Exh. 1.1 THE SERVICEMASTER COMPANY
DEBT SECURITIES
Underwriting Agreement
February 25, 1998
To the Representatives named
in Schedule I hereto of the
Underwriters named in
Schedule II hereto
Ladies and Gentlemen:
The ServiceMaster Company, a Delaware corporation (the "Company"),
proposes to issue and sell to the underwriters named in Schedule II hereto (the
"Underwriters"), for whom you are acting as representatives (the
"Representatives"), the principal amount of its debt securities identified in
Schedule I hereto (the "Securities"), to be issued under the indenture specified
in Schedule I hereto between the Company (as successor, following the merger of
The ServiceMaster Company Limited Partnership ("SMCLP") and ServiceMaster
Limited Partnership ("SMLP") with and into the Company (the "Merger"), to SMCLP
and SMLP and their respective rights and obligations under the Indenture
hereinafter referred to) and the Trustee identified in such Schedule (the
"Trustee") (as heretofore amended or supplemented, and as further amended and
supplemented by the Third Supplemental Indenture (as specified in Schedule I
hereto), the "Indenture"). If the firm or firms listed in Schedule II hereto
include only the firm or firms listed in Schedule I hereto, then the terms
"Underwriters" and "Representatives", as used herein, shall each be deemed to
refer to such firm or firms. The Company and the Company's predecessors, SMCLP
and SMLP (the "Predecessors"), have prepared and filed with the Securities and
Exchange Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement (the file number of which is set forth in Schedule I hereto) on Form
S-3, relating to certain debt securities (the "Shelf Securities") to be issued
from time to time by the Company. The Company has also filed with, or proposes
to file with, the Commission pursuant to Rule 424 under the Securities Act (i) a
prospectus dated February 25, 1998 to reflect, among other things, the Merger
and (ii) a prospectus supplement specifically relating to the Securities. The
registration statement as amended to the date of this Agreement is hereinafter
referred to as the "Registration Statement" and the related prospectus cited in
clause (i) above covering the Shelf Securities in the form first used to confirm
sales of the Securities is hereinafter referred to as the "Basic Prospectus".
The Basic Prospectus as supplemented by the prospectus supplement specifically
relating to the Securities in the form first used to confirm sales of the
Securities is hereinafter referred to as the "Prospectus". If the Company has
filed an abbreviated registration statement pursuant to Rule 462(b) under the
Securities Act (the "Rule 462 Registration Statement"), then any reference
herein to the term "Registration Statement" shall be deemed to include such Rule
462 Registration Statement. Any reference in this Agreement to the Registration
Statement, the Basic Prospectus, any preliminary form of Prospectus (a
"preliminary prospectus") previously filed with the Commission pursuant to Rule
424 or the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
Securities Act which were filed under the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the "Exchange Act") on or before the date of this Agreement or
the date of the Basic Prospectus, any preliminary prospectus or the Prospectus,
as the case may be; and any reference to "amend", "amendment" or "supplement"
with respect to the Registration Statement, the Basic Prospectus, any
preliminary prospectus or the Prospectus shall be deemed to refer to and include
any documents filed under the Exchange Act after the date of this Agreement, or
the date of the Basic Prospectus, any preliminary prospectus or the Prospectus,
as the case may be, which are deemed to be incorporated by reference therein.
The Company hereby agrees with the Underwriters as follows:
1. The Company agrees to issue and sell the Securities to the several
Underwriters, as hereinafter provided, and each Underwriter, on the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated agrees to purchase, severally and not jointly, from the
Company the respective principal amount of Securities set forth opposite such
Underwriter's name in Schedule II hereto at the purchase price set forth in
Schedule I hereto plus accrued interest, if any, from the date specified in
Schedule I hereto to the date of payment and delivery.
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2. The Company understands that the several Underwriters intend (i)
to make a public offering of their respective portions of the Securities and
(ii) initially to offer the Securities upon the terms set forth in the
Prospectus.
3. Payment for the Securities shall be made by wire transfer in
immediately available funds to the account specified by the Company to the
Representatives, no later than noon the Business Day (as defined below) prior to
the Closing Date (as defined below), on the date and at the time and place set
forth in Schedule I hereto (or at such other time and place on the same or such
other date, not later than the fifth Business Day (as defined below) thereafter,
as you and the Company may agree in writing). As used herein, the term "Business
Day" means any day other than a day on which banks are permitted or required to
be closed in New York City. The time and date of such payment and delivery with
respect to the Securities are referred to herein as the "Closing Date".
Payment for the Securities shall be made against delivery to the
nominee of The Depository Trust Company for the respective accounts of the
several Underwriters of the Securities of one or more global notes (the "Global
Note") representing the Securities, with any transfer taxes payable in
connection with the transfer to the Underwriters of the Securities duly paid by
the Company. The Global Note will be made available for inspection by the
Representatives at the office of X.X. Xxxxxx Securities Inc., 00 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, not later than 1:00 P.M., New York City time, on the
Business Day prior to the Closing Date.
4. The Company represents and warrants to each Underwriter that:
(a) the Registration Statement has been declared effective by
the Commission under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceeding for that purpose has been instituted or, to the knowledge of
the Company, threatened by the Commission; and the Registration
Statement and Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) comply, or
will comply, as the case may be, in all material respects with the
Securities Act and the Trust Indenture Act of 1939, as amended, and the
rules and regulations of the Commission thereunder (collectively, the
"Trust Indenture Act"), and do not and will not, as of the applicable
effective date as to the Registration Statement and any amendment or
supplement thereto and as of the date of the Prospectus and any
amendment or supplement thereto, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and the
Prospectus, as amended or supplemented at the Closing Date, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading; provided, however, that the foregoing representations and
warranties shall not apply to (i) that part of the Registration
Statement which constitutes the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of the Trustee,
and (ii) statements or omissions in the Registration Statement or the
Prospectus made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through the Representatives expressly for use therein;
(b) the documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the
case may be, conformed in all material respects to the requirements of
the Securities Act or the Exchange Act, as applicable, and none of such
documents contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading; and any further documents so filed and
incorporated by reference in the Prospectus or any further amendment or
supplement thereto, when such documents become effective or are filed
with the Commission, as the case may be, will conform in all material
respects to the requirements of the Securities Act or the Exchange Act,
as applicable, and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
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(c) the financial statements, and the related notes thereto,
of the Company included or incorporated by reference in the
Registration Statement and the Prospectus present fairly the
consolidated financial position of the Company and its consolidated
subsidiaries as of the dates indicated and the results of their
operations and the changes in their consolidated cash flows for the
periods specified; said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis, and the supporting schedules included or incorporated
by reference in the Registration Statement present fairly the
information required to be stated therein; and the pro forma financial
information, and the related notes thereto, if any, included or
incorporated by reference in the Registration Statement and the
Prospectus has been prepared in accordance with the applicable
requirements of the Securities Act and the Exchange Act, as applicable
and is based upon good faith estimates and assumptions believed by the
Company to be reasonable;
(d) since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
been any material change in the capital stock (other than as a result
of the reclassification of the partnership equity capital of SMLP to
equity accounts of the Company as a result of the Merger) or long-term
debt of the Company or any of its subsidiaries, or any material adverse
change, or any development involving a prospective material adverse
change, in or affecting the general affairs, business, prospects,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole,
otherwise than as set forth or contemplated in the Prospectus; and
except as set forth or contemplated in the Prospectus neither the
Company nor any of its subsidiaries has entered into any transaction or
agreement (whether or not in the ordinary course of business) material
to the Company and its subsidiaries taken as a whole;
(e) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with power and authority (corporate and
other) to own its properties and conduct its business as described in
the Prospectus, and has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws
of each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, other than
where the failure to be so qualified or in good standing would not have
a material adverse effect on the Company and its subsidiaries taken as
a whole; as a result of the Merger, the separate existence of SMLP and
SMCLP ceased and the Company has assumed and succeeded to all of the
obligations of the Predecessors under the Indenture, all in accordance
with the provisions of Section 6.02 of the Indenture;
(f) each of the Company's significant subsidiaries (as defined
in the Commission's Regulation S-X) has been duly incorporated or
organized and is validly existing as a corporation or limited
partnership under the laws of its jurisdiction of incorporation or
organization, with power and authority (corporate or partnership and
other) to own its properties and conduct its business as described in
the Prospectus, and has been duly qualified as a foreign corporation or
limited partnership for the transaction of business and is in good
standing under the laws of each jurisdiction in which it owns or leases
properties, or conducts any business so as to require such
qualification, other than where the failure to be so qualified or in
good standing would not have a material adverse effect on the Company
and its subsidiaries taken as a whole; and all the outstanding shares
of capital stock or partnership interests, as the case may be, of each
significant subsidiary of the Company have been duly authorized and
validly issued, are fully-paid and non-assessable, and (except as
described in the Prospectus) are owned by the Company, directly or
indirectly, free and clear of all liens, encumbrances, security
interests and claims;
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(g) this Agreement has been duly authorized, executed and
delivered by the Company;
(h) the Securities have been duly authorized, and, when
executed, authenticated and issued under the Indenture and delivered to
and paid for in accordance with this Agreement, will have been duly
executed, authenticated, issued and delivered by the Company and will
constitute valid and binding obligations of the Company entitled to the
benefits provided by the Indenture; the Indenture has been duly
authorized, executed and delivered by SMCLP and SMLP and qualified
under the Trust Indenture Act and constitutes a valid and binding
instrument; and the Indenture conforms to the descriptions thereof in
the Prospectus;
(i) neither the Company nor any of its subsidiaries is, or
with the giving of notice or lapse of time or both would be, in
violation of or in default under, its Certificate of Incorporation or
By-Laws or agreement of limited partnership, as the case may be, or any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its subsidiaries is a
party or by which it or any of them or any of their respective
properties is bound, except for violations and defaults which
individually and in the aggregate would not reasonably be expected to
have a material adverse effect on the Company and its subsidiaries
taken as a whole; the issue and sale of the Securities and the
performance by the Company of all of its obligations under the
Securities, the Indenture and this Agreement, and the consummation of
the transactions herein and therein contemplated will not conflict with
or result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, that is material for
the Company and its subsidiaries taken as a whole, nor will such action
result in any violation of the provisions of the Certificate of
Incorporation or the By-Laws of the Company or any applicable law or
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company, its subsidiaries
or any of their respective properties; and no consent, approval,
authorization, order, license, registration or qualification of or with
any such court or governmental agency or body is required for the issue
and sale of the Securities or the consummation by the Company of the
transactions contemplated by this Agreement or the Indenture, except
such consents, approvals, authorizations, orders, licenses,
registrations or qualifications as have been obtained under the
Securities Act or the Trust Indenture Act and as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the Securities;
(j) other than as set forth or contemplated in the Prospectus,
there are no legal or governmental investigations, actions, suits or
proceedings pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its subsidiaries or any of
their respective properties or to which the Company or any of its
subsidiaries is or may be a party or to which any property of the
Company or any of its subsidiaries is or may be the subject which, if
determined adversely to the Company or any of its subsidiaries, could
individually or in the aggregate reasonably be expected to have, a
material adverse effect on the general affairs, business, prospects,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries taken as a whole and, to
the best of the Company's knowledge, no such proceedings are threatened
or contemplated by governmental authorities or threatened by others;
and there are no statutes, regulations, contracts or other documents
that are required to be filed as an exhibit to the Registration
Statement or required to be described in the Registration Statement or
the Prospectus which are not filed or described as required;
(k) immediately after any sale of Securities by the Company
hereunder, the aggregate amount of Securities which have been issued
and sold by the Company hereunder and of any securities of the Company
(other than the Securities) that shall have been issued and sold
pursuant to the Registration Statement will not exceed the amount of
securities registered under the Registration Statement;
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(l) Xxxxxx Xxxxxxxx LLP, who have certified certain financial
statements of the SMLP and its subsidiaries are independent public
accountants as required by the Securities Act;
(m) the Company and its subsidiaries have good and marketable
title in fee simple to all items of real property and good and
marketable title to all personal property owned by them, in each case
free and clear of all liens, encumbrances and defects except such as
are described or referred to in the Prospectus or such as do not
materially affect the value of such property and do not interfere with
the use made or proposed to be made of such property by the Company and
its subsidiaries; and any real property and buildings held under lease
by the Company and its subsidiaries are held by them under valid,
existing and enforceable leases with such exceptions as are not
material and do not interfere with the use made or proposed to be made
of such property and buildings by the Company or its subsidiaries;
(n) the Company is not and, after giving effect to the
offering and sale of the Securities, will not be an "investment
company" or, to the Company's knowledge, an entity "controlled" by an
"investment company", as such terms are defined in the Investment
Company Act of 1940, as amended (the "Investment Company Act");
(o) the Company has complied with all provisions of Section
517.075, Florida Statutes (Chapter 92-198, Laws of Florida) relating to
doing business with the Government of Cuba or with any person or
affiliate located in Cuba;
(p) the Company and its subsidiaries have filed (or prior to
the Merger, SMLP and its subsidiaries have filed) all federal, state,
local and foreign tax returns which have been required to be filed and
have paid (or prior to the Merger, SMLP and its subsidiaries have paid)
all taxes shown thereon and all assessments received by them or any of
them to the extent that such taxes have become due and are not being
contested in good faith; and, except as disclosed in the Registration
Statement and the Prospectus, there is no tax deficiency which has been
or might reasonably be expected to be asserted or threatened against
the Company or any of its subsidiaries;
(q) each of the Company and its subsidiaries owns, possesses
or has obtained all licenses, permits, certificates, consents, orders,
approvals and other authorizations from, and has made all declarations
and filings with, all federal, state, local and other governmental
authorities (including foreign regulatory agencies), all
self-regulatory organizations and all courts and other tribunals,
domestic or foreign, necessary to own or lease, as the case may be, and
to operate its properties and to carry on its business as conducted as
of the date hereof, and neither the Company nor any such subsidiary has
received any actual notice of any proceeding relating to revocation or
modification of any such license, permit, certificate, consent, order,
approval or other authorization, except as described in the
Registration Statement and the Prospectus; and each of the Company and
its subsidiaries is in compliance with all laws and regulations
relating to the conduct of its business as conducted as of the date
hereof;
(r) there are no existing or, to the best knowledge of the
Company, threatened labor disputes with the employees of the Company or
any of its subsidiaries which would reasonably be expected to have a
material adverse effect on the Company and its subsidiaries taken as a
whole;
(s) the Company and its subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are
in compliance with all terms and conditions of any such permit, license
or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, reasonably
be expected to have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
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(t) in the ordinary course of its business, the Company
conducts a periodic review of the effect of Environmental Laws on the
business, operations and properties of the Company and its
subsidiaries, in the course of which it identifies and evaluates
associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any permit, license
or approval, any related constraints on operating activities and any
potential liabilities to third parties). On the basis of such review
and except as disclosed in SMLP's Form 10-K for the year ended December
31, 1996, the Company has reasonably concluded that such associated
costs and liabilities would not, singly or in the aggregate, reasonably
be expected to have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(u) each employee benefit plan, within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as
amended, ("ERISA") that is maintained, administered or contributed to
by the Company or any of its affiliates for employees or former
employees of the Company and its affiliates has been maintained in
compliance with its terms and the requirements of any applicable
statutes, orders, rules and regulations, including but not limited to
ERISA and the Internal Revenue Code of 1986, as amended, ("Code"). No
prohibited transaction, within the meaning of Section 406 of ERISA or
Section 4975 of the Code has occurred with respect to any such plan
excluding transactions effected pursuant to a statutory or
administrative exemption. For each such plan which is subject to the
funding rules of Section 412 of the Code or Section 302 of ERISA no
"accumulated funding deficiency" as defined in Section 412 of the Code
has been incurred, whether or not waived, and the fair market value of
the assets of each such plan (excluding for these purposes accrued but
unpaid contributions) exceeded the present value of all benefits
accrued under such plan determined using reasonable actuarial
assumptions.
(v) Each of the Company and its subsidiaries owns or
possesses, or can acquire, or reasonably believes it can acquire, on
reasonable terms, rights adequate to the present operations of the
businesses now operated by it under the patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and
trade names (collectively, the "Intellectual Property") presently
employed by it in connection with the businesses now operated by it,
except to the extent that the failure to own, possess or acquire such
rights would not, singly or in the aggregate, reasonably be expected to
have a material adverse effect on the Company and its subsidiaries
taken as a whole, and, neither the Company nor any of its subsidiaries
has received any notice of infringement of or conflict with asserted
rights of others with respect to any of the foregoing.
5. The Company covenants and agrees with each of the several
Underwriters as follows:
(a) to file the Prospectus in a form approved by you pursuant
to Rule 424 under the Securities Act not later than the Commission's
close of business on the second Business Day following the date of
determination of the offering price of the Securities or, if
applicable, such earlier time as may be required by Rule 424(b);
(b) to furnish to each Representative and counsel for the
Underwriters, a signed copy of the Registration Statement (as
originally filed) and each amendment thereto, in each case including
exhibits and documents incorporated by reference therein and, during
the period mentioned in paragraph (e) below, to furnish each of the
Underwriters as many copies of the Prospectus (including all amendments
and supplements thereto) and documents incorporated by reference
therein as you may reasonably request;
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(c) from the date hereof and prior to the Closing Date, to
furnish to you a copy of any proposed amendment or supplement to the
Registration Statement or the Prospectus, for your review, and not to
file any such proposed amendment or supplement to which you reasonably
object;
(d) to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Securities, and during such
same period, to advise you promptly, and to confirm such advice in
writing, (i) when any amendment to the Registration Statement shall
have become effective, (ii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement
to the Prospectus or for any additional information, (iii) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation or
threatening of any proceeding for that purpose, and (iv) of the receipt
by the Company of any notification with respect to any suspension of
the qualification of the Securities for offer and sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose; and to use its best efforts to prevent the issuance of
any such stop order or notification and, if issued, to obtain as soon
as possible the withdrawal thereof;
(e) if, during such period after the first date of the public
offering of the Securities as in the opinion of counsel for the
Underwriters a prospectus relating to the Securities is required by law
to be delivered in connection with sales by an Underwriter or dealer,
any event shall occur as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein, in
light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if it is necessary to amend or supplement
the Prospectus to comply with law, forthwith to prepare and furnish to
the Underwriters and to the dealers (whose names and addresses you will
furnish to the Company) to which Securities may have been sold by you
on behalf of the Underwriters and to any other dealers upon request,
such amendments or supplements to the Prospectus as may be necessary so
that the statements in the Prospectus as so amended or supplemented
will not, in light of the circumstances when the Prospectus is
delivered to a purchaser, be misleading or so that the Prospectus will
comply with law;
(f) to endeavor to qualify the Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions as you
shall reasonably request and to continue such qualification in effect
so long as reasonably required for distribution of the Securities;
provided that the Company shall not be required to file a general
consent to service of process in any jurisdiction;
(g) to make generally available to its security holders and
to you as soon as practicable an earnings statement which shall satisfy
the provisions of Section 11 (a) of the Securities Act and Rule 158 of
the Commission promulgated thereunder covering a period of at least
twelve months beginning with the first fiscal quarter of the Company
and its subsidiaries occurring after the "effective date" (as defined
in Rule 158) of the Registration Statement;
(h) so long as the Securities are outstanding, to furnish to
you upon request copies of all reports or other communications
(financial or other) furnished to holders of Securities, and copies of
any reports and financial statements furnished to or filed with the
Commission or any national securities exchange;
(i) during the period beginning on the date hereof and
continuing to and including the Business Day following the Closing
Date, not to offer, sell, contract to sell or otherwise dispose of any
debt securities of or guaranteed by the Company which are substantially
similar to the Securities;
(j) to use the net proceeds received by the Company from the
sale of the Securities pursuant to this Agreement in the manner
specified in the Prospectus under the caption "Use of Proceeds";
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(k) whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all costs and expenses incident to the performance of
its obligations hereunder, including without limiting the generality of
the foregoing, all costs and expenses (i) incident to the preparation,
issuance, execution, authentication and delivery of the Securities,
including any expenses of the Trustee, (ii) incident to the
preparation, printing and filing under the Securities Act of the
Registration Statement, the Prospectus and any preliminary prospectus
(including in each case all exhibits, amendments and supplements
thereto), (iii) incurred in connection with the registration or
qualification and determination of eligibility for investment of the
Securities under the laws of such jurisdictions as the Underwriters may
designate (including reasonable fees of counsel for the Underwriters
and their disbursements), (iv) related to any filing with National
Association of Securities Dealers, Inc., (v) in connection with the
printing (including word processing and duplication costs) and delivery
of this Agreement, the Indenture, the Preliminary and Supplemental Blue
Sky Memoranda and any Legal Investment Survey and the furnishing to
Underwriters and dealers of a reasonable number of copies of the
Registration Statement and the Prospectus, (vi) payable to rating
agencies in connection with the rating of the Securities and (vii) the
cost and charges of any transfer agent.
6. The several obligations of the Underwriters hereunder shall be
subject to the following conditions:
(a) the representations and warranties of the Company
contained herein are true and correct on and as of the Closing Date as
if made on and as of the Closing Date and the Company shall have
complied with all agreements and all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date;
(b) the Prospectus shall have been filed with the Commission
pursuant to Rule 424 within the applicable time period prescribed for
such filing by the rules and regulations under the Securities Act; no
stop order suspending the effectiveness of the Registration Statement
shall be in effect, and no proceedings for such purpose shall be
pending before or threatened by the Commission, and all requests for
additional information on the part of the Commission shall have been
complied with to your satisfaction;
(c) subsequent to the execution and delivery of this
Agreement, there shall not have occurred any downgrading, nor shall any
notice have been given of (i) any downgrading, (ii) any intended or
potential downgrading or (iii) any review or possible change that does
not indicate an improvement in the rating accorded any securities of or
guaranteed by the Company by any "nationally recognized statistical
rating organization", as such term is defined for purposes of Rule
436(g)(2) under the Securities Act;
(d) since the respective dates as of which information is
given in the Prospectus there shall not have been any material change
in capital stock or other equity interests (other than as a result of
the reclassification of the partnership equity capital of SMLP and
SMCLP to equity accounts of the Company as a result of the Merger) or
long-term debt of the Company or any of its subsidiaries or any
material adverse change or any development involving a material adverse
change, in or affecting the general affairs, business, prospects,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole,
otherwise than as set forth or contemplated in the Prospectus, the
effect of which in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities on the terms and in the manner contemplated
in the Prospectus; and neither the Company nor any of its subsidiaries,
has sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any material
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus;
(e) the Representatives shall have received from the Company,
on and as of the Closing Date, a certificate of an authorized officer
Page 8
of the Company, holding the office or title equal or more senior in
rank to that of vice president, with specific knowledge about the
financial matters of the Company satisfactory to you to the effect set
forth in subsections (a) through (c) of this Section and to the further
effect that there has not occurred any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, business, prospects, management,
financial position, stockholders' equity or results of operations of
the Company and its subsidiaries, taken as a whole from that set forth
or contemplated in the Registration Statement;
(f) Xxxxxx X. Xxxxxxx, Esq., Senior Vice President and
General Counsel of the Company, shall have furnished to you his written
opinion, dated the Closing Date, in form and substance satisfactory to
you, to the effect as set forth in Exhibit A hereto;
(g) Xxxxxxxx & Xxxxx, counsel for the Company, shall have
furnished to you their written opinion, dated the Closing Date, in form
and substance satisfactory to you, to the effect as set forth in
Exhibit B hereto;
(h) on the Closing Date, Xxxxxx Xxxxxxxx LLP shall have
furnished to you a letter, dated such date, in form and substance
satisfactory to you, containing statements and information of the type
customarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus;
(i) you shall have received on and as of the Closing Date an
opinion of Xxxxx Xxxx & Xxxxxxxx, counsel to the Underwriters, with
respect to the validity of the Indenture, the Securities, the
Registration Statement, the Prospectus and other related matters as the
Representatives may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to
enable them to pass upon such matters; and
(j) on or prior to the Closing Date, the Company shall have
furnished to the Representatives such further certificates and
documents as the Representatives shall reasonably request.
7. The Company will indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages and liabilities (including without
limitation the legal fees and other expenses incurred in connection with any
suit, action or proceeding or any claim asserted) caused by any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by 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, except insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through the Representatives expressly for use therein; provided that
the foregoing indemnity with respect to any preliminary prospectus shall not
inure to the benefit of any Underwriter (or to the benefit of any person
controlling such Underwriter) from whom the person asserting any such losses,
claims, damages or liabilities purchased Securities if such untrue statement or
omission or alleged untrue statement or omission made in such preliminary
prospectus is eliminated or remedied in the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) and if a copy of the Prospectus (as so amended or supplemented, but
excluding the documents incorporated by reference therein), if required by law
to have been furnished to such person at or prior to the written confirmation of
the sale of such Securities to such person, shall not have been so furnished.
Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company and the directors and officers of the Company who
sign the Registration Statement and each person who controls the Company within
the meaning of Section 15 of the Securities Act and Section 20 of the Exchange
Act, to the same extent as the foregoing indemnity from the Company to each
Underwriter, but only with reference to information relating to such Underwriter
furnished to the Company in writing by such Underwriter through the
Representatives expressly for use in the Registration Statement, the Prospectus,
any amendment or supplement thereto, or any preliminary prospectus.
Page 9
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Person has failed within
a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is
understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm (in addition to any
local counsel) for all Indemnified Persons, and that all such reasonable fees
and expenses shall be reimbursed as they are incurred. Any such separate firm
for the Underwriters and such control persons of Underwriters shall be
designated in writing by the first of the named Representatives on Schedule I
hereto and any such separate firm for the Company and the directors and officers
of the Company who sign the Registration Statement and such control persons of
the Company or authorized representatives shall be designated in writing by the
Company. The Indemnifying Person shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there shall be a final judgment for the plaintiff, the
Indemnifying Person agrees to indemnify any Indemnified Person from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an Indemnified Person shall have
requested an Indemnifying Person to reimburse the Indemnified Person for fees
and expenses of counsel as contemplated by the third sentence of this paragraph,
the Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 60 days after receipt by such Indemnifying Person of the
aforesaid request and (ii) such Indemnifying Person shall not have reimbursed
the Indemnified Person in accordance with such request prior to the date of such
settlement (or delivered a notice to such Indemnified Person setting forth its
good faith objection to such request's conformity to the provisions of this
Section. No Indemnifying Person shall, without the prior written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement includes an unconditional release of such Indemnified
Person from all liability on claims that are the subject matter of such
proceeding.
If the indemnification provided for in the first and second paragraphs
of this Section 7 is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and the Underwriters on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other shall be deemed
to be in the same respective proportions as the net proceeds from the offering
of such Securities (before deducting expenses) received by the Company and the
total underwriting discounts and the commissions received by the Underwriters
bear to the aggregate public offering price of the Securities. The relative
fault of the Company on the one hand and the Underwriters on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
Page 10
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Securities underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective principal amount of the Securities set forth opposite their names in
Schedule I hereto, and not joint.
The remedies provided for in this Section 7 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
The indemnity and contribution agreements contained in this Section 7
and the representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter or by or on behalf
of the Company, its officers or directors or any other person controlling the
Company and (iii) acceptance of and payment for any of the Securities.
8. Notwithstanding anything herein contained, this Agreement may be
terminated in the absolute discretion of the Representatives, by notice given to
the Company, if after the execution and delivery of this Agreement (i) trading
generally shall have been suspended or materially limited on or by, as the case
may be, any of the New York Stock Exchange, the American Stock Exchange, the
National Association of Securities Dealers, Inc., the Chicago Board Options
Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade, (ii)
trading of any securities of or guaranteed by the Company shall have been
suspended on any exchange or in any over-the-counter market, (iii) a general
moratorium on commercial banking activities in New York shall have been declared
by either Federal or New York State authorities or (iv) there shall have
occurred any outbreak or escalation of hostilities or any change in financial
markets or any calamity or crisis that, in the judgment of the Representatives,
is material and adverse and which, in the judgment of the Representatives, makes
it impracticable to market the Securities on the terms and in the manner
contemplated in the Prospectus.
9. If, on the Closing Date, any one or more of the Underwriters shall
fail or refuse to purchase Securities which it or they have agreed to purchase
under this Agreement, and the aggregate principal amount of Securities which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase is not more than one-tenth of the aggregate principal amount of the
Securities, the other Underwriters shall be obligated severally in the
proportions that the principal amount of Securities set forth opposite their
respective names in Schedule I hereto bears to the aggregate principal amount of
Securities set forth opposite the names of all such non-defaulting Underwriters,
or in such other proportions as the Representatives may specify, to purchase the
Securities which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase on such date; provided that in no event shall the
principal amount of Securities that any Underwriter has agreed to purchase
pursuant to Section 1 be increased pursuant to this Section 9 by an amount in
excess of one-tenth of such principal amount of Securities without the written
consent of such Underwriter. If, on the Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Securities and the aggregate
principal amount of Securities with respect to which such default occurs is more
than one-tenth of the aggregate principal amount of Securities to be purchased,
and arrangements satisfactory to the Representatives and the Company for the
purchase of such Securities are not made within 36 hours after such default,
this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Company. In any such case either the
Representatives or the Company shall have the right to postpone the Closing
Page 11
Date, but in no event for longer than seven days, in order that the required
changes, if any, in the Registration Statement and in the Prospectus or in any
other documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect
of any default of such Underwriter under this Agreement.
10. If this Agreement shall be terminated by the Underwriters, or any
of them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement or any condition of the Underwriters' obligations cannot be fulfilled,
the Company agrees to reimburse the Underwriters or such Underwriters as have so
terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and expenses of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering of Securities. Notwithstanding the foregoing, the Company shall not
be liable for the expenses of the Underwriters if the Underwriters terminate
this Agreement pursuant to Section 8(i), 8(iii) or 8(iv).
11. This Agreement shall inure to the benefit of and be binding upon
the Company, the Underwriters, any controlling persons referred to herein and
their respective successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person, firm or
corporation any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained. No purchaser of Securities
from any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
12. Any action by the Underwriters hereunder may be taken by you
jointly or by the first of the named Representatives set forth in Schedule I
hereto alone on behalf of the Underwriters, and any such action taken by you
jointly or by the first of the named Representatives set forth in Schedule I
hereto alone shall be binding upon the Underwriters. All notices and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if mailed or transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be given at the address set forth in Schedule
II hereto. Notices to the Company shall be given to it at Xxx XxxxxxxXxxxxx Xxx,
Xxxxxxx Xxxxx, Xxxxxxxx 00000; Attention: Xxxxxx X. Xxxxxxx, Esq., Senior Vice
President and General Counsel and Attention: Xxxx X. Xxxxxxxx, Vice President
and Treasurer.
13. This Agreement may be signed in counterparts, each of which shall
be an original and all of which together shall constitute one and the same
instrument.
14. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to the conflicts
of laws provisions thereof.
Very truly yours,
THE SERVICEMASTER COMPANY
By:
Name:
Title:
Accepted: February 25, 1998
X.X. XXXXXX SECURITIES INC.
XXXXXXX, XXXXX & CO.
BANCAMERICA XXXXXXXXX XXXXXXXX
FIRST CHICAGO CAPITAL MARKETS, INC.
NATIONSBANC XXXXXXXXXX SECURITIES LLC
By: X.X. XXXXXX SECURITIES INC.
By:
Title:
Page 12
SCHEDULE I
Representatives:
X.X. Xxxxxx Securities Inc.
Xxxxxxx, Xxxxx & Co.
BancAmerica Xxxxxxxxx Xxxxxxxx
First Chicago Capital Markets, Inc.
NationsBanc Xxxxxxxxxx Securities LLC
Underwriting Agreement dated: February 25, 1998
Registration Statement No: 333-32167
Title of Securities: 7.10% Notes due 2018 (the "2018 Notes")
7.25% Notes due 2038 (the "2038 Notes")
Aggregate Principal Amount: $150,000,000 for the 2018 Notes
$150,000,000 for the 2038 Notes
Price to Public: 99.768% of the principal amount of the 2018 Notes
99.200% of the principal amount of the 2038 Notes,
each plus accrued interest, if any, from Xxxxx 0, 0000
Xxxxxxxxx: Indenture dated as of August 15, 1997 between the Company (as
successor by merger to each of The ServiceMaster Company Limited
Partnership ("SMCLP") and ServiceMaster Limited Partnership ("SMLP")) and
Xxxxxx Trust and Savings Bank, as Trustee (the "Trustee").
Third Supplemental Indenture: Third Supplemental Indenture dated as of March 2,
1998 between the Company and the Trustee.
Maturity: March 1, 2018 for the 2018 Notes
March 1, 2038 for the 2038 Notes
Interest Rate: 7.10% for the 2018 Notes
7.25% for the 2038 Notes
Interest Payment Dates: September 1 and March 1
Optional Redemption Provisions: The Securities may be redeemed at any time prior
to maturity at the option of the Company, in whole or in part, upon not
less than 30 or more than 60 days prior written notice, at a redemption
price equal to the greater of (i) 100% of their principal amount or (ii)
the sum of the present values of the Remaining Scheduled Payments (as
defined in the Third Supplemental Indenture) thereon discounted to the
redemption date, on a semi-annual basis, at the Treasury Yield (as defined
in the Third Supplemental Indenture) plus 20 basis points (for the
redemption of the 2018 Notes) and 20 basis points (for the redemption of
the 2038 Notes), together with all accrued but unpaid interest, if any, to
the date of redemption in either case; provided, however, that interest
installments due on an interest payment date that is on or prior to the
date of redemption will be payable to holders who are holders of record of
such notes as of the close of business on the relevant record date for such
installment.
Sinking Fund Provisions: No sinking fund provisions.
Other Provisions: None.
Closing Date and Time of Delivery: March 2, 1998 at 10:00 A.M. (New York time)
Closing Location: Xxxxx Xxxx & Xxxxxxxx, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
Address for Notices to Underwriters: X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000
Page 13
SCHEDULE II
Principal Amount of Securities
To Be Purchased
------------------------------------
2018 2038
------------ ------------
Underwriter
--------------------------
X.X. Xxxxxx Securities Inc. $ 67,500,000 $ 67,500,000
Xxxxxxx, Sachs & Co. $ 67,500,000 $ 67,500,000
BancAmerica Xxxxxxxxx Xxxxxxxx $ 5,000,000 $ 5,000,000
First Chicago Capital Markets, Inc. $ 5,000,000 $ 5,000,000
NationsBanc Xxxxxxxxxx Securities LLC $ 5,000,000 $ 5,000,000
------------ ------------
Total................................ $150,000,000 $150,000,000
Page 14
A-28
EXHIBIT A
Form of ServiceMaster General Counsel Opinion
X.X. Xxxxxx Securities Inc.
Xxxxxxx, Sachs & Co.
BancAmerica Xxxxxxxxx Xxxxxxxx
First Chicago Capital Markets, Inc.
NationsBanc Xxxxxxxxxx Securities LLC
c/o X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies/Gentlemen:
I am rendering this opinion in my capacity as Senior Vice President and
General Counsel of The ServiceMaster Company (the "Company") in response to the
requirement in Section 6(f) of the Underwriting Agreement dated February 25,
1998 (the "Underwriting Agreement") among the Company and the underwriters named
in Schedule II thereto (the "Underwriters"). Every term which is defined or
given a special meaning in the Underwriting Agreement and which is not given a
different meaning in this letter has the same meaning whenever it is used in
this letter as the meaning it is given in the Underwriting Agreement.
In connection with the preparation of this letter, I have, among other
things, read:
(a) the registration statement on Form S-3 (Registration No.
333-32167) filed by the Company and the Company's predecessors, The
ServiceMaster Company Limited Partnership, ("SMCLP") and ServiceMaster
Limited Partnership ("SMLP") with the Securities and Exchange
Commission (the "Commission") on July 28, 1997 for the purpose of
registering the offering of the shelf securities under the Securities
Act of 1933, as amended (the "Securities Act") (which registration
statement, as amended by pre-effective Amendment No. 1, including the
information incorporated therein by reference, and as constituted at
the time it became effective is herein called the "Registration
Statement");
(b) the Company's Prospectus Supplement dated February 25,
1998 (including the information incorporated therein by reference, the
"Prospectus Supplement") to the Core Prospectus for Debt Securities
dated February 25, 1998 (the "Debt Core Prospectus") covering the
offering of the Securities through the Underwriters, in the form which
includes the initial offering price and related terms (which Debt Core
Prospectus, as supplemented by the Prospectus Supplement, including the
information incorporated therein by reference, is herein called the
"Prospectus");
(c) an executed copy of the Underwriting Agreement;
(d) an executed copy of the Indenture dated as of August 15,
1997 in the form executed and delivered by SMCLP and SMLP and Xxxxxx
Trust and Savings Bank as Trustee (the "Trustee") (as amended and
supplemented by the First Supplemental Indenture dated as of August 15,
1997 among SMCLP, SMLP and the Trustee and by the Second Supplemental
Indenture dated as of January 1, 1998 between the Company and the
Trustee, the "Indenture");
(e) an executed copy of the Third Supplemental Indenture dated
as of March 2, 1998 executed pursuant to the Indenture, the global
security representing $150 million aggregate principal amount of the
2018 Notes identified in the Third Supplemental Indenture and the
global security representing $150 million aggregate principal amount of
the 2038 Notes identified in the Third Supplemental Indenture, all in
the form to be delivered at the closing for the sale of those Notes to
be held today under the Underwriting Agreement;
Page 15
(f) A certified copy of resolutions adopted on May 9, 1997 by
the Board of Directors of ServiceMaster Management Corporation and a
certified copy of resolutions adopted on July 25, 1997 by the Board of
Directors of the Company (together, the "Board Resolutions"), a
certified copy of resolutions adopted on January 21, 1998 by the
Finance Committee of the Board of Directors of the Company, and a
certified copy of an Implementing Authorization executed by certain
officers appointed in the Board Resolutions; and
(g) Copies of all certificates and other documents delivered
today at the closing of the purchase and sale of the Securities under
the Underwriting Agreement.
As used in this opinion, (i) the term "Notes" means the Notes referred
to in clause (e) in the preceding sentence; (ii) the term "Transaction
Documents" means the Underwriting Agreement, the Indenture, the Third
Supplemental Indenture and the Notes.
Subject to the assumptions, qualifications and limitations which are
identified in this letter, I advise you that:
1. The Company is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation. The Company is qualified to
do business and is in good standing in the State of Illinois. The Company is not
required to qualify to do business under the laws of any other jurisdiction
other than where the failure to be so qualified would not have a material
adverse effect on the Company.
2. Each of the significant subsidiaries of the Company (the
"Subsidiaries") is a limited partnership or corporation existing and in good
standing under the laws of its respective jurisdiction of organization. The
Company and each Subsidiary is qualified to do business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties
or conducts any business, so as to require such qualification, other than where
the failure to be so qualified would not have a material adverse effect on the
Company and its subsidiaries taken as a whole. The equity of each of the
Subsidiaries is owned as indicated in Schedule A attached hereto. The term
"significant subsidiaries" means the subsidiaries listed as significant
subsidiaries in Schedule B attached hereto. The Company's Treasurer has advised
me that he has determined that the subsidiaries listed on Schedule B are the
only subsidiaries of the Company which constitute "significant subsidiaries" of
the Company within the meaning of that term under the Commission's Regulation
S-X.
3. The Company and each of the Subsidiaries has the power to own and
lease its properties and to conduct its business as described in the Prospectus.
4. The execution of the Transaction Documents (other than the
Indenture) by the Company and, in the case of the Indenture, by SMCLP and SMLP,
has been duly authorized by all necessary actions by the Board of Directors of
the ServiceMaster Board, or the Board of Directors of the Company, as
appropriate, the Finance Committee of the Board of Directors of the Company and
by Authorized Officers qualified to act under the resolutions relevant to the
issuance and sale of the Securities pursuant to the Underwriting Agreement. No
other approval is required under the Certificate of Incorporation of the
Company.
5. Neither the Company nor any of its Subsidiaries is, or with the
giving of notice or lapse of time or both would be, in violation of or in
default under, its charter or Certificate of Incorporation or By-Laws or
agreement of limited partnership, as the case may be. The execution and delivery
of the Underwriting Agreement by the Company, the performance of its obligations
under the Underwriting Agreement, the Indenture, the Third Supplemental
Indenture and the Notes and the Company's sale of the Notes to you in accordance
with the Underwriting Agreement do not (i) violate the Certificate of
Incorporation of the Company or (ii) constitute a violation by the Company of
any applicable provision of any law, statute, rule, regulation or court order
(except that I express no opinion in this paragraph as to (A) any prohibition
against fraud or misrepresentation or (B) whether performance of the
indemnification or contribution provisions in the Underwriting Agreement would
be permitted or (C) compliance with any disclosure requirement, but I refer you
to the third paragraph following clause (d) of numbered paragraph 9 hereof) or
(iii) breach, or result in a default under, any existing obligation of the
Company or any of its subsidiaries under any of the agreements with which I am
familiar.
Page 16
6. After due inquiry, I have no knowledge about any legal or
governmental proceeding that is pending or threatened against the Company or any
of its subsidiaries that has caused me to conclude that such proceeding is
required by Item 103 of Regulation S-K to be described in the Prospectus but
that is not so described. I have no knowledge of any contract, document, or
court order to which the Company is a party or to which any of its properties is
subject that has caused me to conclude that such contract, document or court
order is required to be described in the Prospectus or Registration Statement
but is not so described or is required to be filed as an exhibit to the
Registration Statement but has not been so filed.
7. The Company was not required to obtain any consent, approval,
authorization or order of governmental agency for the issuance, delivery and
sale of the Notes under the Underwriting Agreement except for the order by the
Commission declaring the Registration Statement effective.
8. The Company has received a copy of an order entered for the
Commission by the Division of Corporation Finance that the Commission pursuant
to delegated authority declaring the Registration Statement effective under the
Securities Act on August 6, 1997 (the "effective date") and we have no knowledge
that any stop order suspending its effectiveness has been issued or that any
proceedings for that purpose are pending before, or overtly threatened by, the
Commission. Section 309(a) of the Trust Indenture Act provides that the
Indenture shall be deemed to have been qualified under that Act when the
Registration Statement became effective under the Securities Act.
9. The statements under Item 3 in SMLP's Form 10-K Annual Report for
the fiscal year ended December 31, 1996 were correct in all material respects on
the date that the Annual Report was filed with the Commission. Insofar as the
statements constitute a summary of the legal matters, documents or proceedings
referred to therein, such statements adequately present the information called
for with respect to such legal matters, documents or proceedings.
10. Nothing has come to my attention that has caused me to conclude
that any of the Company or any of its subsidiaries:
(a) does not own or have the rights under any license, permit,
certificate, consent, order, approval or other authorization from or
has not made any declaration or filing with, any federal, state, local
or other governmental authority (including foreign regulatory agencies)
or any court or tribunal, domestic or foreign, necessary to own or
lease, as the case may be, and to operate its properties and to carry
on its business as conducted as of the date hereof;
(b) has received any actual notice of any proceeding relating
to revocation or modification of any license, permit, certificate,
consent, order, approval or other authorization cited in immediately
preceding clause (a);
(c) does not have any material right required to use the
Intellectual Property employed by it in connection with the business
conducted by it as of the date hereof; or
(d) is, or with the giving of notice or lapse of time or both
would be, in violation of or in default under any indenture, mortgage,
deed of trust, loan agreement or other material agreement or instrument
known to me to which the Company or any of its subsidiaries, is a party
or by which it or any of them or any of them or any of their respective
subsidiaries is bound.
I make no representation that I have independently verified the
accuracy, completeness or fairness of the Prospectus or Registration Statement
or that the actions taken in connection with the preparation of the Registration
Statement or Prospectus (including the actions described in the next paragraph)
were sufficient to cause the Prospectus or Registration Statement to be
accurate, complete or fair. I am not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the Prospectus or
the Registration Statement except to the extent otherwise explicitly indicated
in numbered paragraph 9 above.
I can however confirm that I have participated in conferences with
representatives of the Company, representatives of the Underwriters, counsel for
the Underwriters and representatives of the independent accountants for the
Company during which disclosures in the Registration Statement and Prospectus
and related matters were discussed. In addition, I have reviewed certain records
maintained by the Company.
Page 17
Based upon my participation in the conferences and my document review
identified in the preceding paragraph, my understanding of applicable law and
the experience I have gained in my practice thereunder, I can, however, advise
you that nothing has come to my attention that has caused me to conclude that
(i) the Registration Statement at its effective date contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
(ii) the Debt Core Prospectus on the date it bears or on the date of this letter
or the Prospectus Supplement on the date it bears or on the date of this letter
contained an untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading or (iii) the
Registration Statement or the Debt Core Prospectus, each as of the effective
date of the Registration Statement, or the Prospectus Supplement on the date it
bears, did not comply in all material respects with the form and the
requirements of Form S-3 or (iv) any of the periodic reports incorporated by
reference into the Registration Statement as of the date of the filing of such
report with the Commission appeared on its face not to comply as to form in all
material respects with the Exchange Act, and the rules and regulations of the
Commission thereunder.
Except for the activities described in the immediately preceding
section of this letter, I have not undertaken any investigation to determine the
facts upon which the advice in this letter is based. I have not undertaken any
investigation or search of court records for purposes of this letter.
I have assumed for purposes of this letter: each document I have
reviewed for purposes of this letter is accurate and complete, each such
document that is an original is authentic, each such document that is a copy
conforms to an authentic original, and all signatures on each such document are
genuine; that the Underwriting Agreement and every other agreement I have
examined for purposes of this letter constitutes a valid and binding obligation
of each party to that document and that each such party has satisfied all legal
requirements that are applicable to such party to the extent necessary to
entitle such party to enforce such agreement (except that I make no such
assumption with respect to the Company; and that you have acted in good faith
and without notice of any fact which has caused you to reach any conclusion
contrary to any of the conclusions provided in this letter. I have also made
other assumptions which I believe to be appropriate for purposes of this letter.
In preparing this letter I have relied without independent verification
upon: (i) information contained in certificates obtained from governmental
authorities; (ii) factual information represented to be true in the Underwriting
Agreement and other documents specifically identified at the beginning of this
letter as having been read by me; (iii) factual information provided to me by
the other representatives of the Company; and (iv) factual information I have
obtained from such other sources as I have deemed reasonable. I have assumed
that the information upon which I have relied is accurate and does not omit
disclosures necessary to prevent such information from being misleading. For
purposes of numbered paragraphs 1 and 2 (other than the last sentence of
paragraph 2), I have relied exclusively upon certificates issued by governmental
authorities in the relevant jurisdictions and such opinion is not intended to
provide any conclusion or assurance beyond that conveyed by those certificates.
I confirm that I do not have knowledge that has caused me to conclude
that my reliance and assumptions cited in the two immediately preceding
paragraphs are unwarranted. Whenever this letter provides advice about (or based
upon) my knowledge of any particular information or about any information which
has or has not come to my attention such advice is based entirely on my
conscious awareness at the time this letter is delivered on the date it bears.
My advice on every legal issue addressed in this letter is based
exclusively on the internal law of Illinois, the General Corporation Law of the
State of Delaware, or the federal law of the United States, and represents my
opinion as to how that issue would be resolved were it to be considered by the
highest court in the jurisdiction that enacted such law. I express no opinion
with respect to any state securities (or "blue sky") laws or regulations or any
laws, statutes governmental rules or regulations which in my experience are not
applicable generally to transactions of the kind covered by the Underwriting
Agreement. None of the opinions or other advice contained in this letter
considers or covers (i) any financial statements or supporting schedules (or any
notes to any such statements or schedules) or other financial or statistical
information set forth or incorporated by reference in (or omitted from) the
Registration Statement or the Prospectus or (ii) any rules and regulations of
the National Association of Securities Dealers, Inc. relating to the
compensation of underwriters.
Page 18
My advice on each legal issue addressed in this letter represents my
opinion as to how that issue would be resolved were it to be considered by the
highest court of the jurisdiction upon whose law my opinion on that issue is
based. The manner in which any particular issue would be treated in any actual
court case would depend in part on facts and circumstances particular to the
case, and this letter is not intended to guarantee the outcome of any legal
dispute which may arise in the future.
This letter speaks as of the time of its delivery on the date it bears.
I do not assume any obligation to provide you with any subsequent opinion or
advice by reason of any fact about which I did not have knowledge at that time,
by reason of any change subsequent to that time in any law other governmental
requirement or interpretation thereof covered by any of my opinions or advice,
or for any other reason.
This letter may be relied upon by the Underwriters only for the purpose
served by the provision in the Underwriting Agreement cited in the initial
paragraph of this letter in response to which it has been delivered. Without my
written consent: (i) no person other than the Underwriters may rely on this
letter for any purpose; (ii) this letter may not be cited or quoted in any
financial statement, prospectus, private placement memorandum or other similar
document; (iii this letter may not be cited or quoted in any other document or
communication which might encourage reliance upon this letter by any person or
for any purpose excluded by the restrictions in this paragraph; and (iv) copies
of this letter may not be furnished to anyone for purposes of encouraging such
reliance.
Sincerely,
Xxxxxx X. Xxxxxxx
Xx. Vice President and General Counsel
Page 19
B-38
Schedule A
Ownership of the Equity of the Significant Subsidiaries (1)
Subsidiary Equity Interest Owned by and Extent of Ownership
---------------------------- ------------------------ --------------------------------
ServiceMaster Management limited partner interest the Company - 100%
Services general partner interest ServiceMaster Management
Limited Partnership Services, Inc. - 100% (2)
ServiceMaster Consumer Services limited partner interest the Company - 100%
Limited Partnership general partner interest ServiceMaster Consumer
Services, Inc. - 100% (3)
TruGreen Limited Partnership limited partner interest the Company - 100%
general partner interest TruGreen, Inc. - 100% (4)
The Terminix International limited partner interest the Company - 100%
Company Limited general partner interest Terminix International, Inc. - 100% (5)
Partnership
American Home Shield Corporation common stock Company - 100%
Page 20
Schedule B
Significant Subsidiaries (6)
ServiceMaster Management Services Limited Partnership, a Delaware limited
partnership
ServiceMaster Consumer Services Limited Partnership, a Delaware limited
partnership
TruGreen Limited Partnership, a Delaware limited partnership
The Terminix International Company Limited Partnership, a Delaware limited
partnership
American Home Shield Corporation, a Delaware corporation
Page 21
EXHIBIT B
Form of Xxxxxxxx & Xxxxx Opinion
X.X. Xxxxxx Securities Inc.
Xxxxxxx, Xxxxx & Co.
BancAmerica Xxxxxxxxx Xxxxxxxx
First Chicago Capital Markets, Inc.
NationsBanc Xxxxxxxxxx Securities LLC
c/o X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies/Gentlemen:
We are issuing this letter in our capacity as special counsel for The
ServiceMaster Company (the "Company") in response to the requirement in Section
6(g) of the Underwriting Agreement dated February 25, 1998 (the "Underwriting
Agreement") between the Company and the underwriters named in Schedule II
thereto (the "Underwriters"). Every term which is defined or given a special
meaning in the Underwriting Agreement and which is not given a different meaning
in this letter has the same meaning whenever it is used in this letter as the
meaning it is given in the Underwriting Agreement.
In connection with the preparation of this letter, we have, among other
things, read:
(a the registration statement on Form S-3 (Registration No.
333-32167) filed by the Company and the Company's predecessors, The
ServiceMaster Company Limited Partnership ("SMCLP") and Service Master
Limited Partnership ("SMLP") (the "Predecessors"), with the Securities
and Exchange Commission (the "Commission") on July 28, 1997 for the
purpose of registering the offering of the Shelf Securities under the
Securities Act of 1933, as amended (the "Securities Act") (which
registration statement, as amended by pre-effective Amendment No. 1,
including the information incorporated therein by reference, is herein
called the "Registration Statement");
(b the Company's Prospectus Supplement dated February 25, 1998
(including the information incorporated therein by reference, the
"Prospectus Supplement") to the Core Prospectus for Debt Securities
dated February 25, 1998 (including the information incorporated therein
by reference, the "Debt Core Prospectus") covering the offering of the
2018 Notes and 2038 Notes identified in clause (e) through the
Underwriters, in the form which includes the initial offering price and
related terms (which Debt Core Prospectus, as supplemented by the
Prospectus Supplement, is herein called the "Prospectus");
(c an executed copy of the Underwriting Agreement;
(d an executed copy of the Indenture dated as of August 15,
1997 in the form executed and delivered by SMCLP, SMLP and Xxxxxx Trust
and Savings Bank as Trustee (the "Trustee"), the First Supplemental
Indenture dated as of August 15, 1997 among SMCLP, SMLP and the
Trustee, and the Second Supplemental Indenture dated as of January 1,
1998 between the Company and the Trustee (the term "Indenture" as used
in this letter means the Indenture cited in this clause (d) as
constituted after giving effect to the two supplements cited in this
clause (d));
(e an executed copy of the Third Supplemental Indenture dated
as of March 2, 1998 executed pursuant to the Indenture, the global
security representing $150 million aggregate principal amount of the
2018 Notes identified in the Third Supplemental Indenture and the
global security representing $150 million aggregate principal amount of
the 2038 Notes identified in the Third Supplemental Indenture, all in
the form to be delivered at the closing for the sale of those Notes to
be held today under the Underwriting Agreement;
(f a certified copy of resolutions adopted on July 25, 1997 by
the Company's Board of Directors (the "ServiceMaster Board"), a
certified copy of the resolutions adopted by the board of directors of
ServiceMaster Management Corporation on May 9, 1997 incorporated into
those July 25, 1997 resolutions adopted by the ServiceMaster Board, a
certified copy of resolutions adopted on January 21, 1998 by the
Finance Committee of the ServiceMaster Board, and a certified copy of
an Implementing Authorization executed by certain officers appointed in
the Board resolutions; and
Page 22
(g copies of all certificates and other documents delivered
today at the closing of the purchase and sale of the Securities under
the Underwriting Agreement.
The term "Notes" as used in this letter means the Notes cited in clause (e) in
the preceding sentence. The term "Transaction Documents" is used in this letter
to mean the Underwriting Agreement, the Indenture, the Third Supplemental
Indenture and the Notes.
Subject to the assumptions, qualifications and limitations which are
identified in this letter, we advise you that:
1. The Company is validly existing as a corporation in good standing
under Delaware General Corporation Law.
2. Under its Certificate of Incorporation and By-Laws, the Company
has the corporate power necessary to own and lease its properties and to conduct
its business as described in the Prospectus.
3. The Underwriting Agreement has been duly authorized, executed and
delivered on behalf of the Company.
4. Each of the Indenture and the Third Supplemental Indenture has
been duly executed and delivered on behalf of the Company or its Predecessors.
Each of the Indenture and the Third Supplemental Indenture is a valid and
binding obligation of the Company, and (assuming the due authorization,
execution and delivery thereof by the Trustee) is enforceable against the
Company in accordance with its terms.
5. The Notes have been duly executed and delivered by the Company
and, when paid for by the Underwriters in accordance with the terms of the
Underwriting Agreement (assuming the due authorization, execution and delivery
of the Indenture by the Trustee and due authentication and delivery of the Notes
by the Trustee in accordance with the Indenture), will constitute Securities
under the terms of the Indenture, will constitute the valid and binding
obligations of the Company, and will be enforceable against the Company in
accordance with their terms.
6. The execution and delivery of the Underwriting Agreement on behalf
of the Company, the performance of the respective obligations of the Company
under the Underwriting Agreement, the Indenture, the Third Supplemental
Indenture and the Notes, and the Company's sale of the Notes to you in
accordance with the Underwriting Agreement do not (i) violate the Certificate of
Incorporation and By-Laws of the Company or (ii) constitute a violation by the
Company of any applicable provision of any law, statute, rule or regulation
(except that we express no opinion in this paragraph as to compliance with any
disclosure requirement or any prohibition against fraud or misrepresentation or
as to whether performance of the indemnification or contribution provisions in
the Underwriting Agreement would be permitted) or (iii) breach, or result in a
default under, any existing obligation of the Company or any of its subsidiaries
under any of the agreements set forth on Schedule A attached hereto which
representatives of the Company have advised us include all material debt
agreements and instruments of or binding on the Company or any of the Company's
subsidiaries. The agreements in Schedule A contain debt incurrence tests and/or
other financial covenants and tests; we have not attempted to independently
apply any of those covenants or tests. Representatives of the Company have
however advised us that they have applied all of those tests and covenants and
have determined that none of those tests or covenants will be breached by the
Company's sale of the Notes to you or by any of the other actions cited at the
beginning of this paragraph, and we have assumed without investigation that such
advice and determinations are correct.
7. We have no knowledge about any legal action or any governmental
action, investigation or proceeding that is pending or threatened against the
Company or any of the Company's subsidiaries that has caused us to conclude that
such proceeding is required by Item 103 of Regulation S-K to be described in the
Prospectus but that is not so described. We have no knowledge about any
contract, document or court order to which the Company is a party or to which
any of its properties is subject that has caused us to conclude that such
contract, document or court order is required to be described in the Prospectus
or the Registration Statement but is not so described or is required to be filed
as an exhibit to the Registration Statement but has not been so filed.
8. The Company is not and, immediately after the sale of the Notes to
the Underwriters and application of the net proceeds therefrom as described in
the Prospectus Supplement under the caption "Use of Proceeds" will not be, an
"investment company" as such term is defined in the Investment Company Act of
1940, as amended.
Page 23
9. The Company was not required to obtain any consent, approval,
authorization or order of governmental agency for the issuance, delivery and
sale of the Notes under the Underwriting Agreement except for the order by the
Commission declaring the Registration Statement effective.
10. The Company has received a copy of an order entered for the
Commission by the Division of Corporation Finance that the Commission pursuant
to delegated authority declaring the Registration Statement effective under the
Securities Act on August 6, 1997 (the "effective date") and we have no knowledge
that any stop order suspending its effectiveness has been issued or that any
proceedings for that purpose are pending before, or overtly threatened by, the
Commission. Section 309(a) of the Trust Indenture Act provides that the
Indenture was deemed to have been qualified under that Act when the Registration
Statement became effective under the Securities Act.
11. The statements in the Debt Core Prospectus under the heading
"Description of Debt Securities" the statements in the Prospectus Supplement
under the heading "Description of the Notes and in the Registration Statement in
Item 15, to the extent that those statements summarize laws, governmental rules
or regulations or documents, are correct in all material respects.
* * *
The purpose of our professional engagement was not to establish factual
matters, and preparation of the Registration Statement and the Prospectus
involved many determinations of a wholly or partially nonlegal character. We
make no representation that we have independently verified the accuracy,
completeness or fairness of the Prospectus or Registration Statement or that the
actions taken in connection with the preparation of the Registration Statement
or Prospectus (including the actions described in the next paragraph) were
sufficient to cause the Prospectus or Registration Statement to be accurate,
complete or fair. We are not passing upon and do not assume any responsibility
for the accuracy, completeness or fairness of the Prospectus or the Registration
Statement except to the extent otherwise explicitly indicated in numbered
paragraph 11 above.
We can however confirm that we have participated in brief conferences
with representatives of the Company, representatives of the Underwriters,
counsel for the Underwriters and representatives of the independent accountants
for the Company which involved discussions relevant to Registration Statement
and Prospectus. In addition, we have reviewed certain corporate records
furnished to us by the Company. We were not retained by the Company to prepare
the periodic reports, or other materials incorporated in the Prospectus or
Registration Statement, and our knowledge about these materials is limited. We
were not present at any meeting of the ServiceMaster Board or its Finance
Committee at which any resolution relevant to this letter was discussed or
adopted.
Based upon our participation in the conferences and our document review
identified in the preceding paragraph, our understanding of applicable law and
the experience we have gained in our practice thereunder and relying as to
materiality to a large extent upon the opinions and statements of officers of
the Company, we can, however, advise you that nothing has come to our attention
that has caused us to conclude that (i) the Registration Statement at its
effective date contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) the Debt Core Prospectus on the date
it bears or on the date of this letter or the Prospectus Supplement on the date
it bears or on the date of this letter contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading or (iii) the Registration Statement or as of its effective date
or the Debt Core Prospectus or the Prospectus Supplement on the date it bears
did not comply in any material respect with the form and the requirements of
Form S-3.
* * *
Page 24
Except for the activities described in the immediately preceding
section of this letter, we have not undertaken any investigation to determine
the facts upon which the advice in this letter is based. We have not undertaken
any investigation or search of court records for purposes of this letter.
We have assumed for purposes of this letter: each document we have
reviewed for purposes of this letter is accurate and complete, each such
document that is an original is authentic, each such document that is a copy
conforms to an authentic original, and all signatures on each such document are
genuine; that the Underwriting Agreement and every other agreement we have
examined for purposes of this letter constitutes a valid and binding obligation
of each party to that document and that each such party has satisfied all legal
requirements that are applicable to such party to the extent necessary to
entitle such party to enforce such agreement (except that we make no such
assumption with respect to the Company); and that you have acted in good faith
and without notice of any fact which has caused you to reach any conclusion
contrary to any of the conclusions provided in this letter. We have also made
other assumptions which we believe to be appropriate for purposes of this
letter.
In preparing this letter we have relied without independent
verification upon: (i) information contained in certificates obtained from
governmental authorities; (ii) factual information represented to be true in the
Underwriting Agreement and other documents specifically identified at the
beginning of this letter as having been read by us; (iii) factual information
provided to us by the Company or its representatives as of the date of this
letter; and (iv) factual information from such other sources as we have deemed
reasonable. We have assumed that there has been no relevant change or
development between the dates as of which the information cited in the preceding
sentence was given and the date of this letter and that the information upon
which we have relied is accurate and does not omit disclosures necessary to
prevent such information from being misleading. For purposes of numbered
paragraph 1, we have relied exclusively upon the certificate issued by the
Delaware Secretary of State at the closing and such opinion is not intended to
provide any conclusion or assurance beyond that conveyed by that certificate.
We confirm that nothing has come to our attention that has caused us to
conclude that our reliance and assumptions cited in the two immediately
preceding paragraphs are unwarranted. Whenever this letter provides advice about
(or based upon) our knowledge of any particular information or about any
information which has or has not come to our attention such advice is based
entirely on the conscious awareness at the time this letter is delivered on the
date it bears by the lawyers with Xxxxxxxx & Xxxxx at that time who spent
substantial time representing the Company in connection with the offering
effected pursuant to the Prospectus.
Each opinion in this letter that any particular agreement is a valid
and binding obligation or is enforceable in accordance with its terms is subject
to: (i) the effect of bankruptcy, insolvency, fraudulent conveyance and other
similar laws and judicially developed doctrines in this area such as substantive
consolidation and equitable subordination; (ii) the effect of general principles
of equity; and (iii) other commonly recognized statutory and judicial
constraints on enforceability including statutes of limitations. "General
principles of equity" include but are not limited to: principles limiting the
availability of specific performance and injunctive relief; principles which
limit the availability of specific performance and injunctive relief; principles
which limit the availability of a remedy under certain circumstances where
another remedy has been elected; principles requiring reasonableness, good faith
and fair dealing in the performance and enforcement of an agreement by the party
seeking enforcement; principles which may permit a party to cure a material
failure to perform its obligations; and principles affording equitable defenses
such as waiver, laches and estoppel.
Page 25
Our advice on every legal issue addressed in this letter is based
exclusively on the internal law of New York, the General Corporation Law of the
State of Delaware and the federal law of the United States, and represents our
opinion as to how that issue would be resolved were it to be considered by the
highest court in the jurisdiction which enacted such law. We express no opinion
with respect to any state securities (or "blue sky") laws or regulations or any
laws, statutes governmental rules or regulations which in our experience are not
applicable generally to transactions of the kind covered by the Underwriting
Agreement. None of the opinions or other advice contained in this letter
considers or covers (i) any financial statements or supporting schedules (or any
notes to any such statements or schedules) or other financial or statistical
information set forth or incorporated by reference in (or omitted from) the
Registration Statement or the Prospectus or (ii) any rules and regulations of
the National Association of Securities Dealers, Inc. relating to the
compensation of underwriters.
Our advice on each legal issue addressed in this letter represents our
opinion as to how that issue would be resolved were it to be considered by the
highest court of the jurisdiction upon whose law our opinion on that issue is
based. The manner in which any particular issue would be treated in any actual
court case would depend in part on facts and circumstances particular to the
case, and this letter is not intended to guarantee the outcome of any legal
dispute which may arise in the future. It is possible that some terms of the
Indenture or the Notes may not prove enforceable for reasons other than those
cited in this letter should an actual enforcement action be brought, but
(subject to all the exceptions, qualifications, exclusions and other limitations
contained in this letter) such unenforceability would not in our opinion prevent
the Underwriters from realizing the principal benefits purported to be provided
by the Indenture or the Notes.
This letter speaks as of the time of its delivery on the date it bears.
We do not assume any obligation to provide you with any subsequent opinion or
advice by reason of any fact about which we did not have knowledge at that time,
by reason of any change subsequent to that time in any law other governmental
requirement or interpretation thereof covered by any of our opinions or advice,
or for any other reason.
This letter may be relied upon by the Underwriters only for the purpose
served by the provision in the Underwriting Agreement cited in the initial
paragraph of this letter in response to which it has been delivered. Without our
written consent: (i) no person other than the Underwriters may rely on this
letter for any purpose; (ii) this letter may not be cited or quoted in any
financial statement, prospectus, private placement memorandum or other similar
document; (iii) this letter may not be cited or quoted in any other document or
communication which might encourage reliance upon this letter by any person or
for any purpose excluded by the restrictions in this paragraph; and (iv) copies
of this letter may not be furnished to anyone for purposes of encouraging such
reliance.
XXXXXXXX & XXXXX
Page 26
Schedule A
Specified Contracts
1. Note Agreements dated as of September 15, 1988, as amended through
Third Amendments thereto dated as of July 15, 1996 (relating to the Company's
$45 million, 10.57% Senior Notes, Series A, due October 1, 2000).
2. Exchange Agreements dated as of August 1, 1990, as amended through
Third Amendments thereto dated as of July 15, 1996, and related Guaranty
Agreements dated as of August 1, 1990, as amended through Third Amendments
thereto dated as of July 15, 1996 (relating to the $55 million, 10.8125% Senior
Notes, due October 1, 2002, of American Home Shield Corporation (as successor by
merger to SVM Holding Corp.) and guaranteed by the Company).
3. Note Agreements dated as of April 1, 1992, as amended through Second
Amendments thereto dated as of July 15, 1996 (relating to the Company's $50
million, 8.38% Senior Notes, due July 15, 2001).
4. Participation, Master Lease and Construction Agreement dated as of
October 28, 1996, as amended by first amendment thereto dated as of December 5,
1997 (relating to the Company's $35 million line of credit).
5. Note Agreements dated as of January 15, 1994, as amended through
First Amendments thereto dated as of July 15, 1996 (relating to the Company's
$70 million, 6.65% Senior Notes, due January 31, 2004).
6. Note Agreements dated as of July 16, 1996, as amended through First
Amendments thereto dated as of March 1, 1997 (relating to the Company's $100
million, 7.40% Senior Notes, Series A, due July 16, 2006, and the Company's $25
million, 7.40% Senior Notes, Series B, due September 26, 2006).
7. $100 million 6.95% Notes due August 15, 2007
8. $200 million 7.45% Notes due August 15, 2027
9. $750 million Five-Year Credit Agreement dated as of April 1, 1997
among The ServiceMaster Company, the Lenders party thereto, The First National
Bank of Chicago as Administrative Agent and Xxxxxx Guaranty Trust Company of New
York as Documentation Agent.
10. $250 million 364-Day Credit Agreement dated as of April 1, 1997
among The ServiceMaster Company, the Lenders party thereto, The First National
Bank of Chicago as Administrative Agent and Xxxxxx Guaranty Trust Company of New
York as Documentation Agent.
--------
1The significant subsidiaries are the companies listed in Schedule B.
2 All of the common stock of ServiceMaster Management Services, Inc. is
owned, directly or indirectly, by the Company.
3 All of the common stock of ServiceMaster Consumer Services, Inc. is
owned, directly or indirectly, by the Company.
4 All of the common stock of TruGreen, Inc. is owned, directly or
indirectly, by the Company.
5 All of the common stock of Terminix International, Inc. is owned,
directly or indirectly, by the Company.
6This schedule has been prepared pursuant to the last sentence of the
numbered paragraph 2 of the opinion letter.
Page 27
