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