RELATIONSHIP AGREEMENT
This Relationship Agreement has been made on December 31, 1995 (the "date
hereof") among: WMX Technologies, Inc ("WMX"); WMI Urban Services, Inc.
("WMUS"); ServiceMaster Limited Partnership (which, subject to change when and
if prescribed by Part 9, is herein called "ServiceMaster"); and ServiceMaster
Incorporated of Delaware ("ServiceMaster Incorporated").
BACKGROUND
A. On the date hereof, ServiceMaster is a limited partnership whose
limited partner shares are publicly traded on the New York Stock Exchange.
B. Contemporaneous with the execution of this Agreement, WMX, WMUS and
ServiceMaster have entered into a Contribution Agreement pursuant to which among
other things (i) ServiceMaster has issued 18,107,143 ServiceMaster shares to
WMUS (which represent approximately 19% of all ServiceMaster shares outstanding
after giving effect to such issuance) and (ii) ServiceMaster has issued to WMUS
an option (the "WM Option") to acquire an additional 1,250,000 ServiceMaster
shares from ServiceMaster. The WM Option is evidenced by an Option Agreement
(the "WM Option Agreement") among ServiceMaster, ServiceMaster Incorporated and
WMUS made contemporaneously with this Agreement.
C. The ServiceMaster shares and the WM Option have been granted by
ServiceMaster subject to, and in reliance upon, certain acquisition, voting and
transfer restrictions. The parties have entered into this Agreement to
establish and confirm these restrictions and certain other agreements between
them.
AGREEMENT
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. WMX BOARD REPRESENTATION.
ServiceMaster and WMX declare it to be their objective that one position
(the "WMX position") on the ServiceMaster Board will be filled with a person
nominated by WMX ( "WMX's representative"). The parties acknowledge that from
the date of this agreement until he leaves the Board, Xxxxxx X. Xxxxxx will
serve as WMX's representative on the ServiceMaster Board.
ServiceMaster agrees that in connection with any election of directors at which
the term of WMX's representative on the Board is scheduled to expire or the WMX
position on the Board is vacant, ServiceMaster will (i) nominate for election to
the WMX position on the Board any candidate selected by WMX and reasonably
satisfactory to a majority of the Board and (ii) solicit proxies from its
shareholders in favor of such candidate in the same manner ServiceMaster
solicits proxies for other candidates for the Board nominated in the ordinary
course at ServiceMaster (it being understood that ServiceMaster does not expect
to solicit any proxies for Board elections until and unless ServiceMaster
coverts to corporate form). ServiceMaster also agrees that in the event WMX's
representative shall resign from the Board or otherwise leave the Board for any
reason, ServiceMaster's chief executive officer will request that the remaining
directors fill the vacancy with a person who is nominated by WMX and who is
reasonably satisfactory to a majority of the Board. Each person appointed or
elected to the Board as contemplated by the two preceding sentences shall
constitute WMX's representative on the Board until such person leaves the Board.
2. WMX STANDSTILL COMMITMENT.
2.1 Basic Commitment. Except as otherwise provided in Section 2.8,
neither WMX nor any of its affiliates shall acquire, or offer to acquire,
directly or indirectly, by purchase or otherwise, beneficial ownership of any
ServiceMaster shares if after giving effect to such acquisition WMX would
beneficially own more than the Permitted Number of ServiceMaster shares.
2.2 Permitted Number. Any particular person shall be deemed to
beneficially own more than the Permitted Number of ServiceMaster shares at any
particular time if that particular person shall beneficially own:
(1) more than the Applicable Percentage of the ServiceMaster
partnership shares outstanding at the particular time; or
(2) more than the Applicable Percentage of the shares of common stock
issued by ServiceMaster Incorporated which are outstanding at the
particular time; or
(3) more than the Applicable Percentage of the shares in any other
class or series of equity securities issued by ServiceMaster and
outstanding at the particular time; or
(4) shares representing more than the Applicable Percentage of the
votes which could be cast in any election to any position on the
ServiceMaster Board.
2.3 Applicable Percentage.
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(a) The Applicable Percentage as applied to anyone other than WMX shall
be 15%
(b) The Applicable Percentage as applied to WMX shall be 21%.
2.4 Beneficial Ownership.
(a) Except as otherwise provided in Section 2.4(b) or Section 2.8, any
particular person shall be deemed to "beneficially own" any
ServiceMaster shares:
(1) which that particular person or any of that particular person's
affiliates owns directly or indirectly;
(2) which that particular person or any of that particular person's
affiliates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time and/or
the occurrence of a contingency) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise or (B)
the right to vote whether pursuant to any agreement, arrangement
or understanding or otherwise; or
(3) which are beneficially owned, directly or indirectly, by any
other person (or any affiliate thereof) with which that
particular person (or any of that particular person's affiliates)
has any agreement, arrangement or understanding relating to the
acquisition, holding, voting or disposing of any ServiceMaster
shares.
(b) WMX shall not be deemed to beneficially own any ServiceMaster shares
(herein called "ERISA Shares") (i) in which the entire economic
interest is owned by an ERISA Plan and (ii) which that ERISA Plan
trustees or the employees who are beneficiaries of that Plan have the
exclusive right to vote.
(c) The term "ERISA Plan" as used in this Agreement means: any plan or
program (i) established for the benefit of employees or former
employees of WMX or any of its affiliates and (ii) which is governed
by the Employee Retirement Income Security Act of 1974 as amended
("ERISA").
(d) ServiceMaster has agreed to exclude ERISA Shares from the
requirements in this Agreement which apply to WM Shares and the WM
Option in reliance upon indications received from officers of WMX that
such exemption is for convenience to avoid the need to monitor
acquisitions and dispositions of ServiceMaster shares
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by WMX's ERISA Plans which such officers expect to be modest in amount
and routine in nature. WMX hereby covenants that WMX shall not use any
ERISA Plan which is not subject to the ERISA diversification
requirements to circumvent obligations which are imposed on WMX under
this Agreement.
2.5 Ownership Percentage. The percentage of the shares in any series,
class or other relevant population which are beneficially owned by any
particular person at any particular time shall be calculated for purposes of
this agreement by dividing
(1) the number of shares in that series, class or other population
which are beneficially owned by that particular person at that
particular time
by
(2) the sum of (i) the number of shares in that series, class or
other population which are actually outstanding at that
particular time plus (ii) the number of shares in that series,
class or other population which are beneficially owned by that
particular person at that particular time but which are not
actually outstanding at that particular time.
2.6 ServiceMaster share. The term "ServiceMaster share" as applied at any
particular time for purposes of this Agreement designates and includes any of
the following which shall be outstanding at that particular time:
(1) a partnership share issued by ServiceMaster Limited Partnership
(i.e., the equity security issued by ServiceMaster Limited
Partnership which is traded on the New York Stock Exchange on the
date hereof); and
(2) a share of common stock issued or issuable by ServiceMaster
Incorporated; and
(3) a share (or other basic unit) of any other equity security at
any time issued or issuable by ServiceMaster Limited Partnership,
ServiceMaster Incorporated or any other partnership, corporation
or entity which shall succeed to the position of "ServiceMaster"
for purposes of this Agreement pursuant to Section 9.2.
2.7 WM Shares. The term "WM Shares" as applied at any particular time for
purposes of this agreement means all ServiceMaster shares
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(1) in which WMX, WMUS or any other affiliate of WMX holds any
ownership interest at the particular time or
(2) which WMX, WMUS or any other affiliate of WMX has the right to
acquire (whether such right is exercisable immediately or only
after the passage of time and/or the occurrence of a contingency)
pursuant to any agreement, arrangement or understanding, or upon
the exercise of conversion rights, exchange rights, warrants or
options, or otherwise.
The term "WM Shares" as applied on the date hereof includes the ServiceMaster
shares cited in Background Paragraph B and the ServiceMaster shares issuable
upon exercise of the WM Option. No ERISA shares shall be deemed to be WM Shares
for purposes of this Agreement.
2.8 WM Option. For purposes of applying the commitment made in Section
2.1 WMX shall not be deemed to beneficially own any shares which are subject to
the WM Option until and unless such shares are actually issued. No exercise of
the WM Option shall be deemed to violate Section 2.1 regardless of whether WMX
shall beneficially own more than the Permitted Number of ServiceMaster shares
after such exercise. Nothing in this Agreement shall prevent or limit the right
of WMX to exercise the WM Option to the extent WMX is permitted to do so under
the terms of the Option Agreement pursuant to which the WM Option was granted.
3. TAKEOVER COMMITMENTS.
3.1 Basic Commitments. Unless specifically authorized in advance in
writing by the Board, neither WMX nor any of its affiliates shall directly or
indirectly:
(a) attempt or carry out any Takeover;
(b) propose to ServiceMaster or any other Person any transaction between
WMX and ServiceMaster, any of its affiliates and/or its security
holders or involving any of its securities or security holders which
would constitute a Takeover or which (based on information known to
WMX) it is reasonably possible could lead to a Takeover,
(c) endorse or propose that ServiceMaster accept any proposal from any
other person which would result in a Takeover or which (based on
information known to WMX) it is reasonably possible could lead to a
Takeover, or
(d) enter into any discussions, negotiations, arrangements or
understandings with or advise, assist, encourage, act in concert with,
or otherwise support in any manner any other Person in connection with
any activities which it is reasonably possible could
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lead to a Takeover except that this clause (d) shall not be deemed to
prohibit any sale of WMX shares otherwise permitted by this Agreement.
3.2 Takeover.
(a) Except as otherwise provided in this Section 3.2, a "Takeover" shall
be deemed to have occurred if and when:
(1) any person shall become the beneficial owner of more than the
Permitted Number of ServiceMaster shares, or
(2) ServiceMaster or any of its affiliates shall sell or purchase
assets, engage in a merger or engage in any other transaction
immediately after which more than 21% of ServiceMaster's
outstanding shares or ServiceMaster shares representing 21% or
more of the combined voting power of the then outstanding
ServiceMaster shares shall be ultimately owned by person(s) who
shall not have owned such shares prior to such transaction or who
shall be a party to such transaction or an affiliate of a party
to such transaction; or
(3) any other merger, sale of assets or sale of securities shall
occur in connection with which the person who shall have served
as chief executive officer of ServiceMaster prior to the time of
the initiation of the actions which shall have led to such
transaction shall cease to be the chief executive officer of
ServiceMaster; or
(4) any position on ServiceMaster's Board of Directors shall become
occupied by a person who shall not have been nominated or
appointed by a majority of the members of ServiceMaster's Board
of Directors prior to such occupation; or
(5) any distribution shall be made to ServiceMaster's shareholders
of all or a substantial part of ServiceMaster's net assets or
ServiceMaster shall be dissolved.
(b) If there shall be a merger in which the entity which shall have
constituted "ServiceMaster" prior to such merger shall cease to exist,
then the test prescribed in clause (2) in Section 3.2(a) shall be
applied by comparing the ownership of the securities issued by the
entity which shall have constituted "ServiceMaster" prior to such
merger with the ownership immediately after such merger of the
securities of the entity into which ServiceMaster shall have merged or
which shall be the ultimate parent of such entity.
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4. VOTING COMMITMENTS.
4.1 WMX Voting Shares. The term "WMX Voting Shares" as applied as of any
particular time shall mean (i) all WM Shares which are outstanding at the
particular time and (ii) all other ServiceMaster shares which WMX or any of its
affiliates has the power to vote at the particular time. ERISA Shares shall not
be deemed to be Voting Shares for purposes of this Agreement.
4.2 Election Contest. In the event there shall be a contest for any
position on the ServiceMaster Board, then all WMX Voting Shares shall be voted
for the candidate for that position nominated by a majority of the incumbent
members of the ServiceMaster Board.
4.3 Takeover Vote. None of the WMX Voting Shares shall be voted in favor
of any Takeover which is not approved by the ServiceMaster Board.
4.4 No Proxy Solicitation. With respect to any ServiceMaster shares,
with regard to any matter, neither WMX nor any WMX affiliate shall directly or
indirectly: (i) solicit proxies or consents, (ii) become a "participant" in a
"solicitation" (as such terms are defined in Regulation 14A of the Exchange Act)
of proxies or consents or (iii) work in concert with, facilitate, support or
assist in any manner a third party in such third party's solicitation of proxies
or consents, except in support of solicitations made by or on behalf of the
Board.
4.5 Removal.
(a) General Partner. None of the WMX Voting Shares shall be voted in
favor of the removal of any ServiceMaster general partner unless that
general partner shall be guilty of Gross Misconduct (as defined in the
following paragraph).
(b) Director. None of the WMX Voting Shares shall be voted in favor of
the removal of any ServiceMaster director unless the director shall be
guilty of Gross Misconduct. A person shall not be guilty of Gross
Misconduct for purposes of this Agreement unless either (i) such
person shall be convicted of a criminal felony which harmed
ServiceMaster or (ii) such person has engaged in other wrongdoing
which a majority of the incumbent members of the ServiceMaster Board
determine warrants removal of such person from the Board.
5. TRANSFER COMMITMENTS.
5.1 Transfers to Affiliates.
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(a) Provisions Applicable to WMUS. WMUS shall have the right to Transfer
any of the WM Shares or the WM Option at any time to (i) WMX or (ii)
to any affiliate of WMX provided that such transfer to an affiliate
complies with the requirements of Section 5.1(b). WMX and WMUS warrant
to ServiceMaster that WMX has majority ownership and control of WMUS
(as defined in Section 5.1(b)).
(b) Transfers to Other WMX Affiliates. Neither any WMX Share nor the WM
Option shall be transferred to any affiliate of WMX unless the
following conditions are met before such transfer becomes effective:
(i) WMX shall directly or indirectly hold a majority of the ownership
interest in such affiliate and have control over such affiliate
sufficient to cause such affiliate to abide by all requirements of
this Agreement (herein called "majority ownership and control") and
(ii) WMX shall cause such affiliate to execute and deliver to
ServiceMaster a counterpart of this Agreement and thereby agree to be
bound by all provisions in this Agreement which apply to WMX. Any WMX
affiliate which shall acquire any interest in the WM Option and/or in
any ServiceMaster shares (i) shall be deemed by doing so to have
agreed to be bound by all provisions in this Agreement which apply to
WMX and shall in fact be bound by all such provisions and (ii) shall
be entitled to the benefits provided by this Agreement with respect to
the shares acquired. WMX shall not sell or otherwise give up majority
ownership or control over any affiliate unless prior thereto such
affiliate shall not own or control any ServiceMaster shares or the WM
Option.
(c) Transfer to WMX Successor. WMX shall have the right to Transfer the
WM Shares and the WM Option as part of the disposition of all or
substantially all of the businesses and assets of WMX and its
subsidiaries provided that the corporation or other organization which
shall acquire the WM Shares and the WM Option and its ultimate parent
if any (which are together called the "WMX Successor") shall agree to
be bound by this Agreement to the same extent that WMX is bound by
this Agreement by executing an agreement reasonably satisfactory to
ServiceMaster. Even if such an explicit agreement shall not be
obtained, the WMX Successor shall be deemed to have agreed to be bound
by all provisions in this Agreement applicable to WMX by the act of
acquiring the WM Shares and/or the WM Option. The WMX Successor shall
also acquire all of WMX's rights arising under this Agreement and the
WM Option.
(d) WM Option. The WM Option shall not be Transferred to any person other
than WMX or an affiliate over which WMX has majority ownership and
control or to a WMX Successor. Neither any provision in this Agreement
authorizing Transfer of
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WM Shares nor any other provision shall be deemed to authorize
Transfer of any interest in the WM Option which is not authorized by
the preceding sentence.
5.2 Market Sale Restrictions.
(a) Basic Requirement. WMX will limit its market sales of ServiceMaster
Shares on any particular day to 15% of the average daily trading
volume in ServiceMaster shares in the principal market where the
ServiceMaster shares shall then be traded during the four calendar
weeks ending on the Friday preceding that particular day.
(b) Market Sale. Any Transfer of ServiceMaster shares shall be deemed a
"market sale" if it shall occur on the New York Stock Exchange or in
another public market provided that none of the following shall be
deemed "market sales":
(1) sales pursuant to a demand or piggyback registration under Part
7, or
(2) sales pursuant to Section 5.1, 5.5 or 6.8 of this Agreement, or
(3) sales made by means of private placement, or
(4) sales to ServiceMaster.
5.3 Prohibition Against Sales to 5% Owners or Raiders.
(a) In no event shall any WM Shares be Transferred to any person if WMX
or any WMX affiliate knows that the ultimate purchaser of the shares
would be either (i) a 5% owner after giving effect to the purchase and
any other purchases which the ultimate purchaser then intends to make
or (ii) a Raider.
(b) WMX shall (i) advise the principal underwriter, broker or other
representative retained by WMX or any of its affiliates in connection
with the particular Transfer of the requirement in the preceding
clause (a), (ii) prohibit sale of ServiceMaster shares representing
more than 5% of all ServiceMaster shares from being sold to any single
purchaser and (iii) instruct WMX's principal underwriter, broker or
other representative to use reasonable efforts to avoid making any
sale of shares for which any underwriter, broker or other
representative responsible for the sale knows the ultimate purchaser
would be either (i) a 5% owner after giving effect to the purchase and
any other purchases which the underwriter, broker or other
representative knows the ultimate purchaser then intends to make or
(ii) a Raider.
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(c) For purposes of this agreement a person shall be deemed to be a
"5% owner" if such person beneficially owns ServiceMaster shares
representing 5% or more of (i) the shares outstanding in any
class or series or (ii) the votes which could be cast in any
election to any position on the ServiceMaster Board.
(d) Whenever it is used in this Agreement the term "Raider" means
any person who (i) has made a public announcement that it is
considering accomplishing or precipitating a Takeover, (ii) has
advised WMX it is considering accomplishing or precipitating a
Takeover, or (iii) has been identified in writing by
ServiceMaster to WMX in good faith as a person who is considering
accomplishing or precipitating a Takeover, or (iv) WMX knows is
considering accomplishing or precipitating a Takeover.
(e) Any fact or development known to any underwriter, broker or other
representative shall not be deemed known by WMX unless it shall
have been communicated to WMX by such underwriter, broker or
other representative or it shall otherwise actually be known to
WMX.
5.4 Restriction During Any Arbitrage Period.
(a) Basic Commitment. WMX shall not during any Arbitrage Period
either Transfer any WM Shares or enter into any agreement
obligating WMX to Transfer any WM Shares
(1) except as may be permitted by Section 5.1 or Section 5.5 and
(2) except that WMX may Transfer WM Shares during any Arbitrage
Period to the extent WMX is required to do so (i) by any
agreement made by WMX at a time which did not fall within an
Arbitrage Period and which otherwise complies with the
requirements of this Agreement or (ii) by the terms of any
sale made by WMX outside of any Arbitrage Period and which
otherwise complies with the requirements of this Agreement
and for which the settlement day falls within the Arbitrage
Period.
(b) Arbitrage Period.
(1) Except as otherwise provided in this subsection (b), an
"Arbitrage Period" shall begin on a date identified as the
beginning of an Arbitrage Period in a notice from
ServiceMaster to WMX (provided that if the date specified is
earlier than the actual delivery of such notice to WMX, then
the period shall begin on the date of such actual delivery).
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(2) Except as otherwise provided in this subsection (b), an
"Arbitrage Period" shall end on a date identified as the end of
that Arbitrage Period in a notice from ServiceMaster to WMX.
(3) ServiceMaster shall not initiate an Arbitrage Period unless it
reasonably concludes in good faith that there is Significant
Arbitrage Risk. For purposes of this Agreement, Significant
Arbitrage Risk shall be deemed to exist when the filing of a 13D
Statement or any other development has occurred that creates a
reasonable concern that if WMX were to sell the number of shares
it desires to sell at that time a significant component of the
activity in ServiceMaster shares during the period such sales
could occur could be attributable to purchases by persons (herein
called "arbitrageurs") based on speculation that a Takeover could
occur or by any Raider or by persons working in concert with a
Raider or any such arbitrageurs.
(4) If WMX shall so request, ServiceMaster shall request its
principal investment banker to provide at ServiceMaster's expense
an opinion as to whether Significant Arbitrage Risk exists
(utilizing such format as such banker shall deem customary or
appropriate for its advice concerning such subject matter). If
within seven business days after actual delivery of WMX's request
to ServiceMaster, ServiceMaster does not actually deliver to WMX
such an opinion from ServiceMaster's investment banker that a
Significant Arbitrage Risk then exists, the Arbitrage Period
shall end on that seventh business day.
(5) In no event shall ServiceMaster have the right to classify more
than 180 days in any consecutive 720 day period as part of an
Arbitrage Period. Any Arbitrage Period otherwise imposed by this
Agreement shall end whenever necessary to comply with the
requirement in the preceding sentence.
5.5 Approved Takeover. In the event the ServiceMaster Board shall approve
any Takeover offer or proposal, nothing in this Part 5 or in this Agreement
shall prevent WMX from selling any WM Shares to the person making such offer or
proposal pursuant to the terms of such offer or proposal so approved by the
ServiceMaster Board.
5.6 Securities Law Compliance. WMX acknowledges that its position on the
ServiceMaster Board and/or its rights to obtain information under the New
Relationship Agreements will from time to time mean that WMX has information
(herein called "Inside Information") which has not been publicly disclosed and
which under requirements imposed under the federal securities laws (the "federal
insider information requirements") must be disclosed before WMX can sell or
dispose of ServiceMaster shares. WMX agrees that all its Transfers of
ServiceMaster shares will be made in compliance with the federal inside
information requirements. Except as otherwise
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provided in Section 7.6, nothing in this Agreement shall be deemed to obligate
ServiceMaster to disclose Inside Information earlier than ServiceMaster
otherwise deems appropriate. Nothing in this Agreement shall be deemed to
authorize WMX to disclose any Inside Information without ServiceMaster's
consent. WMX shall comply with the Securities Laws in connection with each
Transfer of WM Shares. In addition, in connection with any Transfer of WM Shares
other than pursuant to a registration statement under the Securities Act of
1933, WMX shall as a precondition to such Transfer provide ServiceMaster with
(i) such evidence as ServiceMaster shall reasonably request that such Transfer
will not violate any applicable Securities Laws and (ii) if requested by
ServiceMaster in writing a warranty by WMX that such Transfer will not violate
any requirements of this Agreement imposed on WMX.
6. SERVICEMASTER'S FIRST REFUSAL RIGHT
6.1 Basic Commitment. Before making any Transfer of any of WM shares, WMX
shall afford ServiceMaster the opportunity to purchase those shares in
accordance with the terms of this Part 6.
6.2 First Refusal Notice.
(a) Before making any disposition of any WM Shares, WMX shall actually
deliver to ServiceMaster a notice (a "First Refusal Notice")
specifying the number of WM Shares of which WMX intends to dispose
(herein called the "Available Shares") within the Free Disposition
Period (determined as specified in Section 6.6) and any 2% owner then
known to WMX to which WMX intends to seek to sell any of the Available
Shares. The date upon which WMX's First Refusal Notice shall actually
be delivered to ServiceMaster is herein called the "First Refusal
Notice Date" for that Notice. WMX shall limit the number of shares
specified in any First Refusal Notice to the number of shares which
WMX in good faith contemplates Transferring during the Free
Disposition Period which may arise under Section 6.6 by reason of such
Notice.
(b) WMX will also promptly provide ServiceMaster with such other
information which ServiceMaster shall reasonably request concerning
the proposed Transfer which is known or reasonably available to WMX.
ServiceMaster shall reimburse WMX for all expenses which WMX may
reasonably incur to provide information requested by ServiceMaster
pursuant to the preceding sentence. In no event shall any delay or
failure by WMX in providing information requested by ServiceMaster
under this paragraph (b) have the effect of delaying the onset of the
time at which WMX shall be entitled to sell the Available Shares or
excusing ServiceMaster from any obligation imposed on it hereunder.
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(c) For purposes of this agreement a person shall be deemed to be a "2%
owner" if such person beneficially owns ServiceMaster shares
representing 2% or more of (i) the shares outstanding in any class or
series or (ii) the votes which could be cast in any election to any
position on the ServiceMaster Board.
6.3 ServiceMaster's Purchase Right.
(a) ServiceMaster shall have the right (the "First Refusal Right") to
purchase any WM Share which WMX desires to Transfer. ServiceMaster
shall pay a purchase price (the "First Refusal Price") for each share
purchased by ServiceMaster upon exercise of its First Refusal Right in
the amount of the Market Price per Share for ServiceMaster shares on
the business day preceding the First Refusal Notice Date.
(b) The term "Market Price Per Share" on any particular day means the
closing price per share for ServiceMaster shares on that day on the
New York Stock Exchange provided that (i) if the New York Stock
Exchange shall not then represent the principal market in which
ServiceMaster shares are traded, the closing price shall be taken from
that principal market and (ii) if the principal market shall not be
open on that particular day, the Market Price Per Share on that
particular day shall be the closing market price per share in that
principal market on the first day preceding the particular day on
which that principal market shall have been open.
6.4 Review Period.
(a) ServiceMaster shall be entitled to utilize a Review Period after
receipt of any First Refusal Notice within which to determine whether
or not to exercise the First Refusal Right arising with respect to the
shares covered by that Notice. The Review Period shall begin on the
First Refusal Notice Date and shall end upon the earliest of the end
of the Available Review Interval, the date on which ServiceMaster
notifies WMX that ServiceMaster has elected not to exercise that
particular First Refusal Right, or the date upon which ServiceMaster
notifies WMX that ServiceMaster has elected to exercise that
particular First Refusal Right.
(b) The "Available Review Interval" available after actual delivery of any
particular First Refusal Notice to ServiceMaster shall be a period
beginning on the First Refusal Notice Date for that particular Notice
(the "relevant First Refusal Notice Date") and ending on whichever of
the following dates applies:
(1) The Available Review Interval shall end on the second full
business day which shall occur after the relevant First Refusal
Notice Date if the sum of
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the amount ServiceMaster shall have committed during the 100 days
immediately preceding the First Refusal Notice Date to pay to
purchase ServiceMaster shares from WMX plus the amount which
ServiceMaster would be required to pay to purchase all Available
Shares covered by the triggering First Refusal Notice would not
exceed $2 million.
(2) The Available Review Interval shall end on the fourth full
business day which shall occur after the relevant First Refusal
Notice Date if the preceding test (1) does not apply and if
ServiceMaster's purchase of all the Available Shares specified in
the triggering First Refusal Notice would not exceed the $5
Million Limit. For purposes of this Agreement, any particular
purchase of Available shares shall be deemed to exceed the "$5
Million Limit" if $5 million shall be less than the sum of (i)
the amount ServiceMaster would be required to pay to purchase all
of the Available Shares covered by the triggering First Refusal
Notice plus (ii) the amount ServiceMaster shall have committed
during the 100 days immediately preceding the First Refusal
Notice Date to pay to purchase ServiceMaster shares from WMX.
(3) The Available Review Interval shall end on the 20th full
business day which shall occur after the relevant First Refusal
Notice Date if ServiceMaster's purchase of all the Available
Shares specified in the triggering First Refusal Notice would
exceed the $5 Million Limit.
(c) WMX shall not enter into any agreement obligating it to Transfer any
Available Shares prior to the earlier of (i) the end of the Review
Period or (ii) the sixth business day following the First Refusal
Notice Date provided that any such agreement made during any portion
of the Review Period which occurs on or after the sixth business day
following the First Refusal Notice Date shall be subject to
cancellation to the extent necessary to accommodate exercise of
ServiceMaster's rights under this Part 6.
6.5 ServiceMaster Exercise Of the First Refusal Right.
(a) ServiceMaster shall be deemed to have exercised any particular First
Refusal Right which may become available to ServiceMaster under this
Part 6 if prior to the end of the Review Period associated with that
particular Right, ServiceMaster shall actually deliver to WMX a notice
(herein called an "Exercise Notice") (i) stating that ServiceMaster
has elected to exercise its First Refusal Right, (ii) stating the
number of the Available Shares which ServiceMaster has elected to
purchase (provided that ServiceMaster shall be obligated to purchase
all Available Shares if any are purchased if such purchase would not
exceed the $5 Million Limit) and (iii)
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specifying the closing date for the sale (which without the consent of
WMX shall not be less than three business days after the date on such
which notice shall be so delivered (the "Exercise Date") nor more than
a number of days after the Exercise Date equal in length (beginning on
the Exercise Date) to the length of the Available Review Interval
relating to that particular First Refusal Right). Upon exercise of its
First Refusal Right, ServiceMaster shall become contractually
obligated to purchase the Available Shares with respect to which the
Right is exercised on the terms prescribed in this Agreement and WMX
shall become contractually obligated to sell those Shares to
ServiceMaster on the terms prescribed by this Agreement.
(b) On the closing date so established:
(1) ServiceMaster shall make payment to WMX in immediately available
funds of the purchase price for the shares being purchased by
ServiceMaster by reason of such exercise of its First Refusal
Right and
(2) WMX shall deliver to ServiceMaster a certificate or certificates
representing the shares being purchased by ServiceMaster bearing
endorsements and/or accompanied by instruments sufficient to
convey to ServiceMaster effective as of the closing date
ownership of those shares free from any adverse interest.
(c) ServiceMaster shall also be entitled to receive any distribution,
dividend or other right associated with the shares purchased, the
record date for which shall have occurred on or after the Exercise
Date.
6.6 WMX Sale of Free Shares.
(a) Identification of Free Shares. Except as otherwise provided in
Section 6.6(c):
(1) If ServiceMaster shall deliver a notice to WMX specifying that
ServiceMaster has elected not to exercise its First Refusal Right
arising in connection with any particular First Refusal Notice
provided by WMX or if ServiceMaster shall fail to deliver an
Exercise Notice within the Available Review Interval after
receipt of that First Refusal Notice, then all Available Shares
identified in that Notice shall become Free Shares at the end of
the relevant Review Period.
(2) If during the applicable Review Period, ServiceMaster shall
deliver an Exercise Notice to WMX specifying that ServiceMaster
has exercised its right to purchase some but less than all the
Available Shares specified in any
15
particular First Refusal Notice, then the Available Shares in excess
of those which ServiceMaster has elected to purchase in accordance
with this Agreement shall upon delivery of that Exercise Notice become
Free Shares. ServiceMaster in such a case shall have the right to
specify the purchaser or purchasers proposed by WMX which
ServiceMaster intends to replace by exercise of its First Refusal
Right, and if ServiceMaster does so, the shares purchased by
ServiceMaster shall be eliminated from the allocation of shares which
would otherwise have been made to the purchaser(s) for which
ServiceMaster is substituting itself.
(b) Disposition of Free Shares. During the period (the "Free Disposition
Period") of 100 days following the end of the Review Period applicable
to any First Refusal Notice, WMX shall be entitled to sell or dispose
of any Free Shares covered by that Notice in any manner which is not
prohibited by any provision in this Agreement outside of this Part 6,
provided that if the disposition shall be made by means of a
registration under the Securities Act of 1933, the Free Disposition
Period shall begin when the registration statement shall become
effective and shall end 100 days later.
(c) Reversion Shares. In the event WMX shall not consummate the sale or
other disposition of any Free Shares during the Free Disposition
Period, then at the end of the Free Disposition Period, such shares
shall cease to be Free Shares and WMX shall be required to comply with
the requirements of this Part 6 again with respect to such shares in
the event WMX desires to make any subsequent disposition of those
shares.
6.7 Exemption for Transfers to WMX affiliates.
(a) ServiceMaster's Right of First Refusal shall not apply to any transfer
WMX shall make to any of its affiliates, provided that each of WMX's
affiliates must comply with the provisions of this Part 6 before
disposing of any ServiceMaster shares to any person who is not a WMX
affiliate.
(b) The dispositions by WMX, all WMX affiliates, and all WMX Buyers shall
be aggregated for purposes of Section 6.4(b). The term "WMX" as
applied in Sections 6.1 and 6.4(b) shall be applied to mean WMX, all
WMX affiliates, and all WMX Buyers.
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6.8 Control Change Call.
(a) Basic Call Right.
(1) In the event any WMX Control Change shall occur, then
ServiceMaster shall have the option (the "Control Change Call")
to purchase on the terms prescribed in this Section 6.8 both the
WM Option and the WM Shares. A partial exercises of the Control
Change Call is not permitted.
(2) For purposes of this Agreement a "WMX Control Change" shall be
deemed to have occurred if any development shall occur with
respect to WMX which would constitute a Control Change under the
standards prescribed in Section 11.3 (applying Section 11.3 as if
it referred to WMX rather than ServiceMaster).
(3) The "Change Date" shall be the date upon which the WMX Control
Change shall occur.
(b) Call Price.
(1) Call Shares. The purchase price for each of the Call Shares
shall be the Market Value Per Share on the Change Date (the "Call
Price").
(2) WM Option. The purchase price for the WM Option shall be
determined by multiplying the number of shares subject to the WM
Option on the Change Date times the amount by which the Call
Price shall exceed the exercise price per share of the WM Option
on the Change Date, provided that in the event the Call Price
does not exceed the exercise price per share of the WM Option,
then the purchase price for the WM Option shall be determined by
applying the Black Scholes option pricing model to value the
remaining term of the option.
(c) Call Exercise Period. WMX shall give ServiceMaster written notice
that a WMX Control Change has occurred promptly after such occurrence.
ServiceMaster shall have the right to exercise its Control Change Call
at any time during the period (the "Call Exercise Period") beginning
on the Change Date and ending on the 30th business day after actual
delivery to ServiceMaster of the WMX notice contemplated by the
preceding sentence.
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(d) Exercise. ServiceMaster shall be deemed to have exercised the Control
Change Call if and when during the Call Exercise Period ServiceMaster
shall actually deliver notice of such exercise to WMX.
(e) Closing. If ServiceMaster exercises its Control Change Call,
ServiceMaster shall have 90 business days after the Call Exercise
Period in which to close the transaction. The closing shall occur on
the date set forth in a notice from ServiceMaster to WMX, provided
that such date shall not be later than the 90th business day after the
end of the Call Exercise Period. At the closing:
(A) ServiceMaster shall pay WMX the purchase price for the Call
Shares and the WM Option in immediately available funds.
(B) WMX shall deliver to ServiceMaster the certificates
representing the Call Shares plus such transfer instruments
as shall be sufficient to convey the Call Shares and the WM
Option to ServiceMaster free of any adverse interest of any
kind.
(f) Expiration. The Control Change Call shall expire and shall not be
exercisable unless ServiceMaster shall actually deliver to WMX prior
to the end of the Call Exercise Period the notice prescribed by
Section 6.8(d). If the Closing Call Right shall ever expire
unexercised, then the Closing Call Right may never be exercised
thereafter regardless of whether or not any subsequent WMX Control
Change shall occur.
6.9 Stock Split Adjustment. If during any period operative under this
Part 6 there shall occur any stock split or other occurrence which would be
effective to cause an adjustment under part 4 of the WM Option Agreement, then
the nature and number of shares and the prices applicable under this part 6
shall be adjusted in accordance with the concepts underlying part 4 of the WM
Option Agreement.
7. COMMITMENT TO REGISTER SERVICEMASTER SHARES.
7.1 Demand Registration Right.
(a) Basic Right. From and after January 1, 1998 and subject to the
provisions of this Part 7, WMX shall be entitled to require
ServiceMaster to register under the Securities Act and state
securities laws in accordance with the provisions of this Part 7
Original Shares beneficially owned by WMX.
18
(b) Demand Registration. The term "demand registration" means any
registration to which WMX shall be entitled under this Part 7 which is
not a Piggyback Registration (as defined in Section 7.8).
(c) Original Shares. The term "Original Shares" as used in this Part 7 is
limited to the following shares: (i) the 18,107,143 ServiceMaster
Shares received by WMX on the date hereof under the Contribution
Agreement between ServiceMaster and WMX; (ii) all shares which shall
be issued upon exercise of the WM Option; (iii) all ServiceMaster
shares which shall be acquired by WMX in compliance with this
Agreement prior to the first to occur of a sale of shares pursuant to
a registration under this Part 7 or sales by WMX after the date hereof
aggregating more than 2% of the outstanding ServiceMaster shares; (iv)
other ServiceMaster shares acquired by WMX which ServiceMaster in its
sole discretion shall agree in writing to count as Original Shares for
purposes of this Agreement; and (v) all shares which may be issued
with respect to any Original Shares in the Reincorporating Merger or
in any other merger or reorganization or in connection with any stock
split or stock dividend or in any distribution of equity securities to
the holders of Original Shares or in connection with any other action
having a similar substantive effect. Although the remainder of this
Part 7 refers generally to "ServiceMaster shares" in no event shall
such provisions be deemed to obligate ServiceMaster to register any
shares which are not Original Shares.
7.2 Registration Request. ServiceMaster shall not be required to initiate
a registration under this Part 7 unless ServiceMaster shall have received a
written request from WMX:
(a) affirming that WMX desires to sell Original shares to the public;
(b) affirming that in the opinion of their counsel, the proposed sale
would require registration of Original shares to be sold under the
Securities Act and/or qualification of such Original shares under any
applicable state securities or blue sky laws in any jurisdiction in
which the WMX desires to make such sale;
(c) requesting that ServiceMaster undertake a registration of Original
shares under this Section 7.2;
(d) identifying the number of Original shares to be included in such
registration (provided, that WMX may later increase or decrease such
number to the extent not prohibited by this Agreement or the
Securities Laws); and
(e) describing the method by which WMX proposes to sell such Original
shares (provided, that WMX may later change such method).
19
In the event WMX proposes to sell such Original shares pursuant to an
underwritten offering or through an exclusive broker or brokers, ServiceMaster
shall have the right to select one of the managing underwriters (the managing
underwriter that shall "run the books") for such offering or such exclusive
broker(s), provided that such managing underwriter or exclusive broker(s) shall
be reasonably acceptable to WMX and that, if managing underwriters are used, WMX
shall have the right to select the other managing underwriter (provided that
such managing underwriter shall be reasonably acceptable to ServiceMaster).
7.3 Registration. ServiceMaster shall use reasonable efforts to promptly
register under the Securities Act and any applicable state securities or blue
sky laws all Original Shares which it shall have been requested to register in a
request received in compliance with the requirements specified in Section 7.2
above plus such number of additional Original Shares as WMX may request,
provided that: (i) WMX shall not have the right to change the number of shares
registered after the registration statement becomes effective: (ii)
ServiceMaster shall not be obligated to begin work on the registration until
after the Review Period arising under part 6 in connection with the registration
request; and (iii) if ServiceMaster shall exercise its Refusal Right with
respect to all shares covered by such request, then (A) ServiceMaster shall not
be obligated to undertake that registration and (B) WMX shall be deemed to have
used up one of the demand registrations to which it is entitled under this
Agreement. The registration shall be on such available form as ServiceMaster
chooses, including, if available, Form S-3 or such other form as may have
replaced it under the Securities Act. ServiceMaster may (but shall not be
required to) include in such registration any ServiceMaster Shares, any other
owner(s) of which shall request inclusion, provided, that if ServiceMaster does
so the registration shall be deemed not to have been requested by WMX and WMX
shall have the right to make another request under Section 7.2 and such
registration shall be deemed to convert to a "piggyback" registration pursuant
to Section 7.8. All ServiceMaster Shares which ServiceMaster shall be required
or elect to include in a registration (whether made as contemplated in this
Section 7.3, as contemplated in Section 7.8 or otherwise) are herein called the
"Registered Shares" for that registration.
7.4 Registration Expenses. ServiceMaster shall bear the following costs
and expenses of any demand registration ServiceMaster shall be required to make
under this Part 7:
(a) the fees and disbursements of outside attorneys representing
ServiceMaster,
(b) the fees and disbursements of ServiceMaster's independent public
accountants,
(c) the fees and disbursements of any other Person retained by
ServiceMaster; and
20
(d) all internal costs and expenses of ServiceMaster (including, without
limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties).
All other expenses of any such demand registration and offering shall be borne
by WMX including, without limitation, all registration and filing fees
(including all expenses incident to filing with the National Association of
Securities Dealers, Inc.) relating to WMX's Registered Shares, all fees and
expenses for listing WMX's Registered Shares on each securities exchange on
which ServiceMaster Shares are then listed or on the NASD automated quotation
system, fees for and expenses of complying with state securities and blue sky
laws, printing expenses, fees and disbursements of WMX's attorneys and any other
Persons retained by WMX, and underwriting commissions attributable to WMX's
Registered Shares.
7.5 Demand Registration Limits.
(a) Limitation on Number of Demand Registrations. ServiceMaster shall not
be obligated to make more than four successful demand registrations of
Original Shares under or by reason of this Part 7.
(b) Minimum Share Requirement. Each demand registration request made by
WMX under this Part 7 shall be for not less than 5 million shares nor
more than 10 million shares, except that WMX shall be entitled to
include all of its WM Shares in the last demand registration to which
it is entitled even if less than 5 million shares. The limitations
prescribed in this paragraph (a) shall be appropriately adjusted for
stock splits, stock dividends and other occurrences having analogous
substantive effect.
(c) Successful Registration. Any demand registration made in response to
a request for registration by WMX shall count as a successful
registration except that a registration shall not be deemed successful
unless at least ninety percent (90%) of the Original Shares which
remain registered during the entire period such registration shall be
effective and which are offered for sale in good faith pursuant to the
appropriate registration statement shall be sold during the period for
which the registration statement shall be effective. If WMX elects not
to go forward with a demand registration, the registration shall
nevertheless be deemed "successful" if either (i) it shall have become
effective before the withdrawal decision by WMX or (ii) WMX does not
reimburse the Parent Company for all expenses incurred and paid by the
ServiceMaster to third parties other than employees in connection with
the registration within fifty (50) days after the ServiceMaster shall
deliver to WMX an itemized invoice of such expenses.
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7.6 Materially Disruptive Disclosures. ServiceMaster shall not be
required to file and cause to become effective any registration requested by WMX
pursuant to this Part 7 if, in ServiceMaster's reasonable judgment, the
registration and offering process, including any disclosures required in or
pursuant to such registration, may be materially disruptive of or detrimental to
ServiceMaster's business or the business of any ServiceMaster affiliate or to
any pending or prospective transaction including, but not limited to, a
financing, acquisition or merger or other corporate reorganization to which
ServiceMaster or any of its affiliates is or may become a party. ServiceMaster
shall send a written notice to WMX as promptly as practicable after
ServiceMaster has knowledge of facts or circumstances that ServiceMaster
reasonably believes would cause the registration and offering process to be
materially disruptive of or detrimental to ServiceMaster's business or any
pending or prospective transaction. Such notice shall state that ServiceMaster
is declining to file the registration because of the reason stated in the first
sentence of this Section. After giving such notice, ServiceMaster shall use
reasonable efforts and proceed in good faith to resolve as quickly as reasonably
practicable the issue that causes the registration and offering process to be
materially disruptive of or detrimental to the business of ServiceMaster and/or
any of its affiliates or a pending or prospective transaction. In any event,
ServiceMaster shall not decline to file and cause to become effective any
particular registration requested by WMX pursuant to this Section 7.6 for any
such reason for one or more periods together aggregating in excess of thirty
(30) days. Such period or periods shall be computed beginning on the day that
ServiceMaster gives written notice to WMX that ServiceMaster is relying on such
reason and ending on the day that WMX receives written notice that ServiceMaster
is no longer relying on such reason; provided, however, that in no event shall
such period or periods exceed thirty (30) days.
7.7 120 Day Gap. If ServiceMaster shall give WMX a notice of the
intention of ServiceMaster to register any ServiceMaster Shares, then so long as
ServiceMaster shall pursue such registration in good faith, WMX shall not be
entitled to require ServiceMaster to file a demand registration statement under
this Part 7 during the period beginning when such notice shall be given and
ending 120 days after the effective date of such registration.
7.8 Piggyback Registration. If ServiceMaster makes any Piggyback
Registration of ServiceMaster Shares under the Securities Act, WMX shall be
entitled to include its Original Shares in such registration and to sell
ServiceMaster Shares so included to the extent permitted by this Part 7. The
foregoing piggyback registration right is subject to the following terms and
conditions:
(a) Piggyback Registration. The term "Piggyback Registration" means a
registration by ServiceMaster under the Securities Act other than (i)
a registration made in connection with a merger, purchase of assets or
other similar transaction by ServiceMaster (other than an offering of
securities for cash); (ii) a registration of ServiceMaster Shares at
least 80% of which are offered to employees or partners of
ServiceMaster or of any of its affiliates under any compensation
arrangement, including a ServiceMaster Share option plan or a
ServiceMaster Share purchase plan;
22
(iii) a registration in which the majority of the proceeds will be
derived from the sale of debt securities whether or not convertible
into ServiceMaster Shares (and for this purpose consideration for a
security representing a right to acquire ServiceMaster Shares shall be
deemed to have been paid for such security rather than for those
ServiceMaster Shares); (iv) a registration on a form which does not
permit the inclusion of ServiceMaster Shares; and (v) a registration
undertaken at the demand of WMX pursuant to Section 7.2.
(b) Primary Shares. The term "Primary Share" when used with respect to
any Piggyback Registration means (i) all ServiceMaster Shares which
ServiceMaster desires to sell in such registration and (ii) all
ServiceMaster Shares to be included in such registration pursuant to
any agreements made by ServiceMaster with the approval of one or more
of its General Partners or by its Board of Directors (as the case may
be) which entitles the holders of such ServiceMaster Shares to require
ServiceMaster to file a registration statement with respect to such
ServiceMaster Shares.
(c) Primary Seller. The term "Primary Seller" when applied with respect
to any Piggyback Registration means ServiceMaster, provided that if
the Piggyback Registration shall be undertaken by reason of other
rights granted by ServiceMaster with the approval of one or more
General Partners thereof or by its Board of Directors (as the case may
be) entitling any holder of ServiceMaster Shares to require such
registration, then such holder shall be deemed a "Primary Seller" for
purposes of such registration.
(d) Registration Notice. If ServiceMaster proposes to make a Piggyback
Registration, ServiceMaster shall promptly give written notice (herein
called an "Piggyback Registration Notice") to WMX stating that
ServiceMaster intends to effect such registration and specifying a
date (herein called the "Participation Deadline") by which WMX's
election to participate ("Participation Election") in the Piggyback
Registration must be submitted to ServiceMaster (which date shall not
be less than thirty (30) days after ServiceMaster gives the Piggyback
Registration Notice). The Piggyback Registration Notice shall be given
by ServiceMaster at least thirty (30) days prior to the filing of the
registration statement with the Securities and Exchange Commission.
WMX shall, subject to the conditions and terms set forth in this
Section 7.8, have the right to require ServiceMaster to include in the
proposed Piggyback Registration any or all of its ServiceMaster
Shares. If WMX desires to have any or all of its Original Shares
included in the proposed Piggyback Registration, WMX shall promptly
give ServiceMaster its Participation Election specifying in writing
the number of Original Shares which WMX desires to have included in
such registration, and WMX shall have the right to decrease such
number at any time. WMX shall also have the right to increase such
number of
23
ServiceMaster Shares which WMX desires to have registered at any time,
provided that (i) if WMX and ServiceMaster are the only two Persons
whose ServiceMaster Shares are included in the registration, then the
maximum number of Original Shares that shall be included in the
registration shall be determined in accordance with the rationing
provisions of sub-paragraph (f) and (ii) if ServiceMaster Shares owned
by other Persons are included in such registration, Original Shares
that are in excess of the number of Original Shares specified in the
Participation Election shall be included in the registration only if
it is unnecessary to apply the rationing provisions of sub-paragraph
(f). The term "Secondary Shares" when applied with respect to any
Piggyback Registration means (i) all Original Shares which WMX shall
request in its Participation Election to be included in a proposed
Piggyback Registration prior to the Participation Deadline or such
later date on which ServiceMaster in its sole discretion shall elect
to accept such request and (ii) all other ServiceMaster Shares the
owners of which shall be entitled to include in such registration
pursuant to rights granted by ServiceMaster with the consent of its
general partner or general partners or its board of directors (as the
case may be) on essentially the same terms granted to WMX in this sub-
paragraph (d), and (iii) all shares which are proposed to be sold by
ServiceMaster officers and directors. The term "Secondary Sellers"
when applied with respect to any Piggyback Registration means the
owners of the Secondary Shares involved in such registration.
(e) Distribution Arrangement. All decisions and actions with respect to a
Piggyback Registration shall be entirely in the discretion of the
Primary Seller, including but not limited to whether and when the
offering is to be made pursuant to the registration; the selling price
of the securities; the selection of the underwriters (provided that
WMX shall be entitled to be consulted in this regard); arrangements
with the underwriters and any changes in such arrangements; the
postponement or withdrawal of any such offering; and the contents of
the registration statement and the prospectus. If the Primary Seller
shall make arrangements to sell such Seller's ServiceMaster Shares
included in a Piggyback Registration to or through professional
investment bankers, then such investment bankers shall be deemed the
"Primary Underwriter" for such registration and WMX shall not be
entitled to include any ServiceMaster Shares in such registration
unless (i) WMX shall agree to sell such ServiceMaster Shares under
arrangements essentially similar to the arrangements for the sale of
the Primary Seller's ServiceMaster Shares or such other arrangements
as shall be satisfactory to WMX and the Primary Seller and (ii) WMX
shall supply all information, execute all underwriting agreements and
other documents, and take all other actions which shall be reasonably
required under the arrangements specified in clause (i), provided that
WMX shall not be required to pay any expenses except as provided in
sub-paragraph (g). WMX shall not be entitled to include a class of
ServiceMaster Shares in a registration which is not being sold by
24
the Primary Seller if the Primary Underwriter concludes that inclusion
of ServiceMaster Shares from a class not being sold by the Primary
Seller would materially complicate or could materially delay the
distribution (unless other Secondary Sellers are being allowed to
include ServiceMaster Shares of such class).
(f) Rationing. If the Primary Underwriter determines in good faith that
inclusion of all of the Secondary Shares which the Secondary Sellers
desire to include in a Piggyback Registration would create a
significant risk that either the quantity of securities that the
Primary Seller could otherwise sell or that the price per Share of
such securities to be received by the Primary Seller would be reduced,
then (i) the Secondary Sellers shall be entitled to include in such
registration the largest number of Secondary Shares which the Primary
Underwriter determines will not create such a risk (herein called the
"Piggyback Total"), (ii) the maximum number of Secondary Shares which
any given Secondary Seller shall be entitled to include in the
registration shall be determined by multiplying the Piggyback Total
times a fraction the numerator of which is the number of Secondary
Shares which such Secondary Seller desires to include in such
registration and which are not excluded by any of the preceding
provisions of this Section 7.8 and the denominator of which is the
number of Secondary Shares which all Secondary Sellers desire to
include in such registration and which are not excluded pursuant to
any of the preceding provisions of this Section 7.8. Notwithstanding
the foregoing sentence, WMX shall be entitled to include in the
registration a minimum number of ServiceMaster Shares equal to 20% of
the sum of the Piggyback Total plus the number of Primary Shares.
(g) Expenses. WMX shall not be responsible for any expenses of any
registration required pursuant to this Section 7.8, except that WMX
shall pay underwriting commissions attributable to its Secondary
Shares included in such registration and fees and disbursements of
counsel or any other adviser that it may retain.
(h) Withdrawal Right. ServiceMaster and any other Primary Seller shall
have the right in their sole discretion to abandon any registration or
offering proposed pursuant to this Section 7.8 at any time before such
offering is consummated and shall not have any liability to WMX by
reason of any such abandonment. ServiceMaster shall give WMX written
notice of its intention to abandon the proposed registration and
offering and WMX may, upon notice to ServiceMaster given within five
(5) days after the receipt of such notice from ServiceMaster, elect to
cause the registration or offering to proceed as to any or all
Original Shares as if such registration or offering were pursuant to
Section 7.2 hereof, except that the expenses to be borne by WMX with
respect to such registration or offering shall be only those relating
to the period following WMX's giving such notice. WMX may in its sole
discretion withdraw any or all Original Shares from any registration
or offering proposed pursuant to this
25
Section 7.8 at any time before such offering is consummated and WMX
shall not have any liability to ServiceMaster by reason of such
abandonment.
7.9 Reasonable Efforts Regarding Registration. Whenever under the
preceding provisions of this Part 7 ServiceMaster is required to register any
Original Shares, ServiceMaster shall, subject to the withdrawal right provisions
of sub-paragraph (h) of Section 7.8, use reasonable efforts to do the following
in connection with such registration of Original Shares pursuant to the
Securities Act and the underwritten public offering and sale of Original Shares:
(a) prepare and file with the SEC a registration statement with respect to
ServiceMaster Shares to be registered and use its reasonable efforts
to cause such registration statement to become effective including,
without limitation, responding to SEC staff comments in such manner as
ServiceMaster deems reasonable;
(b) prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for
such period, not to exceed 90 days, as WMX shall request, and to
comply with the provisions of the Securities Act with respect to the
sale of all ServiceMaster Shares covered by such registration
statement during such period;
(c) provide WMX a reasonable opportunity to review and, in the case of
registrations effected pursuant to Section 7.3 hereof, approve prior
to filing, any such registration statement;
(d) furnish to WMX such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in each
case including all exhibits), such number of copies of the prospectus
included in such registration statement (including each preliminary
prospectus and prospectus supplement), in conformity with the
requirements of the Securities Act, and such other documents as WMX
may reasonably request in order to facilitate the sale of
ServiceMaster Shares covered by such registration statement;
(e) use its reasonable efforts to register or qualify ServiceMaster Shares
covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as WMX shall reasonably request,
and do any and all other acts and things which may be reasonably
necessary or advisable to enable WMX to consummate the sale in such
jurisdictions of such Shares; provided, that ServiceMaster shall not
for any such purpose be required to qualify generally to do business
as a foreign corporation in any jurisdiction wherein it would not but
for the requirements of this clause (e) be obligated to be so
qualified, to subject itself to
26
taxation in any such jurisdiction or to consent to general service of
process in any such jurisdiction;
(f) use its reasonable efforts to cause all Original Shares covered by
such registration statement to be listed on each securities exchange
on which ServiceMaster Shares of the same class issued by
ServiceMaster are then listed or, if there shall then be no such
listing, to be accepted for quotation on NASDAQ;
(g) provide a transfer agent and registrar for ServiceMaster Shares
covered by such registration statement not later than the effective
date of such registration statement;
(h) enter into such agreements (including an underwriting agreement in
customary form) and take such other actions as WMX reasonably requests
in order to expedite or facilitate the disposition of such Original
Shares; and
(i) obtain a "cold comfort" letter from ServiceMaster's independent public
accountants in customary form and covering such matters of the type
customarily covered by "cold comfort" letters as WMX shall reasonably
request.
7.10 WMX Support. WMX shall furnish to ServiceMaster in writing such
information regarding WMX and the distribution of Original Shares as
ServiceMaster may reasonably request in writing in connection with any
registration, qualification or compliance referred to in this Part 7, together
with such representations and warranties as ServiceMaster may reasonably request
and shall take such other actions as ServiceMaster shall reasonably request in
connection with such registration (provided that such requests are not
inconsistent with the relative rights and obligations of the parties prescribed
in this Agreement or more onerous than requests made of other Secondary Sellers
which are similarly situated).
7.11 Indemnification.
(a) ServiceMaster shall indemnify and hold harmless (i) WMX and, (ii) if
WMX so requests, each underwriter of Original Shares registered under
this Part 7 and (iii) the officers and directors of WMX and such
underwriters and (iv) each Person, if any, who controls any thereof
within the meaning of Section 15 of the Securities Act and their
respective successors against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on
any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, prospectus supplement, offering circular
or other document incident to any registration or qualification (or in
any related registration statement, amendment thereto or notification)
or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements
therein not
27
misleading, or any violation by ServiceMaster of the Securities Act or
any rule or regulation promulgated under the Securities Act applicable
to ServiceMaster and relating to action or inaction required of
ServiceMaster in connection with any such registration or
qualification, and (except as otherwise provided in Section 7.12(b)
below) shall reimburse WMX and each such underwriter for any legal and
any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or
action; provided, however, that ServiceMaster shall not be liable in
any such case to the extent that any such claim, loss, damage or
liability arises out of or is based on any untrue statement or
omission based upon written information furnished to ServiceMaster by
an instrument duly executed by WMX or any underwriter and stated to be
specifically for use therein.
(b) WMX shall indemnify and hold harmless ServiceMaster and its partners
or shareholders, officers and directors and each person, if any, who
controls any thereof within the meaning of Section 15 of the
Securities Act and their respective successors against all claims,
losses, damages and liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, prospectus
supplement, offering circular or other document incident to any
registration or qualification (or in any related registration
statement, amendment thereto or notification) or any omission (or
alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or any violation by ServiceMaster of the Securities Act or
any rule or regulation promulgated under the Securities Act applicable
to ServiceMaster and relating to action or inaction required of
ServiceMaster in connection with any such registration or
qualification, and (except as otherwise provided in Section 7.12(a)
above) shall reimburse ServiceMaster and each other person indemnified
pursuant to this Section 7.12(b) for any legal and any other expenses
reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action; provided, however, that
this Section 7.12(b) shall apply only if (and only to the extent that)
such statement or omission was made in reliance upon information
furnished to ServiceMaster by an instrument duly executed by WMX and
stated to be specifically for use in such prospectus, offering
circular or other document (or related registration statement or
notification) or any amendment or supplement thereto and not corrected
by any other written statement executed by WMX or an underwriter and
given to ServiceMaster in time to correct the earlier written
information.
(c) Each party entitled to indemnification under this Section 7.12 (herein
called the "indemnified party") shall give notice to the party
required to provide indemnification (herein called the "indemnifying
party") of any claim as to which indemnity may be sought promptly
after such indemnified party obtains actual
28
knowledge of such claim, and shall permit the indemnifying party (at
its expense) to assume the defense of any such claim or any litigation
resulting therefrom; provided however, that counsel for the
indemnifying party who shall conduct the defense of such claim or
litigation shall be reasonably satisfactory to the indemnified party,
and the indemnified party may participate in such defense at the
indemnified party's expense; and provided, further, that the omission
by any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under this Section
7.12(c), but a refusal to permit the indemnifying party to conduct
such defense by such counsel shall relieve such indemnifying party of
its obligations under this Section 7.12(c). No indemnifying party, in
the defense of any such claim or litigation, shall, except with the
consent of each indemnified party, consent to entry of any judgment or
enter in any settlement which is binding on the indemnified party but
which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation without any
requirement for payment of any consideration by the indemnified party
for such release which is not reimbursable by the indemnifying party.
No indemnified party shall, in connection with any such claim or
litigation, consent to the entry of any judgment or enter into any
settlement without the consent of the indemnifying party, which
consent shall not be unreasonably withheld.
7.12 Reports to be Filed; Rule 144. For as long as WMX holds Original
Shares, ServiceMaster shall use all reasonable efforts to file, on a timely
basis, all annual, quarterly and other reports required to be filed by it under
Sections 13 and 15(d) of the Exchange Act, and the rules and regulations of the
SEC thereunder, as amended from time to time. In the event of any proposed sale
of Original Shares by WMX pursuant to Rule 144 (or any successor rule) under the
Securities Act, ServiceMaster shall cooperate with WMX so as to enable such
sales to be made in accordance with applicable laws, rules and regulations.
7.13 Personal Rights of WMX. The rights created by this Part 7 are
personal to WMX, and are not assignable and shall not inure to the benefit of
any subsequent holder of Original Shares; provided, however, that provided
however that WMX shall have the right to include Original Shares beneficially
owned by any of its affiliates in any registration to the same extent that WMX
is entitled to include its own Original Shares in any such registration.
8. NOTICE COMMITMENT.
8.1 Information Exchange. Each party shall supply the other with such
information which the other party shall reasonably deem relevant to the
Relationship Agreements and which the supplying party knows or can obtain. The
requesting party shall reimburse the supplying party for
29
all expenses the supplying party shall reasonably incur to obtain or provide any
requested information. No failure or delay by a party to satisfy its
obligations under this Section 8.1 shall justify or entitle the other parties to
delay or not to perform their obligations under this Agreement.
8.2 Takeover Approaches. WMX shall use reasonable good faith efforts to
notify ServiceMaster promptly after WMX receives any approach or other contact
from any person indicating that such person may be interested in exploring or
otherwise pursuing (i) any activity which would require WMX to take any action
which would require approval by ServiceMaster to avoid breach of the literal
requirements in this agreement or (ii) a Takeover. WMX will also provide
ServiceMaster with such other information about each such contact or approach as
ServiceMaster shall reasonably request and which WMX knows or has the ability to
obtain.
8.3 Actual Delivery. Whenever any provision in this agreement requires
that a notice be "actually delivered" to a person or uses the day of "actual
delivery" as a standard for starting or ending a time period, that notice shall
be deemed "actually delivered" when (but not until) it shall actually be either
(i) delivered in writing to the chief executive offices of the recipient and
plainly marked for immediate delivery to the recipient's chief executive
officer, chief financial officer or general counsel or (ii) successfully
transmitted by fax to the principal fax number used by the recipient's chief
executive officer, chief financial officer or general counsel.
8.4 Regular Transmissions. In order to be effective, any notice or other
communication pursuant to this Agreement must be in writing and shall be deemed
given if delivered personally, telecopied, sent by nationally recognized
overnight courier or mailed by registered or certified mail (return receipt
requested and postage prepaid) to the recipient at the following address or
telecopy number:
If to WMX or WMUS:
WMX Technologies, Inc.
0000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Telecopy Number: 000 000-0000
If to ServiceMaster:
ServiceMaster
Xxx XxxxxxxXxxxxx Xxx
Xxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
Telecopy Number: 000 000-0000
30
Either party may change the address to which notices and other communications
hereunder are to be delivered by giving the other party notice in the manner
herein set forth.
9. REINCORPORATING MERGER.
9.1 Adjustments to Reflect Reincorporating Merger.
(a) WMX understands that: (i) ServiceMaster's shareholders have previously
approved a merger described in a proxy statement/prospectus dated
December 11, 1991 (the "Reincorporation Proxy Statement"); and (ii)
the Reincorporation Proxy Statement contemplates that ServiceMaster
Incorporated of Delaware will hereafter install a shareholder rights
plan.
(b) The merger pursuant to which ServiceMaster Incorporated of Delaware
succeeds to the position now held by ServiceMaster Limited Partnership
as the ultimate parent company for the ServiceMaster enterprise is
herein called the "Reincorporating Merger". ServiceMaster Incorporated
of Delaware as it shall be constituted after giving effect to the
Reincorporating Merger is herein sometimes called "ServiceMaster
Incorporated".
(c) The Reincorporating Merger, the adoption of a shareholder rights
program on terms approved by the ServiceMaster Board and other actions
contemplated by the Reincorporation Proxy Statement or the
Supplemental Disclosure are herein collectively called the
"Reincorporation Actions".
(d) WMX acknowledges that it has acquired the WM Shares subject to the
pre-approval of the Reincorporating Merger by ServiceMaster's
shareholders pursuant to the Reincorporation Proxy Statement. WMX
agrees that the issuance of the ServiceMaster shares pursuant to the
Contribution Agreement (including any shares subsequently issued upon
exercise of the WM Option) does not convey to WMX any right to vote
with respect to the Reincorporation Actions and that by executing this
Agreement, WMX grants any approval for the Reincorporation Actions
which may be required by reason of its ownership of the WM Shares,
provided that this sentence shall not be deemed to preclude WMX from
voting on any matter upon which ServiceMaster's shareholders are
generally entitled to vote in the future. WMX agrees not to contest or
question ServiceMaster's right to consummate the Reincorporating
Merger or to install the shareholder rights plan or take any of the
other Reincorporation Actions.
31
(e) After consummation of the Reincorporating Merger (i) the term
"ServiceMaster" as used in this Agreement shall refer to ServiceMaster
Incorporated of Delaware and (ii) the term "ServiceMaster shares"
shall thereafter designate and include shares of common stock issued
by ServiceMaster Incorporated of Delaware and (iii) this Agreement
shall remain in effect with respect to WMX, the shares issuable to WMX
in the Reincorporating Merger, and all other ServiceMaster Shares
thereafter beneficially owned by WMX and (iv) the consummation of the
Reincorporating Merger shall not otherwise limit or impair the
applicability of this Agreement in any respect.
(f) ServiceMaster hereby advises WMX that under Section 351 of the
Internal Revenue Code, the ability of ServiceMaster's shareholders to
consummate the Reincorporating Merger without recognizing taxable
income for federal income tax purposes requires that at the time of
the merger, ServiceMaster's shareholders may not be parties to
agreements obligating them in the aggregate to dispose of more than
20% of the ServiceMaster shares then outstanding. WMX hereby covenants
that it will not be party to any obligation on the date of the
Reincorporating Merger to Transfer more than 20% of the outstanding
ServiceMaster shares then beneficially owned by WMX. Not later than
the fifth business day following actual delivery to ServiceMaster of
any First Refusal Notice, ServiceMaster shall advise WMX if
ServiceMaster expects to consummate the Reincorporating Merger within
the Free Disposition Period following the Review Period. If
ServiceMaster shall not provide such notice on or prior to such fifth
business day or if ServiceMaster shall advise in such notice that
ServiceMaster does not expect to consummate the Reincorporating Merger
within the relevant Free Disposition Period, then WMX shall have the
right to enter into agreements during that Free Disposition Period (to
the extent not prohibited by other provisions in this Agreement) to
sell any Free Shares which exist during that period without violating
WMX's covenant in this Section 9.1(f) and shall have no liability on
account of this Section 9.1(f) by reason of entering into such
agreement or consummating such sale. ServiceMaster shall provide WMX
once each calendar quarter with a written notice reminding WMX of
WMX's obligations under this paragraph and advising WMX when
ServiceMaster then expects the Reincorporating Merger will occur.
9.2 Other Retained Control Mergers.
(a) In the event ServiceMaster shall engage in any other reorganization,
merger or other business combination which does not involve a Control
Change (as defined in Section 11.3) but which does result in the
conversion of ServiceMaster shares into other shares, the replacement
of previously outstanding ServiceMaster shares in exchange for other
shares (herein called a "Retained-Control Merger") then
32
immediately after such Merger: (i) the entity which shall issue the
shares issuable in such Merger ("New ServiceMaster") shall have all
rights granted to "ServiceMaster" under this Agreement and shall be
subject to all obligations of ServiceMaster under this Agreement and
the term "ServiceMaster" as used in this Agreement shall thereafter
refer to New ServiceMaster; (ii) the shares issued in such Merger in
exchange for ServiceMaster shares shall after such merger become
"ServiceMaster shares" for purposes of this agreement (and all other
shares then outstanding or thereafter issued by New ServiceMaster
shall also be deemed "ServiceMaster shares"); (iii) this Agreement
shall remain in effect with respect to WMX, the shares issuable to WMX
in the Merger, and all other ServiceMaster Shares thereafter
beneficially owned by WMX; and (iv) the consummation of the Merger
shall not otherwise limit or impair the applicability of this
Agreement in any respect.
(b) ServiceMaster shall take all steps necessary to cause New
ServiceMaster to be fully bound by all provisions of this Agreement to
the same extent as if New ServiceMaster had originally executed this
Agreement in the capacity of ServiceMaster.
(c) In the event ServiceMaster shall spin off a business unit which shall
have produced more than one third of its revenues or earnings during
the four fiscal quarters most recently ended prior to such spin off or
shall engage in any other transaction with similar substantive effect,
then (i) both the enterprise which shall have spun off or otherwise
distributed those shares and the enterprise which shall be spun off
shall each be deemed "ServiceMaster" for purposes of this Agreement
and (ii) each enterprise shall be deemed to be subject to a separate
agreement identical to this Agreement and for purposes of its
agreement shall be deemed to be New ServiceMaster and subject to the
same rights and benefits contemplated for New ServiceMaster under the
preceding Section 9.2(a).
(d) ServiceMaster Board.
(1) From the date of this Agreement until the earlier to occur of the
Reincorporating Merger or any other Retained-Control Merger, each
of the terms "Board", "Board of Directors", "ServiceMaster
Board", and other similar terms means the Board of Directors of
ServiceMaster Management Corporation.
(2) At the time the Reincorporating Merger consummates, each of the
terms "Board", "Board of Directors", "ServiceMaster Board", and
other similar terms shall change when applied as of a time after
such consummation and
33
prior to any change made under the next paragraph to mean the
Board of Directors of ServiceMaster Incorporated.
(3) Upon the consummation of any Retained-Control Merger other than
the Reincorporating Merger, each of the terms "Board", "Board of
Directors", "ServiceMaster Board", and other similar terms shall
change when applied as of a time after such consummation and
prior to any change made under the next paragraph to mean the
Board of Directors or other analogous governing body which shall
govern the entity which shall emerge from such Merger as "New
ServiceMaster" under the provisions in Section 9.2(a).
10. LEGENDS.
Each certificate evidencing WM Shares and each certificate issued in
exchange for or upon the transfer of any WM Shares (if such shares continue to
be WM Shares) shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"The securities represented by this certificate are subject to certain
voting, transfer and other restrictions prescribed by a Relationship
Agreement dated December 31, 1995, with WMX Technologies, Inc. A copy
of such Relationship Agreement will be furnished without charge by the
issuer of these securities upon written request."
The legend set forth above shall be removed from the certificates evidencing any
ServiceMaster Shares which cease to be WM Shares by means of Transfers which do
not breach this Agreement.
11. AGREEMENT TERM.
11.1 General Rule.
(a) This Agreement shall terminate on the first to occur of (i) the first
day after WMX shall have ceased to be a 1% Owner and shall not have
been a 1% Owner at any time during the preceding 36 consecutive
calendar months or (ii) January 1, 2030.
(b) After termination of this Agreement, no party shall have any rights or
obligations under or by reason of this Agreement provided that (i)
each party shall have the right to prosecute claims which shall have
arisen or accrued under this Agreement prior to such termination and
to be reimbursed for the cost of prosecuting such claims to
34
the extent provided in Section 13 and (ii) each party shall be liable
for any such claims asserted against it to the extent such claims are
valid.
(c) For purposes of this Agreement, a person shall be deemed to be a 1%
Owner if such person shall beneficially own at least 1% of the
ServiceMaster shares then outstanding or shall beneficially own shares
representing at least 1% of the aggregate voting power of all
ServiceMaster shares then outstanding.
11.2 Transition Period.
(a) Except as otherwise provided in this Section 11.2, the parties shall
not be obligated to comply with the requirements of this agreement
during any period (a "Transition Period") during which WMX is not a 5%
Owner.
(b) During the Transition Period, the parties shall continue to have the
rights and obligations prescribed by parts 6 - 13 of this Agreement.
(c) If requested by ServiceMaster at any time during a Transition Period
or after the termination of this Agreement, WMX shall cause WMX's
representative to resign from the ServiceMaster Board promptly after
actual delivery of such request to WMX.
(d) If WMX again becomes a 5% Owner prior to the termination of this
Agreement, then (i) WMX shall promptly notify ServiceMaster of such
fact and (ii) the parties shall again be obligated by all the
provisions in this Agreement until the earlier of the time WMX again
ceases to be a 5% Owner or the end of the agreement term prescribed in
Section 11.1.
11.3 Control Change.
(a) If a Control Change shall occur, then all rights and obligations of
the parties under this Agreement shall terminate upon such occurrence
except that
(1) WMX shall continue to exercise the rights granted under part 7
until WMX ceases to be a 1% owner and until WMX ceases to be a 1%
owner, parts 8 -13 shall remain in effect, and
(2) So long as WMX shall be a 5% Owner, WMX shall continue to be
entitled to Board representation in accordance with Part 1, and
35
(3) the parties shall have the rights available under the proviso in
Section 11.1(b).
(b) Tender Offer Control Change. A "Control Change" shall be deemed to have
occurred if and when a single person or a group of persons acting in
concert shall make a tender offer for ServiceMaster or shall otherwise
purchase ServiceMaster shares and after such tender offer or purchase such
person or group shall have ownership of a majority of ServiceMaster's
outstanding shares.
(c) Proxy Fight Control Change. A Control Change shall also be deemed to have
occurred if and when a majority of positions on the ServiceMaster Board
shall be filled with Takeover Directors. A person shall be deemed to be a
Takeover Director for purposes of this Agreement if such person shall have
been elected to the Board in a proxy contest in which such person's
election was opposed by ServiceMaster.
(d) Merger Control Change. A "Control Change" shall also be deemed to have
occurred if and when the following conditions are satisfied:
(1) ServiceMaster shall engage in any merger or other business combination
with another enterprise; and
(2) substantially all of the businesses owned directly or indirectly by
ServiceMaster prior to such combination shall be owned directly or
indirectly by the ultimate parent corporation which shall emerge from
such combination (the "acquiring parent"); and
(3) a majority of the shares issued by the acquiring parent corporation
shall be neither (a) shares which shall have been issued by
ServiceMaster prior to such combination or (b) shares issued in such
combination in exchange for shares which shall have been issued by
ServiceMaster prior to such combination; and
(4) within six months after such combination a majority of the positions
on the board of directors of the acquiring parent shall be held by
persons who were not directors of ServiceMaster prior to such
combination for any reason other than due to normal retirement, death
or resignation of directors in the ordinary course.
36
12. INTERPRETATION OF THIS AGREEMENT.
12.1 Additional Definitions. Each of the following terms has the meaning
it is given below whenever it is used in this agreement:
Affiliate. A person shall be deemed an "affiliate" of any other
person if such person shall, directly or through any number of
intermediaries, (a) control such other person, (b) be controlled by such
other person, or (c) be controlled by the same person(s) who shall
ultimately control such other person. For purposes of the preceding
sentence a particular person shall be deemed to control another person if
(i) the particular person is the director or indirect owner of a majority
of the ownership interest in the other person or (ii) the particular person
has the power (directly or indirectly) to appoint or elect (either at one
time or over time) (A) a majority of the members of the board of directors
of the other person or (B) the person or body having equivalent authority
over the other person. Notwithstanding the preceding provisions, none of
an organization's directors or employees shall be deemed an affiliate of
that organization for purposes of this Agreement. No ERISA Plan shall be
deemed to be an affiliate of WMX for purposes of this Agreement.
Business Day. For purposes of this Agreement, a day shall be a
"business day" unless it shall be (i) a Saturday or Sunday or (ii) a day
upon which the New York Stock Exchange is not open for trading.
Exchange Act. The term "Exchange Act" means the Securities Exchange
Act of 1934 as constituted at the time such term shall be applied and any
other federal law in force at such time which shall at such time have
superseded all or any part of the Exchange Act as constituted on the date
hereof or which shall govern any activity governed by the Exchange Act as
constituted on the date hereof.
Relationship Agreements. The term "Relationship Agreements" means
this Agreement and the following additional agreements made by WMX,
ServiceMaster and certain of their affiliates contemporaneously with this
Agreement: the Contribution Agreement; the WM Option Agreement; and the
Cross-Marketing Agreement.
Securities Act. The term "Securities Act" means the Securities Act of
1933 as amended at the time as of which such term shall be applied and any
other federal law which shall at such time have superseded all or any part
of the Securities Act as constituted on the date hereof or which shall
govern any activity governed by the Securities Act as constituted on the
date hereof.
Securities Laws. The term "Securities Laws" means all of the
following laws as constituted at the time as of which the term shall be
applied: The Securities Act; the
37
Exchange Act; all other federal and state laws governing the offer, sale,
purchase or other activities involving securities; and all governmental
regulations and requirements issued or arising under any of these laws.
ServiceMaster. Prior to the first to occur of the Reincorporating
Merger or another Non-Takeover Merger, the term "ServiceMaster" shall mean
ServiceMaster Limited Partnership. Thereafter the term shall have the
meaning prescribed in part 9 of this Agreement.
Transfer. The term "Transfer" whenever it is used in this Agreement
designates and includes any sale, transfer, assignment, pledge,
hypothecation or other direct or indirect disposition of an interest in a
security.
12.2 Severability. To the extent permitted by applicable law, each party
hereby waives any provision of any law or other governmental requirement which
would otherwise render any provision of this Agreement prohibited or
unenforceable in any respect. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be valid and enforceable
under applicable law, but if any provision of this Agreement shall be held to be
prohibited by or unenforceable under applicable law, (i) such provision shall be
applied to accomplish the objectives of the provision as originally written to
the fullest extent permitted by law and (ii) all other provisions of this
Agreement shall remain in full force and effect. Without limiting by
implication the generality of the foregoing, in the event that the covenant in
Section 4.2 shall for any reason be held unenforceable in connection with any
contested election of directors, then the votes represented by the WMX Voting
Shares shall be distributed among the candidates for election in the same
proportion as the votes cast by persons who are not 5% Owners at the time of
that election.
12.3 Complete Agreement. The Relationship Agreements contain the complete
agreement between the parties relating in any way to the subject matter of those
Agreements and supersede any prior understandings, agreements or representations
by or among the parties, written or oral, which may have related to such subject
matter in any way.
12.4 No Oral Commitments. No amendment, waiver, modification or
termination of this Agreement shall be effective or enforceable unless it is set
forth in writing and signed by the party against whom it is sought to be
enforced. No party hereto shall have the right to rely upon or enforce any
representation, warranty, or agreement made by any other person before, on or
after the date hereof and relating to or impacting any of the subjects covered
by this Agreement unless such representation, warranty or agreement shall be set
forth in a writing which shall have been signed by the person to be held
responsible for such representation, warranty or agreement. No delay or
omission in exercising any right hereunder shall operate as a waiver of such
right or of any other right. A waiver upon any one occasion shall not be
construed as a bar or waiver of any right or remedy on any future occasion. All
of the rights and remedies of the parties hereto whether
38
evidenced hereby or by any other agreement, instrument or paper or whether
granted by law, shall be cumulative and may be exercised singly or concurrently.
12.5 No Strict Construction. No rule of strict construction, rule
resolving ambiguities against the person who drafted the provision giving rise
to such ambiguities, or other such rule of interpretation shall be applied
against any party with respect to this Agreement.
12.6 Captions. The captions used in this Agreement are for convenience
only, do not constitute a part of this Agreement and shall not be deemed to
limit, characterize or affect in any way any of the provisions of this
Agreement, and all of the provisions of this Agreement shall be enforced and
construed as if no captions had been used in this Agreement.
12.7 Counterparts. This Agreement shall be come effective when at least
one copy of this Agreement shall have been signed by ServiceMaster and delivered
to WMX and at least one copy of this Agreement shall have been signed by WMX and
delivered to ServiceMaster. A particular party's signature on a copy of this
Agreement in the possession of any other unaffiliated party shall constitute an
acknowledgment by that particular party that the particular party has received
one or more copies of this Agreement bearing the signatures of all other
parties. Two or more duplicate originals of this agreement may be signed by the
parties, and in such a case, each duplicate copy shall be deemed an original but
all of the copies together shall be deemed to constitute one and the same
agreement.
12.8 No Implied Limitation. The word "including" whenever it is used in
this Agreement shall be interpreted to mean "including but not limited to." No
provision in this Agreement shall be construed to limit by implication the scope
otherwise indicated by any other provision in this Agreement.
12.9 Miscellaneous Interpretive Rules. Whenever the context may require,
any pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa. Words such as "herein", "hereinafter",
"hereof", "hereto", "hereby",and "hereunder" shall, unless the context otherwise
requires, be construed to refer to this Agreement. Except as otherwise
explicitly indicated, each reference to number or letter or a combination
thereof used to identify a portion of this Agreement shall be construed to refer
to all provisions in this Agreement marked by such number, letter or combination
or by an identifier which begins with such number, letter or combination.
12.10 No Circumvention.
(a) No WMX affiliate shall take any action which WMX is prohibited from
taking under the terms of this Agreement.
39
(b) No person shall be permitted to do indirectly by means of any
transaction or series of transactions, scheme, artifice, device or
contrivance, no matter how structured or labeled, anything which such
person may not do directly under this Agreement.
12.11 No Implied Purchase Obligations or Sale Restrictions. Nothing in
this Agreement or any other agreement or anything else shall be deemed to create
any express or implied (i) obligation by ServiceMaster to purchase any of its
shares expect to the extent ServiceMaster may become so obligated through
ServiceMaster's election to exercise its first refusal right or (ii) limitation
on ServiceMaster's right to issue or sell shares at such times, in such manner
and on such terms as ServiceMaster shall desire.
13. MISCELLANEOUS.
13.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware, without giving
effect to any choice of law or conflict of law rules or provisions (whether of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than Delaware.
13.2 Assignment. Except as otherwise provided herein, each party shall be
entitled to assign its rights under this Agreement to any other person but such
assignment shall not release the assignor of its obligation under this Agreement
(whether arising prior to or after such assignment). This Agreement shall inure
to the benefit of and be binding upon the successors in interest to each party
to this Agreement.
13.3 Consideration. WMX hereby acknowledges that it has made the
commitments and other covenants in this Agreement in order to induce
ServiceMaster to issue the ServiceMaster shares and the option identified in
Background Paragraph B and that those commitments and other covenants are
supported by adequate consideration. Each of the parties hereby (i)
acknowledges and warrants to the other parties that such party intends and
agrees to be bound by every obligation which this Agreement or any of the other
New Relationship Agreements purports to place upon such party and (ii) covenants
that such party will never assert (whether as a defense against any injunction
sought against it, as a defense to any claim brought against it or otherwise)
that any provision in any of the New Relationship Agreements is not enforceable
against such party in accordance with its terms or that any of the New
Relationship Agreements is not legal, valid, or binding in whole or in part.
13.4 Remedies.
40
(a) WMX hereby agrees that in the event WMX or any of its affiliates fails
to comply with any provision in this Agreement which by its terms
applies to WMX or any of its affiliates then: (i) money damages and
any other remedies which might be available to ServiceMaster at law
would be inadequate and (ii) ServiceMaster shall be entitled to
specific enforcement of such provision and to injunctive relief to
prevent any prospective violation of this Agreement, and (iii)
ServiceMaster shall not be required to post any bond or other security
in connection with any such specified performance or other injunctive
relief.
(b) ServiceMaster hereby agrees that in the event ServiceMaster or any of
its affiliates fails to comply with any provision in this Agreement
which by its terms applies to ServiceMaster or any of its affiliates
then: (i) money damages and any other remedies which might be
available to WMX at law would be inadequate and (ii) WMX shall be
entitled to specific enforcement of such provision and to injunctive
relief to prevent any prospective violation of this Agreement, and
(iii) WMX shall not be required to post any bond or other security in
connection with any such specified performance or other injunctive
relief.
(c) Each party to this agreement shall reimburse the other party for all
reasonable attorneys fees and other costs which the other party shall
reasonably incur to enforce the other party's rights under this
Agreement.
* * * * *
41
Each party has executed this document at the place provided below in order
to evidence such party's agreement to be bound by all of its terms.
WMX TECHNOLOGIES, INC.
By:
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Name:
-----------------------
Title:
----------------------
WMI URBAN SERVICES, INC.
By:
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Name:
-----------------------
Title:
----------------------
SERVICEMASTER LIMITED PARTNERSHIP
By: ServiceMaster Management Corporation
As Managing General Partner
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
------------------------
Title: Sen. V.P. -- C.F.O.
-----------------------
SERVICEMASTER INCORPORATED OF DELAWARE
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
-----------------------
Title: Vice President
----------------------
Each party has executed this document at the place provided below in order
to evidence such party's agreement to be bound by all of its terms.
WMX TECHNOLOGIES, INC.
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------
Title:
----------------------
WMI URBAN SERVICES, INC.
By: /s/ Xxxx X. Xxxxx
------------------------------
Name: Xxxx X. Xxxxx
-----------------------
Title:
----------------------
SERVICEMASTER LIMITED PARTNERSHIP
By: ServiceMaster Management Corporation
As Managing General Partner
By:
------------------------------
Name:
------------------------
Title:
-----------------------
SERVICEMASTER INCORPORATED OF DELAWARE
By:
------------------------------
Name:
-----------------------
Title:
----------------------
