As filed with the Securities and Exchange Commission on December 18, 2003

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 20-F



(Mark One)
                REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)
                 OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
                                     OR
    X             ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended: August 31, 2003
                                     OR
                TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
              for the transition period from ____________ to _____________

Commission file number:  1-31274


                              SODEXHO ALLIANCE, SA
             (Exact name of Registrant as specified in its charter)

                               Republic of France
                 (Jurisdiction of incorporation or organization)

                                3, avenue Newton
                        78180 Montigny - le - Bretonneux
                                     France
                    (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

<TABLE>
    <S>                                      <C>
                                             Name of each exchange
    Title of each class                      On which registered

    American Depositary Shares,
    Representing Common Shares               New York Stock Exchange

    Common Shares,
    par value EUR 4 per share                New York Stock Exchange*
</TABLE>

*    Not for trading, but only in connection with the registration of American
     Depositary Shares, pursuant to the requirements of the Securities and
     Exchange Commission.


<TABLE>
<S>                                                          <C>

Securities registered or to be registered pursuant
to Section 12(g) of the Act:                                 None
Securities for which there is a reporting obligation
pursuant to Section 15(d) of the Act:                        None
The number of outstanding shares of each class of

stock of Sodexho Alliance, SA at August 31, 2003 was:
Common Shares, par value EUR4 per share....................  159,021,565

</TABLE>

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.

                                                          Yes X No
Indicate by check mark which financial statement item the registrant has elected
to follow.

                                                      Item 17 X Item 18
<PAGE>


   TABLE OF CONTENTS

Page

   Forward-Looking Statements...............................................ii


                                     PART I

   Item 1.     Identity of Directors, Senior Management and Advisers ........1


   Item 2.     Offer Statistics And Expected Timetable.......................1


   Item 3.     Key Information...............................................1


   Item 4.     Information on the Company....................................7


   Item 5.     Operating and Financial Review and Prospects.................21


   Item 6.     Directors, Senior Management and Employees...................43


   Item 7.     Major Shareholders and Related Party Transactions............55


   Item 8.     Financial Information........................................57


   Item 9.     The Offer and Listing........................................59


   Item 10.    Additional Information.......................................60


   Item 11.    Quantitative and Qualitative Disclosures about Market Risk...75


   Item 12.    Description of Securities Other than Equity Securities.......76

                                     PART II

   Item 13.    Defaults, Dividend Arrearages and Delinquencies..............76


   Item 14.    Material Modifications to the Rights of Security
               Holders and Use of Proceeds..................................76


   Item 15.    Controls and Procedures......................................76


   Item 16 A.  Audit committee financial expert.............................76


   Item 16 B.  Code of Ethics...............................................76


   ITem 16 C.  Principal Auditor Fees and Services..........................77


                                    PART III

   Item 17.    Financial Statements.........................................77


   Item 18.    Financial Statements.........................................77


   Item 19.    Exhibits.....................................................78











                                        i

<PAGE>

     As used in this Annual Report, the terms "we," "our," "us," "Sodexho,"
"Sodexho Alliance" and "the Group" refer to Sodexho Alliance, SA and its
subsidiaries.

                           FORWARD-LOOKING STATEMENTS

     Certain statements included in this Annual Report contain information that
is forward-looking. Such statements include information regarding our beliefs,
estimates and current expectations concerning our future financial condition and
results of operations, including trends affecting our businesses. Prospective
investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties, and that
actual results may differ materially from those in the forward-looking
statements as a result of various factors. The information contained in this
Annual Report including, without limitation, the information under the heading
"Item 3.D Key Information--Risk Factors" identifies important factors that could
cause such differences. It should be recognized that factors other than those
expressly set forth in this Annual Report, such as general economic factors and
business strategies, may be significant, and that the factors discussed herein
may affect us to a greater extent than indicated. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date hereof. All forward-looking statements attributable to us or to persons
acting on our behalf are expressly qualified in their entirety by the cautionary
statements appearing in this Annual Report. We do not undertake any obligation
to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.






















                                       ii


<PAGE>


                                     PART I

ITEM 1...IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

     Not Applicable.

ITEM 2...OFFER STATISTICS AND EXPECTED TIMETABLE

     Not Applicable.

                            ITEM 3...KEY INFORMATION

A. Selected Financial Data

   Please see the section entitled "Item 5. Operating and Financial Review and
Prospects" for a presentation of selected financial data.

Exchange Rates

   Under the provisions of the Treaty on the European Union negotiated at
Maastricht in 1991 and signed by the then 12 member states of the European Union
in early 1992, a European Monetary Union, known as EMU, was implemented on
January 1, 1999 and a single European currency, the euro, was introduced. The
following 12 member states participate in EMU and have adopted the euro as their
national currency: Austria, Belgium, Finland, France, Germany, Greece, Ireland,
Italy, Luxembourg, The Netherlands, Portugal and Spain. The legal rate of
conversion between French francs and the euro was fixed on December 31, 1998 at
EUR 1.00 = FF6.55957. All translations of French francs into euro herein have
been made at that rate.

   The following tables set forth, for the periods and dates indicated,
certain information concerning the exchange rate for the French franc and euro
based on the 2 p.m. ECB time rates quoted by the European Central Bank. From
January 1, 1999, the European Central Bank has provided 2 p.m. ECB time rates
quoted for the euro only. No representation is made that franc or euro amounts
have been, could have been or could be converted into dollars at the 2 p.m. ECB
time buying rates indicated for any given date. Unless otherwise indicated
herein, exchange rates have been translated throughout this Annual Report on
Form 20-F at the end-of-period rate corresponding to the period for which the
translation has been made.

<TABLE>
<S>                       <C>              <C>             <C>            <C>
                          At end of        Average
                          period(1)        rate(2)         High           Low

Euro per U.S. dollar:
1999.....................   0.9458         0.9061         0.9878         0.8485
2000.....................   1.1228         1.0263         1.1268         0.9201
2001.....................   1.0919         1.1316         1.2118         1.0477
2002.....................   1.0170         1.0978         1.1658         0.9856
2003.....................   0.9152         0.9357         1.0364         0.8403
</TABLE>


(1) All periods end August 31 of the stated year.
(2) The average of the rates on the last day of each month during the relevant
    period.




<TABLE>
<S>                                 <C>                 <C>
Month ended
                                     High                Low
Euro per U.S. dollar:

June 30, 2003.....................  0.8762              0.8436
July 31, 2003.....................  0.8978              0.8663
August 31, 2003...................  0.9246              0.8778
September 30, 2003................  0.9274              0.8582
October 31, 2003..................  0.8636              0.8483
November 30, 2003.................  0.8754              0.8338
</TABLE>


     On December  17,  2003,  the 2 p.m.  ECB time rate  quoted by the  European
Central Bank was EUR 0.8106 = U.S. $1.0000,  or U.S. $1.2337 = EUR 1.0000.  This
rate may differ from certain of the actual rates used in the  preparation of our
consolidated  financial  statements,  which are prepared in euro,  and therefore
dollar  amounts  appearing  herein may differ  slightly  from the actual  dollar
amounts which were translated into euro in the preparation of such  consolidated
financial statements in accordance with accounting principles generally accepted
in France.

     A substantial proportion of our assets, liabilities,  revenues and expenses
are  denominated in currencies  other than euro, in particular,  the U.S. dollar
and the British pound  sterling.  Accordingly,  fluctuations in the value of the
euro  relative  to  other  currencies  can  have  a  significant  effect  on the
translation  into euro of non-euro assets,  liabilities,  revenues and expenses.
For information  with respect to the impact of fluctuations in exchange rates on
our operations,  see "Item 11.  Quantitative and Qualitative  Disclosures  About
Market Risk."

B. Capitalization and Indebtedness

   Not Applicable.

C. Reasons for the offer and use of proceeds

   Not Applicable.

D. Risk Factors

   You should consider the following risks with respect to an investment in us
and investments in our American Depositary Shares ("ADSs").

We depend on the retention and renewal of our existing client contracts and our
ability to attract new customers

   Our success depends on our ability to retain and renew existing client
contracts and to obtain and successfully negotiate new client contracts. Our
ability to do so generally depends on a variety of factors, including the
quality, price and responsiveness of our services, as well as our ability to
market these services effectively and differentiate ourselves from our
competitors. Additionally, our growth in the Service Vouchers and Cards business
depends upon our geographic expansion, new product development, superior
branding and affiliate networks. We cannot assure you that we will be able to
renew existing client contracts or that our current customers will not turn to
competitors, cease operations, elect to self-operate or terminate contracts with
us as a result of merger or acquisition. We also cannot be certain that we will
obtain new contracts in any of our market segments, or that any new contracts
will be profitable. If we cannot continue to grow our operations through the
renewal of existing contracts or the negotiation of new contracts, our business,
financial condition and results of operations will be materially and adversely
affected.

We may be adversely affected if customers reduce their outsourcing or use of
preferred vendors

   Our business and growth strategies depend in large part on the continuation
of a trend in business, education, healthcare and government markets toward
outsourcing services. The decision to outsource depends upon customer
perceptions that outsourcing may provide higher quality services at a lower
overall cost and permit customers to focus on core business activities. We
cannot be certain that this trend will continue or not be reversed or that
customers that have outsourced functions will not decide to perform these
functions themselves. In addition, labor unions representing employees of some
of our current and prospective customers have occasionally opposed the
outsourcing trend and sought to direct to union employees the performance of the
types of services we offer. Management has also identified a trend among some of
our customers toward the retention of a limited number of preferred vendors to
provide all or a large part of their required services. We cannot be certain
that this trend will continue or not be reversed or, if it does continue, that
we will be selected and retained as a preferred vendor to provide these
services. Adverse developments with respect to either of these trends would have
a material adverse effect on our business, results of operations and financial
condition.


Our business may suffer if we are unable to hire, train and retain sufficient
qualified personnel or if labor costs continue to increase


   Certain trends in the global labor market, or in certain specific areas,
could adversely impact our business. The global economy has experienced reduced
levels of unemployment in recent years which have created a shortage of
qualified workers at all levels. Given that our workforce requires large numbers
of entry level, skilled and hourly workers, especially in the delivery of
services other than food services to our clients, low levels of unemployment
could compromise our ability in certain businesses to provide quality service or
compete for new business. A failure to hire, train and retain qualified
management personnel, particularly at the entry management level could also
jeopardize our continued success. Furthermore, increases in wages or employee
benefits whether regulatory or otherwise, could have an impact on profitability.
Moreover, labor laws in certain countries require us to retain employees of
businesses we acquire, which in turn may cause us to incur additional training
costs and increase headcount beyond optimal levels. Adverse developments
regarding the foregoing trends, individually or in the aggregate, could have a
material adverse effect on our results of operations.

We may be adversely affected if claims by employees in connection with their
employment are resolved against us


   Due to the nature of our business and the large number of individuals we
employ around the world, and the risk of employment-related litigation, the
resolution of such claims against us could have a material adverse effect on our
business.

Food shortages, and increases in food or other indirect operating costs could
adversely affect our results of operations and financial condition


   We face fluctuating food prices and limited availability of certain food
items during the year. Food price and availability also varies by geographic
location. In addition, broader trends in food consumption, such as the recent
concern about beef consumption in Europe, may from time to time disrupt our
business. Our typical contract allows for certain adjustments due to rising
prices or changed menus over time, but often we must accept a reduced margin for
a period of time to ensure the availability of certain required food groups and
to maintain customer satisfaction. Our experience has been that changes in food
preferences or shortages, when they occur, may adversely affect our
profitability at a given location. Although most of our contracts provide for
minimum annual price increases for products and services provided by us, we
could be adversely impacted during inflationary periods if the rates of
contractual increases are lower than the relevant inflation rate.


   Our profitability could be adversely affected if we were faced with other
indirect cost increases, especially to the extent we were unable to recover such
increased indirect costs through increases in our prices for our products and
services. For example, in recent years there has been, in general, a rise in
insurance and related premiums. To the extent that food or other operating costs
increase, and to the extent we are unable to pass these costs on to our clients
for competitive or economic reasons, our profit margins will decrease.


The pricing terms of our services contracts may constrain our ability to recover
costs and to make a profit on our contracts

   Fixed price contracts with our customers could expose us to losses if our
estimates of project costs are too low. A substantial portion of our services
contracts are fixed price contracts. The terms of these contracts require us to
guarantee the price of the services we provide and assume the risk that our
costs to perform the services and provide the materials will be greater than
anticipated. Our profitability on these contracts is therefore dependent on our
ability to accurately predict the costs associated with our services. These
costs may be affected by a variety of factors, some of which may be beyond our
control. If we are unable to accurately predict the costs of fixed price
contracts, certain projects could have lower margins than anticipated, which
could have a material adverse effect on our business.



Competition in our industry could adversely affect our results of operations

   There is significant competition in the food and support services business
from local, regional, national and international companies of varying sizes, a
number of which have substantial financial resources. Our ability to
successfully compete depends on our ability to satisfy our clients by providing
quality services at a reasonable price. Certain of our competitors may be
willing to underbid us or accept a lower profit margin or expend more capital in
order to obtain or retain business. Existing or potential clients may also elect
to self-operate their food service, or to utilize other purchasing arrangements,
thereby reducing or eliminating the opportunity for us to serve them or compete
for the account.

   Moreover, because our business is highly decentralized, it is imperative
that we keep pace with advances in technology and information services,
especially with respect to inventory, labor and cost management and the
communication of our best practices among our operations worldwide. If we do not
or cannot make necessary expenditures in these areas, we may be less competitive
and, consequently, less profitable.

Unfavorable economic conditions could adversely affect our results of operations
and financial condition


   Economic conditions in the United States and worldwide have resulted in
lower demand for our services from non-government sector business clients,
particularly private corporate clients in our Food and Management Services
business, with a negative impact on our revenues. Economic conditions may also
exert budgetary pressures on public sector clients. Further economic downturns
may reduce demand for our services as well as decrease occupancy rates in
certain segments of the facilities which we manage. These factors may cause us
to lose business, lose economies of scale, or contract for business on less
favorable terms than our current prevailing terms. Additionally, our Remote
Sites activity is heavily dependent on the oil industry, and therefore can be
cyclical and dependent upon oil prices.


Our semi-annual results may vary significantly as a result of factors beyond our
control

   Our semi-annual results of operations may fluctuate significantly as a
result of a number of factors over which we have no control, including our
customers' budgetary constraints, school vacations, the timing and duration of
our customers' planned maintenance activities and shutdowns, changes in our
competitors' pricing policies and general economic conditions. Furthermore, some
operating and fixed costs which remain relatively constant throughout the fiscal
year may lead to fluctuations in semi-annual results when offset by differing
levels of revenues. For these reasons, a half-year to half-year comparison is
not a good indication of our current performance or how we will perform in the
future.

We are subject to governmental regulation

   Due to the nature of our industry and our listings on the French and the
New York stock exchanges, our operations are subject to a variety of
international, federal, state, county and municipal laws, regulations and
licensing requirements, including regulations governing such areas as labor,
employment, immigration, health and safety, consumer protection and the
environment. The costs of compliance with these various regulatory regimes has a
significant impact on our bottom line, and violations of certain regulations
could result in the loss of a client contract or fines. There can be no
assurance that additional regulation in any of the jurisdictions in which we
operate would not limit our activities in the future or significantly increase
the cost of regulatory compliance.

   In addition, the growth and success of our Service Vouchers and Cards
business depends to an extent upon the continued availability of domestic tax
and labor law incentives encouraging the use of service vouchers by employers
and employees. A reduction or elimination of these benefits in our more
significant markets, or across many of our markets, could have an adverse result
on our business and results of operations.

Claims of illness or injury associated with the service of food and beverages to
the public could adversely affect us

   Claims of illness or injury relating to food quality or food handling are
common in the food service industry, and a number of these claims may exist at
any given time. As a result, we could be adversely affected by negative
publicity resulting from food quality or handling claims at one or more of the
facilities which we serve. In addition to decreasing our revenues and
profitability at our facilities, adverse publicity could negatively impact our
service reputation, hindering our ability to renew contracts on favorable terms
or to obtain new business.



Our international business results are influenced by currency fluctuations and
other factors that may be different from factors affecting the United States
market

   A significant portion of our revenues is derived from international
markets. During fiscal 2003, approximately 72% and 65% of our revenues and
EBITA, respectively, were generated outside the euro zone. The operating results
of our international subsidiaries are translated into euro and such results are
affected by movements in foreign currencies relative to the euro, especially
movements in the value of the U.S. dollar.


   Our business is also subject to risks whose effects may be more pronounced
in our international operations, including national and local regulatory
requirements; potential difficulties in staffing and labor disputes; failures to
obtain and manage support and distribution for local operations; significant
natural disasters such as electrical black-outs, floods or droughts;
fluctuations in local interest rates; inflation; credit risk or poor financial
condition of local customers; the potential imposition of restrictions on
investments; potentially adverse tax consequences, including imposition or
increase of withholding and other taxes on remittances and other payments by
subsidiaries; foreign exchange restrictions; and geo-political or social
conditions in certain sectors of our international markets. There can be no
assurance that the foregoing factors will not have a material adverse effect on
our international operations or on our consolidated financial condition and
results of operations.


   Moreover, we expect that revenues from such emerging markets as Latin
America, Central Europe and Asia will continue to develop over the long term.
Emerging market operations present several risks, including volatility in gross
domestic production; credit risk; civil disturbances; economic and governmental
instability; changes in regulatory requirements; nationalization and
expropriation of private assets; significant fluctuations in interest rates,
currency exchange rates and inflation; the imposition of additional taxes or
other payments by foreign governments or agencies; and exchange controls and
other adverse actions or restrictions imposed by foreign governments.

We are subject to risks associated with our acquisitions of other businesses

   We have acquired and may in the future acquire a substantial number of
businesses. Our acquisitions may not improve our financial performance in the
short or long term as we expect. Acquisitions enhance our earnings only if we
can successfully integrate the acquired businesses into our management
organization, purchasing operations, distribution network and information
systems. Our ability to integrate acquired businesses may be adversely affected
by factors that include customer resistance to our product brands and
distribution system, our failure to retain management and sales personnel,
difficulties in converting different information systems to our systems, the
size of the acquired business and the allocation of limited management resources
among various integration efforts. In addition, the benefits of synergy which we
expect at the time we select our acquisition candidates may not be as
significant as we originally anticipated. One or more of our acquisition
candidates may also have liabilities or adverse operating issues that we fail to
discover prior to the acquisition. Difficulties in integrating acquired
businesses, as well as liabilities or adverse operating issues relating to
acquired businesses, could have a material adverse effect on our business,
operating results and financial condition.

   Even if acquired companies eventually contribute to an increase in our
profitability, the acquisitions may adversely affect our earnings in the short
term. Our earnings may decrease as a result of transaction-related expenses we
record for the quarter in which we complete an acquisition. Our earnings may be
further reduced by the higher operating and administrative expenses we typically
incur in the quarters immediately following an acquisition as we seek to
integrate the acquired business into our operations.

We currently have significant indebtedness and may incur additional indebtedness
in the future

   At August 31, 2003, our percentage of total debt to total capitalization
was approximately 52%. Our total capitalization is the sum of our shareholders'
equity, minority interests and borrowings and long-term debt. Some lenders may
consider this ratio negatively in their credit decisions. Also, financial and
other covenants in our lending agreements may occasionally restrict our ability
to operate our business in certain ways. Specifically, our agreements limit our
ability to dispose of our assets, our subsidiaries' abilities to guarantee and
borrow money, our ability to incur certain types of debt, our ability to merge
or consolidate with other companies (subject to certain exceptions) and our
ability to alter the fundamental nature of our business (subject to certain
exceptions). In addition, we are obligated under these agreements to maintain
certain ratios of net debt to EBITDA and interest to EBITA which may also impair
our ability to enter into certain types of transactions.



   We may incur additional indebtedness in the future, subject to limitations
contained in the instruments governing our indebtedness, to finance capital
expenditures or for other general corporate purposes, including acquisitions. We
cannot assure you that our business will continue to generate cash flow at or
above the levels required to service our indebtedness and meet our other cash
needs, or that we will be able to obtain credit on terms as favorable as those
we enjoy currently if our debt to total capitalization ratio increases. If our
business fails to generate sufficient operating cash flow in the future, or if
we fail to obtain cash from other sources such as asset sales or additional
financings, we will be restricted in our ability to continue to make
acquisitions for cash and to invest in expansion or replacement of our
facilities, information systems and equipment. Such a failure could have a
material adverse effect on our business, operating results and financial
condition.

 Risks Related to an Investment in our American Depositary Shares ("ADSs")

The price of our ADSs and the U.S. dollar value of any dividends will be
affected by fluctuations in the U.S. dollar/euro exchange rate

   The ADSs trade in U.S. dollars.  Fluctuations in the exchange rate between
the euro and the U.S. dollar are likely to affect the market price of the ADSs.
For example, because our financial statements are reported in euro, a decline in
the value of the euro against the U.S. dollar would reduce our earnings as
reported in U.S. dollars.  This could adversely affect the price at which the
ADSs trade on the U.S. securities markets.  Any dividend we might pay in the
future would be denominated in euro.  A decline in the value of the euro against
the U.S. dollar would reduce the U.S. dollar equivalent of any such dividend.

You may not be able to exercise preemptive rights for shares underlying your
ADSs

   Under French law, shareholders have preemptive rights ("droits
preferentiels de souscription") to subscribe for cash for issuances of new
shares or other securities giving rights, directly or indirectly, to acquire
additional shares on a pro rata basis. Shareholders may waive their preemptive
rights specifically in respect of any offering, either individually or
collectively, at an extraordinary general meeting. Preemptive rights, if not
previously waived, are transferable during the subscription period relating to a
particular offering of shares and may be quoted on the exchange for such
securities in Paris. United States holders of ADSs may not be able to exercise
preemptive rights for the shares underlying their ADSs unless a registration
statement under the United States Securities Act of 1933, as amended, is
effective with respect to such rights or an exemption from the registration
requirements thereunder is available. We intend to evaluate at the time of any
rights offering the costs and potential liabilities associated with any such
registration statement, as well as the indirect benefits of enabling the
exercise by the holders of ADSs of the preemptive rights associated with the
shares underlying their ADS, and any other factors we consider appropriate at
the time, and then to make a decision as to whether to file such a registration
statement. We cannot guarantee that any registration statement would be filed,
or, if filed, that it would be declared effective. If preemptive rights cannot
be exercised by an ADS holder, The Bank of New York, as depositary, will, if
possible, sell such holder's preemptive rights and distribute the net proceeds
of the sale to the holder. If the depositary determines, in its discretion, that
such rights cannot be sold, the depositary may allow such rights to lapse. In
either case, ADS holders' interest in us will be diluted, and, if the depositary
allows rights to lapse, holders of ADSs will not realize any value from the
granting of preemptive rights.

Holders of ADSs may be subject to additional risks related to holding ADSs
rather than shares

   Because holders of ADSs do not hold their shares directly, they will be
subject to certain additional risks, including those listed below.

   In the event of a dividend or other distribution, if exchange rates
fluctuate during any period of time when the depositary cannot convert euro into
U.S. dollars, the ADS holder may lose some or all of the value of the
distribution. There can be no assurance that the depositary will be able to
convert any currency at a specified exchange rate or sell any property, rights,
shares or other securities at a specified price, or that any of such
transactions can be completed within a specified time period.

   ADS holders will generally have the right to instruct the depositary to
exercise the voting rights for the shares represented by the ADSs if we ask the
depositary to ask the holders for instructions. There can be no guarantee,
however, that ADS holders will receive voting materials in time to instruct the
depositary to vote. It is possible that ADS holders, or persons who hold their
ADSs through brokers, dealers or other third parties, will not have the
opportunity to exercise a right to vote at all.



   ADS holders may not receive copies of all reports from us or the
depositary; these holders may have to go to the depositary's offices to inspect
any reports issued.

You may not be able to effect claims or enforce judgments brought against us for
alleged violations of the U.S. securities laws

   We are a societe anonyme organized under the laws of France. Almost all of
our directors and officers are not U.S. residents, and a substantial portion of
our assets and the assets of our directors and officers are and will be located
outside the United States. As a result, it may not be possible for you to effect
service of process within the United States upon us or most of these persons or
to enforce judgments against us or them in United States courts. Furthermore,
there is doubt as to the enforceability in France, in original actions or in
actions for the enforcement of judgments of United States courts, of civil
liabilities predicated solely upon the federal securities laws of the United
States. French courts may not have the requisite jurisdiction to grant the
remedies sought in an original action brought in France based solely upon the
U.S. federal securities laws.

   In order to effectively enforce in France judgments of U.S. courts rendered
against our French officers and directors, these persons would have to waive
their rights under Article 15 of the French Civil Code, which provides that
citizens of France may be sued only in France unless they otherwise consent. We
believe that none of these persons has waived this right with respect to actions
predicated solely upon U.S. federal securities laws. Furthermore, actions in the
United States could be adversely affected under certain circumstances by the
French law of July 26, 1968, as modified by a law of July 16, 1980, which may
preclude or restrict the obtaining of evidence in France or from French persons
in connection with such actions.



ITEM 4...INFORMATION ON THE COMPANY

A. History and Development of the Company

   We are a leading global provider of services in two primary business areas:
Food and Management Services and Service Vouchers and Cards. In prior years, we
reported our remote sites and river and harbor cruises activities separately.
However, after a reallocation of management responsibilities for these
activities, they are now included in the applicable regions within the Food and
Management Services business, which is segmented into four geographic regions.
Accordingly, Food and Management Services in North America, the United Kingdom
and Ireland, and Continental Europe now include river and harbor cruise
activities in each of those regions. Likewise, Food and Management Services in
the Rest of the World now includes all remote site activities.

   In the Food and Management Services business, which accounted for
approximately 98% of our total revenues in fiscal 2003, we are a leading global
provider of outsourced food and multiservices to businesses, public agencies and
institutions, long-term and short-term healthcare facilities, universities and
primary and secondary schools. Within our Food and Management Services business,
we also provide many of the foregoing services to temporary and remote sites of
our clients' operations, specifically those affiliated with oil and gas
recovery, major construction projects and mining. We formerly accounted for and
disclosed our remote sites activity as a separate business segment. Our river
and harbor cruises activity, also formerly a separately disclosed business
segment,operates in various markets and provides tourist excursions and upscale
dinner cruises for individuals and corporate consumers alike. In the fiscal year
ended August 31, 2003, we had revenues of approximately EUR 11.4 billion from
our Food and Management Services business, operating through approximately
23,900 individual outlets in more than 70 countries. Revenues for the former
remote sites and river and harbor cruises business, which are now included in
Food and Management Services, totaled EUR 543 million and EUR 87 million,
respectively for the fiscal year. Food services include food and beverage
procurement and preparation, as well as the operation and maintenance of food
service and catering facilities, generally on a client's premises. Multiservices
include physical plant operations and maintenance, energy management,
groundskeeping, housekeeping, custodial and janitorial, on-site laundry and an
evolving suite of other services for which our clients have identified a need.
Our Service Vouchers and Cards business, which had revenues of EUR 248 million
in fiscal 2003, primarily issues and manages the provision of paper and
debit-card vouchers to our clients' employees for food, products and services
and the provision of various welfare benefits from government clients to their
constituents.



   Our chairman, Pierre Bellon, launched the company in 1966 in Marseille,
France, by providing food service to employee restaurants. Since our founding,
we have been focused on growth, especially organic growth. By 1968, we began
operating in the Paris area, and we expanded our operations internationally in
1971 with a food services contract in Belgium. We were incorporated on December
31, 1974 as Sodexho, SA (societe anonyme), a French limited liability company,
for a duration of 99 years from this date, the maximum allowed under French law.
Between 1971 and 1993, we continued our international growth with the
development of our Remote Sites business in Africa and the Middle East, the
extension of our Service Vouchers and Cards business into Belgium and Germany,
and the expansion of our food services business into other parts of Europe and
Asia and overseas into North America, Latin America and South Africa.

   Since 1995, we have rapidly expanded our worldwide presence through organic
growth and acquisitions. Our acquisition of Gardner Merchant in 1995 made us the
world's largest contract food services company, based on annual revenues, gave
us a significant presence in the United Kingdom and the Netherlands and
strengthened our operations in North America. In January 1996, we acquired a
minority interest in Partena, strengthening our position in the Nordic
countries, a position which we further solidified by increasing our holding to
more than 90% of Partena's outstanding capital stock in 1999.

   In Latin America, the acquisitions of Cardapio in Brazil in 1996, a stake
in Luncheon Tickets in Argentina in 1998 and Refeicheque in Brazil in 1999
increased our share of the worldwide service vouchers and cards market.
Globally, our annual revenues in this activity are second only to Accor.

   In March 1997, we acquired 49% of Universal Services in the United States,
and in January 2000 we acquired the remaining stake, forming Universal Sodexho,
the world market leader in Remote Sites operations.

   In 1998, our North American subsidiaries and Marriott Management Services
combined, with Sodexho Alliance holding just under half of the resulting
company's share capital. In connection with this transaction, Sodexho Alliance
contributed an additional U.S. $304 million. The transaction created the largest
North American food and management services company based on annual revenues,
known as Sodexho Marriott Services, Inc., and almost doubled the size of our
operations by adding annual revenues of $3.2 billion (based on 1997 stand-alone
revenues) and over 3,000 clients in North America.

   In June 2001, we completed a transaction by which we acquired the remaining
interest in Sodexho Marriott Services, Inc. ("SMS", now known as Sodexho, Inc.)
for approximately EUR 1.3 billion. In the fourth quarter of fiscal 2001, we
acquired 100% of the capital stock of the Wood Company ("Wood Dining Services"),
a company doing business as Wood Dining Services, and 60% of the capital stock
of Sogeres. We exercised our option to purchase the additional 40% of the
capital stock of Sogeres in November 2001. The total cost for all of the capital
stock of both companies was EUR 521 million, a portion of which was paid in
the fourth quarter of fiscal 2001 and the balance of which was paid at the time
the remaining shares of Sogeres were acquired in the first quarter of fiscal
2002. Prior to the acquisition, Sogeres had been our fourth-largest competitor,
based on revenues, in the French outsourced catering market, operating primarily
in Paris, the French Riviera and the Rhone-Alps region. The acquisition of Wood
Dining Services brought a significant regional food service provider into our
network, adding over 500 clients and the management of over 10,000 employees
across 21 states in the United States.

   Since 1983, our shares have been listed on Euronext Paris (formerly the
Paris Bourse), since 1998 we have been part of the benchmark index for that
exchange, the CAC 40 and on April 3, 2002, our ADSs were listed on the New York
Stock Exchange. In February 1997, our shareholders voted to change our name to
Sodexho Alliance, SA, and we were duly re-incorporated as such on February 25,
1997. We are subject to Book II of the French Code du Commerce and to Act No.
67-236 of March 23, 1967 concerning "les societes commerciales et des
groupements d'interet economique" (French company law). Except as mentioned
above, we and our subsidiaries have not been a party to any material
reclassifications, mergers or consolidations and there have been no material
changes in our mode of conducting business or in the types of products produced
or services we offer. As of the date of this Annual Report on Form 20-F, there
has been no indication of any public takeover offer by any third party
respecting our shares or by us respecting another company's shares, except as
described above.

   We are headquartered in Paris, France and our registered office in France is
3, avenue Newton, 78180 Montigny-le-Bretonneux. Our general telephone number is
011-33-1-30-85-75-00.  Our authorized U.S. representative is Michel Landel, and
our agent for service of process in the U.S. is Robert A. Stern, Sodexho, Inc.,
9801 Washingtonian Boulevard, Suite 1234, Gaithersburg, MD 20878.




Acquisition and Capital Expenditures

   The following table sets forth our acquisition and capital expenditures (on
a consolidated basis) for fiscal 2001, 2002 and 2003.

<TABLE>
<S>                                         <C>           <C>         <C>

                                             Fiscal year ended August 31,
                                            2003         2002          2001
                                                  (millions of euro)
Property, plant and equipment and
 intangibles............................     239          297           233
 Acquisitions...........................      37          107         1,768
                                            -----        -----       -------
Total...................................     276          404         2,001
                                            =====        =====       =======
</TABLE>


   We estimate that our consolidated capital expenditures for fiscal 2004 will
be approximately 2% of our revenues. This estimate is set yearly and is based on
commercial, technical and economic factors such as client demand and the
availability of equipment and building space. Capital expenditure estimates
remain subject to the finalization of services and other client contractual
terms relating to these expenditures.


   Property, Plant and Equipment

   Approximately two-thirds of our property, plant and equipment capital
expenditures involve the purchase of catering equipment used on client premises
and certain boats used in our river and harbor cruises activity. The remaining
portion of our capital expenditures relates to internal items such as
information technology and vehicles used to support our operations. We generally
use our clients' premises for food services, and therefore our property, plant
and equipment capital expenditures are limited. We do, however, use trucks owned
or leased by us to deliver food to the premises of our clients in certain
markets.


   Acquisitions and Divestitures

   Our material acquisition expenditures and divestitures since August 31,
2000 are highlighted below.

   In May 2002, we divested our entire interest in Lockhart Catering Equipment
Ltd for EUR 61 million in cash. Based in the United Kingdom, this subsidiary
was primarily engaged in the distribution of catering equipment, a non-core
activity for the Group.

   In November 2001, we acquired 100% of the capital stock of Minesite
Catering Pty Ltd in Australia for EUR 10 million in cash.

   In June and July 2001, we acquired 100% of the capital stock of Wood Dining
Services, a North American food and management services company, and 60% of the
capital stock of Sogeres, a French food and management services company. The
total cost for all the capital stock of both companies was EUR 521 million. In
November 2001, we acquired the remaining 40% of the shares of Sogeres which we
did not own from BNP Paribas for cash consideration of EUR 72 million.
Sogeres' contribution to Group net income for fiscal 2002 totaled EUR 4.9
million. In June 2001, after a negotiation process with a special committee of
independent directors formed by SMS's Board of Directors, we successfully
completed a tender offer for the 53% of SMS we did not already own, as
calculated on a fully-diluted basis, at a total cost of approximately EUR 1.3
billion. Following its merger into SMS Acquisition Corp., SMS became a
wholly-owned subsidiary of Sodexho Alliance, and was renamed Sodexho, Inc.
Funding for the June and July 2001 transactions was provided through a rights
offering in the amount of EUR 1.0 billion and the incurrence of an additional
EUR 0.8 billion in debt.

   In May 2001, we sold our entire holding in Corrections Corporation of
America ("CCA"), which resulted in an exceptional loss of EUR 3 million, net
of tax benefits. Pursuant to the terms of the purchase and sale agreement, the
buyer of the shares paid us an additional amount totaling EUR 28.6 million
upon resale of some of the shares in May 2003.


   Ongoing capital expenditures for property, plant and equipment are expected
to be funded from operating cash flows. Acquisition expenditures may be financed
through a combination of subsidiary operating cash flows, investment cash flows,
borrowings from financial institutions and other sources, including debt and
equity issuances.

   Since 1996, we have made three bond issuances, two equity offerings and two
syndicated bank borrowings to aid in financing our acquisition expenditures. In
1996, we issued 400,000 bonds for a total of EUR 305 million, each of which
bears an annual interest rate of 6% and matures in 2004. Each of these bonds
carries a warrant entitling the bearer to purchase 16.66 of our shares on or
before the maturity date for EUR 411.61, which may result in further capital
issuances of up to EUR 154 million by 2004. In 1997, we raised EUR 306
million by issuing 835,770 new shares for cash. In March 1998, Sodexho, Inc.
(formerly SMS) raised U.S. $1.3 billion (approximately EUR 1.2 billion, based
on the August 31, 1998 U.S. dollar-to-French franc exchange rate then converted
into euro at the fixed rate of 6.55957 French francs per euro), of which
EUR 580 million was guaranteed by us. Outstanding balances on these facilities
were refinanced in the third quarter of fiscal 2001 (see further discussion
below). In 1999, we issued a total of EUR 300 million in bonds which bear an
annual interest rate of 4.625% and mature in 2009. In July 2001, we raised
additional capital of EUR 1.0 billion by issuing 22,498,729 new shares for
cash.

    In the fourth quarter of 2001, in connection with the acquisitions of
Sodexho, Inc., Sogeres and Wood Dining Services and to refinance Sodexho, Inc.'s
existing debt, we entered into a credit agreement for total amounts of EUR 1.9
billion and U.S. $1.1 billion, divided among four facilities. The first and
second facilities, in the amount of EUR 1.9 billion, financed the
acquisitions. On July 5, 2001, EUR 0.9 billion of these facilities were repaid
out of the proceeds of our July 2001 share issuance. The balance was repaid with
the proceeds of the debt securities issued in March 2002, as described below.
The third and fourth facilities, in the amount of U.S. $1.1 billion, were used
to refinance Sodexho, Inc.'s existing debt and are repayable in quarterly
installments with a final maturity date of April 5, 2006. Our interest margin
for these facilities is 0.55% over LIBOR or EURIBOR, as appropriate, adjusted
over time to reflect fluctuations in our credit rating (these margins may range
from 0.45% to 1.50%). The facilities are subject to customary terms, financial
covenants and events of default. The Group has entered into various agreements
to convert variable interest rates to fixed rates.

     In addition, on March 6, 2002, we finalized the terms of an issuance of
EUR 1 billion of debt securities in the European markets, which closed on
March 25, 2002. We used the net proceeds from the sale of these debt securities,
approximately EUR 1 billion, to refinance the credit facility referred to
above. The debt is issued in 5.875% notes due March 25, 2009.



B.   Business Overview

General

     Our operations can be divided into two broad businesses: Food and
Management Services, which now includes the remote sites and river and harbor
cruises activities, and Service Vouchers and Cards. Food and Management Services
is our most significant business and accounted for 98% of our revenues for the
fiscal year ended August 31, 2003. Approximately half of our revenues in this
business were generated from our North American subsidiary, Sodexho, Inc.
(formerly SMS). Remote sites and river and harbor cruises accounted for 5% and
less than 1%, respectively, of our revenues in fiscal 2003. The Service Vouchers
and Cards business accounted for 2% of our revenues in fiscal 2003. Within the
Food and Management Services business, we separate our operations into four
geographic regions: North America, Continental Europe, the United Kingdom and
Ireland, and the rest of the world.



     The tables set forth below summarize certain financial information for
these activities for the fiscal years ended August 31, 2003, 2002 and 2001.



<TABLE>
<S>                        <C>       <C>     <C>      <C>      <C>      <C>
                             2003    2003    2002(6)  2002(6)  2001(6)  2001(6)
                           Current   Prior   Current   Prior   Current  Prior
                           presen-  presen-  presen-   presen- presen-  presen-
                           tation   tation   tation    tation  tation   tation

Revenues by Activity (1)
                                         (in millions of euro)

Food and Management Services

 North America (1)......  5,427    5,387    6,039    5,995    5,719    5,657
 Continental
  Europe (1)(3).........  3,585    3,501    3,491    3,413    3,099    3,034
 United Kingdom
  and Ireland (1).......  1,453    1,444    1,681    1,671    1,727    1,717
 Rest of the
  World (2)(3)..........    974      477    1,119      566    1,134      581

Total Food and           ------   ------   ------   ------   ------   ------
 Management Services.... 11,439   10,809   12,330   11,645   11,679   10,989


Remote Sites (2)

 North America..........      0      163        0      195        0      180
 Continental Europe.....      0       51        0       51        0       52
 United Kingdom
  and Ireland...........      0       83        0       81        0       74
 Rest of the World......      0      246        0      263        0      273

                         ------   ------   ------   ------   ------   ------
Total Remote Sites......      0      543        0      590        0      579


Service Vouchers and Cards

 Continental Europe.....    128      128      124      124      105      105
 United Kingdom
  and Ireland...........     12       12       10       10        4        4
 Rest of the World......    108      108      145      145      140      140

Total Services            ------   ------   ------   ------   ------   ------
 Vouchers and Cards.....    248      248      279      279      249      249


River and Harbor Cruises (1)
 North America..........      0       40        0       44        0       62
 Continental Europe.....      0       38        0       41        0       39
 United Kingdom
  and Ireland...........      0        9        0       10        0       10

Total River and          ------   ------   ------   ------   ------   ------
 Harbor Cruises.........      0       87        0       95        0      111

                         ------   ------   ------   ------   ------   ------
Total revenues.......... 11,687   11,687   12,609   12,609   11,928   11,928
                         ======   ======   ======   ======   ======   ======


EBITA  by Activity(4)
                                          (in millions of euro)

Food and Management
 Services

 North America(1).......    268      270      293      297      294      295
 Continental
  Europe(1) (3).........    167      158      150      140      139      129
 United Kingdom
  and Ireland(1)........     21       22        9       11       87       87
 Rest of the
  World(2) (3)..........     18        6       31        7       28        0

Total Food and            ------   ------   ------   ------   ------   ------
 Management Services....    474      456      483      455      548      511


Remote Sites(2).........      0       22        0       26        0       30

Service Vouchers
 and Cards..............     68       68       77       77       61       61

River and Harbor
 Cruises(1).............      0        7        0        2        0        7
                          ------   ------   ------   ------   ------   ------
EBITA, excluding
 corporate expenses.....    542      553      560      560      609      609

Corporate expenses(5)...    (28)     (39)     (35)     (35)     (38)     (38)

                          ------   ------   ------   ------   ------   ------
Total...................    514      514      525      525      571      571
                          ======   ======   ======   ======   ======   ======
</TABLE>




(1)  Effective for fiscal 2003, ourFood and Management Services activities in
     North America, Continental Europe, and United Kingdom and Ireland include
     the river and harbor cruises activities in each of those regions. The river
     and harbor cruises activity was formerly reported separately. Prior periods
     have been restated to reflect the current presentation.


(2)  Effective for fiscal 2003, Food and Management Services - Rest of the World
     includes the formerly separate remote sites activity. Prior periods have
     been restated to reflect the current presentation.


(3)  The French overseas territories, with revenues totaling EUR 46 million,
     EUR 38 million, and EUR 26 million, for fiscal 2003, 2002 and 2001,
     respectively, are now included in Continental Europe. Prior periods have
     been restated to reflect the current presentation.


(4)  EBITA represents net income before interest expense, exceptional items,
     income taxes, income from equity method investees, goodwill amortization
     and minority interests. EBITA is a line item from our French GAAP financial
     statements, similar to operating income.


(5)  Refers to corporate holding company level overhead expenses. Effective for
     the fiscal 2003 presentation, certain of these expenses have been allocated
     to the activities.


(6)  Certain amounts for the years ended August 31, 2002 and 2001 differ from
     the corresponding amounts for the same periods reported in the Company's
     Document de Reference filed with the Commission des Operations en Bourse.
     See note 1 to the Consolidated Financial Statements for further
     information.






Strategy

   Since our founding in 1966, our ambition has been to satisfy the
expectations of clients, employees and shareholders alike. Accordingly, we have
focused on a growth strategy to meet and match each of these expectations.
Further, our vision is to improve the quality of daily life. In pursuing this
vision, we have focused on the following key priorities:


   Accelerate organic growth. Organic growth represents our preferred and most
profitable growth alternative as the outsourced food and management services
market in which we operate continues to expand rapidly. This expansion stems
from the worldwide trend towards outsourcing of non-core functions, including
food and management services, as enterprises increasingly make strategic
decisions to focus on their core businesses and seek cost efficiencies. We seek
to be in close proximity to our clients, thereby allowing us to anticipate and
satisfy their needs promptly with service solutions tailored to their specific
situation.


   We expect to find opportunities for organic growth by

    o segmenting and sub-segmenting our client base,

    o expanding our food services offering beyond traditional food service sales
      points into vending, trolley and take-out sales points, directors' tables
      and executive dining, branded concepts, merchandising and other programs,

    o expanding our offering beyond food services to "multiservice" solutions
      such as building management and maintenance, business support services and
      ancillary services to individuals,

    o continuing our expansion into the public sector, and

    o strengthening our large multinational account capabilities as we build our
      organization throughout the world.

   To supplement organic growth, we may also from time to time, across our
business segments, acquire and integrate low-capital intensive, cash-generative
businesses.


   Improve operational management. We are able to provide and continue to
develop more cost-effective services than local, regional and national
participants as a result of our economies of scale, our broader range of
services and our national and international coverage of large clients. These
factors help us at all levels in the management of our purchasing and delivery
logistics.


   By leveraging our size across many markets we also

    o increase the exchange and transfer within our organization of "best
      practices" pertaining to inventory and personnel management and quality
      control and delivery techniques, as well as leverage experience gained
      across the various client segments and markets throughout our operations,

    o leverage our experience and brand through cross-segment teamwork between
      our Food and Management Services and our Service Vouchers and Cards
      businesses,

    o are able to better coordinate labor scheduling practices and share
      training costs across markets, and

    o streamline the use of ingredients we use and coordinate menu planning
      across closely-situated sites.



   Improve our human resource planning. We are strongly committed to the
development and promotion of our staff and invest in our human capital. The
human resources department has prepared plans and programs to detect, prepare,
train and globalize tomorrow's executive teams. It is supported in this role by
the Sodexho Management Institute, our internal management training program,
which currently has capacity for 500 executives a year.


   Diversity is a business imperative and responsibility grounded in our values
of service, progress and teamwork. By valuing and managing workforce and
supplier diversity, we endeavor to leverage the skills and abilities of all
employees and suppliers in order to increase employee, client and customer
satisfaction.


   Improve cash flow. We seek to minimize working capital requirements and
maximize free cash flow. To this end, we implement measures to control internal
capital spending, set targets for lower client credit, manage inventories and
link bonuses for executives and management teams to the achievement of clearly
stated targets at all levels of our organization.


   Reinforce control. Reporting on controls and risk management to the Audit
Committee of our Board of Directors, Group management continues to reinforce our
internal controls, including the intensity and frequency of internal audits. We
are in the process of reinforcing our central audit function, which reports to
our Chairman and Chief Executive Officer. Our internal procedures, delegation
and contract review policies are regularly evaluated and updated. A summary of
risks and financial commitments is presented regularly to the Audit Committee.


   In October 2002, a disclosure committee was formed to evaluate our disclosure
controls and to review annual and semi-annual reports, financial press releases,
our Annual Report on Form 20-F, and other information presented to shareholders.
As a consequence, existing disclosure procedures and controls are evaluated and
updated regularly as appropriate.


   Encourage transparency and communication. We have made, and will continue
to make, significant investments in our information technology systems because
we believe that menu planning and the accurate measurement and reporting of
client and consumer activity, as well as inventory, labor and performance
reporting, are central to our continued success. We are developing a global
intranet aimed at facilitating the exchange of best practices, ideas and
procedures throughout the entire network of our operations. Through our
technology infrastructure, we intend to continue to provide our unit managers
with tools that help them manage operations efficiently, thereby enhancing the
value for our clients of the services we provide.


Food and Management Services

 Overview

   We are a global food and management services contractor. In the fiscal year
ended August 31, 2003, our revenues in this activity were approximately
EUR 11.4 billion. In fiscal 2003, we operated through approximately 23,900
individual outlets in more than 70 countries. None of our clients is responsible
for more than 2% of our total revenues.

   To serve our clients and increase revenues, we pursue a market segmentation
strategy based on client needs. The industry markets in which we operate are
Business and Industry (which includes both corporate clients and government
entities), Healthcare and Education. Within each of these three industry
markets, we have identified sub-segments which permit us to target and address
client requirements promptly and efficiently. Effective for fiscal 2003, the
remote sites and river and harbor Cruises markets are also included in the Food
and Management Services business.



   Business and Industry. The Business and Industry market accounted for
EUR 4.7 billion of our Food and Management Services business revenues in
fiscal 2003, delivered at over 12,000 sites, representing 41% of our total Food
and Management Services business revenues. Traditionally, this market has been
comprised of corporate customers, whom we provide with food services as well as
vending, reception, mailroom, cleaning and facilities maintenance. Over the last
35 years, we have expanded the range and depth of our services and clients to
include


   o providing food and management services to government agencies and other
     public clients, such as the defense sectors in the United States, the
     United Kingdom and Australia;

   o providing food service at prestige occasions, which include some of the
     world's most prominent tourist, sports and recreational events like the
     Royal Ascot horse races, the British Open Golf Tournament, the Tour de
     France, the Davis Cup in France, the Paris-Bercy and Roland-Garros
     Tennis Tournaments and the 2000 Summer Olympic Games in Sydney,
     Australia;

   o providing a full range of executive dining services and the management
     of conference centers and private clubs for our corporate clients; and

   o providing food service and custodial services, maintenance, transportation,
     professional training, and rehabilitation services to correctional
     facilities in many locations outside of North America.


   Healthcare. For fiscal 2003, revenues in the Healthcare market totaled
EUR 2.2 billion at nearly 3,500 sites, representing 19% of our total Food and
Management Services business revenues. In this market, we provide catering
services, vending, meal delivery, patient transport, room upkeep, cleaning,
groundskeeping, laundry and maintenance services, to hospitals, clinics, nursing
homes, retirement and care centers around the world. In order to better address
our clients' needs, we have sub-segmented the Healthcare market into long-term
care facilities, primarily for seniors, and acute care facilities, providing
services primarily to hospitals and outpatient clinics. Historically, a larger
proportion of our business has come from the acute care facilities, but
restructuring in the healthcare industry in recent years has resulted in fewer
hospitals as well as in shorter patient stays, leading the short-stay market to
contract by approximately one percent each year. By contrast, shifting trends in
caring for the elderly have led the long-stay market to expand by approximately
1.5% each year. The Healthcare market has traditionally been more insulated from
economic downturns than the Business and Industry market, lending stability to
our revenue base.


   Education. In fiscal 2003, revenues in the Education market totaled EUR 2.8
billion at over 4,700 sites, representing 26% of our total Food and Management
Services business revenues. This portion of our business provides food and
management services to educational institutions ranging from nursery schools to
universities. Clients choose us to design, manage and equip their food service
facilities and to provide a wide range of incidental services. Besides food, we
offer vending, laundry, maintenance, groundskeeping, environmental services, day
care, mealtime supervision and hospitality services. Like the Healthcare market,
the Education market is relatively unresponsive to changing economic conditions
and thus contributes to reducing volatility in our revenues.

   Remote Sites. As of the end of fiscal 2003, we operated this activity in
1,049 sites around the world and generated revenues of EUR 543 million. Our
primary clients in this activity are oil and gas, construction and mining
businesses, to which we offer a wide range of food, hotel, cleaning, technical
maintenance, security, groundskeeping, medical surveillance and leisure
services, as well as the management of on-site clubs and retail outlets. Clients
in the oil and gas industry currently represent approximately two-thirds of our
business in this activity. This business tends to be cyclical, depending upon
the price of oil and gas, which drives exploration efforts, and the extent of
economic growth, which drives the construction market. We estimate the worldwide
remote services market, which spans five continents, to be approximately
EUR 10 billion per year, and our only global competitor currently is Compass.
We believe that new opportunities will develop for service providers as prices
for raw materials stabilize and the depletion of natural reserves in some
countries leads to prospecting in new onshore and offshore areas.

   River and Harbor Cruises. We operate our river and harbor cruises activity
with 55 boats and it generated revenues of EUR 87 million in fiscal 2003. We
have selectively built an international presence as a premier boat operator in
France, the United States and the United Kingdom, rendering us the largest
operator of river and harbor cruises in the world, based on annual revenues.
This activity is more capital intensive than the remainder of our businesses.


 Services Mix

   Most of our revenues are generated from food services, but our revenues in
the Food and Management Services business increasingly arise from providing
ancillary support services to our clients, which, together with food service, we
refer to as "multiservices." The multiservices market is underpenetrated; we
estimate the not-yet-outsourced portion to be EUR 380 billion annually
worldwide. We expect that the proportion of non-food services we provide will
increase relative to our food services in the future.


   Food Services. The food services industry is broadly divided among the
areas of contract catering, concessions, vending and restaurants. The food
services we provide can generally be described as contract catering - that is,
the preparation and provision of meals to third parties on behalf of a client,
usually on the premises of the client in cafeterias or other on-site facilities.
The third parties to whom we supply our food services tend to be either
employees of our clients or consumers of other services provided by our clients.
Corporate clients request food services for their staff employees and
executives, hospitals do so for their patients and visitors, retirement
communities for their residents, and schools for their students.

   Capital requirements in this business are minimal because of

   o low capital expenditures, as operations are generally conducted at client
     sites;

   o low fixed costs; and

   o predictable cash flow from client and customer payments, which reduces
     working capital needs.

   For certain clients, such as primary and secondary schools in France, we
use central kitchen areas financed or owned by our clients where we prepare
foods for delivery to client sites. We then arrange for delivery of these
prepared foods to locations where either our employees or, depending on the
contract arrangement, workers hired by the client serve the food to its ultimate
consumers. In the majority of cases, however, we prepare and serve the food
on-site.

   Within this core business, we also provide advice and technical support
with respect to the design and installation of food service facilities and the
training of catering and other service personnel. Innovation in this activity is
crucial to meeting demand and enhancing our client base. We have, for instance,
expanded our core food service business from basic on-site food preparation and
service to event catering, take-out, office delivery, off-site meal delivery,
and vending. New vending concepts allow teams working during non-business hours
to get hot meals at any time during the day or night at a reasonable cost. Small
companies without cafeteria facilities can have meals delivered to them on-site
or have vending machines installed.

   Our ability to attract and retain clients depends not only on the cost,
quality and efficiency of our service but also on our ability to gauge and
address the preferences of the consumers for the food we serve. Consequently, we
see the design, tailoring and innovation of our menu options as a key aspect of
the services we provide. In the Education market, we have profiled and analyzed
different age groups through parent and child interviews, independent market
studies and other methods in order to develop optimal food service packages for
students. In the Healthcare market, in connection with the long-term healthcare
business, we have designed a broader range of purpose-designed services to meet
the needs of an ever-growing number of seniors based on an international profile
of seniors and their lifestyles we developed, the first of its kind in our
industry. In the Business and Industry market, we have adapted the practices of
food stations and theme menus to the particular needs of our clients and their
employees using our customer profiling system, Conviv'styles(R).

   Multiservices. Recognizing significant value added to our clients in
service areas that are not directly related to food is a focus area of our
growth strategy. We believe that providing these additional services is key to
our expansion. As consumers' needs become more sophisticated, clients will
continue to seek service contractors who are able to provide solutions for all
of their non-core food and management services on a quality, efficient,
cost-effective basis. The ancillary services we provide are complementary to our
food services and fall into three main categories.

   o People services, which are tailored to end-users and provided on the
     client's premises. These include our retail food services as well as dry
     cleaning, newsstands, leisure services and the on-site management of health
     club facilities and day care centers.

   o Business support services, which add value to our clients through the
     management of peripheral activities. Reception, mailroom, switchboard,
     groundskeeping, housekeeping, custodial and janitorial services, security
     and surveillance and transportation are among the tasks which we perform
     to ensure the smooth operation of our clients' businesses.

   o Building management and maintenance services, which comprise the technical
     maintenance operations required to deliver electricity, water, other
     utilities, heating and ventilation to the various areas on a particular
     site. In Europe, for example, our subsidiary Altys provides building
     services to large client accounts such as Cisco in France, Belgium and
     Germany.



 The Market for Outsourced Food and Management Services

   We estimate that approximately two-thirds of food management services
worldwide currently remain self-operated, and an even greater proportion of
other ancillary services is not outsourced. We believe that over the past ten
years, the portion of outsourced Food and Management services has increased
steadily and we further believe that this trend will be reinforced by the
growing advantages of outsourcing peripheral activities in favor of large,
experienced contractors capable of providing higher quality services at a lower
cost. Specifically, outsourcing support functions allows potential clients to:

   o improve the quality and consistency of support services through
     professional management;

   o benefit from current, innovative trends in procurement and delivery of
     these services; and

   o improve cost effectiveness through the economies of scale and operational
     synergies that a specialized provider can achieve.

   Outsourcing recently has grown particularly in the Education and Healthcare
markets, where a large number of the services we provide had historically been
undertaken by the government or other public institutions. Governments have
found outsourcing to be a useful tool in attempting to reduce central expenses
and budget deficits.

   Healthcare represents the largest potential market for food and management
services with outsourcing rates still comparatively low. We estimate that
roughly half of this market is in short-stay care centers (public and private
hospitals) and half in long-term care facilities for the elderly and dependent.
On average, we estimate that about one quarter of this market is currently
outsourced, with short-stay facilities generally more likely to outsource than
long-stay facilities by a ratio of almost two-to-one. A multiservice approach is
especially important in the Healthcare market, where pressure on cost structures
combined with greater life expectancy and increasingly sophisticated medical
technologies has led clients to seek to reduce the cost of services that are not
an integral part of their business.

   We estimate that the Education market is about one-third outsourced, with
about half of private sector institutions and about one-fourth of public
institutions outsourcing food service. Much of the opportunity for outsourcing
in the Education market is concentrated in ten countries. The campus dining
marketplace, principally colleges and universities, continues to shift from
residential board plans to more retail-oriented operations driven by the growing
proportion of non-resident day and evening students on campuses, the changing
taste and service preferences of young consumers, and colleges' and
universities' desire to provide their students with greater flexibility.
Traditional cafeterias are being replaced by food courts and similar retail
operations providing greater variety of food selection. We believe that these
trends, coupled with cost pressures, lead public and private institutions to
consider outsourcing. Over the past three years, outsourcing in the Education
market has increased steadily.There are significant growth opportunities also in
the Business and Industry market, especially in public sectors such as defense
in developed countries and across all sectors in emerging markets. The market
for multi-service national providers (food and facilities) is growing as large
corporations are moving toward outsourcing all of their non-core services on a
multisite and multiservice basis. We estimate that only about half of such
services are outsourced on average, but substantial differences exist from one
country to another.

   We estimate the outsourcing potential for multiservices as a whole to be
two and one-half times greater than that for food services alone. We believe
this potential reflects not only low independent contractor penetration but also
an increasing trend ofclients seeking a single-source solution for their
facilities and on-site needs.

 Contracts

     We use two broad contract types in our Food and Management Services
business: profit and loss contracts and management fee contracts. However, many
of our contracts contain characteristics of both types of contract. The primary
distinguishing feature of each contract type is the amount of financial risk we
bear and, conversely, our profit or loss potential. Our revenues under each type
of contract may vary substantially depending upon such factors as the type of
client facility involved, whether hourly workers are employed by us or by our
client, the services requested and the amount of capital, if any, invested by
us.


   In profit and loss contracts, we generally receive all revenue derived from
and bear all expenses incurred in providing our services. Expenses under profit
and loss contracts generally include labor and food costs, but they can also
include commissions paid to the client, typically calculated as a percentage of
revenues made on the client's premises. In some cases, we may agree to pay
minimum guaranteed commissions to our clients. We may also receive client
subsidies to cover our fixed operating costs. Profit and loss contracts are
generally indexed for inflation, although our ability to change prices in
response to significant variations in cost may be limited. We believe, however,
that the existence of a captive on-site customer group, the relative ease of
determining sales volumes and operating margins, standard termination provisions
and our broad institutional client base limits and diversifies our risk with
respect to these contracts.

   In management fee contracts, we receive a fee, which is generally fixed,
and we are reimbursed for the operational and administrative expenses we incur.
These contracts have varying terms and may in some instances provide for the
client to purchase food and labor directly or for us to make such purchases and
re-invoice the costs to the client. In either case, our profit potential and
risk of loss are generally fixed.

   In the Business and Industry market, a reduction in client subsidies
combined with pressure on costs has resulted in a move from management fee to
profit and loss contracts. In the Healthcare market, industry trends, especially
in the United States, away from fee-for-service payments and towards a managed
care environment has shifted the risk and burden of cost control from insurance
providers to the health care institutions themselves, forcing them to focus not
only on the cost component of clinical care but also on the cost of all
services, including food and facilities management. These cost pressures are
driving the trend toward consolidation of healthcare institutions and fixed-cost
(profit and loss) contracts for hospital services. Many contracts with
healthcare clients condition a portion of our compensation on financial
performance objectives as well as other measurements by third parties, such as
patient satisfaction.

   The length of contracts that we enter into with clients varies. The
majority of our services are provided under contracts of indefinite term, which
are generally subject to termination on three months' notice by either party
without cause. Certain client contracts, such as those with universities,
hospitals and event catering, which require capital investments on our part,
tend to have fixed terms, generally between three and ten years. When we enter
into these contracts, we may negotiate a capital investment to help finance
facility construction or renovation. Contractually required investments
typically take the form of an investment in leasehold improvements and food
service equipment. At the end of the contract term or its earlier termination,
assets such as equipment and leasehold improvements typically become the
property of the client, but generally the client must reimburse us for any
undepreciated or unamortized capital expenditures.

   Food and Management Services contracts are generally obtained and renewed
either through a competitive process or on a negotiated basis. We selectively
bid on contracts to provide services at facilities within the private and public
sectors with contracts in the public sector frequently being awarded on a
competitive bid basis under the requirements of applicable law. Contracts for
food services with school districts and other public clients are typically
awarded through a formal bid process.


 Competition

   We face significant competition in the Food and Management Services
business from local, regional, national and international outsourced service
providers, as well as from businesses, healthcare and educational institutions,
and government agencies and institutions that choose to operate their own
services following the expiration or termination of contracts with us or with
our competitors. We compete on the basis of both price and quality of service
and product, although in some cases, generally involving large multinational
companies or the government sector, clients put a greater emphasis on price. Our
mission is to improve the quality of daily life, and hence create value for our
clients, and our strategy is to avoid the commoditization of our service
offering. Accordingly, we may lose some business to competitors on the basis of
price.

   Within the outsourced portion of the global market there is a high level of
fragmentation. Only the top two companies, we and Compass (headquartered in the
United Kingdom), can be considered truly global enterprises. The next two
largest contract caterers, Aramark (headquartered in the United States) and
Elior (headquartered in France), are pursuing expansion outside of their home
countries through acquisitions, but they still remain largely focused on their
domestic or continental markets, with less than 40% of their revenues coming
from overseas operations in each case (40% for Elior).


   The following table shows the ranking of the three leading contract caterers,
in terms of revenues, in different market segments, as of August 2003.

<TABLE>
<S>             <C>               <C>               <C>                 <C>
                Business &
                 Industry         Education         Healthcare           Total

No. 1............Compass           Sodexho           Sodexho            Sodexho
No. 2............Sodexho           Aramark           Compass            Compass
No. 3............Aramark           Compass           Aramark            Aramark

   Source: Broker reports, GIRA
</TABLE>


   On a national scale, competition levels vary significantly, though
concentration is generally higher than on the global stage. High concentration
levels are found in some countries such as France, where we, Compass and Elior
have over 75% of the outsourced market, and the Netherlands, where we, Compass
and Albron, a national provider, have approximately 77%. By contrast, more
fragmented environments tend to exist in some of the other countries in which we
operate.

   While the markets in which we operate continue to be highly fragmented, in
recent years the contract food service industry has experienced consolidation
and multinational expansion. Drivers for consolidation come from both the client
and supplier side. A larger entity with international coverage is able to tender
for the larger contracts and can negotiate better terms from its suppliers. In
addition, larger companies can obtain economies of scale and implement best
practices across sites. As a result of these benefits of scale, consolidation in
the industry has been accelerating, both in terms of the number and size of
deals, with the most recent significant examples being the acquisition of
Servicemaster by Aramark in 2001 and the merger between Compass and Granada in
the United Kingdom which was completed in 2000.


 Service Vouchers and Cards

   In our Service Vouchers and Cards business, we have operations in 26
countries, mainly in Europe and Latin America, and our vouchers are used by
nearly 11.5 million people. As of the end of fiscal 2003, this activity issued
over 1.5 billion vouchers on behalf of more than 285,000 clients and generated
revenues of EUR 248 million. Our vouchers were accepted at over 825,000
locations and the total nominal value, which is not included in our revenues, of
vouchers issued in fiscal 2003 was EUR 4.6 billion. This business generates
negative working capital and requires only a modest level of capital investment.

   Our Service Vouchers and Cards business, which focused originally on managing
employee fringe benefits for companies, has expanded into controlling and
managing welfare benefits allocated by federal authorities and local
communities. The business currently comprises three product families: daily
life, incentive and assistance, which are used to pay for a wide range of social
and fringe benefits, including healthcare and household bills, and to purchase
everything from gas and groceries to clothing and medications. Our clients are
generally commercial enterprises and community and governmental entities.
Revenues from service vouchers and cards activities include the commissions paid
by our customers who buy the service vouchers and cards from us and commissions
from our affiliated retail outlets where the service vouchers and cards are
redeemed. Customer commission revenues are recorded at the time of issuance of
the service voucher or card. Affiliate commission revenues are recorded at the
time of redemption. Revenues also include interest income from the investment of
proceeds from the time of sale of the vouchers to our customers until the time
of their redemption, when we must repay our affiliates, generally a
one-to-three-month period. Service vouchers are used by businesses of all sizes,
primarily in large urban centers, and they frequently carry tax or labor law
benefits.

   To meet new needs and enhance quality, we are constantly expanding our
range of services through research and development in card technology, data
processing, security and control systems. In fiscal 2000 and 2001, new order
processing software was rolled out, and custom-designed affiliation programs
were introduced. Express voucher delivery and personalized voucher pick-up from
restaurants both significantly contributed to the efficient handling of nearly
one billion issued vouchers. We are also developing card technology in Europe
and Latin America to offer an advanced solution to client businesses and
government agencies which require a more secure, comprehensive alternative to
vouchers.


   The current market for service vouchers and cards is estimated at more than
EUR 15 billion worldwide, but we estimate that the potential market for
existing products in countries where we are already present totals more than
EUR 30 billion, making it our fastest-growing activity. Between 2001 and 2002,
organic growth in this activity approached 20%, and organic growth between 2002
and 2003 was 11%. We are the second-largest service vouchers and cards business
in the world, based on annual revenues. We have only one significant global
competitor, Accor. Significant drivers in the industry include product
development, geographical expansion, name recognition (branding) and the synergy
effects of building large networks of affiliates. Our current objectives in this
activity are to (i) consolidate our number two position by offering the best
perceived quality services in the market; (ii) enhance our capabilities in new
technologies, with a focus on smart card technology; and (iii) innovate and
develop new products and services to capture a greater share of the market.


 Raw Materials

   Raw materials essential to the operation of our business are obtained
principally through local and national food distributors in each of the
jurisdictions in which we operate. As such, we are subject to fluctuating food
prices and availability, both of which can vary by location. Furthermore,
because of the relatively short storage life of inventories, especially produce,
limited storage facilities at customer locations and our client requirements for
freshness, a minimum amount of inventory is maintained at customer locations at
any given time. All materials and services that we purchase are available from
more than one supplier, and we believe that the loss of any supplier would not
have a material impact on our business.

   Since our inception in 1966, we have been highly proactive in addressing
food safety and health concerns. For example, in November 1999, we formed a Food
Safety Committee in France to anticipate and manage food safety risk. Comprising
four prominent professors and medical doctors specialized in nutrition and food
safety, this committee is supported by the technical resources of the Institut
Pasteur de Lille, a Sodexho partner for more than 20 years, and the French Food
Safety Agency. Similar food safety programs are continuously being developed and
extended across Europe and in other countries. End-to-end traceability has been
introduced in all of the procurement channels, whether for meat or other
products.


 Seasonality

   Although revenues of our business as a whole do not tend to fluctuate
significantly by season, certain market segments have been characterized
historically by seasonal fluctuations in overall demand for services, notably
the Education market of our Food and Management Services business and our River
and Harbor Cruises operations. In the Education market, revenues and operating
performance depends on the school, college and university calendar in each
country, with low activity levels during the long vacation periods, principally
in our fiscal fourth quarter. Our River and Harbor Cruises operations generally
benefit from increased tourism levels in the fourth quarter and may be reduced
to restricted operating levels in our fiscal second and third quarters as a
result of inclement weather.


 Regulation

   The following description of the regulations to which we are subject does
not purport to be complete and is qualified by reference to the relevant
provisions of applicable law in the jurisdictions in which we operate.

   We are subject to various governmental regulations throughout the world in
the course of our operations. These regulations govern such matters as
employment, including wages; environmental protection; human health and safety;
and the bidding for and performance of contracts with governmental entities. To
ensure compliance with these regulations, our facilities and products are
subject to periodic inspection by authorities at a local and national level in
many jurisdictions in which we operate.


   The most significant of the regulations which apply to our business relate
to the handling, preparation and serving of food, and impose standards for food
temperature, kitchen cleanliness and employee hygiene, among other things. In
addition, certain of our operations are subject to licensing requirements with
respect to serving alcoholic beverages, including restrictions on individuals to
whom alcoholic beverages may be served. Various state agencies and governmental
entities have also imposed nutritional guidelines and other requirements on us
at some of the education and corrections facilities we serve.

   Many of our subsidiaries, especially those in countries which are members
of the European Union, must comply with employment regulations designed to
protect hourly, part-time and full-time employees. These regulations govern
working hours, wages, unfair dismissal and discrimination. Furthermore, pursuant
to European Union regulation and subject to certain limitations and exceptions,
in the event we are assigned a contract for food service at a site within the
European Union from another contractor or from a client, we are required to hire
all workers who were employed at that site and were on the previous employer's
payroll to provide food services.


   We have installed various internal controls and procedures designed to
maintain a high level of compliance with these regulations, but we cannot assure
you that we are in full compliance at all times with all applicable laws and
regulations. The cost of our compliance programs is not material, but it is
subject to additions to or changes in legislation, changes in regulatory
implementation, and changes in the interpretation of applicable regulations. If
we fail to comply with applicable laws in any jurisdiction in which we operate,
we could be subject to civil remedies, including fines and injunctions, as well
as potential criminal sanctions.


 Marketing

   In those countries in which we have significant operations, our sales teams
are focused on developing particular client sectors by identifying and pursuing
potential new business opportunities, analyzing and evaluating such
opportunities together with our operational and financial management and
developing specific contract proposals. In addition to our professionals
dedicated exclusively to sales efforts, our food and support field management
shares responsibility for identifying and pursuing new sales opportunities, both
with the clients for which they are directly responsible and for potential
clients in their geographic area of responsibility. In addition, in several of
our major operating territories we also have dedicated sales retention teams.
Our sales retention teams participate directly with our operational management
teams in client retention, including conducting client satisfaction surveys and
the review and implementation of account management procedures. We estimate that
approximately 760 people are involved in sales, sales support and marketing, of
which approximately 40% are located in North America.

   Our marketing efforts are directed both toward increasing our business with
existing clients as well as obtaining business from new clients. We regularly
develop and offer innovations in products and services for our clients that
allow us to grow revenues at existing locations while enhancing value provided
to those clients and improving service quality to their customers or employees
by tailoring new offerings to their needs. We have a specific process in each
country to promote and subsequently implement innovations on a broad scale.



C. Organizational Structure

   As of August 31, 2003, we had 243 subsidiaries in 76 countries. Our
operations are managed locally through these subsidiaries, although our central
management is at the level of Sodexho Alliance, SA. For a complete list of our
subsidiaries and a description of our interests in them, please see note 4 to
our Consolidated Financial Statements.



D. Property, Plant and Equipment

   Our principal property and equipment consists of our service equipment and
fixtures, computer and office equipment, delivery vehicles and cruise vessels.

   Our service equipment and fixtures include vending, commissary, janitorial,
maintenance and laundry equipment used primarily in the Food and Management
Services business. The vehicles comprise automobiles and delivery trucks used in
the Food and Management Services business and cruise vessels used in the
operation of the river and harbor cruises activity. The service equipment and
fixtures, computer and office equipment, delivery and other vehicles and cruise
vessels had an aggregate net book value as of August 31, 2003 of EUR 208
million.


   Our real estate is comprised primarily of office space in several
countries, notably France, the United Kingdom and the United States, and had an
aggregate net book value of approximately EUR 99.3 million as of August 31,
2003. No individual parcel of real estate we own is of material significance to
our total assets.

   In certain circumstances, we lease office space, computer software and
other equipment (primarily kitchen equipment). A discussion of our capital lease
policy can be found in note 1 to our Consolidated Financial Statements.





ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

   The selected consolidated financial data as of and for the years ended
August 31, 2001, 2002 and 2003 have been derived from and should be read in
conjunction with the consolidated financial statements of Sodexho Alliance
included elsewhere in this Annual Report on Form 20-F. The selected consolidated
financial data as of and for the years ended August 31, 1999 and 2000 have been
derived from consolidated financial statements that are not included in this
Annual Report on Form 20-F. Our consolidated financial statements for each of
the years ended August 31, 2001, 2002 and 2003 were audited by
PricewaterhouseCoopers Audit.

   Except as described in note 1 to the consolidated financial statements, our
consolidated financial statements have been prepared in accordance with French
generally accepted accounting principles ("GAAP"), which differ in certain
significant respects from U.S. GAAP. Note 5 to our consolidated financial
statements describes the principal differences between French GAAP and U.S.
GAAP, as they relate to us, and reconciles our net income to U.S. GAAP for each
of the years ended August 31, 2003, 2002 and 2001, and our shareholders' equity
to U.S. GAAP as of August 31, 2003 and 2002.

 CRITICAL ACCOUNTING POLICIES AND ESTIMATES

   The preparation of financial statements in compliance with relevant French
law and in conformity with accounting principles generally accepted in the
United States of America, requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses, and
related disclosure of contingent assets and liabilities, including judgments
related to the selection of appropriate accounting policies as well as the
appropriate application of those policies. Actual results could differ from
those estimates. Our significant accounting policies are described in the notes
to the consolidated financial statements included in this Annual Report on Form
20-F. However, we have identified a number of those accounting policies and
estimates which we believe are the most significant to our business operations
and to an understanding of our financial statements and related footnotes.


 Revenue Recognition

   Our revenue recognition policies are substantially the same for both French
and U.S. GAAP.

   In the Food and Management Services business (which now includes remote
site and river and harbor cruise activities), revenue is recognized in the
period in which services are provided pursuant to the terms of the contractual
relationships with clients.

   Revenues for service voucher activities include commissions received from
customers, which are recorded upon issuance of the vouchers to the customers;
commissions received from affiliates, which are recorded upon redemption of the
vouchers by the affiliates; and interest income realized on the nominal value of
the vouchers during the period from their issuance through redemption
(generally, one to three months).


 Business Combinations and Impairment of Intangible Assets and Goodwill

   Accounting  policies for business  combinations and impairment of intangible
assets and goodwill differ between French and U.S. GAAP.


   Under French GAAP, all of our business combinations are accounted for as
purchases. The cost of an acquired company is assigned to the tangible and
intangible assets acquired and liabilities assumed on the basis of their fair
values at the date of acquisition. Any excess of purchase price over the fair
value of the tangible and intangible assets acquired is allocated to goodwill,
which is amortized over its estimated useful life. Where we have established a
strong presence in a geographic market through an acquisition, an additional
intangible asset, market share, is recorded in the allocation of purchase price
(within intangible assets in our consolidated balance sheet). Market share is
principally determined based on an average of multiples of revenues and EBITA
achieved by the acquired companies in the applicable countries as compared to
unrelated recent transactions in the marketplace and is reviewed annually for
diminution in value. Initial allocations to market share require management to
exercise judgment in the choice of unrelated recent transactions in the
marketplace. If management believes there has been a significant diminution in
the market share value for more than two consecutive years, as determined based
on actual results of the applicable subsidiary as compared to the original
calculation, it is written down by the amount of the diminution in value. This
valuation of market shares on a historical basis is also supported by a
calculation of the current value of these assets as of August 31, 2003 and based
on discounted future cash flows. Market share intangibles are not amortized in
the consolidated financial statements, and no deferred taxes are recorded on
market share intangibles.

   Under French GAAP, intangible assets (other than market share) and goodwill
are written down to estimated net realizable value when negative conditions are
identified. Impairment is determined based on an estimation of value and future
benefits of the intangible assets. Should this determination indicate than an
intangible asset or goodwill is impaired, the related amortization period is
revised or a write-down is recognized. Impairment for market share intangible
assets is recognized as a diminution in value in accordance with the policy
described above.

   Under U.S. GAAP, all of our business combinations are accounted for as
purchases. In accordance with SFAS No. 141, "Business Combinations" (APB 16,
"Business Combinations," for transactions consummated prior to June 30, 2001),
the cost of an acquired company was assigned to the tangible and identifiable
intangible assets acquired and liabilities assumed on the basis of their fair
values at the date of acquisition. In accordance with U.S. GAAP, customer
relationships, trademarks, assembled workforce (for transactions consummated
prior to June 30, 2001 only), and software intangible assets have been
identified with respect to our acquisitions. As such, for U.S. GAAP purposes, a
portion of the amount allocated to market share and goodwill under French GAAP
is allocated to these identified intangible assets. The remaining excess of the
cost of the acquired company over the fair value of the net assets acquired is
recorded as goodwill. The allocation of purchase price to intangible assets
other than goodwill requires management to make estimates with respect to the
fair value of those intangible assets, which fair value is largely dependent on
assumptions utilized in the valuation methodology, including estimates of future
cash flows and appropriate discount rates. A deferred tax liability is recorded
with respect to all intangible assets except goodwill, and the amount assigned
to goodwill is increased by an amount equal to the deferred tax liability
recorded, if any.

   For U.S. GAAP purposes, we adopted SFAS No. 142, "Goodwill and Other
Intangible Assets," which required us to reclassify (into goodwill) the carrying
value of assembled workforce intangibles and those customer relationship
intangibles which did not meet the criteria of SFAS 141 for recognition apart
from goodwill. Intangible assets representing assembled workforce and certain
customer relationship intangibles, totaling EUR 138 million and EUR 17
million, respectively, were reclassified from intangible assets to goodwill as
of the date of adoption of SFAS 142 which, for the Group, was September 1, 2001.
Related deferred tax liabilities totaling EUR 55 million were also
reclassified to goodwill. None of the identifiable intangible assets recognized
apart from goodwill were considered to have indefinite lives. In connection with
the transitional goodwill impairment evaluation required by SFAS 142, we
determined that there was no impairment and, accordingly, no transitional
impairment loss was recorded in the fiscal 2002 U.S. GAAP income statement. The
transitional goodwill evaluation required management to make assumptions with
respect to the identification of its reporting units. In addition, it required
management to make certain assumptions and estimates, including estimates of
future cash flows and appropriate discount rates, in order to determine the fair
value of the reporting units so identified. Upon adoption of SFAS 142, we ceased
amortizing goodwill (including that portion of goodwill which was generated by
the reclassification of assembled workforce and certain customer relationship
intangibles as of September 1, 2001). All other intangible assets, including
customer contracts, trademarks and software, are amortized over their estimated
useful lives.

   SFAS 142 also requires us to evaluate our goodwill (and identifiable
intangible assets with indefinite lives, if any) for impairment at least
annually and more frequently if specific events indicate that an impairment in
value may have occurred. Similar to the transitional impairment evaluation, this
evaluation requires management to make assumptions with respect to the
identification of its reporting units as well as the determination of the fair
value of the reporting units so identified.


   SFAS 144 (SFAS 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of" through fiscal 2003) requires that we
review our identifiable intangible assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable (a "triggering event"). The review for recoverability requires us
to estimate the future cash flows expected to result from the use of the asset
and its eventual disposition. If the sum of the undiscounted future cash flows
is less than the carrying amount of the asset, an impairment loss may be
recognized, which is measured based on the fair value of the asset. Management
is required to exercise judgment in the determination of whether a triggering
event has occurred as well as in the development of the assumptions used to
estimate future cash flows and determine fair value, as needed.


 Provisions for contingencies and losses

   Under French GAAP, provisions for contingencies and losses may be
recognized when there is a possibility of loss and prudence is an important,
although not the only, consideration. In general, provisions for risks and
charges represents liabilities which have not been settled, or for which the
settlement amount or other pertinent information is unknown, as of the balance
sheet date. Such amounts are reflected as charges in the income statement in the
period in which they are provisioned.

   Under U.S. GAAP, provisions for contingencies and losses (contingent
liabilities) are recognized for specific existing risks when the related loss is
both probable and estimable and, in certain specific situations such as business
combinations and restructurings, when certain additional criteria are met. If a
loss is determined to have been incurred and management is able to reasonably
estimate the amount of the loss, an amount must be accrued for the loss. Where
the amount of the probable loss is determined within a range of possible
outcomes and no single amount within the range is considered to be a better
estimate than any other amount within the range, that amount is accrued.
However, when no amount within the range is considered to be a better estimate
than any other amount, the minimum amount in the range is required to be
accrued.

   Under both French and U.S. GAAP, the recording of provisions requires
management to exercise significant judgment in determining the timing of
recognition and amount of recorded provisions.

 Actuarially-Determined Liabilities

   Included in other liabilities are liabilities established using actuarial
methods, notably for pensions and postretirement benefits in some of our
subsidiaries located in France and the United Kingdom. In French GAAP, there are
no specific requirements pertaining to accounting for pension and
post-retirement benefits. For subsidiaries located in France, the projected unit
credit valuation method is used to evaluate the pension and post-retirement
liabilities under French GAAP. In the United Kingdom, our pension plans are
administered by a third-party insurance company. Under French GAAP, premiums
paid to the insurance company are recorded as an expense in the period in which
they are made. Under U.S. GAAP, pension and post-retirement benefits are
accounted for using the methodologies prescribed by SFAS 87 and SFAS 106,
respectively. Both the projected unit credit valuation method and the
methodologies prescribed by SFAS 87 and SFAS 106, which are substantially
similar, require the use of actuarial assumptions, including the discount rate,
the rate of compensation increase and expected long-term rate of return on plan
assets. These assumptions are determined by management and require management to
exercise considerable judgment.

   Also included in other liabilities are liabilities for workers'
compensation, principally in the United States. These liabilities are estimated
using actuarial methods for both French and U.S. GAAP based on assumptions made
by management with respect to the expected development of known and incurred but
not reported claims.


 Derivative Financial Instruments

   Under French GAAP, our derivative financial instruments, which consist
primarily of interest rate and cross-currency swap agreements on debt
instruments, are considered to hedge the underlying debt. Any interest rate
differential is recognized as an adjustment to interest expense over the term of
the related underlying debt. For swaps negotiated on inter-company debt, the
difference between the amount of the debt at the period end rates and the
swapped rates is recorded as debt. Where the hedge is of a net investment in a
foreign subsidiary, the resulting foreign currency translation difference is
recorded in the currency translation adjustment account in shareholders equity.



   Under U.S. GAAP, SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities, which was effective for the Group September 1, 2000,
requires all derivative instruments to be recorded on the balance sheet at their
fair value. Changes in fair value are recorded currently in earnings unless the
item is designated, qualifies, and is effective as a hedge. Fair value is
defined as the amount that would be paid or received to terminate the derivative
instrument at the balance sheet date. Changes in the fair value of derivatives
designated as part of a hedge transaction are recorded each period in current
earnings or other comprehensive income, depending on the type of hedge
transaction. For cash flow hedge transactions in which we are hedging the
variability of cash flows related to a variable rate asset, liability, or a
forecasted transaction, changes in the fair value of the derivative instrument
is reported in other comprehensive income. The gains and losses on the
derivative instrument that are reported in other comprehensive income are
reclassified to earnings in the periods in which earnings are impacted by the
variability of the cash flows of the hedged item. The ineffective portion of all
hedges is recognized in current period earnings. For certain derivative
financial instruments, as permitted by SFAS 133 and as described below, we have
elected not to prepare the documentation required by SFAS 133 in order to meet
hedge accounting criteria. Had we met and appropriately documented the hedge
accounting criteria required by the standard, reported earnings under U.S. GAAP
might have been different in each of the periods presented.

   Under U.S. GAAP, we have accounted for all of our derivative financial
instruments (other than those of Sodexho, Inc., as described below), which
consist primarily of interest rate and cross-currency swap agreements, both
prior and subsequent to the adoption of SFAS No. 133 at fair value with changes
in fair value of instruments recognized currently in earnings. The aggregate
adjustment reflected in the reconciliation of consolidated shareholders' equity
and consolidated net income (loss) to U.S. GAAP as of and for the years ended
August 31, 2003, 2002 and 2001 for "Derivative financial instruments" is
attributable entirely to derivative financial instruments accounted for at fair
value. The fair value of our derivative financial instruments is generally
obtained from third party financial institutions.

   Under U.S. GAAP, Sodexho, Inc.'s interest rate agreements have been
designated as cash flow hedges in accordance with SFAS No. 133. As of August 31,
2003 and 2002, and for the fiscal years then ended, these cash flow hedges were
determined to be effective hedges and, accordingly, changes in their fair value
are reflected in the statement of comprehensive income (recorded directly in
shareholders' equity).


Currency Translation

   For subsidiaries located in foreign countries, assets and liabilities are
translated using the end of period exchange rate. Income statement and cash flow
statement line items are translated using the average exchange rate for the
year, calculated using monthly averages. Exchange rates used are obtained from
the Bourse de Paris and other international financial markets. The difference
between the translation of the income statement at average and period end rates,
as well as the difference between the opening balance sheet accounts as
translated at beginning and end of period rates is recorded in shareholders'
equity, except with respect to countries considered highly inflationary, where
this difference is included in net financial expense. Foreign exchange gains and
losses resulting from intragroup transactions in foreign currencies during the
year are recorded in the income statement.




                     BALANCE SHEET AND INCOME STATEMENT DATA

   Our consolidated financial statements and the selected financial data
presented below are reported in euro. For periods prior to January 1, 1999, our
financial statements were prepared in French francs and translated into euro
using the official fixed exchange rate of EUR 1.00 = FF6.55957, applicable
since December 31, 1998 (see note 1 to our consolidated financial statements).

<TABLE>
<S>                    <C>       <C>       <C>       <C>       <C>        <C>

                                As of and for the year ended August 31,
                        2003      2003      2002      2001      2000      1999
                         USD       EUR       EUR       EUR       EUR       EUR
                        (3)                            (5)       (5)
Income Statement Data
                              (in millions, except per-share amounts)

French GAAP amounts
 Revenues............  14,017    11,687    12,609    11,928    10,496     9,027
 Earnings before
  interest,
  exceptional items,
  income taxes, income
  from equity method
  investees, goodwill
  amortization and
  minority interests
  (EBITA)............     616       514       525       571       530       448
 Financial expense,
  net................    (188)     (152)     (166)     (122)     (118)     (131)
 Minority interests
  in net income of
  consolidated
  subsidiaries.......     (11)       (9)      (13)      (67)      (69)      (56)
 Net income..........     194       162       202       128        79       128

 Earnings per share
  (basic)............    1.22      1.02      1.27      0.93      0.59      0.95
 Earnings per share
  (diluted)..........    1.20      1.00      1.22      0.89      0.56      0.92
 Dividends per
  share..............    0.73      0.61      0.61      0.56      0.56      0.45


U.S. GAAP amounts
 Revenues............  14,020    11,690    12,618     7,557     5,648
 Operating income....     480       400       404       153       195
 Net income (loss)...     176       147       136       (34)       24

 Earnings (loss) per
  share (basic)......    1.13      0.94      0.86     (0.25)     0.18
 Earnings (loss) per
  share (diluted)....    1.13      0.94      0.85     (0.25)     0.17




Balance Sheet Data

French GAAP amounts
 Intangible assets,
  including
  acquisition
  goodwill...........   5,011     4,178     4,556     4,731     3,527     3,111
 Tangible fixed
  assets, including
  non-working capital,
  financial investments
  and other assets...     756       614       584       519       538       556
 Working capital(1)..  (1,511)   (1,260)   (1,275)   (1,208)   (1,016)     (753)
 Cash and cash
  equivalents(2).....   1,533     1,278     1,307     1,213       897       758
 Total assets........   9,724     8,108     8,544     8,638     6,951     6,026
 Total borrowings....   2,984     2,488     2,693     2,781     2,009     2,047
 Provisions for
  contingencies and
  losses.............     107        89        99        93       115       124
  Minority interests.      88        67        73       131       525       333
Total shareholders'
 equity..............   2,697     2,249     2,398     2,386     1,402     1,276

U.S. GAAP amounts
 Total assets........   9,701     8,089     8,503     8,820     4,397
 Total shareholders'
  equity.............   2,082     1,736     1,880     2,029     1,095
</TABLE>


(1)  Working capital is calculated as the net of an asset component (current
     assets, loans receivable and deposits and other and prepaid expenses less
     cash, cash equivalents and restricted cash) and a liability component
     (accounts payable, vouchers payable and other liabilities).
(2)  Cash and cash equivalents includes restricted cash. See note 1 to our
     consolidated financial statements for an explanation of restricted cash.
(3)  The consolidated financial statements are prepared and presented in euro.
     The U.S. dollar amounts presented in the table above have been translated
     solely for the convenience of the reader using the November 30, 2003 2 p.m.
     ECB time rate quoted by the European Central Bank of $1 = EUR 0.8338.
(4)  See Note 1 to the consolidated financial statements for a discussion of the
     impact of changes in accounting principles.
(5)  Certain amounts for the years ended August 31, 2002 and 2001 differ from
     the corresponding amounts for the same periods reported in the Company's
     Document de Reference filed with the Commission des Operations en Bourse.
     See note 1 to the Consolidated Financial Statements for further
     information.



A. Operating Results

   The balance sheets of subsidiaries located outside of the euro zone that
operate in a stable currency environment are translated into euro using exchange
rates in effect at the balance sheet dates. The income statements of these
subsidiaries are translated at average exchange rates for the period. The
difference between the translation of the income statement at average and period
end rates, as well as the difference between the opening balance sheet account
as translated at beginning and end of period rates, are recorded in
shareholders' equity. Transactions in foreign currencies are translated using
the exchange rate in effect at the time of the transaction and the related
impact is reflected in the income statement.

   We have no significant operations in countries with highly inflationary
economies.

   Subject to certain de minimis exceptions discussed below, entities managed
by us, including entities in which we own at least 40% equity interest and are
the single largest shareholder, are fully consolidated. Fully consolidated
subsidiaries that have a year-end that is different from our year-end prepare
balance sheets as of August 31 for consolidation purposes. The foregoing
conditions notwithstanding, subsidiaries with (i) annual revenues of less than
EUR 2 million, (ii) annual profits or losses of less than EUR 0.1 million
and (iii) net assets of less than EUR 2 million, are excluded from the
consolidation. Entities not meeting any of the foregoing conditions, but over
which we are able to exercise significant influence, are consolidated using the
equity method of accounting.

   After reallocating management responsibilities for the remote sites and
river and harbor cruises activities to the applicable regions within the Food
and Management Services business in fiscal 2003, the Group changed the manner in
which it reports its operating segments. Accordingly, the Group now reports two
principal operating segments, which are Food and Management Services and
Services Vouchers and Cards. The Food and Management Services business is
further segmented into four geographic regions. The Group reports the following
principal and secondary segments:

 Food and Management Services

  o North America, which now includes river and harbor cruise activities in the
    North American region.

  o United Kingdom and Ireland, which now includes river and harbor cruise
    activities in the United Kingdom and Ireland.

  o Continental Europe, which now includes river and harbor cruise activities in
    Continental Europe.

  o Rest of the World, which now includes activities on remote sites.


 Service Vouchers and Cards

   Prior year amounts have been restated to conform to the fiscal 2003
presentation. Following is a reconciliation of the current and prior
presentations for each of the years presented:
<TABLE>
<S>                        <C>       <C>      <C>      <C>      <C>      <C>

                                   Fiscal Year Ended August 31,
                            2003     2003     2002     2002     2001     2001
                           Current   Prior   Current   Prior    Current  Prior
                           presen-   presen-  presen-  presen-  presen-  presen-
                           tation    tation   tation   tation   tation   tation
Revenues by Activity (1)
                                         (in millions of euro)

Food and Management Services

 North America (1).......  5,427    5,387    6,039    5,995    5,719    5,657
 Continental Europe (1)..  3,585    3,501    3,491    3,413    3,099    3,034
 United Kingdom and
  Ireland (1)............  1,453    1,444    1,681    1,671    1,727    1,717
 Rest of the World (2)...    974      477    1,119      566    1,134      581

Total Food and            ------   ------    ------   ------   ------  ------
 Management Services..... 11,439   10,809    12,330   11,645   11,679  10,989


Remote Sites (2).........      0      543         0      590        0     579

Service Vouchers
 and Cards...............    248      248       279      279      249     249
River and Harbor
 Cruises (1).............      0       87         0       95        0     111

                          ------   ------    ------   ------   ------  ------

Total revenues........... 11,687   11,687    12,609   12,609   11,928  11,928
                          ======   ======    ======   ======   ======  ======
</TABLE>


     (1) Effective for fiscal 2003, our Food and Management Services activities
         in North America, Continental Europe, and United Kingdom and Ireland
         include the River and Harbor Cruises activities in each of those
         regions. The River and Harbor Cruises activity was formerly reported
         separately. Prior periods have been restated to reflect the current
         presentation.

     (2) Effective for fiscal 2003, Food and Management Services - Rest of the
         World includes the formerly separate Remote Sites activity. Prior
         periods have been restated to reflect the current presentation.




<TABLE>
<S>                        <C>       <C>      <C>      <C>      <C>      <C>

                                   Fiscal Year Ended August 31,
                            2003     2003     2002     2002     2001     2001
                           Current   Prior   Current   Prior    Current  Prior
                           presen-   presen-  presen-  presen-  presen-  presen-
                           tation    tation   tation   tation   tation   tation
EBITA  by Activity
                                 (in millions of euro)

Food and Management Services

 North America............   268      270      293      297       294      295
 Continental Europe.......   167      158      150      140       139      129
 United Kingdom
  and Ireland.............    21       22        9       11        87       87
 Rest of the World.......     18        6       31        7        28        0
                           ------   ------    ------   ------   ------   ------
Total.....................   474      456      483      455       548      511

Remote Sites..............     0       22        0       26         0       30

Service Vouchers
 and Cards................    68       68       77       77        61       61

 River and Harbor
  Cruises..................    0        7        0        2         0        7

                           ------   ------    ------   ------   ------   ------
 EBITA, excluding
  corporate expenses.......  542      553      560      560       609      609


 Corporate expenses........  (28)     (39)     (35)     (35)      (38)     (38)

                           ------   ------    ------   ------   ------   ------
 EBITA.....................  514      514      525      525       571      571
                           ======   ======    ======   ======   ======   ======
</TABLE>



 Overview

   Food and Management Services is our most significant activity, and
accounted for approximately 98% of our revenues and 87% of EBITA (before
corporate expenses) for the fiscal year ended August 31, 2003. It consists of
the supply of food and management services to companies, public agencies and
institutions, hospitals, clinics, retirement homes, schools, colleges and
universities, as well as remote site services to oil and gas operations, both on
land and on offshore oil rigs, major construction projects and mining
facilities. River and harbor cruises, formerly a separately disclosed segment,
represented less than 1% of this activity's revenues and EBITA in fiscal 2003.
Approximately half of our fiscal 2003 revenues in the Food and Management
Services business were generated in North America. The Service Vouchers and
Cards business comprised 2% of our revenues and 13% of EBITA (before corporate
expenses) in fiscal 2003.


 Fiscal Year Ended August 31, 2003 Compared with Fiscal Year Ended
 August 31, 2002

  Consolidated Overview of Revenues and EBITA

   Revenues for fiscal 2003 totaled EUR 11.7 billion, a 7.3% decrease from
fiscal 2002. Organic growth of 3.1% was offset by the unfavorable impact of
foreign currency translation of 10%, principally arising on revenues denominated
in U.S. dollars or reliant on the U.S. dollar exchange rate. The impact of
acquisitions (net of divestitures) of negative 0.4% principally reflected the
sale of the Lockhart subsidiary in the United Kingdom in May 2002. Organic
growth reflected the impact of three significant new defense contracts in the
United States and Sweden. Nonetheless, organic growth continued to be hampered
by the worldwide economic situation, which weighed on the Business and Industry
segment of our Food and Management Services business. We expect our organic
growth rate in fiscal 2004 to be at least comparable to that in fiscal 2003 on a
consolidated basis.

   EBITA decreased by 2.6% to EUR 514 million in fiscal 2003. However, at
constant exchange rates EBITA increased by 9.8%. The operating margin improved
moderately to 4.4% as a result of the initial favorable effects of our action
plans in the United Kingdom and an improved performance in both North America
and Continental Europe.







 Analysis of Revenues and EBITA

   The following table presents, for the periods stated, the variation in
revenues and EBITA by activity.

<TABLE>
<S>                    <C>             <C>              <C>           <C>

                      Fiscal Year Ended August 31,       Change in Revenues
                         2003           2002             EUR          %
Revenues by Activity
                            (in millions of euro, except percentages)

Food and Management Services

 North America......    5,427           6,039             (612)        (10)
 Continental Europe.    3,585           3,491               94           3
 United Kingdom
  and Ireland.......    1,453           1,681             (228)        (14)
 Rest of the World,
  including Remote
  Sites.............      974           1,119             (145)        (13)

                       ------          ------            ------       ------
Total...............   11,439          12,330             (891)         (7)


Service Vouchers
 and Cards..........      248             279               (3)        (11)

                       ------          ------            ------       ------
Total revenues......   11,687          12,609             (922)         (7)
                       ======          ======            ======       ======


                       Fiscal Year Ended August 31,       Change in Revenues
                         2003             2002            EUR          %
EBITA by Activity
                              (in millions of euro, except percentages)

Food and Management Services

 North America......      268             293              (25)         (9)
 Continental Europe.      167             150               17          11
 United Kingdom
  and Ireland.......       21               9               12         133
 Rest of the World,
  including Remote
  Sites.............       18              31              (13)        (42)

                        ------          ------            ------      ------
Total...............      474             483               (9)         (2)


Service Vouchers and
 Cards..............       68              77               (9)        (12)

                        ------          ------            ------      ------
EBITA, excluding
 corporate expenses.      542             560              (18)         (3)

Corporate expenses..      (28)            (35)               7          20

                        ------          ------            ------      ------

Total EBITA.........      514             525              (11)         (2)
                        ======          ======            ======      ======
</TABLE>




 Food and Management Services

   Food and Management Services represented 98% of our consolidated revenues
and 87% of our consolidated EBITA before corporate expenses. Our revenues from
this segment totaled EUR 11.4 billion in fiscal 2003, reflecting organic
growth of 2.9%, which was a net improvement over prior year organic growth of
1.6%. The strengthening of the euro during the year resulted in a negative
foreign currency exchange impact of 9.7% while net dispositions decreased
revenues by 0.3%.

  North America

   Food and Management Services revenues in North America for fiscal 2003 were
EUR 5.4 billion with organic growth of 4.3%.

   Organic growth in the Business and Industry segment was 5.8%. The year was
highlighted by the creation of the Defense sub-segment, which contributed
revenues of EUR 133 million. Excluding Defense, Business and Industry segment
declined by 0.6%. The progressive opening during the year of contracts with
clients such as Sony, General Electric Medical Systems, General Mills and a
national contract with Hewlett Packard, offset the negative effects of
delocalizations and staff reductions in the industrial sector.

   Organic growth in the Healthcare and Seniors segment was 3.5%. This
progression reflects continued good performance on existing sites as well as the
signing of some new multiservice contracts toward the end of the year. Other
recent commercial successes such as Spring Valley Hospital Center, North
Colorado Medical Center and the Medical Center of Louisiana will begin to have a
favorable impact in fiscal 2003-2004.




   The Education segment's revenues reflected organic growth of 3.7% for
fiscal 2003. Significant contracts were signed at the end of the year, such as
the Atlanta Public School District, Rowan University in New Jersey, the
University of Connecticut and Morehouse College in Georgia.

   EBITA in North America reached EUR 268 million. Operating margins
increased from 4.8% in the prior year to 4.9% for fiscal 2003. This improvement
resulted from revenue growth on existing sites in Healthcare and Education and
the continued optimization of purchasing and employee costs in all segments. The
margin improvement was partially offset by start-up costs in the Defense
sub-segment and costs related to the implementation of new information systems.


  Continental Europe

   In Continental Europe, revenues rose to EUR 3.6 billion in fiscal 2003,
with organic growth of 3.6%, as follows: 4.0% in Business and Industry, 3.7% in
Healthcare, and 2.1% in Education.

   In France, the Healthcare segment continued its steady development, notably
with the signing of "Global Hospitality" contracts such as the Chenieux clinics
in Limoges and Clinique St. Louis in Poissy. In Business and Industry, growth
was maintained, despite a depressed economic environment. Labor strikes during
May and June weighed on growth, particularly in the Education segment.

   In Northern Europe, the opening of contracts with the Swedish army and the
city of Stockholm in the Healthcare segment, as well as contracts with Nokia in
Finland and Vattenfall in Sweden in Business and Industry contributed to our
organic growth.

   In other countries in Continental Europe, significant contracts were signed
during the year, both in food service as well as multiservice. Examples include
Banco Santander in Spain, Euroform in the Netherlands, and Wal-Mart in Germany.

   Sodexho Prestige continued its development, particularly in France, with
the operation of renowned restaurants such as Roland Garros. In Sweden, Sodexho
Prestige operates the Parliament Restaurant.

   EBITA increased by 11.3% and the operating margin grew from 4.3% to 4.7%.
This increase resulted from a strong improvement in gross operating profit due
to the pursuit of our Five Step process, which is intended to optimize
purchasing and to a lesser extent to implement a selectivity strategy which in
certain cases led us not to renew certain insufficiently profitable contracts.
In addition, overheads were contained and increased in line with revenues.


  United Kingdom and Ireland

   In the United Kingdom and Ireland, revenues totaled EUR 1.5 billion in
fiscal 2003, a decline of 13.7% from the prior year, including a negative
currency exchange impact of 6.8%. The remaining difference was attributable to
the sale of the Lockhart subsidiary in the third quarter of fiscal 2002. On a
constant consolidation basis and excluding the currency effect, revenues
declined by 3.9%, in part due to the new management team's decision to exit
unprofitable contracts, notably in the Hotels sub-segment. In addition,
retention rates declined, for example, in the Healthcare segment, where certain
clients returned to self-operation. Finally, revenues were affected by site
closings and cost reductions made by Business and Industry clients. New
contracts signed included a multiservice contract with Glaxo Smithkline, two
detention centers and the Deep Cut garrison.

     EBITA of EUR 21 million in fiscal 2003 reflected an EBITA margin increase
to 1.4% as compared with 0.5% for the prior year. The action plan to improve
profitability in the United Kingdom subsidiary is underway. This plan includes
rigorous control over food and employee costs at each site, and the
renegotiation or exit from certain contracts. In spite of Land Technology's
disappointing operating performance, the EBITA margin improved by 0.9%. The
action plan also relies on training and motivation of the teams as well as
strict containment of overheads. Important training initiatives were undertaken
during the year such as "Sodexho Way," to reinforce the rigor of operations
management, and to improve contracting policies. In addition, noteworthy
investments were made in human resources including external recruitment of
executives to reinforce the sales and marketing departments as well as the
management of the Healthcare segment. The return to a margin similar to the
Group's overall food and management services margin is the strong priority for
the next two or three years.



  Rest of the World

   In the Rest of the World, which includes the worldwide remote sites
activity, revenues of EUR 974 million  reflected organic growth of 3.9%.

   In spite of an unfavorable economic environment in the industrial sector,
we continued our development in Latin America and won several new contracts in
multiservice including Coca Cola, Codelco Norte and Carrefour in Chile, Pepsi
Cola and Clariant in Venezuela, Techint in Peru, and Exito in Colombia.

   In China we continue to experience strong growth as a result of new
contracts in all segments such as with Motorola, Shanghai Container Limited, and
Richina in Business and Industry, and Yewcchung Shanghai Internal School and
CAFA in Education. Healthcare development continued with the signing of
contracts with the Jin Shan and Dacang hospitals.

   In Australia, we experienced strong growth, as our Minesite subsidiary
obtained a contract with the Golden Valley camp.

   The remote sites activity had good performances in the North Sea and in
Alaska. The slowdown of foraging activity in the Gulf of Mexico was confirmed.

   The reinforcement of our sales teams and our strategy of following our
clients on large projects have begun to show results, such as the three-year
contract recently signed with Chiyoda on Sakhalin Island (Russia).

   Total EBITA for these regions was EUR 18 million as compared to EUR 31
million for the prior year. The operating margin declined from 2.9% for fiscal
2002 to 1.9% in the current year. A difficult environment and strong competition
in Latin America weighed on EBITA. Finally, in remote sites, expenses related to
the opening of certain contracts and to the reinforcement of our sales
structures, as well as the allocation of certain overhead costs previously
supported by Group management, also weighed on the operating margin.


  Service Vouchers and Cards

   Sodexho Pass had revenues of EUR 248 million and organic growth of 11.3% in
fiscal 2003, representing business activities in 26 countries. This increase was
mainly attributable to new contracts in our traditional services (meal and
food), such as Telecom and Technit in Argentina, SNCB in Belgium, the Ministry
of Health in Venezuela, and General Motors in Mexico. Growth also resulted from
new services offered to existing clients such as, for example, a culture card
provided to 199,000 students in the Centre and Burgundy regions of France, and
the creation of the Education voucher for 15,000 beneficiaries of the Postal
Service in Hungary, and the consultant voucher "Adviescheque" in Belgium.

   EBITA was EUR 68 million for fiscal 2003, compared to EUR 77 million for
the prior year. 74% of the EBITA for this activity is earned in foreign
currencies, and therefore, as a result, currency fluctuations have a more
significant impact in this activity than in the other activities. The operating
margin of 27.5% was comparable to that of the prior year.



  Corporate Expenses

   Corporate expenses, which are included in EBITA, of EUR 28 million in
fiscal 2003 declined significantly from the prior year. This was the result of
the allocation of corporate expenses to each operating entity.


  Financial Expense, Net

     Net  financial  expense  totaled  EUR 152  million as  compared  to EUR 166
million in the prior year. The improvement  resulted in part from a reduction in
interest  expense due to the reduction in debt and exchange  rate  variances and
also from the impact of items which  affected  the prior year,  principally  the
provision  of  EUR  19  million  on  Sodexho   Alliance   shares  held  and  the
non-repetition  of foreign currency exchange gains realized in the prior year in
the Service  Vouchers and Cards business,  when funds were converted into strong
currencies.


  Net Exceptional Income/Expense

     Net  exceptional  income  totaled  EUR 1  million  in  fiscal  2003  and is
principally  explained by a EUR 28.6 million purchase price complement  received
in fiscal 2003 in connection  with the sale of our shares in CCA in fiscal 2001,
offset by provisions  recorded on Sodexho  Alliance  stock options and losses on
Sodexho  Alliance shares totaling EUR 13.6 million,  restructuring  costs in the
United  Kingdom and the U.S.  totaling EUR 7.6 million,  and  exceptional  costs
related to litigation of EUR 5 million.


  Income Taxes

   Income taxes declined to EUR 134 million in fiscal 2003 for an effective
rate of 36.9%, which is comparable to the prior year when computed in the same
manner.


  Net Income from Equity Method Investees

   Net income from equity method investees was EUR 4 million, which was
comparable to the prior year.


  Minority Interests

   Minority interests decreased from EUR 13 million in fiscal 2002 to
EUR 9 million in fiscal 2003 mainly as a result of currency effects.


  Goodwill Amortization

   Goodwill amortization decreased from EUR 67 million in fiscal 2002 to
EUR 62 million in fiscal 2003, mainly as a result of currency exchange
impacts.


Fiscal Year Ended August 31, 2002 Compared with Fiscal Year Ended
August 31, 2001

 Consolidated Overview of Revenues and EBITA

   Revenues for fiscal 2002 totaled EUR 12.6 billion, a 5.7% increase over
fiscal 2001. This increase is net of a 2.5% decrease attributable to the
unfavorable impact of foreign currency translation, principally arising on
revenues denominated in U.S. dollars or reliant on the U.S. dollar exchange
rate. The acquisitions of Wood Dining Services and Sogeres in the fourth quarter
of fiscal 2001 contributed 6.2%. Organic growth of 2.0% reflected strength in
the education and health care segments of the Food and Management Services
business in North America and in Continental Europe, offset by poor performance
in the United Kingdom, where management problems surfaced during a year already
made difficult by the continuing global economic recession. Excluding the United
Kingdom, organic growth was 2.4%. The recession also continued to adversely
affect the Business and Industry segment of our Food and Management Services
business, as well as River and Harbor Cruises. We expect our growth rate in
fiscal 2003 to improve on a consolidated basis.

   EBITA decreased by 8.2% to EUR 525 million in fiscal 2002. Despite the
higher sales, EBITA growth was hampered by a negligible EBITA margin in the
United Kingdom and Ireland primarily due to management problems in that region,
exacerbated by tough economic conditions in the Business and Industry segment.
Excluding the performance of United Kingdom, our EBITA margin was 4.7%;
including the United Kingdom, our EBITA margin was 4.2%. We have implemented
action plans, including a new management team for the United Kingdom and
Ireland, in order to improve profitability.


Analysis of Revenues and EBITA

   The following table presents, for the periods stated, the variation in
revenues and EBITA by activity.

<TABLE>
<S>                   <C>              <C>               <C>          <C>

                      Fiscal Year Ended August 31,       Change in Revenues
                         2002             2001            EUR          %
Revenues by Activity(1)
                            (in millions of euro, except percentages)

Food and Management Services
 North America......    6,039           5,719              320           6
 Continental Europe.    3,491           3,099              392          13
 United Kingdom
  and Ireland.......    1,681           1,727              (46)         (3)
 Rest of the World,
  including Remote
  Sites.............    1,119           1,134              (15)         (1)

                       ------          ------            ------      ------
Total...............   12,330          11,679              651           6

Service Vouchers
 and Cards..........      279             249               30          12

                       ------          ------            ------      ------
Total revenues......   12,609          11,928              681           6
                       ======          ======            ======      ======


(1) Activities reflect the Group's internal management reporting structure.
(2) Percentage figures are derived from actual revenue numbers and so may vary
    from those calculated from the numbers in this table due to rounding.



                        Fiscal Year Ended August 31,       Change in Revenues
                         2002             2001            EUR          %
EBITA by Activity(1)
                            (in millions of euro, except percentages)

Food and Management Services

 North America......      293             294              (1)           0
 Continental Europe.      150             139              11            8
 United Kingdom and
  Ireland...........        9              87             (78)         (90)
 Rest of the World,
  including Remote
  Sites.............       31              28               3           11

                        ------           ------          ------       ------
Total...............      483             548             (65)         (12)

Service Vouchers
 and Cards..........       77              61              16           26
                        ------           ------          ------       ------
EBITA, excluding
 corporate expenses.      560             609             (49)          (8)

Corporate expenses.. ..   (35)            (38)              3            8

                        ------           ------          ------       ------
Total EBITA............   525             571             (46)          (8)
                        ======          ======           ======       ======

(1)  Activities reflect the Group's internal management reporting structure.
(2)  Percentage figures are derived from actual EBITA numbers and so may vary
     from those calculated from the numbers in this table due to rounding.
</TABLE>


 Food and Management Services

   Food and Management Services represented 98% of our consolidated revenues
and 86% of our consolidated EBITA, excluding corporate expenses. Our revenues
from this segment increased in fiscal 2002 to EUR 12.3 billion, an increase of
5.7% over fiscal 2001 revenues, of which 6.2% was from acquisition growth (net
of dispositions) and negative 2.5% was from currency fluctuations. Acquisition
growth resulted primarily from our acquisitions of Sogeres and Wood Dining
Services during the fourth quarter of fiscal 2001. Despite the global economic
recession, organic growth was 2.0%.




  North America

   Food and Management Services revenues in North America for fiscal 2002 were
EUR 6 billion, representing an increase of 5.6% from fiscal 2001 revenues,
which was net of a negative 3% impact from currency fluctuations. The inclusion
of a full year of operations of Wood Dining Services, acquired in the fourth
quarter of fiscal 2001, increased revenues by 8.6%, and organic growth was 0.1%.
Of particular note were the subsidiary's significant wins in the defense market,
with the reaffirmation in July 2002 of a large contract with the United States
Marine Corps, valued at EUR 967 million over ten years, and the award of a
EUR 192 million contract over 15 years with the U.S. Naval Air Station in
Miramar, California. These important contracts affirm our development strategy
in this sub-segment. Healthcare achieved strong organic growth, in part from the
expansion into multiservices on existing sites as well as with the signing of
several significant new contracts, including University Hospitals of Cleveland,
Loyola University Medical Center in Chicago, and Stamford Hospital in
Connecticut.

   The Education segment also achieved a strong performance. In primary and
secondary schools, most of the increase in revenues on existing sites resulted
from the deployment of creative solutions such as Kid's Way Cafe, Crossroads
Cafe and EDZone, a British innovation adapted to the U.S. market. Significant
contracts were signed with Beaufort County School District in South Carolina,
Guildford County School District in North Carolina, and Marysville School
District in Washington. In higher education, important contracts were signed
with Chapman University in California and the University of Wisconsin.

   In Business and Industry, despite new contracts signed with, for example,
Perot Systems, Chicago Museum of Science and Industry, Merrill Lynch Asset
Management and BellSouth, our revenues were down 8% given the difficult economic
environment. This decline reflected site closures, reductions in customers
on-site, and client decisions to reduce catering services, which represent 10%
of the activity in Business and Industry and which declined by 20%. Several
contracts signed in 2002 will commence operations in 2003, such as Sony
Pictures, MetLife, Federal Reserve Bank in Atlanta, and Nationwide Training
Center, and are expected to lead to renewed growth in the upcoming year.


   EBITA in North America of EUR 293 million was comparable to the prior
year. With the integration of Wood Dining Services for a full year, the EBITA
margin was 4.8%, compared to 5.1% in the prior year. Synergies and improvements
in food cost management at the sites improved gross profitability. However, a
number of factors weighed on the EBITA margin: increases in overhead with the
creation of a new division in the Healthcare segment; weaker initial margins at
Wood Dining Services as compared to Sodexho, Inc.; the decline in catering
services; and an increase in employee medical insurance costs. EBITA for river
and harbor cruises was negatively affected by September 11 and the U.S.
recession.


 Continental Europe

   In Continental Europe, revenues rose to EUR 3.5 billion in fiscal 2002,
an increase of 12.7% over the prior year. Acquisition growth of 7.7% resulted
almost entirely from the integration of Sogeres for a full year. Organic growth
in revenues was 5.3%.

   France, Italy, the Netherlands and the countries in Central and Eastern
Europe continued to grow while expanding their service offerings. In addition,
non-food services experienced double digit growth, due in large part to contract
wins generated by our subsidiary, Altys, such as with Cisco in Belgium and
Germany. In France, the Business and Industry segment had positive growth,
defying the economic slowdown affecting not only the high technology sector, but
also some of the more traditional sectors of the economy, such as the automobile
industry. A noteworthy contract was signed with Danone's Vitapole Research and
Development Center.

   In Sweden, activities in the transportation sector suffered the fall-out
from the events of September 11. Elsewhere, the importance to the Swedish
economy of the telecommunications, information technology and engineering
sectors was a limiting factor during the period. Nonetheless, a significant
contract was signed in June 2002 with the municipality of Stockholm giving us
the management of equipment provided for the use of handicapped individuals.

   Strong performances achieved in the Health Care and Senior segments
throughout Continental Europe allowed us to maintain growth rates close to those
of prior years.


   EBITA grew by 8% in fiscal 2002 to EUR 150 million, with Sogeres
contributing EUR 12.7 million. Following the significant increases in food
costs in the prior year, our subsidiaries in France succeeded in negotiating
pricing increases on more than 80% of their contracts. Food cost management and
margins improved significantly as a result. EBITA declined in other countries,
most notably in Sweden and in Italy, where there was an increase in the number
of man-hours lost as a result of worker strikes affecting client sites.




 United Kingdom and Ireland

   In the United Kingdom and Ireland, revenues totaled EUR 1.7 billion in
fiscal 2002, a decline of 3% from the prior year, of which 1.0% was organic. The
currency exchange impact was responsible for 1.5% of the decline and the
remaining difference was attributable to the third quarter sale of Lockhart, a
subsidiary whose activity is the distribution of kitchen equipment, not a core
activity of the Group.

   New contract wins allowed the Education segment to achieve satisfactory
organic growth. A prestigious multiservice contract was signed with the Royal
Air Force in the Defense sub-segment. In the Business and Industry segment, our
subsidiary was awarded a catering contract for the Commonwealth Games.
Multiservice activities continued to develop. However, Business and Industry was
affected by the economic slowdown and the significant decline in demand for
catering services. In Healthcare, revenues declined with a political climate
favoring self-operation.

   EBITA went from EUR 87 million in fiscal 2001 to EUR 9 million in
fiscal 2002. This deterioration principally arose from the decline in
profitability of the Business and Industry segment, which represents more than
two-thirds of the region's revenues. Faced with reductions in meal subsidies by
our clients and a decrease in the number of consumers at our sites, our teams
were not reactive in adapting their cost structures in a timely manner. In
addition, a number of recently signed or renegotiated contracts were determined
to be unprofitable, and a poorly managed entry into hotel management services
generated significant losses. Reduced purchasing volumes negatively impacted
margins. Poorly controlled overheads and the installation of a new information
system also weighed on profitability. In addition, a restructuring charge of
EUR 11 million has been recorded as an exceptional item.

   The new management team has put into place an ambitious action plan, for
which certain costs were recorded in fiscal 2002. The top priority for the next
two to three years is the return to a satisfactory EBITA margin. This will
involve in-depth programs to make our contracts more profitable, to train and
motivate our teams, to tighten on-site management of food and personnel costs,
and to reduce support function overheads.


 Rest of the World

   In the Rest of the World, including remote sites, revenues of EUR 1.1
billion were unchanged from fiscal 2002, as organic growth of 2.8% was offset by
a negative currency exchange effect of 6.5%.

   Latin America continued its expansion, despite an unfavorable economic
climate in the industrial sector, with several important new multiservice
contracts, such as IBM in Chile, Peru, Venezuela and Columbia, Citibank in Chile
and Peru, and Nestle in Argentina and Chile, which contributed to an overall
organic growth of 10% in that region. In Chile, our teams won two initial
contracts for the management of five correctional facilities, a market with
significant potential.

   China saw significant growth, with strong performances across all segments
including contracts signed with Haier, the Chinese leader in electrical
appliances, a multiservice contract with Proctor and Gamble in Guangzhou, and
the French School at the New University of Fine Arts in Peking. Following our
entry into the Healthcare market, new contracts were signed with the
International Peace Maternity Hospital in Shanghai and Beijing United Family
Hospitals and Clinics in Peking, noteworthy accomplishments which resulted from
synergies between our worldwide Healthcare teams, in particular, those in the
United Kingdom, and the local teams. Activities in Singapore and Hong Kong felt
the consequences of numerous client relocations to mainland China.

   In Australia, we continued our strategy of selective growth, the
development of the multiservice activity and growing revenues on existing sites.
Of particular note, was the contract signed with Griffith Brisbane, one of the
largest universities in the country.

   Revenues from remote site operations, which are now included in the Food
and Management Services, Rest of the World activity, grew 2% to EUR 590
million in fiscal 2002. This growth included 3% acquisition growth from the
integration of Minesite Catering, a company in Western Australia acquired at the
beginning of the year, organic growth of 1%, and a negative currency exchange
effect of 2%.



   Strong development in petroleum activities in the North Sea and Alaska was
offset by the slowdown in activity on gas platforms in the Gulf of Mexico. A
slowdown in growth in the second half of the fiscal year resulted from the
non-renewal of the Chevron contract in Kazakhstan and the completion of two
large projects in Latin America (the construction of a mine and a drilling
field). However, we have been awarded food and management services contracts for
the operational phase of both of the projects, which will commence in fiscal
2003. Additional significant contracts have been signed with Fluor in the United
States, Camisea in Peru, Schlumberger in the Middle East and the Argyle Diamond
Mine in Australia.

   EBITA increased to EUR 31 million, as a return to profitability in these
regions (excluding remote sites) more than offset a 13% decline in EBITA for the
remote sites operations resulting from currency effects as well as strong
competition and pressure on our clients to reduce costs on large projects in
Africa, and finally, from the weaker margins of Minesite Catering in Australia.


 Service Vouchers and Cards

     Now present in 26  countries,  Sodexho Pass had revenues of EUR 279 million
in fiscal  2002,  an  increase  of 12% over the prior  year,  net of a  negative
currency exchange effect of 7%. For the fourth year in a row, organic growth was
in the  neighborhood  of 20%, as a result of improvements in the revenue mix and
strong  development in Europe.  This growth resulted from the  implementation of
creative  solutions,  value creators for our clients.  In the employee  benefits
area,  Sodexho Pass implemented a new internet tool, E-SPI,  which  facilitates,
accelerates,  and  validates  the  check  order  process.  In the area of social
benefits,  the research into solutions  adapted to the needs of institutions led
to the signing of a contract to provide  244,000  students in 550 schools in the
Rhone-Alpes  department in France with a "Culture  card" allowing them to buy or
rent school books.

     The total  issue  volume of service  vouchers  and cards (face value of the
service  vouchers and cards  multiplied by their number) reached EUR 5.9 billion
compared to EUR 5.1 billion in fiscal 2001.

     EBITA reached EUR 77 million in fiscal 2002, an increase of 26% compared to
fiscal 2001. This growth was net of a negative foreign currency  exchange impact
of 4.7%.  The EBITA  margin  increased  by 3% in part as a result of the  higher
volumes  which  allowed us to better  absorb  our fixed  production  costs,  and
secondly from the exchange of savoir faire and experiences between countries.


 Corporate Expenses

     Corporate  expenses,  which are  included  in EBITA,  of EUR 35  million in
fiscal 2002 were down 8% from the prior year,  despite the costs  related to the
listing of Sodexho Alliance on the New York Stock Exchange,  illustrating  Group
management's efforts to control overhead expenses.


 Financial Expense, Net

     Net  financial  expense  totaled  EUR 166  million,  as compared to EUR 122
million in fiscal 2001. Higher interest expense of EUR 140 million,  as compared
to EUR 124 million in fiscal  2001,  resulted  from the impact on a full year of
the acquisition  financing  arranged for the June 2001  transactions.  In fiscal
2002,  financial  provisions totaled EUR 26 million, of which EUR 19 million was
on Sodexho  Alliance shares held by the Group to be used for stock  compensation
programs.  The related stock options are  exercisable  over periods ranging from
one to ten years at a higher  exercise price than the closing price of the share
as of August 31, 2002.


 Net Exceptional Income/Expense

     Net  exceptional  income totaled EUR 55 million in fiscal 2002 and included
the following principal elements:  a gain of EUR 49 million euro (EUR 37 million
net of tax) on the sale of the Lockhart subsidiary in the United Kingdom; a gain
of EUR 37 million  representing  the reduction in  liabilities  related to stock
option shares in connection with the acquisition of Sodexho  Marriott  Services,
Inc. (this gain is partially  offset by a EUR 19 million  provision  included in
net financial  expense);  a provision for EUR 11 million related to a lawsuit in
the United States (see "Item 8A - Legal Proceedings,"  below); and restructuring
expenses and costs to exit certain  contracts in the United Kingdom totaling EUR
11 million.


 Income Taxes

     Income  taxes  declined  to EUR 136  million  in  fiscal  2002 from EUR 157
million  in  fiscal  2001  for an  effective  rate of 33%.  Excluding  permanent
differences,  the effective rate was comparable to the prior year effective rate
of 36% as computed in the same manner.


 Net Income from Equity Method Investees

     Net income  from  equity  method  investees  increased  to EUR 4 million in
fiscal  2002  from a loss of EUR 2  million  in  fiscal  2001,  as we  sold  our
remaining interest in Attendo Care, which had reported a loss in the prior year.


 Minority Interests

     Minority  interests  decreased from EUR 67 million in fiscal 2001 to EUR 13
million  in  fiscal  2002 as a result  of our  acquisition  of  Sodexho,  Inc.'s
remaining  shares  in the  fourth  quarter  of fiscal  2001.  In  addition,  the
remaining  shares  of  Sogeres,  of which we  acquired  60% in June  2001,  were
acquired at the end of the first quarter of fiscal 2002.


 Goodwill Amortization

   Goodwill amortization increased 54%, from EUR 44 million in fiscal 2001
to EUR 67 million in fiscal 2002, principally reflecting the additional
goodwill generated by the acquisition of the remaining shares of Sodexho, Inc.
and the acquisitions of Wood Dining Services and Sogeres during fiscal 2001.



B. Liquidity and Capital Resources

   The following table sets forth certain cash flow items for fiscal 2001
through fiscal 2003:

<TABLE>
<S>                                      <C>          <C>         <C>

                                              Year ended August 31,
                                          2003        2002        2001
                                                (millions of euro)
Net cash provided by
 operating activities..................    490         619         554
Net cash used in investing
 activities............................   (278)       (315)     (1,959)
Net cash provided by (used in)
 financing activities..................   (202)        (70)      1,763
Net effect of exchange rate
 variations on cash....................    (54)       (118)        (40)
                                          -----       -----      ------
Net increase (decrease)
 in cash and cash equivalents..........    (44)        116         318
                                          =====       =====      ======
</TABLE>


   For fiscal 2003, net cash provided by operating activities amounted to
EUR 490 million. Cash provided by operating activities totaled EUR 387
million, a level close to that for fiscal 2002, despite unfavorable currency
effects of 13%, thus confirming the Group's ability to generate cash. Net cash
generated by changes in operating working capital amounted to EUR 100 million
in fiscal 2003, of which 40% was from the Service Vouchers and Cards business.
The remaining amount resulted from organic growth in revenues and the efforts of
the operating teams in the Food and Management Services business to improve
receivables collection, a strategic priority for the group.

   Capital expenditures, net of disposals of property, plant and equipment,
amounted to EUR 226 million in fiscal 2003, representing 1.9% of revenues.
Significant investments in information systems were made during the year in the
main countries where the Group operates.

     Net acquisition expenditures of EUR 33 million in fiscal 2003 mainly
included the acquisitions of the remaining 23.16% of Sodexho Pass do Brazil from
its minority shareholders and 91.4% of the outstanding shares of Patriot Medical
Technologies, Inc., a U.S. company based in Tennessee which specializes in
providing engineering services to the medical sector.




   Net cash used in financing activities of EUR 202 million in fiscal 2003
is explained in part by the repayment of debt of EUR 97 million and the
remainder by the payment of EUR 105 million in dividends.

   Net debt was reduced by EUR 162 million of which EUR 82 million
resulted from the exchange rate effect on August 31, 2003. As such, net debt in
our consolidated balance sheet totaled EUR 1,201 million as of August 31,
2003, and represents 52% of our shareholders' equity including minority
shareholders.

   Total financial debt of EUR 2,488 million as of August 31, 2003 principally
comprised three bond issues in euro totaling EUR 1,605 million and U.S. dollar
credit facilities totaling U.S. $718 million. The balance of outstanding debt
represents leasing, term and various revolving credit facilities. As of August
31, 2003, 91% of our debt was at fixed interest rates, and our weighted average
interest cost was 5.5%.

   As of August 31, 2003, and in addition to available cash and cash equivalents
and marketable securities (excluding restricted cash) of EUR 1,142 million, we
had revolving credit facilities available of EUR 119 million to provide funds
for liquidity, seasonal borrowing needs and other corporate purposes. We believe
our working capital is sufficient for our present requirements. Cash on hand,
internally generated cash flows and available credit will be sufficient to cover
our additional cash flow requirements.

   Our off balance sheet commitments totaled EUR 150 million as of August
31, 2003. Refer to note 3.20 in the consolidated financial statements.

   For fiscal 2002, net cash provided by operating activities amounted to
EUR 619 million, an increase of 12% over the prior year, confirming the
quality of the Group's financial model. Net cash generated by changes in
operating working capital amounted to EUR 209 million in fiscal 2002, as
compared to EUR 154 million for fiscal 2001, with about half of the
improvement being made in the Service Vouchers and Cards business and the
remainder resulting from the growth in the business and the efforts by our
operational teams to improve collection of accounts receivable, a strategic
priority for the Group.

   Capital expenditures, net of disposals of property, plant and equipment,
amounted to EUR 268 million in fiscal 2002, representing 2.1% of revenues.

   Net acquisition expenditures of EUR 97 million in fiscal 2002 mainly
included the acquisition of Minesite Catering in Australia and the remaining 40%
of the capital stock of Sogeres.

   In May 2002, the Lockhart subsidiary in the United Kingdom was sold for
EUR 61 million.

   During fiscal 2002 we paid dividends totaling EUR 102 million. Dividend
payments of EUR 15 million were paid out by our subsidiaries to third-party
shareholders.

   In March 2002, we issued EUR 1 billion of debt securities in the European
markets. We used the net proceeds from the sale of these debt securities,
approximately EUR 992,330,000, to refinance outstanding debt. The debt is
issued in 5.875% notes due March 25, 2009.

   Negative currency exchange effects increased net debt EUR 47 million.
Despite this, net debt in our consolidated balance sheet totaled EUR 1,363
million as of August 31, 2002, a reduction of EUR 205 million from the prior
year end and represents 55% of our shareholders' equity.

   Total financial debt of EUR 2,693 million as of August 31, 2002
principally comprised three bond issues (EUR 305 million in bonds issued in
1996 and redeemable in 2004, EUR 300 million in bonds issued in 1999 and
redeemable in 2009, and EUR 1billion in bonds issued in 2002 and redeemable in
2009) and U.S. dollar-denominated credit facilities totaling U.S. $818 million.
The balance of outstanding debt represents leasing, term and revolving credit
facilities by our subsidiaries. As of August 31, 2002, 92% of our debt was at
fixed interest rates, and our weighted average interest cost was 5.7%.

   As of August 31, 2002, and in addition to available cash and cash
equivalents and marketable securities (excluding restricted cash) of EUR 1,142
million, we had revolving credit facilities available of EUR 122 million to
provide funds for liquidity, seasonal borrowing needs and other corporate
purposes.



C. U.S. GAAP

 General

   Except as described in note 1 to the consolidated financial statements, our
financial statements are prepared in accordance with French GAAP, which differs
in certain significant respects from U.S. GAAP, as discussed in note 5 to the
consolidated financial statements. The individual differences discussed in note
5 describe the main adjustments to the French GAAP consolidated financial
statements, which reflect Sodexho, Inc. (previously, Sodexho Marriott Services,
Inc.) as a consolidated subsidiary in all periods presented. Under French GAAP,
we consolidated Sodexho, Inc., of which we owned 47.5% as of August 31, 2000,
until we acquired the remaining shares on June 20, 2001 (at which time we owned
46.9% of Sodexho, Inc.). French GAAP generally requires consolidation of greater
than 40%-owned subsidiaries if there is no single more significant shareholder.
Under U.S. GAAP, Sodexho, Inc. was required to be accounted for by the equity
method until the date when the remaining shares were acquired. The effects of
accounting for Sodexho, Inc. under the equity method in fiscal 2001 as well as
the effects of other U.S. GAAP adjustments are included in note 5 to the
consolidated financial statements.


 New Accounting Pronouncements

   In January 2003, the FASB issued FASB Interpretation, FIN No. 46,
Consolidation of Variable Interest Entities, which is an interpretation of
Accounting Research Bulletin, ARB No. 51 Consolidation of Financial Statements.
FIN No. 46 provides additional guidance regarding how to identify variable
interest entities and how an enterprise assesses its interest in the variable
interest entity to determine whether an entity is required to be consolidated.
The interpretation establishes that an enterprise consolidate a variable
interest entity if the enterprise is the primary beneficiary of the variable
interest entity. The primary beneficiary of a variable interest entity is the
party that absorbs a majority of the entity's expected losses, receives a
majority of its expected residual returns, or both, as a result of holding
variable interests, which are the ownership, contractual, or other pecuniary
interests in an entity. This interpretation applies immediately to variable
interest entities created after January 31, 2003 and to variable interest
entities in which an enterprise obtains an interest after that date. For
interests in variable interest entities existing as of January 31, 2003, the
guidance of FIN No. 46 will apply in the first fiscal year or interim period
beginning after June 15, 2003. The adoption of FIN No. 46 did not have a
significant impact in the current year and is not expected to have a significant
impact in future years on our consolidated results of operations, financial
position, or cash flows.

   In November 2002, the FASB issued FASB Interpretation No. 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others which is an Interpretation of FASB
Statements No. 5, 57 and 107 and Recission of FASB Interpretation No. 34. FIN 45
relates to the accounting for and disclosure of guarantees and requires that
upon issuance of a guarantee, the entity (i.e., the guarantor) must recognize a
liability for the fair value of the obligation it assumes under that guarantee.
Many guarantees are embedded in purchase or sales agreements, service contracts,
joint venture agreements, or other commercial agreements and the guarantor in
many such arrangements does not receive a separately identifiable upfront
payment for issuing the guarantee. FIN 45 requires identical accounting for
guarantees issued with or without a separately identified premium. FIN 45 covers
guarantee contracts that have four specific characteristics, excludes some
guarantee contracts entirely from its scope and excludes certain types of
guarantees (a guarantee issued between parents and their subsidiaries) from its
initial recognition and measurement but for which they are subject to its
disclosure requirements. The initial recognition and initial measurement
provisions applied immediately to guarantees issued or modified after December
31, 2002. The adoption of FIN 45 did not have a significant impact in the
current year and is not expected to have a significant impact in future years on
our consolidated results.

   EITF Issue No. 02-16, Accounting for Consideration Received from a Vendor
by a Customer (Including a Reseller of the Vendor's Products), addresses how a
customer of a vendor's products should account for cash consideration received
from the vendor. EITF 02-16 requires that, for new arrangements entered into
after December 31, 2002, cash consideration received by a customer from a vendor
is presumed to be a reduction of the prices of the vendor's products or services
and should be characterized as a reduction of cost of sales. However, that
presumption may be overcome if the consideration is either (1) a reimbursement
of costs incurred by the customer to sell the vendor's products, which should be
characterized as a reduction of that cost or (2) a payment for assets or
services delivered to the vendor, which should be characterized as revenue.
Additionally, if consideration received by the customer for reimbursement of
costs the customer incurred to sell the vendor's products is more than the
actual costs incurred by the customer, then any "excess" should be treated as a
reduction of the prices of the vendor's product. EITF 02-16 also requires that,
for arrangements entered into after November 21, 2002, assuming the customer can
reasonably estimate the rebate or refund and it is probable that the specified
target will be attained, such amount should be recognized as a reduction of the
cost of sales based on a systematic and rational allocation of the cash
consideration to each of the underlying transactions that results in progress by
the customer toward earning the rebate or refund. If attaining the milestone is
not probable, then the rebate or refund should be recognized as the milestone is
achieved. The adoption of EITF 02-16 did not have a significant impact on our
financial statements.




D. Research and Development, Patents and Licenses, etc.

   We have the patents, trademarks, trade names and licenses that are
necessary for the operation of our business as we currently conduct it. Other
than the Sodexho name, we do not consider our patents, trademarks, trade names
and licenses to be material to the operation of our business.



E. Off-balance sheet arrangements.

   Commitments made as of August 31, 2003 (millions of euro) were as follows:


<TABLE>
<S>                 <C>        <C>         <C>         <C>       <C>
                                     August 31, 2003              August 31,2002
                    Less than
                     1 year    1-5 years   > 5 years    Total         Total

Financial guarantees
to third parties ...     14         45          0          59            41
Performance bonds on
 operating leases ..     13         20          0          33            62
Client performance
 bonds .............      0         39          9          48            22
Other commitments ..      0         10          0          10            18
                        ----      ----        ----        ----          ----
Total ..............     27        114          9         150           143
                        ====      ====        ====        ====          ====

</TABLE>

     With respect to the above table, there are no other significant off balance
sheet commitments.


 Sureties

     In  connection  with its  Service  Vouchers  and  Cards  business,  Sodexho
Alliance and its subsidiaries have secured cash amounts with different financial
institutions,  totaling  EUR 18  million  as of August 31,  2003.  Other  surety
arrangements (security granted over equipment or buildings used for collateral)
agreed to by  Sodexho  Alliance  and its  subsidiaries  in fiscal  2003 were not
significant.


Commitments to purchase or sell shares in companies

 Commitments made:

 o Patriot Medical Technologies, Inc.

     The Group has entered into a put agreement  with the minority  shareholders
of Patriot  Medical  Technologies,  Inc.  ("Patriot"),  to acquire the remaining
shares  outstanding  during the period from March 3, 2003 to March 3, 2004 for a
total of U.S.  $234,000 (EUR 0.2  million).  As of August 31, 2003, a portion of
the put option had already been exercised, in the amount of U.S. $100,000.

 o Medcheque

     The Group, through its Service Vouchers and Cards subsidiary in Brazil, has
entered  into a put  agreement  with the minority  shareholders  of Medcheque to
acquire the remaining 35% of the shares  outstanding during the period from July
2004 to July 2006 for a total price of between EUR 7.7 million (minimum assuming
purchase is made in July 2004) and EUR 9.8 million (maximum assuming purchase is
made in August 2006).




 o Abra (subsidiary of Sodexho Scandinavian Holding AB)

     The Group,  through its Sodexho  Scandinavian  Holding AB  subsidiary,  has
entered into a put agreement with the minority  shareholders of Abra (located in
Norway) to acquire the remaining 15% of the shares outstanding by November 2005,
at the latest,  for a price based upon a profit  multiple.  The minimum purchase
price amount is EUR 1.3 million and based on current  projections,  is estimated
at EUR 2.3 million.

 o Altys Multiservices

     The Group has entered into a put agreement to acquire 1.5% of the shares of
Altys Multiservice from the minority shareholders between October 1 and November
30,  2007 for a purchase  price  based on a  multiple  of the  average  economic
profits,  as defined  contractually  in the year of exercise  with an adjustment
based on the following year's results.

 o Sodexho Italia

     The Group has entered into a put  agreement to acquire the  remaining 2% of
the shares of Sodexho Italia from the minority  shareholders on July 1, 2010, at
the latest,  for a purchase  price  based on a multiple of the average  economic
profits, as defined contractually.

 o Baren Menu

     The Group has entered into a put  agreement to acquire the  remaining 5% of
the shares of Baren Menu in Germany from the minority  shareholders  on December
31, 2005, at the latest, for a purchase price estimated at EUR 0.25 million.

 o Sodexho MM Catering

     The Group has entered into a put agreement to acquire the remaining 9.5% of
the shares of Sodexho MM Catering from the minority shareholders at any time for
a purchase price based on a multiple of the average  economic profits as defined
contractually, for a minimum amount of EUR 0.2 million.


 Commitments received:

 o Patriot Medical Technologies, Inc.

     The minority  shareholders  of Patriot  have entered into a call  agreement
with the Group, which allows the Group, during the period from September 3, 2003
and September 3, 2005, to acquire the remaining  outstanding  shares of Patriot,
if any,  for the  greater of U.S. $2 million  and five times  Patriot's  EBITDA,
reduced by adjustments defined contractually.


 o Medcheque

     The minority  shareholders  of Medcheque have entered into a call agreement
to sell the remaining shares to the Group in accordance with the terms described
above.


 o Abra (subsidiary of Sodexho Scandinavian Holding AB)

   The minority shareholders of Abra have entered into a call agreement to
sell the remaining shares to the Group in accordance with the terms described
above, in November 2005 at the latest.


 o Sodexho Italia

   The minority shareholder of Sodexho Italia has entered into a call
agreement to sell the remaining shares to the Group in accordance with the terms
described above, on July 1, 2010 at the latest.


 o Altys Multiservices

   The minority shareholders of Altys Multiservice have entered into a call
agreement to sell the remaining shares to the Group (18.5% as of August 31,
2003) between October 1 and November 30, 2005 for a purchase price based on a
multiple of the average economic profits as defined contractually in the year of
exercise with an adjustment based on the following year's results.


Other commitments

 Securitization

   Our food service subsidiaries in the United Kingdom have securitized
without recourse a portion of their client receivables for an amount of EUR 82
million as of August 31, 2003.

 Commitments for stock options in Sodexho Alliance shares

 The Group has the following stock option commitments:

 o 2,518,517 shares with an average exercise price of U.S. $26.35 to certain
   employees of Sodexho, Inc., in connection
   with the Group's acquisition of 53% of Sodexho Marriott Services, Inc. in
   June 2001. These options are exercisable in the following periods:

 o From August 31, 2003 through various expiration dates, the latest being
   August 31, 2011: 1,651,722 shares

 o From August 31, 2004 through various expiration dates, the latest being
   August 31, 2011:  648,256 shares

 o From August 31, 2005 through various expiration dates, the latest being
   August 31, 2011:  218,539 shares

 o 5,085,838 Sodexho Alliance shares granted by the Board of Directors to
   Group employees in connection with various stock option plans. These options
   are exercisable in the following periods and at the following exercise
   prices:

 o From January 2004 to January 2009: 744,262 shares at an exercise price of
   EUR 24.00

 o From March 2004 to January 2005: 223,246 shares at an exercise price of
   EUR 39.86

 o From January 2005 to January 2009: 744,263 shares at an exercise price of
   EUR 24.00

 o From March 2005 to January 2006: 319,135 shares at an exercise price of
   EUR 48.42

 o From January 2006 to October 2007: 432,790 shares at exercise prices of
   EUR 21.87 andEUR 47.00

 o From January 2006 to January 2009: 744,262 shares at an exercise price of
   EUR 24.00

 o From January 2006 to March 2008: 1,133,617 shares at an exercise price of
   EUR 47.00

 o From January 2007 to January 2009: 744,263 shares at an exercise price of
   EUR 24.00

   In connection with its acquisition of Sogeres, the Group committed to
maintain Sogeres' stock option plan dated August 1, 1997. The Group committed to
acquire the Sogeres shares from the optionees through September 2004 and has
recorded a related liability in its accounts. As of August 31, 2003 this
liability totals EUR 0.7 million. A second stock option plan was established
for which the Group has committed to increase the capital of Sogeres for the
benefit of the optionees and to buy their shares no later than February 20,
2008. In connection with this agreement, a provision of EUR 3.5 million was
recorded in the consolidated financial statements as of August 31, 2003.




 Operating lease commitments

   Operating lease commitments are as follows:

   Less than one year EUR  65 million

   From one to five yearsEUR 119 million

   More than five years EUR 36 million

   Operating lease commitments primarily relate to central kitchens under
tri-partite agreements for EUR 40 million and rent for office space and
various equipment.


 Retirement plan obligations

   As of August 31, 2003, retirement plan obligations which were not recorded
as a liability in the balance sheet because of the existence of an external fund
totaled EUR 397 million. Partially offsetting this amount are external funds
totaling EUR 269 million.



F. Tabular Disclosure of Contractual Obligations

   Future payments on borrowings and other debt balances as of August 31, 2003
were due as follows:
<TABLE>
<S>               <C>          <C>         <C>          <C>         <C>

                  Less than    One to      More than    Total       Total
                  one year     five years  five years   August 31,  August 31,
                                                        2003        2002
                                        (millions of euro)
Bonds
 Euro..............  341             0       1,300        1,641        1,642
                    ----          ----       -----        -----        -----
Total bonds......    341             0       1,300        1,641        1,642

Bank borrowings (1)
 U.S. Dollars......  157           795           1          953        1,175
 Euro.............. (126)         (324)         62         (388)        (501)
 Pounds Sterling...   86            (1)          0           85          224
 Other currencies..   31            14           0           45           41
                    ----          ----       -----        -----        -----
Total bank
 borrowings........  148           484          63          695          939


Capital lease obligations
 U.S. Dollars......    3             4                        7           12
 Euro..............   15            19           4           38           36
 Other currencies..                  3                        3            4
                    ----          ----       -----        -----        -----
Total capital lease
 obligations.......   18            26           4           48           52


Other borrowings
 Euro..............                  3           1            4            5
 Other currencies..    1                                      1
                    ----          ----       -----        -----        -----
Total other
borrowings.........    1             3           1            5            5


Bank overdraft balances
 Euro..............   25                                     25           18
 Pounds Sterling...   70                                     70           31
 Other currencies..    4                                      4            6
                    ----          ----       -----        -----        -----
Total bank
overdrafts.........   99             0           0           99           55

                    ----          ----       -----        -----        -----
Total..............  607           513       1,368        2,488        2,693
                    ====          ====       =====        =====        =====
</TABLE>

(1)Includes impact of swaps; see notes 3.16.2 and 3.16.3 to the
   consolidated financial statements for further information.





ITEM 6...DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES


A. Directors and Senior Management

   The table below sets forth, as of November 14, 2003, the names of our
directors, their dates of birth, their current positions with us, the dates of
their initial appointment as directors and the expiration dates of their current
terms.
<TABLE>
<S>                   <C>            <C>               <C>           <C>
                                                       Initially     Expiration
Name                  Date of Birth     Position       Appointed      of Term

Pierre Bellon(2) (4)    1/24/1930       Chairman        11/14/1974      2004
Remi Baudin(2) (3)     10/19/1930     Vice Chairman      2/25/1983      2004
Astrid Bellon           4/16/1969       Director         7/26/1989      2004
Bernard Bellon          8/11/1935       Director         2/26/1975      2003
Francois-Xavier Bellon  9/10/1965       Director         7/26/1989      2004
Sophie Clamens          8/19/1961       Director         7/26/1989      2004
Paul Jeanbart(6)*       8/23/1939       Director         2/13/1996      2005
Charles Milhaud         2/20/1943       Director         2/04/2003      2006
Francois Perigot
 (1)(4)*                5/12/1926       Director         2/13/1996      2005
Edouard de Royere(2)
 (4)(5)*                6/26/1932       Director         2/13/1996      2005
Nathalie Szabo          1/26/1964       Director         7/26/1989      2004
H.J. Mark Tompkins
 (6)*                  11/02/1940       Director         2/05/2002      2005

(1) Chairman of the Selection Committee.
(2) Member of the Selection Committee.
(3) Chairman of the Compensation Committee.
(4) Member of the Compensation Committee.
(5) Chairman of the Audit Committee and financial expert.
(6) Member of the Audit Committee.
 *  Independent director.
</TABLE>


   Pierre Bellon. Mr. Bellon founded Sodexho Alliance in 1966 and currently
serves as its Chairman and Chief Executive Officer. Since 1988, he has served as
Chairman and Chief Executive Officer of Bellon SA, the family holding company
that controls us, and as Chairman of its Executive Board (Board of Directors)
from 1996 until February 2002. At that time, he was appointed Chairman of the
Bellon SA Supervisory Board. Mr. Bellon has also served as National President of
the Center for Young Company Managers (formerly the Center for Young Employers)
from 1968 to 1970 and President of the National Federation of Hotel and
Restaurant Chains from 1972 to 1975. He was a member of the Economic and Social
Council from 1969 to 1979 and has been a member of the Executive Council of the
National Council of French Employers (CNPF (now known as the Medef)) since 1981.
He has also served as President of the Management Improvement Association, which
he founded in 1987, and as a member of the Board of the National Association of
Joint-Stock Companies. Mr. Bellon was a director of L'Air Liquide (until May
2003) and is currently a director of Pinault Printemps La Redoute. Mr. Bellon
and his children, Astrid Bellon, Sophie Clamens, Nathalie Szabo and
Francois-Xavier Bellon, hold 54.9% of the shares in Bellon SA, which holds a 39%
economic interest in Sodexho Alliance as of November 30, 2003.



   Remi Baudin. Before helping Pierre Bellon to create Sodexho Alliance, Mr.
Baudin took part in a number of foreign projects for the management consultant
company SEMA from 1957 to 1965. He reorganized and managed its ship supply
business (1965-1969), then created a joint venture with Sonatrach in the Remote
Sites business and headed the two companies' joint subsidiary in Algeria
(1969-1970). He successively managed the Food and Management Services France
division and started up operations in Belgium (1971-1976); the France and Africa
division, overseeing start-ups in Cameroon, Nigeria, Ivory Coast, Angola, Benin,
Guinea, Algeria and Libya (1977-1982); and the Food and Management Services
France and Europe division (1982-1992). Mr. Baudin is also President of FERCO,
the European food services confederation, which he founded in 1988. He was
Chairman of the Bellon SA Supervisory Board from 1996 until February 2002 and
currently serves as its Vice Chairman.


   Astrid Bellon. Astrid Bellon is a member of the Executive Board of Bellon
SA. Since 1999, Ms. Bellon has worked in the field of audio-visual production,
and in 2001, she created the company "Les Films d'a Cote," in which she is also
a shareholder. Astrid Bellon is the daughter of Pierre Bellon.


   Bernard Bellon. Mr. Bellon was Director of Compagnie Hoteliere du Midi (a
member of the Compagnie de Navigation Mixte Group) from 1962 to 1970 and then
held various managerial positions in banking at CIC-Banque de Union Europeenne
Group from 1970 to 1988. In 1988, he founded Finadvance SA, a venture capital
company, and has since served as its Chairman. He also serves as a member of the
Bellon SA Supervisory Board and a director of Perfin SA, CIC France and Allios
Industrie. Bernard Bellon is the brother of Pierre Bellon.


   Francois-Xavier Bellon. Francois-Xavier Bellon began his career in the
temporary employment business as an agency manager for Adia France (1990-1991)
and then for Ecco in Barcelona, Spain, where he was promoted to Sales and
Marketing Director and Regional Director for Catalonia (1993-1995). He joined
the Group in September 1995, initially as segment manager and later as
development manager for the Healthcare segment in France. He is a member of the
Executive Board of Bellon SA and since 1999 has served as the Chief Operating
Officer of Sodexho Mexico. Francois-Xavier Bellon is the son of Pierre Bellon.


   Sophie Clamens. From 1985 to 1987, Ms. Clamens was employed by Credit
Lyonnais in New York as a mergers and acquisitions advisor for the bank's French
clientele. She later worked as a sales agent for a number of leading European
fashion houses, including Chanel, Valentino, Ungaro and Armani. Ms. Clamens
joined the Group's finance department in 1994, initially as a development
analyst and later responsible for strategic financial planning. Since 2002, she
has been Manager of Strategic and Management Control. Ms. Clamens became
Chairman of the Executive Board of Bellon SA in 2002. Ms. Clamens is the
daughter of Pierre Bellon.


   Paul Jeanbart. Mr. Jeanbart is a co-founder, partner and, since 1967, the
Chief Executive Officer of the Rolaco Group. He also serves as Chairman of Oryx
Merchant Bank Limited, Chairman of the Board of Directors of Hotels
Intercontinental Geneve, Managing Director of Rolaco Holding SA and is a member
of the Semiramis Hotel Co., Delta International Bank, NASCO Insurance Group, and
XL Capital Limited Boards of Directors and the Club Mediterranee SA Supervisory
Board. Mr. Jeanbart is a citizen of Canada.


   Charles Milhaud. Mr. Milhaud joined the Caisse d'Epargne in 1964. In 1983,
he became Directeur General of the Caisse d'Epargne des Bouches du Rhone et de
la Corse as well as a Member of the Supervisory Board of the Centre National des
Caisses d'Epargne (CENCEP). In 1995, he was named Vice President of the Board of
Directors of the Caisse Centrale des Caisses d'Epargne. When the two entities
merged in 1999 to form the Caisse Nationale des Caisses d'Epargne (CNCE), Mr.
Milhaud was named President of the Directoire, a position he currently holds.
Mr. Milhaud is also Vice President of the Board of Directors of Eulia Compagnie
Financiere, President of the Supervisory Councils of Credit Foncier de France
and Financiere Oceor, Member of the Supervisory Board of CNP Assurance, and
member of the Boards of Directors of Sopassure and the Banque Internationale des
Mascareignes. He is a permanent representative of the CNCE to the Boards of the
Banque de Tahiti, Holassure, the Banque des Iles Saint-Pierre-et-Miquelon, the
Banque des Antilles Francaises, Credit Saint-Pierrais, the Banque de la Reunion,
the and the Banque de Nouvelle-Caledonie.


   Francois Perigot. After serving as Chairman and Chief Executive Officer of
Thibaud Gibbs et Compagnie from 1968 to 1970, Mr. Perigot successively held the
positions of Chairman and Chief Executive Officer Unilever Spain and Chairman
and Chief Executive Officer Unilever France (1971-1986). From 1986 to 1998, he
was Chairman of Compagnie du Platre, and from 1988 to 1998 he served as Vice
Chairman and later Chairman of UNICE, the European union of employer and
industry confederations. Mr. Perigot has also served as a president of the
Enterprise Institute (1983-1986), a president of the National Council of French
Employers (1986-1994), a member of the Executive Committee of the International
Chamber of Commerce (1987-1989) and a member of the Economic and Social Council
(1989-1999). He has been President of the Franco-Dutch Chamber of Commerce since
1996, President of MEDEF International since 1997 and President of the
International Employers Organisation since June 2001. He currently serves as a
director of Astra Calve, Lever, CDC Participations and Sabate-Diosos.


   Edouard de Royere. After working as an authorized representative with power
of attorney for Credit Lyonnais and as Director of Union Immobiliere et
Financiere, Mr. de Royere joined L'Air Liquide in 1966. He successively held the
positions of General Secretary to senior management and Investor Relations
Manager, and in 1967 he was appointed Company Secretary. Mr. de Royere joined
the L'Air Liquide Board of Directors in 1971. He became Assistant Managing
Director in 1979, then Vice Chairman and Assistant Managing Director, and
finally Vice Chairman in 1982. From 1985 to 1995, he served as Chairman and
Chief Executive Officer of L'Air Liquide. In 1997, he was named Honorary
Chairman of L'Air Liquide and since 2001 he has served as a member of its
Supervisory Board. He is also Chairman of the National Association of
Joint-Stock Companies. Mr. de Royere served as a director of Danone and L'Oreal
through May 2003 and currently serves as a director of Michelin.


   Nathalie Szabo. Ms. Szabo began her career in 1987 in the restaurant
industry. She served as an account manager for Scott Traiteur from 1989 and
later became sales director of Pavillon Royal. She joined the Group in March
1996 as sales director of Sodexho Prestige in France. She became sector manager
in 1999 and effective September 2003 she is the General Manager of Sodexho
Prestige. Ms. Szabo is a member of the Executive Board of Bellon SA. Ms. Szabo
is the daughter of Pierre Bellon.


   H.J. Mark Tompkins. Mr. Tompkins began his career in investment banking in
1964 with Samuel Montagu & Company (now HSBC). From 1965 to 1971, he was a
management consultant with Booz Allen & Hamilton working on assignments in the
U.K., continental Europe and the U.S. He joined the Slater Walker Securities
group in 1972 and was named Chief Executive Officer of Compagnie Financiere
Haussmann, a publicly traded company in France. From 1975 through 1987, he
became active in property development, investment and management in both
residential and commercial sectors. In 1987 and subsequent years, his focus
moved to private equity and capital development in publicly traded entities,
notably in the healthcare, pharmaceutical, retail and distribution, leisure,
tourism and manufacturing sectors. He has significant experience in mergers and
acquisitions, start-ups, initial public offerings, and private and public debt
offerings. He currently serves as director of Partners Bio Projects
International Ltd and Calcitech Ltd. Mr. Tompkins is a British citizen.



Executive Officers

   The table below sets forth, as of November 14, 2003, the names and dates of
birth of our executive officers, which include Pierre Bellon as Chairman and
Chief Executive Officer and the members of our Executive Committee. Albert
George, who had been appointed President and Chief Operating Officer of Sodexho
Alliance on February 20, 2000, resigned his position for health reasons in June
2003. In accordance with the recommendation of the selection committee, the
Board of Directors nominated Jean-Michel Dhenain and Michel Landel as Presidents
and Chief Operating Officers of Sodexho Alliance. In addition, two new members
of the Executive Committee were named: Richard Macedonia, Chief Operating
Officer, North America, and Vincent Hillenmeyer, Senior Vice President,
Strategic Planning and Control.

<TABLE>
<S>                <C>               <C>

Name                Date of Birth    Position

Pierre Bellon         1/24/1930      Chairman and Chief Executive Officer

Elisabeth Carpentier  5/08/1954      Senior Vice President, Human Resources

Jean-Michel Dhenain  12/10/1944      Group President and Chief Operating Officer
                                     Chief Executive Officer, Continental Europe

Sian Herbert-Jones    9/13/1960      Chief Financial Officer

Vincent Hillenmeyer   7/16/1966      Senior Vice President, Strategic Planning
                                     and Control

Michel Landel        11/07/1951      Group President and Chief Operating Officer
                                     Chief Executive Officer, North America

Richard Macedonia     9/21/1943      Chief Operating Officer, North America

Clodine Pincemin      7/20/1952      Senior Vice President, Corporate
                                     Communications
</TABLE>



   Elisabeth Carpentier.  Ms. Carpentier joined us in 1981 as Director of Hiring
and Placement.  From 1994 to 1998, she served as Human Resources Director for
our Food and Management Services subsidiary in France. In January 1998, she was
appointed Senior Vice President, Corporate Human Resources.  Ms. Carpentier has
both a law diploma and a post-graduate degree in human resources management.


   Jean-Michel Dhenain.  Mr. Dhenain joined us in 1972, where he served as
Regional Director, Departmental Director and then Sales Director. He then headed
the Hospitals-Clinics division before moving to our French healthcare subsidiary
in 1987 and our French schools-universities subsidiary in 1991.  Mr. Dhenain is
currently our Chief Executive Officer - Continental Europe.  He has supervised
operations in Continental Europe since April 30, 1998 and is the Market Champion
for Healthcare. Mr. Dhenain has a degree in law and economics from the
University of Dijon, France.


   Sian Herbert-Jones. Ms. Herbert-Jones began her career in Corporate Finance
with Price Waterhouse in London and Paris from 1982 to 1995, where she served,
notably, as Director in the Mergers and Acquisitions department. While at Price
Waterhouse, she played an active role in our acquisition of Gardner Merchant in
1995. Ms. Herbert-Jones joined us in 1995 and was appointed Treasurer in 1998,
Deputy Chief Financial Officer in October 2000 and Chief Financial Officer in
November 2001. She holds an M.A. in History from Oxford University and is a
Chartered Accountant in England and Wales.


   Vincent Hillenmeyer. Mr. Hillenmeyer is the Senior Vice President for
Strategic Planning and Control. He began his career in 1988 with Arthur
Andersen. After joining Sodexho in 1991, he served as Remote Sites Finance
Manager in Cameroon, then in 1993 as District Manager for Sodexho France,
Business and Industry, in 1995 as Financial Analyst for Sodexho France, Business
and Industry, and in 1998 as Paris-Ile de France Regional Director, Large
Accounts. In 2000, he was appointed Vice President, Special Projects,
Information Systems, for Sodexho, Inc. In October 2001, he was promoted to
Corporate Vice President Planning. He earned a degree in 1988 from HEC, one of
France's leading business schools.


   Michel Landel. Mr. Landel has served as President, Chief Executive Officer,
and a member of the Board of Directors of Sodexho, Inc. (formerly SMS) since May
1999. Mr. Landel joined us in 1984 as Chief Operating Manager for Eastern
Africa, Libya and Algeria. Mr. Landel served as President and Chief Executive
Officer of Sodexho North America (known now as Sodexho, Inc.) from 1989 to 1998.
He was appointed an Executive Vice President of Sodexho, Inc. in 1998 and was
also appointed President, Corporate Services, in June 1998. Mr. Landel currently
serves as Chief Executive Officer - North America, and is the Market Champion
for Business and Industry (and prior to April 22, 2002, for Education). He has a
degree in business and management from the European Business School.


   Richard "Dick" Macedonia. Mr. Macedonia is the Executive Vice President and
Chief Operating Officer of Sodexho, Inc. Before being named COO in 2003, Mr.
Macedonia most recently was the president for Sodexho's Health Care Services
Division. Mr. Macedonia began his career with the company in 1968 as a unit
manager in the Campus Services Division, and joined Health Care Services in
1975. He has held positions throughout the divisions including district manager,
vice president of marketing and sales, and vice president of business
development. Mr. Macedonia is a graduate of Indiana University of Pennsylvania,
Indiana, PA. He is a corporate member of both the Health Insights Foundation and
the Hospital Research and Development Institute.


   Clodine Pincemin.  Ms. Pincemin joined us in 1974. She was later appointed
to head public relations and then communications for France. Since 1991, she has
held the position of Senior Vice President, Corporate Communications.  Ms.
Pincemin has a degree in French literature.



B. Compensation

     During fiscal 2003,  members of our Board of Directors received total fees,
compensation  and  benefits  from  Sodexho  Alliance  and related  companies  as
follows.



<TABLE>
<S>                  <C>                  <C>                    <C>
                     Sodexho Alliance
                     Board meeting
Name                 fees                 Bellon S.A.(3)         Total(1)

                                            (in euro)

Pierre Bellon            12,800              330,480            646,372(1)
Remi Baudin              12,800                1,500             14,300
Astrid Bellon             6,400               53,400             59,800
Bernard Bellon            6,400                1,500              7,900
Francois-Xavier Bellon    6,400              112,900            256,773
Sophie Clamens           12,800              122,000            134,800
Patrice Douce(2)          3,200               32,260             35,460
Paul Jeanbart            12,800                                  12,800
Charles Milhaud           3,200                                   3,200
Francois Perigot         12,800                                  12,800
Edouard de Roy           12,800                                  12,800
Nathalie Szabo            6,400               67,900            106,608
H.J. Mark Tompkins        9,600                                   9,600

(1)Amount includes Board meeting attendance fees paid by Sodexho Alliance as
   well as all compensation and benefits of any kind paid with respect to
   responsibilities with Bellon SA and Sodexho Alliance.
(2)Director until February 4, 2003.
(3)Compensation with respect to responsibilities with Bellon SA.
</TABLE>


   As a matter of French law, until January 24, 2001 we could not grant
options to non-employee members of our Board of Directors.

   Compensation for our executives is comprised of a fixed salary, a
performance bonus tied to the achievement of annual objectives, and benefits.
For fiscal 2003, the aggregate compensation received by members of the Executive
Committee was EUR 2,682,582, which included base pay totaling EUR 1,848,557
and variable pay totaling EUR 834,025. The members of the Executive Committee
also received options to purchase a total of 254,000 Sodexho Alliance shares. On
June 13, 2003, the membership of our Executive Committee changed, and the
Committee now has two more members than it did at the end of fiscal 2002. For
this reason, the total compensation figure described above may not be comparable
to the aggregate figure for fiscal 2002. During fiscal 2003, the total
compensation paid to the Group Chief Operating Officers was as follows:

<TABLE>
<S>                               <C>              <C>                <C>

                                  Fixed             Variable
Group Chief Operating Officer     compensation      compensation        Total

                                                  (amounts in euro)

Jean-Michel Dhenain               284,564             149,732          434,296
Michel Landel                     538,598             309,075          847,673
Albert George                     252,671             158,795          411,466
</TABLE>




   The table below provides certain information regarding the options to
purchase our common shares granted to executive officers.
<TABLE>
<S>                 <C>         <C>                         <C>

Date of Plan        Amount(1)   Exercise Price per Share     Expiration Date

January 24, 2001      25,767          EUR 48.42              January 23, 2006
January 11, 2002      46,500          EUR 47.00              January 10, 2007
January 11, 2002      60,000          EUR 47.00              January 10, 2008
January 27, 2003     254,000          EUR 24.00              January 28, 2009
</TABLE>

(1) These amounts have been adjusted retroactively, where appropriate, to
     reflect the four-for-one stock split effective March 7, 2001 and the rights
     offering on July 4, 2001.


   During fiscal 2003, we and our subsidiaries recorded total charges of
EUR 25 million for pension, retirement and similar benefits and, as of August
31, 2003, we and our subsidiaries had accrued a total of EUR 147 million for
these items.


C. Board Practices

   Our Board of Directors has 12 members. Directors are chosen for their
ability to take the interests of all shareholders into account and for their
recognized expertise in areas that are strategic to the company, such as
international expansion, innovation, finances or services. The Board of
Directors periodically reviews operations, on-going business and special
transactions, defines corporate strategy, closes our interim and annual
accounts, prepares shareholders' meetings, designates corporate officers to
implement strategy and monitors the quality of information provided to
shareholders and financial markets.

   Senior executives of the company regularly inform the Board of the
resources used in their respective businesses to implement the strategy defined
by the Executive Committee and approved by the Board. The Board is assisted in
its strategic thinking by three ad hoc committees:

  o the Selection Committee for Board members and corporate officers, which
    examines the Chairman's proposals, prepares recommendations to present to
    the Board and keeps an up-to-date, confidential list of potential
    replacements in case a position becomes vacant;

  o the Compensation Committee, which proposes compensation packages for
    corporate officers and senior executives, including stock option plans; and

  o the Audit Committee, which prepares and monitors internal accounting
    procedures, supervises the application of Group financial, legal and
    accounting rules, proposes changes to accounting procedures, recommends the
    appointment and fees of our external auditors and approves their audit and
    non-audit services, communicates with our internal and external auditors and
    reports on such matters to the rest of our Board.

  The Selection committee is chaired by Francois Perigot with the assistance
of Pierre Bellon, Edouard de Royere and Remi Baudin. The Selection committee met
three times during fiscal 2003 and reviewed matters including succession
planning for Mr. Bellon, the replacement of Mr. George for health reasons, the
assessment of directors' independence, and the replacement of an outgoing
director whose term was expiring.

   The Compensation committee is chaired by Remi Baudin, who is also Vice
Chairman of the Board of Directors, with the assistance of Pierre Bellon and two
non-executive directors, Francois Perigot and Edouard de Royere. The
Compensation committee met three times during fiscal 2003 and reviewed matters
including the feasibility of a new Employee Savings plan, new stock option plans
and revised rules, management retirement benefit plans and related comparisons
between France, the United Kingdom, and the United States, and compensation
packages for the Chairman and Chief Executive Officer and the President and
Chief Operating Officer.



   The Audit Committee is chaired by Edouard de Royere, a financial expert,
with the assistance of Paul Jeanbart and Mark Thompkins. Ms. Clamens and Mr.
Baudin are invited to attend the Audit Committee meetings but are not members.
Our external auditors report to the Audit Committee twice annually on their
activity and planned actions. The Chairman of the Audit Committee reports to the
Board after each Audit Committee meeting. The Audit Committee met three times
during fiscal 2003 to discuss various issues which included the recruitment of a
senior executive to head the internal audit department, the company's accounting
for retirement plan obligations, the impact of International Financial Reporting
Standards (IFRS) on the consolidated financial statements and management's
initiative to evaluate internal control procedures in order to comply with the
recent French "Loi sur la Securite Financiere" and rules adopted by the SEC
pursuant to Section 404 of the Sarbanes-Oxley Act in the United States. The
Audit Committee also approved the Internal Audit plan for fiscal 2004 and
implemented a procedure for its pre-approval of audit and non-audit engagements
of the company's external auditors and their affiliates.


 The Board of Directors met nine times during fiscal 2003.

   There are no service contract termination benefits for Directors as such
benefits are forbidden by French law.


D. Employees and Labor Relations

   As of August 31, 2003, we had 308,385 employees worldwide. The table below
shows the number of employees of our company and our subsidiaries by geographic
zone as of August 31, 2003, 2002 and 2001.

<TABLE>
<S>                              <C>          <C>          <C>

                                              August 31,
                                   2003         2002         2001

North America..................  119,009      117,689      120,147
United Kingdom and Ireland.....   51,843       61,835       63,142
France.........................   30,465       30,477       29,051
Rest of Europe.................   49,897       49,438       47,467
Rest of the World..............   57,171       55,702       53,662
                                 -------      -------      -------
Total Number of Employees......  308,385      315,141      313,469
                                 =======      =======      =======


   Following is a breakdown of our employees by category as of August 31,
2003, 2002 and 2001.


                                              August 31,
                                   2003         2002         2001

Executives and middle
 management....................    6,137        5,759        7,065
Establishment managers
 and supervisory staff.........   33,173       25,614       32,677
Front line service
 staff and other...............  269,075      283,768      273,727
                                 -------      -------      -------
Total Number of Employees......  308,385      315,141      313,469
                                 =======      =======      =======
</TABLE>


   Some of our employees are members of local or national trade unions, and,
consequently, we have entered into various collective bargaining agreements.
Pursuant to regulations in certain countries across Europe, especially in France
and Belgium, various committees which represent employees meet on a regular
basis. These committees are informed about and consulted on pertinent employee
matters. Salaries, working conditions and other employment matters are
negotiated with trade unions every year. It is our practice to renew or replace
our various employee and collective bargaining agreements as and when they
expire, and we are not aware of any material agreements which are not expected
to be satisfactorily renewed or replaced in a timely manner. A relatively small
number of our employees worldwide are subject to collective bargaining
agreements, and we do not believe that a failure to renew our collective
bargaining agreements on terms similar to those we have now would have a
material adverse effect on our financial condition or results of operations.


   Because we are a service company, though, we are highly dependent upon the
availability of hourly or part-time wage and skilled employees. Thus, severe
shortages in the supply of these employees at times of high demand for their
services could materially impact our operating performance.

   In France, recent legislation on working week reduction to 35 hours led to
wide-ranging discussions with employee representatives on issues such as
workplace organization, time management, flexibility and customer service.



   We have not experienced any significant work disruptions or conflicts in
the last few years, and we consider our relationship with our employees to be
satisfactory.


E. Share Ownership

     Collectively, members of the Board of Directors and the Executive Committee
directly own less than 0.5% of our outstanding  capital stock. Pierre Bellon and
his children, Astrid Bellon, Francois-Xavier Bellon, Sophie Clamens and Nathalie
Szabo,  collectively own an economic interest of approximately 55% (representing
a voting interest of approximately  71%) in Bellon SA, which, as of November 30,
2003,  owns an economic  interest of  approximately  39%  (representing a voting
interest  of  approximately  39%) in us.  This  difference  between  voting  and
economic  interests in Sodexho is  attributable to the fact that a double voting
right is  granted to all  holders of  fully-paid  registered  shares  when those
shares  have been  registered  for more than four  years in the name of the same
shareholder, as described in "Item 10.B. Additional  Information--Memorandum and
Articles of Association." As of November 30, 2003, 5,269,400 of the shares owned
by Bellon SA had double voting rights.  Bernard  Bellon,  who is Pierre Bellon's
brother,  and members of his family own, as of November  30,  2003,  an economic
interest  of  approximately  13% in Bellon SA. The table  below sets forth share
ownership  information,   exclusive  of  these  indirect  interests,  for  these
individuals and for Bellon SA as of November 30, 2003.


<TABLE>
<S>                                                 <C>


                                                      Number of
Name                                                Shares Owned

Bellon SA....................................        61,286,881(1)
Pierre Bellon................................            *(2)
Remi Baudin..................................            *(2)
Astrid Bellon................................            *(2)
Bernard Bellon...............................            *(2)
Francois-Xavier Bellon.......................            *(2)
Sophie Clamens...............................            *(2)
Patrice Douce................................            *(2)
Paul Jeanbart................................            *(2)
Francois Perigot.............................            *(2)
Edouard de Royere............................            *(2)
Nathalie Szabo...............................            *(2)
H.J. Mark Tompkins...........................            *(2)
Elisabeth Carpentier.........................            *(2)
Jean-Michael Dhenain.........................            *(2)
Albert George................................            *(2)
Sian Herbert-Jones...........................            *(2)
Michel Landel................................            *(2)
Clodine Pincemin.............................            *(2)
</TABLE>


(1)Pierre Bellon owns .01% of the outstanding shares of Bellon SA; Astrid
   Bellon, Francois-Xavier Bellon, Sophie Clamens and Nathalie Szabo each own
   an economic interest of 13.72% in Bellon SA. At any ordinary shareholders'
   meeting of Bellon SA, Pierre Bellon has a voting interest of 62.7% and each
   of Astrid Bellon, Francois-Xavier Bellon, Sophie Clamens and Nathalie Szabo
   has a voting interest of 2%. At any extraordinary meeting, Pierre Bellon
   has a voting interest of .01% and each of Astrid Bellon, Francois-Xavier
   Bellon, Sophie Clamens and Nathalie Szabo has a voting interest of 17.7%.
   Bernard Bellon owns an economic interest of 21% in Bellon SA. At any
   ordinary shareholders' meeting, Bernard Bellon has a voting interest of
   16.5%. At any extraordinary meeting, Bernard Bellon has a voting interest
   of 2.8%. Bellon SA is the beneficial owner of approximately 39% of our
   outstanding shares.

(2)Indicates beneficial ownership of less than 1% of the shares outstanding.

   As of November 30, 2003, members of our Board of Directors and Executive
Committee held, in the aggregate, options to acquire 596,814 shares of our
common stock. The following table lists the amounts, exercises prices and
expiration dates of options held by these individuals at that time.




<TABLE>
<S>                       <C>             <C>                <C>


                                          Exercise Price
Name                      Amount(1)         per Share         Expiration Date
Pierre Bellon                -                  -                     -
Remi Baudin(2)               -                  -                     -
Astrid Bellon(2)             -                  -                     -
Bernard Bellon(2)            -                  -                     -
Francois-Xavier Bellon(2)    -                  -                     -
Sophie Clamens(2)            -                  -                     -
Patrice Douce(2)             -                  -                     -
Paul Jeanbart(2)             -                  -                     -
Francois Perigot(2)          -                  -                     -
Edouard de Royere(2)         -                  -                     -
Nathalie Szabo(2)            -                  -                     -
H.J. Mark Tompkins           -                  -                     -
Elisabeth Carpentier      19,631            EUR 38.17       December 10, 2003
                           4,172            EUR 39.86       January 24, 2005
                           5,317            EUR 48.42       January 23, 2006
                          10,000            EUR 47.00       January 10, 2007
                          35,000            EUR 24.00       January 26, 2009
Jean-Michel Dhenain        8,221            EUR 39.86       January 24, 2005
                          10,225            EUR 48.42       January 23, 2006
                          15,000            EUR 47.00       January 10, 2007
                          43,000            EUR 24.00       January 26, 2009
Albert George             16,359            EUR 27.11       December 12, 2003
                          10,306            EUR 39.86       January 24, 2005
                          14,314            EUR 48.42       January 23, 2006
                          31,000            EUR 47.00       January 10, 2007
                          80,000            EUR 24.00       January 26, 2009
Sian Herbert-Jones         6,135            EUR 39.86       January 24, 2005
                           6,135            EUR 48.42       January 23, 2006
                          15,000            EUR 47.00       January 10, 2007
                          40,000            EUR 24.00       January 26, 2009
Vincent Hillenmeyer          982            EUR 39.86       January 24, 2005
                           4,000            EUR 47.00       January 10, 2008
                          17,000            EUR 24.00       January 26, 2009
Michel Landel             16,359            EUR 27.11       December 12, 2003
                          30,000            EUR 47.00       January 10, 2008
                          60,000            EUR 24.00       January 26, 2009
Dick Macedonia            26,000            EUR 47.00       January 10, 2008
                          40,000            EUR 24.00       January 26, 2009
Clodine Pincemin           3,068            EUR 39.86       January 24, 2005
                           4,090            EUR 48.42       January 23, 2006
                           6,500            EUR 47.00       January 10, 2007
                          19,000            EUR 24.00       January 26, 2009
                        --------
Total                    596,814
                        ========
</TABLE>

(1)These numbers have been adjusted retroactively, where appropriate, to reflect
   the four-for-one stock split effective March 7, 2001 and the rights offering
   on July 4, 2001.

(2)Until January 24, 2001, we were not permitted under French law to grant
   options to members of the Board of Directors (other than the Chairman of the
   Board) who are not employees.




   Our Board of Directors recently approved four Sodexho Alliance Stock Option
Plans. The granting of stock options to our employees under these plans had been
previously approved by our shareholders at our Extraordinary Shareholders'
Meeting of February 21, 2000. The first three plans were approved on January 27,
2003 and the fourth plan on June 12, 2003. The exercise price for these plans is
EUR 24.00. Options under these plans will be valid from the grant date through
January 26, 2009. Under the January 27, 2003 plans, 25% of the options granted
vest and become exercisable on each anniversary of the grant date, such that the
entire option is vested after four years on January 27, 2007. Options under
these plans, totaling 2,917,800, were granted to 1,344 employees. Under the June
12, 2003 plan, 25% of the options granted vest and become exercisable on January
27 of each year such that the entire option is vested on January 27, 2007.
Options under this plan, totaling 84,660, were granted to nine employees. No
options granted under these plans may be transferred by the optionholder other
than by will or the laws of intestacy. Stock options under these four plans are
governed by the laws of France (specifically, articles L225.177 through L225.185
of the French Code de Commerce). Any Sodexho Alliance shares or Sodexho Alliance
shares underlying any American Depositary Shares to be delivered to Sodexho,
Inc. optionholders will be purchased by Sodexho Alliance on the open market.

   Our Board of Directors approved two Sodexho Alliance Stock Option Plans
prior to December 31, 2002. The granting of stock options to our employees under
these plans had been previously approved by our shareholders at our
Extraordinary Shareholders' Meeting of February 21, 2000. The first plan was
approved on September 17, 2002. Options under this plan, totaling 12,000, were
granted to a single newly hired employee and will be valid from September 17,
2002 to March 31, 2008. The options vest in full on April 1, 2006 and may be
exercised between April 1, 2006 and March 31, 2008 with an exercise price of
EUR 47.00. The second plan was approved on October 10, 2002. Options under
this plan, totaling 3,220, were granted to 46 employees and will be valid from
October 10, 2002 to October 10, 2007. The options vest in full on October 10,
2006 and may be exercised between October 10, 2006 and October 10, 2007 with an
exercise price of EUR 21.87. For both plans, if an optionholder terminates his
or her employment due to disability, retires or dies, his or her options will
vest in proportion to the time he or she has been continuously employed by us.
For both plans, no options granted under this plan may be transferred by the
optionholder other than by will or the laws of intestacy. Stock options granted
under both plans are governed by the laws of France (specifically, articles
L225.177 through L225.185 of the French Code de Commerce). Any Sodexho Alliance
shares or Sodexho Alliance shares underlying any American Depositary Shares to
be delivered to Sodexho, Inc. optionholders will be purchased by Sodexho
Alliance on the open market.

   Our Board of Directors approved the Sodexho Alliance Stock Option Plan A on
January 11, 2002. The granting of stock options to our employees under this plan
had been previously approved by our shareholders at our Extraordinary
Shareholders' Meeting of February 21, 2000. Options under this plan will be
valid from January 11, 2002 to January 10, 2007 and will be granted to our
employees primarily located outside of the United States. The options granted
under Plan A vest in full four years from the date of grant and may be exercised
between January 11, 2006 and January 10, 2007. If an optionholder terminates his
or her employment due to disability, retires or dies, his or her options will
vest in proportion to the time he or she has been continuously employed by us.
No options granted under this plan may be transferred by the optionholder other
than by will or the laws of intestacy. Approximately 475 of our employees were
granted options pursuant to this plan. Plan A stock options are governed by the
laws of France (specifically, articles L225.177 through L225.185 of the French
Code de Commerce).






   On January 11, 2002, our Board of Directors approved the Sodexho Alliance
Stock Option Plan B, under which options will be granted to employees of
Sodexho, Inc. and its affiliates. The issuance of shares to our employees under
this plan had been previously approved by our shareholders at our Extraordinary
Shareholders' Meeting of February 21, 2000. Options in Sodexho Alliance shares
granted under this plan vest in full four years from the date of grant, and
optionholders may exercise the options they receive during the two-year period
between January 11, 2006 and January 10, 2008. If an optionholder terminates his
or her employment due to disability, retires or dies, his or her options will
vest in proportion to the time he or she has been continuously employed by us.
No options granted under this plan may be transferred by the option holder other
than by will or the laws of intestacy. Approximately 772 of our employees were
granted options pursuant to this plan. Any Sodexho Alliance shares or Sodexho
Alliance shares underlying any American Depositary Shares to be delivered to
Sodexho, Inc. optionholders will be purchased by Sodexho Alliance on the open
market.

   At the Extraordinary Shareholders' Meeting of February 13, 1996, our
shareholders renewed the authorization given to our Board at the February 23,
1993 Extraordinary Shareholders' Meeting to issue shares to our employees
through an employee stock ownership plan, the InterEnterprise Mutual Fund.
Pursuant to this authorization, our Board of Directors has approved a separate
stock ownership plan in each of the years between 1996 and 1999, inclusive,
funded through market repurchases of our shares on the Paris Bourse. In December
2000, the Board authorized new issuances of shares to employees participating in
our international employee stock ownership plan.

   In addition, in 2001 we created the Sodexho Alliance International Employee
Stock Ownership Plan in which approximately 150,000 employees of Sodexho
Alliance and Sodexho Alliance's majority-owned subsidiaries were eligible to
participate. This plan was open for cash contributions from April 23, 2001 until
September 19, 2001, and it offered two options to subscribe for shares. The
first, called Alliance Plus, allowed employees to invest up to 2.5% of their
gross annual pay. Each cash contribution was matched on a non-recourse basis by
an unaffiliated bank with an additional contribution equal to nine times the
employee's investment to be used towards the purchase of additional shares. If
the stock appreciates in value during the term of the plan, the employees repay
the matching funds to the bank and a portion of the stock's appreciation from
the proceeds of the sale of the stock. If the stock depreciates in value, the
employee is not responsible for reimbursing the bank for its loss. Under the
second plan, called Alliance Classic, employees were given the option of
investing up to 25% of their gross annual compensation towards the purchase of
shares at a discount to fair market value. The two plans were not mutually
exclusive, and employees could select a combination of the two for investment.
Under both plans, employee investments cannot be withdrawn without penalty for a
period of five years from the time of investment. The employee in both cases
benefited from a discount of up to 20% of the fair market price of our shares at
the time the shares were issued. On October 18, 2001, the Board of Directors
issued 1,385,848 shares with a par value of EUR 4 each and an issue price of
EUR 44.10 per share for United States employees and EUR 41.51 for other
employees.

   As of August 31, 2003, 34,599 employees held 2,691,809 Sodexho Alliance
shares, representing 1.7% of the outstanding shares of Sodexho Alliance.

   Certain members of management have been granted options to purchase Sodexho
Alliance shares repurchased by us in the open market or funded through future
issuances. Options in Sodexho Alliance shares granted under our plans vest in
full five years from the date of grant, except for the December 11, 1997 grant,
which vests in full six years after the date of grant and Plan A and Plan B,
which vest in full four years after the date of grant. In general, if an
optionholder dies during his or her employment, such person's options may be
exercised up to six months after his or her death to the extent vested at the
time of his or her death or termination. Options granted pursuant to Board
resolutions of January 25, 2000, April 4, 2000 and February 21, 2001, however,
provide that if an optionee dies, such person's vested options may be exercised
between March 1, 2005 and January 23, 2006 only (and not in the six months
following such person's death). No option may be transferred by the optionee
other than by will or the laws of intestacy. In any event, all options must be
exercised within one year of vesting.


   Prior to our acquisition of the portion of SMS we did not already own in
June 2001, approximately 6.4 million SMS stock options had been granted under
the SMS 1998 Stock Incentive Plan, 2.7 million of which were vested and 3.7
million of which were unvested at the time of the acquisition. Under the terms
of this plan, SMS stock options were granted to officers and key employees at an
exercise price not less than the market price of SMS stock on the date of grant.
Most of the SMS options vest 25% each year during the four years following the
date of grant and expire ten years following the date of grant. If an SMS
optionholder dies during his or her employment, all such person's SMS stock
options become fully vested and may be exercised up to one year after his or her
death to the extent vested at the time of his or her death. In the event an SMS
employee is terminated, such employee's SMS stock options may be exercised up to
three months after the date of his or her termination to the extent vested at
the time of his or her termination. No SMS stock option may be transferred by
the optionee other than by will or the laws of intestacy.

     Certain members of SMS's management have received restricted stock units in
connection with their employment. These units vest 25% each year during the four
years following the date of grant. If a holder of restricted stock units dies
during his or her employment, all such person's restricted stock units become
fully vested. If an employee is terminated, such employee's unvested restricted
stock units will be forfeited. No restricted stock units may be transferred by
their holder prior to conversion, as described in the following paragraph.

     Pursuant to the terms of our agreement to acquire the 53% of Sodexho, Inc.
we did not already own, vested SMS stock options were cancelled in exchange for
a cash payment equal to the option spread (i.e., the difference between the
exercise price and the tender price offered by us for SMS shares), and unvested
SMS stock options were converted into the right to indirectly purchase our
ordinary shares or our ADSs. The unvested restricted stock units were converted
into the right to indirectly receive, pursuant to their vesting, our ordinary
shares or our ADSs. Any Sodexho Alliance shares or Sodexho Alliance shares
underlying any American Depositary Shares to be delivered to SMS optionholders
will be purchased by Sodexho Alliance on the open market.

     As of November 30, 2003, 2,962 members of management held 7,511,997 options
to purchase Sodexho Alliance shares and 124,203 restricted stock units,
representing 4.9% of the shares of Sodexho Alliance on a fully-diluted basis.




ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.   Major Shareholders

Below is a diagram illustrating our ownership as of November 30, 2003.








There are two shareholders known to management to beneficially own 5% or more
of our shares: Bellon SA, a French company controlled by our chairman, Pierre
Bellon, and members of his family, and the Caisse de Depots et Consignations, a
French bank. As of November 30, 2003, Bellon SA beneficially owned 61,286,881
shares of the company (representing approximately 39% of our outstanding share
capital and 39% of the voting power relating to our outstanding share capital),
and Pierre Bellon and his children beneficially owned approximately 55% of the
outstanding capital stock of Bellon SA. As of the same date, Bernard Bellon and
his children owned 13% of the outstanding capital stock of Bellon SA, and
certain others owned 14% of such stock. As of the same date, Sofinsod, one of
our wholly-owned subsidiaries, held an indirect interest of approximately 5% in
Sodexho Alliance, SA through its interest of approximately 14% in Bellon SA.
Sofinsod also has an indirect interest of approximately 2% in Sodexho Alliance,
SA through its wholly owned subsidiary, Societe Financiere de la Porte Verte,
which in turn owns approximately 4% of Bellon SA. Pursuant to French law, these
shares owned by our subsidiaries are not entitled to any vote. Excluding the
Bellon SA shares owned by our subsidiaries, as of November 30, 2003, Pierre
Bellon and his children owned 67% of the outstanding capital stock of Bellon SA,
Bernard Bellon and his children owned 16% of such stock and certain others owned
17% of such stock.

   To management's knowledge, there have not been any significant changes in
Bellon SA's ownership interest in the company during the past three years, and
there are no agreements granting Bellon SA or any other shareholder different
voting rights from our other shareholders. As disclosed in "Item 10.B.
Additional Information -- Memorandum and Articles of Association Relating to
Shares," a double voting right is granted to all holders of fully-paid
registered shares when those shares have been registered for more than four
years in the name of the same shareholder.

   As of August 31, 2003, our shares were owned by approximately 78,153
shareholders, including approximately 34,600 people acquiring their shares
through our various employee stock ownership plans (together, our employees own
approximately 2% of our outstanding capital stock). French citizens hold
approximately 8% of our shares, while French institutional investors hold
approximately 29% of our shares. To the best of our knowledge and after having
made reasonable inquiries, as of August 31, 2003, foreign shareholders held
approximately 21% of our shares. This figure may not be entirely accurate
because we can obtain only limited information regarding the beneficial owners
of our shares.

  We are not directly or indirectly owned or controlled by another
corporation, other than Bellon SA, or by any government or other natural or
legal person.


B.   Related Party Transactions

     To management's knowledge, since September 1, 2001 no loans have been made
by Sodexho Alliance, Bellon SA or any of their subsidiaries to or for the
benefit of key Sodexho Alliance management personnel or close members of their
families, Bellon SA, any of its affiliates or any other enterprise in which a
substantial interest in the voting power is owned, directly or indirectly, by
any of the foregoing persons or entities.

     In the course of our business, we have occasionally entered into contracts
with certain of our affiliates. The material terms of those material affiliate
contracts which are currently in force or have been in force during some portion
of the last three fiscal years are described below.

     On December 30, 1991, we entered into an agreement with Felix Bellon SA,
the predecessor of Bellon SA, for consulting and advisory services. The contract
renews automatically every year, but it can be terminated on three months'
notice by either party. Amounts invoiced under this contract totaled EUR 2.4
million in fiscal 2003.

     In 2001, we sold our entire holding in Corrections Corporation of America
("CCA"), which resulted in an exceptional loss of EUR 3 million, net of tax
benefits. We sold our CCA shares to Latonia, an entity that is indirectly
controlled by Paul Jeanbart, one of our directors. We sold the CCA shares for
EUR 8,718,339. Pursuant to the terms of the purchase and sale agreement,
Latonia paid us an additional amount totaling EUR 28.6 million upon resale of
some of the shares in May 2003.

     In fiscal 2003, Mr. Douce invoiced Sodexho Alliance EUR 32,260 for
services rendered as a speaker at Sodexho Management Institute.

     In fiscal 2003, Sodexho Alliance acquired the remaining 23.16% of the
shares of Sodexho Pass do Brazil from its minority shareholders, including
Bellon S.A., for EUR 27.6 million.




     A list of Sodexho Alliance, SA's intercompany loans, advances, deposits and
guarantees outstanding as of August 31, 2003 is provided below.

<TABLE>
<S>                   <C>              <C>            <C>           <C>

                                        Amount of
                                        deposits
                       Loans and          and          Largest
                        advances       guarantees        amount
                       given and        given and     outstanding   Total Amount
                      outstanding      outstanding    as of each    outstanding
                         as of            as of       of August 31,    as of
                       August 31,       August 31,     2003, 2002     August31,
                         2003             2003          and 2001        2003

                                         (thousands of euro)

French subsidiaries
 Astilbe                   8,643               0            8,643         8,643
 Societe Marseillaise
  de restauration et
  de services                  0             383              395           383
 SPI                          81          13,690           16,087        13,771
 Holding Sogeres          7, 595               0            7,595         7,595
 Sogeres                       0             947            9,989           947
 STNB                          0             708              708           708
 Other                         4               0            4,151             4

Foreign subsidiaries
 Primary Management
  Aldershot                    0          22,715           22,715        22,715
 Universal Sodexho
  Partnership                 12          16,942           18,827        16,954
 Harmondsworth                 0          25,989           28,664        25,989
 Sodexho Argentina             6             930              936           936
 Universal Sodexho
  Scotland                     0          13,262           13,262        13,262
 Saha                         11             895            2,280           906
 Sodexho Luxembourg            5             273              173           278
 Sakhalin Support
  Services                     0             693              693           693
 Rugby Hospitality 2003        0           2,057            2,057         2,057
 Kelvin Catering Ltd           1           1,586            1,587         1,587
 Universal Services
  Europe Ltd                   0             543              543           543
 Universal Sodexho Norway      0           1,916            1,916         1,916
 Sodexho Maroc                 0             186              186           186
 Sodexho Gabon               332               0              332           332
 PT Universal Ogden
  Indonesia                    0             458              458           458
 Other                       217               6           14,153           223

Foreign affiliates
Serco Sodexho Defense
 Services                      0           5,584            5,616         5,584

                          -------        -------          -------       -------
TOTAL                     16,907         109,763          161,966       126,670
                          =======        =======          =======       =======
</TABLE>



C.   Interests of Experts and Counsel

     Not Applicable.






ITEM 8.  FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information.

   See Item 17.

 Legal Proceedings

   In connection with the expansion of its activities in Lebanon, Sodexho Pass
International SA (SPI), a subsidiary of Sodexho Alliance SA, acquired 40% of the
share capital of Sodexho Pass Lebanon. Prior to the commencement of operating
activities, SPI exerted its right to cancel the agreement due to a
misunderstanding with one of the partners, the manager of Sodexho Pass Lebanon.
The Lebanon partners claimed damages from SPI. On February 20, 2003, the
Arbitration Court ordered Sodexho Pass International to pay U.S. $2 million.
This ruling was final and not subject to appeal. The amount paid was expensed as
an exceptional item during fiscal 2003.

     On March 8, 2001,  ten current and former  employees of Sodexho,  Inc., the
majority of whom had worked for Marriott Management Services,  Inc. (later known
as Sodexho  Marriott  Services,  Inc.,  and now known as Sodexho,  Inc.) filed a
lawsuit  against  Sodexho,  Inc. in the U.S.  District Court for the District of
Columbia,  alleging that they and other African-American salaried employees were
discriminated  against on the basis of their  race.  The  plaintiffs'  complaint
alleges  unspecified  damages  on behalf of a class of over  2,600  current  and
former employees of Sodexho,  Inc.  relating to the period  commencing March 27,
1998 and ending on July 1, 2001,as well as  reimbursement  of plaintiffs'  costs
and attorneys' fees. Sodexho, Inc. has denied the plaintiffs' allegations and is
vigorously defending the lawsuit. On June 25, 2002, the district court certified
the case as a class  action for  purposes  of  determining  liability.  Sodexho,
Inc.'s  requests for permission to appeal this decision have been denied by both
the U.S.  Court of Appeals for the  District of  Columbia  and the U.S.  Supreme
Court.  The parties to this  litigation  are currently  engaged in discovery and
recently,  the trial judge scheduled a trial date for late 2004. A resolution of
plaintiffs'  claims  in their  favor  could  have a  material  effect on our net
income.  In fiscal 2002, a provision of U.S. $10 million (EUR 11 million at the
fiscal 2002 exchange rate and EUR 9 million as of August 31, 2003) was
recorded for defense costs anticipated in connection with this lawsuit.

   We are involved in a number of other legal proceedings incidental to the
normal conduct of our business. We do not believe that liabilities relating to
the these proceedings are likely to be, in the aggregate, material to our
business or our consolidated financial position.


 Dividends

   We have paid dividends in each year since 1976. The payment and amount of
dividends depend on our earnings and financial condition and other factors that
our Board of Directors deem relevant. Dividends are recommended by our Board and
are then voted on by the shareholders at the shareholders' ordinary general
meeting. We have paid dividends in euro since 2000.

     Dividends paid to holders of American Depositary Shares (ADSs) or Sodexho
Alliance shares who are not residents of France will generally be subject to
French withholding tax at a rate of 25%. Holders who qualify for benefits under
an applicable tax treaty and who comply with the procedures for claiming treaty
benefits may be entitled to a reduced rate of withholding tax and, in certain
circumstances, an additional payment (net of withholding tax) representing all
or part of the French avoir fiscal, or tax credit, under conditions provided for
in the relevant treaty and under French law. Investors in our ADSs or shares
should consult their own advisors with respect to the tax consequences of an
investment in ADSs or shares. For further information regarding taxation of
dividends, see "Item 10.E. Additional Information -- Taxation."

     The table below sets forth, for the fiscal years indicated, the amount of
dividends declared per share excluding the French avoir fiscal and the amount of
dividends declared per share including the French avoir fiscal (before deduction
of applicable French withholding tax). Dividends declared for a given fiscal
year are paid in the following fiscal year.

<TABLE>
<S>             <C>               <C>               <C>            <C>

                                                     Shares
                  Dividend per     Dividend per    outstanding       Total
                share excluding   share including  at the date      dividend
Year(1)(2)        avoir fiscal     avoir fiscal    of  payment        paid
                (eur)      $     (eur)      $                        (eur)
                                                                   (in millions)
2000........... 0.56     0.50     0.84    0.75      134,350,116          75.2
2001........... 0.56     0.51     0.84    0.77      158,945,502          89.0
2002........... 0.61     0.60     0.915   0.90      159,021,416          97.0
2003........... 0.61     0.67     0.915   1.00      159,021,565          97.0
</TABLE>


(1)  Pursuant to French law, payment of dividends must be made within nine
     months following the end of the fiscal year to which they relate.
(2)  The amounts listed in this table have been adjusted retroactively, where
     appropriate, to reflect the four-for-one stock split effective March 7,
     2001.





B. Significant Changes

   Not applicable.


ITEM 9. THE OFFER AND LISTING

A. Listing Details

   The principal trading market for our common shares, which have a par value
of EUR 4 each, is Euronext Paris (formerly the Paris Bourse), where they
have been listed since 1983. Since 1998, our shares have been included in the
CAC 40 benchmark index of Euronext Paris. The table below sets forth, for the
periods indicated, the reported high and low prices and average daily trading
volume (in shares) for our outstanding shares on Euronext Paris and its
predecessor, the Paris Bourse (all amounts have been restated to reflect stock
splits). In accordance with the relevant European Union regulations, as of
January 1, 1999 all shares listed on Euronext Paris are traded in euro so, for
ease of reference, the table below indicates the euro prices converted at the 2
p.m. European Central Bank euro-franc exchange rate at the end of fiscal 1997
and 1998.

   Our Articles of Association (statuts) provide that fully-paid common shares
may be held in either registered or bearer form at the option of the
shareholders.

   Prior to the listing of our shares on the New York Stock Exchange,
effective April 3, 2002, there was no public trading market in the United States
for our shares or the ADSs. ADS trading volumes from September 1, 2002 through
November 30, 2003 were less than 2,000 shares per day.


<TABLE>
<S>                                <C>            <C>          <C>
                                                               Average daily
                                                               trading volume
         Fiscal Year               High            Low          (in shares)
                                  EUR           EUR

1999.........................     48.96           32.51           274,315
2000.........................     47.74           31.38           317,693
2001.........................     60.10           41.13           397,875
2002.........................     55.75           25.10           574,261
2003.........................     30.83           17.95           683,519


                                                               Average daily
                                                               trading volume
         Fiscal Year               High            Low          (in shares)
                                  (euro)         (euro)
2002
   First Quarter.............     55.75           41.65           647,348
   Second Quarter............     48.42           42.65           439,090
   Third Quarter.............     48.62           36.63           616,982
   Fourth Quarter............     38.40           25.10           593,625

2003                             (euro)          (euro)
   First Quarter.............     30.83           18.11           744,885
   Second Quarter............     26.85           20.20           579,734
   Third Quarter.............     22.56           17.95           761,906
   Fourth Quarter............     27.36           20.88           646,377
   June......................     24.49           20.88           780,738
   July......................     25.70           23.06           667,345
   August....................     27.36           24.46           489,051
   September.................     28.15           23.00           701,225
   October...................     24.50           21.68           759,908
   November .................     24.75           22.26           910,273
</TABLE>




B. Plan of Distribution

   Not Applicable.

C. Markets

   See Item 9.A.

D. Selling Shareholders

   Not Applicable.

E. Dilution

   Not Applicable.

F. Expenses of the Issue

   Not Applicable.


ITEM 10.ADDITIONAL INFORMATION

A. Share Capital

   We have only one class of share capital, consisting of common shares with a
nominal value of EUR 4 per share. All of our outstanding shares are
fully-paid. Our Articles of Association (statuts) provide that fully-paid shares
may be held in registered or bearer form at the option of the shareholder. The
most recent survey on August 31, 2003 found 42,440 identified holders of bearer
shares and 1,114 holders of registered shares.

   In accordance with French law concerning dematerialization of securities,
the ownership rights of shareholders are represented not by share certificates
but rather by book entries. We maintain a share account with Societe Generale
for all shares in registered form, which is administered by Societe Generale. In
addition, we maintain separate accounts in the name of each shareholder either
directly or, at a shareholder's request, through the shareholder's accredited
intermediary. Each shareholder account shows the name of the holder, the number
of shares held and, in the case of shares held through an accredited
intermediary, the fact that the shares are held through such intermediary.
Societe Generale, as a matter of course, issues confirmation to each registered
shareholder as to shares registered in the shareholder's account, but these
confirmations are not documents of title.

   Shares held in bearer form are held on the shareholder's behalf in an
account maintained by an accredited intermediary and are registered in an
account which the accredited intermediary maintains with Societe Generale. That
account is separate from our share account with Societe Generale. Each
accredited intermediary maintains a record of shares held through it and will
issue certificates of registration for the shares it holds. Shares held in
bearer form may only be transferred through accredited intermediaries and
Societe Generale. Our statuts permit us to request that Societe Generale provide
us at any time with the identity of the holders of our shares or other
securities granting immediate or future voting rights held in bearer form and
with the number of shares or other securities so held.

   Our statuts do not contain any restrictions relating to the transfer of
shares. Under French law, registered shares must be converted into bearer form
before being traded on Euronext Paris and, accordingly, must be registered in an
account maintained by an accredited intermediary. A shareholder may initiate a
transfer by giving instructions to the relevant accredited intermediary. A fee
or commission is payable to the broker involved in the transaction, regardless
of whether the transaction occurs within or outside of France. No registration
tariff is normally payable in France unless a transfer instrument has been
executed in France.

   As of August 31 and November 30, 2003, our share capital, as authorized in
our statuts, was EUR 636,086,260, represented by 159,021,565 shares. Our Board
updates our statuts regularly to take into account increases in share capital
due to the issuance of shares in connection with employee stock ownership plans,
the exercise of stock options, warrants and subscription rights and any
conversion of convertible bonds. Between August 31, 2003 and November 30, 2003,
we issued no shares for these purposes.

   As of August 31, 2003 and November 30, 2003, we directly owned 2,528,062
shares, roughly 1.6% of total share capital, with face value EUR 4 per share
and book value of EUR 4 per share. Sofinsod, one of our wholly-owned
subsidiaries, holds an indirect interest of approximately 5% in Sodexho
Alliance, SA through its interest of approximately 14% in the capital of Bellon
SA. Sofinsod has an indirect interest of approximately 2% in Sodexho Alliance,
SA, through its wholly owned subsidiary, La Societe Financiere de la Porte
Verte, which in turn owns approximately 4% of Bellon SA.

 Equity-Linked Securities

   On June 12, 2003, the Board of Directors issued 84,660 options.

   On January 27, 2003, the Board of Directors issued 2,917,800 options. On
September 17, 2002, the Board of Directors issued 12,000 options. On October 10,
2002, the Board of Directors issued 3,220 options.

   At the Extraordinary Shareholders' Meeting of February 13, 1996, our
shareholders authorized the Board to issue bonds with equity warrants in an
aggregate face amount not to exceed EUR 304,898,000. On May 21, 1996, the
Board approved the issue of EUR 304,898,000 in debt pursuant to this
authorization at a face value of EUR 762 per bond. Each of the 400,000 issued
bonds carried a warrant giving the right to subscribe one share of our common
stock, without preemptive subscription rights, at a price of EUR 411.61 until
June 7, 2004. Following our increase in share capital which took effect in
December 1997, each warrant entitled the holder to subscribe for 1.02 shares of
common stock for EUR 411.61. After the April 1998 bonus share issue, each
warrant entitled the holder to subscribe for 4.08 shares per warrant. Following
our four-for-one stock split effective March 7, 2001 and the capital increase in
June 2001, each warrant currently entitles the holder to 16.66 shares per
warrant. The exercise price remains unchanged at EUR 411.61. As of November 30,
2003, 374,773 warrants were still outstanding.





 Changes in Share Capital

   The table below indicates the changes in our share capital in the fiscal
years ending August 31, 2000, 2001, 2002 and 2003 and in the period commencing
August 31, 2003 and ending November 30, 2003, retroactively adjusted, where
appropriate, to reflect our four-for-one stock split effective March 7, 2001.


<TABLE>
<S>               <C>               <C>                         <C>

                     Shares
                  outstanding
                   before new         Type of transaction        Shares created
                     issue
      Date

December 9, 1999     33,495,697     Exercise of warrants (4)
                                     and stock options(71,468)           71,484
August 31, 2000      33,567,181     Exercise of stock options (1)        20,348
October 13, 2000     33,587,529     Exercise of stock options (1)         1,552
December 5, 2000     33,589,081     Exercise of stock options (1)        18,020
December 11, 2000    33,607,109     Exercise of warrants
                                     and stock options (1)               36,524
December 15, 2000    33,643,625     Exercise of stock options (1)        36,108
January 22, 2001     33,679,733     Exercise of warrants (1)                 82
March 7, 2001        33,679,815     Four-for-one stock split                -
April 9, 2001       134,719,260     Exercise of warrants (1)                 16
April 10, 2001      134,719,276     Exercise of warrants (1)            261,838
May 3, 2001         134,981,114     Exercise of stock options (1)         6,256
May 14, 2001        134,987,370     Exercise of warrants (1)                278
May 15, 2001        134,987,648     International Employee
                                     Stock Ownership Plan(3)              4,728
July 4, 2001        134,992,376     Share issue(4)                   22,498,729
August 24, 2001     157,491,105     Exercise of stock options (1)        23,034
August 27, 2001     157,514,139     Exercise of warrants (1)                 50
August 31, 2001     157,514,189     Exercise of warrants (1)             45,465
October 18, 2001    157,559,654     International Employee
                                     Stock Ownership Plan (3)         1,385,848
December 10, 2001   158,945,502     Exercise of stock options (1)         4,173
December 18, 2001   159,949,675     Exercise of warrants (1)              2,499
January 11, 2002    158,952,174     Exercise of stock options (1)         8,180
January 31, 2002    158,960,354     Exercise of warrants (1)                 16
February 25, 2002   158,960,370     Exercise of stock options (1)         5,726
February 28, 2002   158,966,096     Exercise of warrants (1)             51,230
April 17, 2002      159,017,326     Exercise of stock options (1)         4,090
October 1, 2002     159,021,416     Exercise of warrants (1)                149
</TABLE>

(1)Please see our disclosure in this Annual Report on Form 20-F regarding our
   options and warrants.
(2) The cash increase in issued capital was made in
   order to obtain a EUR 16 per share par value for the outstanding shares
   due to rounding.
(3)Please see our description of the Sodexho Alliance International Employee
   Stock Ownership Plan described in "Item 6.E. Directors, Senior Management
   and Employees--Share Ownership" for the terms of this plan. These shares
   were issued to employees at a discount of 15% to 20%, depending upon the
   jurisdiction in which the shares were issued to our employees, from the
   fair market value of the shares at the time of issuance.
(4)We raised EUR 1.0 billion by issuing 22,498,729 new shares to our existing
   shareholders for cash. Pursuant to the terms of the offering, each  of our
   shareholders was entitled to purchase one share for every six shares held by
   such shareholder at the time of the offering, at a price of EUR 45 per
   share.




 Authorizations

   At the Extraordinary Shareholders' Meeting of February 4, 2003, our
shareholders authorized the Board to increase our issued capital on one or more
occasions, at any time over the 26 month period from such date, by issuing
common shares, warrants and share equivalents with or without preemptive
subscription rights. The shareholders authorized these issuances to be funded in
cash or by capitalizing reserves. The issuances of capital are subject to the
following restrictions: share issues funded with cash may not exceed an
aggregate par value of EUR 175,000,000 at any one time; issues of debt
securities may not have the effect of increasing our indebtedness by more than
EUR 1,200,000,000; and the aggregate par value of share issues funded by
capitalizing reserves may not exceed the amount of treasury reserves. Our
shareholders also authorized the Board of Directors to repurchase shares of our
stock for a period of 18 months following the meeting. The terms of this
repurchase program have been approved by the French Commission des Operations de
Bourse. Pursuant to this authorization, we purchased 969,740 shares on the open
market in fiscal 2003. The maximum purchase price authorized for each share was
EUR 50.00, and the maximum number of shares to be repurchased is an amount
equal to 10% of the issued shares or the limits specified by law.




B. Memorandum and Articles of Association

   The following summary contains a description of the material provisions of
our Articles of Association (statuts), which does not purport to be complete and
is qualified in its entirety by reference to our statuts, an English translation
of which is attached hereto as an exhibit, and French company law.

 Registration and Corporate Purpose

   Sodexho is a societe anonyme a Conseil d'Administration, a form of limited
liability company established under French law. Our bylaws were registered in
Versailles, France on December 31, 1974 under the number 301,940,219, Code APE
741 J.

 Our objects and purposes are set out in Article 2 of our statuts. These include

o  studying and providing all services in connection with the organization of
   catering;

o  operating restaurants, bars, hotels and any business related to catering, the
   hotel industry, hotel services, tourism, leisure;

o  providing, in whole or in part, the services required for the operation,
   maintenance and management of office, commercial, industrial, leisure, health
   and educational establishments and buildings, and providing services
   connected with the operation and maintenance, in whole or in part, of
   facilities associated with the foregoing;

o  providing installation, maintenance, repair and replacement services related
   to any type of facility;

o  providing consultancy services and studying the economic, financial and
   technical aspects of all projects and services connected with the operation
   or organization of the above-mentioned businesses and, specifically, all
   transactions involving advice relating to the operation or organization of
   the above-mentioned businesses;

o  creating, purchasing and holding companies, irrespective of their corporate
   purpose; and

o  engaging in any business transactions directly or indirectly related to the
   foregoing or to any similar or related objects.



 Directors

   We are managed by a Board of Directors. The Board of Directors is invested
with all permissible powers relating to third parties within the scope of our
objects, subject to limitations prescribed by our shareholders and French law.
Under French law, the Board of Directors prepares and presents the year-end
accounts to the shareholders and convenes shareholders' meetings. In addition,
the Board of Directors reviews and monitors our economic, financial and
technical strategies.


   The Board of Directors is composed of a minimum of three members and a
maximum of 18 members appointed at the ordinary general meeting of the
shareholders. The Board of Directors is authorized to act in all circumstances
in the name of Sodexho Alliance, subject to our corporate purpose and to those
powers granted by law or at shareholder meetings. Under French law, Directors
are liable for violations of French legal or regulatory requirements applicable
to societes anonymes, violation of our statuts or mismanagement. A Director may
be held liable for such actions both individually and jointly with the other
directors. The Executive Committee, which is appointed by the Board of
Directors, determines our general strategy and guides our international
development.

   The Directors' term of office was six years until February 5, 2002. This
term was changed to three years at the Extraordinary Shareholders' meeting of
February 5, 2002. Any Director may stand for reelection. A Director appointed to
replace another Director whose term of office has expired can only remain in
office for the remaining period of the term of office of his or her predecessor.
Except in the event of termination of employment if the Director is a salaried
employee, or in the event of resignation, removal or death, the term of office
of a Director expires at the end of the ordinary general meeting held during the
year in which the Director's term of office expires. Our statuts allow for the
election of directors at staggered times. At the Annual Meeting of Shareholders
in February 2004, it is expected that six of our directors' terms will be
renewed.

   The Board of Directors elects a Chairman from among its members and may
elect one or more Vice Chairmen. The Chairman must retire no later than the end
of the ordinary general meeting of shareholders held in the year in which he or
she reaches 85 years of age. The shareholders may, during the following ordinary
general meeting, extend this age limit.





   Meetings of the Board of Directors, which are held as often as necessary,
are normally convened and presided over by the Chairman or Vice Chairman. A
quorum consists of one-half of the members of the Board of Directors, and
decisions are taken by a vote of the majority of the members present or
represented by other members of the Board of Directors. A Director may give a
proxy to another Director but a Director cannot represent more than one other
member at any particular meeting. Members of the Board of Directors represented
by another member at meetings do not count for purposes of determining the
existence of a quorum.


 Transactions between Us and Our Directors

   Any agreement between us and any one of the members of the Board of
Directors that is not in the ordinary course of our business is subject to the
prior authorization of the disinterested members of Board of Directors. The same
applies to agreements between us and another company if one of the members of
the Board of Directors is the owner, general partner, manager, director, general
manager or member of the executive or supervisory board of the other company.


 Directors' Compensation

   The aggregate compensation of the Board of Directors is determined at the
ordinary general meeting of the shareholders. The Board of Directors then
divides up this compensation among its members. It may allocate exceptional
compensation to some of its members for assignments undertaken by them. In
addition, compensation may be granted to directors on a case-by-case basis for
special assignments. The Board may also authorize the reimbursement of travel
and accommodation expenses as well as other expenses incurred by Directors in
the corporate interest.


 Directors' Borrowing Powers

   All loans or borrowings may be decided by the Board of Directors within the
limits duly authorized by the ordinary general meeting of the shareholders.


 Directors' Age Limits

   The number of Directors having reached age 70 may not at any time exceed
one-third of the total number of Directors in office. Any such Directors may
remain in office only until the end of the next ordinary general meeting of
shareholders. In the event that the number of Directors reaching the age of 70
during one year exceeds one-third of the total number of Directors in office,
the order of retirement is decided by drawing lots during a meeting of the Board
of Directors.


 Directors' Share-Ownership Requirements

   Each member of the Board of Directors must own at least four hundred of our
shares.


Rights, Preferences and Restrictions Relating to Shares

   We currently have one class of shares, consisting of common shares with a
nominal value of EUR 4 per share. Our statuts provide that fully-paid shares
may be held in registered or bearer form. Shares not fully-paid may be held in
registered form only. The rights, preferences and restrictions attaching to the
shares are set forth below.


Dividend Rights

     We may distribute dividends to our shareholders from net income in each
fiscal year (after deductions for depreciation and provisions), as increased or
reduced by any profit or loss carried forward from prior years and as reduced by
the legal reserve fund described below, after payment of the initial dividend
described below. These distributions are subject to applicable provisions of
French law.

     Under French law, we are required to contribute a minimum of 5% of our
annual net income in each fiscal year, after a reduction for any losses carried
forward from previous years, to a legal reserve fund. The obligation to make
this minimum contribution ceases if and so long as we maintain a legal reserve
equal to 10% of the aggregate nominal value of our issued share capital. The
legal reserve is distributable only upon our liquidation. The remaining net
income, increased by any profits carried forward, constitutes the distributable
profits.



   On the recommendation of the Board of Directors, shareholders may decide to
carry forward all or part of any distributable profits remaining after payment
of the initial dividend to the next fiscal year as retained earnings or to
allocate them to (i) the creation of reserves; (ii) contingency funds for the
purpose of total or partial redemption of our shares; or (iii) the shareholders
as additional dividends. The Board of Directors may propose a dividend for
approval by the shareholders at the ordinary general meeting.


 Right of Inspection

   Any shareholder has a right of access to all of our corporate documents
(e.g., shareholder lists, corporate minutes, financial records) required to
assess the management of the Company.

   We must distribute dividends to our shareholders pro rata according to
their shareholdings. Dividends are payable to holders of shares outstanding on
the date of the shareholders' meeting approving the distribution of dividends,
or, in case of interim dividend, on the date the Board of Directors meets and
approves the distribution of interim dividends. The actual dividend payment date
is decided by the shareholders at an ordinary general meeting or by the Board of
Directors, if no decision is taken by the shareholders. We must pay any
dividends within nine months of the end of the fiscal year unless otherwise
authorized by court order. Under French law, dividends not claimed within five
years of the date of payment are forfeited.

   If proposed by the Board of Directors and decided at the ordinary general
meeting, each shareholder may be granted at the ordinary general meeting a
choice between payment of the dividend in cash or in shares, for all or for part
of the dividend, according to the procedures set out under French law.

 Voting Rights

   Subject to the limitations on voting rights described below under
"-Shareholders' Meetings" and "-Disclosure of Shareholdings," each shareholder
is entitled to one vote per share at any general meeting of our shareholders. A
double voting right is granted to holders of fully-paid registered shares when
those shares have been registered for more than four years in the name of the
same shareholder. Any share whose ownership is transferred (certain intra-family
transactions excepted) or which is converted into a bearer share loses the right
to the double vote. Double voting rights also attach to any shares issued by
right to shareholders in proportion to the number of shares with double voting
rights which such shareholders held prior to the issuance. Votes can be cast by
proxy or by mail. Proxies can only be exercised by the shareholder's spouse or
by another shareholder. Our statuts do not grant our shareholders the right to
cumulate their votes when electing directors and French law does not
automatically grant this right to shareholders.


 Rights in the Event of Liquidation

   In the event that we are liquidated, our assets remaining after payment of
our debts, liquidation expenses and all of our remaining obligations will be
distributed to repay the nominal value of our shares in full. Any surplus will
then be distributed pro rata among our shareholders.


 Preferential Right of Subscription

   Under French law, shareholders have preemptive rights to subscribe for cash
issuances of new shares or other securities giving rights, directly or
indirectly, to acquire additional shares on a pro rata basis. A two-thirds
majority of the shares entitled to vote at an extraordinary general meeting may
vote to waive preemptive subscription rights with respect to any particular
offering. French law requires that the Board of Directors and our independent
auditors present reports that specifically address any proposal to waive
preemptive subscription rights. In the event of a waiver, the issue of
securities must be completed within the period prescribed by law. The
shareholders may also decide at an extraordinary general meeting to give the
existing shareholders a non-transferable preferential right to subscribe to the
new securities, for a limited period of time. A two-thirds majority of the
shares entitled to vote at an extraordinary general meeting may also grant to
existing shareholders a non-transferable form of preemptive right to subscribe
to any new securities that may affect our share capital. Shareholders may also
notify us that they wish to waive their own preemptive subscription rights with
respect to any particular offering if they so choose.


   Preemptive subscription rights, if not previously waived, are transferable
during the subscription period relating to a particular offering of shares and
may be listed on Euronext Paris.



 Redemption of Shares

   Under French law, our Board of Directors is entitled to redeem a set number
of shares as authorized by our shareholders at an extraordinary shareholders'
meeting, provided that the capital reduction has not been undertaken in an
attempt to mask the effect of losses. In the case of such an authorization, the
shares redeemed must be cancelled within one month after the end of the offer to
purchase such shares from shareholders. One notable exception to this rule,
however, is that shares redeemed on the open market need not be cancelled if the
company redeeming the shares grants options on or awards those shares to its
employees within one year of the redemption.


 Liability to Further Capital Calls

   Shareholders are liable for corporate liabilities only up to the nominal
amount of the shares they hold.

 Changes to Shareholders' Rights

   A two-thirds majority vote at the extraordinary shareholders' meeting is
required to change our statuts, which set out the rights attaching to our
shares. The extraordinary shareholders' meeting may not increase shareholders'
obligations, except in the event that different classes of shares are merged.
However, in such case, any decision involving a change in the rights attaching
to a class of shares shall be final only following its ratification by a
two-thirds majority of a special meeting of the shareholders of the class
concerned.

 Shareholders' Meetings

   In accordance with French law, there are two types of shareholders' general
meetings: ordinary and extraordinary. Ordinary general meetings are required for
matters such as the election of directors, the appointment of statutory
auditors, the approval of annual accounts, the declaration of dividends and the
issuance of debt. Extraordinary general meetings are required for the approval
of matters such as amendments to our statuts, approval of mergers, increases or
decreases in share capital, the creation of a new class of equity securities and
the authorization of the issuance of investment certificates or securities
convertible or exchangeable into equity securities.


 Convocation of Meetings

   The Board of Directors is required to convene an annual ordinary general
meeting of shareholders, which must be held within six months of the end of our
fiscal year, to approve the annual financial statements for the fiscal year.
Other ordinary or extraordinary general meetings may be convened at any time
during the year. Meetings of shareholders may be convened by the Board of
Directors or, if the Board of Directors fails to call such a meeting, by our
statutory auditors or by a court-appointed agent. The court may be requested to
appoint an agent by (i) one or several shareholders holding at least 10% of our
share capital; (ii) any interested party in emergency cases; or (iii) certain
duly qualified associations of shareholders. The notice calling a meeting must
state the matters to be considered at the meeting.

     At least 30 days prior to the date set for any general meeting of
shareholders, a preliminary notice must be sent to the Commission des Operations
de Bourse (the "COB"), the administrative agency responsible for overseeing the
French securities markets, and published in France in the Bulletin des Annonces
Legales Obligatoires (bulletin of obligatory legal announcements) (the "BALO").
This preliminary notice must contain the agenda of the meeting and a draft of
the resolutions to be considered. Within 10 days of the notice, one or several
shareholders holding a specified percentage of shares (determined on the basis
of a formula relating to capitalization) or a duly qualified association of
shareholders holding a specified percentage of voting rights may propose
additional resolutions to be voted on at the meeting. At least 15 days prior to
the date set for a general meeting on its first call, and at least six days
before any meeting's second call, notice must be sent by mail to all holders of
registered shares who have held such shares for more than one month prior to the
notice. Notice of the meeting shall also be given in a journal authorized to
publish legal announcements in the administrative region (departement) in which
we are registered, as well as in the BALO, with prior notice to the COB. The
notice must state the type, agenda, place, date and time of the meeting. No
action may be taken at a meeting on any matter not listed on the agenda for that
meeting, subject to exceptions relating to the dismissal of directors under
certain circumstances and to certain miscellaneous matters.


 Attendance of and Voting at Meetings

   Attendance and the exercise of voting rights at general meetings of
shareholders are subject to certain conditions. A holder of registered shares
must have his shares registered in his own name in a shareholder account
maintained by us or on our behalf at least five days prior to the meeting. A
holder of shares in bearer form must obtain from the financial intermediary with
whom the shares have been deposited a certificate indicating the number of
bearer shares owned and attesting to the fact that the shares are not
transferable until the time fixed for the meeting.

   All shareholders who have properly registered their shares have the right
to participate in general meetings, either in person or by proxy, and to vote
either by proxy or by mail according to the number of shares they hold. Proxies
will be sent to any shareholder on request, but they can only appoint the
shareholder's spouse or another shareholder as proxy. Any vote made by mail
shall be deemed valid if received by us at least three days prior to the date of
the meeting, but the attendance of the shareholder automatically cancels any
proxy previously executed by that shareholder or any previous vote made by mail.

   Under French law, shares of a company held by entities controlled directly
or indirectly by that company are not entitled to voting rights, are not counted
for quorum or majority purposes, and do not receive dividends.

   Under French law, the presence in person or by proxy of shareholders
holding an aggregate of not less than 25% (in the case of an ordinary general
meeting or an extraordinary general meeting deciding upon any capital increase
affecting reserves, such as a stock dividend) or 33 (0)f1/4% (in the case of any
other extraordinary general meeting) of voting shares is necessary for a quorum.
If a quorum is not reached at any meeting, that meeting is adjourned. There is
no quorum requirement upon recommencement of an adjourned ordinary general
meeting. Upon the reconvening of an extraordinary general meeting, the presence
in person or by proxy of shareholders having not less than 25% of the eligible
voting rights is necessary for a quorum, except when an increase in our share
capital is proposed through the incorporation of reserves, profits or a share
premium, in which case the quorum requirements are those applicable to ordinary
general meetings.

   At an ordinary general meeting or at an extraordinary general meeting
deciding upon any capital increase by incorporation of reserves, a simple
majority of the votes cast is required to pass a resolution. At any other
extraordinary general meeting, a two-thirds majority of the votes cast is
required to pass a resolution. However, a unanimous vote is required to increase
the liabilities of shareholders. Abstention from voting by those present or
represented by proxy is deemed to be a vote against the resolution submitted to
a vote.


 Limitation on Security Ownership

   There is no limitation, under French law or in our statuts on the right of
non-French residents or non-French security holders to own or, where applicable,
to vote our securities.

 Change in Control/Anti-Takeover

   There are no provisions in the statuts that would have the effect of
delaying, deferring or preventing a change in our control and that would operate
only with respect to a merger, acquisition or corporate restructuring involving
us or any of our subsidiaries. There also are not any provisions in our statuts
that allow for the issuance of preferred stock upon the occurrence of takeover
attempts or the addition of other "anti-takeover" measures without a shareholder
vote.

 Disclosure of Shareholdings

   French law provides that any individual or entity, acting alone or in
concert with others, that acquires, directly or indirectly, more than 5%, 10%,
20%, 33%, 50% or 66% of our shares or voting rights attached to our shares, or
whose holdings fall below any of these thresholds, must notify us of the number
of shares or voting rights that person or entity holds within 15 calendar days
of the date the threshold has been crossed. The individual or entity must also
notify the Conseil des Marches Financiers (financial markets council) (the
"CMF") within five Euronext Paris trading days of the date on which the
threshold is crossed. If the shareholder fails to comply with this notification
requirement, the shares or voting rights in excess of the relevant threshold
will be deprived of voting rights or the voting rights will not be exercisable,
as the case may be, for two years from the date on which the owner of the shares
or voting rights complies with the notification requirement. In addition, any
shareholder who fails to comply with the above requirements may have all or part
of his voting rights suspended for up to five years by the Commercial Court at
the request of our Chairman, any shareholder or the COB, and may be subject to
other penalties.



   In addition to the requirements set out in French law, our statuts provide
that every person or corporate body who acquires or ceases to hold, directly or
indirectly, 2.5% or more of our shares must notify us within a period of 15 days
from the date when the threshold is exceeded. If the shareholder fails to comply
with the notification requirement, any shareholder holding at least 5% of the
authorized capital can cause the shares in excess of this threshold to be
deprived of voting rights for two years following the date of the notification.

   In order to permit shareholders to give the notice required by law or by
our statuts, we are obligated to publish information disclosing the total number
of votes eligible to be cast at our annual ordinary general meeting in the BALO
within 15 calendar days of the general meeting. In addition, if the number of
eligible votes changes by at least 5% between two ordinary general meetings, we
are required to publish the number of votes then available in the BALO within 15
calendar days of the change and to provide the CMF with a written notice. In
order to facilitate compliance with the notification requirements, a holder of
ADSs may notify the Depositary, and the Depositary shall immediately forward the
notification to us and the CMF.

   Under the regulations of the CMF, and subject to limited exemptions, anyone
acquiring 33 1/3% or more of the share capital or voting rights of a French
listed company must initiate a public tender offer for the balance of our share
capital (including, for these purposes, all securities convertible into or
exchangeable for equity securities).


 Changes in Capital

   As of November 30, 2003 our share capital was EUR 636,086,280, divided
into 159,021,565 shares at a par value of EUR 4 each, all fully-paid and of
the same class. Pursuant to authorizations granted by the shareholders at
previous meetings, see "Authorizations," we are entitled to increase this share
capital under certain circumstances.

   Pursuant to French law, our share capital may be increased only with the
approval of the shareholders at an extraordinary general meeting upon the
recommendation of the Board of Directors. Our share capital may be increased by
the issuance of additional shares, by the issuance of a new class of equity
securities or by an increase in the nominal value of the shares. The
shareholders may delegate to the Board of Directors the powers required to
effect in one or more stages (subject to the limitations provided by French law)
any increase in share capital previously authorized by the shareholders. A
reduction in our share capital can be accomplished either by decreasing the
nominal value of the shares or by reducing the number of outstanding shares. The
number of outstanding shares may be reduced either by an exchange of shares or
by our repurchase and cancellation of shares.

C. Material Contracts

   We are not currently party to any contract, nor have we been party to any
contract within the last two years, which we believe to be individually material
to our business or operations.


D. Exchange Controls

   The French commercial code currently does not limit the right of nonresidents
of France or non-French persons to own and vote shares. However, nonresidents of
France must file an administrative notice with French authorities in connection
with the acquisition of a controlling interest in our company. Under existing
administrative rulings, ownership of 20% or more of our share capital or voting
rights is regarded as a controlling interest, but a lower percentage might be
held to be a controlling interest in some circumstances depending on factors
such as the acquiring party's intentions and the acquiring party's ability to
elect directors, and financial reliance on us by the relying party.

   Under current French exchange control regulations, there are no limitations
on the import or export of capital or on the amount of payments that may be
remitted by us to non-residents. Laws and regulations concerning foreign
exchange control do require, however, that all payments or transfers of funds
(including payments of dividends to foreign shareholders) made by a French
resident to a non-resident be handled by an accredited intermediary. In France,
all registered banks and substantially all credit establishments are accredited
intermediaries.



E. Taxation

 French Taxation

   The following is a general summary of the material French tax consequences
of purchasing, owning and disposing of shares or ADSs. The statements relating
to French tax laws set out below are based on the laws in force as of the date
hereof, and are subject to any changes in applicable French tax laws or in any
applicable double taxation conventions or treaties with France occurring after
such date.

   This discussion is intended only as a descriptive summary and does not
purport to be a complete analysis or list of all potential tax effects of the
purchase or ownership of the shares and of the ADSs or a comprehensive
description of all of the tax considerations that may be important for your
decision to purchase shares or ADSs.

   There is currently no direct simplified procedure available for holders of
ADSs who are not United States residents to claim or receive from the French tax
authorities any tax treaty benefits in respect of dividends that the holder may
be entitled to receive pursuant to a treaty between France and the holder's
country of residence.

   The following summary does not discuss the treatment of shares or ADSs that
are held in connection with a permanent establishment or fixed base through
which a holder carries on business or performs personal services in France.

   As a general matter, we encourage you to consult your own tax advisors as
to the tax consequences of the purchase, ownership and disposition of shares or
ADSs arising from your particular circumstances and the specific laws applicable
to you, including the availability and terms of any applicable tax treaty.


 Taxation on Sale or Disposal of Shares or ADSs

   On the basis of the provisions of any relevant double tax treaty, persons
who are not French residents for the purpose of French taxation (as well as,
under certain conditions, foreign states, international organizations and
certain foreign public bodies) and who have held not more than 25%, directly or
indirectly, of our dividend rights (benefices sociaux) at any time during the
preceding five years, are not subject to any French income tax or capital gains
tax on any sale or disposal of shares.

   If a share transfer is evidenced by a written agreement, such share transfer
agreement is, in principle, subject to registration formalities and therefore to
a 1% registration duty assessed on the higher of the purchase price and the
market value of the shares (subject to a maximum assessment of EUR 3,049 per
transfer) provided that no duty is due if such written share transfer agreement
is executed outside France.

   An owner of shares resident outside France may trade shares on the Euronext
Paris. Should such owner, or the broker or other agent through whom a sale is
effected, require assistance in this connection, an accredited intermediary
should be contacted. For dealings on Euronext Paris, a tax assessed on the price
at which the securities were traded (impot sur les operations de bourse) is
payable at a rate of 0.3% on transactions up to EUR 153,000 and at a rate of
0.15% thereafter, subject to a rebate of EUR 23 per transaction and a maximum
assessment of EUR 610 per transaction. Transactions made by non-residents of
France are not subject to the payment of such tax. In addition, while not
strictly a tax, a fee or commission is payable to the financial intermediary
whether within or outside France.


 Taxation of Dividends

   In France, dividends are paid out of after-tax income. French residents are
entitled to a tax credit, known as the avoir fiscal, equal to 50% of the
dividend paid for individuals and for specific entities (foundations of public
utility), or 10% of the dividend paid for other legal entities. Pursuant to
regulations finalized on December 30, 2002 and applicable as from 1st January
2003, the 10%-rate avoir fiscal is increased to an amount equal to 80% of the
precompte where the precompte is paid by the distributing company. Under French
domestic law, dividends paid to nonresidents are normally subject to a 25%
withholding tax and nonresidents are generally not eligible for the benefit of
the avoir fiscal.




   However, the following countries and territories (including Overseas
Territories) have entered into income tax treaties with France whereby tax
residents of such countries and territories may, as provided in the relevant
treaty, obtain from the French tax authorities a reduction (generally to 15%)of
all or part of such withholding tax and a refund of the avoir fiscal (net of
applicable withholding tax).



Australia          Ghana           Malta              Spain
Austria            Iceland         Mauritius          Sweden
Belgium            India           Mexico             Switzerland
Bolivia            Israel          Namibia            Togo
Brazil             Italy           Netherlands        Turkey
Burkina Faso       Ivory Coast     New Zealand        Ukraine
Cameroon           Japan           Niger              United Kingdom
Canada             Latvia          Norway             United States of America
Estonia            Lithuania       Pakistan           Venezuela
Finland            Luxembourg      Senegal
Gabon              Malaysia        Singapore
Germany            Mali            South Korea


Overseas Territories and Other

  New Caledonia
  Saint-Pierre et Miquelon
  Mayotte


   Treaties with some of the countries and territories listed above contain
specific limitations applicable to corporate entities entitled to benefit from
the avoir fiscal, or limit the rights to the avoir fiscal strictly to individual
residents (as opposed to corporate entities). The "Taxation of Dividends"
section below describes the provisions of the income tax treaty between the
United States and France.

   Except for the United States, none of the countries or territories listed
above has a treaty granting benefits to holders of ADSs, as opposed to shares.
Accordingly, this discussion of treaty benefits does not apply to ADS holders.

   Dividends paid to nonresidents of France benefiting from the avoir fiscal
in accordance with a tax treaty will be subject, on the date of payment, to the
withholding tax at the reduced rate provided for by such treaty (with the
exception of certain shareholders resident in Germany and subject to filing
formalities as provided for by an instruction dated May 13, 1994 and released on
June 7, 1994) rather than to the French withholding tax at the rate of 25% to be
later reduced to the treaty rate, provided that they establish, before the date
of payment of the dividend, their entitlement to such reduced rate.

     If shares are sold in a trade executed on the monthly settlement market
during the month of a dividend payment date, the seller rather than the
purchaser will be entitled to the avoir fiscal with respect to dividends paid on
those shares on that date, unless the seller elects on the determination date to
settle by the last trading day of the month and the dividend payment date occurs
after the determination date.

   Amounts distributed as dividends by French companies out of profits which
have not been taxed at the ordinary corporate income tax rate or which have been
earned and taxed more than five years before the distribution are subject to a
precompte (equalization tax) by such companies equal to the avoir fiscal
attached to the corresponding dividends. The precompte is paid by the
distributing company to the French tax authorities and is equal to a maximum of
50% of the net dividend before withholding tax. When a tax treaty in force does
not provide for a refund of the avoir fiscal or when the nonresident investor is
not entitled to such refund but is otherwise entitled to the benefits of a tax
treaty, such investor may generally obtain from the French tax authorities a
refund of such precompte actually paid in cash by us, if any (net of applicable
withholding tax). We believe that we would be subject to payment of a precompte
with respect to any dividends payable in the foreseeable future.



 Estate and Gift Tax

   France imposes estate and gift tax on certain real and personal property
acquired by inheritance or gift from a nonresident of France if such property is
deemed to be situated in France. France has entered into estate and gift tax
treaties with a number of countries pursuant to which, assuming certain
conditions are met, residents of the treaty countries may be exempted from such
tax or obtain a tax credit. Prospective investors in shares or ADSs should
consult their own advisors concerning the applicability of French estate and
gift tax to their shareholding and the availability of, and the conditions for
claiming exemption under, such a treaty.


 Wealth Tax

   In the absence of a more favorable tax treaty, the French wealth tax (impot
de solidarite sur la fortune) does not apply to non-French resident individual
investors owning directly or indirectly less than 10% of our capital stock.

 Taxation of United States Investors

   The following discussion describes the material United States federal
income tax and French tax consequences of the acquisition, ownership and
disposition of ADSs or shares by a U.S. Holder (as defined below).

   This discussion is based in part on representations of the depositary and
assumes that each obligation provided for in, or otherwise contemplated by the
deposit agreement or any other related document will be performed in accordance
with its terms. The United States Treasury has expressed concerns that parties
to whom American depositary shares such as the ADSs are released may be taking
actions that are inconsistent with the claiming of foreign tax credits by U.S.
Holders of ADSs. Accordingly, the analysis of the creditability of French taxes
described below could be affected by future actions that may be taken by the
United States Treasury.

   This discussion is not a complete analysis or description of all potential
tax consequences to a U.S. Holder of owning ADSs or shares. It deals only with
ADSs or shares held as capital assets by persons who own less than 10% of our
capital and does not discuss the tax consequences applicable to all categories
of investors, some of which (such as dealers in securities and investors whose
functional currency is not the U.S. dollar) may be subject to special rules.

   Holders of our shares or ADSs are advised to consult their tax advisors
concerning the application of the United States federal income tax laws to their
particular situations as well as any tax consequences arising under the laws of
any state, local or foreign taxing authority.

   The statements of United States and French tax laws set forth herein are
based on the laws in force as of the date hereof, including the United States
Internal Revenue Code of 1986, the French Code General des Impots and the
regulations enacted thereunder, and the double tax convention between the United
States and France. In this regard, the Convention between the United States and
the French Republic for the Avoidance of Double Income Taxation and the
Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital of
August 31, 1994, referred to as the Treaty, entered into force on December 30,
1995, and the French tax authorities issued an Instruction dated May 13, 1994
and released on June 7, 1994 relating to the withholding tax on dividends in
favor of non-residents entitled to the avoir fiscal pursuant to a tax treaty,
referred to as the "June 1994 Regulations." The Treaty and the June 1994
Regulations change the French withholding tax rules applicable to dividends to
which an avoir fiscal is associated and may affect the timing of payments to
non-residents of France that are entitled to tax treaty benefits.

   As used herein, the term "U.S. Holder" means a beneficial owner of ADSs or
shares who or that is entitled to Treaty benefits under the "limitation on
benefits" provisions contained in the Treaty and is, for United States federal
income tax purposes:

o  a citizen or resident of the United States;

o  a corporation created or organized under the laws of the United States or any
   political subdivision thereof; or

o  an estate or trust, the income of which is subject to United States federal
   income taxation regardless of its source.



 Taxation of Dividends

   In France, dividends are paid out of after-tax income. French residents are
entitled to a tax credit, known as the avoir fiscal, equal to 50% of the
dividend paid for individuals and for specific entities (foundations of public
utility), or 10% of the dividend paid for other legal entities as from January
1, 2003. Pursuant to regulations finalized on December 30, 2002 and applicable
as from January 1st, 2003, the 10% avoir fiscal is increased to an amount equal
to 80% of the precompte where the precompte is paid by the distributing company.
Under French domestic law, dividends paid to nonresidents are normally subject
to a 25% withholding tax and nonresidents are generally not eligible for the
benefit of the avoir fiscal.

   Under the Treaty, the rate of French withholding tax on dividends paid to a
U.S. Holder whose ownership of ADSs or shares is not effectively connected with
a permanent establishment or a fixed base in France is reduced to 15%. Dividends
paid to an Eligible U.S. Holder and an Eligible Tax Exempt Holder, each as
defined below, will be subject to the reduced rate of 15% at the time of
payment, provided that such holder establishes before the date of payment that
such holder is a resident of the United States under the Treaty in accordance
with the procedures described below. An Eligible U.S. Holder would also be
entitled to a payment equal to the avoir fiscal, less a 15% withholding tax. As
noted below, such payment will not be made to an Eligible U.S. Holder until
after the close of the calendar year in which the dividend was paid, and only
upon receipt by the French tax authorities of a claim made by the Eligible U.S.
Holder for such payment in accordance with the procedures set forth below.

   An Eligible U.S. Holder is a U.S. Holder whose ownership of ADSs or shares
is not effectively connected with a permanent establishment or fixed base in
France and who is (1) an individual or other noncorporate holder that is a
resident of the United States as defined pursuant to the provisions of the
Treaty, (2) a United States corporation, other than a regulated investment
company, (3) a United States corporation, which is a regulated investment
company, provided that less than 20% of its shares are beneficially owned by
persons who are neither citizens nor residents of the United States or (4) a
partnership, or trust that is treated as a resident of the United States as
defined pursuant to the provisions of the Treaty, but only to the extent that
its partners, beneficiaries or grantors would qualify under clause (1) or (2)
above.

   Payment of the avoir fiscal is made by the French Treasury not earlier than
the January 15 following the close of the calendar year in which the related
dividend is paid, and only after receipt by the French tax administration of a
claim for such payment in accordance with the procedures described below.
However, there are certain limitations on the availability of the avoir fiscal
under the Treaty. First, the avoir fiscal is generally only granted if the
Eligible U.S. Holder is subject to United States federal income tax on both the
dividend and the avoir fiscal. Second, a partnership or a trust (other than a
pension trust, a real estate investment trust or a real estate mortgage
investment conduit) in its capacity as an Eligible U.S. Holder is entitled to
the avoir fiscal only to the extent that its partners, beneficiaries or
grantors, as applicable, are themselves Eligible U.S. Holders (other than a
regulated investment company) and are themselves subject to United States
federal income tax on their respective shares of both the dividend and the avoir
fiscal. Third, the Eligible U.S. Holder, where required by the French tax
administration, must show that he or she is the beneficial owner of the ADSs or
shares and that the holding of such ADSs or shares does not have as one of its
principal purposes to allow another person to take advantage of the grant of the
avoir fiscal under the Treaty.

   Under the Treaty, special rules apply to (1) any "Eligible Pension Fund",
which is a tax-exempt entity established in, and sponsored or established by a
resident of, the United States, the exclusive purpose of which is to provide
retirement or employee benefits, (2) any "Eligible Not-For-Profit Organization",
which is a tax-exempt entity organized in the United States, the use of whose
assets is limited under United States federal or state laws, both currently and
upon liquidation, to the accomplishment of the purposes that serve as the basis
of its exemption from income taxation in the United States, and (3) any
"Individual Holding Shares in a Retirement Plan", meaning an individual who is a
resident of the United States under the Treaty and who owns Shares through an
individual retirement account, a Keogh plan or any similar arrangement.
("Eligible Pension Funds", "Eligible Not-For-Profit Organizations" and
"Individuals Holding Shares in a Retirement Plan" are referred to collectively
as "Eligible Tax-Exempt Holders.")




   Provided they are entitled to Treaty benefits under the limitation on
benefits provisions in Article 30 of the Treaty, Eligible Tax-Exempt Holders are
entitled to receive from the French Treasury a payment equal to 30/85ths of the
avoir fiscal (the "partial avoir fiscal"), less a 15% dividend withholding tax
on such amount, notwithstanding the general requirement described above that the
Holder be subject to United States tax on both the dividend and the avoir
fiscal. Thus, for example, if a dividend of EUR 100 were payable by us to an
Eligible Tax-Exempt Holder that is an individual and the requirements of the
June 1994 Regulations are satisfied, such Holder would initially receive
EUR 85 (the EUR 100 dividend less a EUR 15 withholding tax). The Eligible
Tax-Exempt Holder would be further entitled to an additional payment from the
French Treasury of EUR 15, consisting of the partial avoir fiscal of 30/85ths
of EUR 50, less the 15% withholding tax on that amount. Thus, the total net
payment to the Eligible Tax-Exempt Holder would be EUR 100. The Eligible
Tax-Exempt Holder, where required by the French tax administration, must show
that it is the beneficial owner of the shares and that the holding of such
shares does not have as one of its principal purposes to allow another person to
take advantage of the grant of the partial avoir fiscal under the Treaty.

   Eligible Tax-Exempt Holders are also entitled to a refund of any precompte
paid by us with respect to the dividends they receive, but such refund is
reduced by the amount of the partial avoir fiscal to which they are entitled and
further reduced by the 15% dividend withholding tax.

   Eligible Tax-Exempt Holders generally must follow the procedures set forth
hereafter. Nevertheless, the existing French forms do not take into account the
special tax treatment applicable to Eligible Tax-Exempt Holders with respect to
the payment of the partial avoir fiscal and the refund of the precompte. Certain
Eligible Tax-Exempt Holders may also be required to provide written evidence
certified by the IRS of their status under United States federal income tax law.
As a consequence, Eligible Tax-Exempt Holders are urged to contact their own tax
advisors with respect to the procedures to be followed to obtain Treaty
benefits.

   Dividends paid to an Eligible U.S. Holder will be subject to the reduced
withholding tax rate of 15% at the time the dividend is paid if (i) such holder
duly completes and provides the paying agent with Treasury Form RF1 A EU-No.
5052 (the "Form") before the date of payment of the relevant dividend, or (ii)
if completion of the Form is not possible prior to the payment of dividends,
such holder duly completes and provides the institution in charge of the
management of the stock account (etablissement gestionnaire du compte-titres)
with a simplified certificate (the "Certificate") stating that (a) such holder
is a United States resident as defined pursuant to the provisions of the Treaty,
(b) such holder's ownership of the ADSs or shares is not effectively connected
with a permanent establishment or fixed base in France, (c) such holder owns all
of the rights attached to the full ownership of the ADSs or shares, including
but not limited to dividend rights and (d) such holder meets all the
requirements of the Treaty for obtaining the benefit of the reduced rate of
withholding tax and the right to payment of the French avoir fiscal. Dividends
paid to a U.S. Holder that is entitled to the reduced withholding tax rate of
15% but that is not entitled to the avoir fiscal (i.e., one who is not an
Eligible U.S. Holder) will be subject to the reduced withholding tax rate of 15%
at the time the dividend is paid if such holder duly completes and provides the
paying agent with Treasury Form RF1 B EU-No. 5053 before the date of payment of
the relevant dividend. Dividends paid to any U.S. Holder that has not filed the
relevant completed form or Certificate before the dividend payment date will be
subject to French withholding tax at the rate of 25%. Such holder may claim a
refund of the excess withholding tax and an Eligible U.S. Holder may claim the
avoir fiscal by completing and providing the French tax authorities with the
relevant form before December 31st of the year following the year during which
the dividend is paid.

   The avoir fiscal or partial avoir fiscal is generally expected to be paid
to Eligible U.S. Holders and Eligible Tax-Exempt Holders within 12 months of
filing the Form, but not before January 15th following the end of the calendar
year in which the related dividend is paid. Similarly, any French withholding
tax refund is generally expected to be paid to U.S. Holders within 12 months of
filing the Form, but not before January 15th following the end of the calendar
year in which the related dividend is paid.

   The forms or the Certificate, together with their respective instructions,
are available from the United States Internal Revenue Service and at the Centre
des Impots des Non-Residents (9, rue d'Uzes, 75094 Paris Cedex 2, France). The
depositary will provide to all U.S. Holders of ADRs the forms or Certificate,
together with the respective instructions, and will arrange for the filing with
the French tax authorities of all forms and Certificates completed by U.S.
Holders of ADRs and returned to the Depositary within sufficient time.

   If shares are sold in a trade executed on the monthly settlement market of
the Paris Bourse during the month of and prior to a dividend payment date, the
seller of the shares rather than the purchaser will generally be entitled to the
avoir fiscal with respect to dividends paid on such shares on such date.




 Precompte

   Amounts distributed as dividends by French companies out of profits which
have not been taxed at the ordinary corporate income tax rate or which have been
earned and taxed more than five years before the distribution are subject to a
"precompte" (equalization tax) by such companies equal to the avoir fiscal
attached to the corresponding dividends. The precompte is paid by the
distributing company to the French tax authorities and is equal to a maximum of
50% of the dividend distributed before withholding tax.

   A U.S. Holder not entitled to the full avoir fiscal may generally obtain a
refund from the French tax authorities of any precompte paid by us with respect
to the dividends paid to the holder. Pursuant to Treaty, the amount of the
precompte refunded to United States residents is reduced by the 15% withholding
tax applicable to dividends. A U.S. Holder is only entitled to a refund of
precompte actually paid in cash by us.

   A U.S. Holder entitled to the refund of the precompte must apply for such
refund by filing a French Treasury Form RF1 B EU-No. 5053 (the "Treasury Form")
before the end of the year following the year in which the dividend was paid.
The form and its instructions are available from the United States Internal
Revenue Service or at the Centre des Impots des Non-Residents (9, rue d'Uzes,
75094 Paris Cedex 2, France). The depositary will, upon request, provide to U.S.
Holders of ADRs the Treasury Forms, together with the respective instructions,
and will arrange for the filing with the French tax authorities of all Treasury
Forms completed by U.S. Holders of ADRs and returned to the Depositary within
sufficient time.

   For United States federal income tax purposes, the gross amount of a
dividend and the amount of the avoir fiscal or precompte paid to a U.S. Holder,
including any French withholding tax thereon, will be included in gross income
as dividend income in the year each such payment is received to the extent paid
out of our current or accumulated earnings and profits as calculated for United
States federal income tax purposes. No dividends received deduction will be
allowed with respect to dividends paid. Under recently enacted legislation,
dividends received by non-corporate U.S. Holders of ADSs or shares may be
subject to U.S. Federal income tax at lower rates than other types of ordinary
income if certain conditions are met. U.S. Holders should consult their own tax
advisors regarding the implications of this new legislation on their particular
circumstances. The amount of any dividend paid in euro, including the amount of
any French taxes withheld there from, will be equal to the dollar value of such
euro amount on the date such dividend is included in income, regardless of
whether the payment is in fact converted into dollars. A U.S. Holder will
generally be required to recognize United States source ordinary income or loss
upon the sale or disposition of euro. Moreover, a U.S. Holder may be required to
recognize foreign currency gain or loss, which will generally be United States
source ordinary income or loss, upon the receipt of a refund of amounts, if any,
withheld from dividends in excess of the Treaty rate of 15%.

   French withholding tax imposed at the Treaty rate of 15% on dividends paid
by us and on any related payment of the avoir fiscal or precompte is treated as
payment of a foreign income tax and, subject to certain conditions and
limitations, may be taken as a credit against such U.S. Holder's United States
federal income tax liability. For foreign tax credit purposes, dividends will
generally constitute foreign source "passive", or in the case of certain
holders, "financial services" income.


 Taxation of Capital Gains

   Under the Treaty, no French tax is levied on any capital gain derived from
the sale of ADSs or shares by a U.S. Holder who (1) is a resident of the United
States under the Treaty, and (2) does not have a permanent establishment in
France to which the ADSs or shares are effectively connected or, in the case of
an individual, who does not maintain a fixed base in France to which the ADSs or
shares are effectively connected. Special rules apply to individuals who are
residents of' more than one country. In general, for United States federal
income tax purposes, a U.S. Holder will recognize capital gain or loss on the
sale or exchange of ADSs or shares in the same manner as on the sale or exchange
of any other shares held as capital assets. Any gain or loss will generally be
United States source.

 French Estate and Gift Taxes

   Under "The Convention Between the United States of America and the French
Republic for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with Respect to taxes on Estates, Inheritance and Gifts of November 24,
1978," a transfer of ADSs or shares by gift or by reason of the death of a U.S.
Holder that would otherwise be subject to French gift or inheritance tax,
respectively, will generally not be subject to French tax unless (1) the donor
or the transferor is domiciled in France at the time of making the gift, or at
the time of his or her death, or (2) the ADSs or shares were used in, or held
for use in, the conduct of a business through or pertaining to a permanent
establishment fixed base in France. Prospective investors in shares or ADSs
should consult their own advisors as to the applicability of the November 24,
1978 Convention mentioned above, and in particular as to the interpretation of
article 8 of said Convention.




 French Wealth Tax

   The French wealth tax does not apply to any U.S. Holder that is not an
individual or, in the case of natural persons, who owns alone or with their
parents, directly or indirectly, ADSs or shares representing the right to less
than 25% of our profits. Prospective investors in shares or ADSs should consult
their own advisors as to the applicability of the Treaty and in particular to
the interpretation of its article 23.


F. Dividends and Paying Agents

   Not applicable.


G. Statements by Experts

   Not applicable.


H. Documents on Display

   We are subject to the information requirements of the Securities Exchange
Act of 1934 (the "Exchange Act") except that, as a foreign issuer, we are not
subject to the proxy rules under Section 14 of the Exchange Act and our
officers, directors and principal shareholders are not subject to the insider
short-swing profit disclosure and recovery provisions under Section 16 of the
Exchange Act. In accordance with the Exchange Act reporting requirements
applicable to us, we file annual reports on Form 20-F with and submit certain
information on Form 6-K, including our quarterly revenue announcements and our
semi-annual profit and loss information (both of which will be prepared in
accordance with French GAAP and generally will not include a reconciliation to
U.S. GAAP), to the United States Securities and Exchange Commission (the "SEC").
The information that will be filed on Form 6-K will be substantially less
detailed than interim financial statements required of a domestic registrant
pursuant to Article 10 of Regulation S-X. You may read and copy any document
that we file at the Public Reference Room of the SEC at 450 Fifth Street, NW,
Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. You may also inspect
our filings at the regional offices of the SEC located at Citicorp, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, and at 233 Broadway, New
York, New York 10279. To provide shareholders with regular information about our
businesses, financial results and share price, we also offer our annual report
in French and English, including the "Reference Document" filed with the COB.
You may request a copy of the aforementioned filings and annual report at no
cost by writing or telephoning the offices of Sodexho Alliance, SA, attention
Jean-Jacques Vironda, Investor Relations, 3, avenue Newton, 78180
Montigny-le-Brettoneux, France. Our telephone number for these requests is
011-33-0-1-30-85-72-03, our fax number is 011-33-0-1-30-85-51-81 and our e-mail
address is jean-jacques.vironda@sodexhoalliance.com.


I. Subsidiary Information

   Not Applicable.


ITEM 11.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

   We are exposed to interest rate and foreign exchange rate risks associated
with underlying assets and liabilities. We manage this exposure as it pertains
to our borrowings through the use of interest rate, currency and cross-currency
derivative contracts. These swap contracts are entered into with major high
credit quality institutions, in accordance with procedures and within limits
approved by our Board of Directors. Our policy is not to use derivative
contracts for any other purpose than hedging our financial exposures.



 Foreign Exchange Risk Exposure

   Foreign exchange risk exposure arises from the possibility that changes in
foreign currency exchange rates will impact the value of revenues, expenses,
assets and liabilities denominated in foreign currencies. Our results of
operations, financial position, and cash flows are directly dependent on the
periodic monitoring and adjustment of the balance of assets and liabilities in
each of our main operating currencies, which are the euro, the U.S. dollar and
the British pound sterling. The impact of fluctuations in exchange rates is
mitigated to a large extent by the fact that within each of our subsidiaries,
revenues and the related expenses are generally denominated in the same
currency. In order to match the cash flows pertaining to borrowing instruments
held by our subsidiaries with the revenues to which they relate, we occasionally
enter into currency or cross-currency swap contracts.

 Interest Rate Exposure

   In accordance with our policy, we may borrow at variable rates and use
interest rate swaps in order to fix future interest payments, effectively
converting borrowings from floating to fixed rates. As of August 31, 2003,
including the effect of interest and cross-currency swap agreements,
approximately 91% of our borrowings were at fixed rates, with an average
interest rate of 5.5%.

 Sensitivity Analysis

   A hypothetical strengthening or weakening by 10% in the value of the dollar
relative to the euro would have resulted in an increase or decrease,
respectively, of our fiscal 2003 net income by approximately EUR 10 million. A
hypothetical strengthening or weakening by 10% in the value of the British pound
sterling relative to the euro would have resulted in a decrease or increase,
respectively, of our fiscal 2003 net income by approximately EUR 4 million.

     A hypothetical increase of 1% in average interest rates would have resulted
in an increase in fiscal 2003 interest expense of approximately EUR 2 million
on our variable rate borrowings.


ITEM 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

         Not Applicable.


                                     PART II

ITEM 13.DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

     Not Applicable.


ITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS

     Not Applicable.


ITEM 15.CONTROLS AND PROCEDURES

   Our chief executive officer and our chief financial officer, after
evaluating the effectiveness of our "disclosure controls and procedures" (as
defined in Exchange Act Rules 13a-14C and 15d-14C) as of a date (the "Evaluation
Date") within 90 days of the filing date of this Annual Report on Form 20-F,
have concluded that as of the Evaluation Date, our disclosure controls and
procedures were adequate and effective and designed to ensure that material
information relating to us and our consolidated subsidiaries would be made known
to them by others within those entities. There were no significant changes in
our internal controls or, to our knowledge, in other factors that could
significantly affect our internal controls subsequent to the Evaluation Date.

ITEM 16A.Audit committee financial expert.

   Our Board of Directors has determined that Mr. Edouard de Royere, who
serves on the audit committee, has the background and qualifications necessary
to be considered an audit committee financial expert


ITEM 16B.Code of Ethics

   In 2003, the Board of Directors adopted a written Code of Conduct for
Senior Managers. Each of Sodexho Alliance's senior financial managers, including
the Group's CEO, Chief Operating Officers, Chief Financial Officer, Chief
Accountant, and others performing similar functions, signed a statement
acknowledging his or her compliance with the Code. The full text of the Code of
Conduct is available on Sodexho Alliance's internet website at www.sodexho.com.




ITEM 16C.Principal Auditor Fees and Services


<TABLE>
<S>              <C>      <C>      <C>    <C>      <C>     <C>     <C>    <C>

                      PricewaterhouseCoopers
                         and member firms                    KPMG SA (1)
                      Amount        Percentage         Amount        Percentage
                 Fiscal   Fiscal   Fiscal Fiscal   Fiscal  Fiscal  Fiscal Fiscal
                  2003     2002     2003   2002     2003    2002    2003   2002

Audit and
 audit-related:

 Audit fees      4,536    4,578      66%    11%     1,013    N/A     94%    N/A

 Audit-related
  fees             240      655       4%     2%        54    N/A      5%    N/A
                 -----    -----     ----   ----     -----           ----
Total audit and
 audit-related
 fees            4,776    5,233      70%    13%     1,067            99%



Other non-audit
 services:

 Tax, legal and
  human
  resources
  consulting     1,853    2,935      28%     7%         9    N/A      1%    N/A

  Information
   technology       14   31,373       0%    79%         0    N/A      0%    N/A

    Other          140      221       2%     1%         1    N/A      0%    N/A
                 -----   ------     ----   ----      ----           ----
Total other
 services        2,007   34,529      30%    87%        10             1%

                ------   ------     ----   ----     -----           ----
Total           6,783    39,762     100%   100%     1,077           100%
                ======   ======     ====   ====     =====           ====

</TABLE>


(1)Listed companies in France are required to have their financial
   statements audited by two different independent accounting firms. KPMG SA was
   named independent auditor at the February 4, 2003 Shareholders' Meeting,
   replacing Olivier Belnet.


   The fees paid by Group subsidiaries to accounting firms other than
PricewaterhouseCoopers and KPMG in connection with the audit of their financial
statements totaled EUR 766,000 for the year ended August 31, 2003.




                                    PART III

ITEM 17.FINANCIAL STATEMENTS

Reference is made to pages F-1 through F-57 of this Annual Report.

ITEM 18.FINANCIAL STATEMENTS

We have responded to Item 17 in lieu of responding to this Item.



ITEM 19.EXHIBITS

(a) The following exhibits are filed as part of this Form 20-F:

<TABLE>
<S>            <C>

Exhibit
 Number                              Description



  1            Sodexho   Alliance    Restated    Corporate    Statuts   (English
               translation)(incorporated  by  reference  to  Exhibit  1  to  the
               Registration  Statement on Form 20-F filed by Sodexho Alliance SA
               on March 19, 2002, Commission File No. 1-31274)

  2.1          Composite  Conformed  Term and  Revolving  Facilities  Agreement,
               dated  April 6, 2001,  for  Sodexho  Alliance,  SA,  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 (as amended by a letter
               dated 27 April 2001 and an Amendment  and  Restatement  Agreement
               dated 8 June 2001 and as amended by letters  dated March 14, 2003
               and May 15, 2003)

  2.2          Form of Deposit Agreement among Sodexho Alliance, SA, The Bank of
               New York as Depositary, and all Owners and Beneficial Owners from
               time to time of American  Depositary  Receipts issued  thereunder
               (incorporated  by  reference  to  Exhibit  A of the  Registration
               Statement  on Form  F-6  filed  by The  Bank of New  York and the
               Company on March 21, 2002, Commission File No. 333-84970)

  2.3          Terms and  Conditions  of  Offering of Euro  1,000,000,000  5.875
               percent Bonds due 2009  (incorporated by reference to Exhibit 2.3
               to the  Registration  Statement  on Form  20-F  filed by  Sodexho
               Alliance SA on March 19, 2002, Commission File No. 1-31274)



  2.4          Agreement by Registrant  to Furnish  Certain  Information  to the
               Securities and Exchange Commission  (incorporated by reference to
               Exhibit 2.4 to the  Registration  Statement on Form 20-F filed by
               Sodexho  Alliance  SA on  March  19,  2002,  Commission  File No.
               1-31274)



  4.1          Agreement  and Plan of  Merger,  dated as of May 1,  2001,  among
               Sodexho Marriott  Services,  Inc.,  Sodexho Alliance,  SA and SMS
               Acquisition  Corp.  (incorporated  by reference to Exhibit 2.1 to
               the  Current  Report  on  Form  8-K  filed  by  Sodexho  Marriott
               Services,  Inc.  on May 4,  2001,  Commission  File No.  1-12188)
               (incorporated  by  reference  to Exhibit 4.1 to the  Registration
               Statement on Form 20-F filed by Sodexho  Alliance SA on March 19,
               2002, Commission File No. 1-31274)



  4.2          Agreement  dated  December 30, 1991  between  Felix Bellon SA and
               Sodexho S.A. and Addendums (English translation)



  8.1          List of Significant  Subsidiaries  (incorporated  by reference to
               note 4.4 of the  Consolidated  Financial  Statements  of  Sodexho
               Alliance, SA)

 12.1          Certification  by Pierre  Bellon,  Chairman  and Chief  Executive
               Officer,  pursuant  to Section 302 of the  Sarbanes-Oxley  Act of
               2002

 12.2          Certification  by Sian  Herbert-Jones,  Chief Financial  Officer,
               pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 13            Certifications  by Pierre  Bellon,  Chairman and Chief  Executive
               Officer and Sian Herbert-Jones, Chief Financial Officer, pursuant
               to Section 906 of the Sarbanes-Oxley Act of 2002

</TABLE>

<PAGE>




                                   SIGNATURES

     Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant certifies that it meets all of the requirements for
filing this Annual Report on Form 20-F and has duly caused this Annual Report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                                                SODEXHO ALLIANCE, SA
                                                By: /s/ Sian Herbert-Jones

                                                Name: Sian Herbert-Jones
                                                Title: Chief Financial Officer


Dated: December 18, 2003
<PAGE>
                        Index to financial statements



Consolidated Financial Statements of Sodexho Alliance, SA

  Report of Independent Auditors...............................          F-1

  Consolidated Income Statements for each of the fiscal
   years ended August 31, 2003, 2002 and 2001..................          F-2

  Consolidated Balance Sheets as of August 31, 2003 and 2002...          F-3

  Consolidated Statements of Cash Flows for each of
   the fiscal years ended August 31, 2003, 2002 and 2001.......          F-4

  Notes to the Consolidated Financial Statements...............          F-5


<PAGE>




                        REPORT OF INDEPENDENT AUDITORS


 To the Shareholders and the Board of Directors of Sodexho Alliance, SA

   We have audited the accompanying consolidated balance sheets of Sodexho
Alliance, SA and its subsidiaries (together, the "Group") as of August 31, 2003
and 2002 and the related consolidated statements of income and of cash flows for
each of the three years in the period ended August 31, 2003, all expressed in
millions of euro. These financial statements are the responsibility of the
Group's management, and they have been approved by the Board of Directors. Our
responsibility is to express an opinion on these financial statements based on
our audits.

   We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     These financial statements have been prepared in accordance with accounting
principles  generally  accepted in France,  except for the following  matter. As
described  in note 1, in order to comply  with the  requirements  of the  United
States Securities and Exchange Commission, prior years have been restated in the
Annual  Report on Form 20-F to reduce  revenue in the  period the  overstatement
occurred.  Net income has been  reduced by EUR 10  million for the year ended
August 31, 2001. Under accounting  principles generally accepted in France (Avis
CNC No. 97-06),  prior periods are not permitted to be  retroactively  restated,
and the  overstatement  of previously  reported  revenue has been recorded as an
exceptional expense when discovered in the year ended August 31, 2002.

    In our opinion, except for the effects of the restatement described in the
previous paragraph, the consolidated financial statements audited by us present
fairly, in all material respects, the financial position of the Group as of
August 31, 2003 and 2002, and the results of its operations and its cash flows
for each of the three years in the period ended August 31, 2003, in conformity
with accounting principles generally accepted in France.

    We draw your attention to note 1, which includes a description of the
impact of changes in accounting principles adopted in the fiscal year ended
August 31, 2002 on the Group's consolidated financial statements.

   Accounting principles generally accepted in France vary in certain
significant respects from accounting principles generally accepted in the United
States of America. The application of the latter, after giving effect to the
restatement referred to in note 5.5, would have affected the determination of
the consolidated net income expressed in millions of euro for each of the three
years in the period ended August 31, 2003 and the determination of consolidated
shareholders' equity at August 31, 2003 and 2002 to the extent summarized in
note 5 to the consolidated financial statements.

Paris, France
November 13, 2003


PRICEWATERHOUSECOOPERS AUDIT


Gerard Dantheny                                            Hubert Toth



<PAGE>





<TABLE>
<S>                                        <C>             <C>            <C>

                            SODEXHO ALLIANCE, SA

                        CONSOLIDATED INCOME STATEMENTS

                                                    Years ended August 31,
                                            2003           2002           2001
                                                     (millions of euro)

Revenues.................................  11,687         12,609         11,928
Other income.............................      37             54            113
Purchases................................  (3,955)        (4,559)        (4,416)
Employee costs...........................  (5,519)        (5,868)        (5,437)
Other external charges...................  (1,482)        (1,464)        (1,430)
Taxes, other than income taxes...........     (79)           (74)           (75)
Depreciation and increase in provisions..    (175)          (173)          (112)
                                           -------        -------        -------
Earnings Before Interest, Exceptional
 Items, Income Taxes, Income from Equity
 Method Investees, Goodwill Amortization
 and Minority Interests (EBITA)..........     514            525            571
Financial expense, net...................    (152)          (166)          (122)
                                           -------        -------        -------
Income Before Exceptional Items,
 Income Taxes, Income from Equity Method
 Investees, Goodwill Amortization
 and Minority Interests.................      362            359            449
Exceptional (expense) income, net.......        1             55            (51)
Income taxes............................     (134)          (136)          (157)
                                           -------        -------        -------
Income Before Income from Equity Method
 Investees, Goodwill Amortization and
 Minority Interests.....................      229            278            241
Net income (loss) from equity method
 investees..............................        4              4             (2)
Goodwill amortization...................      (62)           (67)           (44)
                                           -------        -------        -------
Group Net Income Before Minority
 Interests..............................      171            215            195
Minority interests in net income of
 consolidated subsidiaries..............       (9)           (13)           (67)
                                           -------        -------        -------
Group Net Income........................      162            202            128
                                           =======        =======        =======

Earnings per share (in euro)............     1.02           1.27            .93
                                           =======        =======        =======
Diluted earnings per share (in euro)....     1.00           1.22            .89
                                           =======        =======        =======
</TABLE>


       See accompanying notes to the consolidated financial statements.

<PAGE>

<TABLE>
<S>                                                  <C>               <C>

                            SODEXHO ALLIANCE, SA

                         CONSOLIDATED BALANCE SHEETS
                                                             August 31,
                                                       2003             2002
ASSETS                                                   (millions of euro)

 Fixed and Intangible Assets, Net
  Goodwill.........................................    1,492            1,616
   Intangible assets...............................    2,686            2,940
   Property, plant and equipment...................      379              371
   Financial investments...........................       64               67
   Equity method investees.........................       19               11
                                                     -------          -------
 Total Fixed and Intangible Assets, Net............    4,640            5,005

 Current and Other Assets
  Inventories .....................................      170              170
  Accounts receivable, net.........................    1,383            1,456
  Prepaid expenses, other receivables
   and other assets................................      637              606
  Marketable securities............................      542              553
  Restricted cash..................................      166              165
  Cash.............................................      570              589
                                                      -------          -------
Total Current and Other Assets.....................    3,468            3,539
                                                      -------          -------
TOTAL ASSETS.......................................    8,108            8,544
                                                      =======          =======

LIABILITIES AND SHAREHOLDERS' EQUITY

 Shareholders' Equity
  Common stock.....................................      636              636
  Additional paid in capital.......................    1,186            1,191
  Consolidated reserves............................      427              571
                                                     -------          -------
Total Shareholders' Equity.........................    2,249            2,398

 Minority Interests.................................      66               73
 Provisions for Contingencies and Losses............      89               99
Liabilities
 Borrowings.........................................   2,488            2,693
 Accounts payable...................................   1,128            1,251
 Vouchers payable...................................     794              732
 Other liabilities..................................   1,294            1,298
                                                     -------          -------
Total Liabilities...................................   5,704            5,974
                                                     -------          -------
Total SHAREHOLDERS' EQuity and Liabilities..........   8,108            8,544
                                                     =======          =======
</TABLE>


          See accompanying notes to the consolidated financial statements.


<PAGE>


<TABLE>
<S>                                         <C>            <C>           <C>

                            Sodexho Alliance, SA

                        consolidated statements of CASH FLOW

                                                 Years ended August 31,
                                              2003           2002          2001
                                                   (millions of euro)
Operating Activities

 Consolidated net income before income
   (loss) from equity method investees and
   minority interests......................    167            211           197
 Noncash items:
  Depreciation and provisions..............    215            254           157
  Deferred taxes...........................     (9)             5            20
  Losses (gains) on disposals and other,
   net of tax..............................     14            (61)           26
                                            -------        -------       -------
 Cash provided by operating activities.....    387            409           400

  Dividends received from equity method
   investees...............................      3              1             0
  Change in working capital from operating
   activities..............................    100            209           154
                                            -------        -------       -------
 Net cash from operating activities........    490            619           554

Investing Activities
 Tangible and intangible fixed assets......   (241)          (297)         (238)
 Fixed asset disposals.....................     15             33            31
 Acquisitions, net of dispositions,
  of consolidated subsidiaries.............    (33)           (48)       (1,739)
 Change in working capital from investing
  activities...............................    (19)            (3)          (13)
                                            -------        -------       -------
Net cash used in investing activities......   (278)          (315)       (1,959)

Financing Activities
 Dividends paid to parent company
  shareholders.............................    (94)           (87)          (74)
 Dividends paid to minority shareholders
  of consolidated subsidiaries.............    (11)           (15)           (9)
 Increase in shareholders' equity..........      0             59         1,020
 Proceeds from borrowings..................    104          1,120         1,977
 Repayment of borrowings...................   (178)        (1,146)       (1,142)
 Change in working capital from financing
  activities...............................    (23)            (1)           (9)
                                            -------        -------       -------
Net cash provided by (used in) financing
 activities...............................    (202)           (70)        1,763
                                            -------        -------       -------
Increase in net cash, cash equivalents
 and marketable securities................      10            234           358
                                            =======        =======       =======

Cash, cash equivalents and marketable
 securities, as of beginning of period....   1,307          1,213           896
Add: provisions as of beginning of period.      23              1             0
Cash, cash equivalents and marketable
 securities, as of end of period .........   1,278          1,307         1,213
Add:  provisions as of end of period......       8             23             1
Net effect of exchange rates on cash......      54            118            40
                                            -------        -------       -------
Increase in net cash, cash equivalents
 and marketable securities................      10            234           358
                                            =======        =======       =======
</TABLE>

         See accompanying notes to the consolidated financial statements.



<PAGE>



                         SODEXHO ALLIANCE, SA


              NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


1.SIGNIFICANT ACCOUNTING POLICIES AND RELATED FINANCIAL INFORMATION

  Sodexho Alliance, SA and its subsidiaries (together, the "Group") applies
accounting principles that comply with French law, including the consolidation
accounting principles established by the Comite de la Reglementation Comptable
No 99-02 ("Regulation CRC 99-02") in France (collectively, "French GAAP") in its
consolidated financial statements. Regulation CRC 99-02 was adopted as of
September 1, 2000, and its impact on the financial statements is fully described
below. The financial statements of Group companies, which have been prepared in
accordance with the accounting principles applicable in their respective
countries, conform to the accounting principles described above in
consolidation.

   The differences between French GAAP and accounting principles generally
accepted in the United States ("US GAAP") that have a material impact on the
Group's consolidated financial statements are described in note 5.

   Amounts in tables are expressed in millions of euro, unless indicated
otherwise. Our consolidated financial statements and information in the notes
thereto are reported in euro.

 Significant Events During the Year

     The Group,  through its U.S. subsidiary,  Sodexho,  Inc., acquired 91.4% of
Patriot  Medical  Technologies,  Inc., a U.S.  company based in  Tennessee,  for
U.S.$3.1 million (EUR 2.9 million). This company, formed in 1997 and specialized
in  engineering   services  in  the  medical  sector,  has  annual  revenues  of
approximately  U.S.  $25  million.  Goodwill  recorded  in  connection  with the
transaction  ofEUR 9.4  million  will be  amortized  over 30 years.  This entity
contributed an EBITA loss ofEUR 0.2 million to Sodexho  Alliance's  consolidated
income statement.

     Sodexho Pass  International  acquired an additional  23% of Sodexho Pass do
Brazil,  in which it already held 77% of the  outstanding  shares,  for EUR 27.6
million.   Goodwill  of  EUR  25.6  million  recorded  in  connection  with  the
transaction will be amortized over 30 years.

     In May 2003,  Sodexho Alliance  received a purchase price complement of EUR
28.6  million  in  connection  with  the  sale  of  its  shares  in  Corrections
Corporation of America in fiscal 2001, which was recorded as exceptional income.

 Divergences from French GAAP

     The  financial  statements  filed  by the  Group  with the  Commission  des
Operations  de Bourse  (the  regulatory  authority  in France)  are  prepared in
accordance with French GAAP. French GAAP does not permit retroactive adjustments
to financial statements.  In order to comply with the requirements of the United
States  Securities  and  Exchange  Commission  ("SEC"),  the Group  restated its
financial  statements  presented  herein as of and for the year ended August 31,
2001 as described below. As a result, the financial  statements presented herein
differ from those filed with the Commission des Operations de Bourse ("COB").

     The Group's  financial  statements  presented  herein have been restated to
reflect revisions  discovered in fiscal 2002 related to revenue  recognition and
accounts receivable in the Group's grounds maintenance subsidiary located in the
United Kingdom. From fiscal 1999 and continuing through the first half of fiscal
2002,  detailed  record-keeping  and  documentation  contractually  required  by
certain of the  subsidiary's  public  authority  clients were not maintained for
orders  related  to  existing  contracts.   Accordingly,   the  related  revenue
recognized by the subsidiary  could not be supported.  Under the requirements of
the SEC, prior year  financial  statements are restated to reduce revenue in the
period  the  overstatement  occurred.   Under  accounting  principles  generally
accepted in France (Avis CNC No.  97-06) prior  periods are not  permitted to be
retroactively restated, and the overstatement of revenue has been recorded as an
exceptional expense when discovered in the year ended August 31, 2002.

     A reconciliation  of the amounts reported in accordance with French GAAP in
the Group's  Document de Reference  (Annual Report) filed with the COB and those
reported in this Form 20-F filed with the SEC,  which have been adjusted for the
overstatement of revenues, follows:

<TABLE>
<S>                 <C>          <C>      <C>       <C>         <C>
                                                                Diluted
                                          Net       Earnings    Earnings
                    Revenues     EBITA    Income    per Share   per Share
                        (millions of euro, except per-share amounts)
Fiscal 2002

Annual Report        12,612        528       183        1.15        1.13
Adjustment               (3)        (3)       19(1)     0.12        0.09
                     ------       ----      ----       -----       -----
Form 20-F            12,609        525       202        1.27        1.22
                     ======       ====      ====       =====       =====

Fiscal 2001

Annual Report        11,943        586       138        1.00        0.99
Adjustment              (15)       (15)      (10)      (0.07)      (0.10)
                     ------       ----      ----       -----       -----
Form 20-F            11,928        571       128        0.93        0.89
                     ======       ====      ====       =====       =====
</TABLE>


(1) Consists of an increase in exceptional income ofEUR 32 million partially
    offset by a reduction in revenues ofEUR 3 million and an increase in
    income tax expense ofEUR 10 million.

Changes in Accounting Principles


   The financial statements have been prepared on a basis consistent with the
prior year, except with respect to the provision of EUR 19 million recorded in
financial expense in fiscal 2002 on Sodexho Alliance shares we acquired in
connection with employee stock option programs in order to reflect the lower of
cost or market. In conformity with Avis CNCC 98D, such provisions and the
release thereof are now included in exceptional items, where losses pertaining
to stock compensation are also recorded.

   The Group adopted the accounting principles recommended by Regulation CRC
99-02 effective September 1, 2000. Following is a discussion of the significant
changes to the Group's accounting and reporting which resulted from the adoption
of these accounting principles.

   o The presentation of the consolidated balance sheet, income statement and
     statement of cash flows conforms to the presentation recommended by
     Regulation CRC 99-02, with the inclusion of two additional balance sheet
     line items, "Restricted cash" and "Vouchers payable", which relate to the
     Service Vouchers and Cards activity.

     o    Effective  September  1, 2000,  both gains and losses  realized on the
          translation  of  foreign  currency  denominated  monetary  assets  and
          liabilities  are recorded in the income  statement.  Previously,  only
          such losses were recorded.  This change in accounting  method has been
          accounted for with the  cumulative  effect of the change  reflected in
          current period earnings.

     o    Employee  profit sharing  charges have been  reclassified  to employee
          costs in all periods presented.

 Principles of Consolidation

   The consolidated financial statements include the accounts of Sodexho
Alliance, SA and its principal subsidiaries. Subsidiaries which are effectively
controlled by Sodexho Alliance are fully consolidated. Companies which are not
fully consolidated but over which Sodexho Alliance is able to exercise
significant influence, are accounted for using the equity method. All fully
consolidated companies that do not have an August 31 year-end are consolidated
on the basis of financial statements prepared on or around August 31 and for the
twelve month period then ended.

   A number of companies having minimal impact on the Group's consolidated
financial statements have been excluded from consolidation, notably those having
sales of less than EUR 2 million, net income or loss of less than EUR  0.1
million, and total assets of less than EUR 2 million.

   A list of subsidiaries and the Group's percentage interest and percentage
of voting rights held is provided in note 4.5.

 Revenue Recognition

   In the Food and Management Services activity, revenue is recognized in the
period in which services are provided pursuant to the terms of the contractual
relationships with clients. Revenues for the service voucher segment include
commissions received from customers, which are recorded upon issuance of the
vouchers to the customers; commissions received from affiliates, which are
recorded upon redemption of the vouchers; and investment income realized on the
nominal value of the vouchers during the period from their issuance through
redemption (generally one to three months).

 Vendor Discounts and Allowances

 Discounts and allowances obtained from vendors are recorded as a reduction to
 the related costs in the income statement.

 Employee Costs

  Retirement Benefits

   For funded plans to which the subsidiary makes a contribution, the amount
of the contribution is recorded as the expense of the plan. The Group's benefit
obligations relating to defined benefit pension and retirement indemnity plans
are recorded in the balance sheet.

  Stock Options

   Sodexho Alliance has acquired treasury shares in connection with its stock
option plans, which are included in marketable securities. A liability (and
corresponding expense) is recorded if at the closing date of the period, the
acquisition cost of the shares acquired is superior to the exercise price of the
options awarded. If the number of treasury shares acquired is less than the
number of options awarded, a liability (and corresponding expense) is recorded
for the difference between the market price at the end of the period and the
exercise price, multiplied by the number of remaining shares to be acquired for
the applicable tranche of stock options. This liability is subject to adjustment
in future periods based on movements in the market price of the Group's common
shares.

 Exceptional income and expenses

   Exceptional income and expenses are recorded for significant items which,
due to their unusual character and non-recurring nature, are not considered to
be inherent to the operating activities of the Group. In general, such costs
relate to gains or losses on asset dispositions, restructuring costs,
exceptional depreciation of fixed and intangible assets, or provisions or
expenses recorded in connection with stock option plans.

 Earnings per Share

   Earnings per share and diluted earnings per share are calculated using
methods recommended by Advice No. 27 of the Ordre des Experts Comptables.
Earnings per share is calculated by dividing group net income by the average
number of shares outstanding during the year, including treasury shares. In the
calculation of diluted earnings per share, the denominator is increased by the
number of potential shares outstanding, and the numerator is increased by the
net-of-tax interest income (calculated at the taux moyen mensuel du marche
monetaire euro) on the proceeds which would have resulted from the issuance of
these shares. The potential shares included in diluted earnings per share relate
to stock options awarded but not yet exercised and warrants outstanding from the
1996 bond issuance, which are exercisable prior to June 2004.

 Foreign Currency Transactions and Translation

   For subsidiaries located in countries with stable currencies, assets and
liabilities are translated using the end of period exchange rate. Income
statement and cash flow statement line items are translated using the average
exchange rate for the year, calculated using monthly averages. Exchange rates
used are obtained from the Bourse de Paris and other international financial
markets. The difference between the translation of the income statement at
average and period end rates, as well as the difference between the opening
balance sheet accounts as translated at beginning and end of period rates is
recorded in shareholders' equity. Foreign exchange gains and losses resulting
from intragroup transactions in foreign currencies during the year are recorded
in the income statement.

   The financial statements of the following subsidiaries reflect currency
devaluations as required by local regulations:

   Sodexho Chile (sub-consolidation)
   Sodexho Pass Chile
   Siges Chile
   BAS Chile
   Sodexho Peru
   Sodexho Maintenimientos y Servicios (Mexico)
   Prestaciones Mexicanas CA de CV (Mexico)
   Sodexho Mexico
   Promocupon (Mexico)
   Sodexho Servicios Operativos (Mexico)
   Sodexho Servicios de Personal (Mexico)
   Luncheon Tickets (Argentina)
   Sodexho Colombia
   Sodexho Pass de Colombia
   Sodexho Pass Venezuela
   Sodexho Sitios Remotos de Peru
   Sodexho Restoran Servisleri (Turkey)
   Sodexho Toplu Yemek (Turkey)
   Sodexho Argentina
   Sodexho Venezuela Alimentacion y Servicios
   Universal Sodexho Services de Venezuela
   Universal Sodexho Empresa Servicios y Campamentos

   The inclusion of monetary corrections imposed by local regulators on these
subsidiaries in the consolidated financial statements had no impact on the
income statement. Foreign currency translation differences for these
subsidiaries are recorded in the currency translation adjustment account in
shareholders' equity in the same manner as for the subsidiaries in countries
with stable currencies.

   For subsidiaries located in highly inflationary countries, differences
between net income translated at average and period-end rates are included in
net financial expense. The impact of these differences on the consolidated
income statement was not significant in any of the periods presented. As of
August 31, 2003, none of the countries in which the Group operates was
considered to be highly inflationary.

   Translation differences on monetary assets and liabilities denominated in
foreign currencies are recorded in the income statement. Translation differences
related to a monetary component of a net investment in a company within a
consolidated foreign subsidiary are recorded in consolidated shareholders'
equity until the sale or liquidation of the net investment.

Business Combinations

   All of the Group's acquisitions have been accounted for as purchases.
Effective September 1, 2000, assets and liabilities of acquired companies have
been recorded at their respective fair values.

 Goodwill

   Goodwill represents the excess of acquisition cost over the identified
assets and liabilities assumed, including market share. Due to the long-term
nature of the Group's business, goodwill is generally amortized over thirty
years (on a pro rata basis in the year of acquisition). In fiscal 2002, an
exceptional charge of EUR 2.1 million was recorded relating to the IFREST
subsidiary. This valuation of goodwill on a historical basis is also supported
by a calculation of the current value of these assets as of August 31, 2003 and
based on discounted future cash flows.

   Additional information pertaining to goodwill balances is provided in note
3.4.


Intangible Assets

   In the allocation of purchase price with respect to the acquisitions of
Sodexho, Inc. (formerly, Sodexho Marriott Services, Inc.), Wood Dining Services,
Sogeres, Sodexho Services Group Ltd (formerly, Gardner Merchant), Sodexho
Scandinavia (formerly, Partena), and Universal Services, a portion of the
difference between the cost of the shares acquired and the Group's equity in the
underlying net assets of the entities acquired has been recognized as market
share. This intangible asset represents the value attributed to the significant
market shares held by the Group in the geographic regions specific to the
acquisitions (the United Kingdom and Ireland, the United States, the
Netherlands, France, Australia and Sweden).

   Market share is principally determined based on an average of multiples of
revenues and EBITA achieved by the acquired companies in the applicable
countries as compared to unrelated recent transactions in the marketplace and is
reviewed annually for diminution in value. Market shares are not amortized in
the consolidated financial statements, and no deferred taxes are recorded on
market shares. If there is a significant diminution in the market share value
for more than two consecutive years, as recomputed based on actual results of
the applicable subsidiary as compared to the original calculation, it is written
down.

   This valuation of market shares on a historical basis is also supported by
a calculation of the current value of these assets as of August 31, 2003 based
on discounted future cash flows.

   Additional information pertaining to market share is provided in note 3.5.
Property, Plant and Equipment

   Leased assets are recorded on the balance sheet as capital leases in
instances where a Group company is deemed to bear substantially all of the risks
and rewards of the leased asset. A corresponding obligation is recorded as a
liability, and the related rental expense is allocated between depreciation and
interest expense in the income statement.

   Depreciation of property, plant and equipment is calculated on a
straight-line basis over the estimated useful lives of the respective assets
giving consideration to the local economic conditions and climate.

   The following useful lives are generally used by Group companies:

   o Software...............................             25%
   o Enterprise resource planning system....             20%
   o Buildings..............................       3.33 - 5%
   o Facilities and fixtures................             10%
   o Plant and machinery....................        10 - 50%
   o Vehicles...............................             25%
   o Office and computer equipment..........        20 - 25%
   o Other fixed assets.....................             10%


 Organization Costs

   Organization costs are capitalized and amortized over a maximum duration of
five years. These costs are included in other intangible assets.

 Deferred Income Taxes

   Deferred income taxes are recorded on temporary differences between the tax
basis of assets and liabilities and their carrying values for financial
reporting purposes as well as on consolidation adjustments.


   As the pattern of temporary difference reversals is not fixed, deferred
taxes recorded on the balance sheet have not been present valued. In addition,
deferred tax assets pertaining to net operating loss carry-forwards (net of
deferred tax liabilities) are only recorded in cases where recovery is deemed
probable.


   A reconciliation of income taxes computed at Sodexho Alliance's statutory
rate to the actual income tax provision is provided in note 3.3.


 Deferred Charges

   Deferred charges primarily include investments made in client facilities in
the U.S. and are amortized over the life of the related contract as well as
deferred financing costs, which are amortized over the maturity period of the
related debt.

 Inventories

   Inventories consist of food items and supplies, which are stated at the
lower of average cost or market, generally using the first-in, first-out method.
As of August 31, 2003, the gross value of inventories was EUR 172 million.

 Accounts Receivable

   Concentration of credit risk within accounts receivable is limited because
a large number of customers make up the Group's customer base, thus spreading
risk associated with trade credit. The Group generally does not require
collateral or specific guarantees.

   The allowance for doubtful accounts is estimated based upon the risk of
non-recoverability of certain client receivables.

   Further information pertaining to accounts receivable is provided in note
3.10.

Marketable Securities and Deposits

   Marketable securities and deposits represent short-term investments akin to
cash equivalents and are generally recorded at the lower of cost or market
value. Also included in marketable securities and deposits are 2,528,062 Sodexho
Alliance shares purchased for a total amount of EUR 89 million. These shares
are to be used to fulfill our obligation with respect to Sodexho Alliance
employees and also to Sodexho, Inc. employees, who held Sodexho Marriott
Services, Inc. stock options which were rolled over into options to purchase
Sodexho Alliance shares in connection with the acquisition of the remaining 53%
of Sodexho Marriott Services, Inc. shares (also see note 3.2). As a result of
the decline in value of Sodexho Alliance shares as of August 31, 2002, the
shares potentially in excess of those needed to fund the stock option plan were
provisioned by EUR 19 million during fiscal 2002 in order to reflect their
market value as of August 31, 2002. As a result of the sale of some of the
shares during fiscal 2003, the shares were provisioned by EUR 7 million as of
August 31, 2003.

   The fair value of marketable securities is presented in note 3.17.


 Restricted Cash

   Restricted cash represents funds set aside in order to comply with
regulations governing the issuance of restaurant vouchers in France (EUR 154
million as of August 31, 2003) and as a guarantee for commitments entered into
by Mexican affiliates (EUR 12 million as of August 31, 2003).

 Vouchers Payable

   Vouchers payable represents the face value of vouchers in circulation or
presented to Sodexho but not yet reimbursed to the affiliate.


 Financial Instruments

   Group policy is to finance acquisitions through borrowings in the acquired
company's currency generally at fixed rates of interest. In most cases where
variable rate debt has been negotiated, the variable rate interest is swapped
into fixed rates through the use of cross-currency or interest-rate swap
agreements. Similarly, in most cases where acquisition financing has been
negotiated in a currency other than that of the acquired company, a
cross-currency or currency swap agreement is negotiated.

   The cross-currency and interest rate swap agreements are used by the Group
to manage its currency and interest rate exposures on its borrowings. All such
agreements are designated as hedges at contract inception. Any interest rate
differential is recognized as an adjustment to interest expense over the term of
the related underlying debt. For swaps negotiated on inter-company debt, the
difference between the amount of the debt at the period end rate and at the
swapped rate is recorded as debt. As a policy, the Group does not engage in
speculative transactions, nor does the Group hold or issue financial instruments
for trading purposes.

   The fair values of financial instruments are presented in note 3.17.

 Provisions for Losses and Contingencies

   The Group applies the recommendations of Regulation CRC 2000-6. Provisions
for contingencies and losses are recorded when it is probable that a legal,
equitable or constructive obligation to sacrifice economic benefits to a third
party in the future without an expectation of receiving proceeds of a similar
amount from the third party.


 2.ANALYSIS OF OPERATING ACTIVITIES AND GEOGRAPHIC INFORMATION

   After reallocating management responsibilities for the remote sites and
river and harbor cruises activities to the applicable regions within the food
and management services activities in fiscal 2003, the Group changed the manner
in which it reports its operating segments. Accordingly, the Group now reports
two principal operating segments, which are Food and Management Services and
Services Vouchers and Cards. The Food and Management Services activity is
further segmented into four geographic regions. The Group reports the following
principal and secondary segments:

   Food and management services

   o North America, which now includes river and harbor cruise activities in the
     North American region.

   o United Kingdom and Ireland, which now includes river and harbor cruise
     activities in the United Kingdom and Ireland.

   o Continental Europe, which now includes river and harbor cruise activities
     in Continental Europe.

   o Rest of the World, which now includes activities on remote sites.


     Prior years have been restated to conform to the current presentation.

<TABLE>
<S>                                     <C>             <C>             <C>

                                              Fiscal year ended August 31,
                                          2003            2002           2001
                                                   (millions of euro)
Revenues by Operating Activity:

 Food and Management Services
  North America......................... 5,427           6,039           5,719
  Continental Europe.................... 3,585           3,491           3,099
  United Kingdom and Ireland............ 1,453           1,681           1,727
  Rest of World.........................   974           1,119           1,134
                                        ------          ------          ------
                                        11,439          12,330          11,679
 Service Vouchers and Cards.............   248             279             249
                                        ------          ------          ------
                                        11,687          12,609          11,928
                                        ======          ======          ======

</TABLE>


<TABLE>
<S>                                     <C>             <C>             <C>

                                             Fiscal year ended August 31,
                                          2003           2002            2001
                                                  (millions of euro)
Revenues by Geographic Region:

 North America.......................    5,427           6,038           5,719
 United Kingdom and Ireland..........    1,465           1,691           1,731
 France..............................    1,734           1,715           1,370
 Rest of Europe......................    1,978           1,901           1,834
 Rest of World.......................    1,083           1,264           1,274
                                        ------          ------          ------
                                        11,687          12,609          11,928
                                        ======          ======          ======
</TABLE>


<TABLE>
<S>                                            <C>                <C>

                                                        August 31,
                                                  2003             2002
                                                   (millions of euro)
Net Fixed Assets by Operating Activity:

 Food and Management Services
  North America............................      2,720            3,015
  Continental Europe.......................        715              712
  United Kingdom and Ireland...............        876              954
  Rest of World............................        148              158
Service Vouchers and Cards.................        147              132
Holding Companies..........................         34               34
                                                ------           ------
                                                 4,640            5,005
                                                ======           ======

</TABLE>



<TABLE>
<S>                                              <C>               <C>

                                                        August 31,
                                                  2003             2002
                                                    (millions of euro)

Net Fixed Assets by Geographic Region:

 North America.............................      2,720           3,015
 United Kingdom and Ireland................        876             957
 France....................................        364             363
 Rest of Europe............................        418             413
 Rest of the World.........................        262             257
                                                ------          ------
                                                 4,640           5,005
                                                ======          ======
</TABLE>



<PAGE>


<TABLE>
<S>                                      <C>           <C>              <C>

                                             Fiscal year ended August 31,
                                         2003           2002            2001
                                                 (millions of euro)
EBITA by Operating Activity:

 Food and Management Services
  North America.......................    268            293             294
  Continental Europe..................    167            150             139
  United Kingdom and Ireland..........     21              9              87
  Rest of World.......................     18             31              28
Service Vouchers and Cards............     68             77              61
Corporate Expenses....................    (28)           (35)            (38)
                                        ------          -----          ------
                                          514            525             571
                                        ======          =====          ======

</TABLE>



<TABLE>
<S>                                         <C>                <C>

                                                     August 31,
                                               2003              2002
                                                  (millions of euro)

Group Employees by Geographic Zone:

 North America...........................   119,009            117,689
 United Kingdom and Ireland..............    51,843             61,835
 France..................................    30,465             30,477
 Rest of Europe..........................    49,897             49,438
 Rest of the World.......................    57,171             55,702
                                            -------            -------
                                            308,385            315,141
                                            =======            =======
</TABLE>

Following is a presentation of revenues and EBITA by activity under the prior
presentation.


<TABLE>
<S>                                   <C>          <C>              <C>

                                            Fiscal year ended August 31,
                                        2003            2002           2001
                                                 (millions of euro)
Revenues by Operating Activity:

 Food and Management Services
  North America......................  5,387          5,995           5,657
  Continental Europe.................  3,501          3,413           3,034
  United Kingdom and Ireland.........  1,444          1,671           1,717
  Rest of World......................    477            566             581
                                      ------         ------          ------
                                      10,809         11,645          10,989
Remote Sites.........................    543            590             579
Service Vouchers and Cards...........    248            279             249
River and Harbor Cruises.............     87             95             111
                                      ------         ------          ------
                                      11,687         12,609          11,928
                                      ======         ======          ======
</TABLE>



<TABLE>
<S>                                    <C>             <C>             <C>

                                         Fiscal year ended August 31,
                                        2003           2002            2001
                                                (millions of euro)
EBITA by Operating Activity:

 Food and Management Services
  North America.......................   270            297             295
  Continental Europe..................   158            140             129
  United Kingdom and Ireland..........    22             11              87
  Rest of World.......................     6              7               0
Remote Sites..........................    22             26              30
Service Vouchers and Cards............    68             77              61
River and Harbor Cruises..............     7              2               7
Corporate Expenses....................   (39)           (35)            (38)
                                       ------          -----           -----
                                         514            525             571
                                       ======          =====           =====
</TABLE>



3. ANALYSIS OF THE INCOME STATEMENT, BALANCE SHEET AND STATEMENT OF CASH FLOWS

   3.1 Financial Expense, Net
<TABLE>
<S>                                   <C>              <C>              <C>

                                                Year ended August 31,
                                      2003             2002             2001
                                                 (millions of euro)

Interest income.................        24               39               34
Net variation in financial
 provisions.....................        (3)             (26)               2
Net exchange gains..............        (8)               1                1
Interest expense................      (165)            (180)            (159)
                                     ------           ------           ------
                                      (152)             (166)           (122)
                                     ======           ======           ======
</TABLE>

   The improvement in net financial expense of EUR 14 million in fiscal 2003
was the result of the prior year reflecting a EUR 19 million provision, as
described below. Exchange losses increased by EUR 9 million from the prior
year when significant exchange gains were realized by our Luncheon Ticket
subsidiary on its investments in strong currencies prior to the devaluation of
the Argentine peso. Interest expense for fiscal 2003 primarily included EUR 38
million of interest expense on the credit facility arranged in April 2001 at the
Sodexho, Inc. subsidiary, and interest of EUR 91 million on the 1996, 1999 and
2002 bond issuances. Reimbursements of borrowings of EUR 74 million and the
decline of the U.S. dollar against the euro reduced our interest expense by
EUR 15 million.

   The increase in financial provisions in fiscal 2002 mainly arose from the
recording of a provision of EUR 19 million on Sodexho Alliance shares we
acquired during fiscal 2001 and fiscal 2002 in connection with employee stock
option programs in order to reflect the lower of cost or market. Interest
expense for fiscal 2002 million primarily included EUR 80 million of interest
expense on the credit facility arranged in April 2001, interest of EUR 58
million on the 1996, 1999 and 2002 bond issuances, and fees of EUR 11 million
incurred in connection with various intercompany swap arrangements.

   Interest expense for fiscal 2001 primarily included EUR 72 million of
interest expense on the Sodexho, Inc. debt, EUR 9 million in financing charges
related to the acquisitions of Wood Dining Services, Sogeres and the remaining
shares of Sodexho Marriott Services, Inc., and interest of EUR 32 million on
the 1996 and 1999 bond issuances.

   3.2 Exceptional Items

   Net exceptional income of EUR 1 million in fiscal 2003 included
EUR 28.6 million received in fiscal as a purchase price complement in
connection with the fiscal 2001 sale of the shares in Corrections Corporation of
America. This income was offset by EUR 13.6 million in losses and provisions
pertaining to Sodexho Alliance shares held and stock option plans, EUR 7.6
million in restructuring costs in our U.S. and U.K. subsidiaries and litigation
expenses of EUR 5 million.

   Net exceptional income totaled EUR 55 million in fiscal 2002 and
primarily included the following items:

     o    a gain  of  EUR 49  million  on the  sale of our  kitchen  equipment
          business (Lockhart) in the United Kingdom;

     o    income  of  EUR 37   million   from  the   reduction  of  the  stock
          compensation  liability recorded in connection with the acquisition of
          the  remaining  shares  of  Sodexho  Marriott   Services.   The  stock
          compensation liability recorded related to the rollover of the Sodexho
          Marriott  Services  stock  options,  which  were  unvested  as of  the
          transaction  date, into options to purchase  Sodexho  Alliance shares.
          The liability was calculated at the acquisition  date based on a share
          price of  EUR 53.47.  A portion  of this  income  resulted  from our
          purchase  of Sodexho  Alliance  shares on the open  market for a lower
          price, to be used for the stock option program.  The remaining  amount
          resulted  from a decrease in the amount of provision  required for "in
          the money"  options as a result of the decline in the price of Sodexho
          Alliance shares;

     o    restructuring  costs  totaling  EUR 11  million,  primarily for loss
          ontracts,  and  receivables  and fixed asset  writedowns in the United
          Kingdom; and,

     o    the  recording  of a EUR 11  million  provision  for legal and other
          costs  related to a  discrimination  lawsuit  filed by ten current and
          former Sodexho, Inc. employees.

     Net  exceptional  charges of EUR 51  million  for fiscal  2001  primarily
reflected  the  following:  EUR 20  million in  transaction-related  expenses,
notably the expenses incurred by the Special Committee of independent  directors
of Sodexho  Marriott  Services,  Inc., name change costs and  refinancing  costs
relating  to that  acquisition;  EUR 7  million  in  losses on the sale of CCA
shares received as a dividend; and EUR 21 million in provisions on the Group's
49.95% share of Attendo Care (formerly, Partena Care), a nursing home management
business in Sweden of which 50.05% was sold in fiscal 2000.


   3.3Income Tax Provision

   Following is a reconciliation of income taxes computed at Sodexho
Alliance's statutory rate to the actual income tax provision (in millions of
euro).


<PAGE>


<TABLE>
<S>                                           <C>           <C>           <C>


                                                   Year ended August 31,
                                              2003          2002          2001
Income before exceptional items,
 income taxes, income from equity
 investees, and goodwill amortization........  362           359           449
Exceptional items............................    1            55           (51)
                                             -------       -------       -------
Income before taxes..........................  363           414           398
Sodexho Alliance tax rate.................... 35.43%        35.43%        36.43%
                                             -------       -------       -------
Theoretical tax provision....................  129           147           145
Effect of differing jurisdictional tax rates.    2           (10)           (1)
Permanent differences........................   (7)           (4)           (4)
Long-term capital gains offset against
 long-term capital losses....................    0             0            (2)
Other taxes..................................    4            (4)           13
Net operating loss carryforwards utilized
 in the current year but generated in prior
 years and not previously recognized.........   (2)           (3)           (3)
Current year non-recognition of net operating
 loss carryforwards..........................    5             8             9
                                             -------       -------       -------
Tax provision................................  131           134           157
                                             =======       =======       =======
Current income taxes.........................  140           129           137
Deferred income taxes........................   (9)            5            20
                                             -------       -------       -------
Total........................................  131           134           157
Withholding taxes............................    3             2
                                             -------       -------       -------
Total income taxes...........................  134           136           157
                                             =======       =======       =======
</TABLE>


  3.4 Goodwill

<TABLE>
<S>                 <C>         <C>         <C>          <C>          <C>


                                Additions   Decreases
                    August 31,  during the  during the   Translation  August 31,
                      2002      year        year         adjustments     2003

                                        (millions of euro)

Sodexho,
 Inc.(including
 Wood Dining
 Services)..Gross     1,039.8        9.5         2.3         (78.0)       969.0
      Accumulated
     Amortization       (61.2)     (32.9)                      3.7        (90.4)

Sodexho Services
 Group (formerly,
 Gardner
 Merchant)..Gross       272.1                                (22.2)       249.9
      Accumulated
     Amortization       (68.8)      (8.6)                      5.9        (71.5)

Sodexho Pass
 do Brazil
 (formerly,
 Cardapio)..Gross        63.4       25.6                      (1.4)        87.6
      Accumulated
     Amortization        (9.7)      (2.9)                      0.1        (12.5)

Sodexho Management
 Services (formerly,
 Marriott
 UK)........Gross        56.0                                 (4.6)        51.4
      Accumulated
     Amortization        (9.0)      (1.8)                      0.8        (10.0)

Sogeres.... Gross        56.0        0.5                      56.5
      Accumulated
     Amortization        (2.1)      (1.9)                                  (4.0)

Sodexho Scandinavian
 Holding....Gross        53.7        2.3                      (0.2)        55.8
      Accumulated
     Amortization        (9.0)      (1.8)                                 (10.8)

Sodexho
 Espana.... Gross        28.5                                              28.5
      Accumulated
     Amortization        (7.4)      (0.9)                                  (8.3)

Sodexho
 Belgique...Gross        22.9                                              22.9
      Accumulated
     Amortization        (8.0)      (0.7)                                  (8.7)

Tillery Valley
 Foods......Gross        22.7                                 (1.9)        20.8
      Accumulated
     Amortization        (4.5)      (0.7)                      0.4         (4.8)

Luncheon
 Tickets....Gross        22.5                                              22.5
      Accumulated
     Amortization        (3.0)      (0.7)                                  (3.7)

Sodexho
 Italie.....Gross        17.9                     0.2                      17.7
      Accumulated
     Amortization        (2.4)      (0.7)                                  (3.1)

Universal
 Services...Gross        17.2                                              17.2
      Accumulated
     Amortization        (1.6)      (0.5)                                  (2.1)

Other goodwill
 (gross amount
 less than 15
 million....Gross       172.4        2.7          3.3         (2.4)      169.4
      Accumulated
     Amortization       (42.7)      (7.5)        (2.7)         0.4       (47.1)

Total goodwill
 Cost............     1,845.1       40.6          5.8       (110.7)    1,769.2
 Accumulated
  amortization...      (229.4)     (61.6)        (2.7)        11.3      (277.0)
                     ---------     ------        -----      -------    --------
  Net book value.     1,615.7      (21.0)         3.1        (99.4)    1,492.2

</TABLE>




  3.5 Intangible Assets
<TABLE>
<S>              <C>         <C>        <C>        <C>        <C>      <C>

                             Addi-      Dec-       Changes    Trans-
                             tions      reases     in conso-  lation
                  August     during     during     lidation   adjust-  August
                  31, 2002   the year   the year   scope      ments    31, 2003

                                      (millions of euro)

Market Shares:

 North America
  (food and
  management
  services)       1,851.0                                    (185.3)    1,665.7

  North America
   (remote sites)    44.4                                      (4.4)       40.0

  United Kingdom
   and Ireland      589.3                                     (48.9)      540.4

  Netherlands        86.1                                                  86.1

  Sweden             77.9                                      (0.5)       77.4

  Australia          10.2                                       0.5        10.7

  France            137.0                                                 137.0
                  -------     -----     -----      -----     ------     --------
 Total Cost       2,795.9      0.0       0.0        0.0      (238.6)    2,557.3

 Diminutions
  in value
  (Australia)        (1.2)              (0.3)                  (0.1)       (1.0)
                  --------    -----     -----      -----     -------    --------
 Net book value   2,794.7      0.0      (0.3)       0.0      (238.7)    2,556.3


Other Intangible Assets:

 Cost               190.6     57.6      24.8       (0.3)      (35.8)      187.3
                  --------   ------     -----      -----     -------    --------
 Accumulated
  amortization
  and diminutions
  in value          (45.2)   (26.9)     (4.9)                   9.6       (57.6)
                  --------   ------     -----      -----     -------    --------
 Net book value     145.4     30.7      19.9       (0.3)      (26.2)      129.7


Totals:

 Cost             2,986.5     57.6      24.8       (0.3)     (274.4)    2,744.6

 Accumulated
  amortization
  and diminutions
  in value         (46.4)    (26.9)     (5.2)                   9.5       (58.6)
                 --------    ------     -----      -----      -------   --------
 Net book value  2,940.1      30.7      19.6       (0.3)     (264.9)    2,686.0
                 ========    ======     =====      =====     =======    ========
</TABLE>





<PAGE>


 3.6 Property, Plant and Equipment

<TABLE>
<S>              <C>         <C>        <C>        <C>        <C>      <C>

                             Addi-      Dec-       Changes    Trans-
                             tions      reases     in conso-  lation
                  August     during     during     lidation   August-
                  31, 2002   the year   the year   scope      ments    31, 2003

                                     (millions of euro)
Land
 Cost               8.3                                        (0.5)        7.8
 Diminutions
  in value         (0.4)                                                   (0.4)
                 --------    ------     -----      -----      -------   --------
 Net book value     7.9        0.0       0.0        0.0        (0.5)        7.4

Buildings
 Cost              74.8        3.7         2.1                 (5.2)       71.2
 Accumulated
  depreciation    (32.9)      (3.9)       (1.0)                 3.4       (32.4)
                 --------    ------      ------    -----      -------   --------
Net book value     41.9       (0.2)        1.1      0.0        (1.8)       38.8

Facilities and fixtures
 Cost             121.4       15.5         9.0                 (3.9)       124.0
 Accumulated
  depreciation    (70.8)     (15.5)       (6.6)                 8.8       (70.9)
                 --------    ------      ------    -----      -------   --------
Net book value     50.6        0.0         2.4      0.0         4.9        53.1

Plant and machinery
 Cost             360.1       44.9        16.1      0.8       (43.3)      346.4
 Accumulated
  depreciation   (224.4)     (50.2)      (25.6)     0.1        30.7      (218.2)
                 --------    ------      ------    -----      -------   --------
Net book value    135.7       (5.3)       (9.5)     0.9       (12.6)      128.2

Vehicles
 Cost              87.0        4.4         6.4      0.1        (3.7)       81.4
 Accumulated
  depreciation    (67.2)      (7.6)       (5.8)                 7.7       (61.3)
                 --------    ------      ------    -----      -------   --------
 Net book value    19.8       (3.2)        0.6      0.1         4.0        20.1

Office and computer equipment
 Cost             178.3       22.8        12.6      0.2         6.2       194.9
 Accumulated
  depreciation   (126.3)     (27.8)      (13.7)    (0.1)        5.2      (135.3)
                 --------    ------      ------    -----      -------   --------
Net book value     52.0       (5.0)       (1.1)     0.1        11.4        59.6

Other fixed assets
 Cost              94.3       30.9         5.1                  2.6       122.7
 Accumulated
  depreciation    (31.6)     (10.8)       (3.6)               (11.8)      (50.6)
                 --------    ------      ------    -----      -------   --------
 Net book value    62.7       20.1        (1.5)     0.0        (9.2)       72.1

Totals:
 Cost             924.2      122.2        51.3      1.1       (47.8)      948.4
 Accumulated
  amortization   (553.6)    (115.8)      (56.3)     0.0        44.0      (569.1)
                 --------    ------      ------    -----      -------   --------
Net book value    370.6        6.4        (5.0)     1.1        (3.8)      379.3
                 ========    ======      ======    =====      =======   ========
</TABLE>


 3.6.1 Capital Leases

   Assets recorded under capital lease arrangements totaled EUR 48 million as
of August 31, 2003 (EUR 44 million as of August 31, 2002), which was net of
amortization of EUR 72 million.



<PAGE>


 3.7 Financial investments


<TABLE>
<S>                  <C>         <C>           <C>         <C>      <C>

                                  Increases/   Changes     Trans-
                                 (decreases)   in conso-   lation
                      August      during       lidation    adjust-   August 31,
                      31, 2002    the year     scope       ments     2003
                                        (millions of euro)
Investment securities
 Cost                   19.5         1.8          (0.2)        (0.6)       20.5
 Diminutions
  in value              (8.6)       (1.4)                       0.5        (9.5)
                       ------      ------         -----        -----       -----
Net book value          10.9         0.4          (0.2)        (0.1)       11.0

Other investments
 Cost                   23.3        (1.0)                      (0.1)       22.2
 Diminutions
  in value              (1.3)                                              (1.3)
                       ------      ------         -----        -----       -----
Net book value          22.0        (1.0)          0.0         (0.1)       20.9

Receivables from investees
 Cost                   14.2         0.5          (0.2)        (0.8)       13.7
 Diminutions
  in value               0.0                                                0.0
                       ------      ------         -----        -----       -----
Net book value          14.2         0.5          (0.2)        (0.8)       13.7

Loans receivable *
 Cost                    7.5        (1.3)                      (0.1)        6.1
 Diminutions
  in value              (0.1)                                              (0.1)
                       ------      ------         -----        -----      ------
Net book value           7.4        (1.3)          0.0         (0.1)        6.0

Deposits and other *
 Cost                   12.9        (0.8)          0.4         (0.5)       12.0
 Diminutions
  in value               0.0                                                0.0
                       ------      ------         -----        -----      ------
 Net book value         12.9        (0.8)          0.4         (0.5)       12.0

Total financial investments
 Cost                   77.4        (0.8)          0.0         (2.1)       74.5
 Diminutions
  in value             (10.0)       (1.4)          0.0          0.5       (10.9)
                       ------      ------         -----        -----      ------
Net book value          67.4        (2.2)          0.0         (1.6)       63.6
                       ======      ======         =====        =====      ======
</TABLE>

* Included in working capital in the cash flow statement.

   As of August 31, 2003, investment securities principally include a EUR 3
million investment in Stadium Australia Management, in which the Group owns
15.8% of the shares, a EUR 3 million investment in Leoc Japan Co (previously,
Sodex Japan Company Ltd), of which it owns 9.3%, and a EUR 1 million
investment in Societe Privee de Gestion, in which the Group owns 10.7% of the
shares.

 3.8 Investments in Equity Investees

    Companies accounted for under the equity method are listed in note 4.4.

<TABLE>
<S>             <C>       <C>       <C>       <C>          <C>         <C>


                          Current                          Trans-
                          year net  Current   Changes      lation      Gross
                August    income    year      in conso-    adjust-     balance,
                31, 2002  (loss)    distri-   lidation     ments and   August
                                    bution    scope        other(1)    31, 2003

                                   (millions of euro)

Equity method
 investees       10.9       4.3      (3.3)       1.0          6.4         19.3
               ======      =====    ======    ======       =======       ======
</TABLE>

(1) Translation adjustments and other are net of EUR 7.6 million classified as
    provisions for contingencies and losses as of August 31, 2003, which
    corresponds to our negative investment in three equity method investees.

<PAGE>




 3.9 Prepaid Expenses, Other Receivables and Other Assets

<TABLE>
<S>                       <C>            <C>           <C>            <C>

                                  Diminutions                  Diminutions
                          Gross value,   in value,     Gross value,   in value,
                          August 31,     August 31,    August 31,     August 31,
                          2003           2003          2002           2002

                                         (millions of euro)

 Advances                         8                            10
 Other operating
  receivables                   265            (1)            238           (2)
 Investment receivables           3                             1
 Financing receivables            2                             1
                              -----          -----          ------         ----
 Total other receivables        278            (1)            250           (2)
 Prepaid expenses                70                            64
 Deferred financing charges      22                            29
 Other deferred charges (1)     170                           155
 Deferred tax asset              98                           110
                              -----          -----          ------         ----
Total                           638            (1)            608           (2)
                              =====          =====          ======         ====
</TABLE>

(1) This item is classified as fixed assets in the cash flow statement.



3.10  Accounts and Other Receivables

<TABLE>
<S>          <C>       <C>        <C>        <C>    <C>       <C>     <C>

                       Allow-
                       ance for                      Due               Net
             Gross     Doubtful   Net book   Due     from      Due     book
             value,    Accounts,  value,     within  one to    after   value,
             August    August     August     one     five      five    August
             31, 2003  31, 2003   31, 2003   year    years     years   31, 2002

                                     (millions of euro)

Accounts
 receivable   1,447       (64)     1,383    1,378       5        0       1,456
            =======     ======    ======   ======     ====     ====     ======
Other
 receivables    278        (1)       277      248      29        0         248
            =======     ======    ======   ======     ====     ====     ======
Prepaid
 expenses        70         0         70       68       1        1          64
            =======     ======    ======   ======     ====     ====     ======
</TABLE>

  The allowance for doubtful accounts represents 4.4% of the accounts
receivable balance as of August 31, 2003.



 3.11 Deferred Charges

<TABLE>
<S>                 <C>          <C>        <C>         <C>         <C>
                    Net book                                         Net book
                    value,       Due        Due from                 value,
                    August 31,   within     one to       Due after   August 31,
                    2003         one year   five years   five years  2002

  Deferred
   financing costs       22          6           15             1           29
                      =====      ======      =======        ======      =======
  Deferred charges      170         40           86            44          155
                      =====      ======      =======        ======      =======
</TABLE>


   Included in deferred charges are investments in client facilities in the
U.S. totaling EUR 124 million as of August 31, 2003 as well as EUR 20
million of bid costs on long term contracts, which are amortized over the
shorter of their estimated useful life and 10 years.



 3.12  Deferred taxes

<TABLE>
<S>                                        <C>                  <C>

                                                   August 31,
                                           2003                 2002
                                               (millions of euro)
Deferred tax assets                          98                  110
Deferred tax liabilities                    (17)                 (18)
                                           -----                -----
Net deferred tax assets                      81                   92
                                           =====                =====
</TABLE>

   As of August 31, 2003, deferred tax assets which were not recorded because
their realization was not considered probable totaled EUR 25 million. As of
August 31, 2002, deferred tax assets which were not recorded because their
realization was not considered probable totaled EUR 24.8 million.

   The principal items giving rise to deferred tax assets and liabilities were
as follows:
<TABLE>
<S>                                        <C>               <C>

                                          August 31,         August 31,
                                            2003               2002
                                        (millions of       (millions of
                                            euro)              euro)
 Temporary differences:
 Employee benefits liabilities               94                   94
 Other temporary differences                (22)                 (21)
 Net operating loss carryforwards             9                   19
                                          ------                -----
 Net deferred tax assets                     81                   92
                                          ======                =====
</TABLE>



  3.13  Shareholders' Equity


   Changes in shareholders' equity are as follows:

<TABLE>
<S>     <C>          <C>    <C>       <C>       <C>     <C>     <C>     <C>
                             Addi-              Foreign
                             tional             cur-                    Group
           Shares            paid               rency   Trea-           Share-
           out       Common  in       Retained  trans-  sury    Net     holders'
           standing  stock   capital  earnings  lation  shares  income  equity

                                 (millions of euro)
Share-
 holders'
 equity,
 August
 31,
 2001      157,559,654   630    1,141     432     86     (31)     128     2,386

Share
 capital
 increase    1,461,762      6       50                                       56

Dividend
 payments
 by the
 holding
 company
 (net of
 divi-
 dends on
 treasury
 shares)                                   41                    (128)      (87)

Net income
 for the
 period                                                           202       202

Foreign
 currency
 translation
 adjustment                                      (159)                     (159)
         ----------     ----      ----   ----    -----   -----   -----    ------

Share
 holders'
 equity,
 August
 31,
 2002   159,021,416      636     1,191    473    (73)    (31)     202     2,398
        ===========     ====     =====   ====    ====    =====   =====   =======

Share
 capital
 increase       149                                                           0

Reclas-
 sifica-
 tion of
 deferred
 taxes on
 share
 capital
 increase
 expenses                           (5)     5                                 0

Dividend
 payments
 by the
 holding
 company
 (net of
 dividends
 on treasury
 shares)                            88                           (183)      (95)

Net income
 for the
 period                                                           162       162

Foreign
 currency
 translation
 adjustment
 and other                                       (215)    (1)              (216)

         ----------     ----      ----   ----   -----    -----   -----    ------
Share
 holders'
 equity,
 August
 31,
 2003   159,021,565     636      1,186    566    (288)   (32)     181     2,249
        ===========     ====     =====   ====    ====    =====   =====   =======
</TABLE>



 3.13.1Indirectly Held Treasury shares

   As of August 31, 2003, Sofinsod had a 5.56% indirect interest in Sodexho
Alliance, SA through its 14.4% interest in the capital of Bellon SA, which in
turn held 38.63% of Sodexho Alliance, SA.

   As of August 31, 2003, Sofinsod had a 1.58% indirect interest in Sodexho
Alliance, SA, through its 100% interest in La Societe Financiere De La Porte
Verte, which in turn owns 4.1% of Bellon S.A., which in turn holds 38.63% of
Sodexho Alliance, SA.


 3.14  Minority Interests

   Changes in minority interests are as follows:

<TABLE>
<S>                                              <C>                <C>

                                                         August 31
                                                 2003               2002
                                                    (millions of euro)
Minority interests, beginning of  year             73               131
 Share capital increase                             0                 0
 Dividends paid                                   (11)              (15)
 Net income for the period                          9                13
 Change in consolidation scope                     (2)              (54)
 Currency translation and other                    (3)               (2)
                                                ------             -----
Minority interests, end of  year                   66                73
                                                ======             =====

</TABLE>


 3.15 Provisions for Contingencies and Losses

   Provisions for contingencies and losses include the following amounts:

<TABLE>
<S>             <C>      <C>     <C>    <C>        <C>       <C>        <C>
                                                   Trans-
                                        Release    lation    Change
                                        without    Diffe-    in
                 August                 corres-    rences    Consoli-   August
                 31,     Inc-    Re-    ponding    and       dation     31,
                 2002    rease   lease  charge     Other     Scope      2003

                                     (millions of euro)
Sodexho Inc.
 acquisition
 provisions         5                                  (1)                  4
Payroll and
 other taxes       39       7      (4)      (4)        (2)        1        37
Contract
 termination
 costs             22       3     (10)                 (5)        1        11
Client and
 supplier
 litigation         5       3      (3)                                      5
Employee
 litigation        18       8      (7)      (1)        (2)                 16
Large repairs       6       3      (3)                 (1)                  5
Equity method
 investees          0                                   8                   8
Other               4       3      (1)      (1)        (1)       (1)        3
                  ----    ----    ----     ----       ----      ----      ----
                   99      27     (28)      (6)        (4)        1        89
                  ====    ====    ====     ====       ====      ====      ====
</TABLE>


     The following table  summarizes the net impact to the income statement line
items of the increases and releases to provisions for  contingencies  and losses
as of August 31, 2003:

<TABLE>
<S>                                      <C>               <C>

                                         Increases         Releases
                                             (millions of euro)
Operating                                      14              (21)
Financial                                       0                0
Exceptional                                    13              (13)
                                            ------            ------
                                               27              (34)
                                            ======            ======

</TABLE>


3.16 Borrowings and Financial Debt

   Future payments on borrowings and other debt balances as of August 31, 2003
were due as follows:

<TABLE>
<S>            <C>    <C>    <C>    <C>    <C>    <C>

                    Less       One to     More          Total         Total
                    than one   five       than five     August 31,    August 31,
                    year       years      years         2003          2002

                                    (millions of euro)
Bonds
 Euro                341                     1,300          1,641        1,642
                    ----       ----          -----          -----        -----
Total bonds          341          0          1,300          1,641        1,642
Bank borrowings (1)
 U.S. Dollars        157        795              1            953        1,175
 Euro               (126)      (324)            62           (388)        (501)
 Pounds Sterling      86         (1)                           85          224
 Other currencies     31         14                            45           41
                    ----       ----          -----          -----        -----
Total bank
 borrowings          148        484             63            69           939

Capital lease obligations
 U.S. Dollars          3          4                            7            12
 Euro                 15         19              4            38            36
 Other currencies      3                                       3             4
                    ----       ----          -----          -----        -----
Total capital
 lease obligations    18         26              4            48            52

Other borrowings
 Euro                             3              1             4             5
 Other currencies      1                                       1
                    ----       ----          -----          -----        -----
Total other
 borrowings            1          3              1             5             5

Bank overdraft balance
 Euro                 25                                      25            18
 Pounds Sterling      70                                      70            31
 Other currencies      4                                       4             6
                    ----       ----          -----          -----        -----
Total bank
 overdrafts           99          0              0            99            55
                    ----       ----          -----         ------        -----
Total                607        513          1,368         2,488         2,693
                    ====       ====          =====         ======        =====
</TABLE>

(1) Includes impact of swaps; see notes 3.16.2 and 3.16.3 for further
information.

<PAGE>


3.16.1 Bond Issues
<TABLE>
<S>                  <C>         <C>        <C>           <C>           <C>

                     August 31,                           Translation   August
                     2002        Increase   Repayments    Differences   31, 2003

                        (millions of euro, except for number of securities)

1996 bond issuance -
 FRF 2,000,000,000
Principal                 305                                               305
Accrued
 interest                   4           4          4                          4
                        ------      -----      -----         ------       ------
Total                     309           4          4              0         309

Number of
 securities           400,000                                           400,000
1999 bond issuance
 - EUR 300,000,000
  Principal               300                                               300
  Accrued interest          7           6          7                          6
                        ------      -----      -----         ------       ------
Total                     307           6          7             0          306

Number of
 securities           300,000                                           300,000
 2002 bond issuance -
 EUR 1,000,000,000
   Principal            1,000                                             1,000
   Accrued interest        26         26          26                         26
                       ------      -----       -----         ------       ------
Total                   1,026         26          26            0         1,026

                       ------      -----       -----         ------       ------
Total                   1,642         36          37            0         1,641
                       ======      =====       =====         ======       ======

</TABLE>



 EUR 305 million bond issue

   On May 22, 1996, Sodexho Alliance issued 400,000 bonds with a face value of
EUR  762.25 per bond, representing a total of EUR 304,898,000. The bonds are
redeemable at par on June 7, 2004 and bear interest at 6% per annum, which is
payable on June 7 annually. Each bond carried a warrant, entitling the bearer to
purchase one Sodexho Alliance share prior to June 7, 2004 for EUR 24.71. After
giving effect to share issuances and stock splits, each warrant currently
entitles the holder to 16.66 shares per warrant. There were 374,773 warrants and
400,000 bonds outstanding as of August 31, 2003.


  euro)300 million bond issue

   On March 16, 1999, Sodexho Alliance issued 300,000 bonds of EUR 1,000
each for total proceeds of EUR 300 million. The bonds will be fully redeemable
at par on March 16, 2009. The bonds carry interest at 4.625% per annum, which is
payable on March 16 annually. There were 300,000 bonds outstanding at August 31,
2003.


 EUR 1 billion bond issue

   On March 25, 2002, Sodexho Alliance issued bonds totaling EUR 1 billion,
maturing on March 25, 2009, and carrying interest of 5.875% payable on March 25
annually.



 3.16.2 Other Borrowings

   As of August 31, 2003, portions of the three tranches of the credit
facility entered into in April 2001 and guaranteed by Sodexho Alliance had been
reimbursed as follows:

>>   Tranche A totalingEUR 1,932 million was fully reimbursed as August 31,
     2002;

>>   Tranche B totaling U.S.$930 million, with quarterly repayments over the
     next five years, of which the entire amount was outstanding as of August
     31, 2001, was reimbursed for an amount of U.S.$232 million (pursuant to the
     swap agreement described in note 3.17 below the U.S. dollar variable
     LIBOR-based rate on this debt has been swapped for a fixed rate); and

>>   Tranche C totaling U.S.$150 million, to be utilized for short-term
     financing, working capital needs and for bank guarantees and reimbursable
     in full in five years, of which U.S. $20 million was utilized as of August
     31, 2003.


 Covenants

   The EUR 305 million and EUR 300 million bond issues, redeemable on June
7, 2004 and March 16, 2009, respectively, are not subject to any financial
covenants.

   The credit facilities arranged in April 2001 with a syndicate of banks
amounted to U.S. $718 million as of August 31, 2003 and include accelerated
repayment conditions typical of this type of arrangement. Also included in the
terms are various specific covenants related to the level of ownership in
Sodexho Alliance by Bellon S.A., which is not permitted to be lower than 33.3%,
as well as to ratios pertaining to the Group's consolidated net debt, its EBITA,
and its net financial expense. These ratios, which are evaluated at each
half-year point and calculated based on a rolling 12 months, are as follows:
<TABLE>
<S>                                                 <C>

                                                    August 31, 2003
Net debt/EBITDA*                                         < 2.25
EBITDA/financial expense*                                > 3.5
</TABLE>

 * These four terms are defined in the credit agreement. These definitions
   differ in several respects from accounting definitions. For example, in
   the definition provided in the covenants, net debt does not include
   restricted cash. As such, the financial covenants cannot be
   recalculated from the published financial statements.


   The Group was in compliance with these covenants as of August 31, 2003.
Should a covenant requirement not be met, the banks representing more than two
thirds of the credit facilities are authorized to require accelerated repayment
of the balance of the credit facilities. Accelerated repayment of the credit
facilities gives the holders of the EUR 1 billion bond issue the right to
demand repayment of the bonds.

 3.16.3  Interest rate swap agreements

   In accordance with Group policy, the majority of variable rate borrowings
are swapped to fixed interest rates. If borrowings are arranged other than in
local currency, a currency swap agreement is negotiated. As of August 31, 2003,
91% percent of borrowings were at fixed rates (including those swapped) and the
average interest rate for fiscal 2003 was 5.5%.

3.17  Financial Instruments

  The table below summarizes the impact on the financial statements of the
financial instruments described in note 3.16.

<TABLE>
<S>               <C>          <C>         <C>           <C>             <C>

 Equivalent
  in millions                                            Borrowings
  of euro            Borrowings  Borrowings  Borrowings  in other
                     in euro     in USD      in GBP      currencies      Total

Borrowings
 subject to
 cross currency
 agreements:

 UK borrowings
 - GBP 60 million

  Due to
   the bank -
   GBP 60 million
                                                  86                         86
  Due from
   the bank -
   EUR 93.26 million     (93)                                               (93)

 Sodexho
  Scandinavia
  borrowings -
  SEK 150 million

  Due to
   the bank -
   SEK 150 million                                             16            16

  Due from
   the bank -
   EUR 16.7 million      (17)                                               (17)


Sodexho, Inc.
 borrowings -
 US $300 million

 Due to
  the bank -
  US $300 million                    275                                    275
 Due from
  the bank -
  EUR 338.5 million     (339)                                              (339)

Other subsidiary
 borrowings

 Due to
  the bank                                                      9             9
  Due from the bank       (7)                     (1)                        (8)

Borrowings subject to
 interest rate swap
 agreements               68         593           0            0           661
Borrowings not subject
 to hedging arrangements   0          85           0           20           105
                        -----       -----        ----         ----         -----
Total borrowings        (388)        953          85           45           695
</TABLE>


  3.17.1  Cross currency Swaps

   In order to match the cash flows on debt repayments with the currency of an
 operating subsidiary in the United Kingdom, in October 1999, the Group
 negotiated a cross currency swap (capped LIBOR in pounds sterling against 5.25%
 in pounds sterling against euro) on an intercompany loan of EUR 93 million.
 The decrease in the value of the pound sterling against the euro decreased
 borrowings as converted to euro by EUR 7 million related to this instruments
 as of August 31, 2003.

   In June 1999, a cross currency swap was negotiated on a loan of EUR 50.1
 million (EUR 39 million as of August 31, 2002) to Sodexho Scandinavia Holding
 AB (4.15% against a variable interest rate in Swedish crowns). The related debt
 at the swapped rate totaled EUR 16.7 million. The swap terminates in August
 2004.

   In March 2002, a cross currency swap was negotiated on an inter-company
 loan of U.S. $309 million to Sodexho, Inc. (6.325% against 6.5775% and in euro
 against U.S. dollars) reimbursable on March 25, 2007. As of August 31, 2003,
 the debt at the swapped rate totaled EUR 339 million. The decrease in the
 dollar against the euro led to a decrease in the debt as converted to euro of
 EUR 64 million.


  3.17.2   Interest Rate Swaps

   Several interest rate swaps (2.1% to 5.9% against US dollar LIBOR) with the
 following maturities were negotiated in order to convert variable rate interest
 to fixed on U.S.$698 million (EUR 639 million) drawn on Tranche B of the
 credit facility described above. Following are the maturities of the underlying
 notional amounts.

<TABLE>
<S>                                           <C>                  <C>

                                              2003-2004            2004-2005
Interest rate swaps
 (in millions of U.S. dollars                    328                  370
Interest rate swaps
 (equivalent in euro)                            300                  339
</TABLE>


   In October 1999, the Group negotiated an interest rate swap maturing in
 2004 on a notional amount of EUR 68 million, which converted fixed rate debt
 at 5.2% to Euribor.

  Fair Values of Financial Instruments

   Following are the fair values of the Group's financial instruments as of
August 31, 2003:

<TABLE>
<S>                                 <C>                <C>           <C>


    ASSETS                          Net book value     Fair value    Difference
                                                   (millions of euro)
Financial fixed assets
 Investments                                11               11               0
 Receivables from investees                 14               14               0
 Loans receivable                            6                6               0
 Other long-term investments                21               21               0
 Other financial fixed assets               12               12               0
                                         -----             ----             ----
Total financial fixed assets                64               64               0
Equity method investees                     19               19               0

Marketable securities and other
 Cash                                       45               45               0
 Term deposits                             133              133               0
 Debt securities                           114              114               0
 Mutual funds - SICAV                      149              149               0
 Listed securities                           0                0               0
 Mutual funds - other                       12               12               0
                                         -----             ----             ----
Total                                      453              453               0

Sodexho Alliance shares (1)                 89               65             (24)
                                         -----             ----             ----
Total marketable securities and other      542              518             (24)

Restricted cash                            166              166               0
                                         -----             ----             ----
Total                                      791              767             (24)
                                         =====             ====             ====

           LIABILITIES

Bonds
 2002 EUR 1 billion bond issuance        1,026            1,096              70
 1999 EUR 300 million bond issuance        306              304              (2)
 1996 EUR 305 million
  (FRF 2,000 million) bond issuance        309              314               5
                                         -----            -----             ----
Total bonds                              1,641            1,714              73

Bank debt
 Sodexho, Inc. borrowings                  663              672               9
 Swap on intercompany
  loan with Sodexho Holdings Ltd            (6)              (7)             (1)
 Swap on intercompany loan
  with Sodexho, Inc                        (64)             (68)             (4)
 Other bank debt                           102              102               0
                                         -----            -----             ----
Total bank debt                            695              699               4

Bank overdrafts                             99               99               0
Other borrowings                            53               58               5
Total borrowings                         2,488            2,570              82
Other liabilities
SMS acquisition debt (1)                    35               11             (24)
                                         -----            -----             ----
Total                                    2,523            2,581              58
                                         =====            =====             ====
</TABLE>

(1) A portion of the acquisition cost for the shares of Sodexho Marriott
    Services, Inc. (now Sodexho, Inc.) acquired in June 2001 related to the
    rollover of employee stock options, was considered payable in Sodexho
    Alliance shares, which have not yet been issued.  A liability was recorded
    in other liabilities as of the acquisition date.  This liability has been
    revalued to reflect the price paid by Sodexho Alliance for shares it
    acquired on the open market to be used in connection with this stock option
    program.  As of August 31, 2003, the fair value of the Sodexho Alliance
    shares  wasEUR 24 million lower than its net book value; the fair value of
    the related debt wasEUR 24 million lower than its net book value.




 3.18 Other liabilities

<TABLE>
<S>                                <C>                          <C>


                                   August 31, 2003             August 31, 2002
                                           (millions of euro)

Advances from clients                      171                         130
Tax and employee liabilities               974                         985
Other operating liabilities                 59                          81
Other non-operating liabilities             38                          55
Deferred revenues                           35                          29
Deferred tax liabilities                    17                          18
                                         -----                       -----
                                         1,294                       1,298
                                         =====                       =====
</TABLE>



3.19 Statement of Cash Flows - Additional Information

    The table below provides additional information on the balance sheet line
items impacting the cash flow statement, excluding exchange rate variations,
changes in consolidation scope, or other variations not impacting cash flows.


3.19.1 Change in Working Capital

<TABLE>
<S>                                     <C>        <C>             <C>
                                        Assets     Liabilities     Total Change
                                               (millions of euro)

Inventories                               9
Accounts receivable, net of
 allowance for doubtful accounts         (5)
Other operating receivables              (1)
Advances                                  8
Accounts payable                                           6
Vouchers payable                                          43
Taxes and social charges payable                          36
Other operating payables                                  26
Deferred revenues                                          0
                                      -----            -----              -----
Change in working capital from
 operating activities                    11              111                100
                                      =====            =====              =====

Investment related receivables            2
Investment related payables                              (17)
                                      -----            ------             ------
Change in working capital
 from investing activities                2              (17)               (19)
                                      =====            ======             ======

Financing related receivables            22
Financing related payables                                (1)
                                      -----            ------             ------
Change in working capital
 from financing activities               22               (1)               (23)
                                      =====            ======             ======

</TABLE>


 3.19.2 Acquisitions of Tangible and Intangible Assets and Subsidiaries

   The following table presents the cash flows for tangible and intangible
fixed assets for fiscal 2003.

<TABLE>
<S>                                       <C>            <C>           <C>

                                          Acquisitions   Disposals      Net
                                                    (millions of euro)
Tangible and intangible assets,
 including certain deferred charges           (239)           14          (225)
Variation in financial assets                   (2)            1            (1)
                                              -----         -----         -----
Total change in tangible
 and intangible assets                        (241)           15          (226)
Acquisitions (disposals) of subsidiaries       (37)            2           (35)
Less: capital gains taxes                                                    0
Less: cash in acquired and
 disposed of companies, net                      3            (1)            2
                                              -----         -----         -----
Total change in consolidation scope            (34)            1           (33)
                                              -----         -----         -----
Total                                         (275)           16          (259)
                                              =====         =====         =====

</TABLE>


<PAGE>




 3.20 Commitments

   Commitments made as of August 31, 2003 (millions of euro) were as follows:
<TABLE>
<S>                     <C>          <C>          <C>           <C>       <C>
                                                                      August 31,
                                       August 31, 2003                   2002
                        Less than    1-5 years    > 5 years   Total      Total
                         1 year
Financial guarantees
 to third parties           14            45           0        59         41
Performance bonds on
 operating leases           13            20           0        33         62
Client performance
 bonds                       0            39           9        48         22
Other commitments            0            10           0        10         18
                         ------        ------       -----     -----      -----
Total                       27           114           9       150        143
                         ======        ======       =====     =====      =====

</TABLE>

   With respect to the above table, there are no other significant off balance
sheet commitments.

 Sureties

     In  connection  with its  Service  Vouchers  and  Cards  activity,  Sodexho
Alliance and its subsidiaries have secured cash amounts with different financial
institutions,  totaling  EUR 18  million  as of August 31,  2003.  Other  surety
arrangements  (security granted over equipment or buildings used for collateral)
agreed to by  Sodexho  Alliance  and its  subsidiaries  in fiscal  2003 were not
significant.


 3.20.1 Commitments to purchase or sell shares in companies

   Commitments made:

o  Patriot Medical Technologies, Inc.

   The Group has entered into a put agreement with the minority shareholders
   of Patriot Medical Technologies, Inc. ("Patriot"), to acquire the remaining
   shares outstanding during the period from March 3, 2003 to March 3, 2004 for
   a total of U.S. $234,000 (EUR 0.2 million). As of August 31, 2003, a
   portion of the put option had already been exercised, in the amount of U.S.
   $100,000.


o  Medcheque

   The Group, through its Service Vouchers and Cards subsidiary in Brazil, has
   entered into a put agreement with the minority shareholders of Medcheque to
   acquire the remaining 35% of the shares outstanding during the period from
   July 2004 to July 2006 for a total price of between EUR 7.7 million
   (minimum assuming purchase is made in July 2004) and EUR 9.8 million
   (maximum assuming purchase is made in August 2006).


o  Abra (subsidiary of Sodexho Scandinavian Holding AB)

   The Group, through its Sodexho Scandinavian Holding AB subsidiary, has
   entered into a put agreement with the minority shareholders of Abra (located
   in Norway) to acquire the remaining 15% of the shares outstanding by November
   2005, at the latest, for a price based upon a profit multiple. The minimum
   purchase  price amount per the agreement is EUR 1.3 million and it is
   estimated at EUR 2.3 million, based on current projections.


o  Altys Multiservices

     The Group has  entered  into a put  agreement  to acquire  1.5% of the
     shares  of Altys  Multiservice  from the  minority  share  holders  between
     October 1 and November 30, 2007 for a purchase price based on a multiple of
     the  average  economic  profits  as  defined  contractually  in the year of
     exercise with an adjustment based on the following year's results.


o  Sodexho Italia

   The Group has entered into a put agreement to acquire the remaining 2% of
   the shares of Sodexho Italia from the minority share holders on July 1, 2010
   at the latest for a purchase price based on a multiple of the average
   economic profits as defined contractually.


o  Baren Menu

   The Group has entered into a put agreement to acquire the remaining 5% of
   the shares of Baren Menu in Germany from the minority share holders on
   December 31, 2005 at the latest for a purchase price estimated at EUR  0.25
   million.

o  Sodexho MM Catering

   The Group has entered into a put agreement to acquire the remaining 9.5% of
   the shares of Sodexho MM Catering from the minority share holders at any time
   for a purchase price based on a multiple of the average economic profits as
   defined contractually for a minimum amount of EUR 0.2 million.

 Commitments received:

o  Patriot Medical Technologies, Inc.

   The minority shareholders of Patriot have entered into a call agreement with
   the Group, which allows the Group, during the period from September 3, 2003
   and September 3, 2005, to acquire the remaining outstanding shares of
   Patriot, if any, for the greater of U.S. $2 million and five times Patriot's
   EBITDA, reduced by adjustments defined in the contract between the parties.

o  Medcheque

   The minority shareholders of Medcheque have entered into a call agreement
   to sell the remaining shares to the Group in accordance with the terms
   described above.

o  Abra (subsidiary of Sodexho Scandinavian Holding AB)

   The minority shareholders of Abra have entered into a call agreement to sell
   the remaining shares to the Group in accordance with the terms described
   above, in November 2005 at the latest.

o  Sodexho Italia

   The minority shareholder of Sodexho Italia has entered into a call agreement
   to sell the remaining shares to the Group in accordance with the terms
   described above, on July 1, 2010 at the latest.

o  Altys Multiservices

   The minority  shareholders of Altys  Multiservice  have entered into a call
   agreement to sell the remaining shares to the Group (18.5% as of August 31,
   2003) between October 1 and November 30, 2005 for a purchase price based on
   a multiple of the average economic profits as defined  contractually in the
    year of exercise with an adjustment based on the following year's results.


 3.20.2 Other commitments

   Securitization

   Our food service subsidiaries in the United Kingdom have securitized without
recourse a portion of their client receivables for an amount of EUR 82
million as of August 31, 2003.

 Commitments for stock options in Sodexho Alliance shares

   The Group has the following stock option commitments:

o  2,518,517 shares with an average exercise price of U.S. $26.35 to certain
   employees of Sodexho, Inc., in connection with the
   Group's acquisition of 53% of Sodexho Marriott Services, Inc. in June 2001.
   These options are exercisable in the following periods:

   o As from August 31, 2003 through August 31, 2011 at the latest: 1,651,722
     shares

   o As from August 31, 2004 through August 31, 2011 at the latest: 648,256
     shares

   o As from August 31, 2005 through August 31, 2011 at the latest:  218,539
     shares

   o 5,085,838 Sodexho Alliance shares granted by the Board of Directors to
     Group employees in connection with various stock option plans. These
     options are exercisable in the following periods:

   o From January 2004 to January 2009: 744,262 shares at an exercise price
     ofEUR 24.00

   o From March 2004 to January 2005: 223,246 shares at an exercise price of
     EUR 39.86

   o From January 2005 to January 2009: 744,263 shares at an exercise price of
     EUR 24.00

   o From March 2005 to January 2006:  319,135 shares at an exercise price of
     EUR 48.42

   o From January 2006 to October 2007: 432,790 shares at exercise prices of
     EUR 21.87 andEUR  47.00

   o From January 2006 to January 2009: 744,262 shares at an exercise price of
     EUR 24.00

   o From January 2006 to March 2008:  1,133,617 shares at an exercise price of
     EUR 47.00

   o From January 2007 to January 2009: 744,263 shares at an exercise price of
     EUR 24.00

   In connection with its acquisition of Sogeres, the Group committed to
maintain Sogeres' stock option plan dated August 1, 1997. The Group committed to
acquire the Sogeres shares from the optionees through September 2004 and has
recorded a related liability in its accounts. As of August 31, 2003 this
liability totals EUR 0.7 million. A second stock option was established for
which the Group has committed to increase the capital of Sogeres for the benefit
of the optionees and to buy their shares no later than February 20, 2008. In
connection with this agreement, a provision of EUR 3.5 million was recorded in
the consolidated financial statements as of August 31, 2003.

   Operating lease commitments

   Operating lease commitments are as follows:

    Less than one year............EUR 65 million

    From one to five years........EUR 119 million

    More than five years..........EUR 36 million

   Operating lease commitments primarily relate to central kitchens under
tri-partite agreements for EUR 40 million and rents for office space and
various equipment.


3.21  Retirement plans

  The following table presents defined benefit obligations by geographic
zones:

<TABLE>
<S>             <C>            <C>           <C>         <C>         <C>

                United
                Kingdom and    Continental               August 31,  August 31,
                Ireland        Europe        Others        2003         2002

Benefit obligation
 to employees          341          131          5           477           468
Liability recorded       0           75          5            80            84
Fair value of assets   228           41          0           269           261
</TABLE>


 Obligations recorded in the balance sheet

   Obligations recorded as a liability in the balance sheet relate to
retirement indemnities and related payments totaling EUR 80 million.


 Other obligations

   As of August 31, 2003, retirement plan obligations which were not recorded
as a liability in the balance sheet because of the existence of an external fund
totaled EUR 397 million. Partially offsetting this amount are external funds
totaling EUR 269 million.

   United Kingdom and Ireland

   In the United Kingdom and Ireland, the retirement plan obligations for
which there is an external fund relate to a complementary retirement plan based
on a percentage of ending salary (affected personnel working in the private
sector) or based on comparable payments in the public sector (affected personnel
working in the public sector).

   The obligations have been calculated using the projected unit credit
valuation method using the following assumptions:
<TABLE>
   <S>                                            <C>

   Discount rate..........................        5.3%
   Rate of salary increase................        3.9%
   Inflation rate.........................        2.6%
   Rate of return on plan assets..........        6.3%
</TABLE>

   It was decided during fiscal 2003 to close the plan to new employees
effective July 1, 2003 and to increase the contributions to the funds, which
should allow for full coverage of the obligation at the end of a period of eight
years.

 Continental Europe

   In Continental Europe, the main defined benefit plan is in the Netherlands,
where retirement plan indemnities are provided to certain employees. The
obligations are calculated using the projected unit credit valuation method with
the following assumptions:
<TABLE>
     <S>                                            <C>

     Discount rate..........................        5.75%
     Rate of salary increase................        3.0%
     Inflation rate.........................        2.0%
     Rate of return on plan assets..........        5.9%
</TABLE>


 United States

   Our subsidiaries in the United States do not have significant defined
benefit plans. There is a defined contribution plan.


4. OTHER  INFORMATION

   4.1 Compensation, Advances, Loans and Retirement Plan Commitments Made to
       Members of the Sodexho Alliance Board of Directors

   Compensation totaling EUR 120,000 was allocated to members of the Board
of Directors during fiscal 2003 and EUR 30,000 was paid to the defined
contribution retirement plan for members of the Board of Directors of Sodexho
Alliance. There were no advances or loans to members of the Board of Directors
of Sodexho Alliance as of August 31, 2003.

   4.2 Related Parties

     Bellon S.A. holds 38.63% of the capital of Sodexho Alliance. Pursuant to an
agreement between Bellon S.A. and Sodexho Alliance, Bellon S.A. invoiced Sodexho
AllianceEUR 2.4 million for consulting and advisory services during fiscal 2003.
Sodexho  Alliance paid dividends ofEUR 37.5 million to Bellon S.A. during fiscal
2003.


   4.3 Legal Proceedings

   In connection with the expansion of its activities in Lebanon, Sodexho Pass
International SA (SPI), a subsidiary of Sodexho Alliance SA, acquired 40% of the
share capital of Sodexho Pass Lebanon. Prior to the commencement of operating
activities, SPI exerted its right to cancel the agreement due to a
misunderstanding with one of the partners, the manager of Sodexho Pass Lebanon.
The Lebanon partners claimed damages from SPI. On February 20, 2003, the
Arbitration Court ordered Sodexho Pass International to pay U.S. $2 million.
This ruling was final and not subject to appeal. The amount paid was expensed as
an exceptional item during fiscal 2003.


   On March 8, 2001, ten current and former employees of Sodexho, Inc., the
majority of whom had worked for Marriott Management Services, Inc. (later known
as Sodexho Marriott Services, Inc., and now known as Sodexho, Inc.) filed a
lawsuit against Sodexho, Inc. in the U.S. District Court for the District of
Columbia, alleging that they and other African-American salaried employees were
discriminated against on the basis of their race. The plaintiffs' complaint
alleges unspecified damages on behalf of a class of over 2,600 current and
former employees of Sodexho, Inc. relating to the period commencing March 27,
1998 and ending on July 1, 2001,as well as reimbursement of plaintiffs' costs
and attorneys' fees. Sodexho, Inc. has denied the plaintiffs' allegations and is
vigorously defending the lawsuit. On June 25, 2002, the district court certified
the case as a class action for purposes of determining liability. Sodexho,
Inc.'s requests for permission to appeal this decision have been denied by both
the U.S. Court of Appeals for the District of Columbia and the U.S. Supreme
Court. The parties to this litigation are currently engaged in discovery. A
resolution of plaintiffs' claims in their favor could have a material effect on
our net income. In fiscal 2002, a provision of U.S. $10 million (EUR 11
million at the fiscal 2002 exchange rate and EUR 9 million as of August 31,
2003) was recorded for defense costs anticipated in connection with this
lawsuit.

   We are involved in a number of other legal proceedings incidental to the
normal conduct of our business. We do not believe that liabilities relating to
the these proceedings are likely to be, in the aggregate, material to our
business or our consolidated financial position.




4.4 Subsequent Events

    There have been no significant events arising subsequent to August 31,
2003.


4.4 List of Subsidiaries

    A list of subsidiaries and the Group's percentage interest and the
percentage of voting rights held is provided below. Unless indicated otherwise
by a percentage, the Group owns 97% or more of the outstanding shares of the
subsidiary. The annotation "N" denotes the 19 companies consolidated for the
first time in fiscal 2003. Two of these companies were acquired during the year,
and the remainder were newly created entities or previously deconsolidated
companies. The annotation "EM" denotes the 11 companies accounted for by the
equity method. All other companies are fully consolidated.


<TABLE>
<S>   <C>             <C>               <C>            <C>            <C>

                                        % voting       Principal
                       % interest       rights         activity        Country
France
      Societe Francaise
      de Restauration                                         FMS       France
      Comrest                                                 FMS       France
      Sofomedi                                                FMS       France
      Sorescom                                                FMS       France
      Sorepar                                                 FMS       France
      Altys Multiservices   80%            80%                FMS       France
      Altys Gestion                                           FMS       France

EM    Saggel Holding        30%            30%                FMS       France
      Societe Francaise
       de Services                                            FMS       France
      Societe Francaise
       de Restauration
       et Services                                            FMS       France
      Societe Marseillaise
       de Restauration
       et Services                                            FMS       France
      Societe de
       Developpement
       des Services
       de Proximite         92%            92%                FMS       France
      Sodequip                                                FMS       France
      Societe Havraise
       de Restauration
       et Services                                            FMS       France
N     O.L. Restauration     70%            70%                FMS       France
      Ecorest               51%            51%                FMS       France
      Sodexho Prestige                                        FMS       France
      S.I.R. FMS France
      C.I.R. FMS France
      Siges                                                   FMS       France
      La Normande SA                                          FMS       France
      La Normande Sarl                                        FMS       France
      Hedelrest                                               FMS       France
      R.G.C.                                                  FMS       France
      Sagere                                                  FMS       France
      Sogerest                                                FMS       France
      Societe Bretonne
       de Restauration
       et Services                                            FMS       France
      Societe Thononaise
       de Restauration et                                     FMS       France
       Services
      Sogeres
       (sub-consolidation)                                    FMS       France
      Bateaux Parisiens
       (sub-consolidation)                                    RHC       France
      Armement Lebert
       Buisson                                                RHC       France
      Societe des
       Thermes de
       Neyrac-les-bains                                       RHC       France
      Emis                                                    FMS       France
      Catesco                                                 FMS       France
      Sodexho Cheques
       et Cartes de
       Services                                               SVC       France
      Sodexho Pass
       International                                          HOL       France
      Sodexho France                                          HOL       France
      Universal Sodexho SA                                    HOL       France
      Sofinsod                                                HOL       France
      Etinbis                                                 HOL       France
      Etin                                                    HOL       France
      Gardner Merchant Groupe                                 HOL       France
       Loisirs Developpement                                  HOL       France
      Holding Altys                                           HOL       France
      Astilbe               86%            86%                HOL       France
      Holding Sogeres                                         HOL       France
N     Sodexho Amerique
       du Sud                                                 HOL       France
N     Sodexho Management                                      HOL       France
N     Sodexho Europe
       Continentale                                           HOL       France
N     Sodexho Asie Oceanie                                    HOL       France
      Sodexho I.S. & T.                                       HOL       France
      Siges Guyane                                            FMS       France
      Societe Hoteliere
       de Tourisme de Guyane                                  FMS       France
      Sodex'Net                                               FMS       France
      Guyane Proprete                                         FMS       France


      La Salamandre                                           FMS       France
      Societe Guyanaise
       de Protection et
       Gardiennage                                            FMS       France
      Sodexho Antilles                                        FMS       France

</TABLE>



<TABLE>
<S>   <C>             <C>               <C>            <C>            <C>


                      % interest        % voting       Principal      Country
                                        rights         activity
Americas

      Sodexho, Inc.
       (sub-
       consolidation)                                         FMS       USA
 N    Patriot
       Clinical
       Services           91%              91%                FMS       USA
 N    Sodexho
       Vending
       Services           51%              51%                FMS       USA
      Spirit Cruises                                          FMS       USA
      Delta Catering
       Management         49%              49%                FMS       USA
      Universal
       Sodexho
       (USA), Inc.                                            HOL       USA
      Universal
       Services
       Partnership                                            FMS       USA
      Universal
       Services
       Enterprises
       LLC                                                    FMS       USA
      Sodexho Pass
       USA                                                    SVC       USA
      Energy
       Catering
       Services
       LLC                                                    FMS       USA
      Universal
       Sodexho
       Empresa de
       Servicios y
       Campamentos                                           FMS      Venezuela
      Universal
       Sodexho
       Services de
       Venezuela                                             FMS      Venezuela
      Universal
       Sodexho
       do Brazil
       Comercial
       Ltda                                                  FMS         Brazil
      Sodexho Do
       Brazil             90%              90%               FMS         Brazil
      Sodexho
       Argentina                                             FMS      Argentina
      Sodexho
       Colombia           65%              65%               FMS       Colombia
      Sodexho
       Venezuela
       Alimentacion
       y Servicios        70%              70%               FMS      Venezuela
      Sodexho Costa
       Rica                                                  FMS     Costa Rica
      Sodexho Mexico                                         FMS        Mexico
      Doyon Universal
       Services JV        50%              50%               FMS        USA
      Sodexho Peru                                           FMS        Peru
      Sodexho sitios
       remotos de Peru                                       FMS        Peru
EM    B.A.S.              33%              33%               FMS        Chile
N, EM B.A.S. II           33%              33%               FMS        Chile
      Siges Chile                                            FMS        Chile
      Sodexho Chile
     (sub-consolidation)                                     FMS        Chile
      Sodexho servicios
       de personnel                                          FMS        Mexico
      Sodexho
       mantenimiento
       y servicios                                           FMS        Mexico
      Sodexho Pass
       do Brazil                                             HOL        Brazil
      Medcheque           65%              65%               SVC        Brazil
      Cardapio
       informatica                                           SVC        Brazil
      National
       administracao
       de restaurentes                                       SVC        Brazil
      Sodexho Pass
       Do Brazil
       Commercial E
       Servicio                                              SVC        Brazil
      Sodexho Pass Chile                                     SVC        Chile
      Sodexho Pass
       Venezuela          64%              64%               SVC      Venezuela
      Sodexho Pass
       de Colombia        51%              51%               SVC       Colombia
      Luncheon Ticket     60%              60%               SVC      Argentina
      Prestaciones
       Mexicanas SA
       de CV                                                 SVC        Mexico
      Sodexho Servicios
       Operativos                                            SVC      Venezuela

</TABLE>




<TABLE>
<S>   <C>             <C>               <C>            <C>            <C>

                      % interest        % voting       Principal      Country
                                        rights         activity
Africa

     Universal
      Sodexho Afrique                                        FMS        France
     Universal
      Sodexho
      North Africa                                           FMS        France
     Sodexho Nigeria                                         FMS        Nigeria
     Universal
     Sodexho Gabon        90%              90%               FMS        Gabon
N    Sodexho Angola                                          FMS        Angola
     Sodexho Pass
      Tunisie             49%              49%               SVC        Tunisia
     Sodexho Maroc                                           SVC        Morocco
     Universal
      Sodexho
      Ecuatorial
      Guinea              70%              70%               FMS     Equatorial
                                                                     Guinea
      Sodexho Cameroun    70%              70%               FMS     Cameroon
      Universal
       Sodexho Congo                                         FMS        Congo
      Sodexho
       Southern
       Africa
       (sub-
       consolidation)     55%              55%               FMS   South Africa
       Sodexho
        Investments
        Ltd                                                  HOL   South Africa
       Sodexho Tanzanie                                      FMS      Tanzania

</TABLE>




<TABLE>
<S>   <C>             <C>               <C>            <C>            <C>
                      % interest        % voting       Principal      Country
                                        rights         activity
Europe

      Sodexho Monaco                                          FMS       Monaco
      Sodexho Belgique                                        FMS       Belgium
      Altys Belgium                                           FMS       Belgium
      Restaura                                                FMS       Belgium
N     Altys Suisse                                            FMS   Switzerland
N     Altys Deutschland                                       FMS       Germany
      Sodexho Luxembourg
      (sub-consolidation)                                     FMS    Luxembourg
      Sodexho Italia
      (sub-consolidation)                                     FMS       Italy
      Sodexho D.O.O.                                          FMS      Slovakia
      Sodexho Oy                                              FMS      Finland
N     Coffee Queen Oy     92%              92%                FMS       Sweden
      Sodexho Scandinavian
       Holding (sub-
       consolidation)                                         FMS       Sweden
      Sodexho Espana
       (sub-consolidation)                                    FMS       Spain
      Sodexho Portugal
       II Restauracao e
       Servicios          90%              90%                FMS      Portugal
      Sodexho Portugal
       Catering                                               FMS      Portugal
      Sodexho Hellas      51%              51%                FMS      Greece
      Sodexho Catering
       & Services Gm                                          FMS      Germany
      Eiring S.C.S.
       Catering
       Services GmbH                                          FMS      Germany
      Plauen Menu                          90%                FMS      Germany
      Baren Menu GmbH     95%              95%                FMS      Germany
      Sodexho A.O.                                            FMS      Russia
N     Sodexho Euroasia                                        FMS      Russia
      Imagor Services                                         HOL      Belgium

      Sodexho Catering                                                 Czech
       Spol Sro                                               FMS     Republic

      Sodexho
       Skolni                                                          Czech
       Hidelny Sro                                            FMS     Republic

      Sodexho
       Spolocne                                               FMS      Slovakia
      Sodexho
       Magyarorszag
       Kft                                                    FMS      Hungary
      Zona Vendeglato
       Kft                                                    FMS      Hungary
      Sodexho
       Toplu Yemek                                            FMS       Turkey
      Sodexho Polska
       Sp. Zoo                                                FMS       Poland
      Sodexho MM
       Catering GmbH      91%              91%                FMS       Austria
EM    Agecroft
       Prison                                                           United
       Management         50%              50%                FMS       Kingdom

       Sodexho
        Services                                                        United
        Group Ltd                                             HOL       Kingdom

                                                                        United
EM      HPC Limited       25%              25%                FMS       Kingdom

        Sodexho
         International                                                  United
         Holdings Ltd                                         HOL       Kingdom

        Keyline
         Travel                                                         United
         Management                                           FMS       Kingdom

        Sodexho                                                         United
         Limited                                              FMS       Kingdom

        Sodexho
         Prestige                                                       United
         Limited                                              FMS       Kingdom

        Universal
         Sodexho                                                        United
         Scotland                                             FMS       Kingdom

        Harmondsworth
         Detention                                                      United
         Services ltd     51%              51%                FMS       Kingdom

                                                                        United
        UKDS                                                  FMS       Kingdom

        Tillery
         Valley
         Foods Ltd                                            FMS       Kingdom

        Rugby
         Hospitality                                                    United
         2003 Ltd         55%              55%                FMS       Kingdom

        Sodexho
         Defence                                                        United
         Services Ltd                                         FMS       Kingdom

        Sodexho
         Land                                                           United
         Technology Ltd                                       FMS       Kingdom

N       Sodexho
         Investments                                                    United
         Services Ltd                                         FMS       Kingdom

N, EM   Peterborough
         Prison                                                         United
         Management Ltd   33%              33%                FMS       Kingdom

N, EM   Ashford
         Prison                                                         United
         Services Ltd     33%              33%                FMS       Kingdom

        Sodexho
         Holding                                                        United
         Limited                                              HOL
        Sodexho
         Education                                                      United
         Servic                                                         Kingdom
        Sodexho
         Management                                                     United
         Services Ltd                                         FMS       Kingdom
        Sodexho
         Healthcare                                                     United
         Services Ltd                                         FMS       Kingdom
        Sodexho
         Support                                                        United
         Services                                             HOL       Kingdom
        Universal
         Sodexho
         Norway                                               FMS       Norway
        Universal
         Sodexho                                                        United
         Holdings Ltd                                         HOL       Kingdom
        Universal
         Services                                                       United
         Europe Ltd                                           FMS       Kingdom
        Universal
         Sodexho
         Nederlands BV                                        FMS   Netherlands
        Primary
         Management                                                     United
         Aldershot        60%              60%                FMS       Kingdom
EM      Mercia
         Healthcare                                                     United
         Holding Ltd      25%              25%                FMS       Kingdom
EM      South
         Manchester                                                     United
         Healthcare Ltd   25%              25%                FMS       Kingdom
        Sodexho
         Holdings -
         Ireland Ltd                                          HOL       Ireland
        Sodexho
         Ireland
         Limited                                              FMS       Ireland
        Sodexho BV                                            FMS   Netherlands
        Sodexho
         Nederland BV                                         FMS   Netherlands
        Sodexho
         Prestige BV                                          FMS   Netherlands
        Sodexho
         Pass Belgique    70%              70%                SVC      Belgium
        Special Event                                         SVC      Belgium
        Sodexho Pass
         Luxembourg                                           SVC    Luxembourg
        Sodexho
         Pass GmbH                                            SVC      Germany
        Sodexho
         Card
         Services GmbH                                        SVC      Germany
        Sodexho
         Pass srl                                             SVC      Italy
        Sodexho
         Pass Espana                       95%                SVC      Spain
        Ticket Menu       95%              95%                SVC      Spain
        Sodexho
         Pass Austria                                         SVC     Austria

        Sodexho                                                         United
         Pass Limited                                         SVC       Kingdom
        Sodehxo
         Pass Hungaria Kft                                    SVC      Hungary
N       Sodexho
         Pass Bulgaria                                        SVC     Bulgaria
        Sodexho
         Pass Ceska                                                    Czech
         Republika                                            SVC     Republic
        Sodexho
         Pass Slovak
         Republic                                             SVC     Slovakia
        Sodexho
         Pass Polska                                          SVC     Poland
        Sodexho
         Restoran
         Servisleri AS    80%             80%                 SVC     Turkey
        Sodexho
         Pass Romania                                         SVC     Romania

        Catamaran                                                      United
         Cruisers                                             FMS      Kingdom
        Compagnie
         Financiere
         Aurore
         International                                        HOL     Belgium
        Pakzon                                                HOL   Switzerland

</TABLE>


<TABLE>
<S>   <C>             <C>               <C>            <C>           <C>





                      % interest        % voting       Principal     Country
                                        rights         activity
Asian - Pacific,
 Middle East

      Kelvin                                                           United
       Catering                                                        Arab
       Services        49%                49%                 FMS      Emirates


      Teyseer
       Services
       Company         49%                49%                 FMS        Qatar

      Socat LLC        50%                50%                 FMS        Oman

                                                                         Saudi
      N.C.M.S.         50%                50%                 FMS        Arabia

      Abbar &                                                            Saudi
       Zainy           50%                50%                 FMS        Arabia

                                                                       United
                                                                       Arab
      SISA (FZE)                                              FMS      Emirates

      Restauration
       Francaise (New-
       Caledonia)     72%                 72%                 FMS       France

      Sodexho
       Nouvelle
       Caledonie      54%                 54%                 FMS       France

      SRRS
       (la Reunion)                                           FMS       France

      Sodexho -
       Singapore                                              FMS     Singapore

      Sodexho
       Malaysia                                               FMS      Malaysia

      Sodexho -
       Hong Kong Ltd                                          FMS     Hong Kong

      Sodexho Korea
       Co Ltd                                                 FMS       Korea

      Universal
       Sodexho                                                         United
       Eurasia                                                FMS      Kingdom

      Universal
       Remote Site
       Services                                               FMS     Singapore

      Aims
       Corporation                                            FMS     Australia

      PT Universal
       Ogden
       Indonesia      50%                 50%                 FMS     Indonesia

      Sodexho -
       Australia                                              FMS     Australia

N      Rugby
       Hospitality
        2003 Pty      55%                100%                 FMS     Australia
  EM   Serco
        Sodexho
        Defence
        Services
        Pty Ltd       50%                 50%                 FMS     Australia

        Sodexho
         Venues
         Australia
         Pty                                                  FMS     Australia
  EM    Serco
         Sodexho
         Defence
         Services
         New Zealand  50%                50%                  FMS   New Zealand

        Minesite
         Catering
         Pty Ltd                                              FMS     Australia

        Sodexho
         (Tianjing)
         Catering
         Company Ltd                                          FMS     China

        Sodexho
         Services
         Company
         Ltd Shanghai                                         FMS     China

        Sodexho
         (Suzhou)
         Catering Company                                     FMS     China

        Beijing
         Sodexho
         Catering
         Services
         Company Ltd                                          FMS      China

        Guangzhou
         Sodexho
         Management
         Services Ltd                                         FMS      China

        Sodexho
         Pass
         Shanghai                                             SVC       China

        Sodexho
         India                                                FMS       India

        Sodexho
         Pass
         Services
         India        74%                74%                  SVC       India

N       Sodexho
         Services
         Liban        60%                60%                  FMS      Lebanon

        Sakhalin
         Support
         Services     95%               95%                   FMS       Russia


        Allied
         Support
         Sakhalin                                             FMS       Russia
</TABLE>


Business:  FMS = Food and Management Services, SVC = Service Vouchers and Cards,
HOL = Holding Company



<PAGE>


5. DIFFERENCES BETWEEN FRENCH GAAP AND U.S. GAAP

     The Group's consolidated financial statements have been prepared in
accordance with French GAAP which, as applied by the Group, differs in certain
significant respects from accounting principles generally accepted in the United
States of America ("U.S. GAAP"). The effects of the application of U.S. GAAP to
net income and shareholders' equity are set forth in the tables below:

 5.1 Reconciliation of consolidated net income (loss)

<TABLE>
<S>                                 <C>            <C>              <C>

                                       For the year ended August 31,

                                    2003            2002            2001
                                (millions of euro, except per-share amounts)


Net income                          162             202             128
                                   ----           -----           -----
U.S. GAAP adjustments: (1)

(a) Business combinations           (39)           (100)           (135)
(b) Stock-based compensation          5             (10)             (2)
(c) Pensions and postretirement
     benefits                       (27)             (3)              2
(d) Investments in marketable
     equity securities                -               -             (35)
(e) Detachable stock
     purchase warrants               (7)             (7)             (6)
(f) Derivative financial
     instruments                     22              (6)              9
(g) Treasury shares                   4              19               0
(h) Other, net                       (2)             (4)            (22)
(i) Deferred income
     tax effect                      29              45              27
                                   ----           -----           -----
Total U.S. GAAP adjustments         (15)            (66)           (162)
                                   ----           -----           -----
Net income (loss),
 as determined under U.S. GAAP      147             136             (34)
                                   ====           =====           =====
Earnings (loss) per share,
 as determined under U.S. GAAP
(j) Basic earnings (loss)
     per share                     0.94            0.86           (0.25)
(j) Diluted earnings (loss)
     per share                     0.94            0.85           (0.25)
</TABLE>

(1) Refer to note 5.5 for explanations.




 5.2 Reconciliation of consolidated shareholders' equity


<TABLE>
<S>                                                  <C>              <C>

                                                             August 31,
                                                       2003             2002
                                                         (millions of euro)

Shareholders' equity                                  2,249            2,398

U.S. GAAP adjustments: (1)
(a) Business combinations                              (352)            (337)
(b) Stock-based compensation                              4               (1)
(c) Pensions and postretirement benefits                (63)             (26)
(e) Detachable stock purchase warrants                    5               12
(f) Derivative financial instruments                      6              (16)
(g) Treasury shares                                     (78)            (100)
(h) Other, net                                           12               15
(i) Deferred income tax effects                         (47)             (65)
                                                      -----           ------
Total U.S. GAAP adjustments                            (513)            (518)
                                                      -----           ------
Shareholders' equity,
 as determined under U.S. GAAP                        1,736            1,880
                                                      =====           ======
</TABLE>

(1) Refer to note 5.5 for explanations.



 5.3 Statement of comprehensive income

     SFAS No. 130, "Reporting Comprehensive Income", established standards for
the reporting and display of comprehensive income and its components.
Comprehensive income includes net income and all changes in equity during a
period that relate to transactions with other than owners, including foreign
currency translation adjustments, unrealized gains and losses on marketable
securities classified as available-for-sale, minimum pension liability
adjustments and certain unrealized gains and losses on derivative financial
instruments.


<TABLE>
<S>                                      <C>            <C>             <C>

                                              For the year ended August 31,
                                          2003           2002            2001
                                                   (millions of euro)
Net income (loss),
 as determined under U.S. GAAP            147            136             (34)
                                         ----           ----            ----
(d) Unrealized gains and losses on
     available-for-sale securities(1):

      Net unrealized holding loss
       arising during the period                                         (31)

      Reclassification adjustment for
       losses included in net income                                      31

(f) Change in fair value of
     cash flow hedge(1)                     4             (7)             (6)

(c) Additional minimum
     pension liability(1)                  (9)           (33)

Foreign currency translation adjustments (223)          (130)            (53)
                                         ----           ----            ----
Other comprehensive income (loss),
 as determined under U.S. GAAP           (228)          (170)            (59)
                                         ----           ----            ----
Comprehensive income (loss),
 as determined under U.S. GAAP            (81)           (34)            (93)
                                         ====           ====            ====
</TABLE>

(1) Refer to note 5.5 for explanations.


 5.4  Condensed U.S. GAAP statement of operations

<TABLE>
<S>                                      <C>             <C>            <C>

                                                For the year ended August 31,
                                         2003            2002           2001(1)
                                                    (millions of euro)
Revenues                                11,690          12,618           7,557
Other operating income                      57              78              24
Operating expenses,
 excluding goodwill and
 intangible assets                      11,232
amortization                            12,166           7,284
Goodwill and intangible
 assets amortization                       115             126             144
                                        -------         -------          ------
Operating income                           400             404             153

Interest expense                           158             203             109
Equity in income
 (loss) of investees                         4               6               2
Other non-operating
 income (expense)                           16              33              (7)
                                        ------          -------          ------
Income before income taxes,
 minority interest and
 extraordinary item                        262             240              39
Income tax expense                         105              91              61
Minority interest
 in net income of
 consolidated subsidiaries                   9              13               9
                                        ------          -------          ------
Income (loss) before
 extraordinary item                        147             136             (31)
Extraordinary loss
 on extinguishment of debt                  -               -               (3)
                                        ------          -------          ------
Net income (loss)                          147             136             (34)
                                        ======          =======          ======
</TABLE>

(1) For fiscal 2001, the most significant differences between the amounts
    reported in accordance with French GAAP and those reported under US GAAP
    relate to the accounting for Sodexho, Inc. (formerly, Sodexho Marriott
    Services, Inc.). See note 5.5 (a) for additional information on the nature
    of this accounting difference.


 5.5 Notes to reconciliation of consolidated net income and consolidated
     shareholders' equity

    (a) Business combinations

     Under French GAAP, all of the Group's business combinations are accounted
for as purchases. The cost of an acquired company is assigned to the tangible
and intangible assets acquired and liabilities assumed on the basis of their
fair values at the date of acquisition. Any excess of purchase price over the
fair value of the tangible and intangible assets acquired is allocated to
goodwill, which is amortized over its estimated useful life. Where the Group has
established a strong presence in a geographic market through an acquisition, an
additional intangible asset, market share, is recorded in the allocation of
purchase price. In accordance with French GAAP, this market share intangible
asset is not amortized. However, it is evaluated annually for impairment as
described in note 1. Deferred taxes are not recorded with respect to goodwill or
market share under French GAAP.


     Under U.S. GAAP, all of the Group's business combinations are accounted for
as purchases. In accordance with SFAS 141, "Business Combinations", and related
interpretations (APB 16 prior to July 1, 2001), the cost of an acquired company
is assigned to the tangible and identifiable intangible assets acquired and
liabilities assumed on the basis of their fair values at the date of
acquisition. In accordance with U.S. GAAP, customer relationships, trademarks,
workforce (prior to July 1, 2001 only) and software intangible assets were
identified with respect to the Group's acquisitions. As a result, part of what
was allocated to market share and goodwill under French GAAP is reallocated to
these identified intangible assets for U.S. GAAP. The remaining excess of cost
over fair value of the net assets acquired is recorded as goodwill. In
accordance with SFAS 142 (APB 17 prior to September 1, 2001) all intangible
assets acquired, including customer relationships, trademarks and software are
amortized over their estimated useful lives. In accordance with APB 17, goodwill
and assembled workforce were amortized through fiscal 2001; thereafter assembled
workforce has been reclassified to goodwill, which is no longer amortized. A
deferred tax liability is recorded with respect to all intangible assets except
goodwill. Generally, the amount assigned to goodwill is increased by an amount
equal to the deferred taxes recorded.

     A summary of the composition of the aggregate adjustments included in the
reconciliations of consolidated net income (loss) and consolidated shareholders'
equity related to the Group's business combinations follows:


<TABLE>
<S>                                      <C>            <C>             <C>

                                             For the year ended August 31,
                                         2003            2002           2001
                                                   (millions of euro)

     Sodexho, Inc                        (30)            (88)           (74)
     Gardner Merchant                    (11)            (21)           (39)
     Other                                 2               9            (22)
                                        -----           -----         ------
                                         (39)           (100)          (135)
                                        =====           =====         ======
</TABLE>


    For the year ended August 31, 2001, the effects of deferred income taxes
and minority interests pertaining to Sodexho, Inc. were included in the business
combinations adjustment as follows:

<TABLE>
<S>                                          <C>


                                              For the year ended
                                                August 31, 2001
                                               (millions of euro)
 Sodexho, Inc.:
  Adjustment before deferred
   income taxes and minority interest                 (200)
  Effect of deferred income taxes                       68
  Effect of minority interest                           58
                                                      -----
  Total Sodexho, Inc                                   (74)
                                                      =====
</TABLE>

     The deferred income tax effect related to the adjustments for the
acquisition of Sodexho, Inc. (for fiscal 2003 and 2002), Gardner Merchant and
other business combinations is included in the reconciliations of consolidated
net income (loss) and consolidated shareholders' equity within the caption
"Deferred income tax effects." There is no minority interest impact related to
the adjustments for the Gardner Merchant acquisition or other business
combinations.


     As of August 31, 2003, the principal effects on the Group's balance sheet
related to the accounting for business combinations were to increase goodwill by
EUR 1.4 billion, decrease intangible assets other than goodwill by EUR 1.5
billion and increase deferred tax liabilities by EUR 0.3 billion. As of August
31, 2002, the principal effects on the Group's balance sheet related to the
accounting for business combinations were to increase goodwill by EUR 1.5
billion, decrease intangible assets other than goodwill by EUR 1.6 billion and
increase deferred tax liabilities by EUR 0.4 billion.


   The following table presents the allocation of intangible assets and
goodwill, their estimated useful lives and the related amortization expense.

<TABLE>
<S>               <C>        <C>      <C>            <C>       <C>         <C>

                                                        Amortization Expense
                     August 31,        Estimated        Year Ended August 31,
                   2003      2002     Useful Life    2003       2002       2001
                 (millions of euro)     (years)          (millions of euro)

Customer
 relationships    1,438     1,599       10 - 19        87         97         57
Assembled
 workforce           -         -           6            -          -          7
Trademarks           30        33          5            -          -          -
Software and other  182       226        3 - 7         28         29         16
Goodwill          3,257     3,484                       -          -         64
                 -------   -------                   -----      -----      -----
                  4,907     5,342                     115        126        144
                                                     =====      =====      =====

Accumulated
 amortization      (820)     (828)
                 -------   -------
Total intangible
 assets and
 goodwill, net    4,087     4,514
                ========   ========
</TABLE>



   Incremental U.S. GAAP amortization with respect to software and other
intangible assets totaled EUR 7 million, EUR 7 million and EUR 6 million
in fiscal 2003, fiscal 2002 and fiscal 2001, respectively, and principally
related to leased assets which are capitalized under U.S. GAAP but treated as
operating leases under French GAAP.

   Additional information with respect to the differences between French GAAP
and U.S. GAAP for the Group's significant acquisitions is provided below.

 Sodexho, Inc. (formerly Sodexho Marriott Services, Inc.)

   Under French GAAP, the Group consolidated Sodexho, Inc., of which it owned
47.4% as of August 31, 2000, until the Group acquired the remaining shares on
June 20, 2001 (at which time it owned 46.9% of Sodexho, Inc.). French GAAP
generally requires consolidation of greater than 40%-owned subsidiaries if there
is no single more significant shareholder. Under U.S. GAAP, Sodexho, Inc. is
required to be accounted for by the equity method until the date when the
remaining shares were acquired. The reconciling items included in the tables
above related to net income and shareholders' equity principally reflect the
impact of re-allocating market share and goodwill, as recorded under French
GAAP, to identified intangible assets, including customer contracts, software
and assembled workforce as well as the related deferred tax effects. These
assets are being amortized over their estimated useful lives of 17 years, seven
years and six years, respectively, under U.S. GAAP for purposes of the
reconciliation. The remaining excess was allocated to goodwill which was
amortized over its estimated useful life of 30 years through August 31, 2001.

   In connection with the acquisition of the 53% of Sodexho, Inc. it did not
already own, Sodexho Alliance agreed to convert the unvested stock options into
unvested Sodexho Alliance stock options. Sodexho Alliance recorded a liability
amounting to EUR 79 million in connection with this agreement, computed as the
aggregate intrinsic value of the options (using the market value of the
underlying shares of EUR 53.47 based on the average Sodexho Alliance share
price over the 20 days preceding the transaction). The liability was recorded as
part of the cost of the acquisition. For the year ended August 31, 2002, the
liability was reduced (with a corresponding benefit recorded in the income
statement) by EUR 37 million, which was computed as the lesser of a) the
original provision and b) the difference between EUR 53.47 per share and the
acquisition cost of the related treasury shares (see note 5.5 (h)). For the year
ended August 31, 2003, the liability was reduced (with a corresponding benefit
recorded in the income statement) by EUR 13.5 million, which was computed as
the lesser of a) the original provision and b) the difference between
EUR 53.47 per share and the acquisition cost of the related treasury shares
(see note 5.5 (h)).

   Under U.S. GAAP, the portion of the intrinsic value of the rolled over
unvested options related to future service was recorded as unearned compensation
in shareholders' equity. The fair value of these stock options was recorded as
shareholders' equity.


   Prior to its consolidation beginning June 20, 2001 under U.S. GAAP, the
impact of the adjustment related to the accounting for Sodexho, Inc. between
French and U.S. GAAP was more pronounced than it is currently, now that Sodexho,
Inc. is fully consolidated under both U.S. GAAP and French GAAP. For fiscal 2001
the impact of the adjustment on the statement of operations and balance sheet
was to decrease revenues and operating income by EUR 4,379 million euro and
EUR 291 million, respectively, and to increase total assets and total
liabilities by EUR 551 million and EUR 675 million, respectively. Beginning
June 20, 2001, Sodexho, Inc. is consolidated under French and U.S. GAAP. The
impact of the adjustment on the income statement is reflected in the condensed
U.S. GAAP income statement in note 5.4.


 Gardner Merchant ("GM")

   In accounting for the acquisition of the worldwide operations of GM in
1995, the Group allocated a significant portion of the excess of purchase price
over the fair value over the tangible assets acquired and liabilities assumed to
market share, which is not subject to amortization. Under U.S. GAAP, the excess
of purchase price over the fair value of the tangible assets acquired and
liabilities assumed was partially allocated to identifiable intangible assets,
including customer contracts, trademarks and assembled workforce, which are
being amortized over their estimated useful lives of 14 years, five years and
four years, respectively. The remaining excess was allocated to goodwill which
was being amortized over its estimated useful life of 30 years through August
31, 2001.

(b) Stock-based compensation

    Stock purchase plan

   In fiscal 2001 the Group created the Sodexho Alliance International
Employee Stock Ownership Plan in which approximately 150,000 employees of
Sodexho Alliance and its majority-owned subsidiaries were eligible to
participate. The plan offered two options to subscribe for shares. The first,
called Alliance Plus, allowed employees to invest up to 2.5% of their gross
annual pay. Each cash contribution was matched on a non-recourse basis by an
unaffiliated bank with an additional contribution equal to nine times the
employee's investment to be used towards the purchase of additional shares. If
the stock appreciates in value during the term of the plan, the employees repay
the matching funds to the bank and a portion of the stock's appreciation from
the proceeds of the sale of the stock. If the stock depreciates in value, the
employee is not responsible for reimbursing the bank for its loss. Under the
second plan, called Alliance Classic, employees were given the option of
investing up to 25% of their gross annual pay. The employee in both cases
benefited from a discount of up to 20% of the fair market value of the shares at
the time the shares were issued and was limited to a total subscription of 25%
of gross annual pay. On October 18, 2001, the Board of Directors issued
1,385,848 shares at an issue price of EUR 44.10 per share for United States
employees and EUR 41.51 for other employees.

   Under French GAAP, these transactions are recorded directly in equity upon
issuance. Under US GAAP, the plan is considered compensatory and, therefore,
results in the recognition of compensation expense for the difference, if any,
between the fair value, as determined on the measurement date, and the purchase
price of the shares. Total compensation expense recognized under US GAAP with
respect to this plan was EUR 11 million for the year ended August 31, 2002.


 Stock options

   In addition, the Group has historically granted certain employees options
to purchase common shares of Sodexho Alliance. Under French GAAP, these
transactions have no impact on the income statement. For U.S. GAAP, the Group
has elected to account for its stock-based compensation plans in accordance with
the intrinsic value method prescribed by APB Opinion No. 25 which requires that
companies recognize total compensation cost equal to the excess, if any, of the
market price of the share over the exercise price of the option on the
measurement date. The measurement date is defined as the first date on which the
number of shares the employee is entitled to receive and the exercise price are
known. Option grants for which both the number of shares an employee is entitled
to receive and the exercise price are known on the date of grant are referred to
as "fixed" stock option grants. All other grants are considered to be "variable"
stock option grants. For fixed stock option grants, total compensation cost is
measured only once, on the date of grant. For variable stock option grants, this
excess is estimated periodically at interim dates and final measurement occurs
on the measurement date. Compensation expense for both fixed and variable option
grants is recognized over the employee service period, which is generally the
vesting period of the option, in accordance with the provisions of FIN 28. Total
compensation expense recognized under U.S. GAAP with respect to these stock
options was EUR 0.3 million, EUR 0.8 million and EUR 1.2 million and for
each of the years ended August 31, 2003, 2002 and 2001, respectively.

 Other stock-based compensation

   In addition to traditional stock option plans, certain of the Group's
subsidiaries have stock-based compensation plans whereunder an employee is
granted a number of hypothetical shares in the subsidiary ("phantom shares").
The employee is entitled to any appreciation in the value, as determined by
application of a formula based on a multiple of adjusted EBITA, of those phantom
shares. The employee's interest in that appreciation vests 100% after completion
of a service period (generally, between four and five years). For French GAAP,
compensation expense is recognized currently for the amount of the total
appreciation in the value of the phantom shares (or change in value in
subsequent periods) as computed based on the contractual formula. For U.S. GAAP,
the total compensation expense is computed in the same manner; however, the
expense is recognized ratably over the service period. Total compensation
expense recognized under U.S. GAAP with respect to these plans was EUR 1.4
million and EUR 1 million for the years ended August 31, 2003 and 2001
compared to EUR 3.4 million and EUR 0.5 million recognized under French GAAP
for the same period. There was no compensation expense recognized under U.S.
GAAP with respect to these plans for the year ended August 31, 2002.


 (c) Pensions and postretirement benefits

   Prior to fiscal 2001, the Group accounted for certain of its pension and
similar obligations on a pay as you go basis for French GAAP purposes. In fiscal
2001, a new accounting policy was adopted for French GAAP (except for funded
plans as described below) under which pension and similar obligations are
accrued using the projected unit credit valuation method. Accrued pension
obligations were recorded as an adjustment directly to shareholders' equity as
of September 1, 2000. However, for funded plans to which the Group subsidiary
makes a contribution, the amount of the contribution is recorded as the annual
expense of the plan.


   Under U.S. GAAP, the Group accounts for its pension plans in accordance
with SFAS 87, "Employers' Accounting for Pensions." Transition obligations have
been calculated as of September 1, 1999 as permitted for companies outside the
United States and have been amortized over a period of 15 years from the initial
implementation date of SFAS 87 in 1989 for pensions and of SFAS 106 in 1995 for
other post retirement benefits. For the funded plans where the accumulated
benefit obligation exceeded the fair value of the plan assets as of August 31,
2003 and 2002, an additional minimum liability has been recorded, with a
corresponding entry recorded net of tax as accumulated other comprehensive
income, a component of shareholders' equity.


 (d) Investments in marketable equity securities

   The adjustment for investments in marketable equity securities relates
principally to the Group's investment in Corrections Corporation of America
("CCA"). Under French GAAP, this investment was considered an investment in a
non-consolidated company. Due principally to the uncertainty of the outcome of
litigation between CCA and some of its shareholders, the investment was fully
provisioned in fiscal 2000. Under U.S. GAAP, marketable equity securities are
classified as trading securities, available-for-sale securities, or
held-to-maturity. Available-for-sale securities are reported at market value,
with unrealized gains and losses excluded from earnings and recorded directly in
equity as a separate component of accumulated other comprehensive income.
Unrealized gains and losses on available-for-sale securities are generally
transferred from accumulated other comprehensive income to the profit and loss
account when they are realized. However, unrealized losses which are considered
other than temporary in nature are transferred to the profit and loss account
when such determination is made. The Group's investment in CCA is considered
available-for-sale under U.S. GAAP. Accordingly, under U.S. GAAP the Group's
investment in CCA was written down to its market value (EUR 35 million) as of
August 31, 2000 which resulted in a lower write-down than under French GAAP in
that year. The decline was considered other than temporary and, therefore, was
recognized in earnings of the period. During fiscal 2001, when the investment
was sold, an additional charge (EUR 35 million) was recorded under U.S. GAAP
to reflect the incremental decline in value from the August 31, 2000 until the
sale date. As of August 31, 2001, the Group had divested its entire investment
in CCA.


 (e) Detachable stock purchase warrants

     Under French GAAP, detachable stock purchase warrants issued in connection
with the issuance of debt obligations are not separated and accounted for apart
from the related debt instrument. Under U.S. GAAP, proceeds received for debt
obligations issued with detachable stock purchase warrants are required to be
allocated between the debt obligation and the stock purchase warrants. Amounts
allocated to the stock purchase warrants are accounted for as additional paid in
capital and debt discount. The debt discount is required to be amortized to
interest expense over the life of the debt obligation by the effective interest
method.


 (f) Derivative financial instruments

  Under French GAAP, the Group's derivative financial instruments, which
primarily include interest rate and cross-currency swap agreements on debt
instruments, are considered to hedge the underlying debt. Any interest rate
differential is recognized as an adjustment to interest expense over the term of
the related underlying debt. For swaps negotiated on intercompany debt, the
difference between the amount of the debt at the period end rates and the
swapped rates is recorded as debt. Where the hedge is of a net investment in a
foreign subsidiary, the resulting foreign currency translation difference is
recorded in the currency translation adjustment account in shareholders equity.

   Under U.S. GAAP, all derivative instruments are required to be recorded on
the balance sheet at their fair value. Changes in fair value are recorded
currently in earnings unless the item is designated, qualifies, and is effective
as a hedge. Fair value is defined as the amount that would be paid or received
to terminate the derivative instrument at the balance sheet date. Changes in the
fair value of derivatives designated as part of a hedge transaction are recorded
each period in current earnings or other comprehensive income, depending on the
type of hedge transaction. For cash flow hedge transactions in which the Group
is hedging the variability of cash flows related to a variable rate asset,
liability, or a forecasted transaction, changes in the fair value of the
derivative instrument will be reported in other comprehensive income. The gains
and losses on the derivative instrument that are reported in other comprehensive
income are reclassified to earnings in the periods in which earnings are
impacted by the variability of the cash flows of the hedged item. The
ineffective portion of all hedges is recognized in current period earnings.

   Under U.S. GAAP, the Group has accounted for all of its derivative
financial instruments (other than those of Sodexho, Inc.) at fair value with
changes in fair value of instruments recognized currently in earnings. The
aggregate adjustment reflected in the reconciliation of consolidated
shareholders' equity and consolidated net income (loss) as of and for the year
ended August 31, 2001 for "Derivative financial instruments" is comprised
entirely of derivative financial instruments accounted for at fair value.

   Under U.S. GAAP, Sodexho, Inc.'s interest rate agreements have been
designated as cash flow hedges in accordance with SFAS No. 133. As of August 31,
2002, and for the fiscal years ended August 31, 2002 and 2001, these cash flow
hedges were determined to be effective hedges, and accordingly, changes in fair
value are reflected in the statement of comprehensive income. The aggregate
adjustment related to derivative financial instruments accounted for as cash
flow hedges in accordance with SFAS No. 133, which is included within the
caption "Business combinations" in the reconciliations of consolidated
shareholders' equity and consolidated net income (loss), amounted to an increase
in consolidated shareholders' equity of EUR 4 million as of August 31, 2003
and a decrease of EUR 7 million as of August 31, 2002, and no adjustment to
consolidated net income (loss) for the year ended August 31, 2001.

 (g) Treasury shares

   Under French GAAP, treasury shares are recorded, at cost, as an asset in a
company's balance sheet when re-purchased for re-issuance in connection with
stock-based compensation plans. A provision is recorded when the shares are
expected to re-issued at below their recorded cost. Upon issuance, the
difference between the proceeds and the recorded cost, after giving
consideration to provisions, if any, is recognized in the profit and loss
account as a gain or loss. No provisions were recorded under French GAAP with
respect to the Group's treasury shares for the years ended August 31, 2003, 2002
(except as described in the following paragraph) or 2001.

   During the years ended August 31, 2002 and 2003, the Group acquired
treasury shares to be reissued in connection with the exercise of certain
employee stock options (see note 5.5 (a)). To the extent that the treasury
shares were related to options whose exercise price was higher than the fair
value of the shares at August 31, 2003 and 2002 ("out of the money options"),
the Group had provisioned EUR 7 million and EUR 19 million, respectively,
representing the difference between the fair market value of the treasury shares
as of August 31, 2003 and 2002, respectively, and their cost. No provision was
recorded with respect to treasury shares held for reissuance in connection with
the exercise of in the money options (also see note 3.17 to the consolidated
financial statements).

   Under U.S. GAAP, treasury shares are recorded, at cost, as a reduction of
shareholders' equity. Any difference between the recorded cost and proceeds
received on a subsequent issuance of the shares is also reflected directly in
equity.


 (h) Other, net

   Other consists of the impacts on net income (loss) and shareholders' equity
for the differences between U.S. GAAP and French GAAP summarized in the table
below:
<TABLE>
<S>                   <C>         <C>          <C>            <C>        <C>

                      Net Income (Loss) for the Year       Shareholders' Equity
                             Ended August 31,                 as of August 31,
                        2003        2002       2001           2003        2002


Foreign currency
 transactions            -           -         (8)             -           -
Provisions for
 contingencies
 and losses             (3)         (4)        (1)             2           5
Leases                   1          (1)        (3)            (6)         (6)
Scope of
 consolidation           -           -         (1)             -          (1)
Organization costs       -           1         (1)             -           0
Indirectly-held
 treasury shares         -           -          -             31          31
Deferred charges
 and other               -           -         (8)           (15)        (14)
                      -----       -----      -----          -----        -----
Total - Other, net      (2)         (4)       (22)            12          15
                      =====       =====      =====          =====        =====

</TABLE>



 Foreign currency transactions


    Under French GAAP (prior to the adoption of Regulation CRC 99-02),
unrealized gains and losses resulting from assets and liabilities denominated in
currencies other than a company's functional currency are deferred as
liabilities and assets, respectively, on a company's balance sheet. A separate
provision is recorded to recognize the unrealized losses at the balance sheet in
the profit and loss account. Unrealized gains are recognized when realized.
Under U.S. GAAP, unrealized gains and losses resulting from assets and
liabilities denominated in currencies other than a company's functional currency
are both recognized in the profit and loss account. Subsequent to the adoption
of Regulation CRC 99-02 for French GAAP (September 1, 2000 for the Group), there
is no difference between French GAAP and U.S. GAAP related to foreign currency
transactions. For the year ended August 31, 2001, the difference included in the
reconciliation of net income (loss) represents the reversal of the cumulative
effect adjustment recorded for French GAAP upon adoption of the provisions of
Regulation CRC 99-02 on September 1, 2000.



 Provisions for contingencies and losses

    Provisions for contingencies and losses may be recognized when there is a
possibility of loss and prudence is an important, although not the only,
consideration. In general, provisions for risks and charges represent
liabilities which have not been settled, or for which the settlement amount or
other pertinent information is unknown, as of the balance sheet date. Such
amounts are reflected as charges in the income statement in the period in which
they are provisioned.


    Under U.S. GAAP, provisions for contingencies and losses (liabilities) are
recognized for specific existing risks when the related loss is both estimable
and probable and subject to additional criteria in certain situations, such as
business combinations and restructurings.


   In fiscal 2001, the Group recorded a provision under French GAAP in the
amount of EUR 6 million related to performance guarantees with respect to its
investment in Attendo Care. Under French GAAP, the related expense is included
in "Exceptional (expense) income, net" in the consolidated income statement. The
adjustment to net income (loss) for the year ended August 31, 2001 included in
the table above for "Provisions for contingencies and losses" includes a
positive adjustment of EUR 5 million related to Attendo Care for provisions
which are not recognizable under U.S. GAAP. The Attendo Care adjustment is
offset by a negative adjustment of EUR 6 million related to a variety of other
provisions, principally the impact in fiscal 2001 of adjustments to August 31,
2000 balances primarily related to major repairs, reengineering costs, certain
tax risks, flood contingencies and other provisions which did not meet U.S. GAAP
criteria for liability recognition.


 Leases

   Under French GAAP, leases that transfer substantially all of the risks and
rewards of ownership to the lessee are accounted for as capital leases. All
other leases are accounted for as operating leases.

   Under U.S. GAAP, lease accounting is based on a series of established
quantitative criteria. These criteria are: (i) the lease automatically transfers
ownership of the asset to the lessee at the end of the lease, (ii) the lease
contains a bargain purchase option exercisable by the lessee, (iii) the term of
the lease is equal to or greater than 75% of the estimated useful life of the
leased asset at lease inception and (iv) the present value of the future minimum
lease payments to be made pursuant to the lease agreement represents 90% or more
of the fair value of the leased asset at inception of the lease. A lease meeting
any one of these criteria is required to be accounted for as a capital lease by
the lessee. All other leases are required to be accounted for as operating
leases.


    The aggregate impact of the capitalization of leases for U.S. GAAP on
total assets is an increase of EUR 61 million and EUR 67 million as of
August 31, 2003 and 2002, respectively. The aggregate impact on total
liabilities (debt) is an increase of EUR 64 million and EUR 71 million as of
August 31, 2003 and 2002, respectively.


 Consolidation

   Under French GAAP, the Group does not consolidate certain insignificant
subsidiaries. Under U.S. GAAP, the Group consolidates all subsidiaries which it
has the ability to control regardless of significance. The net impact on the
Group financial statements of consolidating these subsidiaries in U.S. GAAP was
not material in any of the periods presented.


  Organization costs

   Under French GAAP, certain organization costs are capitalized and amortized
over a period not exceeding five years. Under U.S. GAAP, organization costs are
required to be expensed as incurred.


 Indirectly-held treasury shares

   Under French GAAP, certain of the Group's outstanding common shares which
are indirectly owned by consolidated subsidiaries of the Group are considered
treasury shares (see note 3.13.1). A portion of the Group's investment in these
subsidiaries is reclassified and treated as a reduction of equity in the
consolidated French GAAP financial statements. Under U.S. GAAP, these
indirectly-held shares are not considered treasury shares because the
subsidiaries of the Group do not control the entity which actually owns the
shares in the Group. Therefore, no such reclassification between investments and
shareholders' equity is made under U.S. GAAP. Indirectly-held treasury shares
are considered outstanding for purposes of computing earnings-per-share under
French and U.S. GAAP.


 Deferred charges and other

  Under French GAAP, certain costs, such as costs incurred for strategic
consultancy studies and, in certain cases, contract mobilization costs, can be
capitalized and amortized over their estimated useful lives of three to five
years, if the cost is expected to provide a future benefit. U.S. GAAP requires
that such costs be expensed as incurred.


 (i) Deferred income tax effect of U.S. GAAP adjustments

   This reconciliation item includes the tax effects of the U.S. GAAP
adjustments reflected in the reconciliations of shareholders' equity and net
income (loss) except for the adjustments related to SMS for fiscal 2001 (which
was recorded using the equity method of accounting through June 20, 2001 for
U.S. GAAP),which are reflected net of taxes in the business combinations
adjustment.


 (j) Earnings per share

   Under French GAAP, earnings per share is computed as the Group's share of
consolidated net income divided by the weighted average number of shares
outstanding during the period, including treasury shares. In the calculation of
diluted earnings per share under French GAAP, the denominator is increased by
the number of potential shares outstanding, and the numerator is increased by
the net-of-tax interest income on the proceeds which would have resulted from
the issuance of these shares. The potential shares included in diluted earnings
per share relate to stock options awarded but not yet exercised and warrants
outstanding from the 1996 bond issuance.

   Under U.S. GAAP, companies are required to present their earnings per share
on a basic and diluted basis. Basic earnings per share are computed as net
income available to common shareholders divided by the weighted average shares
outstanding for the period. For purposes of computing the weighted average
shares outstanding for the period, treasury shares are not considered
outstanding. Diluted earnings per share are computed after giving effect to all
dilutive potential common shares outstanding during the period. Net income
available to common shareholders is adjusted to add back items such as interest
expense on convertible debt. The number of weighted average shares outstanding
is adjusted to include the number of additional common shares that would have
been outstanding if dilutive potential common shares had been issued. Dilutive
potential common shares includes such items as stock purchase options, stock
purchase warrants and convertible securities.

   The number of shares used to compute basic and diluted earnings per share
under U.S. GAAP is summarized below:


<TABLE>
<S>                                 <C>              <C>            <C>
                                                     August 31,
                                        2003            2002           2001

Basic earnings (loss) per share     156,422,010     157,395,975     137,689,214

Diluted earnings (loss) per share   156,422,141     159,953,836     137,689,214
</TABLE>



     For Fiscal  2001,  the number of  weighted  average  shares used to compute
diluted  earnings  per share is the same as the  number  used to  compute  basic
earnings per share  because the Group's  outstanding  stock options and warrants
are  anti-dilutive for that period (since the Group reported a net loss for U.S.
GAAP).  Had the Group  reported  net income the number of shares used to compute
Fiscal 2001 diluted  earnings,  per share in accordance  with U.S. GAAP
would have been 141,039,135.


 5.6 New U.S. GAAP accounting pronouncements

   In January 2003, the FASB issued FASB Interpretation, FIN No. 46,
Consolidation of Variable Interest Entities, which is an interpretation of
Accounting Research Bulletin, ARB No. 51 Consolidation of Financial Statements.
FIN No. 46 provides additional guidance regarding how to identify variable
interest entities and how an enterprise assesses its interest in the variable
interest entity to determine whether an entity is required to be consolidated.
The interpretation establishes that an enterprise consolidate a variable
interest entity if the enterprise is the primary beneficiary of the variable
interest entity. The primary beneficiary of a variable interest entity is the
party that absorbs a majority of the entity's expected losses, receives a
majority of its expected residual returns, or both, as a result of holding
variable interests, which are the ownership, contractual, or other pecuniary
interests in an entity. This interpretation applies immediately to variable
interest entities created after January 31, 2003 and to variable interest
entities in which an enterprise obtains an interest after that date. For
interests in variable interest entities existing as of January 31, 2003, the
guidance of FIN No. 46 will apply in the first fiscal year or interim period
beginning after June 15, 2003. The adoption of FIN No. 46 did not have a
significant impact in the current year and is not expected to have a significant
impact in future years on our consolidated results of operations, financial
position, or cash flows.

   In November 2002, the FASB issued FASB Interpretation No. 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others which is an Interpretation of FASB
Statements No. 5, 57 and 107 and Recission of FASB Interpretation No. 34. FIN 45
relates to the accounting for and disclosure of guarantees and requires that
upon issuance of a guarantee, the entity (i.e., the guarantor) must recognize a
liability for the fair value of the obligation it assumes under that guarantee.
Many guarantees are embedded in purchase or sales agreements, service contracts,
joint venture agreements, or other commercial agreements and the guarantor in
many such arrangements does not receive a separately identifiable upfront
payment for issuing the guarantee. FIN 45 requires identical accounting for
guarantees issued with or without a separately identified premium. FIN 45 covers
guarantee contracts that have four specific characteristics, excludes some
guarantee contracts entirely from its scope and excludes certain types of
guarantees (a guarantee issued between parents and their subsidiaries) from its
initial recognition and measurement but for which they are subject to its
disclosure requirements. The initial recognition and initial measurement
provisions applied immediately to guarantees issued or modified after December
31, 2002. The adoption of FIN 45 did not have a significant impact in the
current year and is not expected to have a significant impact in future years on
our consolidated results.

     EITF Issue No. 02-16, Accounting for Consideration Received from a Vendor
by a Customer (Including a Reseller of the Vendor's Products), addresses how a
customer of a vendor's products should account for cash consideration received
from the vendor. EITF 02-16 requires that, for new arrangements entered into
after December 31, 2002, cash consideration received by a customer from a vendor
is presumed to be a reduction of the prices of the vendor's products or services
and should be characterized as a reduction of cost of sales. However, that
presumption may be overcome if the consideration is either (1) a reimbursement
of costs incurred by the customer to sell the vendor's products, which should be
characterized as a reduction of that cost or (2) a payment for assets or
services delivered to the vendor, which should be characterized as revenue.
Additionally, if consideration received by the customer for reimbursement of
costs the customer incurred to sell the vendor's products is more than the
actual costs incurred by the customer, then any "excess" should be treated as a
reduction of the prices of the vendor's product. EITF 02-16 also requires that,
for arrangements entered into after November 21, 2002, assuming the customer can
reasonably estimate the rebate or refund and it is probable that the specified
target will be attained, such amount should be recognized as a reduction of the
cost of sales based on a systematic and rational allocation of the cash
consideration to each of the underlying transactions that results in progress by
the customer toward earning the rebate or refund. If attaining the milestone is
not probable, then the rebate or refund should be recognized as the milestone is
achieved. The adoption of EITF 02-16 did not have a significant impact on our
financial statements.



 5.7 Other disclosures

   The following are supplemental disclosures which pertain to the Group's
financial statements as prepared in accordance with French GAAP.

 (a) Impairment of long-lived assets

    Tangible fixed assets (property, plant and equipment) are written down to
estimated net realizable value when changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Impairment is determined for
each group of asset by considering management's expectations of future economic
and operating conditions of the respective assets to be held for use. Should
this determination indicate that an asset is impaired, a write-down is
recognized which is equal to the difference between carrying value and fair
value. Fair value is determined on the basis of market prices.
Intangible assets and goodwill are written down to estimated net realizable
value when negative conditions are identified. Impairment is determined based on
an estimation of value and future benefits of the intangible assets. Should this
determination indicate that an intangible asset or goodwill is impaired, the
related amortization period is revised or a write-down is recognized. Impairment
for market share intangible assets are recognized as a diminution in value in
accordance with the policy described in note 1.

 (b) Allowance for doubtful accounts

    Set forth below is a  table which provides information on the Group's
    allowance for doubtful accounts.


<TABLE>
<S>                                 <C>               <C>             <C>

                                                   August 31,
                                     2003              2002            2001
                                               (millions of euro)

Balance at beginning of period        60                57              59
Additions                             14                29               8
Deductions                            (3)              (20)            (11)
Scope of consolidation and
 currency translation adjustment      (7)               (6)              1
                                    -----             -----           -----
Balance at end of period              64                60              57
                                    =====             =====           =====
</TABLE>



(c) IAS 7 Consolidated Statements of Cash Flow

   Following are consolidated statements of cash flows presented in accordance
with IAS 7:

<TABLE>
<S>                                  <C>              <C>             <C>

                                              Years ended August 31,
                                      2003            2002             2001
                                                (millions of euro)
Cash flows from operating activities

 Group net income                      162             202              128
 Minority interests in net income        9              13               67
 Net (income) loss from equity
  method investees, net of
  dividends received                    (1)             (3)               2
Adjustments for:
 Depreciation and provisions           153             187              113
 Goodwill amortization                  62              67               44
 Deferred taxes                         (9)              5               20
 Less: gains or losses
  on disposal net of tax                14             (61)              26
                                     ------           ------           ------
Operating profit before working
 capital changes                       390             410              400
 Increase in inventories                (9)              8               (8)
 Increase in account receivables         5             (29)             (23)
 Increase in prepaid expenses,
  other receivables and other assets    (7)            (54)              (7)
 Increase in accounts pay                6              78              114
 Increase in vouchers payab             43             126              110
 Increase in other liabilities          62              80              (32)
                                     ------           ------           ------
 Net cash flow from operating
  activities                           490             619              554
                                     ------           ------           ------
Cash flows from investing activities
 Purchases of tangible and
  intangible fixed asset              (241)           (297)            (233)
 Acquisitions of subsidiaries
  net of cash acquired                 (34)            (97)          (1,741)
 Proceeds on disposal
  of fixed assets                       14              81               31
 Decrease (increase)
  in loans to equity
  method investees                       -               1               (4)
 Other investing activities            (18)             (3)             (12)
                                     ------           ------         --------
Net cash used in investing
 activities                           (278)           (315)          (1,959)
                                     ------           ------           ------
Cash flows from financing activities
 Dividends paid                        (94)            (87)             (74)
 Dividends paid to minority
  shareholders                         (11)            (15)              (9)
 Proceeds from issuance of
  share capital, including
  minority interests                     -              59            1,020
 Purchases of treasury shares           23             (90)             (28)
 Proceeds from long-term
  borrowings                            57           1,113            1,966
 Repayment of borrowings              (178)         (1,146)          (1,142)
 Increase (decrease)
  in bank overdrafts                    47               7               11
 Other financing activities            (21)             (1)              (9)
                                     ------          ------         --------
Net cash provided by (used in)
 financing activities                 (177)           (160)           1,735
                                     ------           ------           ------
Net increase in cash and
 cash equivalents                       35             144              330
                                     ------          ------         --------
Cash and cash equivalents at
 beginning of period                 1,211           1,185              896
Net effect of exchange
 rates on cash                         (54)           (118)             (41)
                                     ------          ------         --------
Cash and cash equivalents at
 end of period                       1,192           1,211            1,185
                                     ======          ======         ========
</TABLE>

Cash and cash equivalents include marketable securities, which are short-term
investments readily convertible to cash and with maturities of three months or
less (excluding treasury shares totaling EUR 96 million, EUR 119 million and
EUR 28 million as of August 31, 2003, 2002 and 2001) and restricted cash,
which are compensating balances.


 (d) Provisions for contingencies and losses

   Following is supplemental information pertaining to the provisions for
contingencies and losses recorded by the Group in accordance with French GAAP as
listed in note 3.15:

 Sodexho, Inc. acquisition provisions

   The Sodexho, Inc. acquisition provisions were recorded in connection with
the 1998 transaction with Marriott Management Services, and primarily
represented an unfavorable contract for food and supply distribution and
restructuring costs, principally related to employee termination, relocation of
facilities and closures, related to Sodexho North America.


 Payroll and other taxes

   The payroll and other taxes provision relates to payroll and other tax
exposures, including sales and use taxes in the United States, in the various
countries in which the Group operates.


 Contract termination costs

   The provision for contract termination costs relates to anticipated costs
to exit certain client relationships, generally in acquisition situations.


 Client, supplier and employee litigation

   Client, supplier and employee litigation provisions relate to pending or
threatened litigation.


  Large repairs

   Large repairs provisions represent significant anticipated costs to
maintain certain facilities.


  Incentive compensation

   Provisions for incentive compensation were recorded with respect to the
subsidiary level formula based stock option plans, which were discontinued in
fiscal 2001.


 Under-utilized premises

   Under-utilized premises are recorded in order to fair value leased premises
of acquired companies.


 Other

   Other provisions include re-engineering costs, exchange loss risks and flood
contingencies related to the River and Harbor Cruises activity.

<PAGE>

Exhibit 2.1  Composite Conformed Term and Revolving Facilities Agreement


                    TERM AND REVOLVING FACILITIES AGREEMENT

                       1,932,500,000 and US$1,080,000,000

                               FACILITY AGREEMENT

                               dated 6 April 2001
  (as amended by a letter dated 27 April 2001 and an Amendment and Restatement
            Agreement dated 8 June 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
                                   Ref: PHPS

                                    CONTENTS

CLAUSE                                                                PAGE

                                   SECTION 1
INTERPRETATION
1. Definitions and interpretation                                      1
                                   SECTION 2
                                 THE FACILITIES
2. The Facilities                                                     20
3. Purpose                                                            20
4. Conditions of Utilisation                                          21
                                   SECTION 3
                                  UTILISATION
5. Utilisation - Loans                                                24
6. Utilisation - Letters of Credit                                    26
7. Letters of Credit                                                  31
8. Optional Currencies                                                35
                                   SECTION 4
                     REPAYMENT, PREPAYMENT AND CANCELLATION
9. Repayment                                                          37
10.Prepayment and cancellation                                        38
                                   SECTION 5
COSTS OF UTILISATION
11. Interest 42 12. Interest Periods                                  44
13. Changes to the calculation of interest                            46
14. Fees                                                              47
                                   SECTION 6
                         ADDITIONAL PAYMENT OBLIGATIONS
15. Tax gross up and indemnities                                      48
16. Increased costs                                                   50
17. Other indemnities                                                 52
18. Mitigation by the Lenders                                         53
19. Costs and expenses 53
                                   SECTION 7
                                   GUARANTEE
20. Guarantee and indemnity                                           55
                                   SECTION 8
              REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT
21. Representations                                                   58
22. Information undertakings                                          62
23. Financial Covenants                                               66
24. General undertakings                                              68
25. Events of Default                                                 73
                                    SECTION 9
                               CHANGES TO PARTIES
26. Changes to the Lenders                                            78
27. Changes to the Obligors                                           82
                                   SECTION 10
                              THE FINANCE PARTIES
28. Role of the Agent and the Arranger                                84
29. Conduct of business by the Finance Parties                        88
30. Sharing among the Lenders                                         88
                                   SECTION 11
                               ADMINISTRATION
31. Payment mechanics                                                 90
32. Set-off                                                           92
33. Notices                                                           92
34. Calculations and certificates                                     94
35. Partial invalidity                                                94
36. Remedies and waivers                                              94
37. Amendments and waivers                                            95
38. Counterparts                                                      95
                                   SECTION 12
                         GOVERNING LAW AND ENFORCEMENT
39. Governing law                                                     96
40. Enforcement                                                       96

                                 THE SCHEDULES
SCHEDULE                                                             PAGE
SCHEDULE 1 The Original Lenders                                       97
SCHEDULE 2 Conditions precedent                                       98
SCHEDULE 3 Requests                                                  102
SCHEDULE 4 Mandatory Cost formulae                                   105
SCHEDULE 5 Form of Transfer Certificate                              108
SCHEDULE 6 Form of Accession Letter 109
SCHEDULE 7 Form of Compliance Certificate                            110
SCHEDULE 8 LMA Form of Confidentiality Undertaking                   111
SCHEDULE 9 Timetables                                                116
SCHEDULE 10 Acquisition Financing Indemnity                          118
SCHEDULE 11 Form of TEG Letter                                       120
SCHEDULE 12 Material Subsidiaries                                    122
SCHEDULE 13 Form of Letter of Credit                                 123


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 or, as the
    case may be in the case of the acquisition of the Wood Dining Services
    business, by SMS of the relevant businesses from 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 or, as the case may be, the Company in respect of the Wood Dining
    Services, Sogeres and other 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 French and/or US companies
    ncorporated 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;
         (iii)and 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 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" means:
(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, SMS or the
    relevant AA Bidco, as the case may be, completing that AA Acquisition, being
    the date on which the relevant business is transferred to the Company, SMS
    or an AA Bidco, as the case may be, under the relevant Acquisition
    Agreement; and
(b) in respect of the SMS Acquisition, from and including the Company or SMS
    Bidco gaining control of SMS (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;
(h) or 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" 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 Schedule 1 (The Original Lenders) 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 Schedule 1 (The  Original  Lenders)  and the amount of any other  Facility A2
Commitment  transferred to it under this  Agreement;  and

(b) in relation to anyother 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 Schedule 1 (The  Original  Lenders) 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 Schedule 1 (The Original Lenders) 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.

"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
(or SMS Bidco on its behalf in the circumstances and on the terms set out in
Clause 4.1(e) (Initial conditions precedent)) 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 (or SMS Bidco, as the case may be)).

"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 662/3% of the Total Commitments (or,
    if the Total Commitments have been reduced to zero and there are no
    Utilisations then outstanding, aggregated more than 662/3% 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 662/3% 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 SMS 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 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.

"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 SMS or its Subsidiaries until the earlier
    of (i) SMS 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 SMS 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.
"Obligor" means a Borrower or a Guarantor.

"Offer" means an offer (which is recommended  by the Special  Committee) 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 SMS  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.

"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).

"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 (Solvency),
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 SMS 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 SMS
(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 Operations, LLC.

"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.

"SMS" means Sodexho Marriott Services, Inc.

"SMS Acquisition" means the acquisition by the Company or SMS Bidco of Shares,
whether pursuant to an Offer or Market Purchases.

"SMS Bidco" means the US company incorporated by the Company for the purpose of
carrying out the SMS Acquisition.

"SMS Existing Facility" means the existing US$ 620,000,000 syndicated term
facility between SMS and the banks and financial institutions named therein,
dated as of 30 January 1998, as amended.

"Special Committee" means the committee of SMS's board of directors formed to
consider the proposal made by the Company to SMS'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 (SMS 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;  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 EUR
1,932,500,000 at the date of this Agreement.

"Total Facility A1 Commitments" means the aggregate of the Facility A1
Commitments, being EUR 600,000,000 at the date of this Agreement.

"Total Facility A2 Commitments" means the aggregate of the Facility A2
Commitments, being EUR 1,332,500,000 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.

"Withdrawal Liability" has the meaning specified in Part I of Subtitle E
of Title IV of ERISA.

1.1 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.

1.2 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.

1.3 SMS and SMO as Subsidiaries
    Notwithstanding that at the date of this Agreement SMS and SMO may not
    satisfy the requirements to qualify as a Subsidiary, as set out in the
    definition thereof, each of SMS 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 SMS 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 SMS or SMO;

(c)  Clause 22.11 (Environment)  provided that SMS 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 SMS 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); and

(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, SMS 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
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),  SMS and/or 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),  SMS Bidco, a multicurrency term loan facility
          in an aggregate amount equal to the Total Facility A2 Commitments;
     (c)  the  Company  and,   following   their  accession  under  Clause  27.2
          (Additional  Borrowers),  SMS  and/or  SMO,  a US  Dollars  term  loan
          facility  in an  aggregate  amount  equal  to  the  Total  Facility  B
          Commitments; and
     (d)  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,  as the case may be, SMS 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, as the case may be,
               SMS  and/or  AA  Bidcos  for  an  AA  Acquisition   under  an  AA
               Acquisition  Agreement;
          (ii) Financial Indebtedness (if any) existing within the AA businesses
               acquired at the time of, and which remains outstanding following,
               an AA Acquisition; and (iii)AA Acquisition Costs.

     (b)  The Company and/or SMS Bidco shall apply all amounts they borrow under
          Facility A2 in or towards financing or refinancing:
          (i)  consideration  payable  by the  Company  and/or SMS Bidco for the
               acquisition  by it of those  Shares to be acquired by it pursuant
               to an Offer;
          (ii) consideration payable by the Company and/or SMS Bidco in relation
               to (A) any  merger  of SMS and SMS 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 SMS Bidco in making
               Market  Purchases up to an aggregate  maximum  amount of not more
               than EUR 250,000,000; and
          (iv) Offer Costs.


     (c)  the  Company,  SMS and/or  SMO,  as the case may be,  shall  apply all
          amounts borrowed by it under Facility B to refinance or repurchase the
          SMS Existing Facility and the SMO Drawn Debt.

     (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 No Borrower, subject to paragraph

     (a)  below, 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), (c) and

     (d)  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.  (e)
          Notwithstanding the above, SMS Bidco may deliver a Utilisation Request
          for and on behalf of SMS and/or  SMO,  as the case may be, in relation
          to a Utilisation of Facility B and/or Facility C notwithstanding that:
          (a) SMS Bidco  itself is not able to be a  Borrower  of  Facility B or
          Facility C; and (b) SMS and/or SMO may not, at the time of delivery of
          such Utilisation  Request by SMS Bidco, have acceded to this Agreement
          as Additional Borrowers,

          provided  that SMS Bidco may only deliver such a  Utilisation  Request
          if:
          (i) SMS and/or,  as the case may be, SMO have not at that time acceded
              as an Additional Borrower; and
          (ii) the documents and other evidence listed in Part 1A of Schedule 2
               (Conditions  Precedent) have been received in form  and
               substance  satisfactory  to the  Agent.

          Reference  in this  Agreement to a Borrower  delivering a  Utilisation
          Request shall  include,  for the avoidance of doubt,  SMS Bidco in the
          circumstances and on the terms set out in this Clause 4.1(e).

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,
     (ii) in the case of any other  Utilisation,  no  Default is  continuing  or
          would  result  from  the  proposed  Utilisation;   and  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  Loans  in
          aggregate  and more than 25  Letters of Credit 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 in 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  Utilisations
     (a)  No more than  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 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
          200,000,000 only may be drawn by the Company, SMS and/or AA Bidcos, as
          the case may be, during the Additional A1 Period.
     (b)  A drawing  may only be made by SMS under  Facility  A1  following  the
          refinancing,  repayment  and  cancellation  in full of each of the SMS
          Existing Facility and the SMO Credit Agreement.
     (c)  The Lenders and the Agent shall not be obliged to fund any Loan(s) and
          the  Issuing  Bank  shall not be obliged to issue any Letter of Credit
          requested by SMS Bidco in the  circumstances  and on the terms set out
          in Clause 4.1(e) (Initial  conditions  precedent) unless the Agent has
          received, in form and substance satisfactory to it:
          (i)  a certified copy of the formal notice of  cancellation  by SMS
               and SMO (which is  irrevocable)  of the SMS Existing  Facility
               and the SMO Credit  Agreement;  and
          (ii) the provisions of Clause  27.2(a)  (Additional Borrowers)  has
               been  complied with in all respects in relation to SMS and SMO so
               that they are Additional  Borrowers,
          in each case  prior to the time of the  proposed  funding  or issue of
          such  Letter of  Credit.  If such  funding  is not able to  proceed or
          Letter of Credit  able to be issued on the basis of (i) or (ii)  above
          not being  complied  with,  the  provisions of Clause  17.2(c)  (Other
          indemnities) shall apply in relation to such requested Utilisations.

     (d)  Facility B and Facility C may only be utilised  following  the initial
          drawing of Facility A2.

     (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;
          (vii)in the case of a requested  Utilisation  of  Facility  A2, (A)in
               the case of the first request for such a  Utilisation,  the Offer
               continues to be recommended by the Special Committee and (B) each
               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;  and (
          viii)in the case of a requested  Utilisation of Facility B or Facility
               C by SMS Bidco in the  circumstances  and on the terms set out in
               Clause 4.1(e) (Initial  conditions  precedent),  each Utilisation
               Request is  accompanied,  so far as  practicable,  by a certified
               copy of the formal notice of cancellation  (which is irrevocable)
               by SMS and SMO of the SMS  Existing  Facility  and the SMO Credit
               Agreement in form and substance  satisfactory to the Agent. If it
               is not possible for such notice of  cancellation to accompany the
               Utilisation  Request the  provisions  of Clause  4.5(c) (Limit on
               timing and amount of Utilisations) shall apply in relation to the
               Utilisations requested by SMS Bidco.

     (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, 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' articipation

     (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
               continuingat  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) no more than EUR  500,000,000  in aggregate may be extended under
               Facility A1 and/or Facility A2 pursuant to this Clause 5.5; and
          (iii)no more than EUR  375,000,000  may be extended  under Facility A1
               pursuant to this Clause 5.5.

    (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 Facility of Credit
            Sub-Limit or, if less, the Available Facility for 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  other  than  Clause  5.2(a)(viii)  (Completion  of a
        Utilisation Request).

   6.2  Facility C
        Facility C may be utilised by way of Letters of Credit by SMO only 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 or, in the  circumstances  and on the terms set out in Clause 4.1(e)
        (Initial conditions precedent), SMS Bidco on SMO's behalf, 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,  subject to paragraph (a)
        of Clause 4.4 (Maximum number of Utilisations).
    (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;

    (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);
        and

    (h) the  provisions  of Clause  5.2(a)(viii)  (Completion  of a  Utilisation
        Request) have been complied with.

    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)  (Issue of Letters of  Credit))
            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.


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)  Inrespect  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:
<TABLE>
     <S>                                    <C>

     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
</TABLE>


     (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 331/3 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 EUR 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  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, EUR 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 10.5 shall reduce the Commitments of the Lenders rateably under
        that Facility.

  10.6  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 EUR 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 10.6 shall satisfy the
          obligations  under  Clause  9.2  (Repayment  of  Facility  B Loans) in
          chronological order.

   10.7 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).

   10.8 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).

   10.9  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 111.2,  the Margin
          will be 60 basis  points  per annum in  respect  of  Facility A and 70
          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 (e) 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:
<TABLE>
       <S>                      <C>                   <C>
       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
</TABLE>



      (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 (e) below by 15 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 SMS  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 EUR 900,000,000.
          (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 (e)
          below, if:
          (i)  no part of the SMS  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 EUR 450,000,000 (or its equivalent) in aggregate has
               been spent on the SMS Acquisition  and AA  Acquisitions  (whether
               that be a partial  AA  Acquisition  or partial  SMS  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 EUR 450,000,000.

     (e)  Any  adjustment  to the  Margin  (whether  upwards  on  downwards)  in
          accordance  with  paragraphs (b), (c) or (d) above or (f)(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  111.2(d)(i) or (ii) as
               the  case  may be,  is  satisfied;  or (iv)  the  date on which a
               substitute  Rating is  assigned  to the  Company as  provided  in
               paragraph (f)(ii) or (iii) below, as the case may be.

     (f)  For the  purpose  of this  Clause  111.2,  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
               SMS  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+.

     (g)  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  (f)(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  111.4 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 (i) the  Company  on behalf of a Borrower  or (ii) SMS
          Bidco on behalf of SMS and SMO in the  circumstances  and on the terms
          set out in Clause 4.1(e) (Initial conditions precedent)) 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 112.2,  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 113.2 (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) 331/3 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 anypayment in relation to a sum received or  receivable  (or
               any sumdeemed 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 fallsdue):

               (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 a Finance Party:

               (i)  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

               (ii) 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,

               (iii)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.

          (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,

          whichis 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 (or SMS Bidco in the
                 circumstances and on the terms set out in Clause 4.1(e)
                 (Initial conditions precedent)) 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 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 Loanpursuant 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,  "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)  No 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.

     21.11Existing  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).

     21.12Environmental  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.

     21.13Material  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).

     21.14Solvency  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.

     21.15Tax  liabilities
          All  necessary  returns have been  delivered by each member of the
          Group (subject to the provisions of Clause 21.4 (SMS 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.

     21.16Employee  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.

     21.17US 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.

     21.18Investment  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 Acquisitions

          (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.

          21.20Repetition
               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 22.4 (SMS 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  22.4 (SMS and SMO as  Subsidiaries))  as any
               Finance Party (through the Agent) may reasonably request;

          (d)  written confirmation of when it has gained control of SMS (within
               the meaning set out in the definition of  "Subsidiary"  in Clause
               22.1  (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 SMS  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 22.4 (SMS 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:
               <TABLE>
                 <S>                                               <C>

                 Date                                              Ratio
                 28 February 2002                                  24.00:1
                 31 August 2002                                    24.00:1
                 28 February 2003                                  24.00:1
                 31 August 2003                                    24.00:1
                 29 February 2004                                  24.00:1
                 31 August 2004                                    24.00:1
                 28 February 2005                                  24.00:1
                 31 August 2005                                    24.00:1
                 28 February 2006                                  24.00:1
               </TABLE>


          (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:
                 <TABLE>
                 <S>                                               <C>

                 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
                 </TABLE>


     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 23.1 (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 23.4 (SMS 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  23.4 (SMS 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 SMS and SMO such
                    disclosure  shall be  limited  to  disclosure  of the  total
                    amount  of  indebtedness  secured  by  SMS  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 EUR 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 EUR  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 23.4 (SMS 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 SMS
               Existing  Facility  and SMO Credit  Agreement  and, in  addition,
               other  Financial  Indebtedness  not exceeding EUR  300,000,000 in
               aggregate for all members of the Group  (excluding  the Company);
               or

               (ii)Financial  Indebtedness  not  exceeding  EUR  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 SMS with SMS 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 23.4 (SMS 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 23.4 (SMS and SMO as Subsidiaries)) in the same location as it
        or the relevant Obligor or Material Subsidiary (subject to Clause 23.4
        (SMS and SMO as Subsidiaries)).

     24.9 The Offer

        Each Obligor shall (and the Company shall procure that each Material
        Subsidiary (subject to Clause 23.4 (SMS 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 23.4 (SMS 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 23.4 (SMS 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 23.4 (SMS
        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 23.4 (SMS 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 EUR 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 EUR 400,000,000 in
        aggregate may be spent by the Company or any of its Subsidiaries on
        Market Purchases.

     24.15 AA Bidcos and SMS Bidco

        In relation to the AA Bidcos and the SMS 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 22.5  (Notification of default),  23
          (Financial  Covenants),  24.3 (Negative pledge),  24.5 (Restriction on
          Subsidiary  borrowings/guarantees),  24.6 (Merger) and 24.7 (Change in
          business) 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 EUR  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 EUR
               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).

     25.10Unlawfulness  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 225.6(b)
               (No  default),  225.10 (No  proceedings  pending or  threatened),
               225.12 (Environmental laws) and 225.15 (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) SMS or any of its Subsidiaries which exists on the date SMS 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 EUR  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 EUR 7,500,000 or US$7,500,000,  as the case
               may be,  or (B) any  transfer  or  assignment  of the  whole of a
               Facility  whether  higher  or  lower  than EUR  7,500,000  or US$
               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 previous
               Facility  Office would have been if the  assignment,  through its
               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 EUR 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 SMS 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,  SMS  and  SMO  becomes  an  Additional  Borrower.  That
               Subsidiary shall become an Additional Borrower if:


               (i)  (A)  it is SMS or SMO;  or(B) it is an AA Bidco or SMS Bidco
                         incorporated  in France or the United  States  provided
                         that there are no more than two AA Bidco's  and one SMS
                         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  SMS and  SMO)  which  becomes  an
               Additional  Borrower  shall at the same time become an Additional
               Guarantor.

          (b)  If any amounts remain outstanding under the SMS Existing Facility
               and/or the SMO Credit Agreement on 31 July 2001 and the same have
               not been  cancelled  in full by such date,  SMO shall by no later
               than 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.

          (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 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  328.5
               (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 328.5 (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 331.3 (Distributions to an
        Obligor) and Clause 331.4 (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  34.3 (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 333.2
               (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 333.2 (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  35.5
               (Extension  of Facility A1 and  Facility  A2), a  certificate  in
               accordance  with Clause  232.2  (Compliance  Certificate)  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 131.5  (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  31.1
                    (Definitions);

               (ii) except pursuant to Clause 35.5 (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 32.2  (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

<TABLE>
<S>           <C>               <C>                <C>             <C>
Name of
Original      Facility A1       Facility A2        Facility B      Facility C
Lender        Commitment        Commitment         Commitment      Commitment


Citibank
 Inter-
 national
 plc
 (for Utili-
 sations
 other than
 to a US
 Person)  EUR 200,000,000   EUR 444,166,666.67  US$ 310,000,000  US$ 50,000,000

Citicorp USA,
 Inc.(for
 Utili-
 sations
 to a US
 Person)

Goldman
 Sachs
 Interna-
 tional
 Bank     EUR 200,000,000  EUR 444,166,666.67  US$ 310,000,000  US$ 50,000,000

Societe
 Generale EUR 200,000,000  EUR 444,166,666.66   US$ 310,000,000  US$ 50,000,000
          ---------------  ------------------   ---------------  --------------
          EUR 600,000,000  EUR 1,332,500,000    US$ 930,000,000  US$ 150,000,000
</TABLE>

<PAGE>


                                   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.



<PAGE>



                                     PART 1 B
               CONDITIONS PRECEDENT TO UTILISATION OF FACILITY A1




(c)   (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  from the Company that all conditions set out in
          such AA Acquisition  Agreement have been satisfied by the Company (or,
          as the case may be,  other  relevant  acquiror)  and/or  waived by the
          relevant member of the AA Group in full.

(d)  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.

(e)  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.





<PAGE>



                                    PART I C
               CONDITIONS PRECEDENT TO UTILISATION OF FACILITY A2


(f)  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).

(g)  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 SMS Acquisition.

(h)  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.
     (i)  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.
     (j)  A legal  opinion of Davis Polk &  Wardwell  substantially  in the form
          distributed  to the  Original  Lenders  prior  to  the  date  of  this
          Agreement.


                                     PART I

     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

                               UTILISATION REQUEST


From:         [Borrower] [SMS Bidco]

To:           [Agent]

Dated:

Dear Sirs

                 Sodexho Alliance, S.A. - EUR 1,932,500,000 and
                      US$1,080,000,000 Facility Agreement
            dated 6 April 2001, as amended (the "Facility Agreement")

     1.   [We, SMS, SMO] 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.

     5.   [This Utilisation Request is delivered by us on behalf of [SMS/SMO] in
          accordance with the terms of the Facility Agreement.]**



                                Yours faithfully





                                ................

                            authorised signatory for
                           [name of relevant Borrower]

                        [SMS Bidco on behalf of SMS/SMO]


--------------------------------------------------------------------------------
*   Delete as appropriate.

**  Delete if not from SMS Bidco in relation to Facility B or Facility C


                                     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. - EUR 1,932,500,000 and
                      US$1,080,000,000 Facility Agreement
            dated 6 April 2001, as amended (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] [SMS Bidco]

To:           [Agent]

Dated:

Dear Sirs

                 Sodexho Alliance, S.A. - EUR 1,932,500,000 and
                      US$ 1,080,000,000 Facility Agreement
            dated 6 April 2001, as amended (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.

5.   [This Utilisation Request is delivered by us on behalf of SMO in accordance
     with the terms of the Facility Agreement]*


                                Yours faithfully





                     ......................................

                            authorised signatory for

                                      [SMO]

                          [SMS Bidco on behalf of SMO]


--------
* Delete as appropriate


<PAGE>



                                   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(C-D) + E * 0.01] / [100-(A+C)] per cent. per annum

     (b)  in relation to a Loan in any currency other than Sterling:

                  (E*0.01) / 300 per cent. per annum.

        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 (pound)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
          2001 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. - EUR 1,932,500,000 and
                      US$1,080,000,000 Facility Agreement
            dated 6 April 2001, as amended (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:



<PAGE>

                                   SCHEDULE 6
                            FORM OF ACCESSION LETTER


To:           [                   ] as Agent


From:         [Subsidiary] and Sodexho Alliance, S.A.

Dated:

Dear Sirs

                 Sodexho Alliance, S.A. - EUR 1,932,500,000 and
                      US$1,080,000,000 Facility Agreement
            dated 6 April 2001, as amended (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. - EUR 1,932,500,000 and
                      US$1,080,000,000 Facility Agreement
            dated 6 April 2001, as amended (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 EUR [ ];


     (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.





                                   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]







<PAGE>



*    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.

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.
<TABLE>
<S>                     <C>                <C>                   <C>

                         Loans in euro     Loans in Sterling      Loans in other
                                                                    currencies
Delivery of a duly
 completed Utilisation
 Request (Clause 5.1
 (Delivery of a
 Utilisation Request))
 or a Selection Notice
 (Clause 12.1
 (Selection of              D-3                    D-1                   D-3
 Interest Periods))      11:00 a.m.             11:00 a.m.            11:00 a.m.


Agent determines
 (in relation to a
 Utilisation) the
 Base Currency Amount
 of the Loan, if
 required under
 Clause 5.4
 (Lenders'                 D-3                    D-1                   D-3
 participation)         12:00 p.m.             12:00 p.m.            12:00 p.m.



Agent notifies
 the Lenders
 of the Loan
 in  accordance
 with Clause 5.4
(Lenders'                  D-3                    D-1                   D-3
 participation)         2:00 p.m.              2:00 p.m.             2:00 p.m.

Agent receives
 a notification
 from a Lender under
 Clause 8.2
 (Unavailability          D-2                     D                    D-2
 of a currency)         9:30 a.m.              9:30 a.m.             9:30 a.m.

Agent gives
 notice in
 accordance with
 Clause 8.2
 (Unavailability         D-2                     D                    D-2
 of a currency)        10:30 a.m.             10:30 a.m.            10:30 a.m.

Agent determines
 amount of the
 Loan in Optional
 Currency in
 accordance with
 Clause 8.3
 (Exchange rate           D-3                    D-1                   D-3
 movements)            12:00 p.m.             12:00 p.m.            12:00 p.m.


LIBOR or EURIBOR      Quotation Day         Quotation Day        Quotation Day
 is fixed           as of 11:00 a.m.       as of 11:00 a.m.     as of 11:00 a.m.
                     (Paris time)           (London time)          (London time)

</TABLE>


                                    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.


<TABLE>
<S>                                  <C>                      <C>
                                                               L/Cs
                                                               in Canadian
                                      in US Dollars            Dollars
Delivery  of  a  duly
 completed   Utilisation
 Request  (Clause 6.3
 (Delivery  of  a  Utilisation            D-4                         D-4
 Request  for Letters of Credit))      11:00 a.m.                  11:00 a.m.

Agent  determines
 (in relation to a
 Utilisation) the Base
 Currency  Amount
 of the  Letter of
 Credit,  if  required
 under Clause 6.6
 (Issue of Letters                        D-3                         D-3
 of Credit)                            12:00 p.m.                  12:00 p.m.


Agent notifies the
 Issuing Bank and
 the Lenders of the
 Letter of Credit
 in accordance with
 Clause 6.6 (Issue of                      D-3                         D-3
 Letters of Credit)                     2:00 p.m.                   2:00 p.m.

SMO requests renewal
 of a Letter of
 Credit under Clause
 6.8 (Renewal of a                         D-4                         D-4
 Letter of Credit)                      11:00 a.m.                  11:00 a.m.
</TABLE>





                                   SCHEDULE 2

                         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 SMS, 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 1


                               FORM OF TEG LETTER
To:           Sodexho Alliance, S.A.

From:         [                   ] as Agent

Dated:        [                   ] 2001



Dear Sirs

   Sodexho Alliance, S.A. - EUR 1,932,500,000 and US$1,080,000,000 Facility
      Agreement dated 6 April 2001, as amended (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$
        /EUR exchange rate is 1 EUR = 0.[ ]US$, (h) that the Rating (as defined
        in Clause 11.2(f) (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 15bps 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 1

                              MATERIAL SUBSIDIARIES


1. Sodexho Limited

2. Sodexho Marriott Services, Inc.

3. Sodexho Operations, LLC.

<PAGE>



                                   SCHEDULE 2
                            FORM OF LETTER OF CREDIT



To:    [Beneficiary]
       [Address]
       [other relevant information]

       (the "Beneficiary")


       [Date]


                   Irrevocable Standby Letter of Credit no.[ ]

At the request of [ ], Societe Generale (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 the office of Societe Generale at 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 3p.m.  (New York 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.

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 3p.m. (New
          York 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 as follows:

     Societe Generale, 1221 Avenue of the Americas, New York, NY 10020, USA Loan
     Servicing Group Attn: Loan Servicing Group

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,

Societe Generale

By:



<PAGE>



                                    SCHEDULE
                                 Form of Demand


To:      Societe Generale
         Loan Servicing Group
         1221 Avenue of the Americas
         New York
         NY 10020
         USA

         Attn: Loan Servicing Group                                [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]




<PAGE>



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 : Loan Servicing Group

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


--------

1    This may need to be amended  depending on the currency of payment under the
     Letter of Credit.


                                SOCIETE GENERALE


                                AMENDMENT LETTER




SODEXHO ALLIANCE S.A.

3 avenue Newton

78180 Montigny-le-Bretonnneux

FRANCE

For the attention of Sian Herbert-Jones



                                                                March 14, 2003




Dear Madam,
REF: SODEXHO ALLIANCE S.A. (the "Company") - EUR 1,932,500,000 and USD
1,080,000,000 Term and Revolving Facilities Agreement dated 6 April 2001, as
amended by a letter dated 27 April 2001, an Amendment and Restatement Agreement
dated 8 June 2001, a Syndication Agreement dated 22 June 2001 and an amendment
letter dated 15 May 2002 (the "Facilities Agreement").

We, SOCIETE GENERALE (the "Agent"), write to you in our capacity as Agent under
the Facilities Agreement. Terms defined in the Facilities Agreement shall have
the same meaning when used in this letter (the "Amendment Letter") unless
otherwise defined in this Amendment Letter or the context otherwise requires.

1.   The  Obligors  and the  Majority  Lenders  have  agreed  (at the  Company's
     request) that the Facilities Agreement shall be amended in the form set out
     in the schedule to this Amendment Letter.

2.   The  Amendment  Letter  shall  take  effect  on the date on which the Agent
     notifies  the Lenders and the Company  that it has  received a copy of this
     Amendment Letter signed by the Company.

3.   Save to the  extent  specifically  referred  to in this  Amendment  Letter,
     nothing  contained in this Amendment Letter shall be construed as a waiver,
     novation or amendment of the provisions of the Facilities  Agreement  which
     otherwise continues in full force and effect.

1.   The Company shall reimburse the Agent on first demand the reasonable amount
     of all costs and expenses  (including  legal fees,  if any) incurred by the
     Agent in connection  with the  negotiation  and execution of this Amendment
     Letter.

2.   The  Company  shall,  on the date set forth in  clause 2 above,  pay to the
     Agent for each Lender having  confirmed in writing their  agreement to this
     Amendment  Letter on or before 13 March  2003,  the fee(s)  payable to that
     Lenders in  accordance  with the  letter  dated 19  February  2003 from the
     Company to the Agent  relating to the  Facilities  Agreement and requesting
     the amendments set out in this Amendments Letter.

3.   The  Company and the Agent  designate  this  Amendment  Letter as a Finance
     Document.

4.   The Amendment Letter shall be governed and construed in accordance with the
     laws of  England,  and the  provisions  of clause 40  (Enforcement)  of the
     Facilities Agreement shall be incorporated into this Amendment Letter as if
     set out in full.



Please acknowledge your agreement to the terms of this Amendment Letter by
dating, signing and returning each of the four enclosed copies of this Amendment
Letter.



Yours faithfully,





Made in four (4) originals



For and on behalf of

SOCIETE GENERALE

As Agent

Signed:  -------------------------------------

Name: Jean-Marc GIRAUD------------------------

Position:  Head of Corporate Acquisition Finance-------





We agree to the terms set out above.



For and on behalf of:

SODEXHO ALLIANCE S.A.

Signed:     -----------------------------------------------------------

Name:       -----------------------------------------------------------

Position:   -----------------------------------------------------------

Date:       -----------------------------------------------------------





For and on behalf of:

SODEXHO Inc.

Signed:     -----------------------------------------------------------

Name:       -----------------------------------------------------------

Position:   -----------------------------------------------------------

Date:       -----------------------------------------------------------



For and on behalf of:

SODEXHO OPERATIONS

Signed:     -----------------------------------------------------------

Name:       -----------------------------------------------------------

Position:   -----------------------------------------------------------

Date:       -----------------------------------------------------------





<PAGE>



                                                       Schedule



In Clause 23.1 (a) (ratio Net Consolidated Financial Indebtedness to EBITDA) the
ratios opposite the three following items shall be amended as follows:


<TABLE>
<S>                        <C>

         Date               Ratio



o 28 February 2003         o  2.50:1

o 31 August 2003           o  2.25:1

o 28 February 2004         o  2.15:1

</TABLE>


In Clause 23.1 (b) (ratio EBIT to Net Consolidated Interest Expense) the ratios
opposite the three following items shall be amended as follows:

<TABLE>
<S>                        <C>

Date                        Ratio

o 28 February 2003         o  3.30:1

o 31 August 2003           o  3.50:1

o 28 February 2004         o  3.75:1
</TABLE>



All the other terms of this Clause remain unchanged.



<PAGE>



                                SOCIETE GENERALE




                                AMENDMENT LETTER









SODEXHO ALLIANCE S.A.

3 avenue Newton

78180 Montigny-le-Bretonnneux

FRANCE

For the attention of Sian Herbert-Jones



                                                             May 15, 2003




Dear Madam,
REF: SODEXHO ALLIANCE S.A. (the "Company") - EUR 1,932,500,000 and USD
1,080,000,000 Term and Revolving Facilities Agreement dated 6 April 2001, as
amended by a letter dated 27 April 2001, an Amendment and Restatement Agreement
dated 8 June 2001, a Syndication Agreement dated 22 June 2001 (the "Facilities
Agreement").

We, SOCIETE GENERALE (the "Agent"), write to you in our capacity as Agent under
the Facilities Agreement. Terms defined in the Facilities Agreement shall have
the same meaning when used in this letter (the "Amendment Letter") unless
otherwise defined in this Amendment Letter or the context otherwise requires.

     The  Obligors  and the  Majority  Lenders  have  agreed  (at the  Company's
     request) that the Facilities Agreement shall be amended in the form set out
     in the schedule to this letter.

2.   The  amendments  shall take effect on the date on which the Agent  notifies
     the  Lenders  that it has  received  a copy of this  letter  signed  by the
     Company.

3.   The amendments are limited to those expressly provided in this letter..

4.   The  Company  shall pay the Agent  the  reasonable  amount of all costs and
     expenses (including legal fees, if any) incurred by the Agent in connection
     with the amendment contemplated by this letter.

5.   The Company and the Agent designate this letter as a Finance Document.

6.   The letter shall be governed and construed in  accordance  with the laws of
     England,  and the provisions of clause 40  (Enforcement)  of the Facilities
     Agreement shall be incorporated into this letter as if set out in full.



Please acknowledge your agreement to the terms of this letter by dating, signing
and returning each of the four enclosed copies of this letter.



Yours faithfully,





Made in four (4) originals



For and on behalf of

SOCIETE GENERALE

As Agent

Signed:   ----------------------------------------------

Name:    Jean-Marc GIRAUD-------------------------------

Position:   Head of Corporate Acquisition Finance-------





We agree to the terms set out above.



For and on behalf of:

SODEXHO ALLIANCE S.A.

Signed:   -----------------------------------------------------------

Name:     -----------------------------------------------------------

Position: -----------------------------------------------------------

Date:     -----------------------------------------------------------





For and on behalf of:

SODEXHO Inc.

Signed:    -----------------------------------------------------------

Name:      -----------------------------------------------------------

Position:  -----------------------------------------------------------

Date:      -----------------------------------------------------------



For and on behalf of:

SODEXHO OPERATIONS

Signed:   -----------------------------------------------------------

Name:     -----------------------------------------------------------

Position: -----------------------------------------------------------

Date:     -----------------------------------------------------------





<PAGE>



                                    Schedule



In Clause 23.1 (a) (ratio Net Consolidated Financial Indebtedness to EBITDA) the
ratios opposite the three following items shall be amended as follows:



<TABLE>
<S>                               <C>
     Date                           Ratio



28 February 2002                  2.35:1

31 August 2002                    2.25:1
</TABLE>



All the other terms of this Clause remain unchanged.



<PAGE>



Exhibit 4.2  Services agreement between Bellon SA and Sodexho Alliance SA

                                  SERVICES AGREEMENT
BY AND BETWEEN:


-- FELIX BELLON S.A.
A French stock corporation with a capital of 2,200,800 francs
having its registered office at 5, place de la Joliette - 13002 MARSEILLES

represented by Mr. Pierre BELLON
as President General Manager

hereinafter referred to as "FBSA"


                                                          OF THE FIRST PART,



AND:

-- SODEXHO S.A.
acting both on its own behalf as well as agent for all of the SODEXHO Group
companies
A French stock corporation with a capital of 502,610,700 francs
having its registered office at 3, avenue Newton - 78180 MONTIGNY LE BRETONNEUX

represented by Mr. Raphael DUBRULE
Secretary General, duly empowered for the purposed hereof,

hereinafter referred to as "SODEXHO"


                                                          OF THE SECOND PART.



<PAGE>


                                 WITNESSETH

FBSA's main activity is providing services in the areas of management,
leadership and control of its group's companies.

Due to the vast experience of
FBSA's leaders, it has exceptional know-how in the fields of general management,
financial, commercial and administrative management and organization and
management control as well as in the legal and stock exchange fields.

SODEXHO S.A., as well as the SODEXHO Group companies, are desirous of benefiting
from the FBSA's skill and know-how for performing their corporate purpose.

NOW, THEREFORE, THE PARTIES HERETO HAVE AGREED AS FOLLOWS:

ARTICLE 1 -- APPOINTMENT

SODEXHO hereby entrusts FBSA, pursuant to the terms and conditions of this
Agreement, to assist and advise it with the management, leadership, control and
development of its activities and, notably, general management, financial
management, general administration, commercial management and marketing, as well
as in the legal and stock exchange fields, by providing the services listed in
Article 3 hereinafter,

Consequently, upon signature of this Agreement, FBSA shall act as a services
company vis a vis SODEXHO, in the place and stead of the various service
provider companies whose services it uses, as well as in the place and stead, or
together with, the internal structures it has developed, which is accepted by
SODEXHO.


ARTICLE 2 -- PERFORMANCES

In order to perform the mission defined in Article 1 hereinabove and specified
in Article 3 hereinafter, FBSA agrees to:

2.1. make available to SODEXHO all of its personnel, more notably Messrs. Pierre
BELLON and Remi BAUDIN, officers of FBSA, and Messrs. Patrice DOUCE, Bernard
CARTON and Raphael DUBRULE, FBSA employees who, as a result of exercising these
duties in other companies, have vast general management skills and vast
experience in the commercial, administrative, financial, legal and stock
exchange fields, as well as in respect of organization and management control;

2.2 perform, either by itself or, subject to SODEXHO's prior consent, which
consent may not be unreasonably withheld, with the assistance of all highly
qualified third parties, all tasks, studies and reports that SODEXHO entrusts it
with from time to time.


ARTICLE 3 -- SERVICES

3.1. FBSA shall provide SODEXHO with the following services, within the
     framework of the directives given it by SODEXHO, in a timely manner:
     a) Assistance and advice in respect of the determination and implementation
        of SODEXHO's strategy and coordination of general management.
     b) Assistance and advice in respect of the development and leadership of
        SODEXHO Group companies.
     c) Assistance and advice in respect of financial management in order to
        ensure the implementation of the Group's financial policy and the
        management of SODEXHO S.A.'s investments. d) Assistance and advice in
        legal, financial, financial and stock exchange matters.
     e) Assistance and advice of the most qualified experts in order to assist
        SODEXHO's officers during the negotiations which may take place in the
        most varied fields, necessitating their services.

3.2. FBSA, upon SODEXHO's request, undertakes that the individuals mentioned
     hereinabove (paragraph 2.1.) shall spend the time which is necessary in
     order to ensure the tasks entrusted by SODEXHO to FBSA in a continuous
     manner.

3.3. FBSA and SODEXHO expressly agree that:

     - the services to be rendered in accordance with the terms of this
       Agreement shall be based on the general principle of protecting SODEXHO's
       interests,
     - FBSA shall only be bound by an obligation to use best efforts and not to
       achieve a certain result, - FBSA shall render the services listed above
       with due diligence and care, being more aware of the importance of its
       task than any other service company.


3.4. In order to enable FBSA's personnel to perform their tasks hereunder,
     SODEXHO shall make available to them, at its expense, all necessary
     material means, i.e., notably: offices, telephone, telex, fax, photocopy
     machines, secretarial help -- excepting secretarial help for Mr. Pierre
     BELLON, which shall be provided directly by FBSA.


3.5. The parties hereby agree that during performance of the Agreement, the task
     which FBSA has agreed to fulfill pursuant to the Agreement, may be modified
     by written notice so as to adapt the services provided to the needs
     expressed by SODEXHO. 3.6. Any new company becoming a part of the SODEXHO
     Group (by creation, acquisition, etc.) shall be entitled to benefit from
     the provisions of this Agreement without it being necessary to amend the
     Agreement.


ARTICLE 4 -- COMPENSATION

4.1. In consideration  for the supply of services set out  hereinabove,  SODEXHO
     shall pay FBSA, for 1992, compensation in the amount of FRF10,140,000,  net
     of tax (ten million one hundred forty thousand francs, net of tax). SODEXHO
     S.A.  shall  be  personally   responsible   for  the  passing  on  of  such
     compensation to the other SODEXHO Group companies.

4.2. For the subsequent years, the parties agree to meet before December 31st of
     each year in order to set the  compensation for the following year, and for
     the first time before  December 31,  1992.  The new  compensation  shall be
     covered by an addendum attached hereto.

4.3. This compensation shall be payable monthly,  in arrears,  upon presentation
     by FBSA to SODEXHO of an invoice  prepared for an amount  corresponding  to
     one-twelfth of the annual compensation set forth in 4.1. hereinabove.

4.4. SODEXHO shall pay all amounts due FBSA by virtue of this  Agreement  within
     eight (8) days from their  invoicing.  4.5. The amount of the  compensation
     may be revised during the year in the event of substantial  modification of
     the contents of FBSA's task as set out in Article 3.5. of this Agreement.

4.6. The expenses and disbursements  which have been reasonably incurred by FBSA
     in performing the services  hereunder shall be  cross-charged to SODEXHO at
     cost upon presentation of supporting documents.


ARTICLE 5 -- TERM

This Agreement shall become effective on January 1, 1992, for a term of
one-year, which shall be tacitly renewed annually unless terminated by either
one of the parties hereto by registered letter, bill of receipt requested three
months before expiration of the contractual period in progress.

ARTICLE 6 -- SANCTION -- TERMINATION

6.1. All the clauses and conditions of this Agreement are de rigeuer. Each of
     them is a material condition of this Agreement, without which the parties
     would not have entered into the Agreement.

6.2. If either one of the parties fails to perform any one of these conditions,
     this Agreement may be terminated ipso jure and forthwith, at the election
     of the other party, one month following a simple notice to pay or perform
     which remains unanswered and containing the statement by the party sending
     the notice of its intention to rely on this clause.

6.3 In addition, notwithstanding the preceding provisions, SODEXHO may terminate
    this Agreement in advance, in the event that one of the leaders specified in
    Article 2.1. hereinabove ceases taking part in FBSA's activities.

6.4 In spite of this termination, the party requesting termination may claim
    payment of any damages to which it has right.

ARTICLE 7 -- NO ASSIGNMENT

This Agreement is personal in nature. It may not be assigned or transferred
without the prior special consent of the parties.

ARTICLE 8 -- NATURE OF THE
RELATIONS BETWEEN FBSA AND SODEXHO The purpose of this Agreement is that set out
in the preamble.
This Agreement does not create any company between the parties and, more
particularly, it does not constitute a joint venture. It also does not create
any dependency of one party on the other, both parties hereto being legally
independent. Consequently, neither party shall be liable for the acts of the
other vis a vis third parties, and it may not be impleaded or be liable for
indemnification of damages.

ARTICLE 9 -- NO AGENCY
In no case may FBSA hold itself out as SODEXHO's agent; FBSA is not authorized
and cannot claim to bind SODEXHO in any manner whatsoever.

ARTICLE 10 -- CONFIDENTIALITY
Throughout the term of this Agreement and for three years following its
termination, FBSA shall keep confidential all of the documents and information,
whether commercial, financial, accounting or otherwise, concerning SODEXHO's
activities of which it has or shall have knowledge of or is or shall be in its
possession during the performance of this Agreement, excepting however such
documents or information whose publication or disclosure to given persons
results from the application of regulations in force or which, independently of
FBSA, are or become public knowledge.

ARTICLE 11 -- STRICT PERFORMANCE
The fact that one of the parties does not require the strict performance of the
provisions of this Agreement shall not be deemed a waiver of requiring
compliance with such provisions in the future.

ARTICLE 12 -- GOOD FAITH
The parties hereby represent that this Agreement has been entered into by them
in good faith and that they shall seek to settle any problems which may arise in
a spirit of cooperation, so as to enable this operation to be properly
performed.

ARTICLE 13 -- NOTICES
All notices prescribed by this Agreement shall be validly given if sent by
letter, with bill of receipt requested, by one party to the registered office of
the other party first above written, or to any other address which the parties
may notify to each other from time to time.

ARTICLE 14 -- DISPUTES
Any disputes arising from this Agreement in respect of its interpretation,
validity, nonperformance or termination, shall be settled by the Commercial
Court of Versailles, on which jurisdiction is hereby conferred.

ARTICLE 15 -- ENTIRE AGREEMENT
This Agreement contains all of the commitments undertaken by the contracting
parties with respect to its purpose. It cancels and replaces all oral and
written agreements prior to its signature.
This Agreement may only be amended by
a written addendum, signed by the persons who are duly empowered for such
purpose.


Done in two original copies,
In Montigny le Bretonneux,
On December 30, 1991

(signature)                                       (signature)
R. DUBRULE                                        The President General Manager
Secretary General


(stamp of SODEXHO)                                (stamp of FELIX BELLON S.A.)



<PAGE>


                 ADDENDUM NO. 10 TO THE SERVICES AGREEMENT
                    ENTERED INTO ON DECEMBER 30, 1991
                 BETWEEN BELLON S.A. AND SODEXHO ALLIANCE


The parties have met and determined the services to be supplied by BELLON S.A.
to SODEXHO ALLIANCE and its subsidiaries for the year 2000. In accordance with
Article 4, paragraph 4.2., they have set the annual compensation of BELLON S.A.
at a maximum amount of FRF19,098,800, net of tax (NINETEEN MILLION NINETY-EIGHT
THOUSAND EIGHT HUNDRED FRANCS, NET OF TAX) which shall be invoiced according to
the services actually performed.



Done in two original copies,
In Montigny le Bretonneux,
On January 7, 2000
(signature)                                     (signature)
R. DUBRULE                                      The President General Manager
Secretary General

(stamp of SODEXHO Alliance)                     (stamp of BELLON S.A.)


<PAGE>


                   ADDENDUM NO. 11 TO THE SERVICES AGREEMENT
                      ENTERED INTO ON DECEMBER 30, 1991
                   BETWEEN BELLON S.A. AND SODEXHO ALLIANCE


The parties have met and determined the services to be supplied by BELLON S.A.
to SODEXHO ALLIANCE and its subsidiaries for the year 2001. In accordance with
Article 4, paragraph 4.2., they have set the annual compensation of BELLON S.A.
at a maximum amount of 3,042,000 euros net of tax (THREE MILLION FORTY-TWO
THOUSAND EUROS,NET OF TAX) which shall be invoiced according to the services
actually performed.



Done in two original copies,
In Montigny le Bretonneux,
On January 4, 2001

(signature)                                     (signature)
R. DUBRULE                                      The President General Manager
Secretary General

(stamp of SODEXHO Alliance)                     (stamp of BELLON S.A.)





<PAGE>




               ADDENDUM NO. 12 TO THE SERVICES AGREEMENT
                  ENTERED INTO ON DECEMBER 30, 1991



BY AND BETWEEN:


BELLON S.A., formerly known as FELIX BELLON S.A.

A French stock corporation with a capital of 411,360 euro having its registered
office at 5, place de la Joliette - 13002 MARSEILLES

Identified at the Registry of Commerce and Companies of Marseille under the No.
055 812 440, and the General Management at 3 Avenue Newton, 78180
Montigny-le-Bretonneux

represented by Sophie CLAMENS as President General
Manager, the signature of this addendum having been authorized by the
Supervisory Council on January 16, 2002,


Hereafter referred to as "the Service Provider"

                                                            OF THE FIRST PART,
AND:

SODEXHO ALLIANCE S.A., formerly known as SODEXHO S.A.
A French stock corporation with a capital of 635,841,416 euro,
having its registered office at 3, avenue Newton - 78180 MONTIGNY LE BRETONNEUX
Identified at the Registry of Commerce and Companies of Versailles under the No.
301 940 219, acting both on its own behalf as well as agent for all of the
SODEXHO Group companies

represented for purposes of this document by Mr. Pierre BELLON
as President of the Board of Directors, the signature of this addendum having
been authorized by the Board of Directors on January 11, 2002

hereinafter referred to as "SODEXHO"


                                                           OF THE SECOND PART.
<PAGE>

                   THE FOLLOWING IS PRELIMINARILY STATED:

On December 30, 1991, the parties concluded among themselves a services contract
(referred to hereafter as the Contract) renewable from one year to the next. The
new environment of the SODEXHO Group has made an adaptation of this contract
necessary today.

                  THIS STATEMENT HAS BEEN AGREED AS FOLLOWS:
SECTION 1:
Article 1 of the contract is rendered null and void and replaced with the
following article:

ARTICLE 1-- APPOINTMENT
-----------------------

The Service Provider agrees and is obligated by the present document to provide
SODEXHO, either personally or with the assistance of qualified experts, its
assistance and its advice as identified below, in the following areas:

1.1 In the area of strategy:

1.1.1 Assistance and advice related to the determination and implementation of
      SODEXHO's strategy and the coordination of the general management.

1.1.2 Assistance and advice related to the development and operation of SODEXHO
      and its subsidiaries.

1.1.3 Assistance and advice in finance in order to ensure the implementation of
      financial polices at SODEXHO and the management of its investments.

1.1.4 Assistance and advice in the implementation of strategic planning for
      SODEXHO in order to better define performance indicators.


1.2 In the area of finance and accounting:

1.2.1 Assistance in all financial planning.

1.2.2 Assistance in the preparation of budgets and analysis of variances.

1.2.3 Assistance in the control and execution of budgets.

1.2.4 Assistance in the creation and implementation of cost control systems.

1.2.5 Assistance in tax studies.

1.2.6 Assistance and advice in the deployment of financial information systems.


1.3 In the commercial area:

1.3.1 Assistance in all strategic planning.

1.3.2 Assistance in the development and launching of all new products and
services and in particular on the internet network.

1.3.3 Assistance in the preparation of marketing strategies.


1.4 In technical areas:

1.4.1 Assistance and study of new technical developments

1.4.2 Assistance in the maintenance and evaluation of quality control.


1.5 In the human rescources area:

1.5.1 Assistance and recruitment of senior managers to SODEXHO.

1.5.2 Assistance in the research and selection of expert consultants.

1.5.3 Advice in the determination of Sodexho's personnel policies and
      procedures.

1.5.4 Advice on the development of management competencies.

1.5.5 Advice on the implementation of Sodexho's procedures with respect to
      ethics and social oversight.

1.6 In legal areas:

1.6.1Follow up on legal and regulatory changes concerning Sodexho's  activities,
     both in France and internationally.

1.6.2Assistance  and advice for the treatment of any question or difficulty of a
     legal nature, specially or generally.

1.6.3The  management of industrial  property  rights  (trademarks  and patents),
     literary and artistic.

1.6.4Assistance  and  advice  for the  management  of all  disputes,  litigation
     proceedings,  and trials (review and  preparation of files,  relations with
     attorneys and external  advisors,  accompaniment  to judicial  assessments,
     efforts toward ultimately friendly or transactional solutions, etc.)

1.6.5Legal  assistance  for  specific  transactions  as well as for the  update,
     negotiation  and conclusion of all contracts of  significant  importance to
     SODEXHO.

1.6.6Assistance  with all government  institutions  and  authorities,  public or
     private.

1.6.7Advice and  assistance  with legal  services  (convocations,  minutes,  and
     reports of interest to the Board of Director  meetings  and the Ordinary or
     Extraordinary Shareholders' Meetings, the maintenance of books and records,
     formalities  with the court  clerks and the Register of Commerce and Trade,
     publications in legal announcement documents, etc.)


1.7 In the administrative area:

1.7.1 The management of insurance policies and coverage, negotiations with the
      companies and/or brokers, the follow-up on contracts and addenda, the
      maintenance of files, the management and payment of claims.

1.7.2 The definition of operational and functional organizations, update and
      review of procedures, assistance in the optimization of Sodexho's internal
      communication.

1.7.3 The technical management of property, assistance in the negotiation and
      follow up of rental agreements, management of relations with landlords and
      lessors and assistance in all projects for the acquisition or construction
      of property.


1.8 With respect to the financial markets:

1.8.1 Follow-up on changes in legislation and rules related to the financial
      markets, both in France and abroad, concerning the activities and
      operations of SODEXHO.

1.8.2 Assistance in structuring with respect to the financial markets of all
      specific transactions as well as the refinement of all transactions of
      ignificance to SODEXHO in this area, both in France and abroad.

1.8.3 Advice and assistance in the management of relations between SODEXHO and
      governmental and other regulators, public or private, with respect to the
      financial markets, both in France and abroad.

1.8.4 Assistance and advice in the refinement of all communications, releases,
      information publications, prospectuses or press relations related to
      SODEXHO's activities and operations in the financial markets area, both in
      France and abroad.


SECTION 2:
Article 2 of the contract is deleted.


SECTION 3:
Article 3 of the contract is cancelled and replaced with the following article:

ARTICLE 3, TERMS OF PERFORMANCE:

3.1 Service Provider's obligations:

3.1.1 The Service Provider commits to put into place for the execution of all of
      the services it is charged with in this contract, all of the required
      diligence, to execute its services in conformity with the rules in
      practice, with the objective of preserving the interests of SODEXHO.

3.1.2 However, the Service Provider is only committed by the present agreement
      to provide the means but not the result.

3.1.3 The Service Provider must subscribe to all necessary insurance policies in
      order to cover its responsibilities which might result from the execution
      of this contract.


3.2 Personnel allocated to the execution of this contract

3.2.1 The Service Provider alone will decide on the choice of personnel to be
      allocated to the services described in this agreement.

3.2.2 The personnel will not be able to receive any directive from SODEXHO and
      will remain, under any assumption, under the hierarchical responsibility
      of the Service Provider.

3.2.3 The Service Provider will also be able to call upon any external
      consultants having a particular skill with respect to the required
      assistance services.

3.3 SODEXHO's obligations:

3.3.1 SODEXHO commits to provide all of the information necessary for the timely
      completion in optimal conditions of the assignments given to the Service
      Provider through this agreement. In the same manner, SODEXHO will provide
      in a timely manner all of the documents necessary to the satisfactory
      completion of the contracted services.

3.3.2 In addition, SODEXHO commits to, each time the services requested through
      this contract make it necessary or useful, allow the Service Provider's
      personnel free access to its offices and facilities and to put at their
      disposition all of the means available to facilitate their intervention,
      these personnel being required to respect all arrangements enacted by
      SODEXHO with respect to access and movement on the premises, hygiene and
      security, confidentiality, etc.


3.4 Periodic meetings:

    The parties commit to arrange for one meeting per half-year in order to
    determine the status of the conditions of execution of the contractual
    relationship, to possibly decide on new services, in addition or in
    substitution.


SECTION 4:
Article 4 is cancelled and replaced with the following article:

    ARTICLE 4:  COMPENSATION

    4.1 The nature, diversity and frequency of the services likely to be
        performed in connection with this agreement do not allow for the
        individual billing of the services provided by the Service Provider.

    4.2 In return for rendering the services defined above, SODEXHO will pay the
        Service Provider, for calendar year 2002, compensation of 2,910,000
        euro, excluding tax (two million nine hundred ten thousand euro
        excluding tax), VAT tax in addition. SODEXHO will make it its business
        the recharging of this compensation to the companies in the SODEXHO
        GROUP.

        For future years, the parties agree to meet prior to December 31 of each
        year in order to determine compensation. Newly determined compensation
        will be addressed in an addendum.

        This compensation is payable on a monthly basis, in arrears, upon
        presentation by the Service Provider to SODEXHO of an invoice in an
        amount corresponding to one-twelfth of the annual compensation foreseen
        above.

        SODEXHO will pay all amounts due to the Service Provider pursuant to
        this agreement within fifteen (15) days of their invoicing.

        The amount of compensation will be able to be revised during the year in
        the case of a substantial modification to the services provided by the
        Service Provider as foreseen in Article 1 of this contract.

        Reasonable expenses and payments incurred by the Service Provider in the
        execution of its services pursuant to this contract will be the
        responsibility of SODEXHO for their cost upon presentation of supporting
        documentation.


SECTION 5:

Article 6.3 is deleted.

Article 7 is completed by the following paragraphs:

        This contract is granted to SODEXHO in consideration of the Service
        Provider's holding of its share capital at a level of 33%.

        Below this level of its share capital, for whatever reason, this
        contract can be terminated by either party at any time and at its sole
        discretion, by registered letter with return receipt, with a notice
        period of six (6) months.


SECTION 6:

This addendum takes effect January 2, 2002.

All of the terms of the contract in effect at the signing date of this addendum
which are not in conflict with this contract remain unchanged.

This contract does not result in a substitution of the December 30, 1991
contract.



                                             Executed in Montigny le Bretonneux
                                             January 16, 2002
                                             In two original copies


(signature)                                  (signature)

Pierre Bellon                                Sophie Clamens
Chairman of the Board of Directors           President of the Directorate
SODEXHO ALLIANCE                             BELLON S.A.


<PAGE>



                   ADDENDUM NO. 13 TO THE SERVICES AGREEMENT
                       ENTERED INTO ON DECEMBER 30, 1991
                    BETWEEN BELLON S.A. AND SODEXHO ALLIANCE


In accordance with Article 4, paragraph 4.2 of the services agreement contract
of December 30, 1991 and its addendum No. 12 signed on January 16, 2002, the
parties have set the annual compensation of BELLON S.A. for the year 2003 at
2,910,000 euros net of tax (TWO MILLION NINE HUNDRED TEN THOUSAND EUROS,NET OF
TAX).



In two original copies,
Montigny le Bretonneux,
January 13, 2003

(signature) (signature)

Pierre Bellon                                      Sophie Clamens
Chairman of the Board of Directors                 President of the Directorate
Chief Executive Officer                            BELLON S.A.
SODEXHO ALLIANCE


<PAGE>


                   ADDENDUM NO. 14 TO THE SERVICES AGREEMENT
                       ENTERED INTO ON DECEMBER 30, 1991
                    BETWEEN BELLON S.A. AND SODEXHO ALLIANCE


In accordance with Article 3, "Terms of Performance," and Article 4,
"Compensation," of Addendum No. 12 to the services agreement of December 30,
1991, the parties, after having met to discuss the services performed on behalf
of the Sodexho Group since January 16, 2003 by BELLON S.A., have set the
compensation for these services at 1,458,000 euros, excluding taxes (ONE MILLION
FOUR HUNDRED FIFTY EIGHT THOUSAND EURO excluding taxes) for the period from
January 1, 2003 to August 31, 2003.

This addendum cancels and replaces Addendum No. 13 of January 13, 2003.


In two original copies,
Montigny le Bretonneux,
August 28, 2003


(signature)                                        (signature)



Pierre Bellon                                      Sophie Clamens
Chairman of the Board of Directors                 President of the Directorate
Chief Executive Officer                            BELLON S.A.
SODEXHO ALLIANCE







<PAGE>


Exhibit 12.1   Certification pursuant to Section 302 of the Sarbanes-Oxley Act


   I, Pierre Bellon, the Chief Executive Officer of Sodexho Alliance, SA (the
"registrant"), certify that:


1. I have reviewed this annual report on Form 20-F of the registrant;


2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;


3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;


4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:


   a) Designed such disclosure controls and procedures to ensure that  material
      information relating to the registrant, including its consolidated
      subsidiaries, is made known to us by others within those entities,
      particularly during the period in which this annual report is being
      prepared;


   b) Evaluated the effectiveness of the registrant's disclosure controls  and
      procedures as of a date within 90 days prior to the filing date of  this
      annual report (the "Evaluation Date"); and


   c) Presented in this annual report our conclusions about the effectiveness of
      the disclosure controls and procedures based on our evaluation as of the
      Evaluation Date; and


   d) Disclosed in this report any change in the company's internal control over
      financial reporting that occurred during the period covered by the annual
      report that has materially affected, or is reasonably likely to materially
      affect, the company's internal control over financial reporting.


5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):


   a) All significant deficiencies in the design or operation of internal
      controls which could adversely affect the registrant's ability to record,
      process, summarize and report financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and


    b) Any fraud, whether or not material, that involves management or other
       employees who have a significant role in the registrant's internal
       controls; and


6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date: December 18, 2003



                                           By: /s/ Pierre Bellon
                                               __________________________
                                           Name:  Pierre Bellon
                                           Title: Chairman and Chief Executive
                                                  Officer





<PAGE>

Exhibit 12.2  Certification pursuant to Section 302 of the Sarbanes-Oxley Act


I, Sian Herbert-Jones, the Chief Financial Officer of Sodexho Alliance, SA
(the "registrant"), certify that:


1. I have reviewed this annual report on Form 20-F of the registrant;


2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;


3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;


4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:


   a) Designed such disclosure controls and procedures to ensure that
      material information relating to the registrant, including its
      consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this annual report is
      being prepared;


   b) Evaluated the effectiveness of the registrant's disclosure controls and
      procedures as of a date within 90 days prior to the filing date of this
      annual report (the "Evaluation Date"); and


   c) Presented in this annual report our conclusions about the effectiveness of
      the disclosure controls and procedures based on our evaluation as of the
      Evaluation Date; and


   d) Disclosed in this report any change in the company's internal control over
      financial reporting that occurred during the period covered by the annual
      report that has materially affected, or is reasonably likely to materially
      affect, the company's internal control over financial reporting.


5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):


   a) All significant deficiencies in the design or operation of internal
      controls which could adversely affect the registrant's ability to  record,
      process, summarize and report financial data and have identified for the
      registrant's auditors any material weaknesses in internal controls; and


   b) Any fraud, whether or not material, that involves management or other
      employees who have a significant role in the registrant's internal
      controls; and


6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.


Date: December 18, 2003



                                          By: /s/ Sian Herbert-Jones
                                              __________________________
                                          Name:  Sian Herbert-Jones
                                          Title: Chief Financial Officer



<PAGE>

Exhibit 13   Certifications pursuant to Section 906 of the Sarbanes-Oxley Act

     Pursuant to the  requirements of Section 906 of the  Sarbanes-Oxley  Act of
2002  (subsections  (1) and (b) of Section 1350,  chapter 63 of title 18, United
States Code),  each of the  undersigned  officers of Sodexho  Alliance,  SA (the
"registrant"), does hereby certify to the best of his and her knowledge that:

     The  Annual  Report on Form  20-F for the year ended  August 31,  2003 (the
"Form 20-F") of the registrant  fully complies with the  requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934 and information  contained
in the Form 20-F  fairly  presents,  in all  material  respects,  the  financial
condition and results of operations of the registrant.


Date:   December 18, 2003



                                          By: /s/ Pierre Bellon
                                             ____________________________
                                          Name:  Pierre Bellon
                                          Title: Chairman and Chief Executive
                                                 Officer

                                          By: /s/ Sian Herbert-Jones
                                             ____________________________
                                          Name:  Sian Herbert-Jones
                                          Title:  Chief Financial Officer


A signed  original of this  written  statement  required by Section 906 has been
provided to Sodexho  Alliance SA and will be retained by Sodexho Alliance SA and
furnished to the Securities and Exchange Commission or its staff upon request.