CANADA
EXPO 1997
ARAMARK CORPORATION
CANADIAN SUPPLEMENT TO
EXPO PROSPECTUS
Dated December 1, 1997
This supplement addresses significant aspects of the ARAMARK Ownership
Program and Expanded Stock Purchase Opportunities granted thereunder that
apply to Canadian-resident employees of Versa Services Ltd.
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The following sections of the Prospectus are amended by this
Supplement:
Questions and Answers on pages 5 - 10
Income Tax Considerations on pages 12-13 Exercise
Forms and Instructions in EXPO Prospectus on Page B-1
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If you have any questions concerning the Program, you should call any
of the individuals or the automated Shareholder Information Service listed on
page 4 of the Prospectus.
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The date of this Prospectus Supplement is December 1, 1997
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is not intended to be a complete statement of
the Canadian federal income tax consequences of the granting and exercise of
purchase opportunities pursuant to the Plans or the disposition of Class B
shares acquired upon exercise of such purchase opportunities. Because of the
complexities of the Canadian income tax law, offerees are urged to consult
their own tax advisors.
This summary applies to employees of Versa Services Ltd. who are
resident in Canada, who hold the purchase opportunities and Class B shares as
capital property and who deal at arm's length with Versa Services Ltd. and
ARAMARK for the purposes of the Income Tax Act (Canada), as amended.
With respect to the purchase opportunities, ARAMARK understands that,
under current Canadian federal income tax laws: (i) no income will be
recognized by the employee at the time of grant; (ii) upon exercise of a
purchase opportunity, the employee must treat as a taxable benefit from
employment, any excess of the fair market value on the date of exercise of the
Class B shares received on the exercise of a purchase opportunity over the
exercise price of the purchase opportunity; (iii) the employee may deduct
one-quarter of the benefit in computing taxable income; and (iv) the adjusted
cost base of the Class B shares acquired on the exercise of the purchase
opportunity will be equal to the exercise price plus the amount of the taxable
benefit realized. The adjusted cost base of the Class B shares will be
computed in Canadian dollars, using the Canada-U.S. exchange rate prevailing
on the date of exercise. The adjusted cost base of all Class B shares received
on the exercise of a purchase opportunity will then be averaged with the
adjusted cost base of other Class B shares owned by the employees; and (v) on
a subsequent disposition of the Class B shares, the amount by which the
proceeds of disposition exceed (or are exceeded by) the adjusted cost base of
the Class B shares, plus any costs of disposition, will be treated as capital
gain (or capital loss) of the employee.
If Class B shares are first disposed of by the employee to raise the
cash to exercise purchase opportunities, the same tax consequences as set out
above will apply. In addition, the employee will realize a capital gain (or
capital loss) equal to the amount by which the proceeds of disposition of the
Class B shares exceed (or are exceeded by) the adjusted cost base of the
disposed shares, plus any costs of disposition.
ARAMARK understands that it is the administrative position of Revenue
Canada, Customs, Excise & Taxation ("Revenue Canada") that a taxable benefit
recognized upon the exercise of a purchase opportunity is not subject to tax
withholding. The Company will report to Revenue Canada the amount of the
taxable benefit generated by the exercise of a purchase opportunity, and the
employee is required to report that amount in his/her income tax return.
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QUESTIONS AND ANSWERS
The following questions and answers have changed from those in the
original Prospectus to reflect the application of Canadian federal income tax
laws and Canadian securities laws:
15. Q: How do I make payment for the purchase price?
A: You may be eligible to use a combination of any of the
following means to pay for the aggregate purchase price upon
exercise of your purchase opportunity:
(1) by personal cheque or bank draft in U.S. dollars; or
(2) the sale of Class B Shares.
18. Q: Will the Company report to Revenue Canada the taxable benefit
(if any) that I realize upon the exercise of my purchase
opportunity?
A: Yes. Any taxable income will be reported on a T-4 form for the
year in which the purchase occurs. The purchase occurs at the
time your completed exercise form and your purchase price
payment are received by the Company. For example, if your
exercise form and purchase price payment for the appropriate
installment are received by the Company in December 1997, the
taxable income will be reported on a T-4 form for 1997; and if
they are received in January 1998, the taxable benefit will be
reported on a T-4 form for 1998. You may wish to consult with
your tax advisor when considering the time, within an
installment exercise period, to exercise a purchase
opportunity.
19. Not Applicable.
22. Q. What are the tax consequences if I sell Class B shares to
raise cash to exercise my purchase opportunity?
A. The sale of Class B shares is a taxable event. For a
discussion of the tax treatment accorded sales of Class B
shares, see "Canadian Federal Income Tax Considerations" in
this Supplement. The tax consequences of selling Class B
shares is not affected by whether or not you use the proceeds
of such sale to exercise other purchase opportunities. Taxes
due from the sale of shares must be paid in addition to the
taxes due on the exercise of purchase opportunities. Again,
you are urged to discuss your particular situation with your
tax advisor.
25. Q: Can I have the shares registered jointly in my name and my
spouse's name?
A: To register Class B shares as joint tenants in your name and
your spouse's name you must first transfer the Class B shares
to such joint holding following exercise of the ISPO by you.
Canadian securities laws generally do not permit a trade of
Class B shares by Canadian-resident holders. However, the
Company has obtained relief from each of the Ontario and
Quebec Securities Commissions from restrictions on transfer
that otherwise would apply. The relief granted by the
Commissions permits Employees to transfer Class B shares to
prescribed groups of persons, including their spouse (see
Question 29). To register Class B shares in the names of you
and your spouse as joint tenants, both you and your spouse
must sign the exercise form. (Introduction to the
Stockholders' Agreement.)
29. Q: May I transfer my shares of Common Stock for estate or tax
planning purposes?
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A: Canadian securities laws generally do not permit trades of
Class B shares by Canadian-resident holders. The Company has
obtained certain relief from each of the Ontario and Quebec
Securities Commissions from restrictions on transfer that
otherwise would apply. The relief granted by the Ontario
Securities Commission permits Ontario-resident employees and
senior officers of Versa Services Ltd. and its subsidiaries
(collectively called "Employees") to transfer Class B shares
only to "Eligible Persons" provided it is done in compliance
with the Stockholders' Agreement. Subsequent transfers of
Class B shares are similarly restricted to other Eligible
Persons. "Eligible Persons" are: (i) spouses of Employees,
(ii) minor children of Employees, (iii) corporations
controlled by Employees and/or their spouses where the
Employee is an officer and director of the corporation and
where all the shares of the corporation are owned at all times
by any combination of the Employee, the spouse of the Employee
and children of the Employee and/or the children of the
Employee's spouse or the respective offspring of the children
of the Employee, (iv) trusts where all the beneficiaries are
any combination of the Employee, the spouse of the Employee,
the children of the Employee and/or children of the Employee's
spouse and the offspring of the children of the Employee, and
where at least one of the trustees is the Employee, and (v)
registered retirement savings plans of the Employee or
Eligible Person and/or personal holding corporations of the
Employee or Eligible Persons. The relief granted by the Quebec
Securities Commission permits Quebec-resident holders of Class
B shares to transfer Class B shares in accordance with the
Stockholders' Agreement. Pursuant to the Stockholders'
Agreement, you may transfer your Class B shares for estate or
tax planning purposes as gifts to your spouse, child,
grandchild or parent or a trust for the benefit of any of them
or to a qualifying charitable organization. Pursuant to the
Stockholders' Agreement, you may also make other transfers to
your family members, their trusts or other entities if the
transfer is approved by the Company's Board of Directors.
(Section 3.01)
35. Q: Will I be able to sell shares back to the Company?
A: Yes. Primarily, you will be able to sell your Class B shares
to the Company in the internal market. Secondly, the Company
provides an Emergency Buyback Program to accommodate certain
limited instances when unanticipated emergencies arise. The
Company anticipates that the combination of the internal
market and the emergency buyback program should provide
adequate liquidity to all management investors on an orderly
and equitable basis. The Company also provides an
offer-to-sell procedure for the Class B shares that could be
utilized. These three methods for realizing liquidity are
described more fully in the Prospectus (see Questions 37, 38,
and 39). Of course, the ability of the Company to repurchase
any shares is subject to the Company's continued strong
operating and financial performance. (Section 3.03)
The purchase price will be payable in U.S. dollars. Since the
shares are valued in U.S. dollars and are purchased and sold in
U.S. dollars, the currency exchange risk is borne by the
employee investing.
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39. Q: Will I be able to sell my Class B shares in any other way?
A: The anticipated normal procedure for selling Class B shares is
through the internal market. However, you could also offer a
portion of your Class B shares to the Company at the current
Appraisal Price of the Common Stock. The Canadian securities
laws generally do not allow any sale of shares other than
sales back to the Company. However, as described under
Question 35 above, the Company has obtained certain relief
from Canadian securities laws that would permit, in the case
of Ontario-resident Employees, a sale of Class B shares to
Eligible Persons and, in the case of Quebec-resident holders
of Class B shares, a sale of Class B shares to a third party,
provided that: (i) those Class B shares were not purchased by
the Company, (ii) the transfer to such Eligible Person, in the
case of Ontario-residents, and to such third party, in the
case of Quebec-residents, takes place within 90 days of the
offer to the Company, (iii) such transfer takes place on the
same terms offered to the Company, and (iv) such Eligible
Person or third party transferee, as the case may be, agrees
to abide by all the terms of the Stockholders' Agreement (see
Question 31 and Section 4 of the Stockholders' Agreement).
Upon termination for any reason, subject to the Company's right
to Call your Class B shares (see Question 40), you could offer
to sell your Class B shares as described above.
47. Q: How will the Canadian/U.S. dollar exchange rate affect my
participation in the plan?
A: The shares of ARAMARK stock are valued in U.S. dollars and you
will need to pay for your stock in U.S. dollars.
Any taxable benefit in the year of purchase will be calculated
on the Canadian dollar equivalent of excess of the Appraisal
Price at exercise over the grant price.
48. Q: Is there any Canadian/U.S. dollar exchange risk?
A: Yes, there is an exchange risk representing the change in the
Canadian dollar as compared to the U.S. dollar between the
date of purchase of the stock and the sale of the stock. If
the Canadian dollar weakens as compared to the U.S. dollar,
you stand to gain. If the Canadian dollar strengthens as
compared to the U.S. dollar, you may lose.
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