the United States or any state of the United States (including the District of Columbia). (b) Each US Guarantor acknowledges that: (i) it will receive valuable direct or indirect benefits as a result of the transactions financed by the Finance Documents; (ii) each Finance Party has acted in good faith in connection with the guarantee given by that US Guarantor and the transactions contemplated by the Finance Documents; and (iii) it has not incurred and does not intend to incur debts beyond its ability to pay as they mature. (c) Each US Guarantor must ensure that at all times: (i) its capital must not be unreasonably small to carry on its business as it is being conducted; and (ii) it has not made a transfer or incurred any obligation under any Finance Documents with the intent to hinder, delay or defraud any of its present or future creditors. SECTION 8 REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT 21. REPRESENTATIONS Each Obligor (in respect of itself and, where applicable, its Subsidiaries) makes the representations and warranties set out in this Clause 21 to each Finance Party on the date of this Agreement. 21.1 Status (a) The Company is a societe anonyme, duly established and existing under the laws of the Republic of France. (b) Each other Obligor is a corporation, duly incorporated and validly existing under the law of its jurisdiction of incorporation. (c) Each Obligor has the power to own its assets and carry on its business as it is being conducted. 21.2 Binding obligations Subject to the Reservations, the obligations expressed to be assumed by it in each Finance Document are, legal, valid, binding and enforceable obligations. 21.3 Non-conflict with other obligations The entry into and performance by it of, and the transactions contemplated by, the Finance Documents do not and will not conflict with: (a) any law or regulation applicable to it; (b) the constitutional documents of it or any Material Subsidiary; (c) any agreement or instrument binding upon it or any Material Subsidiary in a manner or to an extent which has or might have a Material Adverse Effect. 21.4 Power and authority It has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Finance Documents to which it is a party and the transactions contemplated by the Finance Documents. 21.5 Validity and admissibility in evidence All Authorisations required: (a) to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents to which it is a party; and (b) to make the Finance Documents admissible in evidence in its jurisdiction of incorporation, have been obtained or effected and are in full force and effect. 21.6 No default (a) No Event of Default is continuing or might reasonably be expected to result from the making of any Utilisation. (b) Save as disclosed by the Company prior to the date of this Agreement in respect of the Waivers, no other event or circumstance is outstanding which constitutes a default under any other agreement or instrument which is binding on it or any of its Subsidiaries which would have a Material Adverse Effect. 21.7 Information Memorandum This representation and warranty is made by the Company only upon issue of an Information Memorandum approved by the Company in writing, on the date of any update thereof and on the date of each or any Syndication Agreement (on the Information Memorandum as the same may have been updated). (a) The factual information provided by or on behalf of the Company in the Information Memorandum was true and accurate in all material respects as at the date (if any) at which it is stated or at the date of the Company's approval of the Information Memorandum. (b) The financial projections contained in the Information Memorandum have been prepared (in good faith) on the basis of recent historical information and on the basis of reasonable assumptions current at the date of the Information Memorandum or any update thereof, and were arrived at after due and careful consideration. (c) Nothing has occurred or been omitted from the Information Memorandum and no information has been given or withheld that results in the information, projections or assumptions contained in the Information Memorandum being untrue or misleading in any material respect in so far as the Information Memorandum relates to the financing contemplated in the Financing Documents. 21.8 Financial statements (a) In the case of the Company, its Original Financial Statements were prepared in accordance with French GAAP consistently applied. (b) In the case of the Company, its Original Financial Statements fairly represent the consolidated financial position of the Group as at the end of the relevant financial year. (c) There has been no material adverse change in the financial condition or business of the Group taken as a whole since 31 August 2000 (the Company only makes this representation and warranty). 21.9 Pari passu ranking Its payment obligations under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally. 21.10 No proceedings pending or threatened No litigation, arbitration or administrative proceedings (other than disclosed in writing to the Arranger prior to the date of this Agreement and which the Company or other relevant Obligor believes on reasonable grounds will be decided in its favour) of or before any court, arbitral body or agency have been started or (to the best of its knowledge and belief) threatened against it or any of its Subsidiaries which, if adversely determined, would be reasonably likely to have a Material Adverse Effect. 21.11 Existing Security No Security exists on or over its assets or those of any of its Subsidiaries except as permitted by Clause 24.3 (Negative pledge). 21.12 Environmental laws (a) It and each of its Subsidiaries is and has been in compliance with all applicable Environmental Laws and there are no circumstances known to it or any of its Subsidiaries that may prevent or interfere with such full compliance in the future and there are no circumstances known to it or any of its Subsidiaries that could give rise to any liability under Environmental Laws; (b) It and each of its Subsidiaries has been and is in compliance with the terms of all Environmental Approvals necessary for the ownership and operation of its and their facilities and businesses as presently owned and operated and as presently proposed to be owned and operated and it and each of its Subsidiaries will have all such Environmental Approvals prior to the commencement of any new activities or the commencement of work at any new sites to be owned or operated by it or them; (c) To the best of the knowledge and belief of the Company (having made due and careful enquiry) there is no Environmental Claim pending or threatened against it or any of its Subsidiaries, and there are no past or present acts, omissions, events or circumstances which could form the basis of any Environmental Claim against it or any of its Subsidiaries, in each of (a), (b) and (c) above, to the extent that no existing claim or non-compliance would be likely to have a Material Adverse Effect. 21.13 Material Subsidiaries Each member of the Group which, as at the date of this Agreement, is a Material Subsidiary is listed in Schedule 12 (Material Subsidiaries). 21.14 Solvency No Obligor has taken any action nor have any steps been taken or legal proceedings started or threatened against it for winding up, examination, dissolution or re-organisation, the enforcement of any Security over its assets or for the appointment of a receiver, examiner, administrative receiver or administrator, trustee or similar officer of it or any of its assets. 21.15 Tax liabilities All necessary returns have been delivered by each member of the Group (subject to the provisions of Clause 1.4 (Kodak and SMO as Subsidiaries)) or on their behalf to the relevant taxation authorities and neither it nor any of its Subsidiaries is in default in the payment of any taxes, and no material claim is being asserted with respect to taxes which (if adversely decided) would have a Material Adverse Effect which has not been contested and appropriately reserved against in its most recent financial statements. 21.16 Employee Plans (a) No ERISA Event has occurred or is reasonably expected to occur with respect to any Plan that has resulted in or is reasonably expected to result in a liability of a US Material Subsidiary or any ERISA Affiliate that would reasonably be expected to have a Material Adverse Effect. (b) As of the last annual actuarial valuation date, except as would not reasonably be expected to have a Material Adverse Effect, the funded current liability percentage, as defined in Section 302(d)(8) of ERISA, of each Plan exceeds 90 per cent and there has been no adverse change in the funding status of any such Plan since such date. (c) No US Material Subsidiary nor any ERISA Affiliate has incurred or is reasonably expected to incur any Withdrawal Liability to any Multiemployer Plan that would reasonably be expected to have a Material Adverse Effect. (d) No US Material Subsidiary nor any ERISA Affiliate has been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganisation or has been terminated, within the meaning of Title IV of ERISA, and no such Multiemployer Plan is reasonably expected to be in reorganisation or to be terminated, within the meaning of Title IV of ERISA, in any such case, in a manner or to an extent that would reasonably be expected to have a Material Adverse Effect. (e) Each US Material Subsidiary and its respective Subsidiaries have no material liability with respect to "expected post retirement benefit obligations" within the meaning of Statement of Financial Accounting Standards No. 106 that would reasonably be expected to have a Material Adverse Effect. 21.17 US Federal Reserve Regulations Neither the making of any Loan nor the use of the proceeds or the benefits thereof will violate or be inconsistent with Regulations T, U or X of the Board. 21.18 Investment Company Act and Public Utility Holding Company Act No Obligor is an "investment company", as such term is defined in the US Investment Company Act of 1940 as amended, or subject to the Public Utility Holding Company Act 1935, as amended. 21.19 The Offer and AA Acquisition (a) The Tender Offer Statement contains all the material terms and conditions of the Offer. (b) The AA Acquisition Agreements provided to the Agent contain all the material terms and conditions of the AA Acquisitions. 21.20 Repetition The Repeating Representations are deemed to be made by each Obligor by reference to the facts and circumstances then existing on: (a) the date of each drawdown date and each interest payment date; and (b) in the case of an Additional Obligor, the day on which the relevant company becomes (or it is proposed the company becomes) an Additional Obligor. 22. INFORMATION UNDERTAKINGS The undertakings in this Clause 22 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force. 22.1 Financial statements The Company shall supply to the Agent in sufficient copies for all the Lenders: (a) as soon as the same become available, but in any event within 120 days after the end of each of its financial years: (i) its audited consolidated financial statements for that financial year; and (ii) the financial statements of each Obligor (unaudited unless audited accounts are prepared and presented on an unconsolidated and, if prepared, consolidated basis) for that financial year; and (b) as soon as the same become available, but in any event within 120 days after the end of each half of each of its financial years the consolidated financial statements of the Company for that financial half year (unaudited unless audited accounts are prepared). 22.2 Compliance Certificate (a) The Company shall supply to the Agent, with each set of financial statements delivered pursuant to paragraph (a)(i) or (b) of Clause 22.1 (Financial statements), a Compliance Certificate setting out: (i) (in reasonable detail) computations as to compliance with Clause 23 (Financial Covenants) as at the date as at which those financial statements were drawn up; and (ii) a statement that no Default is continuing or, to the extent such statement cannot be made, identifying any Default that is continuing and the steps, if any, being taken to remedy it. (b) Each Compliance Certificate shall be signed by the Chief Financial Officer, or such other appropriate and responsible officer, of the Company and, when delivered with the financial statements delivered pursuant to paragraph (a)(i) of Clause 22.1 (Financial statements), shall be confirmed by the Company's auditors subject to agreeing their terms of engagement with the Company as approved by the Agent (acting reasonably). 22.3 Requirements as to financial statements (a) Each set of financial statements delivered by the Company pursuant to paragraph (b) of Clause 22.1 (Financial statements) shall be certified by a director of the relevant company as fairly representing its consolidated financial condition as at the end of and for the period in relation to which those financial statements were drawn up. (b) The Company shall procure that each set of financial statements delivered pursuant to Clause 22.1 (Financial statements) is prepared using French GAAP or, in the case of US Obligors, US GAAP. In relation to its own financial statements delivered pursuant to Clause 22.1 (Financial statements), the Company shall ensure it uses accounting practices and financial reference periods consistent with those applied in the preparation of its Original Financial Statements unless, in relation to any set of financial statements, it notifies the Agent that there has been a change in French GAAP, the accounting practices or reference periods which has an effect on the calculation of the covenants as set out in Clause 23 (Financial Covenants) and its auditors deliver to the Agent (as reasonably required): (i) a description of any change necessary for those financial statements to reflect the French GAAP, accounting practices and reference periods upon which the Company's Original Financial Statements were prepared; and (ii) sufficient information, in form and substance as may be reasonably required by the Agent, to enable the Lenders to determine whether Clause 23 (Financial Covenants) has been complied with and make an accurate comparison between the financial position indicated in those financial statements and the Company's Original Financial Statements. Any reference in this Agreement to those financial statements shall be construed as a reference to those financial statements as adjusted to reflect the basis upon which the Company's Original Financial Statements were prepared. 22.4 Information: miscellaneous The Company shall supply to the Agent (in sufficient copies for all the Lenders, if the Agent so requests): (a) all financial press releases and circulars dispatched by the Company: (i) to its shareholders (or any class of them); or (ii) to its creditors generally at the same time as they are dispatched; (b) promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against any member of the Group (subject to Clause 1.4 (Kodak and SMO as Subsidiaries)), and which could, if adversely determined, have a Material Adverse Effect; (c) promptly, such further information regarding the financial condition, business and operations of any member of the Group (subject to Clause 1.4 (Kodak and SMO as Subsidiaries)) as any Finance Party (through the Agent) may reasonably request; (d) written confirmation of when it has gained control of Kodak (within the meaning set out in the definition of "Subsidiary" in Clause 1.1 (Definitions)) promptly following control being obtained; and (e) promptly on request, a certificate confirming how much the Company and any other member of the Group has spent on acquiring Shares. 22.5 Notification of default Each Obligor shall notify the Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence (unless that Obligor is aware that a notification has already been provided by another Obligor). 22.6 Offer and AA Acquisition related documents (a) The Company will promptly deliver to the Agent: (i) enough copies for the Lenders of each Tender Offer Statement, proxy statements and any merger agreement and any other document containing material terms and conditions of any Offer which the Company (acting reasonably) thinks it should disclose; (ii) a copy of each AA Acquisition Agreement and any amendments thereto and, if applicable, any other document containing material terms and conditions of the AA Acquisition which the Company (acting reasonably) thinks it should disclose; (iii) details of any publicly announced determination of the Special Committee relating to the Offer; and (iv) details of any litigation, arbitration or other proceeding or, to the extent known to the Company, any pending or threatened litigation or proceedings relating to the Offer or the acquisition of any Kodak shares which would have a Material Adverse Effect. (b) The Company will promptly deliver to the Agent for distribution to the Lenders such other information (in reasonable detail) relating to the status and progress of the Offer or the AA Acquisition as the Agent (or any Lender acting through the Agent) may from time to time reasonably request including, without limitation, details as to the current level of acceptances to the Offer. 22.7 ERISA Events and ERISA reports A US Material Subsidiary shall (and the Company shall ensure that it shall) deliver to the Agent: (a) promptly and in any event within 10 days after it or any ERISA Affiliate knows or has reason to know that any ERISA Event has occurred that would reasonably be expected to have a Material Adverse Effect, a statement of the chief financial officer of that US Material Subsidiary describing such ERISA Event and the action, if any, that that US Material Subsidiary or such ERISA Affiliate has taken and proposes to take with respect thereto; and (b) on the date any records, documents or other information must be furnished to the PBGC with respect to any Plan pursuant to Section 4010 of ERISA in connection with a related event or condition that would reasonably be expected to have a Material Adverse Effect, a copy of such records, documents and information. 22.8 Plan terminations A US Material Subsidiary shall (and the Company shall ensure that it shall) deliver to the Agent promptly and in any event within two Business Days after receipt thereof by that US Material Subsidiary or any ERISA Affiliate, copies of each notice from the PBGC stating its intention to terminate any Plan or to have a trustee appointed to administer any Plan that would reasonably be expected to have a Material Adverse Effect. 22.9 Plan annual reports A US Material Subsidiary shall (and the Company shall ensure that it shall) deliver to the Agent promptly and in any event within 10 days after request of the Agent, copies of each Schedule B (Actuarial Information) to the most recently filed annual report (Form 5500 Series) with respect to each Plan. 22.10 Multiemployer Plan notices A US Material Subsidiary shall (and the Company shall ensure that it shall) deliver to the Agent promptly and in any event within five Business Days after receipt thereof by that US Obligor or any ERISA Affiliate from the sponsor of a Multiemployer Plan, copies of each notice concerning: (a) the imposition of Withdrawal Liability by any such Multiemployer Plan that would reasonably be expected to have a Material Adverse Effect; (b) the reorganisation or termination, within the meaning of Title IV of ERISA, of any such Multiemployer Plan that would reasonably be expected to have a Material Adverse Effect; or (c) the amount of liability incurred, or that may be incurred, by that US Material Subsidiary or any ERISA Affiliate in connection with any event described in paragraphs (a) or (b) above. 22.11 Environment The Company shall, and shall procure that each other member of the Group (subject to Clause 1.4 (Kodak and SMO as Subsidiaries)) shall, promptly upon receipt of the same, notify the Agent of any claim, notice or other communication served on it in respect of any alleged breach of any Environmental Law which may have a Material Adverse Effect. 23. Financial Covenants 23.1 Financial condition The Company shall ensure that: (a) the ratio of Net Consolidated Financial Indebtedness on each date listed below to EBITDA for the Relevant Period ended on such date will be not more than the ratio set opposite that date: Date Ratio 28 February 2002 2.00:1 31 August 2002 2.00:1 28 February 2003 2.00:1 31 August 2003 2.00:1 29 February 2004 2.00:1 31 August 2004 2.00:1 28 February 2005 2.00:1 31 August 2005 2.00:1 28 February 2006 2.00:1 (b) the ratio of EBIT to Net Consolidated Interest Expense for each Relevant Period ending on each date listed below will not be less than the ratio set opposite that date: Date Ratio 28 February 2002 3.50:1 31 August 2002 3.50:1 28 February 2003 4.00:1 31 August 2003 4.00:1 29 February 2004 4.00:1 31 August 2004 4.00:1 28 February 2005 4.00:1 31 August 2005 4.00:1 28 February 2006 4.00:1 23.2 Definitions In this Clause 23: "EBIT" means, in relation to any period, the "resultat d'exploitation consolide" (as determined in accordance with French GAAP) as shown in the consolidated accounts of the Group for that period excluding for the avoidance of doubt any charge for amortisation of goodwill (amortissement d'ecarts d'acquisition). "EBITDA" has the meaning ascribed thereto in Clause 1.1 (Definitions). "Net Consolidated Financial Indebtedness" means, at any time, the Relevant Financial Indebtedness of the Group less the amount of cash at hand and marketable securities ("disponibilities et valuers mobilieres de placement") as shown in the Group's consolidated accounts excluding for the avoidance of doubt reserved funds relating to the vouchers activity ("fonds reserves") and Relevant Financial Indebtedness in respect of Guaranteed Investments. "Net Consolidated Interest Expense" means, for any period, the "resultat financier consolide" (as determined in accordance with French GAAP) as shown in the Group's consolidated accounts for that period after excluding any foreign exchange gains or losses and any amortisation provision ("dotations et reprises aux amortissements et provisions") made, to the extent included within the "resultat financier consolide" during that period. "Relevant Financial Indebtedness" means, in relation to any person at any time, any indebtedness of that person, whether actual or contingent, present or future, in respect of: (a) total financial debt ("dettes financieres") including moneys borrowed, debit balances at banks and any debenture, bond, note, loan stock or other debt security; (b) receivables sold or discounted (otherwise than on a non-recourse basis), acceptance credits and other arrangements required to be given similar treatment under French GAAP; (c) the obligations under capital leases ("credit-bail") or other contracts required to be given similar treatment under French GAAP; (d) any guarantee of any person in respect of any of the above, but no particular Relevant Financial Indebtedness shall be taken into account more than once (so that, for example, a guarantee shall be excluded to the extent the Relevant Financial Indebtedness guaranteed thereby is already taken into account and, in the case of Relevant Financial Indebtedness of any member of the Group, there shall also be excluded (i) any Relevant Financial Indebtedness owing to any member of the Group (ii) (for avoidance of doubt) any performance guarantee issued in favour of Spirit Marine in respect of the contractual arrangements entered into by Spirit Cruises and (iii) (for avoidance of doubt) the Relevant Financial Indebtedness of any person (not being a member of the Group) that is guaranteed by a member of the Group which guarantee thereof is treated as Relevant Financial Indebtedness). "Relevant Period" means each period of 12 months ending on each 28 or 29 February, as the case may be, and 31 August. 24. General undertakings The undertakings in this Clause 24 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force. 24.1 Authorisations Each Obligor shall promptly obtain, comply with and do all that is necessary to maintain in full force and effect any Authorisation required under any applicable law or regulation to enable it to perform its obligations under the Finance Documents to which it is a party and to ensure the legality, validity, (subject to the Reservations) enforceability or admissibility in evidence in its jurisdiction of incorporation of any Finance Document. 24.2 Compliance with laws Each Obligor shall (and the Company shall ensure that each other member of the Group (subject to Clause 1.4 (Kodak and SMO as Subsidiaries)) shall) comply in all respects with all laws and regulations including, without limitation, compliance with ERISA, to which it may be subject, if failure to do so would be reasonably likely to have a Material Adverse Effect. 24.3 Negative pledge (a) The Company shall not (and the Company shall ensure that no other member of the Group (subject to Clause 1.4 (Kodak and SMO as Subsidiaries)) will) create or permit to subsist any Security over any of its assets (but excluding for this purpose Security over the Acquired Shares). (b) Paragraph (a) does not apply to: (i) Security granted in favour of any person which is not a member of the Group in effect on the date of this Agreement and disclosed in writing to the Agent prior to the date of this Agreement provided that in relation to Kodak and SMO such disclosure shall be limited to disclosure of the total amount of indebtedness secured by Kodak and SMO and a breakdown between each such company; (ii) liens arising by operation of law or in the ordinary course of trading including in respect of any client money held in trust by a Group member or rights of set-off arising by operation of law or bankers' rights of set-off; (iii) group account netting and pooling arrangements entered into between members of the Group and any bankers to the Group; (iv) any Security on any asset of a member of the Group arising in respect of any escrow arrangements put into place for the purpose of a disposal or acquisition by a member of the Group; (v) any Security on any asset acquired by a member of the Group which exists at the time of, and is not created in contemplation of, such acquisition, provided that the same does not secure any obligation which is not secured thereby at the time of such acquisition; (vi) any Security on any asset which secured only Financial Indebtedness incurred to refinance any other Financial Indebtedness secured by the same asset by any such security as is referred to in paragraph (v) above, provided that the aggregate amount secured by such asset is not thereby increased; (vii) any Security created by any member of the Group to secure any Guaranteed Investments made or to be made by it; (viii) any Security pursuant to any order of attachment, distraint or similar legal process arising in connection with court proceedings provided that the execution or other enforcement thereof is effectively stayed and the claims served thereby are being contested at the time in good faith by appropriate proceedings and proper provision has been made for any adverse judgments; (ix) any Security on any sum payable under any contract (or on any security representing such sum or otherwise issued pursuant to such contract) in respect of which the major part of the price receivable by a member of the Group is guaranteed or insured by, or is part of a scheme operated by, a national export credit institution or other similar institution; (x) any Security created on the assets of any member of the Group in the course of margin trading entered into by such member as part of its normal treasury operations; (xi) Security on assets the subject of operating leases up to an aggregate amount not exceeding (Euro)40,000,000; (xii) Security created by any member of the Group to another member of the Group in connection with dealings carried on between such persons on arm's length terms; and (xiii) other Security not contained in paragraphs (i) to (xii) above securing indebtedness in an amount not to exceed the higher of Euro 200,000,000 or 5 per cent of Adjusted Net Worth. (c) If the Company or any other member of the Group creates or permits to subsist Security over any of the Acquired Shares to any person, it will at the same time grant identical Security to or on behalf of the Lenders ranking pari passu over the Acquired Shares pursuant to documentation acceptable to the Agent. 24.4 Disposals No member of the Group (subject to Clause 1.4 (Kodak and SMO as Subsidiaries)) shall (individually or together) dispose of all or a substantial part of the Group (as defined below) except for: (a) disposals where the net proceeds are applied to prepay the Facilities; or (b) (after the first anniversary of the Credit Agreement and provided that the Company's Rating is higher than BBB-) disposals where the net proceeds are invested within 6 months in the acquisition of similar assets or businesses of comparable or better value and revenue generation; or (c) disposals to other wholly owned Subsidiaries of the Company, and provided that any such disposals in (a), (b) or (c) above are made on arm's-length terms. For the purposes of this Clause 24.4, a disposal of "a substantial part of the Group" means the disposal of assets, businesses (or lines of businesses) or shares or other investments in Subsidiaries, where the disposed part or parts accounts for at least 10 per cent. of the Group's gross assets or revenues or form a part of the business or businesses acquired under an AA Acquisition Agreement, but in any event this definition does not apply to: (i) disposal of stock in trade in the ordinary course of trading; (ii) disposals of short-term investments as part of normal treasury operations; and (iii) disposals of Guaranteed Investments. 24.5 Restriction on Subsidiary borrowings/guarantees The Company and each other Obligor shall ensure that no member of the Group (other than the Company) will create, assume, incur or otherwise be liable in respect of, or have outstanding, any Financial Indebtedness other than: (a) any Financial Indebtedness falling within paragraph (g) of the definition of "Financial Indebtedness" and entered into to hedge actual or projected exposure arising in the ordinary course of business; (b) Financial Indebtedness owing to a member of the Group; (c) Financial Indebtedness incurred under the Facilities; (d) Financial Indebtedness in respect of Guaranteed Investments; and (e) (i) Financial Indebtedness incurred and outstanding under the Kodak Existing Facility and SMO Credit Agreement and, in addition, other Financial Indebtedness not exceeding Euro 300,000,000 in aggregate for all members of the Group (excluding the Company); or (ii) Financial Indebtedness not exceeding (Euro)400,000,000 in aggregate for all members of the Group (other than the Company). 24.6 Merger Except with the prior written consent of the Majority Lenders, the Company will not (and will procure that no other Obligor or Material Subsidiary shall) enter into any merger or consolidation other than: (a) a merger of Kodak with Kodak Bidco following and in connection with an Offer; and (b) a solvent merger or consolidation with another member of the Group (in the case of an Obligor which must be the surviving entity) and where the Agent (acting reasonably) is satisfied that such merger or consolidation will not have an adverse impact on any obligation owed by that Obligor to the Finance Parties or upon any rights that a Finance Party may have against that Obligor. 24.7 Change of business The Company shall procure that no substantial change is made (whether by acquisition or otherwise) to the general nature of the business of the Group from that carried on at the date of this Agreement provided that the members of the Group shall be able to extend into new markets, services and product areas in related businesses. 24.8 Insurance Each Obligor shall, and the Company shall ensure that each other Material Subsidiary (subject to Clause 1.4 (Kodak and SMO as Subsidiaries)) shall, maintain with financially sound and reputable insurers such insurance as may be required by law and such other insurance, to such extent and against such hazards and liabilities as is customarily maintained by companies carrying on a business such as that carried on by it or the relevant Obligor or Material Subsidiary (subject to Clause 1.4 (Kodak and SMO as Subsidiaries)) in the same location as it or the relevant Obligor or Material Subsidiary (subject to Clause 1.4 (Kodak and SMO as Subsidiaries)). 24.9 The Offer Each Obligor shall (and the Company shall procure that each Material Subsidiary (subject to Clause 1.4 (Kodak and SMO as Subsidiaries)) will) comply with the rules of the New York Stock Exchange, the Securities and Exchange Commission and all other applicable laws in all respects material in the context of the Offer. 24.10 Pari Passu ranking Each Obligor shall ensure that its payment obligations under the Finance Documents rank and will at all times rank at least pari passu with the claims of all its other unsecured and subordinated creditors, except for obligations mandatorily preferred by law applying to companies generally. 24.11 Taxes Each Obligor shall pay and discharge, and the Company shall cause each Material Subsidiary (subject to Clause 1.4 (Kodak and SMO as Subsidiaries)) to pay and discharge, before the same shall become delinquent, all taxes, assessments and governmental charges or levies imposed upon it or upon its property provided, however, that no Obligor nor any Material Subsidiary (subject to Clause 1.4 (Kodak and SMO as Subsidiaries)) shall be required to pay or discharge any such tax, assessment, charge or claim that is being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained. 24.12 Transactions with Affiliates and shareholders The Company shall, in addition to complying with applicable French law, conduct, and cause each of its Subsidiaries (subject to Clause 1.4 (Kodak and SMO as Subsidiaries)) to conduct, all material transactions otherwise permitted under the Finance Documents with any of their Affiliates (including, for the avoidance of doubt for the purpose of this Clause 24.12, material transactions with any shareholder of the Company who owns 5 per cent. or more of the issued share capital of the Company) on terms that are fair and reasonable and no less favourable to the Company or such Subsidiary (subject to Clause 1.4 (Kodak and SMO as Subsidiaries)) than it would obtain in a comparable arm's-length material transaction with a person not an Affiliate. For the purpose of this Clause 24.12, "material transaction" shall mean any transaction or series of related transactions having a cash or non-cash value of at least Euro 2,000,000 (or its equivalent). 24.13 Regulations T, U and X No US Obligor shall (and the Company shall ensure that they do not) use, directly or indirectly, the proceeds of the Facilities in a way which violates any of Regulations T, U or X or any other applicable US federal or state laws and regulations. If requested by the Agent, the Company or the relevant Borrower will furnish to the Agent a statement to the foregoing effect in conformity with the requirements of Form U-1 referred to in Regulation U. 24.14 Market Purchases For so long as any amount is outstanding under Facility A or any Facility A Commitment is in force, no more than Euro 400,000,000 in aggregate may be spent by the Company or any of its Subsidiaries on Market Purchases. 24.15 AA Bidcos and Kodak Bidco In relation to the AA Bidcos and the Kodak Bidco, the Company shall at all times ensure that such companies are properly capitalised for the purposes of applicable French and United States laws and regulations where the consequences of such non-compliance could, by the Lenders performing their obligations under this Agreement, cause the Lenders (directly or indirectly) to incur additional obligations to those set out in this Agreement or a liability which would not have been incurred by the Lenders had the companies been properly capitalised. 25. Events of Default Each of the events or circumstances set out in Clause 25 (other than Clause 25.16 (Acceleration) and Clause 25.17 (Clean-up Period)) is an Event of Default. 25.1 Non-payment An Obligor does not pay on the due date any amount payable pursuant to a Finance Document at the place at and in the currency in which it is expressed to be payable unless: (a) its failure to pay is caused by administrative or technical error and payment is made within 3 Business Days of its due date; or (b) in the case of payment of fees pursuant to a Finance Document, payment is made within 5 Business Days of its due date. 25.2 Financial and other covenants Any requirement of any of Clauses 23 (Financial Covenants), 24.3 (Negative pledge), 24.5 (Restriction on Subsidiary borrowings/guarantees), 24.6 (Merger), 24.7 (Change in business) and 22.5 (Notification of default) is not satisfied. 25.3 Other obligations (a) An Obligor does not comply with any provision of the Finance Documents (other than those referred to in Clause 25.1 (Non-payment) and Clause 25.2 (Financial and other covenants)). (b) No Event of Default under paragraph (a) above in relation to any of Clauses 22.1 (Financial statements), 22.2 (Compliance Certificate), 22.3 (Requirements as to financial statements), 22.4 (Information: miscellaneous), 22.7 (ERISA Events and ERISA reports), 22.8 (Plan termination), 22.9 (Plan annual reports), 22.10 (Multiemployer Plan notices) and 22.11 (Environment) will occur if the failure to comply is capable of remedy and is remedied within 5 Business Days of the Agent giving notice to the Company or the Company becoming aware of the failure to comply. (c) No Event of Default under paragraph (a) above in relation to any other undertaking, obligation or provision (excluding the Clauses specified in paragraph (a) above) will occur if the failure to comply is capable of remedy and is remedied within 30 days of the Agent giving notice to the Company or the Company becoming aware of the failure to comply. 25.4 Misrepresentation Any representation or statement made, repeated, or deemed to be made by an Obligor in the Finance Documents or any other document delivered by or on behalf of any Obligor under or in connection with any Finance Document (including the Information Memorandum) is or proves to have been incorrect or misleading in any material respect when made or deemed to be made. 25.5 Cross default (a) Any Financial Indebtedness of any member of the Group is not paid when due nor within any originally applicable grace period. (b) Any Financial Indebtedness of any member of the Group is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described). (c) Any commitment for any Financial Indebtedness of any member of the Group is cancelled or suspended by a creditor of any member of the Group as a result of an event of default (however described). (d) Any creditor of any member of the Group becomes entitled to declare any Financial Indebtedness of any member of the Group due and payable prior to its specified maturity as a result of an event of default (however described). (e) No Event of Default will occur under this Clause 25.5 if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within paragraphs (a) to (d) above is less than Euro 30,000,000 (or its equivalent in any other currency or currencies) at any time. 25.6 Insolvency (a) Any Obligor or any Material Subsidiary is unable or admits inability to pay its debts as they fall due, suspends making payments on any of its debts or threatens to stop payments of its debts generally or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness. (b) A moratorium is declared in respect of any indebtedness of any Obligor or any Material Subsidiary including, without limitation, a moratorium governed by French law no. 84-148 of 1 March 1984. 25.7 Insolvency proceedings Any corporate action, legal proceedings or other procedure or step is taken in relation to: (a) the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, bankruptcy, judicial liquidation (liquidation judiciaire), concordat, administration or judicial reorganisation (redressement judiciaire), amicable settlement (reglement amiable) or other reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of any Obligor or Material Subsidiary other than a solvent liquidation or reorganisation previously approved in writing by the Majority Lenders; (b) a composition, assignment or arrangement with any creditor of any Obligor or Material Subsidiary; (c) the appointment of a liquidator (liquidateur) (other than in respect of a solvent liquidation previously approved in writing by the Majority Lenders), receiver, administrator, administrative receiver, custodian, compulsory manager, bankruptcy receiver (curateur), conciliator (conciliateur), ad hoc official (mandataire ad hoc), judicial administrator (administrateur judiciaire), liquidation official (mandataire liquidateur) or any other similar officer in respect of any Obligor or Material Subsidiary or any of its assets; or (d) enforcement of any Security over any assets of any Obligor or Material Subsidiary unless the liability or potential liability in respect of which such proceedings are brought is less than Euro 15,000,000 (or its equivalent in any other currency), or any analogous procedure or step is taken in any jurisdiction. 25.8 Creditors' process Any expropriation, attachment, sequestration, distress or execution affects any asset or assets of an Obligor or Material Subsidiary and is not discharged within 20 days. 25.9 Cessation of business Any Obligor or any Material Subsidiary ceases or threatens to cease, to carry on all or a substantial part of its business (other than pursuant to a solvent reorganisation previously approved in writing by the Majority Lenders). 25.10 Unlawfulness It is or becomes unlawful for an Obligor to perform any of its obligations under the Finance Documents. 25.11 Repudiation An Obligor repudiates a Finance Document or evidences an intention to repudiate a Finance Document. 25.12 Company guarantee The guarantee of the Company specified in Clause 20 (Guarantee and Indemnity) is demanded by a Finance Party in accordance with, and in the circumstances specified in, Clause 20.1(b) (Guarantees and Indemnity) or cash-cover has not been provided as specified therein. 25.13 Judgments (a) Any judgment or order for the payment of money shall be rendered against the Company or any of its Subsidiaries that would reasonably be expected to have a Material Adverse Effect and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect. (b) Any non-monetary judgment or order shall be rendered against the Company or any of its Subsidiaries that would reasonably by expected to have a Material Adverse Effect, and there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect. 25.14 ERISA (a) Any ERISA Event shall have occurred with respect to a Plan and the sum (determined as of the date of occurrence of such ERISA Event) of the Insufficiency of such Plan and the Insufficiency of any and all other Plans with respect to which an ERISA Event shall have occurred and then exist (or the liability of any of the US Material Subsidiary and the ERISA Affiliates related to such ERISA Event) exceeds US$30,000,000; or (b) Any US Material Subsidiary or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to such Multiemployer Plan in an amount that, when aggregated with all other amounts required to be paid to Multiemployer Plans by the relevant US Material Subsidiary and the ERISA Affiliates as Withdrawal Liability (determined as of the date of such notification), exceeds US$30,000,000; or (c) Any US Material Subsidiary or any ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganisation or is being terminated, within the meaning of Title IV of ERISA, and as a result of such reorganisation or termination the aggregate annual contributions of the relevant US Material Subsidiary and the ERISA Affiliates to all Multiemployer Plans that are then in reorganisation or being terminated have been or will be increased over the amounts contributed to such Multiemployer Plans for the plan years of such Multiemployer Plans immediately preceding the plan year in which such reorganisation or termination occurs by an amount exceeding US$30,000,000. 25.15 Material Adverse Change Any event or series of events whether related or not occurs which could reasonably be expected materially and adversely to affect the: (a) ability of any Obligor to perform any of its payment obligations under the Financing Documents; or (b) the business or financial condition of the Company and its Subsidiaries taken as a whole. 25.16 Acceleration (a) On and at any time after the occurrence of an Event of Default the Agent may, and shall if so directed by the Majority Lenders, by notice to the Company: (i) cancel the Total Commitments whereupon they shall immediately be cancelled; (ii) declare that all or part of the Utilisations, together with accrued interest, and all other amounts accrued under the Finance Documents be immediately due and payable, whereupon they shall become immediately due and payable; and/or (iii) declare that all or part of the Utilisations be payable on demand, whereupon they shall immediately become payable on demand by the Agent on the instructions of the Majority Lenders, and, for the avoidance of doubt, Letters of Credit shall be repaid, or repaid on demand (as the case may be), as specified in Clause 6.1 (General). (b) Notwithstanding the provisions of paragraph (a) above, in the event of an actual or deemed entry of an order for relief with respect to a US Material Subsidiary under the Federal Bankruptcy Code, (A) the obligation of each Lender to make Utilisations shall automatically be terminated and (B) the Utilisations, all accrued interest and all such other amounts shall automatically become and be due and payable, without notice, demand or declaration of any kind all of which are hereby expressly waived by the Company and each US Material Subsidiary 25.17 Clean-up Period Until the date after the Clean-up Period ends, the Events of Default set out in: (a) Clause 25.3 (Other obligations) as it relates to Clauses 24.2 (Compliance with laws), 24.3 (Negative pledge), 24.8 (Insurance) and 24.11 (Taxes); and (b) Clause 25.4 (Misrepresentation) as it relates to Clauses 21.6(b) (No Default), 21.10 (No proceedings pending or threatened), 21.12 (Environmental laws) and 21.15 (Tax liabilities), shall not apply to or in respect of any event or circumstance with respect to (i) the AA businesses acquired under an AA Acquisition Agreement which exists on the date of the relevant AA Acquisition or (ii) Kodak or any of its Subsidiaries which exists on the date Kodak becomes a Subsidiary of the Company (in accordance with the requirements set out in the definition of Subsidiary) except that, in each case, this Clause 25.17 shall not apply to any event or circumstance which the Company could, in all the circumstances, reasonably be expected to have exercised control to prevent or overcome. SECTION 9 CHANGES TO PARTIES 26. CHANGES TO THE LENDERS 26.1 Assignments and transfers by the Lenders Subject to this Clause 26, a Lender (the "Existing Lender") may: (a) assign any of its rights; or (b) transfer by novation any of its rights and obligations, to another bank, financial institution or other person (the "New Lender"). 26.2 Conditions of assignment or transfer (a) A partial transfer or assignment by a Lender shall be in a minimum Base Currency Amount of (Euro) 7,500,000 in relation to Facility A and in a minimum Base Currency Amount of US$7,500,000 in relation to Facility B or Facility C unless, in each case: (i) such transfer or assignment is to an Affiliate of a Lender or to another existing Lender; or (ii) an Event of Default is continuing. For the avoidance of doubt (A) any transfer or assignment of a Facility in excess of (Euro) 7,500,000 or US$7,500,000, as the case may be, or (B) any transfer or assignment of the whole of a Facility whether higher or lower than (Euro) 7,500,000 or US$7,500,000, as the case may be, shall, in each case, be freely transferable or assignable. (b) The consent of the Issuing Bank shall be required to a transfer or assignment of Facility C to the extent specified in Clause 7.2 (Assignments and transfers). (c) An assignment will only be effective on receipt by the Agent of written confirmation from the New Lender (in form and substance satisfactory to the Agent) that the New Lender will assume the same obligations to the other Finance Parties as it would have been under if it was an Original Lender and the Agent has recorded the transfer to the New Lender in the Register (as defined in paragraph (g) below). (d) A transfer will only be effective if the procedure set out in Clause 26.5 (Procedure for transfer) is complied with. (e) Any assignment or transfer by an Existing Lender to a New Lender may be made in respect of one or more of the Facilities. (f) If: (i) a Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and (ii) as a result of circumstances existing at the date the assignment, transfer or change occurs, an Obligor would be obliged to make a payment to the New Lender or Lender acting through its new Facility Office under Clause 15 (Tax gross-up and indemnities) or Clause 16 (Increased Costs), then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred. (g) Paragraph (f) above and Clause 26.3 (Assignment or transfer fee) shall not apply to any assignment or transfer made as part of the syndication of the Facilities on or prior to the Syndication Date. (h) The Agent shall maintain a book-entry transfer register (for the purposes of this Clause 26, the "Register") for the purposes of all assignments or transfers made pursuant to this Clause 26 and shall supply to any other Party (at that Party's expense) a copy of this Register upon reasonable written request. (i) The Agent shall notify the Company promptly and no later than 10 Business Days following: (i) any assignment or transfer under this Clause 26; and (ii) the end of each half of its financial years deliver to the Company a list of the Lenders and their level of Commitments in each Facility as at that date. (j) If any Lender assigns its rights under this Agreement a written instrument by which such rights are assigned must be notified to any Borrower incorporated in France by bailiff ("huissier") in accordance with the provisions of Article 1690 of the French Civil Code at the cost of the Lender concerned. 26.3 Assignment or transfer fee The New Lender shall, on the date upon which an assignment or transfer takes effect pay to the Agent (for its own account) a fee of (Euro) 2000. 26.4 Limitation of responsibility of Existing Lenders (a) Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for: (i) the legality, validity, effectiveness, adequacy or enforceability of the Finance Documents or any other documents; (ii) the financial condition of any Obligor; (iii) the performance and observance by any Obligor of its obligations under the Finance Documents or any other documents; or (iv) the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document or any other document, and any representations or warranties implied by law are excluded. (b) Each New Lender confirms to the Existing Lender and the other Finance Parties that it: (i) has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Obligor and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender in connection with any Finance Document; and (ii) will continue to make its own independent appraisal of the creditworthiness of each Obligor and its related entities whilst any amount is or may be outstanding under the Finance Documents or any Commitment is in force. (c) Nothing in any Finance Document obliges an Existing Lender to: (i) accept a re-transfer from a New Lender of any of the rights and obligations assigned or transferred under this Clause 26; or (ii) support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under the Finance Documents or otherwise. 26.5 Procedure for transfer (a) Subject to the conditions set out in Clause 26.2 (Conditions of assignment or transfer) a transfer is effected in accordance with paragraph (b) below when the Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender and the Agent has recorded the transfer to the New Lender in the Register. The Agent shall, as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement delivered in accordance with the terms of this Agreement, execute that Transfer Certificate on behalf of the other Finance Parties and the Obligors as well as itself. Each Finance Party and each Obligor irrevocably authorises the Agent to sign such a Transfer Certificate on its behalf. (b) On the Transfer Date: (i) to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Finance Documents each of the Obligors and the Existing Lender shall be released from further obligations towards one another under the Finance Documents and their respective rights against one another shall be cancelled (being the "Discharged Rights and Obligations"); (ii) each of the Obligors and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as that Obligor and the New Lender have assumed and/or acquired the same in place of that Obligor and the Existing Lender; (iii) the Agent, the Arranger, the New Lender and other Lenders shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Agent, the Arranger and the Existing Lender shall each be released from further obligations to each other under this Agreement; and (iv) the New Lender shall become a Party as a "Lender". (c) For the avoidance of doubt, the Parties agree that any novation effected in accordance with this Clause shall constitute a novation (novation) within the meaning of Article 1271 et seq. of the French Civil Code, provided that notwithstanding any such novation, all the rights of the Finance Parties against any Guarantor shall be maintained. 26.6 Syndication Agreements A Lender may transfer any of its rights and obligations under this Agreement pursuant to a Syndication Agreement and the Obligors agree that they shall at the request of the Agent execute a Syndication Agreement. 26.7 Disclosure of information and confidentiality (a) Each Finance Party on it becoming a Party to this Agreement confirms to the Company that it shall keep confidential and not disclose any information (other than such information which is already in the public domain) which it has received in connection with the Facilities or transactions contemplated under this Agreement ("Confidential Information") except with the prior written consent of the Company and except that a Finance Party may disclose the provisions of (or a copy of) this Agreement or Confidential Information as follows: (i) to such of its officers, directors, employees and professional advisers (on a "need to know" and confidential basis for the purposes of the Facilities but without prejudicing its ordinary internal operations); (ii) in the case of the Agent or Issuing Bank, to the extent it is required or obliged to pass on information in accordance with its obligations under the Finance Documents; (iii) to anyone else to the extent required by law or regulation; or (iv) to the extent necessary, to any applicable governmental or other regulatory authority, provided that in the case of (iii) and (iv) above, the relevant Lender shall, to the extent permitted by law, give the Company reasonable prior notice of any intended disclosure to the extent practicable to give prior notice (or, if not practicable, promptly after the disclosure) and, if the Company requests, take into account its comments. This Clause shall continue to apply to a Finance Party for the period of 3 years after it ceases to be a Finance Party under this Agreement. (b) Notwithstanding the provisions of paragraph (a) above, a Lender may disclose to any of its Affiliates and any other person: (i) to (or through) whom that Lender assigns or transfers (or may potentially assign or transfer) all or any of its rights and obligations under this Agreement; (ii) with (or through) whom that Lender enters into (or may potentially enter into) any sub-participation in relation to, or any other transaction under which payments are to be made by reference to, this Agreement or any Obligor; or (iii) to whom, and to the extent that, information is required to be disclosed by any applicable law or regulation, any information about any Obligor, the Group and the Finance Documents as that Lender shall consider appropriate for the purposes of the Facilities if, in relation to paragraphs (i) and (ii) above, the person to whom the information is to be given has entered into a Confidentiality Undertaking. (c) The terms and conditions of the Finance Documents are not to be disclosed by the Company to any person who is not a Finance Party, except with the prior written consent of the Arranger and except that the Company may disclose the terms and conditions or a copy of any of them: (i) to its advisers (on a "need to know" and confidential basis) for the purpose of the AA Acquisitions or Kodak Acquisition; (ii) to the Special Committee and their advisers (on a "need to know" and confidential basis); (iii) to anyone else to the extent required by law, regulation or any applicable stock exchange; or (iv) to the extent necessary, to any applicable governmental or other regulatory authority, provided that (except for disclosure to those advisers referred to above) the Company shall, to the extent permitted by law, give the Arranger reasonable prior notice of any intended disclosure to the extent practicable to give prior notice (or, if not practicable, promptly after the disclosure) and, if the Arranger requests, take into account its comments. 27. CHANGES TO THE OBLIGORS 27.1 Assignments and transfer by Obligors No Obligor may assign any of its rights or transfer any of its rights or obligations under the Finance Documents. 27.2 Additional Borrowers (a) The Company may request that any of its wholly owned Subsidiaries and/or, once the same have become a Subsidiary (in accordance with the requirements set out in the definition thereof) of the Company, Kodak and SMO becomes an Additional Borrower. That Subsidiary shall become an Additional Borrower if: (i) (A) it is Kodak or SMO; or (B) it is an AA Bidco or Kodak Bidco incorporated in France or the United States provided that there are no more than 4 AA Bidco's and 1 Kodak Bidco, in aggregate, in existence; or (C) all the Lenders otherwise approve the addition of that Subsidiary as a Borrower and the Facilities in respect of which it is to be a Borrower; (ii) the Company delivers to the Agent a duly completed and executed Accession Letter; (iii) the Company confirms that no Default is continuing or would occur as a result of that Subsidiary becoming an Additional Borrower; and (iv) the Agent has received all of the documents and other evidence listed in Part II of Schedule 2 (Conditions Precedent) in relation to that Additional Borrower, each in form and substance satisfactory to the Agent. (b) The Agent shall notify the Company and the Lenders promptly upon being satisfied that it has received (in form and substance satisfactory to it) all the documents and other evidence listed in Part II of Schedule 2 (Conditions precedent). 27.3 Additional Guarantors (a) Each Subsidiary (other than Kodak and SMO) which becomes an Additional Borrower shall at the same time become an Additional Guarantor. (b) SMO shall become an Additional Guarantor and the SMO Guarantee shall be given, notwithstanding that SMO may not be an Additional Borrower, if: (i) the Company wishes to exercise the extension option set out in Clause 5.5 (Extension of Facility A1 and Facility A2) in respect of Facility A1 and/or Facility A2 in an amount, in aggregate, in excess of (Euro) 250,000,000; and (ii) the Kodak Existing Facility and/or SMO Credit Agreement remain outstanding in whole or in part and, if in part, to the extent that more than (Euro) 400,000,000 (or its equivalent) in aggregate of Financial Indebtedness has been incurred and is outstanding by members of the Group (other than the Company). (c) The Company may request that any other of its wholly owned Subsidiaries become an Additional Guarantor. (d) Each Subsidiary (including, for the avoidance of doubt, SMO) shall become an Additional Guarantor when: (i) the Company delivers to the Agent a duly completed and executed Accession Letter; and (ii) the Agent has received all of the documents and other evidence listed in Part II of Schedule 2 (Conditions precedent) in relation to that Additional Guarantor, each in form and substance satisfactory to the Agent. (e) The Agent shall notify the Company and the Lenders promptly upon being satisfied that it has received (in form and substance satisfactory to it) all the documents and other evidence listed in Part II of Schedule 2 (Conditions precedent). 27.4 Repetition of Representations Delivery of an Accession Letter constitutes confirmation by the relevant Subsidiary that the Repeating Representations are true and correct in relation to it as at the date of delivery as if made by reference to the facts and circumstances then existing. SECTION 10 THE FINANCE PARTIES 28. ROLE OF THE AGENT AND THE ARRANGER 28.1 Appointment of the Agent (a) Each of the Arranger and the Lenders appoints the Agent to act as its agent under and in connection with the Finance Documents. (b) Each of the Arranger and the Lenders authorises the Agent to exercise the rights, powers, authorities and discretions specifically given to the Agent under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions. 28.2 Duties of the Agent (a) The Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Agent for that Party by any other Party. (b) If the Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the Lenders. (c) The Agent shall promptly notify the Lenders of any Default arising under Clause 25.1 (Non-payment). (d) The Agent's duties under the Finance Documents are solely mechanical and administrative in nature. 28.3 Role of the Arranger Except as specifically provided in the Finance Documents, the Arranger has no obligations of any kind to any other Party under or in connection with any Finance Document. 28.4 No fiduciary duties (a) Nothing in this Agreement constitutes the Agent or the Arranger as a trustee or fiduciary of any other person. (b) Neither the Agent nor the Arranger shall be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account. 28.5 Business with the Group The Agent and the Arranger may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group. 28.6 Rights and discretions of the Agent (a) The Agent may rely on: (i) any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and (ii) any statement made by a director, authorised signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify. (b) The Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Lenders) that: (i) no Default has occurred (unless it has actual knowledge of a Default arising under Clause 25.1 (Non-payment)); (ii) any right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised; and (iii) any notice or request made by the Company (other than a Utilisation Request or Selection Notice) is made on behalf of and with the consent and knowledge of all the Obligors. (c) The Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts. (d) The Agent may act in relation to the Finance Documents through its personnel and agents. 28.7 Majority Lenders' instructions (a) Unless a contrary indication appears in a Finance Document, the Agent shall (a) act in accordance with any instructions given to it by the Majority Lenders (or, if so instructed by the Majority Lenders, refrain from acting or exercising any right, power, authority or discretion vested in it as Agent) and (b) not be liable for any act (or omission) if it acts (or refrains from taking any action) in accordance with such an instruction of the Majority Lenders. (b) Unless a contrary indication appears in a Finance Document, any instructions given by the Majority Lenders will be binding on all the Lenders and the Arranger. (c) The Agent may refrain from acting in accordance with the instructions of the Majority Lenders (or, if appropriate, the Lenders) until it has received such security as it may require for any cost, loss or liability (together with any associated VAT) which it may incur in complying with the instructions. (d) In the absence of instructions from the Majority Lenders (or, if appropriate, the Lenders), the Agent may act (or refrain from taking action) as it considers to be in the best interest of the Lenders. (e) The Agent is not authorised to act on behalf of a Lender (without first obtaining that Lender's consent) in any legal or arbitration proceedings relating to any Finance Document. 28.8 Responsibility for documentation Neither the Agent nor the Arranger: (a) is responsible for the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Agent, the Arranger, an Obligor or any other person given in or in connection with any Finance Document or the Information Memorandum; or (b) is responsible for the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of or in connection with any Finance Document. 28.9 Exclusion of liability (a) Without limiting paragraph (b) below, the Agent will not be liable for any action taken by it under or in connection with any Finance Document, unless directly caused by its gross negligence or wilful misconduct. (b) No Party may take any proceedings against any officer, employee or agent of the Agent in respect of any claim it might have against the Agent or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document and any officer, employee or agent of the Agent may rely on this Clause. (c) The Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Agent if the Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Agent for that purpose. 28.10 Lenders' indemnity to the Agent (a) Each Lender shall (in proportion to its share of the Total Commitments (subject to paragraph (b) below) or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Agent, within three Business Days of demand, against any cost, loss or liability incurred by the Agent (otherwise than by reason of the Agent's gross negligence or wilful misconduct) in acting as Agent under the Finance Documents (unless the Agent has been reimbursed by an Obligor pursuant to a Finance Document). (b) For the purposes of calculating the Total Commitments for paragraph (a) above, each Facility B Commitment and Facility C Commitment of a Lender shall be taken into account in euro at the Agent's Spot Rate of Exchange for the purchase of US Dollars with euro on the date (as determined by the Agent) such determination is required to be made. 28.11 Resignation of the Agent (a) The Agent may resign and appoint one of its Affiliates acting through an office in Paris or the United Kingdom as successor by giving notice to the Lenders and the Company. (b) Alternatively the Agent may resign by giving notice to the Lenders and the Company, in which case the Majority Lenders (after close consultation with the Company) may appoint a successor Agent. (c) If the Majority Lenders have not appointed a successor Agent in accordance with paragraph (b) above within 30 days after notice of resignation was given, the Agent (after close consultation with the Company) may appoint a successor Agent (acting through an office in Paris or the United Kingdom). (d) The retiring Agent shall, at its own cost, make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its functions as Agent under the Finance Documents. (e) The Agent's resignation notice shall only take effect upon the appointment of a successor. (f) Upon the appointment of a successor, the retiring Agent shall be discharged from any further obligation in respect of the Finance Documents but shall remain entitled to the benefit of this Clause 28. Its successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party. (g) After consultation with the Company, the Majority Lenders may, by notice to the Agent, require it to resign in accordance with paragraph (b) above. In this event, the Agent shall resign in accordance with paragraph (b) above. (h) The Company may request that the Agent should resign and put such resignation to a vote of the Lenders. The Lenders shall consider the grounds of the Company's request and any submissions of the Agent and, within 10 Business Days of receiving notice of such request from the Company through the Agent, the Lenders shall (acting reasonably) vote on whether the Agent should resign or not. If the Majority Lenders vote to remove the Agent, the Agent shall resign in accordance with paragraph (b) above. 28.12 Confidentiality (a) In acting as agent for the Finance Parties, the Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments. (b) If information is received by another division or department of the Agent, it may be treated as confidential to that division or department and the Agent shall not be deemed to have notice of it. (c) Notwithstanding any other provision of any Finance Document to the contrary, neither the Agent nor the Arranger are obliged to disclose to any other person (i) any confidential information or (ii) any other information if the disclosure would or might in its reasonable opinion constitute a breach of any law or a breach of a fiduciary duty. 28.13 Relationship with the Lenders (a) The Agent may treat each Lender as a Lender, entitled to payments under this Agreement and acting through its Facility Office unless it has received not less than five Business Days prior notice from that Lender to the contrary in accordance with the terms of this Agreement. (b) Each Lender shall supply the Agent with any information required by the Agent in order to calculate the Mandatory Cost in accordance with Schedule 4 (Mandatory Cost formulae). 28.14 Credit appraisal by the Lenders Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Lender confirms to the Agent and the Arranger that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance Document including but not limited to: (a) the financial condition, status and nature of each member of the Group; (b) the legality, validity, effectiveness, adequacy or enforceability of any Finance Document and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; (c) whether that Lender has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; and (d) the adequacy, accuracy and/or completeness of the Information Memorandum and any other information provided by the Agent, any Party or by any other person under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document. 28.15 Lenders' tax status confirmation (a) Subject to paragraph (b) below, each Lender confirms in favour of the Agents on the date of this Agreement or, in the case of a Lender which becomes a Party pursuant to a transfer or assignment, on the date on which the relevant transfer or assignment becomes effective that either: (a) it is not resident for tax purposes in the United Kingdom and is beneficially entitled to its share of the Loan and associated interest; or (b) it is a bank as defined for the purposes of section 349 of the Taxes Act and is beneficially entitled to its share of the Loan and associated interest, and each Lender shall promptly notify the Agent if there is any change in its position from that set out above. (b) Paragraph (a) above shall only apply if the Agent is acting out of an office in the United Kingdom. 28.16 Reference Banks If a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of which it is an Affiliate) ceases to be a Lender, the Agent shall (in consultation with the Company) appoint another Lender or an Affiliate of a Lender to replace that Reference Bank. 29. Conduct of business by the Finance Parties No provision of this Agreement will: (a) interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit; (b) oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or (c) oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax. 30. Sharing among the Lenders 30.1 Payments to Lenders If a Lender (a "Recovering Lender") receives or recovers any amount from an Obligor other than in accordance with Clause 31 (Payment mechanics) and applies that amount to a payment due under the Finance Documents then: (a) the Recovering Lender shall, within three Business Days, notify details of the receipt or recovery to the Agent; (b) the Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Lender would have been paid had the receipt or recovery been received or made by the Agent and distributed in accordance with Clause 31 (Payment mechanics), without taking account of any Tax which would be imposed on the Agent in relation to the receipt, recovery or distribution; and (c) the Recovering Lender shall, within three Business Days of demand by the Agent, pay to the Agent an amount (the "Sharing Payment") equal to such receipt or recovery less any amount which the Agent determines may be retained by the Recovering Lender as its share of any payment to be made, in accordance with Clause 31.5 (Partial payments). 30.2 Redistribution of payments The Agent shall treat the Sharing Payment as if it had been paid by the relevant Obligor and distribute it between the Finance Parties (other than the Recovering Lender) in accordance with Clause 31.5 (Partial payments). 30.3 Recovering Lender's rights (a) On a distribution by the Agent under Clause 30.2 (Redistribution of payments), the Recovering Lender will be subrogated to the rights of the Finance Parties which have shared in the redistribution. (b) If and to the extent that the Recovering Lender is not able to rely on its rights under paragraph (a) above, the relevant Obligor shall be liable to the Recovering Lender for a debt equal to the Sharing Payment which is immediately due and payable. 30.4 Reversal of redistribution If any part of the Sharing Payment received or recovered by a Recovering Lender becomes repayable and is repaid by that Recovering Lender, then: (a) each Lender which has received a share of the relevant Sharing Payment pursuant to Clause 30.2 (Redistribution of payments) shall, upon request of the Agent, pay to the Agent for account of that Recovering Lender an amount equal to its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Lender for its proportion of any interest on the Sharing Payment which that Recovering Lender is required to pay); and (b) that Recovering Lender's rights of subrogation in respect of any reimbursement shall be cancelled and the relevant Obligor will be liable to the reimbursing Lender for the amount so reimbursed. 30.5 Exceptions (a) This Clause 30 shall not apply to the extent that the Recovering Lender would not, after making any payment pursuant to this Clause, have a valid and enforceable claim against the relevant Obligor. (b) A Recovering Lender is not obliged to share with any other Lender any amount which the Recovering Lender has received or recovered as a result of taking legal or arbitration proceedings, if: (i) it notified the other Lenders of the legal or arbitration proceedings; and (ii) the other Lender had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice or did not take separate legal or arbitration proceedings. SECTION 11 ADMINISTRATION 31. Payment mechanics 31.1 Payments to the Agent (a) On each date on which an Obligor or a Lender is required to make a payment under a Finance Document, that Obligor or Lender shall make the same available to the Agent (unless a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment. (b) Payment shall be made to such account in the principal financial centre of the country of that currency (or, in relation to euro, in the principal financial centre in a Participating Member State or London) with such bank as the Agent specifies. 31.2 Distributions by the Agent Each payment received by the Agent under the Finance Documents for another Party shall, subject to Clause 31.3 (Distributions to an Obligor) and Clause 31.4 (Clawback), be made available by the Agent as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Agent by not less than five Business Days' notice with a bank in the principal financial centre of the country of that currency (or, in relation to euro, in the principal financial centre of a Participating Member State or London). 31.3 Distributions to an Obligor The Agent may (with the consent of the Obligor or in accordance with Clause 32 (Set-off)) apply any amount received by it for that Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Obligor under the Finance Documents or in or towards purchase of any amount of any currency to be so applied. 31.4 Clawback (a) Where a sum is to be paid to the Agent under the Finance Documents for another Party, the Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum. (b) If the Agent pays an amount to another Party and it proves to be the case that the Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Agent shall on demand refund the same to the Agent together with interest on that amount from the date of payment to the date of receipt by the Agent, calculated by the Agent to reflect its cost of funds. 31.5 Partial payments (a) If the Agent receives a payment that is insufficient to discharge all the amounts then due and payable by an Obligor under the Finance Documents, the Agent shall apply that payment towards the obligations of that Obligor under the Finance Documents in the following order: (i) first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Agent or the Arranger under the Finance Documents; (ii) secondly, in or towards payment pro rata of any accrued interest or commission due but unpaid under this Agreement; (iii) thirdly, in or towards payment pro rata of any principal due but unpaid under this Agreement; and (iv) fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents. (b) The Agent shall, if so directed by the Majority Lenders, vary the order set out in paragraphs (a)(ii) to (iv) above. (c) Paragraphs (a) and (b) above will override any appropriation made by an Obligor. 31.6 No set-off by Obligors All payments to be made by an Obligor under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim. 31.7 Business Days (a) Any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not). (b) During any extension of the due date for payment of any principal or an Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date. 31.8 Currency of account (a) Subject to paragraphs (b) to (e) below, the Base Currency relative to a Facility is the currency of account and payment for any sum due from an Obligor under any Finance Document. (b) A repayment of a Utilisation or Unpaid Sum or a part of a Utilisation or Unpaid Sum shall be made in the currency in which that Utilisation or Unpaid Sum is denominated on its due date. (c) Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated when that interest accrued. (d) Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred. (e) Any amount expressed to be payable in a currency other than the Base Currency of a Facility shall be paid in that other currency. 31.9 Change of currency (a) Subject to Clause 4.3(b) (Conditions relating to Optional Currencies), unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then: (i) any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Agent (after consultation with the Company); and (ii) any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Agent (acting reasonably). (b) If a change in any currency of a country occurs, this Agreement will, to the extent the Agent (acting reasonably and after consultation with the Company) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant Interbank Market and otherwise to reflect the change in currency. 32. Set-off A Finance Party may set off any matured obligation due from an Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to that Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off. 33. Notices 33.1 Communications in writing Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter. 33.2 Addresses The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents is: (a) in the case of the Company, that identified with its name below; (b) in the case of each Lender, that notified in writing to the Agent on or prior to the date on which it becomes a Party; and (c) in the case of the Agent, that identified with its name below, or any substitute address or fax number or department or officer as the Party may notify to the Agent (or the Agent may notify to the other Parties, if a change is made by the Agent) by not less than five Business Days' notice. 33.3 Delivery (a) Any communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective: (i) if by way of fax, when received in legible form; or (ii) if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address, and, if a particular department or officer is specified as part of its address details provided under Clause 33.2 (Addresses), if addressed to that department or officer. (b) Any communication or document to be made or delivered to the Agent will be effective only when actually received by the Agent and then only if it is expressly marked for the attention of the department or officer identified with the Agent's signature below (or any substitute department or officer as the Agent shall specify for this purpose). (c) All notices from or to an Obligor shall be sent through the Agent. (d) Any communication or document made or delivered to the Company in accordance with this Clause will be deemed to have been made or delivered to each of the Obligors. 33.4 Notification of address and fax number Promptly upon receipt of notification of an address and fax number or change of address and fax number pursuant to Clause 33.2 (Addresses) or changing its own address or fax number, the Agent shall notify the other Parties. 33.5 Electronic communication (a) Any communication to be made between the Parties under or in connection with the Finance Documents (other than (aa) in the case of the Company, delivery of any Utilisation Request, Selection Notice, any request to extend the Termination Date relating to Facility A1 or Facility A2 under Clause 5.5 (Extension of Facility A1 and Facility A2), a certificate in accordance with Clause 22.2 (Compliance Certificates) or any request for an amendment to or waiver of this Agreement, (bb) in the case of any other Borrower, delivery of any Utilisation Request or (cc) in the case of any other Obligor, delivery of any request for an amendment to or waiver of this Agreement) may be made by electronic mail or other electronic means and the Parties shall notify each other (in particular, the Agent) in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means. (b) Each Party shall promptly notify each other Party (in particular, the Agent) of any change to their electronic mail address or any other such information supplied by them. (c) Any electronic communication made: (i) by the Agent or Issuing Bank, as the case may be, to another Party will be effective only when actually received by the relevant recipient; and (ii) by a Lender or an Obligor to the Agent or Issuing Bank, as the case may be, will be effective only when actually received by the Agent or Issuing Bank, as the case may be, and then only if it is addressed in such a manner as the Agent or Issuing Bank, as the case may be, shall specify to that Lender or, as the case may be, that Obligor for this purpose. (d) Each Party shall notify any affected parties promptly upon becoming aware that its electronic mail system or other electronic means of communication cannot be used due to technical failure (and that failure is continuing for more than 7 hours). Until that Party has notified the other affected parties that the failure has been remedied, all notices between those parties shall be sent by fax or letter in accordance with this Clause 33 (Notices). (e) In the case of the notification of rates of interest by the Agent pursuant to Clause 11.5 (Notification of rates of interest) and in the case of the delivery of any document by the Agent pursuant to paragraph (a) of Clause 28.2 (Duties of the Agent), the Agent may refer a Lender or an Obligor (by fax, letter or e-mail) to a web site and to the location of the relevant information on such web site in discharge of such notification or delivery obligation. 33.6 English language (a) Any notice given under or in connection with any Finance Document must be in English. (b) All other documents provided under or in connection with any Finance Document must be: (i) in French or English; or (ii) if not in French or English, and if so required by the Agent (acting reasonably), accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document. 34. CALCULATIONS AND CERTIFICATES 34.1 Accounts In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by a Finance Party are prima facie evidence of the matters to which they relate. 34.2 Certificates and Determinations Any certification or determination by a Finance Party of a rate or amount under any Finance Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates. 34.3 Day count convention Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days or, in any case where the practice in the Relevant Interbank Market differs, in accordance with that market practice. 35. PARTIAL INVALIDITY If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired. 36. REMEDIES AND WAIVERS No failure to exercise, nor any delay in exercising, on the part of any Finance Party, any right or remedy under the Finance Documents shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law. 37. AMENDMENTS AND WAIVERS 37.1 Required consents (a) Subject to Clause 37.2 (Exceptions) any term of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and the Obligors and any such amendment or waiver will be binding on all Parties. (b) The Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause. (c) The Company may effect, on behalf of any Obligor, any amendment or waiver permitted by this Clause. 37.2 Exceptions (a) An amendment or waiver that has the effect of changing or which relates to: (i) the definition of "Majority Lenders" in Clause 1.1 (Definitions); (ii) except pursuant to Clause 5.5 (Extension of Facility A1 and Facility A2), an extension to the date of payment of any amount under the Finance Documents; (iii) a reduction in the Margin or the amount of any payment of principal, interest, fees or commission payable; (iv) an increase in Commitment; (v) a change to the Borrowers or Guarantors other than in accordance with Clause 27 (Changes to the Obligors); (vi) any provision which expressly requires the consent of all the Lenders; (vii) Clause 2.2 (Lenders' rights and obligations), Clause 26 (Changes to the Lenders), Clause 30 (Sharing among the Lenders) or this Clause 37; (viii) any extension of an Availability Period; or (ix) the guarantee or indemnity of any Obligor, shall not be made without the prior consent of all the Lenders. (b) An amendment or waiver which relates to the rights or obligations of the Agent, the Issuing Bank or the Arranger may not be effected without the consent of the Agent, the Issuing Bank or the Arranger respectively. 38. COUNTERPARTS Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document. SECTION 12 GOVERNING LAW AND ENFORCEMENT 39. GOVERNING LAW This Agreement is governed by English law. 40. ENFORCEMENT 40.1 Jurisdiction of English courts (a) The courts of England have jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement) (a "Dispute"). (b) The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary. (c) This Clause 40.1 is for the benefit of the Finance Parties only. As a result, no Finance Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions. 40.2 Service of process Without prejudice to any other mode of service allowed under any relevant law, each Obligor (other than an Obligor incorporated in England and Wales): (a) irrevocably appoints Sodexho Holdings Limited as its agent for service of process in relation to any proceedings before the English courts in connection with any Finance Document; and (b) agrees that failure by a process agent to notify the relevant Obligor of the process will not invalidate the proceedings concerned. This Agreement has been entered into on the date stated at the beginning of this Agreement. SCHEDULE 1 The Original Lenders
Name of Original Facility A1 Facility A2 Facility B Facility C Lender Commitment Commitment Commitment Commitment Citibank International (Euro)223,333,333.34 (Euro) 350,000,000 US$310,000,000 US$ 50,000,000 plc (for Utilisations other than to a US Person) Citicorp USA, Inc. (for Utilisations to a US Person) Goldman Sachs (Euro)223,333,333.33 (Euro) 350,000,000 US$310,000,000 US$ 50,000,000 International Bank Societe Generale (Euro)223,333,333.33 (Euro) 350,000,000 US$310,000,000 US$ 50,000,000 -------------------- ------------------- -------------- -------------- (Euro) 670,000,000 (Euro)1,050,000,000 US$930,000,000 US$150,000,000
SCHEDULE 2 Conditions precedent PART I A Conditions Precedent to Initial Utilisation 1. The Company (a) A copy of the constitutional documents of the Company. (b) A copy of a resolution of the board of directors of the Company: (i) approving the terms of, and the transactions contemplated by, the Finance Documents to which it is a party and resolving that it execute the Finance Documents to which it is a party demonstrating that the provisions of Art. L225-35 et seq. of the French Commercial Code have been respected; (ii) authorising a specified person or persons to execute the Finance Documents to which it is a party on its behalf; and (iii) authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices (including, if relevant, any Utilisation Request and Selection Notice) to be signed and/or despatched by it under or in connection with the Finance Documents to which it is a party. (c) A specimen of the signature of each person authorised by the resolution referred to in paragraph (b) above. (d) A certificate of an authorised signatory of the Company dated no earlier than the date of this Agreement certifying that each copy document relating to it specified in this Part IA of Schedule 2 is correct, complete and in full force and effect. 2. Legal opinions (a) A legal opinion of Linklaters, London, legal advisers to the Arranger and the Agent in England, substantially in the form distributed to the Original Lenders prior to signing this Agreement. (b) A legal opinion of Linklaters, Paris, legal advisers to the Arranger and the Agent in France, substantially in the form distributed to the Original Lenders prior to signing this Agreement. (c) A legal opinion of Clifford Chance, legal advisers to the Company as to French law, substantially in the form distributed to the Original Lenders prior to signing this Agreement 3. Other documents and evidence (a) Evidence that any process agent referred to in Clause 40.2 (Service of process) has accepted its appointment. (b) Evidence that the fees, costs and expenses then due from the Company pursuant to Clause 14 (Fees) and Clause 19 (Costs and expenses) have been paid or will be paid by the first Utilisation Date. PART IB Conditions Precedent to Utilisation of Facility A1 (a) (i) A copy of each AA Acquisition Agreement relevant to the AA Acquisition to be made with the proceeds of Utilisation under Facility A1; and (ii) written confirmation that all conditions set out in such AA Acquisition Agreement have been satisfied by the Company and/or waived by the relevant member of the AA Group in full. (b) A certificate of the Company (signed by a director) confirming that the relevant time limit for the European Commission to consider the proposed acquisition under the appropriate AA Acquisition Agreement has expired without a decision having been issued. (c) Evidence that all applicable waiting periods (including extensions thereof) under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the regulations made under the Act have expired, lapsed or been terminated in respect of the relevant proposed acquisition under the AA Acquisition Agreements. PART IC Conditions Precedent to Utilisation of Facility A2 (a) A copy of any Tender Offer Statement, any other document filed with the Securities and Exchange Commission in connection with the Offer and any draft or definitive merger agreement related to the Offer (in the case of the latter, to the extent available at the time of such Utilisation). (b) Evidence that all applicable waiting periods (including extensions thereof) under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the regulations made under the Act have expired, lapsed or been terminated in respect of the Kodak Acquisition. (c) Following the issue of a formal press release of the Special Committee giving a Negative Committee Announcement and prior to the Company launching a Non-Recommended Offer, a notice from the Company informing the Arranger as to the reason (to the best of its knowledge and belief) for the Negative Committee Announcement. (d) A copy of an opinion of Davis Polk & Wardwell relating to compliance with United States securities laws addressed to the Company and substantially in the form distributed to the Original Lenders prior to the date of this Agreement. (e) A legal opinion of Clifford Chance confirming that the use, structuring and terms of the Finance Documents will not, amongst other things, cause a breach of Regulation U. (f) A legal opinion of Davis Polk & Wardwell substanitally in the form distributed to the Original Lenders prior to the date of this Agreement. PART II Conditions precedent required to be delivered by an Additional Obligor 1. An Accession Letter, duly executed by the Additional Obligor and the Company. 2. A copy of the constitutional documents of the Additional Obligor. 3. A copy of a resolution of the board of directors of the Additional Obligor: (a) approving the terms of, and the transactions contemplated by, the Accession Letter and the Finance Documents and resolving that it execute the Accession Letter and, in the case of a French Obligor, demonstrating that the provisions of Art L225-35 at seq. of the French Commercial Code have been respected; (b) authorising a specified person or persons to execute the Accession Letter on its behalf; and (c) authorising a specified person or persons, on its behalf, to sign and/or despatch all other documents and notices (including, in relation to an Additional Borrower, any Utilisation Request or Selection Notice) to be signed and/or despatched by it under or in connection with the Finance Documents. 4. A specimen of the signature of each person authorised by the resolution referred to in paragraph 3 above. 5. A certificate of an authorised signatory of the Additional Obligor certifying that each copy document listed in this Part II of Schedule 2 is correct, complete and in full force and effect as at a date no earlier than the date of the Accession Letter. 6. A legal opinion of Linklaters, London, legal advisers to the Arranger and the Agent in England. 7. A legal opinion of Linklaters, Paris, or as the case may be, Linklaters, New York, legal advisers to the Arranger and the Agent in Paris and New York and Delaware respectively. 8. A legal opinion of Clifford Chance, Paris, or as the case may be, Davis Polk & Wardwell, legal advisers to the Company as to (i) French law and (ii) United States and federal law and Delaware law respectively. 9. In relation to the accession of the AA Bidco which is a US company, a legal opinion of Clifford Chance, legal advisers to the Company as to the AA Acquisition, that such AA Bidco is not required to register as an "investment company" as such term is defined in the US Investment Companies Act of 1940, as amended. 10. If the Additional Obligor is incorporated in a jurisdiction other than Paris or New York and/or Delaware, a legal opinion of the legal advisers to (a) the Arranger and the Agent and/or (b) the Company (having regard to market practice on such matters in the relevant jurisdiction) in the jurisdiction in which the Additional Obligor is incorporated. 11. If the proposed Additional Obligor is incorporated in a jurisdiction other than England and Wales, evidence that the process agent specified in Clause 40.2 (Service of process), if not an Obligor, has accepted its appointment in relation to the proposed Additional Obligor. SCHEDULE 3 Requests PART I Utilisation Request From: [Borrower] To: [Agent] Dated: Dear Sirs Sodexho Alliance, S.A. - (Euro) 1,720,000,000 and US$1,080,000,000 Facility Agreement dated [________] April 2001 (the "Facility Agreement") 1. We wish to borrow a Loan on the following terms: Proposed Utilisation Date: [___________________] (or, if that is not a Business Day, the next Business Day) Facility to be utilised: [Facility A1]/[Facility A2]/[Facility B]/[Facility C]* Currency of Loan: [___________________] Amount: [___________________] or, if less, the Available Facility Interest Period: [___________________] 2. We confirm that each condition specified in Clause 4.2 (Further conditions precedent) is satisfied on the date of this Utilisation Request. 3. The proceeds of this Loan should be credited to [account]. 4. This Utilisation Request is irrevocable. Yours faithfully _______________________________________ authorised signatory for [name of relevant Borrower] ________________________________________________________________________________ * Delete as appropriate. PART II Selection Notice Applicable to a Facility A Loan or Facility B Loan From: [Borrower] To: [Agent] Dated: Dear Sirs Sodexho Alliance, S.A. - (Euro) 1,720,000,000 and US$1,080,000,000 Facility Agreement dated [________] April 2001 (the "Facility Agreement") 1. We refer to the following [Facility A1 Loan[s]/Facility A2 Loan[s]/Facility B Loan[s]] in [identify currency] with an Interest Period ending on [___________________].* 2. [We request that the above [Facility A Loan[s]/Facility B Loan[s]] be divided into [___________________] [Facility A1 Loans/Facility A2 Loan[s]/Facility B Loan[s]] with the following Interest Periods:]** or [We request that the next Interest Period for the above [Facility A Loan[s]/Facility A2 Loan[s]/Facility B Loan[s]] is [___________________]].*** 3. This Selection Notice is irrevocable. Yours faithfully _______________________________________ authorised signatory for [the Company on behalf of] [name of relevant Borrower] ________________________________________________________________________________ * Insert details of all Facility A Loans in the same currency which have an Interest Period ending on the same date. ** Use this option if division of Loans is requested. *** Use this option if sub-division is not required. PART III Letters of Credit From: [Borrower] To: [Agent] Dated: Dear Sirs Sodexho Alliance, S.A. - (Euro) 1,720,000,000 and US$1,080,000,000 Facility Agreement dated [________] April 2001 (the "Facility Agreement") 1. We wish to arrange for a Letter of Credit to be issued by the Issuing Bank on the following terms: Proposed Utilisation Date: [_____________](or, if that is not a Business Day, the next Business Day) Facility to be utilised: Facility C Currency of Letter of Credit: [_____________] Amount: [_____________] or, if less, the Available Facility Term: [_____________] 2. We confirm that each condition specified in Clause 6.6(b) (Issue of Letters of Credit) is satisfied on the date of this Utilisation Request. 3. We attach a copy of the proposed Letter of Credit. 4. This Utilisation Request is irrevocable. Yours faithfully ______________________________________ authorised signatory for [name of relevant Borrower] SCHEDULE 4 Mandatory Cost formulae 1. The Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of compliance with (a) the requirements of the Bank of England and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank. 2. On the first day of each Interest Period (or as soon as possible thereafter) the Agent shall calculate, as a percentage rate, a rate (the "Additional Cost Rate") for each Lender, in accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the Agent as a weighted average of the Lenders' Additional Cost Rates (weighted in proportion to the percentage participation of each Lender in the relevant Loan) and will be expressed as a percentage rate per annum. 3. The Additional Cost Rate for any Lender lending from a Facility Office in a Participating Member State will be the percentage notified by that Lender to the Agent as the cost of complying with the minimum reserve requirements of the European Central Bank. 4. The Additional Cost Rate for any Lender lending from a Facility Office in the United Kingdom will be calculated by the Agent as follows: (a) in relation to a Sterling Loan: AB + C(B-D) + E x 0.01 ------------------------ per cent. per annum 100 - (A+C) (b) in relation to a Loan in any currency other than Sterling: E x 0.01 ---------- per cent. per annum. 300 Where: A is the percentage of Eligible Liabilities (assuming these to be in excess of any stated minimum) which that Lender is from time to time required to maintain as an interest free cash ratio deposit with the Bank of England to comply with cash ratio requirements. B is the percentage rate of interest (excluding the Margin and the Mandatory Cost) payable for the relevant Interest Period on the Loan. C is the percentage (if any) of Eligible Liabilities which that Lender is required from time to time to maintain as interest bearing Special Deposits with the Bank of England. D is the percentage rate per annum payable by the Bank of England to the Agent on interest bearing Special Deposits. E is the rate of charge payable by that Lender to the Financial Services Authority pursuant to the Fees Regulations (but, for this purpose, ignoring any minimum fee required pursuant to the Fees Regulations) and expressed in pounds per (Pounds)1,000,000 of the Fee Base of that Lender. 5. For the purposes of this Schedule: (a) "Eligible Liabilities" and "Special Deposits" have the meanings given to them from time to time under or pursuant to the Bank of England Act 1998 or (as may be appropriate) by the Bank of England; (b) "Fees Regulations" means the Banking Supervision (Fees) Regulations 2000 or such other law or regulation as may be in force from time to time in respect of the payment of fees for banking supervision; and (c) "Fee Base" has the meaning given to it in, and will be calculated in accordance with, the Fees Regulations. 6. In application of the above formulae, A, B, C and D will be included in the formulae as percentages (i.e. 5 per cent. will be included in the formula as 5 and not as 0.05). A negative result obtained by subtracting D from B shall be taken as zero. The resulting figures shall be rounded to four decimal places. 7. Each Lender shall supply any information required by the Agent for the purpose of calculating its Additional Cost Rate. In particular, but without limitation, each Lender shall supply the following information in writing on or prior to the date on which it becomes a Lender: (a) its jurisdiction of incorporation and the jurisdiction of its Facility Office; and (b) any other information that the Agent may reasonably require for such purpose. Each Lender shall promptly notify the Agent in writing of any change to the information provided by it pursuant to this paragraph. 8. The percentages or rates of charge of each Lender for the purpose of A, C and E above shall be determined by the Agent based upon the information supplied to it pursuant to paragraph 7 above and on the assumption that, unless a Lender notifies the Agent to the contrary, each Lender's obligations in relation to cash ratio deposits, Special Deposits and the Fees Regulations are the same as those of a typical bank from its jurisdiction of incorporation with a Facility Office in the same jurisdiction as its Facility Office. 9. The Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over or under compensates any Lender and shall be entitled to assume that the information provided by any Lender pursuant to paragraphs 3 and 7 above is true and correct in all respects. 10. The Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for each Lender based on the information provided by each Lender pursuant to paragraphs 3 and 7 above. 11. Any determination by the Agent pursuant to this Schedule in relation to a formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender shall, in the absence of manifest error, be conclusive and binding on all Parties. 12. The Agent may from time to time, after consultation with the Company and the Lenders, determine and notify to all Parties any amendments which are required to be made to this Schedule in order to comply with any change in law, regulation or any requirements from time to time imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any other authority which replaces all or any of its functions) and any such determination shall, in the absence of manifest error, be conclusive and binding on all Parties. SCHEDULE 5 Form of Transfer Certificate To: [___________________] as Agent From: [The Existing Lender] (the "Existing Lender") and [The New Lender] (the "New Lender") Dated: Sodexho Alliance, S.A. - (Euro) 1,720,000,000 and US$1,080,000,000 Facility Agreement dated [________] April 2001 (the "Facility Agreement") 1. We refer to Clause 26.5 (Procedure for transfer): (a) The Existing Lender and the New Lender agree to the Existing Lender and the New Lender transferring by novation all or part of the Existing Lender's Commitment, rights and obligations referred to in the Schedule in accordance with Clause 26.5 (Procedure for transfer). (b) The proposed Transfer Date is [___________________]. (c) The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause 33.2 (Addresses) are set out in the Schedule. 2. The New Lender expressly acknowledges the limitations on the Existing Lender's obligations set out in paragraph (c) of Clause 26.4 (Limitation of responsibility of Existing Lenders). 3. This Transfer Certificate is governed by English law. THE SCHEDULE Commitment/rights and obligations to be transferred [insert relevant details] [Facility Office address, fax number and attention details for notices and account details for payments.] [Existing Lender] [New Lender] By: By: This Transfer Certificate is accepted by the Agent and the Transfer Date is confirmed as [___________________]. [Agent] By: SCHEDULE 6 Form of Accession Letter To: [___________________] as Agent From: [Subsidiary] and Sodexho Alliance, S.A. Dated: Dear Sirs Sodexho Alliance, S.A. - (Euro)1,720,000,000 and US$1,080,000,000 Facility Agreement dated [________] April 2001 (the "Facility Agreement") 1. [Subsidiary] agrees to become an Additional [Borrower]/[Guarantor] and to be bound by the terms of the Facility Agreement as an Additional [Borrower]/[Guarantor] pursuant to [Clause 27.2 (Additional Borrowers)]/[Clause 27.4 (Additional Guarantors)] of the Facility Agreement. [Subsidiary] is a company duly incorporated under the laws of [name of relevant jurisdiction]. 2. [Subsidiary's] administrative details are as follows: Address: Fax No: Attention: 3. This letter is governed by English law. Yours faithfully ............................ .......................... Authorised signatory for Authorised signatory for Sodexho Alliance, S.A. [Subsidiary] SCHEDULE 7 Form of Compliance Certificate To: [___________________] as Agent From: Sodexho Alliance, S.A. Dated: Dear Sirs Sodexho Alliance, S.A. - [Euro]1,720,000,000 and US$1,080,000,000 Facility Agreement dated [________] April 2001 (the "Facility Agreement") 1. We refer to the Facility Agreement. This is a Compliance Certificate. 2. We confirm that: (a) as at [___________________], the Net Consolidated Financial Indebtedness for the Relevant Period ended on [___________________] was (Euro)[___________________]; (b) the ratio of Net Consolidated Financial Indebtedness on [___________________] to EBITDA for the Relevant Period ending on such date was [_]:1; and (c) the ratio of EBIT to Net Consolidated Interest Expense for the Relevant Period ending on [___________________] was [_]:1. Computations of the above are attached. 3. [We confirm that no Default is continuing.]* Signed: ................... [Chief Financial Officer] (other appropriate officer) of Sodexho Alliance, S.A. ________________________________________________________________________________ * If this statement cannot be made, the certificate should identify any Default that is continuing and the steps, if any, being taken to remedy it. SCHEDULE 8 LMA Form of Confidentiality Undertaking LMA CONFIDENTIALITY LETTER (SELLER) [Letterhead of Seller/Seller's agent/broker] To: ============================================= [insert name of Potential Purchaser/Purchaser's agent/broker ============================================= Re: The Agreement ============================================= Borrower: Date: Amount: Agent: ============================================= Dear Sirs We understand that you are considering [acquiring]/1//[arranging the acquisition of]/2/ an interest in the Agreement (the "Acquisition"). In consideration of us agreeing to make available to you certain information, by your signature of a copy of this letter you agree as follows: 1. Confidentiality Undertaking You undertake (a) to keep the Confidential Information confidential and not to disclose it to anyone except as provided for by paragraph 2 below and to ensure that the Confidential Information is protected with security measures and a degree of care that would apply to your own confidential information, (b) to use the Confidential Information only for the Permitted Purpose, (c) to use all reasonable endeavours to ensure that any person to whom you pass any Confidential Information (unless disclosed under paragraph 2[(c)/(d)]/3/ below) acknowledges and complies with the provisions of this letter as if that person were also a party to it, and (d) not to make enquiries of any member of the Group or any of their officers, directors, employees or professional advisers relating directly or indirectly to the Acquisition. 2. Permitted Disclosure We agree that you may disclose Confidential Information: (a) to members of the Purchaser Group and their officers, directors, employees and professional advisers to the extent necessary for the Permitted Purpose and to any auditors of members of the Purchaser Group; [(b) subject to the requirements of the Agreement, in accordance with the Permitted Purpose so long as any prospective purchaser has delivered a letter to you in equivalent form to this letter;] [(b/c)]/3/ subject to the requirements of the Agreement, to any person to (or through) whom you assign or transfer (or may potentially assign or transfer) all or any of the rights, benefits and obligations which you may acquire under the Agreement or with (or through) whom you enter into (or may potentially enter into) any sub-participation in relation to, or any other transaction under which payments are to be made by reference to, the Agreement or the Borrower or any member of the Group so long as that person has delivered a letter to you in equivalent form to this letter; and [(c/d)]/3/ (i) where requested or required by any court of competent jurisdiction or any competent judicial, governmental, supervisory or regulatory body, (ii) where required by the rules of any stock exchange on which the shares or other securities of any member of the Purchaser Group are listed or (iii) where required by the laws or regulations of any country with jurisdiction over the affairs of any member of the Purchaser Group. 3. Notification of Required or Unauthorised Disclosure You agree (to the extent permitted by law) to inform us of the full circumstances of any disclosure under paragraph 2[(c)/(d)]/3/ or upon becoming aware that Confidential Information has been disclosed in breach of this letter. 4. Return of Copies If we so request in writing, you shall return all Confidential Information supplied to you by us and destroy or permanently erase all copies of Confidential Information made by you and use all reasonable endeavours to ensure that anyone to whom you have supplied any Confidential Information destroys or permanently erases such Confidential Information and any copies made by them, in each case save to the extent that you or the recipients are required to retain any such Confidential Information by any applicable law, rule or regulation or by any competent judicial, governmental, supervisory or regulatory body or in accordance with internal policy, or where the Confidential Information has been disclosed under paragraph 2[(c)/(d)]/3/ above. 5. Continuing Obligations The obligations in this letter are continuing and, in particular, shall survive the termination of any discussions or negotiations between you and us. Notwithstanding the previous sentence, the obligations in this letter shall cease (a) if you become a party to or otherwise acquire (by assignment or sub-participation) an interest, direct or indirect, in the Agreement or (b) twelve months after you have returned all Confidential Information supplied to you by us and destroyed or permanently erased all copies of Confidential Information made by you (other than any such Confidential Information or copies which have been disclosed under paragraph 2 above (other than sub-paragraph 2(a)) or which, pursuant to paragraph 4 above, are not required to be returned or destroyed). 6. No Representation; Consequences of Breach, etc You acknowledge and agree that: (a) neither we, [nor our principal] nor any member of the Group nor any of our or their respective officers, employees or advisers (each a "Relevant Person") (i) make any representation or warranty, express or implied, as to, or assume any responsibility for, the accuracy, reliability or completeness of any of the Confidential Information or any other information supplied by us or the assumptions on which it is based or (ii) shall be under any obligation to update or correct any inaccuracy in the Confidential Information or any other information supplied by us or be otherwise liable to you or any other person in respect to the Confidential Information or any such information; and (b) we [or our principal]/4/ or members of the Group may be irreparably harmed by the breach of the terms hereof and damages may not be an adequate remedy; each Relevant Person may be granted an injunction or specific performance for any threatened or actual breach of the provisions of this letter by you. 7. No Waiver; Amendments, etc This letter sets out the full extent of your obligations of confidentiality owed to us in relation to the information the subject of this letter. No failure or delay in exercising any right, power or privilege hereunder will operate as a waiver thereof nor will any single or partial exercise of any right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privileges hereunder. The terms of this letter and your obligations hereunder may only be amended or modified by written agreement between us. 8. Inside Information You acknowledge that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation relating to insider dealing and you undertake not to use any Confidential Information for any unlawful purpose. 9. Nature of Undertakings The undertakings given by you under this letter are given to us and (without implying any fiduciary obligations on our part) are also given for the benefit of [our principal,]/4/ the Borrower and each other member of the Group. 10. Third Party Rights (a) Subject to paragraph 6 and to paragraph 9 the terms of this letter may be enforced and relied upon only by you and us and the operation of the Contracts (Rights of Third Parties) Act 1999 is excluded. (b) Notwithstanding any provisions of this letter, the parties to this letter do not require the consent of any Relevant Person to rescind or vary this letter at any time. 11. Governing Law and Jurisdiction This letter (including the agreement constituted by your acknowledgement of its terms) shall be governed by and construed in accordance with the laws of England and the parties submit to the non-exclusive jurisdiction of the English courts. 12. Definitions In this letter (including the acknowledgement set out below) terms defined in the Agreement shall, unless the context otherwise requires, have the same meaning and: "Confidential Information" means any information relating to the Borrower, the Group, the Agreement and/or the Acquisition provided to you by us or any of our affiliates or advisers, in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that (a) is or becomes public knowledge other than as a direct or indirect result of any breach of this letter or (b) is known by you before the date the information is disclosed to you by us or any of our affiliates or advisers or is lawfully obtained by you thereafter, other than from a source which is connected with the Group and which, in either case, as far as you are aware, has not been obtained in violation of, and is not otherwise subject to, any obligation of confidentiality; "Group" means the Borrower and each of its holding companies and subsidiaries and each subsidiary of each of its holding companies (as each such term is defined in the Companies Act 1985); "Permitted Purpose" means [subject to the terms of this letter, passing on information to a prospective purchaser for the purpose of] /2/ considering and evaluating whether to enter into the Acquisition; and "Purchaser Group" means you, each of your holding companies and subsidiaries and each subsidiary of each of your holding companies (as each such term is defined in the Companies Act 1985). Please acknowledge your agreement to the above by signing and returning the enclosed copy. Yours faithfully ................................... For and on behalf of [Seller/Seller's agent/broker] To: [Seller] [Seller's agent/broker] The Borrower and each other member of the Group We acknowledge and agree to the above: ................................... For and on behalf of [Potential Purchaser/Purchaser's agent/broker] - -------------------------------------------------------------------------------- /1/ delete if addressee is acting as broker or agent. /2/ delete if addressee is acting as principal. /3/ delete as applicable. /4/ delete if letter is sent out by the Seller rather than the Seller's broker or agent. SCHEDULE 9 Timetables PART I Loans "D" refers to the number of Business Days before the relevant Utilisation Date/the first day of the relevant Interest Period. For the avoidance of doubt, the reference to a time below is to London time unless otherwise stated.
Loans in euro Loans in Sterling Loans in other currencies Delivery of a duly completed Utilisation Request D-3 D-1 D-3 (Clause 5.1 (Delivery of a Utilisation Request)) 11:00 a.m. 11:00 a.m. 11:00 a.m. or a Selection Notice (Clause 12.1 (Selection of Interest Periods)) Agent determines (in relation to a Utilisation) D-3 D-1 D-3 the Base Currency Amount of the Loan, if 12:00 p.m. 12:00 p.m. 12:00 p.m. required under Clause 5.4 (Lenders' participation) Agent notifies the Lenders of the Loan in D-3 D-1 D-3 accordance with Clause 5.4 (Lenders' 2:00 p.m. 2:00 p.m. 2:00 p.m. participation) Agent receives a notification from a Lender under D-2 D D-2 Clause 8.2 (Unavailability of a currency) 9:30 a.m. 9:30 a.m. 9:30 a.m. Agent gives notice in accordance with Clause 8.2 D-2 D D-2 (Unavailability of a currency) 10:30 a.m. 10:30 a.m. 10:30 a.m. Agent determines amount of the Loan in Optional D-3 D-1 D-3 Currency in accordance with Clause 8.3 (Exchange 12:00 p.m. 12:00 p.m. 12:00 p.m. rate movements) LIBOR or EURIBOR is fixed Quotation Day Quotation Day Quotation Day as of 11:00 a.m. as of 11:00 a.m. as of 11:00 a.m. (Paris time) (London time) (London time)
PART II Letters of Credit "D" refers to the number of Business Days before the relevant Utilisation Date/the first day of the Relevant Term. For the avoidance of doubt, the reference to a time below is to London time.
L/Cs L/Cs in US Dollars in Canadian Dollars Delivery of a duly completed Utilisation Request D-4 D-4 (Clause 6.3 (Delivery of a Utilisation Request for 11:00 a.m. 11:00 a.m. Letters of Credit) Agent determines (in relation to a Utilisation) the D-3 D-3 Base Currency Amount of the Letter of Credit, if 12:00 p.m. 12:00 p.m. required under Clause 6.6 (Issue of Letters of Credit) Agent notifies the Issuing Bank and the Lenders of D-3 D-3 the Letter of Credit in accordance with 6.6 (Issue 2:00 p.m. 2:00 p.m. of Letters of Credit)
SCHEDULE 10 Acquisition Financing Indemnity In the event that any of the Finance Parties or any of their respective affiliates or any of their respective partners, directors, agents, advisers or employees (each a "Relevant Person") becomes involved in any capacity in any action, proceeding, or investigation brought by or against any person, including shareholders of Kodak, AA or the Company arising out of, in connection with or as a result of either the Finance Parties' commitment or any matter referred to in the Finance Documents (including the acquisitions and any use of the proceeds of the Facilities) (other than due to such Finance Party's illegal activity, negligence, wilful misconduct or bad faith), the Company periodically on request will reimburse the Relevant Person for its reasonable legal and other reasonable expenses (including the cost of any investigation and preparation) arising out of or incurred in connection therewith. The Company also agrees to co-operate with each Relevant Person and to give, subject to Clause 26.7 (Disclosure of Information and confidentiality) and so far as it is able to procure the giving of, all such information and render all such assistance to as the Relevant Persons may reasonably request in connection with any such action, proceeding or investigation and not to take any action which might reasonably be expected to prejudice the position of a Relevant Person in relation to any such action, proceeding or investigation without the consent of the Relevant Person concerned (such consent not to be unreasonably withheld). The Company will also indemnify and hold harmless each of the Finance Parties for themselves and as trustee for the other Relevant Persons, against any and all losses, claims, damages or liabilities to any person in connection with or as a result of either their respective commitments or any matter referred to in the Finance Documents and in particular (without limitation to the generality of the foregoing) arising out of, or in relation to, or in connection with, any untrue statement (or alleged untrue statement) of a material fact contained in any preliminary or final offering materials or information memorandum prepared in connection with the Facilities and approved by the Company or any filings with or submissions to, in each case made by or on behalf of the Company, any governmental or self regulatory authority or agency or securities exchange or caused by an omission (or alleged omission) to state therein a material fact necessary to make the statements therein in the light of the circumstances under which they are made, not misleading, except to the extent that any such loss, claim, damage or liability results from the illegal activity, negligence, wilful misconduct or bad faith of the Relevant Person in performing the services that are the subject of the Finance Documents. The Company also agrees that the Relevant Persons shall not have any liability to the Company or any person asserting claims on behalf of or in right of the Company arising out of, or in connection with, or as a result of, the commitment or any matter referred to in the Finance Documents except to the extent that any losses, claims, damages, liabilities or expenses incurred by the Company or such person result from the illegal activity, negligence, wilful misconduct or bad faith of the Relevant Person in performing the services that are the subject of the Underwriting Documents. If any person is potentially entitled to indemnification under this Schedule 10 with respect to any action or proceeding brought by a third party that is also brought against the Company, the Company shall be entitled to assume the defence of any such action or proceeding with counsel reasonably satisfactory to the Relevant Person provided that the Company shall at all times during such action or proceedings consider and take account of that person's business, good standing and reputation in the market (as communicated to the Company) in relation to such action and proceedings. Upon assumption by the Company of the defence of any such action or proceeding, the Relevant Person shall have the right to participate in such action or proceeding and to retain its own counsel but the Company shall not be liable for any legal expenses of other counsel incurred by such Relevant Person in connection with such defence unless (i) the Company shall have failed to employ counsel reasonably satisfactory to the Relevant Person in a timely manner, or (ii) the Relevant Person shall have been advised by counsel that there are actual or potential or conflicting interests between the Company and the Relevant Person, including situations in which there are one or more legal defences available to the Relevant Person that are different from or additional to those available to the Company. The Company shall not consent to the terms of any compromise or settlement of any action defended by the Company in accordance with the foregoing without the prior consent of the Relevant Person, which consent shall not be unreasonably withheld. Each of the Company and the Relevant Person (each acting reasonably) shall, in the case of deciding not to settle or compromise on any action or proceedings, take into account the cost (both financial or otherwise) to both parties of continuing with such action or proceedings, the likely outcome of such action or proceedings and the adverse effects (both actual or potential) on the business interests of both parties by making such decision. No Relevant Person shall admit liability in respect of, or consent to the terms of any compromise or settlement of, any action with respect to which such Relevant Person may be entitled to indemnification hereunder without the prior consent of the Company, which consent shall not be unreasonably withheld. The Company agrees with the Relevant Persons that the reimbursement, indemnity and contribution obligations of the Company under this Schedule 10 will be in addition to any liability which the Company may otherwise have, and shall be binding on and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company, the Relevant Person, any such affiliate and any such person. The provisions of this Schedule 10 shall survive any termination of the Finance Documents. In this Schedule 10: "affiliate" of any person means any other person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such person; "controlling person" means any person who controls any other person; and "control" (including terms "controlling", "controlled by" and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management, policies or activities of a person, whether through the ownership of securities, by contract or agency or otherwise. SCHEDULE 11 Form of TEG Letter To: Sodexho Alliance, S.A. From: [___________________] as Agent Dated: [ ] 2001 Dear Sirs Sodexho Alliance, S.A. - Euro 1,720,000,000 and US$1,080,000,000 Facility Agreement dated [________] 2001 (the "Facility Agreement") We refer to the Facility Agreement. Terms defined in the Facility Agreement shall bear the same meaning in this letter unless otherwise defined in this letter. References to Clauses in this letter are references to Clauses in the Agreement. We confirm that: 1. this is the letter referred to in Clause 12.5 (Taux Effectif Global) of the Facility Agreement; 2. you acknowledge that, due to the fact that interest payable under the Facility Agreement is to be calculated on a floating rate basis by references to LIBOR or EURIBOR for Interest Periods selected by a Borrower, it is not possible to compute the effective global rate ("taux effectif global") for the lifetime of the Facilities; and 3. in order to comply with the provisions of Articles L313-1 and L313-2 of the French "Code de la Consommation", and only as an indication based on the assumptions described below, an example of calculation of the effective global rate would result in a rate for the Facilities (taux de periode) of [ ]%. The above rate is given on an indicative basis and on the basis (a) that drawdown for the full amount of the Facilities in the relative Base Currency has been made, (b) for the US Dollar denominated Facilities an Interest Period of three months in US Dollars has been chosen and that the US$ LIBOR rate of [ ]% per annum is applicable, (c) for the euro denominated Facilities an Interest Period of three months in euro has been chosen and that the EURIBOR rate of [ ]% per annum is applicable, (d) that the LIBOR/EURIBOR rate, expressed as an annual rate, is as fixed on [date], (e) repayments occur at contractual maturity and not earlier, (f) no term out option has been exercised, (g) that the US$/Euro exchange rate is 1 Euro = 0.[ ]US$, (h) that the Rating (as defined in Clause 11.2(g) (Margin and adjustments)) of the Company is BBB+, (i) of the various fees payable by you under the terms of the Facility Agreement and (j) that a Margin reduction of 10bps is assumed 364 days after the first Utilisation. Such rates shall not be binding on the Finance Parties. We should be grateful if you would confirm your acceptance of the terms of this letter by signing and returning to us the enclosed copy. This letter is designated a Finance Document. Yours faithfully. ................................................. [___________________] as Agent We agree to the above. ................................................. SODEXHO ALLIANCE, S.A. SCHEDULE 12 Material Subsidiaries 1. Sodexho Limited 2. Sodexho Marriott Services, Inc. 3. Sodexho Marriott Operations, Inc. SCHEDULE 13 Form of Letter of Credit To: [Beneficiary] [Address] [other relevant information] (the "Beneficiary") [Date] Irrevocable Standby Letter of Credit no.[___________________] At the request of [ ], [Issuing bank] (the "Issuing Bank") issues this irrevocable standby letter of credit ("Letter of Credit") in your favour on the following terms and conditions: 1. Definitions In this Letter of Credit: "Business Day" means a day (other than a Saturday or a Sunday) on which banks are open for general business in [London]./1/ "Demand" means a demand for a payment under this Letter of Credit in the form of the schedule to this Letter of Credit. "Expiry Date" means [___________________]. "Relevant Place" means [in the case of Societe Generale as Issuing Bank, 1221 Avenue of the Americas, New York, NY 10020, USA]. "Total L/C Amount" means [___________________]. 2. Issuing Bank's agreement (a) The Beneficiary may request a drawing or drawings under this Letter of Credit by giving to the Issuing Bank a duly completed Demand. A Demand must be received by the Issuing Bank by [____]p.m. ([London] time) on the Expiry Date at the Relevant Place. (b) Subject to the terms of this Letter of Credit, the Issuing Bank unconditionally and irrevocably undertakes to the Beneficiary that, within [ten] Business Days of receipt by it of a Demand, it must pay to the Beneficiary the amount demanded in that Demand. (c) The Issuing Bank will not be obliged to make a payment under this Letter of Credit to the Beneficiary if as a result the aggregate of all payments made by it under this Letter of Credit would exceed the Total L/C Amount. - -------------------------------------------------------------------------------- /1/ This may need to be amended depending on the currency of payment under the Letter of Credit. 3. Expiry (a) The Issuing Bank will be released from its obligations under this Letter of Credit on the date (if any) notified by the Beneficiary to the Issuing Bank as the date upon which the obligations of the Issuing Bank under this Letter of Credit are released. (b) Unless previously released under paragraph (a) above, on [___________]p.m. ([London] time) on the Expiry Date the obligations of the Issuing Bank under this Letter of Credit will cease with no further liability on the part of the Issuing Bank except for any Demand validly presented under the Letter of Credit that remains unpaid. (c) When the Issuing Bank is no longer under any further obligations under this Letter of Credit, the Beneficiary must return the original of this Letter of Credit to the Issuing Bank. 4. Payments All payments under this Letter of Credit shall be made in [___________________] and for value on the due date to the account of the Beneficiary specified in the Demand. 5. Delivery of Demand Each Demand shall be in writing, and, unless otherwise stated, may be made by letter, fax or telex and must be received in legible form by the Issuing Bank at its address and by the particular department or officer (if any) as follows: [in the case of Societe Generale as Issuing Bank, 1221 Avenue of the Americas, New York, NY 10020, USA]. 6. Assignment The Beneficiary's rights under this Letter of Credit may not be assigned or transferred. 7. UCP Except to the extent it is inconsistent with the express terms of this Letter of Credit, in which case it is subject to the laws of the State of New York (including, without limitation, the Uniform Commercial Code of the State of New York), this Letter of Credit is subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500. 8. Governing Law This Letter of Credit is governed by New York law. 9. Jurisdiction The courts of New York have exclusive jurisdiction to settle any dispute arising out of or in connection with this Letter of Credit. Yours faithfully, [Issuing Bank] By: SCHEDULE Form of Demand To: [ISSUING BANK] [Date] Dear Sirs Standby Letter of Credit no. [ ] issued in favour of [BENEFICIARY] (the "Letter of Credit") We refer to the Letter of Credit. Terms defined in the Letter of Credit have the same meaning when used in this Demand. 1. We certify that the sum of [___________________] is due [and has remained unpaid for at least [___________________] Business Days] [under [set out underlying contract or agreement]]. We therefore demand payment of the sum of [___________________]. 2. Payment should be made to the following account: Name: Account Number: Bank: 3. The date of this Demand is not later than the Expiry Date. Yours faithfully (Authorised Signatory) (Authorised Signatory) For [BENEFICIARY] The Company SODEXHO ALLIANCE, S.A. Address: 3, avenue Newton - 78180, Montigny-le-Bretonneux, France Fax No: + 33 1 30 85 5185 Attention: The Corporate Secretary By: Sian Herbert-Jones The Arranger CITIBANK INTERNATIONAL plc By: John Stafford GOLDMAN SACHS INTERNATIONAL By: Jacquelyn Titus SG INVESTMENT BANKING By: Francois Dupin The Original Lenders CITIBANK INTERNATIONAL plc By: John Stafford CITICORP USA, INC. By: Steven R. Victorin GOLDMAN SACHS INTERNATIONAL BANK By: Jacquelyn Titus SOCIETE GENERALE By: Francois Dupin The Agent SOCIETE GENERALE Address: DEFI/ATM/LEV Tour Societe Generale 17, cours Valmy 92972 Paris La Defense Cedex France Credit Matters: Attention: Jean-Francois Michard Tel: 33 1 42 13 68 37 Fax: 33 1 42 14 60 93 Operational Matters: Attention: Laurence Gaertner/ Maxime Seillier Tel: 33 1 42 13 77 71 / 33 1 42 13 41 11 Fax: 33 1 42 13 69 67 For all requests regarding Facility C, a copy is to go to: Societe Generale Loan Servicing Group 1221 Avenue of the Americas New York, NY 10020 USA Attention: Robert Preminger Tel: 1 212 278 5703 Fax: 1 212 278 6136 By: Francois Dupin The Issuing Bank SOCIETE GENERALE Address: 8 avenue des Olympiades 94727 Fontenay-sous-Bois France Attention: Patrick Lenfant Tel : 33 1 42 14 11 11 Fax : 33 1 42 14 10 14 By: Francois Dupin EX-99.(B)(2) 22 dex99b2.txt AMEND. LETTER TO REVOL. FACILITIES EXHIBIT 99.(b)(2) 27 April 2001 Sodexho Alliance, S.A. 3 Avenue Newton 78180 Montigny-le-Bretonneux France Attention: Sian Herbert-Jones Dear Sirs Amendment Letter We refer to the Euro 1,720,000,000 and US$1,080,000,000 facility agreement dated 6 April 2001 between Sodexho Alliance, S.A. (the "Company"), the Arrangers, Original Lenders, the Agent and the Issuing Bank (the "Facility Agreement"). 1 Interpretation 1.1 In this letter, "Effective Date" means the date (being no later than 2 May 2001 or such other date as the Agent (with the prior agreement of the Original Lenders) may agree) on which the Agent has confirmed to the Company that the Agent has received the enclosed duplicate of this letter duly countersigned and dated on behalf of the Company. 1.2 Terms defined and references construed in the Facility Agreement (but not defined or construed in this letter) have the same meaning and construction in this letter. 1.3 This letter is a Finance Document. 2 Amendments With effect from the Effective Date: 2.1 The definitions of "Total Commitments" and "Total Facility A Commitments" in Clause 1.1 (Definitions) of the Facility Agreement shall be amended by deleting the reference to "Euro 1,720,000,000" and inserting therein a reference to "Euro 2,040,000,000". 2.2 The definition of "Total Facility A2 Commitments" in Clause 1.1 (Definitions) of the Facility Agreement shall be amended by deleting the reference to "Euro 1,050,000,000" and inserting therein a reference to "Euro 1,370,000,000". 2.3 The references to "Euro 1,720,000,000" on the cover sheet of the Facility Agreement and in the headings to Parts I, II and III of Schedule 3, Schedule 5, Schedule 6, Schedule 7 and Schedule 11 shall be replaced by references to "Euro 2,040,000,000". 2.4 The references to "Euro 350,000,000", "Euro 350,000,000", "Euro 350,000,000" and "Euro 1,050,000,000" in the column headed "Facility A2 Commitment" in Schedule 1 (The Original Lenders) of the Facility Agreement shall be deleted and replaced in the following order with references to "Euro 456,666,666.67", "Euro 456,666,666.67", "Euro 456,666,666.66" and "Euro 1,370,000,000" respectively. 2.5 Clause 11.2 (Margin and adjustment) of the Facility Agreement shall be amended: (a) by replacing the table set out in paragraph (b) thereof with the following: Rating Margin (bps p.a.) Facility A Facilities B and C A- (or higher) 50 60 BBB+ 60 70 BBB 70 80 BBB- 90 100 BB+ (or lower) 140 165 (b) in line 2 of paragraph (c)(i) by deleting the reference to "10 basis points" and inserting therein a reference to "15 basis points" (c) in the final line of paragraph (c)(i) by deleting the reference to "Euro 750,000,000" and inserting therein "Euro 900,000,000". 2.6 The following additional paragraph shall be inserted immediately after paragraph (e) of clause 27.3 (Additional Guarantors) of the Facility Agreement: "(f) If any amounts remain outstanding under the Kodak Existing Facility and/or the SMO Credit Agreement on 31 July 2001, SMO shall by no later 60 days from the date of the first drawing under Facility A2 become an Additional Guarantor and the SMO Guarantee shall be given by no later than 60 days from the date of the first drawing under Facility A2, notwithstanding that SMO may not be an Additional Borrower." 3 Representations and Warranties By countersigning a copy of this letter, the Company represents and warrants to and for the benefit of the Finance Parties that the Repeating Representations are true in all material respects on the date of such countersignature by reference to the circumstances existing on that date and will be true in all material respects on the Effective Date by reference to the then existing circumstances 4 Miscellaneous 4.1 Save as expressly provided in this letter, the Facility Agreement remains and shall continue in full force and effect. 4.2 With effect from the Effective Date, this letter and the Facility Agreement shall be read and construed together and be deemed to constitute one and the same instrument. 5 Governing Law This letter shall be governed by English law and the provisions of clause 40 (Enforcement) of the Facility Agreement shall apply to this letter. Please confirm your agreement by countersigning, dating and returning to us a copy of this letter. Yours faithfully Citibank International plc as Arranger and Original Lender By: Citicorp USA, Inc. As Original Lender By: Goldmans Sachs International as Arranger and Original Lender By: SG Investment Banking as Arranger By: Societe Generale as Agent, Issuing Bank and Original Lender By: Accepted and agreed to as of on ________ April 2001 Sodexho Alliance, S.A. By:.......................... EX-99.(C)(2) 23 dex99c2.txt MATERIALS PRESENTED BY UBS WARBERG Exhibit 99.(c)(2) Contact information - -------------------------------------------------------------------------------- UBS WARBURG LLC 1999 Avenue of the Stars, 15/th/ Floor Los Angeles, CA 90067 Tel: 310-556-6700 www.ubswarburg.com UBS Warburg LLC is a subsidiary of UBS AG UBS Warburg is a business group of UBS AG [LOGO] UBS Warburg [LOGO] UBS Warburg Project Showtime Presentation to the Special Committee of the Board of Directors May 1, 2001 MAY 2001 ________________________________________________________________________________ This board presentation was prepared by UBS Warburg LLC solely for the benefit and use of the special committee of the board of directors of Sodexho Marriott Services, Inc. The board presentation was delivered to the Special Committee on May 1, 2001, and is current only as of that date. The board presentation is subject to, and should be reviewed in conjunction with, the assumptions, qualifications and limitations set forth in the text of the written fairness opinion, dated May 1, 2001, delivered by UBS Warburg LLC to the special committee and included as Exhibit (c)(1) to this Schedule TO. [LOGO] UBS Warburg Contents - -------------------------------------------------------------------------------- SECTION 1 TRANSACTION OVERVIEW ____________________________________ 1 SECTION 2 Magic Overview __________________________________________ 5 SECTION 3 Valuation Analyses ______________________________________ 14 [LOGO] UBS Warburg Transaction Overview - ------------------------------------------------------------------------------- SECTION 1 [LOGO] UBS Warburg Transaction History - -------------------------------------------------------------------------------- . Magic ("Magic" or the "Company") was formed in March 1998 through the merger of the North American food service operations of Alcindor and the food service operations of Magic International . As a result of the merger, Alcindor owned 48% (excluding the dilutive effect of options outstanding), the Magic family controlled 9% and former Magic International shareholders owned the remaining 43% . In conjunction with the merger, Alcindor and Magic entered into several agreements whereby Alcindor agreed to provide a variety of operational services for Magic for a fee, as well as guarantee a substantial portion of Magic's debt . In order to maintain the tax free status of the distribution of certain businesses to shareholders of Magic International, Alcindor and Magic International entered into an agreement whereby Alcindor was prohibited from increasing its ownership stake to 50% or more until 3/27/01 . Magic stock began trading on 3/23/98 at $24.00 per share and subsequently traded down to an all-time low of $10.31 on 2/15/00 as a result of poor operating results . In anticipation of the expiration of its three year standstill obligation, on 1/25/01, Alcindor announced a bid of $27.00 per share in cash for the 54.2% of the fully-diluted shares of Magic outstanding that it does not already own /1/ . On 1/29/01, the Board of Directors of Magic appointed a Special Committee to evaluate the Alcindor proposal . On 2/27/01, the Company announced the appointment of UBS Warburg ("UBSW") to advise the Special Committee with regard to the Alcindor proposal . On 4/25/01, Alcindor agreed to pay $32.00 per share in cash for the 54.7% of the fully-diluted shares of Magic it did not already own /1/ . Alcindor plans to fund the cash purchase price through a combination of debt and equity offerings with no financing contingency NOTE: 1 Percentage of fully-diluted shares not owned by Alcindor is 54.2% @ $27.00 and 54.7% @ $32.00 [LOGO] UBS Warburg Deal Overview - --------------------------------------------------------------------------------
Initial Alcindor Current Alcindor Proposal One Month One Day Proposal Market ----------------------------- Valuation Prior Prior (100.0%) 4/27/01 (54.7%) (100.0%) - -------------------------------------------------------------------------------------------------------------------------------- Stock Price ($) 20.81 24.88 27.00 29.53 32.00 32.00 Premium to One Day Prior Stock Price (%) -- -- 8.5 18.7 28.6 28.6 Premium to One Month Prior Stock Price (%) -- 19.6 29.7 41.9 53.8 53.8 Equity Value ($mm) 1,340 1,620 1,767 1,943 1,158 2,117 Total Enterprise Value ($mm) 2,210 2,490 2,637 2,813 -- 2,987 Total Enterprise Value as a Multiple of LTM: /1/ Revenue ($4,863 mm) (x) 0.5 0.5 0.5 0.6 -- 0.6 EBITDA ($296 mm) (x) 7.5 8.4 8.9 9.5 -- 10.1 EBIT ($209 mm) (x) 10.6 11.9 12.6 13.5 -- 14.3 Stock Price Multiple of: CY2001E Cash EPS ($1.68) (x) 12.4 14.8 16.1 17.6 -- 19.1 - --------------------------------------------------------------------------------------------------------------------------------
________________________________________ NOTE: /1/ Latest Twelve Months as of 3/2/01 [LOGO OF UBS WARBURG] Section 1: Transaction Overview 3 Summary of Merger Agreement - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Form of Transaction: . Tender Offer by Alcindor Acquisition Corporation, a Delaware corporation controlled by Alcindor Merger Consideration: . $32.00 per share in cash Tax Structure: . Fully taxable to selling shareholders Accounting Treatment: . Purchase accounting Significant Conditions and Other Terms: . Special Committee and Board of Directors approval of the Tender Offer . Tender of the requisite number of common shares of Magic to Alcindor Acquisition Corporation to give Alcindor majority ownership of common shares outstanding on a fully diluted basis . Customary conditions relating to regulatory approvals and no material adverse effect . Non-solicitation of other offers . Limited representations and warranties by Magic due to existing ownership stake by Alcindor . [Alcindor makes certain representations to the effect that the transaction will not jeopardize the tax-free nature of the 1998 spin-off] Termination Conditions: . Customary termination conditions and provisions including: - Termination by mutual consent - Termination by either Magic or Alcindor, if the merger is not consummated on or before [_] - Termination by Alcindor, if (i) the Board of Directors fails to recommend the Tender Offer; (ii) Magic enters into a different Acquisition Proposal (as defined in the Agreement); or (iii) Alcindor terminates the Tender Offer because of a failure of any conditions set forth in Annex I of the Agreement - Termination by Magic, if before Alcindor accepts for payment shares tendered in the offer (i) the Board of Directors advises the Company to enter into a Superior Proposal (as defined in the Agreement); or (ii) the offer expires without the requested number of shares being tendered to give Alcindor a majority ownership on a fully diluted basis - Termination fee for Alcindor of [_] million, if (i) the Company terminates due to a third party Acquisition Proposal; (ii) Alcindor terminates because the Magic Board of Directors fails to recommend the Tender Offer or enters into a different Acquisition Proposal; or (iii) each of the following occurs: the Tender Offer expires without sufficient shares being tendered to Alcindor, the Merger Agreement is terminated because the merger is not consummated by [_], 2001, a different Acquisition Proposal is received during that period, and, within 12 months following termination, Magic enters into [and consummates] a different Acquisition Proposal
- -------------------------------------------------------------------------------- [LOGO OF UBS WARBURG] Section 1: Transaction Overview 4 Magic Overview - -------------------------------------------------------------------------------- SECTION 2 [LOGO OF UBS WARBURG] Summary of Magic Actual and Projected Financial Results - --------------------------------------------------------------------------------
53 WEEKS 53 WEEKS 2000-2005 Fiscal Years ending September 1/st/ 1999A 2000A LTM 2001E 2002E 2003E 2004E 2005E CAGR (%) - ------------------------------------------------------------------------------------------------------------------------- Operating Summary Revenue ($mm) 4,502 4,734 4,863 4,970 5,244 5,559 6,011 6,263 5.8 EBIT ($mm) 187 196 209 215 235 269 299 338 11.5 EBITDA ($mm) 272 280 296 300 320 355 390 429 8.9 Interest Expense ($mm) 87 84 80 78 74 71 54 43 - Net Income ($mm) 60 63 74 78 92 115 143 174 22.5 Capital Expenditures ($mm) 72 66 66 82 99 96 98 103 - FY EPS ($)/1/ 0.94 1.00 1.16 1.21 1.42 1.76 2.17 2.62 21.2 FY Cash EPS ($) 1.35 1.41 1.56 1.61 1.81 2.13 2.53 2.97 16.0 Margins Operating Margin (%) 6.7 6.7 6.9 6.9 7.2 7.5 7.6 8.1 - EBIT Margin (%) 4.2 4.1 4.3 4.3 4.5 4.8 5.0 5.4 - EBITDA Margin (%) 6.0 5.9 6.1 6.0 6.1 6.4 6.5 6.8 - Net Income Margin (%) 1.3 1.3 1.5 1.6 1.8 2.1 2.4 2.8 - Capital Expenditures (%) 1.6 1.4 1.4 1.6 1.9 1.7 1.6 1.6 - Growth Rates/2/ Revenue (%) - 7.2 - 5.0 5.5 6.0 6.1 6.2 - EBITDA (%) - 4.9 - 7.1 6.7 10.9 7.8 12.1 - Net Income (%) - 7.0 - 23.8 17.9 25.0 22.0 24.0 - - -------------------------------------------------------------------------------------------------------------------------
NOTES: /1/ Management earnings estimates /2/ Adjusted to reflect the additional week in fiscal 1999 and 2004 [LOGO OF UBS WARBURG] Section 2: Magic Overview 6 Historical Balance Sheet - ---------------------------------------------------------------------------- ($mm) 1999 2000 3/2/01 - ---------------------------------------------------------------------------- Cash 48 54 70 Accounts Receivable 445 463 515 Inventories 60 67 67 PP&E 85 96 95 Intangible Assets 535 497 478 Other Assets 174 187 196 - ---------------------------------------------------------------------------- TOTAL ASSETS 1,347 1,364 1,421 - ---------------------------------------------------------------------------- Accounts Payable and Current Liabilities 585 684 728 Other Long Term Liabilities 113 112 110 LONG TERM DEBT Revolving Credit Facility 52 -- -- Secured Credit Facility 430 350 310 Guaranteed Credit Facility 620 620 620 Senior Debt 6 6 6 Other 5 5 4 - ---------------------------------------------------------------------------- TOTAL DEBT 1,113 981 940 - ---------------------------------------------------------------------------- Convertible Sub. Debt 30 -- -- Shareholders' Equity (494) (413) (357) - ---------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,347 1,364 1,421 - ---------------------------------------------------------------------------- [LOGO] UBS Warburg Section 2: Magic Overview 7 Magic Stock Price History--Last Twelve Months - ------------------------------------------------------------------------------ APRIL 27, 2000 TO APRIL 27, 2001 [PERFORMANCE GRAPH APPEARS HERE] [Graph depicting the daily closing stock price and the daily trading volume of Magic from April 27, 2000 to April 27, 2001. The graph has annotations A through G as described below. The graph also has a line at $32.00 per share for the proposed purchase price which demonstrates that the offer price is higher than any closing stock price over the time period presented.] SOURCE: Factset
Annotations Selected Statistics/1,/2/ ($) - -------------------------------------------------------------------- ------------------------------------------- A Reported Q3 results, including moderate growth (7/14/00) B Reported FY 2000 results (11/13/00) Pre-announcement Price (1/24/01) 24.88 C Reported Q1 results (1/12/01) 30 Day Average 22.58 D Alcindor announced bid of $27.00 (1/25/01) 90 Day Average 20.90 E UBS Warburg announced as advisor to Special Committee (2/27/01) 52 Week Average 16.31 F Announced the award of 2 Marine Corps Contracts (3/15/01) 52 Week High 25.69 G Reported Q2 results (4/12/01) 52 Week Low 10.31 - -------------------------------------------------------------------- ------------------------------------------- NOTES: 1 Statistics for the periods denoted prior to the announcement date, January 25, 2001 2 Closing prices
[LOGO] UBS Warburg Section 2: Magic Overview 8 Magic Price Performance Since the 1998 Transaction - -------------------------------------------------------------------------------- [PERFORMANCE GRAPH APPEARS HERE] [Graph depicting the daily closing stock price and the daily trading volume of Magic from March 23, 1998 to April 27, 2001. The graph has annotations showing the all-time high stock price of $32.69 on 7/10/98 and the all-time low stock price of $10.31 on 2/15/00. The graph also has a line at $32.00 per share for the proposed purchase price which demonstrates that the offer price is higher than any closing stock price during the time period presented except for a few days during the middle of 1998 and early 1999.] [LOGO] UBS Warburg Section 2: Magic Overview 9 Magic Relative Price Performance - -------------------------------------------------------------------------------- APRIL 26, 2000 TO APRIL 27, 2001 [PERFORMANCE GRAPH APPEARS HERE] [Graph depicting the relative price performance of Magic and Alcindor to an index of comparable companies consisting of ABM, Autogrill, Chemed, Compass, Elior, ISS, Rentokil Initial and ServiceMaster from April 26, 2000 to April 27, 2001. The graph shows that Magic and Alcindor have outperformed the comparable companies index beginning in October 2000. The graph also shows that Magic outperformed the comparable companies index by a wide margin since the announcement by Alcindor of its proposal to purchase the remaining shares of Magic on January 25, 2001.] SOURCE: FactSet NOTE: Comparable Companies Index consists of: ABM, Autogrill, Chemed, Compass, Elior, ISS, Rentokil Initial and ServiceMaster Magic Trading Summary Prior to Announcement [LOGO] UBS Warburg Section 2: Magic Overview 10 Magic Trading Summary Prior to Announcement - -------------------------------------------------------------------------------- [Four graphs depicting how many shares traded at various per share stock prices during specific time periods prior to the announcement by Alcindor of its proposal to purchase the remaining shares of Magic on January 25, 2001. The tables below describe the information in those graphs.] Graph 1 One Month (12/26/00-1/24/01) Stock Price Range Volume (`000s) % of Total Volume ----------------- -------------- ----------------- - ------------------------------------------------------------------------------- $20-$22 992 33.5% - ------------------------------------------------------------------------------- $22-$24 456 15.4% - ------------------------------------------------------------------------------- $24-$26 1,512 51.1% - ------------------------------------------------------------------------------- Graph 2 Three Months (10/23/00-1/24/01) Stock Price Range Volume (`000s) % of Total Volume ----------------- -------------- ----------------- - ------------------------------------------------------------------------------- $18-$20 808 14.0% - ------------------------------------------------------------------------------- $20-$22 2,915 50.5% - ------------------------------------------------------------------------------- $22-$24 536 9.3% - ------------------------------------------------------------------------------- $24-$26 1,512 26.2% - ------------------------------------------------------------------------------- Graph 3 Six Months (7/24/00-1/24/01) Stock Price Range Volume (`000,000s) % of Total Volume ----------------- ------------------ ----------------- - ------------------------------------------------------------------------------- $14-$16 0.3 0.3% - ------------------------------------------------------------------------------- $16-$18 29.1 33.4% - ------------------------------------------------------------------------------- $18-$20 8.1 9.3% - ------------------------------------------------------------------------------- $20-$22 29.2 33.5% - ------------------------------------------------------------------------------- $22-$24 5.4 6.2% - ------------------------------------------------------------------------------- $24-$26 15.1 17.4% - ------------------------------------------------------------------------------- Graph 4 One Year (1/24/00-1/24/01) Stock Price Range Volume (`000,000s) % of Total Volume ----------------- ------------------ ----------------- - ------------------------------------------------------------------------------- $10-$12 47.3 26.2% - ------------------------------------------------------------------------------- $12-$14 10.4 5.8% - ------------------------------------------------------------------------------- $14-$16 25.9 14.4% - ------------------------------------------------------------------------------- $16-$18 36.5 20.2% - ------------------------------------------------------------------------------- $18-$20 10.9 6.0% - ------------------------------------------------------------------------------- $20-$22 29.2 16.1% - ------------------------------------------------------------------------------- $22-$24 5.4 3.0% - ------------------------------------------------------------------------------- $24-$26 15.1 8.4% - ------------------------------------------------------------------------------- [LOGO] UBS Warburg Section 2: Magic Overview 11 Ownership Summary - ------------------------------------------------------------------------------- Ownership Shares (`000S) % - ------------------------------------------------------------------------------- Alcindor 29,950 47.1 Transamerica Corp. 7,486 11.8 Other: Bank of America Corp. 2,078 3.3 Goldman Sachs Group 1,800 2.8 Fidelity 1,347 2.1 Massachusetts Financial 1,112 1.8 Barclays Bank 636 1.0 Vanguard Group 415 0.7 Oppenheimer International 282 0.5 State Street Corp. 238 0.4 Other Holders 18,150 28.6 - ------------------------------------------------------------------------------- Total 63,537/1/ 100.0 - ------------------------------------------------------------------------------- SOURCE: Magic Proxy (12/1/00), 10-Q (4/12/00), CDA Spectrum /1/ Reflects basic shares outstanding [LOGO] UBS Warburg Section 2: Magic Overview 12 Valuation Analyses - ------------------------------------------------------------------------------- SECTION 3 [LOGO] UBS Warburg Valuation Techniques - -------------------------------------------------------------------------------- UBS Warburg used the following methodologies to determine the appropriate Magic valuation Methodology Description - ------------------------------------------------------------------------------- . Comparable Companies Analysis Compares trading multiples (Total Enterprise Value/EBITDA and Price/Cash EPS) of companies similar to Magic to the proposed purchase price multiples for the Alcindor/Magic merger . Comparable Transactions Analysis Compares purchase price multiples of similar transactions to the proposed multiples for the Alcindor/Magic merger . Premiums Paid Analysis All Deals: Compares stock price premiums paid to other companies one day, one week and one month prior to transaction announcement to the proposed premiums for the Alcindor/Magic merger Minority Squeeze-Out Deals: Compares stock price premiums paid for companies that were acquired in minority squeeze-outs to the proposed premiums for the Alcindor/Magic merger Control Deals: Compares stock price premiums paid to acquire more than 50% of companies where the ownership before the transaction was less than 50% but greater than 5% to the proposed premiums for the Alcindor/Magic merger . DISCOUNTED CASH FLOW ANALYSIS Implies valuation ranges for Magic by taking free cash flow estimates and arriving at a terminal value by either (i) growing the free cash flow estimates by a growth rate into perpetuity and discounting them to the terminal year; or (ii) using a multiple of EBITDA - -------------------------------------------------------------------------------- [LOGO] UBS Warburg Section 3: Valuatior Analyses 14 Valuation Issues - -------------------------------------------------------------------------------- There are several issues that need to be considered when evaluating the Alcindor proposal, which are not entirely reflected in the valuation analyses Methodology Issues - -------------------------------------------------------------------------------- . Comparable Company Analysis - Magic has lower EBITDA margins and lower expected revenue growth than its comparables - Magic operates in the relatively mature North American market, whereas many of the highly valued comparables operate in the faster growing European market - Unlike many of the comparables, Magic is not a global business, it operates solely in the North American market - Many of the higher multiple comparables trade on foreign exchanges . Comparable Transaction Analysis - Alcindor already exercises de facto control over Magic's operations. Alcindor assists the Company in purchasing activities, catering and site support services, marketing, management and administration, legal and financial matters, human relations, communications and cash management - There are no expected material synergies as a result of this transaction . Premiums Paid Analysis - The pre-announcement stock prices may have been impacted by speculation of an impending offer from Alcindor for the remaining interest in Magic - Given Alcindor's current ownership position, minority squeeze out premiums may be more applicable . Discounted Cash Flow Analysis - Alcindor's guarantee of a substantial portion of Magic's debt results in an artificially low cost of debt - ------------------------------------------------------------------------------- [LOGO] UBS Warburg Section 3: Valuatior Analyses 15
Comparable Company Analysis - ----------------------------------------------------------------------------------------------------------------------------------- Stock Total Equity Debt / LTM Company Name Price Enterprise Market Value Total LTM Revenue LTM Ebitda Ebitda Margin (4/27/01) Value ($MM) Enterprise ($MM) ($MM) (%) ($) ($MM) Value (%) - ----------------------------------------------------------------------------------------------------------------------------------- ABM Industries 33.00 878.9 834.9 4.5 1,849.4 101.7 5.5 Autogrill 11.13 3,975.9 2,831.4 28.3 2,837.1 348.1 12.3 Chemed 34.31 437.7 363.2 18.9 500.7 59.3 11.8 Compass Group/1/ 7.69 18,177.2 17,087.3 5.8 11,821.6 1,183.4 10.0 Elior 12.32 1,587.8 1,266.6 35.5 1,606.0 135.6 8.4 ISS 58.29 2,849.2 2,329.6 18.2 3,584.4 230.2 6.4 Rentokil Initial 2.73 6,698.9 6,212.8 23.0 3,801.7 887.3 23.3 ServiceMaster 10.14 4,713.8 3,057.9 37.3 5,970.6 574.6 9.6 MEAN/3/ 9.8 MEDIAN 9.8 HIGH 23.3 LOW 5.5 Magic 32.00 2,986.7 2,116.7 31.5 4,863.0 296.0 6.1 Alcindor 49.31 7,682.1 6,647.3 23.2 9,577.2 645.4 6.7 - ----------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------- TEV / Equity Value / --------------------- Company Name LTM Cy2001e Cy2002e I/B/E/S Growth Ebitda Cash EPS Cash EPS Rate (%) (X) (X)/2/ (X)/2/ - ------------------------------------------------------------------------- ABM Industries 8.6 13.0 11.8 12.0 Autogrill 11.4 13.7 12.2 14.6 Chemed 7.4 11.6 -- 22.5 Compass Group/1/ 15.4 18.3 17.0 14.7 Elior 11.7 17.8 -- -- ISS 12.4 20.6 17.7 (2.5) Rentokil Initial 7.5 14.3 13.1 9.9 ServiceMaster 8.2 12.4 11.7 12.0 MEAN/3/ 10.0 14.9 13.5 12.6 MEDIAN 10.0 14.0 12.7 12.0 HIGH 15.4 20.6 17.7 22.5 LOW 7.4 11.6 11.7 (2.5) Magic 10.1 19.1 16.7 14.5 Alcindor 11.9 28.0 25.6 10.5 - ------------------------------------------------------------------------
NOTES: /1/ Pro forma for acquisition of Morrison Management Services and Selecta Group and for sale of Hotel Group for an estimated $5.0 billion after tax from MSDW research /2/ I/B/E/S earnings estimates with the exception of Compass (MSDW), Autogrill (Merrill), ISS (Dresdner), Magic (Management) and Alcindor (UBSW) all adjusted to exclude amortization of goodwill /3/ Excludes high and low [LOGO] UBS Warburg Section 3 Valuator Analyses 16
Comparable Company Business Descriptions - ------------------------------------------------------------------------------------------------------------------------------------ Company Business Description - ------------------------------------------------------------------------------------------------------------------------------------ Abm Industries Largest public facility services contractor with over 60,000 employees. Provides air conditioning, elevator, engineering, janitorial and parking and security services to thousands of customers throughout North America. Autogrill Operator of restaurants along highways and in airports throughout Europe and America. Also operates self service restaurants across Italy. Chemed Provides plumbing and drain cleaning services through Roto-Rooter Inc. Also offers home healthcare services and air-conditioning repair. Compass Group International food service operator, providing contract and concession catering services to businesses, airports, healthcare institutions, schools and universities. Elior Supplier of food to restaurants located near highways, at airports, in rail stations, in schools and in hospitals. Services over 7,400 restaurants in France, the U.K., the Netherlands and Italy. ISS Provider of cleaning and maintenance services primarily in Europe for the food processing and healthcare sectors. Also provides landscaping, security, linen and catering services. Rentokil Initial Services include pest control, landscaping, hospital waste disposal, cleaning services and facilities management operations. Also provides staffing, delivery and security services. Servicemaster Provides housecleaning, pest control, and landscaping services. Also supplies facilities management, housekeeping and food services to healthcare and education facilities. - ------------------------------------------------------------------------------------------------------------------------------------
[LOGO] UBS Warburg Section 3 Valuator Analyses 17 Comparable Transaction Analysis
- --------------------------------------------------------------------------------------------------------------------------------- Implied Target Target TEV / Equity / Enterprise LTM LTM LTM LTM Cash Date Transaction Value Revenue EBITDA EBITDA Earnings Announced Target Name Acquiror Name Consideration ($MM) ($MM) ($MM) (X) (X) /1/ - --------------------------------------------------------------------------------------------------------------------------------- 3/29/01 LSG SkyChefs /2/ Lufthansa Cash 2,662.5 -- 186.3 14.3 -- 2/12/01 Selecta Group /2/ Compass Group Cash 775.3 510.4 82.7 9.4 21.4 2/6/01 Morrison Mgmt. Specialists Compass Group Cash 633.6 509.3 36.2 17.5 33.4 12/7/00 Henkel-Ecolab /2/ Ecolab Cash/Stock 969.4 900.2 127.4 7.6 18.2 5/17/00 Compass Group Granada Group Stock 10,096.7 8,138.4 687.3 17.6 3 36.3 7/26/99 Host Marriott Services Autogrill Cash 947.1 1,436.6 132.2 7.2 28.7 11/2/98 LandCare ServiceMaster Stock 279.7 304.0 31.0 9.0 14.6 MEAN /4/ 11.6 25.4 MEDIAN 9.4 25.1 HIGH 17.6 36.3 LOW 7.2 14.6 1/24/01 Magic Alcindor Cash 2,986.7 4,863.0 296.0 10.1 21.2 Premium to Stock Price (%) -------------------------------- One One One Date Day Week Month Announced Target Name Prior Prior Prior - ------------------------------------------------------------------------ 3/29/01 LSG SkyChefs /2/ -- -- -- 2/12/01 Selecta Group /2/ 30.1 33.3 38.5 2/6/01 Morrison Mgmt. Specialists 20.8 21.0 25.6 12/7/00 Henkel-Ecolab /2/ -- -- -- 5/17/00 Compass Group 3.5 (11.4) (8.9) 7/26/99 Host Marriott Services 61.5 78.7 111.8 11/2/98 LandCare 30.4 30.4 60.5 MEAN /4/ 27.1 28.2 41.5 MEDIAN 30.1 30.4 38.5 HIGH 61.5 78.7 111.8 LOW 3.5 (11.4) (8.9) 1/24/01 Magic 28.6 30.9 53.8 - ------------------------------------------------------------------------
NOTES: /1/ Excludes goodwill amortization /2/ Pending /3/ 17.6x TEV/EBITDA excludes expected synergies of $112 million, 14.7x TEV/EBITDA including the synergies /4/ Excludes high and low [LOGO] UBS Warburg Section 3 Valuator Analyses 18
Comparable Transaction Target Business Descriptions - ----------------------------------------------------------------------------------------------------------------------------------- Company Name Business Description - ----------------------------------------------------------------------------------------------------------------------------------- Compass Group International food service operator, providing contract and concession catering services to businesses, airports, healthcare institutions, schools and universities. Henkel-Ecolab European joint venture between Ecolab and Henkel. Provider of cleaning products and services. Host Marriott Services Operates food, beverage, and merchandise concessions at US airports, toll road travel plazas, shopping malls and entertainment venues. Landcare Offers landscape maintenance, landscape installation and tree services to the commercial and institutional markets. LSG SkyChefs The world's largest inflight catering alliance. Previously jointly owned by Lufthansa and Onex Corp. Morrison Mgmt. Specialists Second largest outsourcing provider in the healthcare and senior living industries. Only national publicly held company that specializes exclusively in providing food, nutrition and dining services to the healthcare and senior living markets. Selecta Group Largest operator of vending machines in Europe. The company sells and leases machines as well as offering repair and maintenance services. - ------------------------------------------------------------------------------------------------------------------------------------
[LOGO] UBS Warburg Section 3 Valuator Analyses 19
Premiums Paid Analysis/1/ - ------------------------------------------------------------------------------------------------------------------------------------ Completed Transactions Premium to Stock Price (%) --------------------------------------------------- One Day One Week One Month Number of Deals Prior Prior Prior - ------------------------------------------------------------------------------------------------------------------------- Deals Announced in 2001 Cash Deals 27 20.0 23.2 40.7 Other Deals 6 42.4 51.9 54.7 All Deals 33 24.3 28.4 43.2 Deals Announced in 2000 Cash Deals 104 35.2 41.3 46.0 Other Deals 69 33.5 38.1 42.5 All Deals 173 34.5 40.0 44.6 Deals Announced in 1999 Cash Deals 116 29.2 33.8 40.9 Other Deals 58 34.9 46.0 58.7 All Deals 174 31.1 37.9 46.8 Combined Averages Cash Deals 247 30.8 35.8 43.0 Other Deals 133 34.5 42.2 50.1 All Deals 380 32.1 38.0 45.5 Premium of Offer Price to Magic Stock Price/2, 3/ 28.6 30.9 53.8 - -------------------------------------------------------------------------------------------------------------------------
NOTES: /1/ Excludes financial company targets, transactions involving less than 10% of the target and targets of less than $50 million in equity value /2/ Based on Magic one day prior, one week prior, and four weeks prior stock prices of $24.88, $24.44, and $20.81, respectively /3/ Assumes offer price of $32.00 per share [LOGO] UBS Warburg Section 3: Valuation Analyses 20
Discounted Cash Flow Analysis - ---------------------------------------------------------------------------------------------- ($mm unless specified otherwise) 2001 2002 2003 2004 2005 - ---------------------------------------------------------------------------------------------- EBIT 215 235 269 299 338 Less: Tax Effect @ 43.0% (92) (101) (116) (129) (145) Plus: Depreciation and Amortization 85 85 86 91 91 Less: Capital Expenditures (82) (99) (96) (98) (103) Change in Working Capital 33 24 22 30 28 Unlevered Free Cash Flows 159 144 165 193 209 - ----------------------------------------------------------------------------------------------
Implied Stock Price Sensitivity Analysis/1/ - -------------------------------------------------------------------------------- Terminal Growth Rate - -------------------------------------------------------------------------------- 2.5% 3.0% 3.5% ---------------------------- Weighted Average Cost of Capital 9.0% 29.26 32.12 35.51 9.5% 26.13 28.55 31.36 10.0% 23.43 25.48 27.85 - -------------------------------------------------------------------------------- Terminal EBITDA Multiple - -------------------------------------------------------------------------------- 8.0x 9.0x 10.0x ---------------------------- Weighted Average Cost of Capital 9.0% 30.65 34.87 39.08 9.5% 29.75 33.87 37.99 10.0% 28.87 32.90 36.93 - -------------------------------------------------------------------------------- NOTE: /1/ Calculated using 66.1 million fully-diluted shares outstanding based on proposed Magic acquisition price of $32.00 [LOGO] UBS Warburg Section 3: Valuation Analyses 21
Weighted Average Cost of Capital Analysis - ------------------------------------------------------------------------------------------------------------------------------------ - ---------------------------------------------------------------------------------------------------------- Market Adjusted Value Equity of Equity Total Debt Tax Rate Unlevered Company Name Beta/1/ ($mm) ($mm) (%) Beta /2/ - ---------------------------------------------------------------------------------------------------------- ServiceMaster 0.40 3,045.6 1,756.8 40.0 0.25 ABM Industries 0.40 758.3 39.5 40.0 0.38 Autogrill 0.72 2,860.1 1,126.6 48.0 0.52 Chemed 0.47 335.6 82.6 40.0 0.38 ISS 0.88 2,325.7 519.6 32.0 0.72 - ---------------------------------------------------------------------------------------------------------- Mean 0.45 Median 0.38 High 0.72 Low 0.25 - ----------------------------------------------------------------------------------------------------------
Weighted Market Value Unlevered Equity Cost Debt Cost Average Implied Of Equity Total Debt Tax Rate Industry Of Capital Of Capital Cost of Equity Beta ($mm) ($mm) (%) Beta (%)/3/ (%) Capital (%) - ------------------------------------------------------------------------------------------------------------------------------------ Magic/4/ 0.67 1,925.8 940.0 43.0 0.45 11.56 6.81 9.04 Compass Group 0.48 17,214.2 1,058.8 27.0 0.45 9.53 6.65 9.26 Elior/4/ 0.65 1,291.8 563.9 36.0 0.45 11.37 5.47 8.98 ServiceMaster/4/ 0.71 3,045.6 1,756.8 40.0 0.45 11.88 9.11 9.53 Alcindor 0.57 6,440.6 1,786.0 40.0 0.45 10.30 6.75 8.94 - ------------------------------------------------------------------------------------------------------------------------------------
NOTES: /1/ Adj. Beta = 0.33 + 0.67*Raw Beta. Raw Beta calculated using weekly data from 4/30/99 - 4/20/01 against local market index /2/ Beta Unlevered = Beta Equity / [1 + (D / E) ] /3/ Equity Cost of Capital = Risk Free Rate (5.71%) + Equity Beta * Market Risk Premium (8.0%) /4/ 0.5% mid-cap premium added to Equity Cost of Capital [LOGO] UBS Warburg Section 3: Valuation Analyses 22 EX-99.(C)(3) 24 dex99c3.txt MATERIALS PRES. BY GOLDMAN SACHS 1/19/01 EXHIBIT 99.(c)(3) - -------------------------------------------------------------------------------- Highly Confidential Project Mars Discussion Materials Goldman Sachs International January 19, 2001 - -------------------------------------------------------------------------------- Table of Contents Valuation and Approach I II Financing Appendix Financing Appendix A Valuation Appendix B Executive Summary o Transactions, whether Control buyouts or Minority buyouts, tend to have initial premiums of approximately 15% o Ultimately an Acquirer can expect to be negotiated by the Special Committee to a higher price, typically on average of approximately 20% in the case of Minority buyouts and approximately 25% in the case of Control buyouts -- Special Committee exercising their fiduciary duty to get more value for shareholders being bought out -- 5% on average above initial premiums in Minority buyout transactions -- 10% on average above initial premiums in Control buyout transactions o Mars has seen substantial increase in its stock price since March. While a portion of the improvement may be due to speculation about a potential takeover bid, Mars' improved operating performance seems to be driving much of its share price appreciation o Given the price appreciation Mars shareholders have seen, we would suggest considering a premium modestly below typical initial premiums, with the expectations of needing to increase the premium somewhat during negotiations with the Special Committee Valuation Rationale Background o After going public at $24 per share in March, 1998, Mars' stock price rose to an all-time high of $32.69 in July, 1998 before beginning a generally steady decline that lasted through the first quarter of 2000 -- Three out of four quarters in FY1999 with disappointing or lackluster results -- Negative profit warning in December 1999 -- Decreased contract retention rates and sluggish sales growth -- Top management changes o Since March, 2000, Mars' stock price has steadily risen from an all-time low of $10.13 per share to over $24 as of January 17, 2001: -- Improved operating results -- Four straight quarters of exceeding analyst expectations -- Potential speculation about a possible takeover bid from Milky Way o The top 25 US institutional shareholders, representing 22% of Mars shares outstanding, purchased their shares at a weighted average price of approximately $21, consistent with the weighted average price since inception -- 12 out of these 25 shareholders, owning almost 2/3 of these shares, purchased their shares at prices close to or above $21 -- Transamerica, Mars' largest shareholder representing 11% of all shares outstanding and 49% of shares owned by the top 25, purchased shares at approximately $25 o Despite a disparity in operating growth and expectations for future performance (with Mars modestly under-performing Morrison along most operating and valuation measures), Mars' stock price has outperformed Morrison's between March, 2000 and January, 2001 -- Stock price up over 80% -- Mars' performance has been improving, even though Mars' operations still fall below Morrison's along key metrics such as sales growth and long term EPS growth Valuation Rationale -- Mars earnings growth, at 29% for the December, 2000 quarter, was below Morrison's 35% earnings growth -- Mars' operating margins are 2/3 of Morrison's when Morrison is judged on a managed-volume basis Public Market Valuation o Today, on an EPS basis, Mars trades at a modest discount to Morrison and at a premium to ServiceMaster -- Mars and Morrison are trading at or near 52-week highs, though ServiceMaster continues to trade 20% off its 52-week high o Morrison is valued at a premium to Mars (0.6x 2000 Sales; 16.3x 2000 EBIT; 20.0x 2001 P/E) because the market expects it will report higher revenue, EBIT and EPS growth rates -- Projected EPS growth of up to 40% in FY2001, stabilizing to 15%-20% long term -- Projected managed-volume revenue growth of 13% in CY2001 and 15% in CY2002 o ServiceMaster trades at a discount to Mars because over the last year, it has consistently failed to meet analyst expectations, and is projecting lower revenue growth, margins, and EPS growth relative to Mars -- 0.9x 2000 Sales; 12.0x 2000 EBIT; 17.5 2001 P/E -- 3.6% CY2000 EBIT Management Services margin, 12% long-term EPS growth o European service management companies as a group trade at a premium to Mars, because they generally project higher revenue, EBIT and EPS growth o Given higher growth expectations for European companies relative to US companies and a more receptive European investor base, it is unlikely that US companies can look at European trading multiples as achievable over at least the near term -- Even Morrison which has growth and margins in line with European counterparts trades at a discount to the group Valuation Rationale Minority Buyout Premiums o Bidder owns more than 50% of the shares prior to the transaction o Median premiums paid in 84 transactions are 15% - 20% to the undisturbed price Control Buyout Premiums o Bidder owns 25% - 50% of the shares prior to the transaction and controls less than half of the board seats o Median premiums paid in 6 US transactions are somewhat higher (at the high end of the range) than in minority buyout situations -- 14% - 26% over the undisturbed price -- suggesting the need to pay a premium for actual rather than effective control Preliminary Thoughts on the Value of Mars Current Price $24.44(a) | Per Share(b) $5 $10 $14 $19 $24| $29 $33 $38 | Equity | Consideration $300 $600 $900 $1,200 $1,500 $1,800 $2,100 $2,400 | | | | | | | | ---------------------------------|------------------------ | | Trading $10-----------------|--$24| 1 year trading range Range $10-----------------|-----|---------$32 Trading range | | since inception | | | | | | Common 18.5x-19.5 CY2001 EPS | $24|--$26 Stock | | Comparison 12.0x-14.0x CY2000 EBIT | |$24----$30 (c) | | | | | | | | Minority 15%-20% Premium | $|25-$26 30 Day Average Buyout | | Premium Analysis 15%-20% Premium | | $28-$29 Current Price | | | | | | Control 14%-26% Premium | $|25--$27 30 Day Average Buyout | | Premium Analysis 14%-26% Premium | | $28--$30 Current Price | | 30 day average $21.45 (a) Price as of January 17, 2001. (b) Assumes 63.25 million basic shares outstanding as of September 1, 2000. (c) Range based on selected contract food services companies. Recommended Approach A formal approach with an indication of price would restrain escalation in the stock price Step 1 o Call Mars CEO Bill Shaw on Friday/Saturday -- Sending a letter to express interest in buying out shares not owned by the Company -- Price -- Not interested in selling the Company -- Not in a position to sign before 27/03/2001 unless conditions limiting the ability to consummate transaction before 27 March are waived -- Will file 13-D and issue confirmation press release on Monday Step 2 o Follow immediately with Letter Step 3 o Company likely to issue press release about offer and formation of Special Committee o Amend 13-D on Monday -- Attach letter sent to Bill Shaw -- Attach Milky Way confirmatory press release Step 4 o Mars Board forms Special Committee (Metz and Altobello) Step 5 o Special Committee evaluates and negotiates proposal -- Hire advisors -- Analyze proposal -- Negotiate price, terms and conditions -- Likely asked to sign standstill Step 6 o Announce the deal, commence the tender offer & financings Mars Timetable Summary
Jan February March April May June 22 29 5 12 19 26 5 12 19 26 2 9 16 23 30 7 14 21 28 4 11 18 Mars Buyout - ----------- Approach Board (26/1) XXXX Sign Agreement XXXX Closing XXXX AA Timetable (tentative) - ------------ Binding Bid XXXX Signing XXXX Closing XXXX Debt Financing - --------- Committed Financing XXXX Syndication XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX Funds available XXXX Rights Issue - ------------ Pricing of DPS XXXX Roadshow XXXX Trading of DPS / Exercise of rights XXXXXXXXXXX Centralisation / Settlement XXXXXXXXXXX Bond Issue - ---------- Roadshow XX Pricing XX Signing and Closing XX Hedging - ------- Pre-hedging XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX Adjustments Hedging XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX (1) Adjusted for Off B/S Debt and Operating Leases June to August
Outline of Offer Letter o Overview -- Offer to acquire all of the outstanding shares not currently owned by Milky Way -- Consideration: all cash, price -- Premium information o Strategic Rationale o Conditions -- Usual and customary closing conditions including: -- Execution of definitive merger agreement -- Approval of Mars shareholders -- No Milky Way shareholder approval required -- No financing conditions. Highly confident on financing o Other considerations -- Not in a position to sign before 27/03/2001 unless conditions limiting the ability to consummate transaction before 27 March are waived -- Interested only in acquiring publicly held shares -- Not interested in selling Milky Way stake Mars Transaction Sensitivity Analysis Assuming 50% equity financing of the transaction through a rights issue Based on January 17 share price of Mars of: $24.44
Pre Gwill Pre Gwill Post Gwill Post Gwil Total EPS EPS EPS EPS EBITDA Equity Accretion Accretion Accretion Accretion Interet FFO/Net raised 2002 2003 2002 2003 2002 Debt 2002 (EURO) ---- ---- ---- ---- ---- --------- ------ Premium on Cash Offer/ the offer share ($) --------- --------- 0% 21.45 9.0% 10.8% 7.0% 9.5% 5.22 35.8% 403 5% 22.52 8.4% 10.3% 5.9% 8.5% 5.18 35.3% 422 10% 23.60 7.7% 9.7% 4.7% 7.6% 5.14 34.8% 441 15% 24.67 7.1% 9.2% 3.6% 6.7% 5.11 34.2% 460 20% 25.74 6.5% 8.7% 2.5% 5.7% 5.07 33.7% 479 Premium on the 30 day-average share price of Mars. Assuming an Exchange Rate $/(EURO) of 0.95 and a share price of EURO 200.00 for Milky Way Exchange Rate ($/EURO) -------- 0.80 9.6% 12.1% 6.1% 9.7% 4.98 31.1% 542 0.90 8.0% 10.2% 4.5% 7.7% 5.07 33.3% 482 1.00 6.6% 8.6% 3.2% 6.1% 5.16 35.4% 433 1.10 5.6% 7.5% 2.3% 5.0% 5.27 37.7% 394 Assuming a cash offer of $ 24.44 per Mars share (Jan 17) and a share price of (EURO)200.00 for Milky Way Milky Way Share Price ----------- 190 6.8% 8.9% 3.4% 6.5% 5.12 34.5% 456 195 7.0% 9.1% 3.7% 6.7% 5.12 34.4% 456 200 7.2% 9.3% 3.8% 6.9% 5.12 34.3% 456 205 7.4% 9.5% 4.0% 7.0% 5.11 34.3% 456 210 7.6% 9.7% 4.2% 7.2% 5.11 34.2% 456
Assuming a cash offer of $ 24.44 per Mars share (Jan 17) and an Exchange Rate $/(EURO) of 0.95 [MS4] Summary of Transactions Impact Mars Only Key Assumptions Transaction Date: June 1st 2001 Price paid per Mars share (Jan 17 price): $ 24.44 Total Mars deal consideration (include fees): $ 867 m Exchange Rate ($/Euro): 0.9500 Milky Way Share price: Euro 200.00 Equity Raised: Euro 456 m Ammend Mars existing debt, refinance with Euro 1bn bond ----------------------------------------- Net Income 2002 316 before goodwill 2003 404 ----------------------------------------- EPS Accretion 2002 7.2% before gwill 2003 9.3% ----------------------------------------- Net Income 2002 272 2003 360 ----------------------------------------- EPS Accretion 2002 3.8% 2003 6.9% ----------------------------------------- Cumulative Net Income 2002 272 2003 632 2004 1011 2005 1420
- ------------------------------------------ FFO / Net Debt (%) 2001A 25% 2002 34% 2003 51% 2004 66% 2005 100% - ------------------------------------------ EBITDA/Net Interest Expense (x) 2001A 5.1 2002 5.1 2003 6.4 2004 7.1 2005 7.8 - ------------------------------------------
Note: EPS pre-goodwill includes amortization of fees. Amortization schedule varies depending on the fee nature between 5 and 7 years. Assuming shares bought back in the market to cover Mars option rolled over, with estimated Milky Way price based on a constant P/E multiple Treatment of Mars Stock Options Plan o In-the-money, vested stock options: cash out at spread value o All other options: roll-over into Milky Way options Rationale o Treats holders of in-the-money vested options on the same basis as public shareholders o Maintains continuity of incentives for holders of unvested and out-of-the-money options Execution o Avoid filing of US GAAP-reconciled financials in the interim period between deal closing and US listing by temporarily freezing exercise of options o To avoid employee morale issues, the goal should be to complete a US listing as soon as possible, and in any case no later than December 2001 Cost / Impact o $29.5m for the cash out of 3.3m vested in the money options o Rollover of all other options into 573,311 Milky Way options, representing about 1.6% of Milky Way 2001 average basic number of shares o Share buy back to cover impact of further dilution of control o Buyback of Milky Way shares over the next four years (up to 2004) to prevent further dilution of control of Bellon SA from the exercise of rolled over options (bought back shares considered as still outstanding in assets) o Price of buyback at projected Milky Way share price, estimated by applying 2001 P/E to next four years' earnings o Total cost of buy back of about (EURO)200m before option exercise proceeds, (EURO)100m after exercise proceeds o Excludes any assumption for new options on an ongoing basis Key Issues Relating to a US Listing o Key benefits of a US listing in the case of Milky Way o Single-stock based compensation mechanism, allowing Milky Way to have maximum flexibility in providing options and shares to US employees o Provide a better acquisition currency to support the group's expansion plans in the US o Timing, sequence o We would recommend proceeding with both the US listing and the equity/debt financing separately. We would not recommend listing the DPS's in the US as Milky Way's US investor base is very limited and would therefore prove to be very cumbersome and unnecessary from a demand standpoint o Note however that a US listing is a lengthy process which needs to be started as soon as possible; assuming the accounts are available, it can take approximately three months from start to finish o US listing vehicle for acquisition purposes o We would recommend listing the holding/parent (Milky Way's ADRs): - The sole disadvantage seems to be the potential dilution at the Bellon level. o The disadvantages of listing a subsidiary are numerous: - An IPO/US listing of one of Milky Way's main divisions would generally suffer from lack of visibility, investor interest and liquidity and would, as a result, have an impact on valuation, which in turn, would impact the effectiveness and scope of the acquisition currency; o Depending on the acquisition contemplated, financing structures will have to be put in place on an ad-hoc basis (e.g. does it make sense to float a subsidiary, do a reverse take-over, sell assets, issue preferred, issue a small amount of equity, reduce rating to BBB,...) Mars Timetable Preemptive Case
Jan February March April May June July 22 29 5 12 19 26 5 12 19 26 2 9 16 23 30 7 14 21 28 4 11 18 25 2 9 16 23 30 - --------------------------- BUY OUT Offer to Mars Board X Amend 13 D X Send Offer Letter X Announce Offer made X Special Committee formed X Merger agreement signed / Special Committee Approval X Announce deal signed (1) X Tender Offer File tender offer X Close tender offer X Closing X Back end Merger X - ------------------------------------------------------------------------------------------------------------------------------------ AA TENTATIVE TIMETABLE Binding Bid X Signing X Closing X - ------------------------------------------------------------------------------------------------------------------------------------ DEBT FINANCING Credit Rating Call/Meeting with S&P X Visit to S&P X Documentation - Bank Term sheet negotiations XXXXXXX Terms sheet finalized and XX commitment signed Negotiate Credit Agreement XXXXXX Credit Agreement finalised and XXXX signed Documentation - Bond
Mars Timetable Preemptive Case [CHART]
Jan February March April May June July 22 29 5 12 19 26 5 12 19 26 2 9 16 23 30 7 14 21 28 4 11 18 25 2 9 16 23 30 - ------------------------- Prepare Prospectus and Necessary Documentation XXXXXXXXXXXX Notify Stock Exchange XXXXXXXXXXXXXX Marketing - Bank Prepare Bank Book XXXXXXXXXXXXX Mail Bank Book XXX Develop Bank Meeting Presentation XXXXXXX Bank Meeting Presentation XXX Primary Syndication XXXXXXXX General Syndication XXXXXXXXXXXXX Syndication Closes (Funds available) XX Marketing - Bond Prepare Sales Memo XXXXXXXXXX Set-up Roadshow XX Roadshow XX Pricing XX Signing and Closing XX - ------------------------------------------------------------------------------------------------------------------------------------ RIGHTS ISSUE Due Diligence Due Diligence on Milky Way XXXXXXXXXXXXXXXXXXXXXXXXXXX Documentation Drafting of "note d'operation" XXXXXXXXXXXXXXXXXXXXXXXXX File documentation with COB XX COB Comments XX Visa of COB XX Marketing/Communication Prepare Presentation Roadshow XXXXXXXXXX Pricing of DPS XX Publication in BALO XX
Mars Timetable Preemptive Case Jan February March April May June July ------------------------------------------------------------------------------------------------- 22 29 5 12 19 26 5 12 19 26 2 9 16 23 30 7 14 21 28 4 11 18 25 2 9 16 23 30 ------------------------------------------------------------------------------------------------- Roadshow X Trading of DPS/ exercise of rights X X X Centralisation, settlement XXXXXXXX - ------------------------------------------------------------------------------------------------------------------------------------ US GAAP financials ready X Drafting 20-F XXXXXXXXXXXXXXXXXXXXXX Preliminary listing eligibility review X Confidentially file 20-F X Submit Preliminary listing application X Respond to SEC comments X Submit signed lising application X Resolve last open comments 20-F effective (end of August) X - ------------------------------------------------------------------------------------------------------------------------------------ HEDGING Recommendation and execution of pre-hedging XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX Adjustment of pre-hedging XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX Hedging XXXXXXXXXXXXXXXXXXXXXXXX - ------------------------------------------------------------------------------------------------------------------------------------
Mars Shares Traded at Various Prices [Four graphs depicting the volume of Mars shares traded at various prices, over different time periods. Graph 1 - Since 3/27/1998 - Daily Trading Volume from 3/27/1998 to 1/16/2001 Price Range Volume (000) - ----------- ------------ 10.00 - 11.99 4,785 12.00 - 13.99 4,151 14.00 - 15.99 7,887 16.00 - 17.99 9,440 18.00 - 19.99 5,877 20.00 - 21.99 4,687 22.00 - 23.99 4,965 24.00 - 25.99 5,257 26.00 - 27.99 13,365 28.00 - 29.99 9,011 30.00 - 31.99 3,336 32.00 - 32.69 669 Weighted Average Price: 21.51 Total Volume for Period: 73.4 Average Daily Trading Volume (a): 92,897 Graph 2 - One Year - Daily Trading Volume from 1/17/2000 to 1/16/2001 Price Range Volume (000) - ----------- ------------ 10.00 - 10.99 842 11.00 - 11.99 3,798 12.00 - 12.99 1,118 13.00 - 13.99 421 14.00 - 14.99 1,914 15.00 - 15.99 461 16.00 - 16.99 2,837 17.00 - 17.99 1,136 18.00 - 18.99 782 19.00 - 19.99 263 20.00 - 20.99 1,721 21.00 - 21.99 1,196 22.00 - 23.00 579 Weighted Average Price: 15.58 Total Volume for Period: 17.1 Average Daily Trading Volume (a): 65,139 Graph 3 - Since 3/27/2000 - Daily Trading Volume 3/27/2000 to 1/16/2001 Price Range Volume (000) - ----------- ------------ 12.00 - 12.99 201 13.00 - 13.99 369 14.00 - 14.99 1,914 15.00 - 15.99 461 16.00 - 16.99 2,837 17.00 - 17.99 1,136 18.00 - 18.99 782 19.00 - 19.99 263 20.00 - 20.99 1,721 21.00 - 21.99 1,196 22.00 - 23.00 579 Weighted Average Price: 17.63 Total Volume for Period: 11.5 Average Daily Trading Volume (a): 54,049 Graph 4 - Three Months - Daily Trading Volume from 10/16/2000 to 1/16/2001 Price Range Volume (000) - ----------- ------------ 17.10 - 17.49 80 17.50 - 17.89 167 17.90 - 18.29 18.30 - 18.69 438 18.70 - 19.09 200 19.10 - 19.49 125 19.50 - 19.89 19.90 - 20.29 440 20.30 - 20.69 591 20.70 - 21.09 951 21.10 - 21.49 693 21.50 - 21.89 242 21.90 - 22.29 249 22.30 - 23.00 330 Weighted Average Price: 20.52 Total Volume for Period: 4.5 Average Daily Trading Volume (a): 67,249 (a) Excludes first 7 trading days after IPO] Mars Shares Traded at Specific Prices [Graph depicting Mars shares traded as specified prices. This graph shows the daily trading volume of Mars shares as set forth below Mars Shares Traded at Specific Prices - Daily Trading Volume from 3/1/2000 to 4/27/2000 Price Range Volume (000) - ----------- ------------ 10.50 - 10.89 415 10.90 - 11.29 1,073 11.30 - 11.69 1,172 11.70 - 12.09 120 12.10 - 12.49 12.50 - 12.89 133 12.90 - 13.29 74 13.30 - 13.69 13.70 - 14.09 143 14.10 - 14.49 355 14.50 - 14.89 548 14.90 - 15.30 373 Weighted Average Price: 12.41 Total Volume for Period: 4.4 mil. Average Daily Trading Volume: 104,912] Mars Top 25 US Institutional and Fund Shareholders (a) [GOLDMAN SACH LOGO] (US Dollars)
Institution or Fund Shares as of Shareholder Since % of Mars % of Top 25 Weighted Avg. 9/1/2000 Price(b)(c) Transamerica Investment Management LLC 6,782,500 Mar-1998 10.72% 48.46% $25 Goldman Sachs & Company 1,800,000 Jun-2000 2.85% 12.86% $15 Armstrong Shaw Associates, Inc. 1,149,305 Jun-2000 1.82% 8.21% $17 Massachusetts Financial Services 1,135,236 Sep-1999 1.79% 8.11% $16 Barclays Bank Plc 626,902 Mar-1998 0.99% 4.48% $23 Vanguard Group, Inc. 430,471 Mar-1998 0.68% 3.08% $19 Marshfield Associates 285,310 Mar-2000 0.45% 2.04% $14 State Street Corporation 237,816 Mar-1998 0.38% 1.70% $20 Mellon Bank, N.A. 206,698 Mar-1998 0.33% 1.48% $21 Deutsche Asset Management Americas 181,556 Mar-1998 0.29% 1.30% $21 College Retirement Equities Fund 159,951 Mar-1998 0.25% 1.14% $23 New York State Teachers' Retirement System 152,495 Jun-1998 0.24% 1.09% $28 Charles Schwab Investment 147,800 Mar-1999 0.23% 1.06% $17 California Public Employees Retirement 142,425 Dec-1998 0.23% 1.02% $23 Soros Fund Management, LLC 97,200 Mar-2000 0.15% 0.69% $12 Northern Trust Company 93,242 Mar-1998 0.15% 0.67% $25 Batterymarch Financial Management 89,500 Jun-1999 0.14% 0.64% $17 California State Teacher's Retirement System 47,992 Mar-1998 0.08% 0.34% $26 Merrill Lynch Investment Managers(NJ) 43,767 Jun-2000 0.07% 0.31% $15 Smith Barney Asset Management 39,956 Jun-2000 0.06% 0.29% $15 Florida State Board of Administration 34,725 Jun-1998 0.05% 0.25% $26 Northern Trust Global Investments 32,331 Mar-1998 0.05% 0.23% $19 General Motors Investment Management Corp. 30,000 Jun-2000 0.05% 0.21% $15 World Asset Management 25,564 Jun-2000 0.04% 0.18% $19 Chase Asset Management 23,071 Jun-1998 0.04% 0.16% $26 - ------------------------------------------------------------------------------------------------------------------------------- Total 13,995,813 22.13% $21 Median $19
Source: Carson (a) Excludes European institutional and fund shareholders due to lack of quarterly transaction data for weighted average calculation. (b) Assumes shares held at the time of the spinoff were purchased at 3/1998 average price. (c) Assumes that the first shares purchased are the first sold. Mars Daily Common Stock Price History Since Inception [This graph is a review of the historical closing market prices of the shares of MARS from the date of the formation of MARS on March 27, 1998 to January 16, 2001. During this period, shares of MARS traded at a high of $32.69 and a low of $10.31. Its closing market price on January 16, 2001 was $22.69, 13.2% below its initial price of $26.13.] Mars vs. S&P 500 vs. Comparables Daily Indexed Trading History Since Inception [This graph is a comparison of the daily indexed trading history for shares of MARS, a composite comprised of Morrison Management Specialists, Inc. and ServiceMaster Company, and the S&P 500, since the formation of MARS on March 27, 1998 to January 16, 2001. The indexed trading price for shares of MARS on March 27, 1998 was $26.13 and on January 16, 2001 was $22.69. The indexed trading price for shares of MARS on the occurrence of the following events were as follows:
Date MARS Price S&P 500 Composite Event Price Price May 11, 1998 $27.00 $26.39 $26.40 MARS reports quarterly net income of $4 million and an increase in sales and profits of 4% and 9%, respectively, from the previous quarter. December 22, 1998 $28.50 $23.79 $24.24 Net income up 58%, sales up 2% and operating profit up 11% from previous year. EPS of $0.52 is lower than analysts expectations of $0.84. May 3, 1999 $22.94 $32.31 $25.58 Charles O'Dell resigns as CEO of MARS, Michel Landel named president, CEO and board member. MARS reported decreased contract retention rates and sluggish sales growth. November 3, 1999 $18.00 $32.31 $22.87 Lawrence E. Hyatt resigns as senior vice president and chief financial officer of MARS. January 11, 2000 $12.69 $34.31 $22.96 Reported net income of $27.8 million down 2% from previous quarter and down 16% from previous year. Sales for quarter increased 6.5% from previous year. Profit growth lagged sales growth due to higher labor and start-up costs for quarter. EPS of $0.94 meets analysts expectations. April 7, 2000 $13.75 $36.16 $26.08 Earnings up 5% and sales up 8% from previous quarter. July 14, 2000 $16.88 $36.01 $28.75 3rd quarter earnings up 22% from previous quarter driven by double digit growth in operating profits in health care and corporate divisions. October 19, 2000 $17.25 $33.12 $26.15 7 % rise in sales and 11% rise in earnings for fourth quarter. First profitable fourth quarter since 1998. EPS of $1.00 meets analysts expectations. January 11, 2001 $21.75 $31.64 $30.61 Quarterly net income of $36 million, up 29% compared to same period previous year. Sales up 6% and operating profit up 14% from previous year.]
Mars Daily Common Stock Price History [This graph is a review of the historical closing market prices for shares of MARS for the period from December 1, 1999 to January 16, 2001. During this period, shares of MARS traded at a high of $22.69 and a low of $10.31. Its closing market price on January 16, 2001 was $22.69, up 42.4% from its December 1, 1999 closing market price of $15.94.] Comparables Daily Indexed Common Stock Price History [This graph offers a comparison of the daily indexed common stock price history for shares of MARS, S&P Pharmaceuticals, S&P Foods and Goldman Sachs Technologies indices for the period from March 27, 2000 to January 16, 2001. The indexed trading price for shares of MARS on March 27, 2000 was $100 and on January 16, 2001 was $189.06, +89.1% from March 27, 2000. The indexed trading price for shares comprising the S&P Pharmaceuticals Index on March 27, 2000 was $100.00 and on January 16, 2001 was $124.62, +24.6% from March 27, 2000. The indexed trading price for shares comprising the S&P Foods Index on March 27, 2000 was $100.00 and on January 16, 2001 was $137.08, +37.1% from March 27, 2000. The indexed trading price for shares comprising the GS Technologies Index on March 27, 2000 was $100.00 and on January 16, 2001 was $52.62, -47.4% from March 27, 2000.] Mars vs. ServiceMaster Co. Daily Indexed Prices [This graph is a review of the daily indexed common stock price history for shares of MARS and ServiceMaster Company for the period from December 1, 1999 to January 16, 2001. The indexed trading price for shares of MARS on December 1, 1999 was $100.00 and on January 16, 2001 was $142.35, +42.4% from December 1, 1999. The indexed trading price for shares of MARS on the occurrence of the following events were as follows:
Date MARS Price Event December 28, 1999 $86.67 MARS reports that EPS is expected to be 5% below analyst's estimates. April 6, 2000 $83.14 MARS reports an increase in earnings of 5% and sales of 8% from previous year. July 13, 2000 $105.88 MARS exceeds quarterly EPS estimates. October 19, 2000 $108.24 MARS reports 7% rise in sales and 11% rise in earnings for fourth quarter. First profitable fourth quarter since 1998. Expects EPS to grow in mid-teens and sales in 5% to 6% range. January 11, 2001 $136.47 MARS reports quarterly net income of $36 million, up 29% from previous quarter. Sales up 6% and operating profit up 14% from previous years.
The indexed trading price for shares of ServiceMaster Company on December 1, 1999 was $100.00 and on January 16, 2001 was $88.83, -11.2% from December 1, 1999. The indexed trading price for shares of ServiceMaster Company on the occurrence of the following events were as follows:
Date ServiceMaster Price Event January 25, 2000 $111.65 ServiceMaster reports 18% increase in net income, 13% increase in EPS and a revenue growth of 21% for the quarter. April 25, 2000 $103.40 ServiceMaster meets analysts expectations and reports 21% growth in revenues for quarter. July 24, 2000 $72.33 ServiceMaster reports lower than expected earnings and that second quarter performance is not up to plan. October 2, 2000 $67.96 ServiceMaster downgrades earnings estimates. October 25, 2000 $70.39 ServiceMaster meets modest analyst expectations and reports trouble digesting new acquisitions.]
Mars vs. Morrison Management Daily Indexed Common Stock Price History [This graph is a review of the daily indexed common stock price history for shares of MARS and Morrison Management Specialists for the period from March 27, 2000 to January 16, 2001. The indexed trading price for shares of MARS on March 27, 2000 was $100.00, trading, over the graphed period, at a high of $189.06 and a low of $100. The closing indexed stock price for shares of MARS on January 16, 2001 was $189.06, up 89.1% from March 27, 2000. The indexed stock price for shares of Morrison Management Specialists on March 27, 2000 was $100.00, trading, over the graphed period, at a high of $169.01 and a low of $98.64. The closing indexed stock price of Morrison Management Specialists on January 16, 2001 was $166.36, up 66.4% from March 27, 2000.] Mars vs. ServiceMaster Co Daily Indexed Prices [This graph is a review of the daily indexed common stock price history for shares of MARS and ServiceMaster Company for the period from December 1, 1999 to January 16, 2001. The indexed trading price for shares of MARS on December 1, 1999 was $100.00 and on January 16, 2001 was $142.35, +42.4% from December 1, 1999. The indexed trading price for shares of MARS on the occurrence of the following events were as follows:
Date MARS Price Event December 28, 1999 $86.67 MARS reports that EPS is expected to be 5% below analyst's estimates. April 6, 2000 $83.14 MARS reports an increase in earnings of 5% and sales of 8% from previous year. July 13, 2000 $105.88 MARS exceeds quarterly EPS estimates. October 19, 2000 $108.24 MARS reports 7% rise in sales and 11% rise in earnings for fourth quarter. First profitable fourth quarter since 1998. Expects EPS to grow in mid-teens and sales in 5% to 6% range. January 11, 2001 $136.47 MARS reports quarterly net income of $36 million, up 29% from previous quarter. Sales up 6% and operating profit up 14% from previous years.
The indexed trading price for shares of ServiceMaster Company on December 1, 1999 was $100.00 and on January 16, 2001 was $88.83, -11.2% from December 1, 1999. The indexed trading price for shares of ServiceMaster Company on the occurrence of the following events were as follows:
Date ServiceMaster Price Event January 25, 2000 $111.65 ServiceMaster reports 18% increase in net income, 13% increase in EPS and revenue growth of 21% for the quarter. April 25, 2000 $103.40 ServiceMaster meets analysts expectations and reports 21% growth in revenues for quarter. July 24, 2000 $72.33 ServiceMaster reports lower than expected earnings and that second quarter performance is not up to plan. October 2, 2000 $67.96 ServiceMaster downgrades earnings estimates. October 25, 2000 $70.39 ServiceMaster meets modest analyst expectations and reports trouble digesting new acquisitions.]
Mars vs. ServiceMaster Company Daily Indexed Common Stock Price History [This graph is a review of the daily indexed common stock price history for shares of MARS and ServiceMaster Company for the period from March 27, 2000 to January 16, 2001. The indexed trading price for shares of MARS on March 27, 2000 was $100.00, trading, over the graphed period, at a high of $189.06 and a low of $100.00. The closing indexed stock price for shares of MARS on January 16, 2001 was $189.06, up 89.1% from March 27, 2000. The indexed stock price for shares of ServiceMaster Company on March 27, 2000 was $100.00, trading, over the graphed period, at a high of $115.95 and a low of $74.46. The closing indexed stock price of ServiceMaster Company on January 16, 2001 was $97.34, down 2.7% from March 27, 2000.] Catering and Business Services Companies Public Market Valuation [GOLDMAN SACHS LOGO] (US Dollars in Millions, except per share amounts)
1 2 3 4 5 6 7 8 9 Market Value - January 17, 2001 % of 52 Equity Enterprise Revenue EBIT Wk High Market Cap Value CY 2000 CY 2001 CY 2002 CY 2000 CY 2001 CY 2002 Company Europe - ------ Milky Way 97% $ 6,389 $ 8,009 0.8 x 0.7 x 0.7 x 16.0 x 14.6 x 13.1 x Concession - ---------- Autogrill Spa 92% 3,011 4,003 1.4 1.3 1.2 32.4 27.9 23.8 50/50 Concession and Contract - ------------------------------ Groupe Elior 95% 1,408 1,875 1.1 1.0 0.9 21.9 18.8 16.7 Contract - -------- Compass Hospitality (a) 90% 16,364 21,297 1.8 1.6 1.5 14.9 13.8 12.4 International Service System A/S 90% 2,838 3,362 0.9 0.8 0.8 34.7 27.6 23.9 European Mean (b) 92% 1.3 x 1.2 x 1.1 x 26.0 x 22.0 x 19.2 x European Median (b) 91% 1.2 x 1.1 x 1.1 x 27.1 x 23.2 x 20.3 x U.S.A - ----- Mars (c) 100% $ 1,566 $ 2,515 0.5 x 0.5 x 0.5 x 12.4 x 11.2 x 10.0 x Morrison Management 94% 467 521 0.6 0.5 0.5 16.3 13.3 11.4 Specialists, Inc. (d) Servicemaster Company 80% 3,555 5,398 0.9 0.9 0.8 12.0 10.9 9.6 10 11 12 13 CY-2000 PE/ 5-year Growth Company CY 2001 CY 2002 CY2002 Europe - ------ Milky Way 53.4 x 31.0 x 28.0 x 2.8 x Concession - ---------- Autogrill Spa 318.0 70.7 45.4 13.8 50/50 Concession and Contract - ------------------------------ Groupe Elior 51.6 25.0 24.7 3.4 Contract - -------- Compass Hospitality (a) 20.5 18.4 16.1 1.6 International Service System A/S 85.8 54.9 38.8 5.7 European Mean (b) 52.6 32.8 x 26.5 x 3.6 x European Median (b) 51.6 25.0 x 24.7 x 3.4 x U.S.A - ----- Mars (c) 22.9 18.7x 15.3 x 1.6 Morrison Management Specialists, Inc. (d) 24.9 20.0 17.1 1.4 Servicemaster Company 18.7 17.5 14.7 1.6
Source: 1999 Annual Report and 2000 Research Reports (a) Granada Compass without Granada Media (b) Excludes Milky Way EPS mean and median calculations excludes Autogrill Spa (c) 2000-02 EPS based on HSBC estimates Long-term EPS growth based on IBES estimates (d) Reflects an assumption that all contracts are accounted for on a profit and loss basis. The revenue multiplies based on GAAp revenue figures are 1 1x in CY 2000, 0.9x in CY 2001 and 0.8 in CY 2002 Catering and Business Services Companies [GOLDMAN SACHS LOGO] Operating Statistics
1 2 3 4 5 6 7 8 9 10 Growth Margins Revenue EBIT EPS EBIT Net Income CY 2001 CY 2002 CY 2001 CY 2002 CY 2001 CY2002 CY 200 CY 2001 CY 2000 CY 2001 Europe - ------ Milky Way 6.3% 10.6% 9.5% 11.9% 72.5% 10.6% 5.0% 5.1% 1.2% 1.9% Concession - ---------- Autogrill Spa 8.6% 8.6% 15.8% 17.5% 350.0% 55.6% 4.4% 4.7% 0.3% 1.4% 50/50 Concession and Contract - ----------------------------- Groupe Elior 9.6% 8.3% 16.3% 12.6% 106.4% 1.3% 4.9% 5.2% 1.6% 2.9% Contract - -------- Compass Hospitality (a) 6.8% 7.5% 7.9% 11.4% 11.6% 14.6% 11.8% 11.9% 6.6% 6.9% International Service System A/S 12.7% 6.2% 26.0% 15.2% 56.1% 41.8% 2.7% 3.0% 0.9% 1.3% European Mean (b) 9.4% 7.6% 16.5% 14.2% 58.0% 19.2% 5.9% 6.2% 2.3% 3.1% European Median (b) 9.1% 7.9% 16.0% 13.9% 56.1% 14.6% 4.6% 4.9% 1.2% 2.2% U.S.A - ----- Mars (c) 4.3% 8.0% 10.4% 12.3% 22.5% 21.9% 4.2% 4.5% 1.4% 1.7% Morrison Management Specialists, Inc. (d) 13.2% 15.7% 22.5% 16.8% 24.4% 17.2% 3.8% 4.1% 2.2% 2.4% Servicemaster Company 4.4% 6.3% 10.6% 13.5% 6.3% 19.4% 7.4% 7.9% 3.2% 3.2% Servicemaster Management Services (e) 1.0% 1.0% -4.5% 7.8% N.A. N.A. 3.6% 3.4% N.A. N.A. 11 12 Net Debt/ Market Long-term Equity EPS Growth Europe - ------ Milky Way 25.4% 19.3% Concession - ---------- Autogrill Spa 33.0% 23.0% 50/50 Concession and Contract - ----------------------------- Groupe Elior 33.1% 15.3% Contract - -------- Compass Hospitality (a) 30.1% 12.5% International Service System A/S 18.5% 15.0% European Mean (b) 28.7% 16.5% European Median (b) 31.6% 15.2% U.S.A - ----- Mars (c) 60.6% 14.5% Morrison Management Specialists, Inc. (d) 11.6% 18.0% Servicemaster Company 51.8% 12.0% Servicemaster Management Services (e) N.A. N.A.
Source: 1999 Annual Report and 2000 Research Reports (a) Granada Compass without Granada Media Long-term EPS growth estimates are for 2000-02. Morgan Stanley Dean Witter estimates 2000-05 EPS growth of 10%. (b) Excludes Milky Way EPS ,mean and median calculations excludes Autogril Spa (c) 2001-02 EPs based on HSBc estimates. Long-term EPs growth based on IBES estimates. (d) Reflects an assumption that all contracts are accounted for on a profit and loss basis The EBIT margins based on GAAP revenue figures are 6.4% in CY 2000 and 68% in CY 2001. (e) Based on Morgan Stanley Dean Witter estimates. Analysis of Premiums in Acquisition Transactions [GOLDMAN SACHS LOGO] Involving Insiders
Minority Buyouts (a) (>$100m) Control Buyouts (b) (>$100m) Number in Initial Final Number in Initial Final Sample Premium Premium Sample Premium Premium (c)(e) (d)(e) (c)(e) (d)(e) Stock Only 17 0.4% 18.3% Stock Only 1 21.2% 28.9% Cash Only 60 7.1% 20.7% Cash Only 4 19.6% 27.6% Mix 7 6.9% (f) 7.2% (f) Mix 1 2.2% 5.8% All 84 5.4% 19.6% All 6 13.8% 25.7%
(a) Acquiror had more than 50% ownership prior to transaction. Period 6/1989 - 5/2000. (b) Acquiror has less than 50% ownership prior to transaction. Period 3/1995 - 11/1999. (c) Initial premiums were found by calculating the percentage difference between the earliest mentioned offer price and the undisturbed target stock price. Source Company filings and public information. (d) Final premiums were found by calculating the percentage difference between the consideration ultimately paid and the undisturbed target stock price. Source Company filings and public information. Analysis at Various Prices for Mars [GOLDMAN SACHS LOGO] (US Dollars in millions, except for per share data) Premium to Market Price 0.0% 5.0% 10.0% 15.0% 20.0% Purchase Price Per Share ($)(a) 24.44 25.66 26.88 28.11 29.33 Equity Consideration - Basic ($) (a) 1,545.9 1,623.2 1,700.5 1,777.8 1,855.1 Equity Consideration - Options (b) 28.9 36.8 44.7 52.7 60.6 ------- ------- ------- ------- ------- Equity Consideration - Diluted ($) (b)(c) 1,574.8 1,660.0 1,745.3 1,830.5 1,915.7 Net Debt (d) 949.0 949.0 949.0 949.0 949.0 Enterprise Value (d) 2,523.8 2,609.0 2,694.3 2,779.5 2,864.7 Enterprise Value / Sales (e) CY 2000E 4,798.7 0.5 x 0.5 x 0.6 x 0.6 x 0.6 x CY 2001E 5,004.7 0.5 0.5 0.5 0.6 0.6 CY 2002E 5,407.3 0.5 0.5 0.5 0.5 0.5 Enterprise Value / EBIT (e) CY 2000E 202.9 12.4 x 12.9 x 13.3 x 13.7 x 14.1 x CY 2001E 224.0 11.3 11.6 12.0 12.4 12.8 CY 2002E 251.6 10.0 10.4 10.7 11.0 11.4 Eq. Cons. - Diluted / Net Income (e) CY 2000E 68.3 23.0 x 24.3 x 25.5 x 26.8 x 28.0 x CY 2001E 83.7 18.8 19.8 20.9 21.9 22.9 CY 2002E 102.1 15.4 16.3 17.1 17.9 18.8 Premium to Trading Averages (f) Prior 30 days 21.5 14% 20% 25% 31% 37% Prior 60 days 21.1 16% 22% 27% 33% 39% Prior 90 days 20.3 20% 26% 32% 38% 44% Prior 180 days 18.4 33% 39% 46% 53% 59%
(a) Stock price as of January 17, 2001 ($) = 24.44 (b) Assumes 63.3 million basic shares outstanding as of December 1, 2000. (c) Assumes exercise of 6.5 million options outstanding with a weighted average strike price of $20.00. Assumes options outstanding are not tax-deductible. (d) Assumes net debt of $949.0 million as of December 1, 2000 as per 10-Q. (e) Estimates as per HSBC Analyst Report dated August 29, 2000. (f) Based on calendar days. Summary of Selected Transactions in the Catering Industry (a) (Dollars in Millions) [GOLDMAN SACHS LOGO]
Levered Levered Announcement Total Transaction Multiple of Multiple of Date Acquiror/Target Equity Value Value LTM Sales LTM EBIT --------------------------------------------------- North American Transactions --------------------------------------------------- Concession ---------- 03/30/00 Aramark (US) / Ogden (US) (b) 225 236 0.6 N.A. 07/26/99 Autogrill Spa (Italy) / Host Marriott Services (US) 547 948 0.7 15.5 06/03/98 Compass Group (UK) / Restaurant Associates Ind. (US) 88 88 N.A. 23.6 Contract -------- 11/03/00 Granada Compass (UK) / Beaver Foods (Canada) N.A. $ 98 0.5x N.A. 09/30/97 Sodexho Marriott Services (US) / Marriott Management Services (US) 610 2,054 0.6 13.2 05/27/97 Compass Group (UK) / Daka International (US) 194 194 0.48 N.A. 08/23/96 Compass Group (UK) / Service America Corp (US) N.A. 115 0.3 N.A. 04/27/94 Compass Group (UK) / Canteen Corp (US) 450 470 0.5 12.4 ------------------------------------------------------------ US Median 0.50 x 14.35 x US Arithmetic Mean 0.53 16.18 ------------------------------------------------------------ US Harmonic Mean 0.49 15.19 ------------------------------------------------------------ --------------------------------------------------- European Transactions --------------------------------------------------- Contract -------- 05/17/00 Granada Group (UK) / Compass Group (UK) 8,089 9,681 1.3 x 23.7 x 10/02/99 Compass Group (UK) / P&O Australia N.A. 90 0.6 N.A. 07/23/97 Compass Group (UK) / SHRM (France) 380 380 0.6 14.5 04/17/96 Compass Group (UK) / Eurest France (France) 205 305 0.5 12.2 12/29/95 Sodexho (France) / Partena (Sweden) 143 176 0.5 11.1 07/06/95 Compass Group (UK) / Eurest International (France) 850 810 0.8 N.A. 02/01/95 Sodexho (France) / Gardner Merchant (UK) 927 1,215 0.6 11.7 03/24/93 Granada (UK) / Sutcliffe Catering (UK) 584 600 0.7 12.4 ------------------------------------------------------------ European Median 0.60 x 12.30 x European Arithmetic Mean 0.70 14.27 ------------------------------------------------------------ European Harmonic Mean 0.64 13.35 ------------------------------------------------------------ --------------------------------------------------- ------------------------------------------ Europe + US Transactions Median 0.60 x 12.80 x --------------------------------------------------- Arithmetic Mean 0.62 15.03 ------------------------------------------ Harmonic Mean 0.56 14.03 ------------------------------------------ Low 0.30 11.10 High 1.30 23.70 ------------------------------------------ ---------------------------------------------- ------------------------------------------ Compass/Morrison Deal Comparison (c) Harmonic Mean 0.56 x 14.40 x ---------------------------------------------- Low 0.35 10.00 High 1.37 23.40 ------------------------------------------ Unlevered Leveraged Multiple of Announcement Multiple of LTM Net Comments Date Acquiror/Target LTM EBITDA Income ---------------------------------------------- North American Transactions ---------------------------------------------- Concession ---------- 03/30/00 Aramark (US) / Ogden (US) (b) 6.8 N.A. Cash 07/26/99 Autogrill Spa (Italy) / Host Marriott Services (US) 7.5 22.7 Cash 06/03/98 Compass Group (UK) / Restaurant Associates Ind. (US) 13.3 N.A Cash Contract -------- 11/03/00 Granada Compass (UK) / Beaver Foods (Canada) N.A. N.A Cash 09/30/97 Sodexho Marriott Services (US) / Marriott Management 10.6 N.A Marriott Management Services was Services (US) split from Marriott International and merged with Sodexho North America operations forming SMS 05/27/97 Compass Group (UK) / Daka International (US) 10.8 N.A Cash 08/23/96 Compass Group (UK) / Service America Corp (US) N.A. N.A Mixed: Cash and Stock Cash 04/27/94 Compass Group (UK) / Canteen Corp (US) N.A. 19.8 Cash ----------------------------- 10.60 x 21.25 x 9.80 21.25 ----------------------------- 9.22 21.15 ----------------------------- --------------------------------------------------- European Transactions --------------------------------------------------- Contract -------- 05/17/00 Granada Group (UK) / Compass Group (UK) 18.9 x N.A Stock swap transaction 10/02/99 Compass Group (UK) / P&O Australia N.A. N.A Cash 07/23/97 Compass Group (UK) / SHRM (France) N.A. N.A Cash 04/17/96 Compass Group (UK) / Eurest France (France) N.A. 20.5 Cash 12/29/95 Sodexho (France) / Partena (Sweden) 8.6 23.1 Cash 07/06/95 Compass Group (UK) / Eurest International (France) N.A. N.A Mixed: 50% cash/ 50% stock 02/01/95 Sodexho (France) / Gardner Merchant (UK) 10.8 35.9 Cash 03/24/93 Granada (UK) / Sutcliffe Catering (UK) N.A. N.A Cash ----------------------------- 10.80 23.10 x 12.77 26.50 ----------------------------- 11.46 25.02 ----------------------------- --------------------------------------------------- ----------------------------- Europe + US Transactions 10.70 x 22.07 x --------------------------------------------------- 10.91 24.40 ----------------------------- 9.95 23.31 ----------------------------- 6.80 19.80 18.90 35.90 ----------------------------- --------------------------------------------------- ----------------------------- Compass/Morrison Deal Comparison (c) 8.90 x 23.80 x --------------------------------------------------- 7.20 18.10 12.20 39.30 -----------------------------
(a) Excludes in-flight catering transactions. (b) Multiples based on 2000E projected numbers excluding 2 properties, Anaheim and Corel Center. Based on sales of $395mm and EBITDA of $34.6mm. (c) Source: Morrison 14D-9 dated 2/16/2001. Comparison of Selected Buyouts of Public Majority [GOLDMAN SACHS LOGO] Shareholders
Initial Date of 52 Week Premium Acquiring Company/ Undisturbed Undisturbed Date of High Prior to Over 52 Date Acquired Company Stock Price Stock Price Announcement Ann. Week High 11/1999 Three Cities Research $ 7.25 11/19/99 11/22/99 $ 8.12 17.0% Garden Ridge Corp. 6/1999 Merck (a) $27.88 6/7/99 6/8/99 $ 31.50 17.5% VWR 7/1997 Fujitsu (c) 10.13 7/25/97 7/30/97 13.63 -22.4% Amdahl 2/1999 Delta 31.94 2/15/99 2/16/99 50.00 -32.0% ASA (b) 3/1995 Union/Pacific 24.88 3/6/95 3/10/95 27.75 22.5% Chicago & North Western - ---------------------------------------------------------------------------------------------------------------------- Low (h) -32.0% Mean (h) -3.6% Median (h) -2.5% High (h) 22.5% - ---------------------------------------------------------------------------------------------------------------------- Inside Final Aggregate Ownership Consideration For Initial Premium Final Premium Before the Consideration Amount Acquired Initial Bid Over Undist. Final Bid Over Undist. Date Transaction type ($millions) Per Share Stock Price Per Share Stock Price 11/1999 29.3% Cash $ 144.4 $ 9.50 31.0% $ 11.50 58.6% 6/1999 49.9% Cash $ 575.0 $ 37.00 32.7% $ 37.00 32.7% 7/1997 42.0% Cash 910.0 10.57 4.4% 12.40 22.5% 2/1999 29.0% Cash 700.0 34.00 6.5% 34.00 6.5% 3/1995 28.8% Cash 1,200.0 34.00 36.7% 35.00 40.7% - ---------------------------------------------------------------------------------------------------------------------------- Low (h) 28.8% 4.0 $ 10.57 4.4% 6.5% Mean (h) 37.4% $ 28.89 20.1% 25.6% Median (h) 35.5% $ 34.00 19.6% 27.6% High (h) 49.9% $ 37.00 36.7% 40.7% - ---------------------------------------------------------------------------------------------------------------------------- Percent Special Buyer Increase Committee Representation Date in Offer Appointed on Board 11/1999 21.1% Yes 1 out of 7 Directors(d) 6/1999 0.0% Yes 5 out of 11 Directors 7/1997 17.3% Yes 3 out of 10 Directors (f) 2/1999 0.0% No 0 out of 7 Directors (e) 3/1995 2.9% No 1 out of 7 Directors - ------------------------------------------------------------------------------------------ Low (h) Mean (h) Median (h) High (h) - ------------------------------------------------------------------------------------------
(a) Discussions between Merck and VWR management occurred for some time before the offer was made and the transaction was publicly announced. (b) Delta was already renegotiating its Connection agreement with ASA. This information was not public and would have depressed ASA's stock price. (c) Fujitsu increased its final bid from $12.00 to $12.40 when it settled a lawsuit filed by dissenting shareholders who argued that Fujitsu underpaid for Amdahl. (d) The change in premium was calculated by taking the difference between the offer price based on the old exchange rate (1.34 shares) and the offer price based on the new exchange rate (1.425 shares) on the day Vons' board approved the transaction. (e) As long as Delta maintained 10% ownership of ASA, it was permitted to fill 2 Directors positions. When the last Delta appointed Director retired, Delta chose not to appoint anyone to replace him. (f) J. Sidney Webb, a Vons Director, was the former president of a joint venture between TRW and Fujitsu. Because Mr. Webb spent most of his career at TRW, he is not considered a Fujitsu representative. (g) Three Cities Research Inc. held only one board seat, yet three additional board members were affiliated with various Three Cities Research Inc. companies. (h) Excludes Three Cities Research Inc acquisition of Garden Ridge Corp. Comparison of Selected Buyouts of Public Majority [GOLDMAN SACHS Shareholders LOGO]
Stock Initial Inside Consideration Aggregate Price One 52 Week Premium Ownership Type Consideration For Acquiring Company/ Day Prior Date High Prior Over 52 Before the Amount Acquired Date Acquired Company to Ann. of Ann. to Ann. Week High Transaction (000's) 5/2000 Total Fina Elf SA $ 169.29 5/25/2000 $99.25 90.5% 95.6% Stock $ 2,327,00 Elf Aquitaine SA 5/2000 TietoEnator Oyj Abp 33.50 5/15/2000 45.61 1.3 55.7 Stock 262,900 Entra Data AB 5/2000 Fiat SpA (a) 4.04 5/5/2000 14.94 0.0 70.0 Cash 444,900 Magnetti Marelli SpA 5/2000 Fiat SpA 11.79 5/5/2000 15.25 (5.8) 75.0 Cash 355,700 Toro Assicurazioni SpA 4/2000 Banco Santaander 13.27 4/19/2001 4.26 NA 70.7 Cash 132,700 Central Hispano Credital Predial Portugues, S.A. 4/2000 Taylor Woodrow PLC 5.15 4/7/2000 7.52 NA 55.0 Cash 142,200 Monarch Development Corporation 3/2000 Hartford Financial 42.56 3/27/2000 55.00 (20.0) 81.5 Cash 1,324,600 Services Group Inc Hartford Life Inc. 3/2000 Security Capital Group 2.75 3/23/2000 5.13 (33.7) 87.0 Cash 156,800 Inc. Homestead Village Inc. 3/2000 Citigroup Inc. 33.69 3/21/2000 41.88 (0.9) 85.0 Cash 2,449,300 Travelers Property Casualty 3/2000 Spotless Group Limited 0.73 3/16/2000 1.05 (10.6) 67.0 Stock 101,700 Spotless Services Limited 3/2000 Israel Chemicals 4.09 3/7/2000 4.40 2.2 89.2 Cash 143,900 Limited Dead Sea Works Limited 3/2000 Linde AG 42.38 3/3/2000 55.30 44.7 65.0 Cash 205,500 WA Hoek's Machine 1/2000 Thermo Instruments 18.50 1/31/2000 26.25 6.7 84.0 Cash 167,900 Systems Inc Thermo BioAnalysis Corporation 1/2000 Corp Mafre SA 27.03 1/25/2000 23.80 37.1 68.8 Cash 325,600 Mapfre Vida Seguros 1/2000 Snia-BPD SpA 2.99 1/10/2000 4.66 (27.9) 75.0 Cash/Stock 128,500 Sorin Biomedica SpA 1/2000 Telefonica SA 2.81 1/13/2000 3.97 NA 51.8 Stock 4,066,100 Telefonica Argentina SA 11/1999 Alcoa Inc. / 14.06 11/13/1999 20.31 (16.3) 84.6 Cash 261,800 Howmet International Initial Premium Final Premium Percent Acquiring Company/ Initial Bid Over Market Final Bid Over Market Increase Date Acquired Company Per Share Price Per Share Price in Offer 5/2000 Total Fina Elf SA $ 189.03 11.7% $ 189.03 11.7% 0.0% Elf Aquitaine SA 5/2000 TietoEnator Oyj Abp 46.19 37.9 46.19 37.9 0.0 Entra Data AB 5/2000 Fiat SpA (a) 4.94 22.2 4.94 22.2 0.1 Magnetti Marelli SpA 5/2000 Fiat SpA 14.36 21.8 14.36 21.8 0.0 Toro Assicurazioni SpA 4/2000 Banco Santaander NA NA 13.67 3.0 NA Central Hispano Credital Predial Portugues, S.A. 4/2000 Taylor Woodrow PLC NA NA 7.72 50.0 18.7 Monarch Development Corporation 3/2000 Hartford Financial 44.00 3.4 50.50 18.7 14.8 Services Group Inc Hartford Life Inc. 3/2000 Security Capital Group 3.40 23.6 4.10 49.1 20.6 Inc. Homestead Village Inc. 3/2000 Citigroup Inc. 41.50 23.2 41.95 24.5 1.1 Travelers Property Casualty 3/2000 Spotless Group Limited 0.94 28.8 0.94 29.3 0.0 Spotless Services Limited 3/2000 Israel Chemicals 4.50 9.9 4.50 9.9 0.1 Limited Dead Sea Works Limited 3/2000 Linde AG 80.05 88.9 80.05 6.7 0.0 WA Hoek's Machine 1/2000 Thermo Instruments 28.00 51.4 28.00 51.4 0.0 Thermo BioAnalysis Corporation 1/2000 Corp Mafre SA 32.64 20.7 32.64 20.7 0.0 Mapfre Vida Seguros 1/2000 Snia-BPD SpA Sorin Biomedica SpA 3.36 12.4 3.36 3.0 (0.1) 1/2000 Telefonica SA NA NA 3.94 40.0 NA Telefonica Argentina SA 11/1999 Alcoa Inc. / 17.00 20.9 21.00 49.3 23.5 Howmet International
(1) Aggregate consideration offer both ordinary shares and preference shares. Offered $ 10.77 per preference share. Comparison of Selected Buyouts of Public Majority [GOLDMAN SACHS Shareholders LOGO]
Stock Initial Inside Consideration Aggregate Price One 52 Week Premium Ownership Type Consideration For Acquiring Company/ Day Prior Date High Prior Over 52 Before the Amount Acquired Date Acquired Company to Ann. of Ann. to Ann. Week High Transaction (000's) 11/1999 Amway Corporation / 9.39 11/15/1999 12.99 (1.5) 76.7 Cash 476,844 Amway Japan 11/1999 Amway Corporation / 11.75 11/15/1999 14.44 4.2 84.9 Cash 153,000 Amway Asia Pacific 9/1999 Hoechst AG / 12.91 5/19/1999 19.31 (12.3) 56.2 Cash 329,200 Celanese Canada Inc 8/1999 Worldcast(UBS 46.39 4/16/1999 67.66 N.A. 95.4 Cash 263,800 Capital) / Groupe Valfond 8/1999 Investor Group / 15.00 7/19/1999 15.00 N.A. 90.0 Cash 151,000 Nortel Inversora SA 7/1999 Total SA / 573.87 6/9/1999 629.07 N.A. 98.7 Stock 129,200 Petrofina SA 7/1999 Viacom Inc(Natl 9.00 3/21/1999 9.56 (5.9) 80.9 Cash 191,600 Amusements) / Spelling Entertainment Group 6/1999 Roche Holding AG / 86.81 6/3/1999 88.63 (2.0) 67.0 Cash 4,818,000 Genentech Inc 5/1999 Global TeleSystems 199.11 4/14/1992 218.87 N.A. 52.5 Cash 189,800 Group Inc / Omnicom 4/1999 Endesa SA / 13.33 11/5/1998 13.97 (2.3) 75.0 Cash/ Stock 1,019,300 Cia Sevillana de Electricidad 4/1999 Endesa SA / 38.72 11/5/1998 46.51 (10.9) 87.6 Cash/ Stock 102,700 Electra de Viesgo SA(Endesa) 4/1999 Endesa SA / 24.54 11/5/1998 N.A. N.A. 91.4 Cash/ Stock 149,800 Empresa Nacnl Hidroelec Ribago 4/1999 Cie de Saint-Gobain 90.65 3/24/1999 100.28 N.A. 96.1 Cash 119,700 SA / Poliet SA 2/1999 Affiliated Computer 16.22 10/16/1998 21.94 N.A. 51.0 Cash 131,900 Services / BRC Holdings Inc 12/1998 Allianz AG / 1.32 10/30/1998 2.60 N.A. 68.0 Cash 100,700 MMI Ltd(Allianz AG) 12/1998 Investor Group / 6.68 10/14/1998 7.87 N.A. 86.6 Cash 203,600 Samancor Ltd 12/1998 Disco/Ahold 5.22 11/13/1998 15.20 N.A. 52.0 Cash 159,400 International / Disco SA Initial Premium Final Premium Percent Acquiring Company/ Initial Over Market Final Bid Over Market Increase Date Acquired Company Per Share Price Per Share Price in Offer 11/1999 Amway Corporation / 12.80 36.4 14.13 50.5 10.4 Amway Japan 11/1999 Amway Corporation / 15.50 31.9 18.00 53.2 16.1 Amway Asia Pacific 9/1999 Hoechst AG / 16.93 31.2 18.46 43.0 9.0 Celanese Canada Inc 8/1999 Worldcast(UBS N.A. N.A. 53.20 14.7 N.M. Capital) / Groupe Valfond 8/1999 Investor Group / N.A. N.A. 52.43 249.5 N.M. Nortel Inversora SA 7/1999 Total SA / N.A. N.A. 563.18 (1.9) N.M. Petrofina SA 7/1999 Viacom Inc(Natl 9.00 0.0 9.75 8.3 8.3 Amusements) / Spelling Entertainment Group 6/1999 Roche Holding AG / 82.50 (5.0) 82.50 (5.0) N.M. Genentech Inc 5/1999 Global TeleSystems N.A. N.A. 210.44 5.7 N.M. Group Inc / Omnicom 4/1999 Endesa SA / 13.65 2.4 13.66 2.5 N.M. Cia Sevillana de Electricidad 4/1999 Endesa SA / 41.42 7.0 41.43 7.0 N.M. Electra de Viesgo SA(Endesa) 4/1999 Endesa SA / 26.26 7.0 26.27 7.0 N.M. Empresa Nacnl Hidroelec Ribago 4/1999 Cie de Saint-Gobain N.A. N.A. 111.40 22.9 N.M. SA / Poliet SA 2/1999 Affiliated Computer N.A. N.A. 19.00 17.1 N.M. Services / BRC Holdings Inc 12/1998 Allianz AG / N.A. N.A. 1.37 3.6 N.M. MMI Ltd(Allianz AG) 12/1998 Investor Group / N.A. N.A. 7.95 19.0 N.M. Samancor Ltd 12/1998 Disco/Ahold N.A. N.A. 7.00 34.1 N.M. International / Disco SA
(a) Aggregate consideration offer for both ordinary shares and preference shares. Offered $10.77 per preference share
Comparison of Selected Buyouts of Public Majority [Goldman Sachs LOGO] Shareholders Stock Initial Inside Consideration Aggregate Price One 52 Week Premium Ownership Type Consideration For Acquiring Company/ Day Prior Date High Prior Over 52 Before the Amount Acquired Date Acquired Company to Ann. of Ann. to Ann. Week High Transaction (000's) 12/1998 Allianz AG / 13.25 10/7/1998 17.19 N.A. 86.8 Cash 100,000 AGF Union-Fenix(Assurance Gen) 12/1998 Prince of Liechtenstein / 1,053.78 10/28/1998 N.A. N.A. 75.0 Cash 951,100 Liechtenstein Global Trust 12/1998 Allmerica Financial Corp 27.56 10/27/1998 34.94 (17.0) 81.8 Cash 212,400 Citizens Corp(Hanover Ins Co) 10/1998 Dow AgroSciences/ 19.75 4/30/1998 29.25 (29.9) 68.6 Cash 411,600 Mycogen Corp 9/1998 NV Koninklijke KNP BT/ 10.38 1/22/1998 12.33 (14.8) 70.0 Cash 138,900 BT Office Products 8/1998 Petrofina SA/ 50.13 2/25/1997 55.50 8.1 85.4 Cash 257,000 Fina Inc. 3/1998 Waste Management/ 13.00 6/20/1997 16.88 (11.1) 67.0 Cash 853,100 Wheelabrator Technologies 3/1998 Robert Johnson & Liberty Media/ 40.00 9/11/1997 40.00 20.0 89.0 Cash 130,460 BET Holdings 1/1998 Rheinmetall Berlin AG/ 10.32 9/29/1997 20.00 N.A. 53.5 Stock 278,100 Kolbenschmidt AG 11/1997 Telephone and Data Systems Inc./ 33.00 12/18/1993 36.88 N.A. 80.7 Stock 537,840 United States Cellular 11/1997 Enron Corp/ 30.25 5/14/1997 32.38 N.A. 52.0 Stock 428,017 Enron Global Power & Pipelines 12/1997 Orion Capital/ 32.50 9/18/1997 35.25 (3.5) 77.3 Cash 117,219 Guaranty National Corp 8/1997 Rhone-Poulenc/ 79.44 6/26/1997 80.88 13.7 68.0 Cash 434,000 Rhone-Poulenc Rorer Inc. 3/1997 Tembec Inc./ 7.00 3/4/1997 7.00 42.9 51.0 Stock 111,600 Spruce Falls 2/1997 Hoechst AG/ 266.21 12/10/1996 273.78 7.6 56.5 Cash 3,500,000 Roussel-Uclaf 9/1996 Chemed Corporation / 36.50 8/8/1996 41.50 (1.2) 54.9 Cash 93,600 Roto Rooter Inc. 8/1996 Investor Group/ 2.90 7/1/1996 3.40 (30.0) 51.0 Cash 137,200 Macallan-Glenlivet Initial Premium Final Premium Percent Acquiring Company/ Initial Bid Over Market Final Bid Over Market Increase Date Acquired Company Per Share Price Per Share Price in Offer 12/1998 Allianz AG / N.A. N.A. 13.25 (0.0) N.M. AGF Union-Fenix(Assurance Gen) 12/1998 Prince of Liechtenstein / N.A. N.A. 1,261.57 19.7 N.M. Liechtenstein Global Trust 12/1998 Allmerica Financial Corp / 29.00 5.2 33.25 20.6 14.7 Citizens Corp(Hanover Ins Co) 10/1998 Dow AgroSciences/ 20.50 3.8 28.00 41.8 36.6 Mycogen Corp 9/1998 NV Koninklijke KNP BT/ 10.50 1.2 13.75 32.5 31.0 BT Office Products 8/1998 Petrofina SA/ 60.00 19.7 60.00 19.7 0.0 Fina Inc. 3/1998 Waste Management/ 15.00 15.4 16.50 27.0 10.0 Wheelabrator Technologies 3/1998 Robert Johnson & Liberty Media/ 48.00 20.0 63.00 57.5 31.3 BET Holdings 1/1998 Rheinmetall Berlin AG/ N.A. N.A. 10.32 0.0 N.M. Kolbenschmidt AG 11/1997 Telephone and Data Systems Inc./ N.A. N.A 33.00 0.0 N.M. United States Cellular 11/1997 Enron Corp/ N.A. N.A. 32.00 5.8 N.M. Enron Global Power & Pipelines 12/1997 Orion Capital/ 34.00 4.6 36.00 10.8 5.9 Guaranty National Corp 8/1997 Rhone-Poulenc/ 92.00 15.8 97.00 22.1 5.4 Rhone-Poulenc Rorer Inc. 3/1997 Tembec Inc./ N.A. N.A. 10.00 42.9 N.M. Spruce Falls 2/1997 Hoechst AG/ N.A. N.A. 294.53 10.6 N.M. Roussel-Uclaf 9/1996 Chemed Corporation / 41.00 12.3 41.00 12.3 0.0 Roto Rooter Inc. 8/1996 Investor Group/ N.A. N.A. 2.38 (13.0) N.M. Macallan-Glenlivet
(a) Aggregate consideration offer for both ordinary shares and preference shares. Offered $10.77 per preference share.
Comparison of Selected Buyouts of Public Majority [Goldman Sachs LOGO] Shareholders Stock Initial Inside Consideration Price One 52 Week Premium Ownership Type Acquiring Company/ Day Prior Date High Prior Over 52 Before the Date Acquired Company to Ann. of Ann. to Ann. Week High Transaction 1/1996 Berkshire Hathaway Inc./ 55.75 8/25/1995 68.63 N.A. 52.4 Cash GEICO Corp (Berkshire Hathaway) 12/1995 COBE Laboratories/ 15.75 7/14/1995 19.38 (7.1) 53.0 Cash REN-Corp-USA (COBE Labs) 12/1995 BIC SA/ 35.75 5/19/1995 38.88 (6.1) 78.0 Cash Bic Corp (BIC SA) 10/1995 McCaw Cellular/ 109.88 4/7/1995 140.50 (9.3) 52.0 Cash LIN Broadcasting (McCaw Cellular) 9/1995 PacifiCorp/ 24.25 11/2/1994 29.50 (5.1) 86.6 Cash Pacific Telecom (PacifiCorp) 6/1995 Club Mediterranee SA/ 22.63 4/5/1995 26.00 10.0 70.8 Cash Club Med 5/1995 GTE Corp/ 17.75 9/8/1994 21.25 5.9 90.0 Cash Contel Cellular Inc. 3/1995 Proventus AB/ 3.70 12/15/1994 4.29 N.A. 78.2 Cash Aritmos AB 12/1994 Ogden Corp./ 17.38 6/6/1994 24.25 (29.2) 84.2 Stock Ogden Services 9/1994 EW Scripps Co./ 78.50 2/17/1994 86.00 0.7 86.0 Stock Scripps Howard Broadcasting 4/1994 Medco Containment Services/ 25.75 10/13/1993 36.50 (25.3) 54.2 Cash Medical Marketing Group 10/1993 Torchmark/ 26.88 2/22/1993 30.25 0.8 83.0 Cash United Investors Management 5/1993 Rust International Inc./ 17.88 11/13/1992 23.88 (25.1) 56.0 Cash/ Stock Brand Cos Inc. 3/1992 W.R.9Grace & Company/ 15.25 3/2/1992 N.A. N.A. 83.4 Cash Grace Energy Corporation 5/1992 Unocal Corp./ 9.88 2/24/1992 12.00 (9.8) 96.0 Stock Unocal Exploration Corp. 12/1991 Siemens AG/ 120.62 10/21/1991 N.A. N.A. 78.0 Cash/ Stock Siemens Nixdorf Information Systems 12/1991 Tele-Communications Inc./ 13.50 5/1/1991 16.50 (20.4) 57.2 Cash/ Stock United Artists Entertainment Co. Aggregate Consideration For Initial Premium Final Premium Percent Acquiring Company/ Amount Acquired Initial Bid Over Market Final Bid Over Market Increase Date Acquired Company (000's) Per Share Price Per Share Price in Offer 1/1996 Berkshire Hathaway Inc./ 2,347,000 N.A. N.A. 70.00 25.6 N.M. GEICO Corp (Berkshire Hathaway) 12/1995 COBE Laboratories/ 177,700 18.00 14.3 20.00 27.0 11.1 REN-Corp-USA (COBE Labs) 12/1995 BIC SA/ 212,600 36.50 2.1 40.50 13.3 11.0 Bic Corp (BIC SA) 10/1995 McCaw Cellular/ 3,323,400 127.50 16.0 129.90 18.2 1.9 LIN Broadcasting (McCaw Cellular) 9/1995 PacifiCorp/ 159,000 28.00 15.5 30.00 23.7 7.1 Pacific Telecom (PacifiCorp) 6/1995 Club Mediterranee SA/ 135,600 26.50 17.1 32.00 41.4 21.9 Club Med 5/1995 GTE Corp/ 254,300 22.50 26.8 25.50 43.7 13.3 Contel Cellular Inc. 3/1995 Proventus AB/ 141,300 N.A. N.A. 4.38 18.4 N.M. Aritmos AB 12/1994 Ogden Corp./ 110,250 0.78 (1.3) 0.84 6.3 7.7 Ogden Services 9/1994 EW Scripps Co./ 115,920 3.00 10.4 3.45 26.9 15.0 Scripps Howard Broadcasting 4/1994 Medco Containment Services/ 122,510 27.25 5.8 27.75 7.8 1.8 Medical Marketing Group 10/1993 Torchmark/ 216,591 30.50 13.5 31.25 16.3 2.5 United Investors Management 5/1993 Rust International Inc./ 185,000 17.88 0.0 18.75 4.9 4.9 Brand Cos Inc. 3/1992 W.R.9Grace & Company/ 77,300 16.50 8.2 19.00 24.6 15.2 Grace Energy Corporation 5/1992 Unocal Corp./ 117,500 0.50 9.5 0.54 18.3 8.0 Unocal Exploration Corp. shares shares 12/1991 Siemens AG/ 1,000,000 147.52 22.3 147.52 22.3 0.0 Siemens Nixdorf Information Systems 12/1991 Tele-Communications Inc./ 1,189,000 0.95 (2.7) 1.02 3.6 6.5 United Artists Entertainment Co. shares shares
(a) Aggregate consideration offer for both ordinary shares and preference shares. Offered $10.77 per preference share.
Comparison of Selected Buyouts of Public Majority [Goldman Sachs LOGO] Shareholders Stock Initial Inside Consideration Aggregate Price One 52 Week Premium Ownership Type Consideration For Acquiring Company/ Day Prior Date High Prior Over 52 Before the Amount Acquired Date Acquired Company to Ann. of Ann. to Ann. Week High Transaction (000's) 4/1991 Murphy Oil Corp/ 16.63 1/3/1991 22.63 (24.8) 61.0 Stock 391,800 Ocean Drilling & Exploration 3/1991 BHP Holdings/ 33.75 2/6/1991 44.50 (10.1) 50.1 Cash 530,000 Hamilton Oil Corp. 11/1990 Freeport-McMoRan Inc./ 8.00 7/31/1990 11.13 (5.7) 81.5 Stock 239,161 Freeport-McMoRan Oil & Gas 10/1990 Renault Vehicules Industrial/ 5.25 7/6/1990 21.13 (71.6) 60.0 Cash 103,145 Mack Trucks Inc. 8/1990 Imetal S.A./ 11.50 1/24/1990 16.00 (3.1) 55.6 Cash 781,571 Copperweld Corp. Steel 8/1990 American Express Company/ 14.50 3/2/1990 N.A. N.A. 61.0 Stock 360,000 Shearson Lehman Brothers 6/1990 Esselte A.B./ 41.83 10/3/1989 38.00 14.5 78.5 Cash 219,298 Esselte Business Systems, Inc. 5/1990 Montedison S.p.A./ 31.12 N.A. 32.13 15.2 71.3 Cash 465,904 Erbamont 1/1990 Dow Jones & Co. Inc./ 15.13 9/21/1989 16.38 9.8 66.2 Cash 657,394 Telerate, Inc. 1/1990 Montedison S.p.A./ 44.13 7/31/1989 46.00 6.5 81.0 Cash 653,811 HIMONT Inc. 1/1990 Tele-Communications Inc./ 27.00 5/24/1989 24.00 32.3 75.0 Cash 209,625 WestMarc Communications 12/1989 General Accident Fire Life/ 0.28 6/16/1989 1.38 N.A. 51.0 Cash 175,000 NZI Corp. Ltd. 11/1989 Primerica Corporation/ 17.88 6/9/1989 21.25 (5.9) 70.8 Stock 453,000 The A.L. Williams Corporation 11/1989 Mayfair Acquisition Corp/ 17.25 4/3/1989 25.25 (6.9) 71.0 Cash 193,600 Mayfair Super Markets, Inc. 8/1989 The Henley Group, Inc./ 19.25 6/8/1989 21.38 (4.1) 80.2 Cash 119,801 Fisher Scientific Group, Inc. 6/1989 Zayre Corp./ 26.38 12/5/1989 27.13 0.3 83.0 Stock 414,000 The TJX Companies, Inc. Number of entries ---------------------------------------------------------------------------------------------------------------------- Mean (4.0)% 71.2% 84.0 Median (3.8) 73.2 High 44.7 98.7 Low (71.6) 50.1 ---------------------------------------------------------------------------------------------------------------------- Initial Premium Final Premium Percent Acquiring Company/ Initial Bid Over Market Final Bid Over Market Increase Date Acquired Company Per Share Price Per Share Price in Offer 4/1991 Murphy Oil Corp/ 0.50 2.3 0.55 12.5 0.1 Ocean Drilling & Exploration shares shares 3/1991 BHP Holdings/ 40.00 18.5 40.00 18.5 0.0 Hamilton Oil Corp. 11/1990 Freeport-McMoRan Inc./ 0.27-0.33 31.2 0.31 37.5 4.8 Freeport-McMoRan Oil & Gas shares shares 10/1990 Renault Vehicules Industrial/ 6.00 14.3 6.25 19.1 4.2 Mack Trucks Inc. 8/1990 Imetal S.A./ 15.50 34.6 17.00 47.8 9.7 Copperweld Corp. Steel 8/1990 American Express Company/ 0.43 0.1 0.48 12.8 12.7 Shearson Lehman Brothers 6/1990 Esselte A.B./ 43.50 4.0 48.06 14.9 10.5 Esselte Business Systems, Inc. 5/1990 Montedison S.p.A./ 35.00 18.9 37.00 18.9 0.0 Erbamont 1/1990 Dow Jones & Co. Inc./ 18.00 19.0 21.00 38.8 16.7 Telerate, Inc. 1/1990 Montedison S.p.A./ 47.00 11.1 51.00 15.6 4.1 HIMONT Inc. 1/1990 Tele-Communications Inc./ 31.75 17.5 32.25 19.4 1.6 WestMarc Communications 12/1989 General Accident Fire Life/ N.A. N.A. 0.37 32.1 N.M. NZI Corp. Ltd. 11/1989 Primerica Corporation/ 0.80 11.7 0.82 33.4 19.4 The A.L. Williams Corporation shares shares 11/1989 Mayfair Acquisition Corp/ 23.50 36.2 24.70 43.2 5.1 Mayfair Super Markets, Inc. 8/1989 The Henley Group, Inc./ 20.50 23.3 22.25 33.8 8.5 Fisher Scientific Group, Inc. 6/1989 Zayre Corp./ 1.35 32.2 1.45 42.0 0.1 The TJX Companies, Inc. shares shares --------------------------------------------------------------------------------------------------------- Mean 16.5% 24.5% 8.1% Median 15.4 19.6 5.9 High 88.9 249.5 36.6 Low (5.0) (13.0) (0.1) ---------------------------------------------------------------------------------------------------------
(a) Aggregate consideration offer for both ordinary shares and preference shares. Offered $10.77 per preference share. EX-99.(C)(4) 25 dex99c4.txt MATERIALS PRES. BY GOLDMAN SACHS 1/24/01 Exhibit 99.(c)(4) Highly Confidential Project Mars Board Meeting Goldman Sachs International January 24, 2001 Benefits to doing the Mars Minority Buyout [LOGO OF GOLDMAN SACHS] - --------------- o Access to Mars cash flows Strategic o Regroup all Milky Way US activities with the rest of the group o Enable more efficient combination of present and future Mars and Milky Way US operations - --------------- Financial o Eliminate lower Mars valuation impact on Milky Way o Transaction is slightly earnings accretive - --------------- Capital Markets o Better investor perception of Milky Way stock o Consolidate investor demand in more liquid stock o Replace US investor base with European investors more knowledgeable about the industry - --------------- o Eliminate perception of complexity in intra-group Corporate/ transactions Employee Incentive o Use of same stock for incentive scheme on a worldwide basis o Provide an incentive to US employees based on the stock of a company operating in an international market - --------------- Key Financing Assumptions [LOGO OF GOLDMAN SACHS] We assume: o Milky Way share price is [EURO]200 o Foreign exchange rate is [EURO]1 for $0.95 o Transaction is 50% equity - financed, through a rights issue o Rights are issued at a 15% discount Transaction Mars [LOGO OF GOLDMAN SACHS] Sensitivity Analysis
Assuming a 50% equity financing through a rights issue 2002 Pre Transaction FFO/Net Debt 59% Based on a Mars share price at 23/01: $25.44 2002 Pre Transaction EBITDA Interest Cover 6.3
2002 Deal 2002 EPS 2003 EPS 2002 EPS 2003 EPS EBITDA 2002 Capital Considera- Accretion pre Accretion pre Accretion Accretion Interest FFO/Net Increase tion goodwill goodwill post goodwill post goodwill Cover Debt (EURO) (EURO) ------------- ------------- ------------- ------------- -------- ------- -------- ----------- Implied Premium on Cash the 23/01 Offer/share stock price - ------------ ----------- 25.00 -2% 8.8% 10.9% 5.5% 8.5% 5.10 33.6% 466 933 26.00 2% 8.2% 10.4% 4.5% 7.7% 5.07 33.2% 484 968 27.00 6% 7.7% 9.9% 3.4% 6.9% 5.04 32.7% 502 1004 28.00 10% 7.1% 9.4% 2.4% 6.0% 5.01 32.3% 520 1039 29.00 14% 6.5% 8.9% 1.4% 5.2% 4.98 31.9% 537 1075
Exchange Rate Assumption $/ of 0.95 with a Milky Way share price of 200.00 Mars Stock Price Performance [LOGO OF GOLDMAN SACHS] Daily Indexed Trading History Since Inception [This graph sets forth MARS stock price performance. The indexed trading price for shares of MARS on March 27, 1998 was $26.13 and on January 16, 2001 was $22.69, down 13.2%. The indexed trading price for shares of MARS on the occurrence of the following events were as follows:
Date Price Event December 22, 1998 $28.00 Net income up 58%, sales up 2% and operating profit up 11% from previous year. EPS of $0.52 is lower than analysts expectations of $0.84. May 3, 1999 $22.94 Charles O'Dell resigns as CEO of SMS, Michel Landel named president, CEO and board member. MARS reports decreased contract retention rates and sluggish sales growth. November 3, 1999 $18.00 Lawrence E. Hyatt resigns as senior vice president and chief financial officer of SMS. January 11, 2000 $12.69 Reported net income of $27.8 million down 2% from previous quarter and down 16% from previous year. Sales for the quarter increased 6.5% from the previous year. Profit growth lagged sales growth due to higher labor and start-up costs for quarter. EPS of $0.94 meets analysts' expectations. April 7, 2000 $13.75 Earnings up 5% and sales up 8% from previous quarter. July 14, 2000 $16.88 3rd quarter earnings up 22% from previous quarter driven by double digit growth in operating profits in the health care and corporate divisions. October 19, 2000 $17.25 7 % rise in sales and 11% rise in earnings from previous quarter. First profitable fourth quarter since 1998. EPS of $1.00 meets analysts' expectations. January 11, 2001 $21.75 Quarterly net income of $36 million, up 29% compared to same period previous year. Sales up 6% and operating profit up 14% from previous year.]
Note: S&P 500 up 21.1% for the same period Analysis of Premiums in Acquisition Transactions [LOGO OF GOLDMAN SACHS] Involving Insiders Inside Ownership Greater Than 40% and Cash Consideration Only Buyouts (a) (greater than $100m) ---------------------------------------------------- Initial Final Premium (b) Premium (c) ------------ ------------- Low 0.0% 0.0% Median 18.4% 26.4% Mean 15.9% 21.8% High 88.9% 88.9% (a) Acquiror had more than 40% ownership prior to transaction. Sample size includes 59 transactions from 11/1989 - 5/2000. (b) Initial premiums were found by calculating the percentage difference between the earliest mentioned offer price and the undisturbed target stock price. Source: Company filings and public information. (c) Final premiums were found by calculating the percentage difference between the consideration ultimately paid and the undisturbed target stock price. Source: Company filings and public information. EX-99.(D)(5) 26 dex99d5.txt ASSISTANCE AGRMT. DATED AS OF MARCH 27, 1998 Exhibit 99.(d)(5) ASSISTANCE AGREEMENT This ASSISTANCE AGREEMENT (this "Agreement") is made and entered into as of March 27, 1998 by and between SODEXHO ALLIANCE, S.A. a societe anonyme organized under the laws of the Republic of France ("Sodexho"), and MARRIOTT INTERNATIONAL, INC., a Delaware corporation to be renamed "Sodexho Marriott Services, Inc." ("SMS"). W I T N E S S E T H: WHEREAS, Sodexho has significant experience and knowledge in the administration, trading, organization, control, management and financing of the food service and facilities management business; WHEREAS, SMS is in the food service and facilities management business and wishes to benefit from the knowledge and experience of Sodexho; and WHEREAS, Sodexho agrees to provide assistance to SMS under the terms and conditions described below. THEREFORE, the parties hereto agree as follows: 1. Scope of Assistance Sodexho agrees to provide SMS, on the terms and conditions described below, with assistance and consultation in the following fields: o purchasing activities o catering and site support services o marketing o management and administration o legal and fiscal matters o human relations o communications o cash management Among other things, Sodexho will provide SMS with periodic reports on developments in the above-listed fields, in accordance with Sodexho's customary business practices. Each party agrees that the assistance to be provided by Sodexho hereunder shall cover SMS and any present or future controlled subsidiaries of SMS. 2. Description of the Services For the term of this Agreement, Sodexho shall assist SMS and its present and future controlled subsidiaries by providing the following consulting and advisory services: 2.1. Purchasing activities: -- Negotiation of supply contracts with SMS's suppliers -- Discounts and other benefits from Sodexho's group-wide purchasing activities 2.2. Catering and site support activities: -- Service methodology -- Product information -- New product development -- Inventory management 2.3. Marketing: -- Information on trends, market distribution and competition -- Recommendations regarding sales training and techniques, including, if necessary, visits to SMS's sales staff and contacts with SMS's customers -- Assistance with fairs and exhibitions -- Programs and documentation for use by sales staff -- Referrals to SMS of customers that have relationships with Sodexho outside of the United States 2.4. Management and administration: -- General and analytical accounting systems -- Management information and control systems -- Reporting packages -- Budget systems -- Budgetary controls -- Strategic matters, including product diversification and mergers and acquisitions 2.5. Legal and fiscal matters: 2 -- Advice on legal and fiscal matters, including preparation and negotiation of contracts with customers and suppliers -- Advice on insurance matters 2.6. Human relations: -- Organizational development -- Development of premium programs, bonuses and other forms of incentive compensation for employees -- Development of career programs for SMS's executives 2.7. Communications: -- Advice and support in preparing communication strategies -- Advice and support in implementing business plans -- Training communications managers -- Managing the Sodexho brand (graphics standards manual) 2.8. Cash management: -- Establishing and analyzing internal objectives -- Rationalizing short-term cash -- Agreements with bankers -- Assistance in negotiations with financial institutions that provide lending and leasing arrangements 3. Provision of Services 3.1. Regular assistance: Sodexho shall provide SMS with regular assistance in the fields listed in Section 2 as follows: -- dispatching Sodexho's executives and employees to meet with SMS's management on a periodic basis -- making Sodexho's executives and employees available to SMS's management to respond to questions from, and provide advice to, SMS's management -- communicating to SMS advice received by Sodexho relating to the fields mentioned in Section 2 -- communicating to SMS the conclusions of studies conducted by Sodexho, practical information in Sodexho's possession and any recommendation regarding catering and site support services likely to enable SMS to develop and improve its activities. 3 3.2. Specific studies or services: If SMS requires the assistance of Sodexho for a particular project that is outside of the ordinary course of business, but which SMS believes is necessary or desirable to pursue (such as an acquisition or the development of a new business), Sodexho shall provide such assistance in accordance with the provisions under Section 4.2. 4. Sodexho's Remuneration 4.1. Regular assistance: Subject to Section 5.3, SMS agrees to pay to Sodexho an annual network fee (the "Network Fee") equal to the specified percentage set forth below (the "Network Percentage") of the annual gross sales of SMS and its consolidated subsidiaries, determined in accordance with generally accepted accounting principles in the United States ("SMS's Gross Sales") for each of the fiscal years set forth below: Fiscal Year Ending Network Percentage ------------------ ------------------ August 31, 1998 0% August 31, 1999 0.05% August 31, 2000 0.15% If the term of this Agreement is extended pursuant to Section 6.8, then the Network Fee shall remain at 0.15%. The Network Fee shall be prorated for any portion of a fiscal year occurring during the term of this Agreement. 4.2. Specific studies or services: If SMS requests from Sodexho specific studies or services described in Section 3.2, Sodexho and SMS shall determine in advance the nature and extent of the studies or services requested, and Sodexho will invoice SMS for all third-party billings relating to such studies or services in accordance with Section 5.1(b). No additional Network Fees will be payable for the work of Sodexho's management and employees in connection with such specific studies or services. 5. Invoicing and Methods of Payment: 5.1. Methods of invoicing: (a) At the end of each month during a fiscal year, Sodexho shall issue to SMS a monthly invoice for one-twelfth (1/12) of SMS's Gross 4 Sales projected for such fiscal year, multiplied by the Network Percentage for the relevant fiscal year. (b) Following the end of each quarter, Sodexho shall provide SMS with a statement of third-party services rendered (including the nature of work carried out and the names of third-party vendors utilized) as described in Section 4.2. 5.2. Payments: SMS shall pay on receipt any invoice delivered pursuant to Section 5.1, but in any case not later than 30 days after receipt of such invoice. 5.3. Determination by SMS's Board of Directors: Promptly after the end of each fiscal year, the managements of Sodexho and SMS shall prepare a joint report for the Board of Directors of SMS (x) describing the services provided by Sodexho to SMS during such fiscal year and (y) estimating the fair market value of the benefits received by SMS from such services. The Independent Directors (as defined below) of the Board of Directors of SMS shall review such report with a view towards assessing whether the Combined Fee (as defined below) for such fiscal year exceeds the fair market value of the benefits received from such services. The Independent Directors shall have the right to retain independent advisors and to have access to all information and personnel necessary to make such assessment. Each party agrees that Sodexho's remuneration for the services provided hereunder in respect of any fiscal year shall be the lesser of (i) the Combined Fee and (ii) the fair market value of the benefits received by SMS from such services during such fiscal year as determined by the Independent Directors. If the Combined Fee exceeds the fair market value of the benefits received as so determined, Sodexho shall reimburse SMS for such excess, plus interest at a rate of LIBOR plus 1%. "Combined Fee" means, for any fiscal year, the Network Fee for such fiscal year plus the Royalty Fee (as defined in the Royalty Agreement referred to in Section 6.3 hereof) for such fiscal year. For purposes of this Agreement, "Independent Directors" shall exclude (i) any persons designated by Sodexho for nomination to the Board of Directors of SMS pursuant to the Stockholder Agreement dated as of the date hereof between Sodexho and SMS, (ii) any employee or officer of Sodexho, SMS or Spinco (as defined below) or their respective affiliates and (iii) William J. Shaw and John W. Marriott III and any successor director designated by either of them. 5 6. Miscellaneous 6.1. Headings: The headings in this Agreement are for convenience of reference only and shall not control or affect the meaning or construction of any provisions hereof. 6.2. No Inconsistent Agreements: SMS will not hereafter enter into any agreement with respect to its securities which is inconsistent with, or grant rights superior to the rights granted to Sodexho pursuant to, this Agreement. 6.3. Entire Agreement; Termination of Prior Agreement: (a) This Agreement, the Royalty Agreement dated as of the date hereof by and between Sodexho and SMS (the "Royalty Agreement"), the Agreement and Plan of Merger dated as of September 30, 1997 by and among Marriott International, Inc. ("MII"), Marriott-ICC Merger Corp., New Marriott MI, Inc. ("Spinco"), Sodexho and International Catering Corporation, as amended (the "Merger Agreement"), the Distribution Agreement dated as of September 30, 1997 by and between MII and Spinco, as amended (the "Distribution Agreement") and the other related agreements constitute the entire agreement and understanding of the parties hereto or thereto in respect of the subject matter contained herein, and there are no restrictions, promises, representations, warranties, covenants, or undertakings with respect to the subject matter hereof or thereof, other than those expressly set forth or referred to herein and therein. This Agreement, the Royalty Agreement, the Merger Agreement, the Distribution Agreement and the other related agreements supersede all prior agreements and understandings between the parties hereto with respect to the subject matter hereof. (b) Sodexho agrees that, effective as of the date hereof, the Assistance Agreement dated as of September 1, 1992 between Sodexho and Sodexho USA, Inc., as amended, shall terminate pursuant to the Termination attached as Annex A hereto. 6.4. Notices: All notices, requests and other communications to any party hereunder shall be in writing (including facsimile) and shall be deemed to have been duly given or made if sent by facsimile (with confirmation in writing), delivered 6 personally or sent by registered or certified mail (postage prepaid, return receipt requested) to such party at its address or telecopier number set forth below or such other address or telecopier number as such party may hereinafter specify for the purpose to the party giving such notice: If to SMS, to: Sodexho Marriott Services, Inc. 10400 Fernwood Road Bethesda, MD 20817 U.S.A. Fax: (301) 380-8150 Attn: Chief Financial Officer With a copy to: Sodexho Marriott Services, Inc. 10400 Fernwood Road Bethesda, MD 20817 U.S.A. Fax: (301) 380-6727 Attn: General Counsel If to Sodexho, to: Sodexho Alliance, S.A. 3, avenue Newton 78180 Montigny Le Bretonneux France Fax: 011-33-1-3085-5005 Attn: Bernard Carton All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5 p.m. in the place of receipt and such day is any day except a Saturday, Sunday or other day that is a national holiday in the United States or the Republic of France and on which commercial banks are authorized by law to close (a "Business Day") in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt. 7 6.5. Applicable Law; Submission to Jurisdiction: This Agreement shall be construed in accordance with and governed by the laws of the State of New York, without regard to the conflicts of law rules of such jurisdiction. Each of the parties hereto hereby consents to the exclusive jurisdiction of a federal court of the United States of America sitting in the City of New York, Borough of Manhattan, or, if subject matter jurisdiction is unavailable, a New York state court sitting in the City of New York, Borough of Manhattan (each a "New York Court"), over any suit, action or proceeding arising out of or relating to this Agreement. Each party hereto irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue in any such New York Court or that any such proceeding which is brought in accordance with this Section has been brought in an inconvenient forum. Subject to applicable law, process in any such proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such New York Court. Without limiting the foregoing and subject to applicable law, each party agrees that service of process on such party as provided in Section 6.4 shall be deemed effective service of process on such party. Nothing herein shall affect the right of any party to serve legal process in any other manner permitted by law or at equity or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction. Each party hereby agrees to waive its respective rights to a jury trial of any claim or cause of action based upon or arising out of this Agreement. 6.6. Severability: The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of this Agreement, including any such provision, in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law. 6.7. Expenses: Except as otherwise provided herein, all costs and expenses in connection with this Agreement shall be paid by the party incurring such cost or expense. 6.8. Term: This Agreement shall become effective as of the date hereof and shall continue for a period expiring on the third anniversary of the date hereof. It shall then be automatically extended for one or more periods of one year, unless at least thirty (30) days' notice of termination by either party has been given in writing, confirming such party's intention not to renew this Agreement at the expiration 8 date of the first period or of each subsequent one-year period. Upon expiration of this Agreement and in accordance with Section 5, (i) Sodexho shall issue to SMS an invoice for any unpaid services and (ii) SMS may issue to Sodexho a statement requesting any reimbursement to which SMS is entitled under the provisions of Section 5.3. 6.9. Successors; Assigns; Transferees: The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective successors and permitted assigns. Except as expressly provided otherwise herein, neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by either party. Nothing in this Agreement, expressed or implied, is intended to confer on any individual, corporation, partnership, limited liability company, association, trust or other entity (including a government or political subdivision or an agency or instrumentality thereof) other than the parties hereto, and their respective successors and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. 6.10. Amendments; Waivers: No failure or delay on the part of either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. No provision of this Agreement may be waived except by an instrument in writing executed by the party or parties against whom the waiver is to be effective. No provision of this Agreement may be amended or otherwise modified except (i) by an instrument in writing executed by each party hereto and (ii) with the approval of the Independent Directors of SMS. 6.11. Counterparts: This Agreement may be executed in any number of counterparts, each of which shall be an original with the same effect as if the signatures thereto and hereto were upon the same instrument. 6.12. Remedies: Each party hereto acknowledges that the remedies at law of the other parties for a breach or threatened breach of this Agreement would be inadequate and, in recognition of this fact, any party to this Agreement, without posting any bond, and in addition to all other remedies which may be available, shall be entitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available. 9 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. SODEXHO ALLIANCE, S.A. /s/ Bernard Carton - ------------------------------------------ Name: Bernard Carton Title: Senior Vice President And Chief Financial Officer MARRIOTT INTERNATIONAL, INC. (to be renamed "Sodexho Marriott Services, Inc.") /s/ Lawrence E. Hyatt - ------------------------------------------ Name: Lawrence E. Hyatt Title: Vice President Annex A Termination of Assistance Agreement The undersigned hereby agree that, effective as of the date hereof, the Assistance Agreement (the "1992 Agreement") dated as of September 1, 1992, as amended, between Sodexho Alliance, S.A. ("Sodexho SA") and Sodexho USA, Inc. ("Sodexho USA") shall terminate and have no further force or effect. Sodexho SA shall promptly issue to Sodexho USA an invoice for any unpaid services under the 1992 Agreement, and Sodexho USA shall promptly make payment in respect thereof. IN WITNESS WHEREOF, the parties hereto have caused this Termination to be duly executed on March 27, 1998. SODEXHO ALLIANCE, S.A. - ------------------------------------------ Name: Title: SODEXHO USA, Inc. - ------------------------------------------ Name: Title: EX-99.(D)(6) 27 dex99d6.txt SODEXHO GUARANTY DATED MARCH 27, 1998 Exhibit (d)(6) SODEXHO GUARANTY Dated as of March 27, 1998 From SODEXHO ALLIANCE, S.A. as Guarantor in favor of THE LENDER PARTIES REFERRED TO IN THE CREDIT AGREEMENT REFERRED TO HEREIN TABLE OF CONTENTS
PAGE ---- SECTION 1. Guaranty....................................................................2 SECTION 2. Purchase Option.............................................................2 SECTION 3. Guaranty Absolute...........................................................2 SECTION 4. Waivers and Acknowledgments.................................................3 SECTION 5. Subrogation and Subordination...............................................4 SECTION 6. Payments Free and Clear of Taxes, Etc.......................................5 SECTION 7. Representations and Warranties..............................................8 SECTION 8. Financial Reporting Obligations............................................10 SECTION 9. Financial Covenants........................................................11 SECTION 10. Negative Covenants.......................................................14 SECTION 11. Events of Default........................................................17 SECTION 12. Amendments, Etc..........................................................19 SECTION 13. Notices, Etc.............................................................20 SECTION 14. No Waiver; Remedies......................................................20 SECTION 15. Right of Set-off.........................................................20 SECTION 16. Indemnification..........................................................21 SECTION 17. Continuing Guaranty; Assignments Under the Credit Agreement..............21 SECTION 18. Judgment.................................................................21 SECTION 19. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc...................22
Exhibit 99.(d)(6) SODEXHO GUARANTY GUARANTY dated as of March 27, 1998 (the "Guaranty") made by SODEXHO ALLIANCE, S.A., a societe anonyme organized under the laws of France (the "Guarantor"), in favor of the Administrative Agent and the Lenders (as defined in the Credit Agreement referred to below) (the Administrative Agent and the Lenders being the "Lender"). PRELIMINARY STATEMENT (1) The Lenders and Societe Generale, as Administrative Agent for the Lenders, are parties to a Credit Agreement dated as of January 30, 1998 (said Agreement, as it may hereafter be amended, supplemented or otherwise modified from time to time, being the "Credit Agreement", the terms defined therein and not otherwise defined herein being used herein as therein defined, except that for all purposes hereof, the term "Subsidiaries" of the Guarantor shall include at all times the Borrower and Sodexho Marriott Operations, Inc., a Delaware corporation ("Sodexho Operations"), and each of their Subsidiaries; provided that neither New Marriott nor any Person that will become a Subsidiary of New Marriott upon consummation of the Transaction shall be a Subsidiary of the Guarantor, the Borrower or Sodexho Operations for any purpose under this Agreement) with Marriott International, Inc. (which will be renamed Sodexho Marriott Services, Inc. on the Funding Date), a Delaware corporation (the "Borrower"). (2) It is a condition precedent to the making of Advances under the Credit Agreement that the Guarantor, which is to be, upon consummation of the Transaction, the owner of between 40.01% and 49.9% of the outstanding shares of capital stock of the Borrower, shall have executed and delivered this Guaranty. (3) The Guarantor acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Loan Documents. (4) The aggregate principal amount of the Advances guaranteed hereunder is U.S. $620,000,000. The interest rate applicable thereto shall be at (i) the Base Bate, or (ii) an Applicable Margin above the Eurodollar Bate for Interest Periods of 1, 2, 3, 6, 9 or 12 months, varying from 0.35% to 1.125% per annum, in each case, as specified in the Credit Agreement. NOW, THEREFORE, in consideration of the premises and in order to induce the Lenders to make Advances under the Credit Agreement, the Guarantor hereby agrees as follows: SECTION 1. Guaranty. The Guarantor hereby unconditionally and irrevocably guarantees (a) the punctual payment when due, whether at stated maturity, by acceleration or otherwise, of all Obligations of the Borrower now or hereafter existing under the Loan Documents, for principal plus all other amounts due thereunder upon acceleration of the Borrower's Obligations under the Credit Agreement and (b) the payment of interest, fees and other amounts (other than principal) which remain unpaid five (5) Business Days after such interest, fees and other amounts become due under the Loan Documents (such Obligations under (a) and (b) above being the "Guaranteed Obligations"), and agrees to pay any and all reasonable expenses (including counsel fees and expenses) incurred by the Administrative Agent or any other Lender Party in enforcing any rights under this Guaranty. Without limiting the generality of the foregoing, the Guarantor's liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by the Borrower to the Administrative Agent or any other Lender Party under the Loan Documents but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving the Borrower. SECTION 2. Purchase Option. At any time in which payment is required from the Guarantor pursuant to Section 1 above, the Guarantor may, in lieu of making payment pursuant thereto, purchase within two Business Days after the same becomes due, by payment in same day funds to the Administrative Agent's Account, the amount of the Obligations of the Borrower, whether for principal, interest, expenses, fees or otherwise then due and payable under the Loan Documents and not otherwise then paid. Upon such payment the Guarantor shall have been deemed to have purchased without recourse to or representation or warranty from any of the Lenders such Obligations, subject to Section 5 hereof. If payment is made of the purchase price of the full amount of all Obligations of the Borrower, the Lender Parties shall execute the documents referred to in Section 5. SECTION 3. Guaranty Absolute. The Guarantor guarantees, to the fullest extent permitted under applicable law, that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Loan Documents, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Administrative Agent or any other Lender Party with respect thereto. The Obligations of the Guarantor under this Guaranty are independent of the Guaranteed Obligations or any other Obligations of any other Loan Party under the Loan Documents, and a separate action or actions may be brought and prosecuted against the Guarantor to enforce this Guaranty, irrespective of whether any action is brought against the Borrower or any other Loan Party or whether the Borrower or any other Loan Party is joined in any such action or actions. The liability of the Guarantor under this Guaranty shall be irrevocable, absolute and unconditional irrespective of, and the Guarantor hereby irrevocably waives any defenses it may now or hereafter have in any way relating to, any or all of the following: 2 (a) any lack of validity or enforceability of any Loan Document or any agreement or instrument relating thereto as against any other Loan Party; (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations or any other Obligations of any other Loan Party under the Loan Documents, or any other amendment or waiver of or any consent to departure from any Loan Document, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to the Borrower or any of its Subsidiaries or otherwise; (c) any change, restructuring or termination of the corporate structure or existence of the Borrower or any of its Subsidiaries; (d) any failure of any Lender Party to disclose to the Borrower or the Guarantor any information relating to the business, financial condition, results of operations or prospects of any other Loan Party now or in the future known to any Lender Party (the Guarantor waiving any duty on the part of the Lender Parties to disclose such information); or (e) any other circumstance (including, without limitation, to the maximum extent permitted under applicable law, any statute of limitations) or any existence of or reliance on any representation by the Administrative Agent or any other Secured Party that might otherwise constitute a defense available to, or a discharge of, the Borrower, the Guarantor or any other guarantor or surety. This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by any Lender Party or any other Person upon the insolvency, bankruptcy or reorganization of the Borrower or any other Loan Party or otherwise, all as though such payment had not been made. SECTION 4. Waivers and Acknowledgments. (a) The Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Guaranteed Obligations and this Guaranty and any requirement that the Administrative Agent or any other Lender Party protect, secure, perfect or insure any lien or any property subject thereto or exhaust any right or take any action against the Borrower or any other Person or any collateral security. (b) The Guarantor hereby waives any right to revoke this Guaranty, and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future. 3 (c) The Guarantor acknowledges that the waivers set forth in this Section 4 are knowingly made in contemplation of the benefits to be received by it as referred to in Preliminary Statement (3). SECTION 5. Subrogation and Subordination. The Guarantor will not exercise any rights that it may now or hereafter acquire against the Borrower or any other insider guarantor that arise from the existence, payment, performance or enforcement of the Guarantor's Obligations under this Guaranty or any other Loan Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Administrative Agent or any other Lender Party against the Borrower or any other insider guarantor or any collateral security, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from the Borrower or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, and all such rights shall be subordinated, unless and until all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash or purchased by the Guarantor in full for cash. If any amount shall be paid to the Guarantor in violation of the preceding sentence at any time prior to the payment in full in cash of the Guaranteed Obligations or the purchase in full by the Guarantor for cash of the Guaranteed Obligations and the payment in full in cash of all other amounts payable under this Guaranty such amount shall be held in trust for the benefit of the Administrative Agent and the other Lender Parties and shall forthwith be paid to the Administrative Agent to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of the Loan Documents, or to be held as collateral for any Guaranteed Obligations or other amounts payable under this Guaranty thereafter arising. If (i) the Guarantor shall make payment to the Administrative Agent or any other Lender Party of all or any part of the Guaranteed Obligations, or shall purchase all or any part of the Guaranteed Obligations, pursuant to Section 1, Section 2 or Section 11 hereof, and (ii) all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall be purchased or paid in full in cash, the Administrative Agent and the other Lender Parties will, at the Guarantor's request and expense, execute and deliver to the Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation or purchase, as the case may be, to the Guarantor of an interest in, all or such part of, the Guaranteed Obligations resulting from such payment or purchase by the Guarantor. SECTION 6. Payments Free and Clear of Taxes, Etc. (a) Any and all payments by the Guarantor hereunder shall be made, in accordance with Section 2.10 of the Credit Agreement, free and clear of and without deduction for any and all present or future Taxes. If the Guarantor shall be required by law to deduct any 4 Taxes from or in respect of any sum payable hereunder to any Lender Party or the Administrative Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) such Lender Party or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Guarantor shall make such deductions and (iii) the Guarantor shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (b) In addition, the Guarantor agrees to pay any present or future Other Taxes. (c) The Guarantor shall indemnify each Lender Party and the Administrative Agent for and hold it harmless against the full amount of Taxes and Other Taxes, and for the full amount of Taxes and Other Taxes on amounts payable under this Section, imposed on or paid by such Lender Party or the Administrative Agent (as the case may be) and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within 30 days from the date such Lender Party or the Administrative Agent (as the case may be) makes written demand therefor, accompanied by a certificate of such Lender Party setting forth the amount thereof, the basis therefor and the calculation thereof; provided, however, that the Guarantor shall not be obligated to make payment to such Lender Party or the Administrative Agent (as the case may be) pursuant to this Section in respect of penalties, additions to tax, interest, expenses and other liabilities attributable to any Taxes or Other Taxes, if (i) written demand therefor has not been made by such Lender Party or the Administrative Agent within 30 Business Days from the date on which such Lender Party or the Administrative Agent received written notice of an imposition of Taxes or Other Taxes by the relevant taxing or governmental authority (but only to the extent that the Guarantor is materially damaged as a result of such failure), (ii) such penalties, additions to tax, interest, expenses and other liabilities have accrued as a result of the failure of such Lender Party to remit the amount of any indemnity payment it receives from the Guarantor pursuant to this Section to a taxing authority or (iii) such penalties, additions to tax, interest, expenses and other liabilities are attributable to the gross negligence or willful misconduct of such Lender Party or the Administrative Agent. After a Lender Party or the Administrative Agent (as the case may be) receives notice of an assessment of Taxes or Other Taxes, such Lender Party or Administrative Agent will act in good faith to promptly notify the Guarantor of its obligations hereunder. (d) Within 30 days after the date of any payment of Taxes, the Guarantor shall furnish to the Administrative Agent, at its address referred to in Section 13, the original or a certified copy of a receipt evidencing such payment, except to the 5 extent such receipt or other document is not legally available, in which case the Guarantor will furnish other satisfactory evidence of such payment. (e) Each Lender Party organized under the laws of a jurisdiction outside the United States shall, on or prior to the date of its execution and delivery of the Credit Agreement in the case of each Initial Lender and on the date of the Assignment and Acceptance pursuant to which it becomes a Lender Party in the case of each other Lender Party, and from time to time thereafter as requested in writing by the Guarantor (but only so long thereafter as such Lender Party remains lawfully able to do so), provide each of the Administrative Agent and the Guarantor with two original Internal Revenue Service forms 1001 or 4224, as appropriate, or any successor form prescribed by the Internal Revenue Service, certifying that such Lender Party is exempt from or entitled to a reduced rate of United States withholding tax on payments pursuant to the Credit Agreement, the Notes or this Guaranty. If the forms provided by a Lender Party at the time such Lender Party first becomes a party to the Credit Agreement indicates a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Taxes unless and until such Lender Party provides the appropriate form certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only shall be considered excluded from Taxes for periods governed by such form; provided, however, that, if at the date of the Assignment and Acceptance pursuant to which a Lender Party assignee becomes a party to the Credit Agreement, the Lender Party assignor was entitled to payments under subsection (a) in respect of United States withholding tax with respect to interest paid at such date, then, to such extent, the term Taxes shall include (in addition to withholding taxes that may be imposed in the future or other amounts otherwise includible in Taxes) United States withholding tax, if any, applicable with respect to the Lender Party assignee on such date. (f) For any period with respect to which a Lender Party has failed to provide the Guarantor with the appropriate form described in subsection (e) above (other than if such failure is due to a change in law occurring after the date on which a form originally was required to be provided or if such form otherwise is not required under subsection (e) above), such Lender Party shall not be entitled to indemnification under subsection (a) or (c) with respect to Taxes imposed by the United States by reason of such failure; provided, however that should a Lender Party become subject to Taxes because of its failure to deliver a form required hereunder, the Guarantor shall take such steps as such Lender Party shall reasonably request to assist such Lender Party to recover such Taxes at such Lender Party's expense. (g) If a Lender Party shall become aware that it is entitled to receive a refund from a relevant taxing or governmental authority in respect of Taxes or Other Taxes as to which it has been indemnified by the Guarantor pursuant to this Section, it shall promptly notify the Guarantor of the availability of such refund 6 and shall, within 30 days after receipt of a request by the Guarantor (whether as a result of notification that it has made to the Guarantor or otherwise) make a claim to such taxing or governmental authority for such refund at the Guarantor's expense; provided that the Guarantor agrees to indemnify such Lender Party for any adverse tax consequences resulting from the making of such claim for refund. If such Lender Party finally and irrevocably receives a refund of any Taxes or Other Taxes (including penalties, additions to tax, and interest) for which it has been indemnified by the Guarantor pursuant to this Section, or which the Guarantor has paid pursuant to this Section, then, to the extent such Lender Party may do so without jeopardizing the right to such refund or the right to benefit from any other refunds, credits, reliefs, remissions or repayments to which it may be entitled, it shall promptly notify the Guarantor of such refund and shall within 30 days from the date of receipt of such refund pay to the Guarantor the portion of such refund (including the after-tax amount of any interest paid by the relevant taxing or governmental authority with respect to such refund) that the Lender Party determines would leave such Lender Party in no worse position than if no Taxes or Other Taxes had been imposed (but in no case shall such portion exceed the amount of the indemnity payments made, or Taxes or Other Taxes (including penalties, additions to tax, and interest) paid, by the Guarantor under this Section that gave rise to such refund), net of all out-of-pocket expenses of such Lender Party and without interest, provided, however, that the Guarantor, upon the request of such Lender Party agrees to repay the amount paid over to the Guarantor (plus penalties, interest or other charges due to the appropriate authorities in connection therewith) to such Lender party in the event such Lender Party is required to repay such refund to such relevant authority. (h) Any Lender Party claiming any additional amounts payable pursuant to this Section agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Applicable Lending Office or take such other actions as may be reasonably requested by the Guarantor, if the making of such a change or the taking of such an action would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the reasonable judgment of such Lender Party, be disadvantageous to such Lender Party; provided, that the mere existence of quantifiable fees, charges, costs and expenses that the Guarantor has offered and agreed to pay on behalf of such Lender Party shall not be deemed to be disadvantageous to such Lender Party. SECTION 7. Representations and Warranties. The Guarantor hereby represents and warrants as follows: (a) The Guarantor (i) is a societe anonyme duly organized and validly existing under the laws of France and (ii) has all requisite corporate power and authority (including, without limitation, all governmental licenses, permits and 7 other approvals) to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted. (b) The execution, delivery and performance by the Guarantor of this Guaranty and the other transactions contemplated hereby (excluding for the avoidance of doubt the transactions under the Senior Debt Credit Agreement (as hereinafter defined) and the Collateral Documents as defined therein), are within the Guarantor's corporate powers, have been duly authorized by all necessary corporation action, and do not (i) contravene the Guarantor's constitutive documents, (ii) violate any law, rule, regulation (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System), order, writ, judgment, injunction, decree, determination or award applicable to it the violation of which would reasonably be expected to have a Material Adverse Effect, (iii) conflict with or result in the breach of, or constitute a default under, any contract, loan agreement, indenture, mortgage, deed of trust, lease or other instruments binding on or affecting the Guarantor or any of its Subsidiaries or any of their properties, which conflict, default or breach would reasonably be expected to have a Material Adverse Effect, or (iv) result in or require the creation or imposition of any Lien upon or with respect to any material portion of the properties of the Guarantor or any of its Subsidiaries. Neither the Guarantor nor any of its Subsidiaries is in violation of any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or in breach of any such contract, loan agreement, indenture, mortgage, deed of trust, lease or other instrument, the violation or breach of which would reasonably be expected to have a Material Adverse Effect. (c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for the due execution, delivery, recordation, filing or performance by the Guarantor of this Guaranty, or for the consummation of the other transactions contemplated hereby (excluding for the avoidance of doubt the transactions under the Senior Debt Credit Agreement and the Collateral Documents as defined therein), except for authorizations, approvals, actions, notices and filings the absence of which would not reasonably be expected to have a Material Adverse Effect. (d) This Guaranty has been duly executed and delivered by the Guarantor. This Guaranty is the legal, valid and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors' rights generally and to general equitable principles. (e) There is no action, suit, investigation, litigation or proceeding affecting the Guarantor or any of its Subsidiaries, including any Environmental 8 Action, pending or threatened before any court, governmental agency or arbitrator that would reasonably be expected to have a Material Adverse Effect. (f) The audited Consolidated balance sheet of the Guarantor and its Subsidiaries as at August 31, 1997, and the related Consolidated statements of income and cash flows of the Guarantor and its Subsidiaries for the fiscal year then ended, accompanied by an opinion of an internationally recognized firm of independent public accountants, the originals of which, in each case, have been produced in French and accompanied by an English translation thereof, copies of which have been furnished to each Lender Party, have been properly prepared and give a [true and] fair view of the assets, liabilities, financial position and results of the Group in accordance with accounting principles and practices generally accepted and adopted in France under the "Plan Compatible General" and "Code de Commerce" ("French GAAP") and since August 31, 1997, there has been no material adverse change in the business, assets or financial condition of the Guarantor and its Subsidiaries taken as a whole. (g) The information, exhibits and reports furnished by the Guarantor to any Lender Party in connection with the negotiation of this Guaranty or pursuant to the terms of the Loan Documents, taken as a whole, did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made therein not misleading. (h) The Guarantor is not an "investment company" as such term is defined in the Investment Company Act of 1940, as amended. Neither the making of this Guaranty, nor the consummation of the other transactions contemplated hereby, will violate any provision of such Act or any rule, regulation or order of the Securities and Exchange Commission thereunder. (i) Except to the extent that the same would not reasonably be expected to have a Material Adverse Effect, the operations and properties of the Guarantor and each of its Substantial Subsidiaries comply in all material respects with all applicable Environmental Laws and Environmental Permits, all past non-compliance with such Environmental Laws and Environmental Permits has been resolved without ongoing obligations or costs, and no circumstances exist that could reasonably be expected to (i) form the basis of an Environmental Action against the Guarantor or any of its Subsidiaries or any of their properties or (ii) cause any such property to be subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law. (j) There are no conditions precedent to the effectiveness of this Guaranty that have not been satisfied or waived. As used in this Guaranty, the term "Material Adverse Effect" means a material adverse effect on (a) the business, financial condition or results of 9 operations of the Guarantor and its Subsidiaries taken as a whole, (b) the rights and remedies of the Administrative Agent and the Lenders under the Guaranty or (c) the ability of the Guarantor to perform its Obligations under the Guaranty, and the term "Substantial Subsidiary" means, on any date, any Subsidiary of the Guarantor (i) whose revenues for the four fiscal quarters of the Guarantor most recently ended on or prior to such date equaled or exceeded 5% of the Consolidated revenues of the Guarantor and its Subsidiaries for such period or (ii) whose assets as of such date equaled or exceeded 5% of the Consolidated assets of the Guarantor and its Subsidiaries as of such date. SECTION 8. Financial Reporting Obligations. The Guarantor covenants and agrees that, so long as any part of the Guaranteed Obligations shall remain unpaid or any Lender Party shall have any Commitment, the Guarantor will, unless the Required Lenders shall otherwise consent in writing: (a) Semi-Annual Financials. Furnish to the Lenders, as soon as available and in any event within 120 days after the end of each semi-annual period, a Consolidated balance sheet of the Guarantor as of the end of such period and unaudited Consolidated statements of income and cash flows of the Guarantor for such semi-annual period, all in reasonable detail and duly certified (subject to year-end adjustments) by the Chief Financial Officer of the Guarantor as having been prepared in accordance with French GAAP, together with (i) a certificate of said officer stating that no Default in respect of a Guarantor Event of Default has occurred and is continuing or, if such a Default has occurred and is continuing, a statement as to the nature thereof and the action that the Guarantor has taken or proposes to take with respect thereto and (ii) a schedule in form satisfactory to the Administrative Agent of the computations used by the Guarantor in determining compliance with the covenants contained in Section 9. (b) Annual Financials. Furnish to the Lenders, as soon as available and in any event within 120 days after the end of each Fiscal Year, a copy of the annual audit report for such year for the Guarantor, including therein a Consolidated balance sheet of the Guarantor as of the end of such Fiscal Year and Consolidated statements of income and cash flows of the Guarantor for such Fiscal Year, in each case accompanied by an opinion, and an English translation thereof, of an internationally recognized independent public accounting firm to the effect that such financial statements have been properly prepared and give a [true and] fair view of the assets, liabilities, financial position and results of the Group in accordance with French GAAP, together with (i) a certificate of the Chief Financial Officer of the Guarantor stating that no Default in respect of a Guarantor Event of Default has occurred and is continuing, or if such a Default has occurred and is continuing, a statement as to the nature thereof and the action the Guarantor has taken or proposes to take with respect thereto and (ii) a schedule in form satisfactory to the Administrative Agent of the computations 10 used by the Guarantor in determining compliance with the covenants contained in Section 9. (c) Default Notice. As soon as possible and in any event within five Business Days after a Responsible Officer of the Guarantor has knowledge of the occurrence of a Guarantor Event of Default, furnish to the Lenders a statement setting forth details of such Guarantor Event of Default and the action that the Guarantor has taken or proposes to take with respect thereto. (d) Other Information. Provide such other information respecting the business, financial condition, results of operations or prospects of the Guarantor and its Subsidiaries as any Lender (through the Administrative Agent) may from time to time reasonably request. SECTION 9. Financial Covenants. The Guarantor covenants and agrees that, so long as any part of the Guaranteed Obligations shall remain unpaid or any Lender Party shall have any Commitment, the Guarantor will, unless the Required Lenders shall otherwise consent in writing: (a) Leverage Ratio. Maintain at the end of each six-month fiscal period of the Guarantor and its Subsidiaries ending on a date set forth below, a ratio of Net Consolidated Financial Indebtedness to Adjusted Net Worth of not more than the ratio set forth below for such date: Date Ratio ---- ----- August 31, 1998 and February 28, 1999........................ 1.25 August 31, 1999 and February 29, 2000........................ 1.10 August 31, 2000 and February 28, 2001........................ 0.85 The last day of each August and February thereafter.......... 0.75 where: "Adjusted Net Worth" means, at any time, the sum of: (i) the amount of shareholders' funds ("capitaux propres") as shown in the Group's then most recent consolidated balance sheet; (ii) the amount of minority interests ("interets minoritaires") as shown in the Group's then most recent consolidated balance sheet; and (iii) the amount of goodwill arising on acquisitions ("ecarts de premiere consolidation") which has been written off against reserves, minority interests or amortized (but only to the extent that such write-off or amortization has been deducted in computing profit, reserves or 11 minority interests), such amount to be calculated on a cumulative basis since August 31, 1994. "Financial Indebtedness" means, in relation to any person at any time, any indebtedness of that person, whether actual or contingent, present or future, in respect of: (i) total financial debt ("dettes financieres") including moneys borrowed, debit balances at banks and any debenture, bond, note, loan stock or other debt security; (ii) receivables sold or discounted (otherwise than on a non-recourse basis), acceptance credits and other arrangements required to be given similar treatment under French GAAP; (iii) the obligations under capital and operating leases ("credit-bail") or other contracts required to be given similar treatment under French GAAP; (iv) any guarantee of any person in respect of any of the above, excluding Financial Indebtedness in respect of Guaranteed Investments, but no particular Financial Indebtedness shall be taken into account more than once (so that, for example, a guaranty shall be excluded to the extent the Financial Indebtedness guaranteed thereby is already taken into account) (and, in the case of Financial Indebtedness of any member of the Group, there shall also be excluded (i) any Financial Indebtedness owing to any member of the Group (ii) (for avoidance of doubt) any performance guaranty issued in favor of Spirit Marine (as referred to in the AFA (as hereinafter after defined)) in respect of the contractual arrangements entered into by Spirit Cruises (as referred to in the AFA) and (iii) (for avoidance of doubt) the Financial Indebtedness of any person guaranteed by a member of the Group if that person is not a member of the Group). "Group" means, at any time, the Guarantor, its Subsidiaries at such time and any other entity the accounts of which would be fully consolidated with those of the Guarantor in its Consolidated financial statements if such statements were prepared as of such time but, for avoidance of doubt, excluding any holding company of the Guarantor or any Subsidiary of such holding company not being a Subsidiary of the Guarantor. "Guaranteed Investments" means, in relation to any member of the Group, amounts invested by that member of the Group in order to finance on behalf of a customer, whether by "credit-bail" or leasing transaction or other means, the construction and/or installation of a facility to be utilized in connection with an operating contract awarded to it or any other member of the Group on 12 terms which provide that the financing costs of the relevant investment is not to be borne by the relevant member of the Group, "Net Consolidated Financial Indebtedness" means, at any time, the Financial Indebtedness of the Group less the amount of cash at hand and marketable securities ("disponibilites et valeurs mobilieres de placement") as shown in the Group's consolidated accounts excluding for the avoidance of doubt reserved funds relating to the vouchers activity ("fonds reserves"). (b) Interest Expense Coverage Ratio. Maintain at the end of each six-month fiscal period ending on a date set forth below, a ratio of EBIT to Net Consolidated Interest Expense of not less than the ratio set forth below in respect of such date for the period of two consecutive semi-annual fiscal periods ending on such date: Date Ratio ---- ----- February 28, 1999.............................................. 3.00 August 31, 1999 and February 29, 2000.......................... 3.25 August 31, 2000 and February 28, 2001.......................... 3.75 The last day of each August and February thereafter............ 4.00 where: "EBIT" means, in relation to any period, the "resultat d'exploitation consolide" (as determined in accordance with French GAAP) as shown in the consolidated accounts of the Group for that period excluding for the avoidance of doubt any charge for (a) amortization of goodwill ("amortissement d'ecarts d'aquisition") and (b) Integration Costs in respect of the Transaction in an amount not to exceed, in aggregate for all such deductions taken over the term of the Facility, $45,000,000 less the amount of such costs classified by the Guarantor's independent public accountants, and recorded, as capitalized expenses, in each case, to the extent deducted in computing "resultat d'exploitation". "Integration Costs" means costs incurred in connection with the combination of the businesses of MMS, ICC, Sodexho Canada, MMS Canada and their respective Subsidiaries and Affiliates. "Net Consolidated Interest Expense" means, for any period, the "resultat financier consolide" (as determined in accordance with French GAAP) as shown in the Group's consolidated accounts for that period after excluding any foreign exchange gains or losses and any amortization provision ("dotations et reprises aux amortissements et provisions") made, to the extent included within the "resultat financier consolide" during that period. 13 SECTION 10. Negative Covenants. The Guarantor covenants and agrees that, so long as any part of the Guarauteed Obligations shall remain unpaid or any Lender Party shall have any Commitment, the Guarantor will not, without the prior written consent of the Required Lenders: (a) Debt. Allow the aggregate U.S. dollar amount of any (i) Debt incurred by or assumed by the Borrower or any of its Subsidiaries (other than current accounts) from the Guarantor or any of its Subsidiaries (other than the Borrower or any of its Subsidiaries); and (ii) equity invested by the Guarantor or any of its Subsidiaries (other than the Borrower or any of its Subsidiaries) in the Borrower or any of its Subsidiaries to exceed $25,000,000 per annum; provided that this Section 10(a) shall not apply to any Investment made by the Guarantor or any of its Subsidiaries (i) to cure or prevent a payment Event of Default under the Credit Agreement or (ii) pursuant to the Cash Payment. (b) Negative Pledge. Create, incur, assume or suffer to exist, or permit any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien upon or with respect to any of its properties of any character (including, without limitation, accounts) or assign, or permit any of its Subsidiaries to assign, any accounts or other right to receive income other than: (i) any Lien permitted under Section 5.02(a) of the Senior Debt Credit Agreement (excluding Liens permitted under clause 5.02(a)(x) therein); (ii) any Lien permitted under Section 5.02(a) the Credit Agreement (excluding Liens permitted under clause 5.02(a)(x) therein); (iii) any Lien in effect on the date hereof under the AFA and RWCFA facilities; (iv) other Liens in effect on November 1, 1997; (v) any Lien constituted or evidenced by a Security Document (as defined in the AFA) or a RWC Security Document (as defined in the AFA); (vi) liens arising by operation of law or in the ordinary course of business, including in respect of any client money held in trust by a Group member or rights of set-off arising by operation of law or bankers' rights of set-off, 14 (vii) group account netting and pooling arrangements entered into between members of the Group and any bankers to the Group; (viii) any Lien on any asset of a member of the Group arising in respect of any escrow arrangements put into place for the purpose of a disposal or acquisition by a member of the Group permitted by the AFA; (ix) any Lien on any asset acquired by a member of the Group which exists at the time of, and is not created in contemplation of, such acquisition, provided that the same does not secure any obligation which is not secured thereby at the time of such acquisition; (x) any Lien on any asset which secures only Financial Indebtedness (as such term is defined in Section 9) incurred to refinance any other Financial Indebtedness secured by the same asset by any such Lien as is referred to in paragraph (ix) above, provided that the aggregate amount secured by such asset is not thereby increased; (xi) any Lien created by any member of the Group to secure any Guaranteed Investments (as such term is defined in Section 9) made or to be made by it; (xii) the Lien created by the AFA Borrower subject to the deed of deposit and security dated 2lst January 1995 between the AFA Borrower and Societe Generale in relation to the guarantee given by Societe Generale of the Loan Notes (as defined in the AFA); (xiii) any Lien pursuant to any order of attachment, distraint or similar legal process arising in connection with court proceedings provided that the execution or other enforcement thereof is effectively stayed and the claims served thereby are being contested at the time in good faith by appropriate proceedings and proper provision has been made for any adverse judgments; (xiv) any Lien on any sum payable under any contract (or on any security representing such sum or otherwise issued pursuant to such contract) in respect of which the major part of the price receivable by a member of the Group is guaranteed or insured by, 15 or is part of a scheme operated by, a national export credit institution or other similar institution; (xv) any Lien created on the assets of any member of the Group in the course of margin trading entered into by such member as part of its normal treasury operations; and (xvi) other Liens securing Debt in an amount not to exceed the higher of $100,000,000 or 5% of Adjusted Net Worth (as such term is defined in Section 9), where: "AFA" means the Acquisition Facility Agreement dated 1 March 1995 (as amended), between the AFA Borrower, the banks party thereto and Societe Generale, as agent (as the same has been or may be further amended, supplemented or otherwise modified from time to time). "AFA Borrower" means Sodexho Gardner Merchant Alliance Limited, a company incorporated under the laws of England, ICC and the Guarantor. "GMSG" means Gardner Merchant Services Group Limited, a company incorporated under the laws of England. "RWCFA" means the Refinancing and Working Capital Facility Agreement dated 1 March 1995 between the Guarantor, GMSG and certain of its subsidiaries and Societe Generale (as the same has been or may be further amended, supplemented or otherwise modified from time to time). "Senior Debt Credit Agreement" means the Credit Agreement, dated as of January 30, 1998 among Sodexho Operations, the lenders party thereto, Sodexho Marriott Services, Inc. (currently called Marriott International, Inc.), as parent guarantor, and Morgan Guaranty Trust Company of New York, as documentation agent and administrative agent for the lender parties thereto (as the same may be amended, supplemented or otherwise modified from time to time). SECTION 11. Events of Default. If any of the following events ("Guarantor Events of Default") shall occur and be continuing: (a) the Guarantor shall fail to pay (i) any of the Guaranteed Obligations set forth in clause (a) of Section 1 when the same shall become due and payable under the Loan Documents, or (ii) any of the Guaranteed Obligations set forth in clause (b) of Section 1 within seven (7) Business Days after the same shall become due and payable under the Loan Documents; or 16 (b) any representation or warranty made by the Guarantor (or any of its officers) under or in connection with this Guaranty shall prove to have been incorrect in any material respect when made; or (c) the Guarantor shall fail to perform or observe any term, covenant or agreement contained in Sections 8 or 10 herein if such failure shall remain unremedied for 30 days after written notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender Party; or (d) the Guarantor shall fail to perform or observe any term, covenant or agreement contained in Section 9 herein; or (e) the Guarantor or any of its Subsidiaries shall fail to pay any principal of, premium or interest on or any other amount payable in respect of any Debt of the Guarantor or such Subsidiary (as the case may be), that is outstanding in a principal amount of at least FRF 200 million either individually or in the aggregate when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to any such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt or otherwise to cause, or permit the holder thereof to cause, such Debt to mature; or any such Debt shall be declared to be due and payable or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption or prepayments required to be made from the proceeds of certain cash generation events or the results of operations of the Guarantor or such Subsidiary), purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or (f) the Guarantor or any of its Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Guarantor or any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 30 days or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief 17 against, or the appointment of a receiver, trustee, custodian or other similar official for, it or any substantial part of its property) shall occur; or the Guarantor or any of its Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (f); or (g) any judgment or order for the payment of money in excess of FRF 200 million shall be rendered against the Guarantor or any of its Subsidiaries and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (h) any non-monetary judgment or order shall be rendered against the Guarantor or any of its Subsidiaries that would reasonably be expected to have a Material Adverse Effect, and there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (i) a material adverse change shall occur in (i) the ability of the Guarantor to perform its payment obligations under this Guaranty or (ii) the business, assets or financial condition of the Guarantor and its Subsidiaries taken as a whole, then, upon written demand by the Administrative Agent, given at the request or with the consent of the Required Lenders, the Guarantor shall forthwith purchase from the Lenders without recourse to or representation or warranty from any of the Lenders, and the Lenders shall sell and assign to the Guarantor, all Obligations of the Borrower, whether for principal, interest, expenses, fees or otherwise under the Loan Documents. The Guarantor shall effect such purchase, sale and assignment by making available to the Administrative Agent's Account, as specified in such written demand by the Administrative Agent, in same day funds an amount equal to all such Obligations. If and to the extent that the Guarantor shall not have so made the amount of its purchase price with respect to such Obligations available to the Administrative Agent, the Guarantor agrees to pay to the Administrative Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by the Administrative Agent to the date such amount is paid to the Administrative Agent, at a rate of 2% per annum. The Guarantor acknowledges and agrees that, notwithstanding anything in this Guaranty to the contrary, its obligation to purchase the Obligations hereunder is, to the fullest extent permitted under applicable law, absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limitation, (i) the occurrence and continuance of any Default or Event of Default (except to the extent any such incurrence is a condition to the Guarantor's obligations hereunder), (ii) the existence of any claim, set-off, defense or other right that the Guarantor may have at any time against the Lenders, any other 18 Lender Party, the Borrower or any other Person, whether in connection with the transactions contemplated by this Guaranty or any unrelated transaction (provided that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim) or (iii) any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Guarantor. SECTION 12. Amendments, Etc. No amendment or waiver of any provision of this Guaranty and no consent to any departure by the Guarantor therefrom shall in any event be effective unless the same shall be in writing and signed by the Administrative Agent and the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by all of the Lender Parties (other than any Lender Party that is, at such time, a Defaulting Lender), (a) limit the liability of the Guarantor hereunder, (b) postpone any date fixed for payment hereunder or (c) change the number of Lender Parties required to take any action hereunder. SECTION 13. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including telecopy communication) and mailed, telecopied, or delivered to it, if to the Guarantor, addressed to it at 3 Avenue Newton, 78180 Montigny-le-Bretonneux, France (telecopy number: 33-1-3085-5005), Attention: Rapael Dubrule, Corporate Secretary, with a copy to Sian Herbert-Jones, 33-1-3085-5088, if to the Administrative Agent or any Lender Party, at its address specified in the Credit Agreement, or as to any party at such other address as shall be designated by such party in a written notice to each other party. All such notices and other communications shall be effective, (i) if given by telecopy, when transmitted to the telecopy number referred to in this Section and confirmation of receipt is received, (ii) if given by mail, 120 hours after such communication is deposited in the mails with the postage prepaid, addressed as aforesaid or (iii) if given by any other means, when delivered at the address referred to in this Section. SECTION 14. No Waiver; Remedies. No failure on the part of the Administrative Agent or any other Lender Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 15. Right of Set-off. Upon (a) the occurrence and during the continuance of any Event of Default and (b) the making of the request or the granting of the consent specified by Section 6.01 of the Credit Agreement to authorize the Administrative Agent to declare the Notes due aud payable pursuant to the provisions of said Section 6.01, each Lender Party and each of its respective 19 affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender Party or such affiliate to or for the credit or the account of the Guarantor against any and all of the Obligations of the Guarantor now or hereafter existing under this Guaranty, whether or not such Lender Party shall have made any demand under this Guaranty and although such Obligations may be unmatured. Each Lender Party agrees promptly to notify the Guarantor after any such set-off and application; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender Party and its respective affiliates under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender Party and its respective affiliates may have. SECTION 16. Indemnification. Without limitation on any other Obligations of the Guarantor or remedies of the Lender Parties under this Guaranty, the Guarantor shall, to the fullest extent permitted by law, indemnify, defend and save and hold harmless each Lender Party from and against, and shall pay on demand, any and all losses, liabilities, damages, costs, expenses and charges (including the reasonable fees and disbursements of such Lender Party's legal counsel) suffered or incurred by such Lender Party as a result of any failure of any Guaranteed Obligations to be the legal, valid and binding obligations of any Loan Party intended to be obligated therefor, enforceable against such Loan Party in accordance with their terms. SECTION 17. Continuing Guaranty; Assignments Under the Credit Agreement. This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until the later of the purchase or payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty and the Termination Date, (b) be binding upon the Guarantor, its successors and assigns and (c) inure to the benefit of and be enforceable by the Administrative Agent and the other Lender Parties and their successors, transferees and assigns. Without limiting the generality of the foregoing clause (c), any Lender Party may assign or otherwise transfer all or any portion of its rights and obligations under the Credit Agreement (including, without limitation, all or any portion of its Commitment, the Advances owing to it and the Note or Notes held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Lender Party herein or otherwise, in each case as and to the extent provided in Section 8.07 of the Credit Agreement. SECTION 18. Judgment. To the fullest extent permitted under applicable law, the obligation of the Guarantor in respect of any sum due from it in any currency (the "Primary Currency") to any Lender hereunder shall, notwithstanding any judgment in any other currency, be discharged only to the 20 extent that on the Business Day of receipt by such Lender of any sum adjudged to be so due in such other currency, such Lender may in accordance with normal banking procedures purchase the applicable Primary Currency with such other currency; if the amount of the applicable Primary Currency so purchased is less than such sum due to such Lender in the applicable Primary Currency, the Guarantor agrees, to the fullest extent permitted under applicable law, as a separate obligation and notwithstanding any such judgment, to indemnify such Lender against such loss, and if the amount of the applicable Primary Currency so purchased exceeds such sum due to any Lender in the applicable Primary Currency, such Lender agrees to remit to the Guarantor such excess. SECTION 19. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. (a) This Guaranty shall be governed by, and construed in accordance with, the laws of the State of New York. (b) The Guarantor hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Guaranty or any of the other Loan Documents to which it is or is to be a party, or for recognition or enforcement of any judgment, and the Guarantor hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court. The Guarantor hereby further irrevocably appoints and empowers Corporation Service Company (the "Process Agent") as its agent in the State of New York pursuant to the designation of agent for service delivered (or to be delivered) pursuant to Section 3.02(k)(xxii) of the Credit Agreement to receive on behalf of the Guarantor and its property service of copies of the summons and complaint and any other process that may be served in any action or proceeding arising out of or relating to this Guaranty, aud the Guarantor hereby irrevocably authorizes the Administrative Agent to file such designation of agent for service with any appropriate authority at such time and from time to time as the Administrative Agent, in its sole discretion, shall elect. The Guarantor hereby further irrevocably consents to the service of process in any such action or proceeding in such courts by the mailing thereof by any parties to any of the Loan Documents by registered or certified mail, postage prepaid, to the Process Agent, and hereby further agrees that the failure of the Process Agent to give any notice of any such service to the Guarantor shall not impair or affect the validity of such service or of any judgment rendered in any action or proceeding based thereon. As an alternative method of service, the Guarantor hereby also irrevocably consents to the service of any and all process in any such action or proceeding in such courts by delivering copies of such process by mail (using a method requiring evidence of receipt) to the Guarantor at its address specified in Section 13. The Guarantor agrees that a final judgment in any such action or proceeding shall be conclusive 21 and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Guaranty shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Guaranty or any of the other Loan Documents to which it is or is to be a party in the courts of any jurisdiction. (c) To the extent that the Guarantor has or hereafter may acquire any immunity from the jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, the Guarantor hereby irrevocably waives such immunity in respect of its obligations under this Guaranty. (d) The Guarantor irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Guaranty or any of the other Loan Documents to which it is or is to be a party in any such New York State or federal court. The Guarantor hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (e) The Guarantor hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to any of the Loan Documents, the transactions contemplated thereby or the actions of the Administrative Agent or any other Lender Party in the negotiation, administration, performance or enforcement thereof. IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written. SODEXHO ALLIANCE, S.A. By /s/ Bernard Carton -------------------------------- Title: Senior Vice President and Chief Financial Officer 22 ACKNOWLEDGMENT OF THE BORROWER The undersigned, as Borrower under the Credit Agreement dated as of January 30, 1998 (the "Credit Agreement", the terms defined therein are used herein as therein defined), among the undersigned, the Guarantor, the Lenders party thereto, Societe Generale, as Administrative Agent, and Morgan Guaranty Trust Company of New York, as Documentation Agent, hereby acknowledges the subrogation and subordination provisions set forth in Section 5 of the Guaranty and agrees not to make any payment to the Guarantor which the Guarantor is not entitled to receive pursuant to the terms of the Guaranty. MARRIOTT INTERNATIONAL, INC. (to be renamed Sodexho Marriott Services, Inc. on the Funding Date) By /s/ Lawrence E. Hyatt --------------------------------------- Title: Senior Vice President and Chief Financial Officer 23 EX-99.(D)(7) 28 dex99d7.txt GUARANTY LETTER Exhibit 99.(d)(7) Marriott International, Inc. (to be renamed "Sodexho Marriott Services, Inc.") 10400 Fernwood Drive Bethesda, Maryland 20817 March 27, 1998 Re: Guaranty Fee for Guaranteed Senior Debt Sodexho Alliance, S.A. 3, avenue Newton 78180 Montigny-le-Bretonneux France Ladies and Gentlemen: Reference is made to the Omnibus Restructuring Agreement (the "Omnibus Agreement") dated as of September 30, 1997, as amended, among Marriott International, Inc. (to be renamed "Sodexho Marriott Services, Inc.") (the "Borrower"), Marriott-ICC Merger Corp., New Marriott MI, Inc., Sodexho Alliance, S.A. (the "Guarantor") and International Catering Corporation. Pursuant to Section 3(d) of the Omnibus Agreement, the Borrower agreed to pay the Guarantor a guarantee fee equal to 0.5% per annum of the outstanding principal amount of the Borrower's indebtedness guaranteed by the Guarantor. The purpose of this letter is to set forth certain terms and conditions governing the payment of such guarantee fee. The Borrower hereby acknowledges that the Guarantor is executing as of the date hereof a Sodexho Guaranty (the "Guaranty") in favor of the Lender Parties (as defined in the Guaranty). In consideration of the agreement of the Guarantor to execute and perform the Guaranty, the Borrower hereby agrees as follows: 1. On the last day of each fiscal quarter of the Borrower occurring after the date hereof, the Borrower shall pay to the Guarantor a fee (the "Guaranty Fee") equal to 0.5% per annum of the daily average aggregate principal amount of advances outstanding under the Credit Agreement (as defined in the Guaranty) during such quarter. 2. Subject to Section 5 of the Guaranty, to the extent that the Guarantor makes any payments under the Guaranty, the Guarantor shall have a claim against the Borrower for reimbursement in the amount of any and all such payments, plus any costs associated with enforcing such claim. The right of the Guarantor to so proceed against the Borrower shall survive the termination of the Guaranty. 3. The Borrower's obligations to pay the Guaranty Fee hereunder shall remain in full force and effect from the date hereof until the date upon which the Guaranty is terminated and all amounts accrued hereunder shall have been paid in full. This letter agreement shall be governed by New York law. Very truly yours, MARRIOTT INTERNATIONAL, INC. (to be renamed "Sodexho Marriott Services, Inc.") /s/ Lawrence E. Hyatt ---------------------------------- Name: Lawrence E. Hyatt Title: Vice President Accepted and agreed as of the date first above written: SODEXHO ALLIANCE, S.A. /s/ Bernard Carton - -------------------------------------- Name: Bernard Carton Title: Senior Vice President and Chief Financial Officer EX-99.(D)(8) 29 dex99d8.txt CONFIDENTIALITY AGREEMENT Exhibit 99.(d)(8) April 5, 2001 Sodexho Alliance, S.A. 3 , avenue Newton 78180 Montigny-le-Bretonneux FRANCE Re: Confidentiality Agreement Ladies and Gentlemen: Sodexho Alliance, S.A. ("Sodexho") has requested access to certain information concerning the business, operations and assets of Sodexho Marriott Services, Inc. (the "Company") in connection with the performance of "due diligence" relating to a proposed acquisition by Sodexho of the shares of the Company that are not currently owned by Sodexho. Except to the extent that any of such information (i) is at the time of disclosure in the public domain; (ii) thereafter enters the public domain through no fault of Sodexho; (iii) was in Sodexho's possession without such restriction; (iv) is developed by Sodexho or its Representatives (as defined below) independently without reliance on such information; or (v) is required by law to be disclosed, all such information to which Sodexho is given access or which is made available to Sodexho by the Company or its advisors, after the date hereof and until the earlier of the closing of the proposed transaction or the termination of discussions with respect thereto, for purposes of the evaluation of the proposed transaction between Sodexho and the Company is hereinafter referred to as the "Information" and is subject to Sodexho's agreement as set forth herein. For the avoidance of doubt, Information shall not include financial and operating information provided to Sodexho in the ordinary course in accordance with past practices, which information shall remain subject to Sodexho's obligations set forth in Section 5.13 of the Stockholder Agreement dated March 27, 1998 between Sodexho and the Company. As a condition to the Company making such Information available to Sodexho, the Company requires that Sodexho agree, as set forth below, to treat such Information confidentially. Sodexho agrees to use its best efforts to cause its directors, officers, other employees, agents, financing sources, advisors and representatives (collectively, "Representatives") to comply with the terms hereof. Sodexho agrees that it will be responsible for any breach on the part of its Representatives of the terms of this letter agreement. Sodexho agrees that the Information shall be made available only to those Representatives who require it, and that Sodexho will not authorize any dissemination of such Information to third parties. Sodexho agrees that the Information will be used by Sodexho solely for purposes of the evaluation of the proposed transaction with the Company and that such Information will be retained by Sodexho in confidence; provided, however, that (a) any of such Information may be disclosed to those Representatives who need to know such Information for the purpose of evaluating the proposed transaction with the Company (it being understood that such Representatives shall be clearly informed by Sodexho of the confidential nature of such Information and shall be directed by Sodexho to treat such Information with the utmost confidentiality), and (b) other disclosure of such Information may be made if the Company has previously furnished its written consent. Immediately upon request by the Company at any time, Sodexho shall promptly return to the Company and shall cause its Representatives to return to the Company all Information, including copies thereof, and destroy any notes, compilations, analyses or other material that incorporates or refers to such Information. Inasmuch as any breach of this agreement may result in immediate and irreparable injury (for which there is no adequate remedy at law) to the business of the Company, Sodexho agrees that the Company shall, upon discovering a breach or threatened breach of this agreement, be entitled to equitable relief in the nature of an injunction or specific performance, in addition to any other remedies available to the Company. Such relief may be granted by any court of general jurisdiction in the State of Delaware and any other court of equity having jurisdiction. It is further understood and agreed that no failure or delay by the Company in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. In the event that Sodexho or any of its Representatives are at any time requested or required (by oral questions, interrogatories, requests for information or documents, subpoena or similar process) to disclose any of the Information, Sodexho agrees to provide the Company with prompt notice of such request(s) and shall cause its Representatives to provide the Company with prompt notice of such request(s) so that the Company may seek an appropriate protective order and/or waive Sodexho's compliance with the provisions of this letter agreement. This letter agreement shall be governed and construed in accordance with the laws of the State of Delaware, and shall be binding on the parties hereto for a period of two years from the date hereof. 2 If Sodexho is in agreement with the foregoing, please sign and return one copy of this letter which will constitute an agreement between the Company and Sodexho with respect to the subject matter of this letter. Very truly yours, SODEXHO MARRIOTT SERVICES, INC. /s/ Robert A. Stern By: _______________________ Name: Robert A. Stern Title: Senior Vice President and General Counsel ACCEPTED AND AGREED TO: SODEXHO ALLIANCE, S.A. /s/ Bernard Carton By: ___________________________ Name: Bernard Carton Title: Senior Vice President and Chief Financial Officer 3 -----END PRIVACY-ENHANCED MESSAGE-----