Contribution Agreement
This Contribution Agreement has been made December 31, 1995
by: WMX Technologies, Inc. a Delaware corporation ("WMX"): WMI
Urban Services, Inc. ("WMUS"); ServiceMaster Limited Partnership,
a Delaware limited partnership ("ServiceMaster"); and ServiceMaster
Consumer Services Limited Partnership ("ServiceMaster Consumer
Services").
Background
A. WMUS presently owns 308,078 limited partner shares in
ServiceMaster Consumer Services (the "WM Consumer Shares") which
represent approximately 28% of the ownership interest in
ServiceMaster Consumer Services. ServiceMaster indirectly owns
substantially all of the remaining ownership interest in
ServiceMaster Consumer Services.
B. WMX indirectly owns the entire ownership interest in WMUS
and is WMUS' ultimate parent corporation.
C. ServiceMaster is a limited partnership whose partnership
shares are publicly traded on the New York Stock Exchange.
D. On the date hereof, the parties have engaged in a series
of interrelated steps to restructure their relationships.
E. Pursuant to this Agreement:
(1) WMUS has contributed the WM Consumer Shares to
ServiceMaster in a transaction intended to be tax-free;
(2) ServiceMaster has in exchange issued to WMUS
(a) 18,107,143 partnership shares (the "WM Partnership
Shares") and
(b) An option (the "WM Option") entitling WMUS to
purchase an additional 1,250,000 partnership shares
from ServiceMaster at the price and terms and
subject to the conditions specified in an Option
Agreement (the "WM Option Agreement") made by WMUS,
ServiceMaster Incorporated of Delaware ("SMI") and
ServiceMaster contemporaneous with this Agreement.
F. Contemporaneous with this Agreement, ServiceMaster, WMX,
WMUS, and SMI have entered into a Relationship Agreement to govern
aspects of their on going relationship.
G. This Contribution Agreement, the WM Option Agreement, and
the Relationship Agreement which have been made by ServiceMaster
and WMX on the date hereof are herein collectively called the "New
Relationship Agreements."
Agreement
The parties agree as follows:
1. Contribution of WM Consumer Shares to ServiceMaster.
1.1 Contribution. WMUS hereby contributes the WM Consumer
Shares to ServiceMaster.
1.2 Acceptance. ServiceMaster hereby accepts the WM
Consumer Shares from WMUS and herewith delivers to WMUS in exchange
the equity interests in ServiceMaster specified in Part 2.
1.3 Consent. ServiceMaster Consumer Services hereby consents
to the contribution of the WM Consumer Shares to ServiceMaster.
1.4 Release. It is the intention of the parties that upon
execution of this Agreement all interest of every kind of which WMX
or any of its affiliates may have in ServiceMaster Consumer
Services shall be contributed to ServiceMaster, and by their
execution of this Agreement both WMUS and WMX hereby convey to
ServiceMaster any other right, title or interest which either of
them may have in ServiceMaster Consumer Services whether or not now
known. WMX hereby agrees that in the event it shall be established
that any other WMX affiliate has any interest in ServiceMaster
Consumer Services, WMX will cause that interest to be contributed
to ServiceMaster as of the time of the execution of this Agreement.
WMX and WMUS hereby waive and release any other rights they may
have under or by reason of the Amended and Restated Agreement of
Limited Partnership of ServiceMaster Consumer Services (including
but not limited to any rights under Article 15 of that Agreement)
or any other agreement or understanding relating to their rights
with respect to ServiceMaster Consumer Services except for the
rights cited in Section 1.5 of this Agreement.
1.5 Tax Distribution; Information. Not later than March 15,
1996, ServiceMaster Consumer Services shall make one or more
distributions to WMUS which are sufficient (when added to all tax
distributions related to the year 1995 previously made by
ServiceMaster Consumer Services to WMUS) to provide WMUS with
distributions related to the taxable income of ServiceMaster
Consumer Services for the year 1995 in an amount which is
determined in a manner which is consistent with comparable
distributions in respect of prior year's tax distributions. WMX
shall provide ServiceMaster with such information as ServiceMaster
may reasonably request to determine the amount which should be
distributed. ServiceMaster Consumer Services shall provide WMX all
information relevant to the period in which WMUS held its
investment in ServiceMaster Consumer Services as WMX shall request
and to which it was entitled under the terms of the ServiceMaster
Consumer Services Amended and Restated Agreement of Limited
Partnership.
2. Issuance of Partnership Shares and Grant of Option. In
exchange for the contribution made by WMUS of the WM Consumer
Shares under the preceding Part 1:
(a) ServiceMaster herewith issues to WMUS 18,107,143
ServiceMaster Partnership Shares (herein called the "WM
Partnership Shares"); and
(b) ServiceMaster herewith grants the WM Option to WMUS by
executing and delivering the WM Option Agreement to WMUS
contemporaneous with the execution of this Agreement.
3. ServiceMaster Warranties.
ServiceMaster hereby warrants to WMX that:
3.1 Organization of ServiceMaster. ServiceMaster is duly
organized, validly existing and is in good standing as a Delaware
limited partnership.
3.2 Organization of ServiceMaster's Managing General Partner.
The managing general partner of ServiceMaster is ServiceMaster
Management Corporation. ServiceMaster Management Corporation is
duly organized, validly existing and is in good standing as a
Delaware corporation.
3.3 No Conflict. The execution and delivery of the New
Relationship Agreements, the issuance of the Partnership Shares
under Part 2 of this Agreement and the granting of the WM Option do
not contravene and the issuance of the WM Option Shares upon
occurrence of the WM Option will not contravene: (i) any provision
of ServiceMaster's certificate of limited partnership or
ServiceMaster's agreement of limited partnership; (ii) the
certificate of incorporation of ServiceMaster Management
Corporation or the bylaws of ServiceMaster Management Corporation;
(iii) the certificate of incorporation or bylaws of SMI; (iv) any
agreement to which ServiceMaster, ServiceMaster Management
Corporation or SMI is a party; or (v) any provision of any law or
regulation applicable to ServiceMaster, ServiceMaster Management
Corporation or SMI.
3.4 Authorization. The execution and delivery of each of the
New Relationship Agreements and the consummation of the
transactions contemplated by each of the New Relationship
Agreements (including, but not limited to, the issuance of the WM
Partnership Shares and the granting of the WM Option) has been duly
authorized by the Board of Directors of ServiceMaster Management
Corporation. Each of ServiceMaster, SMI and ServiceMaster Consumer
Services has duly executed and delivered each of the New
Relationship Agreements to which it is a party.
3.5 WM Shares as Fully Paid and Non-Assessable. The WM
Partnership Shares have been validly issued and are fully paid and
non-assessable. The shares which will be issued to WMUS upon a
valid exercise of the WM Option (the "WM Option Shares") will upon
issuance and upon receipt by ServiceMaster or SMI (as the case may
be) of the consideration prescribed by the WM Option Agreement be
fully paid and nonassessable. ServiceMaster has obtained all
approvals necessary for listing (subject to notice of issuance) on
the New York Stock Exchange of the WM Partnership Shares and the WM
Option Shares (which are collectively called the "WM Shares" in
this Agreement).
3.6 No Adverse Interest. The WM Partnership Shares have been
issued (and the WM Option Shares will when issued be) free and
clear of all liens, claims, encumbrances and restrictions, except
that the WM Shares (i) have not been registered under either state
or federal securities laws and, therefore, the transferability of
the WM Shares is restricted as provided by such laws, (ii) are
subject to the right of first refusal and other restrictions
specified in the Relationship Agreement or in ServiceMaster's
Partnership Agreement.
3.7 Financial Statements. The financial statements of
ServiceMaster which have been included in its Annual Report on Form
10-K for 1994 (the "1994 10-K") and its Quarterly Report on Form
10-Q for the periods ending September 30, 0000 (xxx "xxxxx xxxxxxx
00-X") were prepared in accordance with generally accepted
accounting principles applied on a consistent basis and present
fairly the financial condition and results of operations of
ServiceMaster for the dates and as of the periods stated therein
except that the financial statements included in the third quarter
10-Q omits footnotes and condenses information as permitted by the
rules applicable to the preparation of 10-Q reports and are subject
to adjustments to be made in the course of the preparation of
ServiceMaster's annual financial statements for 1995.
3.8 No Knowledge of Adverse Matters. ServiceMaster is not
aware of any fact or set of facts or trend or known uncertainty
which has materially and adversely affected or may reasonably be
expected to materially and adversely affect ServiceMaster's
business, financial condition or results of operations (whether
actual or prospective) which are not disclosed by the financial
statements referred to above, by information either publicly
disclosed by ServiceMaster or otherwise communicated in writing by
ServiceMaster to a senior officer of WMX.
3.9 ServiceMaster's Public Reports Are Not Misleading.
Neither the 1994 10-K nor the third quarter 10-Q makes any untrue
statement of a material fact or omits to state a material fact
which is necessary in order to make statements made, in the
circumstances under which they were made, not misleading.
4. Private Placement Procedures.
4.1 Information. WMX acknowledges that ServiceMaster has
advised WMX that ServiceMaster has been prepared to provide any
information relevant to the decision to dispose of the WM Consumer
Shares, to acquire the WM Partnership Shares or the WM Option, or
other investment decision inherent in the New Relationship
Agreements (herein collectively called "relevant information"),
that ServiceMaster has provided WMX with all relevant information
which WMX has requested, and that there is no relevant information
which WMX or WMUS desires but has not received.
4.2 Private Placement Restrictions. Each of WMX and WMUS
understands that:
(a) neither the WM Partnership Shares nor the WM Option have
been registered or qualified under the Securities Act of
1933 or any other Securities Laws and that the shares
issuable upon exercise of the WM Option will not be so
registered when they are issued;
(b) ServiceMaster's obligations to register the WM
Partnership Shares and the WM Option Shares are limited
to those set forth in the Relationship Agreement; and
(c) both the Securities Laws and the Relationship Agreement
impose restrictions on the offer and sale of the WM
Shares.
4.3 Acknowledgment of Good Private Placement. Each of WMX and
WMUS warrants that it is familiar with the Securities Law
requirements relevant to the acquisition of the WM Consumer Shares
by ServiceMaster and the issuance by ServiceMaster of the WM
Partnership Shares and the WM Option and that (i) each of WMX and
WMUS has concluded that no registration under the Securities Act of
1933 is required in connection of any of such actions and (ii)
neither WMX nor WMUS has any reason to believe that such actions do
not comply with any other requirements of the Securities Laws. The
term "Securities Laws" whenever it is used in this Agreement means
all of the following laws as constituted at the time as of which
the term shall be applied: The Securities Act of 1933; the
Securities Exchange Act of 1934; 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.
5. WM Warranties. Each of WMX and WMUS hereby warrants to
ServiceMaster and ServiceMaster Consumer Services that:
5.1 Organization. It is duly organized, validly existing and
is in good standing as a Delaware corporation.
5.2 Authorization. The execution and delivery of each of the
New Relationship Agreements and the consummation of the
transactions contemplated by each of the New Relationship
Agreements has been duly authorized by its board of directors and
(in the case of WMUS) by its sole stockholder. Each of WMX and
WMUS has duly executed and delivered each of the New Relationship
Agreements to which it is a party.
5.3 No Adverse Interest. The WM Consumer Shares have been
conveyed to ServiceMaster free and clear of all liens, claims,
encumbrances and restrictions, except that (i) the WM Consumer
Shares are subject to the restrictions specified in the partnership
agreement governing ServiceMaster Consumer Services and
restrictions on resale under securities laws and (ii) no warranty
is made with respect to any liens, claims, encumbrances and
restrictions to which such shares may have become subject before
they were issued to WMUS (provided that WMX warrants that it has no
knowledge of any such preexisting liens, claims, encumbrances or
restrictions).
5.4 No Conflict. The execution and delivery of the New
Relationship Agreements and the disposition of the WM Consumer
Shares does not contravene: (i) any provision of the certificate of
incorporation or bylaws of WMX or WMUS; (iii) any agreement to
which WMX or WMUS is a party; or (iv) any provision of any law or
regulation applicable to WMX or WMUS.
6. General Provisions
6.1 Interpretative Rules. The provisions contained in
Sections 12.2 - 12.10 of the Relationship Agreement are
incorporated herein by reference, for purposes of such
incorporation shall be deemed to refer to this Agreement, and as so
incorporated shall govern this Agreement to the same extent as if
set forth at this place.
6.2 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.
6.3 Survival of Warranties. All warranties in this Agreement
and those in each New Relationship Agreement shall survive the
execution, delivery and performance of this Agreement and the New
Relationship Agreements and the closing of the transactions
contemplated hereby and thereby.
* * * * * * * * * *
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/ Xxxx X. Xxxxx
Name:________________________
Title:_______________________
WMI URBAN SERVICES, INC.
By: /s/ Xxxx X. Xxxxx
Name:________________________
Title:_______________________
SERVICEMASTER LIMITED PARTNERSHIP
By: ServiceMaster Management Corporation
As Managing General Partner
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title:Sr. V.P. - C.F.O.
SERVICEMASTER CONSUMER SERVICES LIMITED PARTNERSHIP
By: ServiceMaster Consumer Services, Inc.
As Managing General Partner
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Vice President
